· Table of contents 1. General information on the Bevek KBC Equity Fund 1.1. Organisation of the...

KBC Equity FundAudited annual report31 December 2018

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

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

3

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

Chairmanappointed 10/04/2018

Jan Gysels General Manager KBC Private Banking- Wealth Office and Central Region

Directorresigned 01/01/2018

Luc Vanderhaegen / Directorappointed 01/02/2018

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 DirectorLinda Demunter Managing DirectorGert Rammeloo Managing Director resigned 01/01/2018Frank Van de Vel Managing Director appointed 19/01/2018Chris Sterckx Managing DirectorKlaus Vandewalle Managing Director

4

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 DirectorLinda Demunter Managing DirectorGert Rammeloo Managing Director resigned 01/01/2018Frank Van de Vel Managing Director appointed 19/01/2018Chris 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.

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 of

5

has 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 its

behalf, 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

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

6

- 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., avenue du Port 2, B-1080 Bruxelles.

Accredited auditor of the the BevekDeloitte Bedrijfsrevisoren BV o.v.v.e. CVBA, Gateway Building, Luchthaven Nationaal 1 J, 1930 Zaventem,represented by 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.

7

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 2018

the total rew ard over the fiscal year, broken downinto the fixed and variable pay that the manager paysto its staff , the number of recipients and any amountpaid direct by the bevek/sicav, including allperformance rewards and carried interest.

Fixed pay: 32.207.614 EURVariable pay: 4.594.871 EURNumber of recipients: 337

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

Management rewards: 2.280.149 EURReward for the manager's staff whose acts affectthe risk profile: 591.923 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.

8

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 Consumer Durables Classic Shares Classic Shares CSOB CZK Institutional B Shares

8 CSOB Akciovy fond dividendovych firem9 Emerging Europe


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

11 Europe Classic Shares Classic Shares CSOB CZK Institutional B Shares

12 Eurozone Classic Shares Institutional B Shares

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

9

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

15 Finance Classic Shares Institutional B Shares

16 Flanders17 Food & Personal Products

Classic Shares Corporate Wealth & Institutional Office shares Institutional B Shares

18 Global Leaders Classic Shares Institutional B Shares

19 High Dividend Classic Shares Institutional B Shares Institutional Shares

20 High Dividend Eurozone Classic Shares Institutional B Shares

21 High Dividend New Markets Classic Shares Institutional B Shares

22 High Dividend North America Classic Shares Institutional B Shares

23 Industrials & Infrastructure Classic Shares Institutional B Shares

24 Japan Classic Shares Institutional B Shares

25 Latin America26 Luxury & Tourism


27 Medical Technologies Classic Shares Institutional B Shares

28 New Asia Classic Shares Institutional B Shares

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

10

30 New Shares31 Oil


32 Pacific (In Liquidation) Classic Shares Institutional B Shares

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 Eurozone Classic Shares Institutional B Shares

40 SRI Eurozone & North America Classic Shares Institutional B Shares

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

42 SRI North America Classic Shares Institutional B Shares

43 SRI Rest of Europe Classic Shares Institutional B Shares

44 SRI World Classic Shares Institutional B Shares

11

45 Strategic Cyclicals Classic Shares Institutional B Shares

46 Strategic Finance Classic Shares Institutional B Shares

47 Strategic Non Cyclicals Classic Shares Institutional B Shares

48 Strategic Satellites Classic Shares Institutional B Shares

49 Strategic Telecom & Technology Classic Shares Institutional B Shares

50 Technology Classic Shares Institutional B Shares

51 Telecom 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 World

Sub-funds and share classes liquidated during the reporting periodNot applicable

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

12

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 the mainrisks and uncertainties facing the undertaking for collective investment.

• No important events took place after the close of the financial year.• As regards events that might have a material impact on the development of the undertaking for collective

investment, 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.

