KBC Multi Track - TeleTrader · Semi-Annual report as at 30th June 2014 . KBC Multi Track . Public open-ended investment company under Belgian law (bevek) with a variable number of

Semi-Annual report as at 30th June 2014

KBC Multi Track

Public open-ended investment company under Belgian law (bevek) with a variable number of units/shares 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 free copy of the key investor information or prospectus has been provided.

1

TABLE OF CONTENTS

1. General information on the bevek

1.1. Organization of the bevek

1.2. Management report 1.2.1. Information for shareholders 1.2.2. General market overview

1.3. Aggregate balance sheet

1.4. Aggregate profit and loss account

1.5. Summary of recognition and valuation rules

1.5.1. Summary of the rules 1.5.2. Exchange Rates

2

1. GENERAL INFORMATION ON THE BEVEK

1.1 ORGANIZATION OF THE BEVEK

REGISTERED OFFICE :

2 Havenlaan - B-1080 Brussels, Belgium.

DATE OF INCORPORATION:

10 October 2000

LIFE:

Unlimited.

BOARD OF DIRECTORS OF THE BEVEK:

Wouter Vanden Eynde, Managing Director KBC Asset Management NV Paul Beller, Head Specialised Investment Management KBC Asset Management NV Luc Vanderhaegen, Private Banking & Wealth Management Branch General Manager KBC Bank NV Olivier Morel, Financial Manager CBC Banque SA Theo Peeters, Independent Manager

Chairman: Luc Vanderhaegen, Private Banking & Wealth Management Branch General Manager KBC Bank NV Natural persons to whom the executive management of the bevek has been entrusted: Wouter Vanden Eynde, Managing Director KBC Asset Management NV Paul Beller, Head Specialised Investment Management KBC Asset Management NV

MANAGEMENT TYPE:

Bevek 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 COMPANY:

30 December 1999.

NAMES AND POSITIONS OF THE DIRECTORS OF THE MANAGEMENT COMPANY:

Chairman: L. Gijsens Directors: D. Mampaey, President of the Executive Committee J. Peeters, Independent Director P. Buelens, Managing Director J. Daemen, Non-Executive Director P. Konings, Non-Executive Director J. Verschaeve, Managing Director G. Rammeloo, Managing Director O. Morel, Non-Executive Director K. Mattelaer, Non-Executive Director K. Van Eeckhoutte, Non-Executive Director W. Vanden Eynde, Managing Director C. Sterckx, Managing Director D. Cuypers, Managing Director L. Demunter, Managing Director

3

NAMES AND POSITIONS OF THE NATURAL PERSONS TO WHOM THE EXECUTIVE MANAGEMENT OF THE MANAGEMENT COMPANY HAS BEEN ENTRUSTED:

D. Mampaey, President of the Executive Committee J. Verschaeve, Managing Director G. Rammeloo, Managing Director W. Vanden Eynde, Managing Director C. Sterckx, Managing Director D. Cuypers, Managing Director L. Demunter, Managing Director These persons may also be directors of various beveks.

AUDITOR OF THE MANAGEMENT COMPANY:

Ernst & Young Bedrijfsrevisoren BCVBA, represented by Christel Weymeersch, company auditor and recognized auditor, De Kleetlaan 2, 1831 Diegem.

STATUS OF THE BEVEK:

Bevek with various sub-funds that has opted for investments complying with the conditions of Directive 2009/65/EC and which, as far as its operations and investments are concerned, is governed by the Act of 3 August 2012 on certain forms of collective management of investment portfolios.

FINANCIAL PORTFOLIO MANAGEMENT:

In this regard, please see ‘Information concerning the sub-fund’.

FINANCIAL-SERVICES PROVIDERS:

The financial services providers in Belgium are: KBC Bank NV, Havenlaan 2, B-1080 Brussels CBC Banque SA, Grand Place 5, B-1000 Brussels

CUSTODIAN:

KBC Bank N.V., 2 Havenlaan - B-1080 Brussels, Belgium.

ADMINISTRATION AND ACCOUNTING MANAGEMENT:

KBC Asset Management N.V., 2 Havenlaan - B-1080 Brussels, Belgium.

ACCREDITED AUDITOR OF THE BEVEK:

Deloitte Bedrijfsrevisoren BV o.v.v.e. CVBA, in the form of a CVBA (co-operative limited liability company), Berkenlaan 8b, B-1831 Diegem, represented by partner Frank Verhaegen, company auditor and recognized auditor.

DISTRIBUTOR:

KBC Asset Management S.A., 5, Place de la Gare, L-1616 Luxembourg.

PROMOTER:

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

LIST OF SUB-FUNDS OF KBC MULTI TRACK

1. Belgium

2. Germany

3. Netherlands In the event of discrepancies between the Dutch and the other language versions of the (Semi-)Annual report, the Dutch will prevail.

4

1.2 MANAGEMENT REPORT

1.2.1 INFORMATION FOR THE SHAREHOLDERS

Reclaims of foreign withholding taxes on dividends. In some Member States of the European Union domestic investment funds benefit from exemptions or refunds of withholding taxes when they receive dividends from a domestic entity. The same tax benefits do not apply to non-resident investment funds investing cross-border. Such tax system is not in accordance with the free movement of capital within the European Union. Since 2006 KBC investment funds yearly file requests for a refund of discriminatory withholding tax paid on dividends in France, Spain, Italy, Germany, The Netherlands, Finland, Sweden, Norway and Austria. Refunds have already been received from Austrian, Finnish, French, Norwegian and Swedish fiscal administration.

1.2.2 GENERAL MARKET OVERVIEW

1 July 2013 – 30 June 2014

Doubts about the sustainability of the economic recovery shaped investor sentiment for a long time. But sentiment began to turn more positive during the summer months of 2013. Europe shook off the recession, the euro crisis lost its stranglehold, the US easily digested a severe austerity programme and Japan broke out of its negative deflation spiral. The stock markets responded warmly to the economic optimism. The bond markets were dominated by the prospect of tapering, the technical term for the US central bank’s programme gradually to scale back its purchases of debt paper. The economic tightrope

Although more jobs have been created than lost in the US since 2010, the rate of employment growth remained on the thin side for some considerable time. The unemployment rate declined, but for the wrong reasons. Not because employment was growing strongly but because many Americans dropped out of the labour market in disillusionment. Pay rises barely outstripped inflation. Taken together, these two factors ensured that household purchasing power in the US only grew to a limited extent, so that economic growth remained on the weak side. However, the US economy was fundamentally much stronger than the stark growth figures might suggest. On 1 January 2013 a number of temporary tax cuts and other budgetary stimuli came to an end. This was set to hold back the already weak growth to such an extent as to generate fears of a new recession. The severe winter of 2013–14 could also have been disastrous. The revival of the economy in spring 2014 confirms the relative strength of the economy. In the first five months of 2014 an average of +13 600 new jobs were created each month and the unemployment rate fell by 0.7 percentage points to 6.3%. In the EMU the recession that had been precipitated by the euro crisis, and which went back as far as the fourth quarter of 2011, came to an end. From the second quarter of 2013 onwards positive growth figures were at last recorded again and the overall unemployment rate stopped rising. Consumer and producer confidence are recovering quite strongly, surprisingly even in the hard-hit countries of Southern Europe. Japan managed to break out of the negative deflation spiral. In December 2012 the new government announced a renewed economic programme with much fanfare, while in April 2013 the Bank of Japan stated that it would specifically be pursuing an inflation target of +2% and would be doubling the monetary base to that effect. In anticipation of the policy turnaround the yen had already been weakening sharply since August 2012. This ensured that exports recovered in 2013 and that inflation moved into positive territory. The weak growth in the Western economies also had an impact on the export performance in emerging countries. This was translated in the year under review into a marked cooling in growth, especially in countries such as Brazil and South Africa with their large commodity industries. The slowdown in growth in China brought the problems of the excessive debt burden of Chinese banks to the foreground from time to time. On two occasions (in June and December) the interbank market briefly ended up in a crisis, which the Bank of China managed to suppress by means of massive injections of cash.