1.2.1.1. Securities Financing Transactions (SFTs)Except for the sub-fund Eurozone DBI-RDT, SRI Asia Pacific, SRI Emerging Markets, SRI Eurozone, SRIEurozone & North America, SRI Minimum Variance, SRI North America, SRI Rest of Europe, SRI Worldapplies:

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

13

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.

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.

14

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.- The return of securities similar to the securities that have been lent is guaranteed by the principal or the

agent, 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.

15

- 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.

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.

16

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 principle, the percentage share amounts to between 35% and 70%. However, in a small number of cases, thedistributor’s fee is less than 35%. Investors may, on request, obtain more information on these cases.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 does not affect the amount of the management fee paid by a sub-fund to the management company.This management fee is subject to the limitations laid down in the articles of association. The limitations may onlybe amended after approval by the General Meeting.The management company has concluded a distribution agreement with the distributor in order to facilitate thewider distribution 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.

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.

17

BrokerCommission gross in EUR paid

during the period:1-01-2018 - 31-12-2018

CSA Credits in EUR accrued duringthe period:

1-01-2018 - 31-12-2018Percentage

CARNEGIE 97,810.40 29,376.63 30.03%

CITI 2,583,859.34 1,047,581.14 40.54%

CSFBSAS 1,635,596.42 663,377.28 40.56%

DEUTSCHE 496,930.85 203,839.34 41.02%

EQ CSA GOLDMANSACHSINTERNATIONAL

1,819,336.19 775,800.93 42.64%

EQ CSA ING 82,006.02 24,249.14 29.57%

EQ CSA KBCSEC 124,483.17 35,075.55 28.18%

HSBC 2,139,059.10 820,918.43 38.38%

INSTINET 1,618,228.99 640,279.13 39.57%

MACQUARIE 1,706,780.41 708,579.96 41.52%

MERRILL 1,559,044.36 591,880.02 37.96%

MORGAN STANLEY 636,486.70 204,470.86 32.12%

SOCGEN 554,116.52 201,716.18 36.40%

UBSWDR 701,513.44 245,397.17 34.98%

WOOD 20,963.84 2,450.11 11.69%

1.2.1.8. Recurrent fees and chargesRecurrent fees and charges paid by the BevekFees 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-fundsmarketed.

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.

18

1.2.2. General market overview1 January 2018 – 31 December 2018General overviewThe economic context

In the first half of the reporting period, there was a great deal of optimism regarding economies around the world.Stubbornly low interest rates, large numbers of new jobs and a hefty tax reform in the US created a very positiveeconomic environment, which was also reflected in the rest of the world.The second half of the reporting period was marked by increasing uncertainty. Protracted trade disputes betweenthe US and its main trading partners coupled with economic confidence indicators tumbling from their fairly headyheights fuelled fears of a slowdown in growth. Simultaneously, inflation figures increased somewhat and centralbanks (especially in the US) presented the prospects of a more stringent policy, which just poured oil on the fire.However, published figures revealed that it was only economic growth in the euro area that had come to a standstill,not least in Germany. Economic growth in the US remained very strong in the second half of the year.

Monetary policyAn increase in underlying inflation through mounting labour costs and, in the first nine months of the year, sharplyrising oil prices pushed the US inflation rate above the central bank's target of 2%. The Federal Reserve alsocontinued its policy of systematically raising the base rate, hiking it by 0.25% per quarter.Apart from a number of emerging countries that had to contend with a flight of capital, monetary policy in the rest ofthe world remained rather accommodative. In June, the European Central Bank (ECB) revealed its plans to phaseout its bond-buying programme as of September and to bring it to a halt at the end of December. At the same time,the Frankfurt-based bank made it clear that it would only be well into 2019 before interest rates would be raisedagain. At just 1%, core inflation in the euro area is incidentally still well below the ECB's objective.

Foreign exchange marketsThe euro was able to strengthen against most currencies during the reporting period. The main exception was theUS dollar, which benefited from a widening rate spread with the euro area. Towards the end of the year, when stockmarket sentiment grew considerably gloomier, the currencies of Japan and Switzerland, perceived as safe, alsogained ground. The biggest losers were the emerging market currencies, which suffered from falling export prices(mainly commodities) and in some cases (e.g., Turkey) carried the consequences of a declining confidence ineconomic policy being pursued.

Stock marketsThe international stock markets (in euro terms) closed the reporting period with a loss of 4.8%. The market climateremained very positive until the end of January 2018. Wall Street leapt from record to record and sharp rises werealso achieved on European markets.

However, the second half of the reporting period was marked by substantial fluctuations on the stock markets thatled to a sharp correction, especially in the last quarter.

In the regional markets ranking, damage in the US (-0.3% in euros) remained limited during the reporting period,due in part to the appreciation of the US dollar. In Latin America (-1.9%) and Eastern and Central Europe (-3.5%),too, the decline was not as bad as expected. European markets (-10.7%) were clearly lagging behind, with the euroarea (-12.8%) far worse off than the other markets in the region. The Asian region (-10.7%) suffered acutely fromthe trade disputes with a loss of almost 15% for the Chinese market.

Among the sectors, only the defensive industries could make progress. Both the utilities and the health sectorsclosed by 6.5% higher. The cyclical sectors found themselves in considerable difficulty. The biggest losers were theproducers of materials (-11.8%) and industrials (-10.1%). The financial sector had to surrender 11.5% worldwide.

ProjectionsThe economic context

For 2019, we are counting on a positive but slightly slowing growth in the world economy. The effects of anytightening of monetary policy and the disappearance of tax incentives are pushing growth down slightly in the US. Asharp increase in jobs and higher wages, however, are underpinning the growth of consumption, which should helpthe economy speed well.

In Europe, a slight recovery seems possible following the weak figures in the second half of the year, boosted heretoo by private consumption. A weaker euro and receding uncertainty surrounding the trade dispute with the UScould provide an additional stimulus. However, the trade conflict, combined with the Brexit issue, remains one of thekey risks for the economy.

We are expecting the Chinese economy to continue its soft landing and a slight return to growth in most of the othergrowth markets.

Monetary policyWe believe the US central bank will continue to tighten its policy in 2019, albeit at a slower pace. We are countingon two 0.25%-rate hikes. The European Central Bank is expected to leave it at a first and rather modest rate hikeafter the summer. The Bank of Japan continues to create money at a pace.

19

Foreign exchange marketsFrom the second half of the year, we expect a slight depreciation of the US dollar versus the euro. The slowing paceof rate hikes in the US and the emerging adjustment of interest-rate policy in the euro area should ensure this.

Stock marketsShares continue to be preferable to bonds. They offer the prospect of a higher return and their relative valuationalso remains interesting. This has a lot to do with the fact that bonds are heavily overpriced due to the low level ofinterest rates. By contrast, following the recent stock market correction, the price/earnings ratios of shares are belowtheir historical average. Dividend yields also exceed government bond yields, except in the US.

2019 won’t be a bull market at any rate. The economic cycle is entering its eleventh year, with profit margins in theUS in particular at very high levels. But it will not be a bear market either. We only see those in economicrecessions, which is not the scenario for 2019.

Regionally, we prefer the developed economies, such as the US and the euro area. The more attractive valuationfavours the euro area. The strong euro could dampen corporate earnings there, but this is not expected untilmid-2019.

Within the euro area, German shares are attractive. The German stock market is cheaper than the euro areaaverage. Investors overreacted to the trade threats made by President Trump and to the disappointing indicators. Itis also quite cyclical (i.e. sensitive to changes in the economic cycle), which enables it to benefit from continuingabove-average worldwide growth.

Factors favouring the US include the stronger earnings growth, solid economic growth and the America First policy.President Trump's tax cuts are boosting confidence and driving up both economic and earnings growth. But evenwithout tax incentives, earnings are expected to increase by more than 9% in 2019.

At sector level, the cyclical (i.e. sensitive to changes in the economic cycle) and growth-oriented sectors, inparticular, should benefit from the stronger economy. Financial companies can benefit from rising interest rates,increased lending and declining write-downs. Technology and communication services remain profitable growthsectors. In the third quarter, companies again managed to exceed analyst forecasts by 7%, recording a 25%increase in earnings. Even so, the sectors were penalised in the autumn, mainly because turnover growth forecastswere adjusted downwards.

Defensive sectors, such as utilities, health care and consumer staples (e.g., foodstuffs), have withstood the stockmarket correction very well. However, they are sectors that benefit less from the strong economic cycle. What’smore, these sectors perform less well in an environment of rising interest rates. We avoid these sectors, with theexception of health care, the only defensive sector which is also a growth sector. Fears of a political bidding war ondrug prices have also eased following the midterm elections in the US in November 2018.

20

1.3. Auditor's report

21

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 2018 – Annual accountsThe original text of this report is in Dutch

22

KBC Equity Fund NVBevek under Belgian law, category UCITS | 31 December 2018

1

Statutory auditor’s report to the shareholders’ meeting of KBC Equity Fund NVfor the year ended 31 December 2018 – 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 17 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 2018 and the income statement for the year then ended, as well as the explanatory notes. Theannual accounts show a total net asset value of 9 839 080 513,60 EUR and the income statement shows a lossfor the year ended of 1 951 762 916,13 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 2018 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 39 665 725,02 -12 431 250,12

KBC Equity Fund - World EUR 104 609 182,32 -15 013 666,39

KBC Equity Fund - Europe EUR 167 698 198,76 -45 798 166,94

KBC Equity Fund - America USD 1 740 016 819,80 -242 693 717,62

KBC Equity Fund - Japan JPY 21 999 205 772,00 -7 116 416 176,50

KBC Equity Fund - New Markets EUR 257 546 462,83 -87 101 731,14

KBC Equity Fund - New Asia EUR 168 194 635,62 -20 266 274,80

KBC Equity Fund - Latin America EUR 22 656 734,42 -988 802,76

KBC Equity Fund - Emerging Europe EUR 20 944 858,14 -4 684 877,73

KBC Equity Fund - Technology USD 131 978 699,72 -11 160 622,02

KBC Equity Fund - Flanders EUR 60 433 539,08 -20 120 724,95

KBC Equity Fund - Pharma EUR 200 240 987,11 11 895 104,14

KBC Equity Fund - Finance EUR 60 266 375,14 -11 063 330,58

KBC Equity Fund - Telecom EUR 14 035 892,30 -985 541,60

KBC Equity Fund - Buyback America USD 130 266 773,28 -9 031 104,23

KBC Equity Fund - Us Small Caps USD 299 264 679,97 -116 840 611,37

KBC Equity Fund - Utilities EUR 6 167 553,83 490 176,48

KBC Equity Fund - Food & Personal Products EUR 48 439 293,73 -5 849 451,98

KBC Equity Fund - New Shares EUR 16 053 644,40 -3 515 997,06

KBC Equity Fund - Medical Technologies USD 67 376 403,53 1 931 326,04

KBC Equity Fund - Strategic Satellites EUR 299 858 680,73 -126 357 160,47

23


2

Name Currency Net Asset Value ResultKBC Equity Fund - Commodities & Materials EUR 14 470 012,75 -2 810 318,35

KBC Equity Fund - Luxury & Tourism EUR 17 673 247,75 -2 271 263,51

KBC Equity Fund - Trends EUR 62 765 904,32 -6 280 419,06

KBC Equity Fund - Consumer Durables EUR 28 552 737,50 -3 726 109,77

KBC Equity Fund - Strategic Cyclicals EUR 574 721 507,33 -117 748 325,35

KBC Equity Fund - Strategic Telecom & Technology EUR 730 445 514,76 -35 657 691,03

KBC Equity Fund - Strategic Finance EUR 616 752 721,36 -244 841 209,88

KBC Equity Fund - Buyback Europe EUR 70 971 747,74 -7 910 983,87

KBC Equity Fund - Global Leaders EUR 22 047 142,55 -1 695 709,23

KBC Equity Fund - Oil EUR 79 096 879,21 -8 425 867,55

KBC Equity Fund - Eurozone EUR 531 553 311,76 -125 605 756,75

KBC Equity Fund - Central Europe EUR 51 903 611,75 -6 562 935,85

KBC Equity Fund - High Dividend North America USD 23 891 623,05 -2 305 823,31

KBC Equity Fund - Quant Global 1 EUR 71 328 276,44 -9 376 483,55

KBC Equity Fund - High Dividend EUR 188 103 622,42 -14 898 328,58

KBC Equity Fund - Turkey TRY 13 977 037,81 -4 320 105,30

KBC Equity Fund - High Dividend Eurozone EUR 381 931 633,02 -94 678 111,63

KBC Equity Fund - High Dividend New Markets EUR 8 123 044,88 -864 464,76

KBC Equity Fund - Satellites EUR 140 893 005,45 -99 404 763,07

KBC Equity Fund - Quant Emu EUR 254 448 683,01 -81 103 291,62

KBC Equity Fund - Strategic Non Cyclicals EUR 359 554 919,66 -16 683 702,75

KBC Equity Fund - Industrials & Infrastructure EUR 5 567 748,63 -1 318 758,11

KBC Equity Fund - CSOB Akciovy fond dividendovych firem CZK 2 217 740 972,13 -320 549 034,94

KBC Equity Fund - EMU Small & Medium Caps EUR 377 666 023,83 -108 894 943,68

KBC Equity Fund - SRI Minimum Variance EUR 178 580 382,09 -10 053 657,19

KBC Equity Fund - Eurozone DBI-RDT EUR 133 443 895,62 -29 082 939,93

KBC Equity Fund - SRI World EUR 101 999 741,17 -9 881 336,52

KBC Equity Fund - SRI North America USD 122 146 958,64 -12 199 823,06

KBC Equity Fund - SRI Rest Of Europe EUR 34 341 380,74 -2 962 480,34

KBC Equity Fund - SRI Eurozone EUR 111 348 435,28 -11 483 686,55

KBC Equity Fund - SRI Asia Pacific JPY 3 382 537 186,00 -477 269 356,00

KBC Equity Fund - SRI Eurozone & North America EUR 107 444 146,68 -10 877 963,47

KBC Equity Fund - SRI Emerging Markets EUR 211 294 442,18 -18 349 511,09

KBC Equity Fund - Family Enterprises EUR 394 394 059,46 -109 634 341,84

KBC Equity Fund – Pacific (in liquidation) EUR 0,00 -95,45

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.

24


3

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.

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 orerror, design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from an error, as fraud may involvecollusion, 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 thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the 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;

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 therelated disclosures 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.

25


4

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 (Revised in 2018) to theInternational Standards on Auditing (ISA), our responsibility is to verify, in all material respects, the director’sreport on the annual accounts and compliance with certain obligations referred to in the Companies Code andthe 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 the same year and it hasbeen established in accordance with the requirements of article 95 and 96 of the Companies Code.

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 hasremained independent 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 134 of the Companies Code, have been properly disclosed and disaggregated in the notesto the annual accounts.

26


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 or the Companies Code other than not respecting the legal requirementsstipulated in article 533 of the Companies Code in respect of the communication to convene the generalmeeting.

Zaventem, 20 March 2019

The statutory auditor

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

27

1.4. Aggregate balance sheet (in EUR)

Balance sheet layout 31/12/2018 31/12/2017

TOTAL NET ASSETS 9,839,080,513.60 17,176,964,445.16II. Securities, money market instruments,

UCIs and derivativesA. Bonds and other debt instruments

a) Bonds Collateral received in the form of bonds 237,707,525.91 281,511,036.28

C. Shares and similar instrumentsa) Shares 9,925,857,077.76 16,978,283,608.60 Of which securities lent 186,027,524.38 226,585,360.92b) Closed-end undertakings for collectiveinvestment

840.00 24,840.00

D. Other securities 3,175,026.81 4,755,116.34E. Open-end undertakings for collective

investment105,303,583.07 126,972,428.31

F. Derivative financial instrumentsj) Foreign exchange Futures and forward contracts (+/-) 509,547.31 1,249,690.97m) Financial indices Futures and forward contracts (+/-) 4,400,815.64 -1,617,506.85

IV. Receivables and payables within oneyear

A. Receivablesa) Accounts receivable 127,104,218.90 13,283,590.54b) Tax assets -0.02 -0.02c) Collateral 10,677,219.83 4,608,980.55

B. Payablesa) Accounts payable (-) -599,442,708.53 -14,876,873.38c) Borrowings (-) -134,021,304.47 -71,234,425.40d) Collateral (-) -237,707,525.92 -281,511,036.28

V. Deposits and cash at bank and in handA. Demand balances at banks 399,745,044.70 137,652,032.37VI. Accruals and deferralsB. Accrued income 9,062,241.38 12,683,627.81C. Accrued expense (-) -13,291,088.89 -14,820,664.49

TOTAL SHAREHOLDERS' EQUITY 9,839,080,513.60 17,176,964,445.16A. Capital 11,889,543,714.29 15,498,166,246.03B. Income equalization -98,700,284.37 2,588,193.36D. Result of the bookyear -1,951,762,916.13 1,676,210,004.90

Off-balance-sheet headingsI. Collateral (+/-)I.A. Collateral (+/-)I.A.a. Securities/money market instruments 237,707,525.91 281,511,036.28I.A.b. Cash at bank and in hand/deposits 10,677,219.83 4,608,980.55III. Notional amounts of futures and forward

contracts (+)III.A. Purchased futures and forward contracts 75,989,306.87 151,475,399.71III.B. Written futures and forward contracts -208,040,833.47 -20,709,201.95IX. Financial instruments lent 186,027,524.38 226,585,360.92

28

1.5. Aggregate profit and loss account (in EUR)Income Statement 31/12/2018 31/12/2017

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

a)Bonds 119,100.34 12,788.78C. Shares and similar instruments

a)Shares -2,101,680,512.68 2,269,252,718.35D. Other securities 224,165.68 -149,811.84

E. Open-end undertakings for collectiveinvestment -16,520,535.20 15,018,175.15

F. Derivative financial instrumentsl)Financial indices Futures and forward contracts 4,224,173.88 3,757,071.64

G. Receivables, deposits, cash at bank and inhand and payables 0.04 0.06

H. Foreign exchange positions andtransactionsa)Derivative financial instruments Futures and forward contracts -730,478.61 1,566,439.35b)Other foreign exchange positions andtransactions 93,717,309.96 -677,108,386.14

Det.section I gains and losses oninvestmentsRealised gains on investments 2,378,584,205.63 1,964,048,881.38Unrealised gains on investments -1,670,306,064.40 628,975,464.64Realised losses on investments -1,889,091,728.21 -834,253,749.62Unrealised losses on investments -839,833,189.55 -146,421,600.74

II. Investment income and expensesA. Dividends 315,473,361.21 339,009,716.60B. Interests

a)Securities and money marketinstruments 5,326,849.80 4,906,868.19

b)Cash at bank and in hand and deposits 1,041,334.16 500,942.57C. Interest on borrowings (-) -997,228.73 -727,567.63F. Other investment income 56,758.54 21,653.57

III. Other income

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

33,436,426.17 25,180,060.01

B. Other 25,974.63 259,190.12

IV. Operating expenses

A. Investment transaction and delivery costs(-) -35,099,329.30 -34,361,465.62

B. Financial expenses (-) -32,611.08 -33,386.43C. Custodian's fee (-) -6,784,201.85 -8,978,891.22D. Manager's fee (-)

a)Financial management -221,744,390.14 -237,539,143.32b)Administration and accountingmanagement -15,031,285.59 -15,873,271.59

E. Administrative expenses (-) -47,292.33 -44,920.73F. Formation and organisation expenses (-) -283,986.83 -165,787.34

G. Remuneration, social security charges andpension -872.78 -859.64

H. Services and sundry goods (-) -506,780.26 -620,216.20

29

J. Taxes -3,070,587.04 -3,969,087.22K. Other expenses (-) -2,878,278.19 -3,702,824.70

Income and expenditure for the periodSubtotal II + III + IV 68,883,860.45 63,861,009.99

V. Profit (loss) on ordinary activitiesbefore tax -1,951,762,916.13 1,676,210,005.33

VII. Result of the bookyear -1,951,762,916.13 1,676,210,005.23

30

Appropriation Account 31/12/2018 31/12/2017

I. Profit to be appropriated .-2,050,461,914.42 .1,678,798,198.43Profit for the period available forappropriation .-1,951,762,916.13 .1,676,210,005.13

Income on the creation of shares (incomeon the cancellation of shares) .-98,698,998.30 .2,588,193.25

II. (Appropriations to) Deductions fromcapital .2,076,409,888.28 .-1,655,511,596.84

IV. (Dividends to be paid out) .-25,947,973.83 .-23,286,601.68

31

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%

32

Given that a number of securities exchanges were closed on 31/12/2018 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 28/12/2018 instead of 31/12/2018 . However, a theoretic netasset value was calculated for these sub-funds as at 31/12/2018 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 Equity FD SRI Eurozone- KBC Equity Fd SRI Eurozone & Nor AM- 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 - STRATE. TELEC & TECH- KBC EQUITY FD - TECHNOLOGY- KBC EQUITY FD - TELECOM- KBC EQUITY FD - TRENDS- KBC EQUITY FD - UTILITIES- KBC EQUITY FD - WORLD

33

1.6.2. Exchange rates1 EUR = 31/12/2018 31/12/2017

1.623800 AUD 1.535250 AUD4.430600 BRL 3.983200 BRL1.561300 CAD 1.504500 CAD1.126900 CHF 1.170150 CHF

793.346200 CLP 738.468050 CLP3,712.380000 COP 3,583.787850 COP

25.737000 CZK 25.529000 CZK7.462450 DKK 7.445400 DKK1.000000 EUR 1.000000 EUR0.897550 GBP 0.887650 GBP8.950150 HKD 9.387050 HKD

320.800000 HUF 310.205000 HUF16,438.497800 IDR 16,291.854300 IDR

4.271700 ILS 4.168750 ILS79.809050 INR 76.644100 INR

125.420700 JPY 135.270100 JPY1,275.526800 KRW 1,285.516450 KRW

22.512900 MXN 23.494250 MXN4.724050 MYR 4.859600 MYR9.898750 NOK 9.821750 NOK1.704800 NZD 1.688400 NZD

60.112500 PHP 59.943900 PHP4.294550 PLN 4.172500 PLN4.655050 RON 4.668700 RON

79.303150 RUB 69.131550 RUB10.135000 SEK 9.831500 SEK

1.558150 SGD 1.604750 SGD36.965200 THB 39.144250 THB

6.081450 TRY 4.552950 TRY35.137000 TWD 35.734000 TWD

1.143150 USD 1.200800 USD99,999.000000 VEF 99,999.000000 VEF

16.444200 ZAR 14.865900 ZAR

34

Audited annual report as at 31 December 2018

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

35

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 borrowings aimed at solvingtemporary liquidity problems.

Permitted derivatives transactionsDerivatives may be used to achieve the investment objectives as well as to hedge in risks.

It is possible to work with either listed or unlisted derivatives: these may be forward contracts, options orswaps on securities, indices, currencies or interest rates or other transactions involving derivatives.Unlisted derivatives transactions may only be concluded with prime financial institutions specialised in suchtransactions. Subject to the applicable laws and regulations and the articles of association, the sub-fund willalways seek to conclude the most effective transactions. All costs associated with the transactions will becharged to the sub-fund and all income generated will be paid to the sub-fund.

37

If the transactions result in a risk in respect of the counterparty, this risk can be hedged by using a marginmanagement system that ensures that the sub-fund is the beneficiary of security (collateral) in the form of cash orinvestment grade bonds. When calculating the value of the bonds, a margin will be applied that varies depending ontheir residual term to maturity and the currency in which they are denominated. The relationship with thecounterparty or counterparties is governed by standard international agreements.

Derivatives can also be used to hedge the assets of the sub-fund against open exchange risks in relation tothe currency.

Where derivatives are used, they must be easily transferable and liquid instruments. The use of derivativesdoes not, therefore, affect the liquidity risk. Furthermore, using derivatives does not affect the portfolio’sallocation across regions, industry sectors or themes. As a result, they have no effect on concentration risk.Derivatives are not used to protect capital, either fully or partially. They neither increase nor decreasecapital risk. In addition, using derivatives has no effect on settlement risk, custody risk, exchange rate risk,flexibility risk, inflation risk or risk dependent on external factors.

Strategy selectedAt least 75% of these assets are invested in shares of American and Canadian companies.

Volatility of the net asset valueThe volatility of the net asset value may be high due to the composition of the portfolio.

Securities Financing Transactions (SFTs)A more detailed explanation can be found in this report's General information on the Bevek under ‘Information forshareholders – 1.2.1.1. Securities Financing Transactions (SFTs)’.

General strategy for hedging the exchange riskA more detailed explanation can be found in this report's General information on the Bevek under ‘Information forshareholders – 1.2.1.2. General strategy for hedging the exchange rate risk’.

Social, ethical and environmental aspectsA more detailed explanation can be found in this report's General information on the Bevek under ‘Information forshareholders – 1.2.1.3. Social, ethical and environmental aspects

2.1.4. Financial portfolio managementThe intellectual management, with the exception of the creation of the sub-fund and its maintenance in terms of thetechnical, product-specific and legal aspects has been delegated by the management company to KBC FundManagement Limited, Sandwith Street, Dublin 2, D02 X489, Ireland.

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

2.1.6. Index and benchmarkNot applicable.

2.1.7. Policy pursued during the financial yearActive positions in stocks were taken based on quantitative analysis and a stringent risk framework. Approximatelyonce a month, the fund was rebalanced to reflect recommendations originated by forementioned analysis.

2.1.8. Future policyThe fund will continue its active stock selection strategy based on quantitative analysis within the limits defined bythe stringent risk framework.

2.1.9. Synthetic risk and reward indicator (SRRI)Classic Shares: on a scale of 1 (lowest risk) to 7 (highest risk)Institutional B Shares: on a scale of 1 (lowest risk) to 7 (highest risk)Classic Shares CSOB CZK: on a scale of 1 (lowest risk) to 7 (highest risk)

A more detailed explanation can be found in this report's General information on the Bevek under ‘Information forshareholders – 1.2.1.4. Synthetic risk and reward indicator’

The synthetic risk indicator gives an idea of the risk associated with investing in an undertaking for collectiveinvestment or a sub-fund. It measures risk on a scale of zero (least risk) to seven (most risk).

38

Leveraged financeThe total amount of leveraged finance used by the sub-fund is 208,300,487.20 USD.This amount was calculated by multiplying the leverage ratio calculated using the commitment method by the sub-fund's total assets under management.

39

2.2. Balance sheet

Balance sheet layout31/12/2018

(in the currency of the sub-fund)

31/12/2017(in the currency of the sub-

fund)

TOTAL NET ASSETS 1,740,016,819.80 1,629,522,730.00II. Securities, money market instruments,

UCIs and derivativesA. Bonds and other debt instruments

a) Bonds

· Table of contents 1. General information on the Bevek KBC Equity Fund 1.1. Organisation of the...

Documents

Transcript of · Table of contents 1. General information on the Bevek KBC Equity Fund 1.1. Organisation of the...