5

Talking down the euro crisis

The euro crisis, which broke out in October 2009 when bond investors began to question Greece’s creditworthiness, raged until the summer of 2012. It led to the bankruptcy of Greece and Cyprus, but Portugal and Ireland too lost the trust of international bond investors and had to be rescued by the IMF, the ECB and their EMU partner countries. The intertwining of the solvency risk of the European banks – which traditionally hold an extensive portfolio of government bonds and which emerged weakened from the credit crisis of 2008–09 – with the fate of national governments – which act as moral guarantors of their banking sectors, and which emerged from the recession with severely disrupted public finances – had left the euro system shaky and threatened the continued existence of the single currency. As these storms raged, several of the currency union’s rules were reformed. But once the sense of urgency had subsided, it proved almost impossible to get all the members of the euro orchestra playing the same tune. The European Stability Mechanism (ESM) became operational after much delay. The new budget treaty, which only came into force on 1 January 2013, is already being questioned. The compromise over the banking union bears witness to the lack of any shared vision. The ECB therefore stood alone in its task of defending the euro. The central bank launched several programmes to secure and strengthen the flow of liquidity to the banking sector. The liquidity injections did not however have the hoped-for effect, as they were used more for reinvestment in government paper than for lending. The operations were halted from February 2011 onwards. That did not prevent the ECB from issuing a solid assurance in September 2012 that it would pump liquidity into the market on an unlimited scale and for an unlimited period if necessary. Those words alone were enough to dampen the euro crisis. Confidence returned. The interbank market began to function once again, and interest rate spreads between the EMU partners narrowed. In the course of 2014, Ireland and Portugal were able to fund themselves once more in the traditional way. Greece even successfully concluded a new bond loan in March 2014. New record for corporate earnings

Equally as spectacular as the slump in profits during the recession was the recovery of corporate earnings from the fourth quarter of 2009 onwards. By the third quarter of 2012, all the companies making up the US S&P 500 index had equalled their earnings levels from before the recession, and profits have continued to rise at a rate of around 5% annually ever since. In addition to higher revenues, the increase in earnings was due to a sharp reduction in (wage) cost pressure. The spectacular recovery in profits experienced by the companies in the MSCI Europe until 2011 failed to hold up. The euro crisis, the accompanying recession in Europe, the devaluation of government bond portfolios held by banks and the strong euro all left their mark. Earnings per share were down by an average of 25% in the first quarter of 2014 compared with mid-2011. Commodity market correction continues

The Arab Spring and the power struggle in Libya meant a barrel of Brent crude oil cost 126 US dollars at the end of April 2011. The balance of supply and demand over the last three years (weak global demand, high stocks and rising supplies) has caused the oil price to fall since then, apart from an occasional increase due to a flare-up in geopolitical tensions (in 2013, for instance, disruption to supplies in Libya and Nigeria, and in 2014, the threat to Iraqi oilfields by Islamic extremists). At the end of June 2014 the price of a barrel of crude oil was 112 USD. The steep price rises on most other commodity markets had already come to an end earlier. The prices of many industrial metals and agricultural products peaked around mid-February 2011. This was followed by a correction, rising to 30–35% since the peak levels of early 2011. The easing of economic doubts appears to have placed a floor in recent months beneath this price correction. Inflation cooled. In the US the annual increase in the consumer price index fell from a peak of 3.9% in September 2011 to 1.5% in April 2014. Over the same period inflation in the euro area fell from 3% to 0.7%. Inflation in the EMU dipped from 3% to 0.5% in the same period.

6

Learning to live with negative interest rates

The US central bank (the Fed) had already cut its key rate very early on in the crisis. Since December 2008 the rate has been a symbolic 0.25%. The ECB waited much longer before cutting rates. It lowered its policy rate in 2013 by two 25 basis point increments, and on 5 June 2014, it trimmed a further ten basis points from its refinancing rate, which now stands at 0.15%. On that most recent occasion, it announced a negative deposit rate of -0.10% That policy of (virtually) free money was not sufficient to guarantee the economic recovery would prove lasting. The central banks therefore looked for alternatives. The Federal Reserve, the Bank of England and the Bank of Japan intervened directly in the bond markets and bought up large amounts of debt paper in an attempt to keep the long-term rate low as well. The Fed, for instance, had repurchased government bonds and mortgage loans to the value of 85 billion US dollars a month to the end of 2013. As of January 2014, this programme began to be scaled down gradually, with 55 billion dollars of debt now being repurchased each month. This introduced a new trend known as ‘tapering’, whereby the tap of excessive liquidity provision was gradually turned off. The Fed will close off the monetary tap further in the months ahead, so that the repurchase programme will be ended completely by around the end of the year. Provided, at least, that the economic circumstances remain favourable. The Bank of England had already discontinued its own large-scale liquidity injections at year-end 2013. The Bank of Japan only began its programme in April 2013 and could persist with it for a while. The ECB is wary of a similarly unorthodox policy. It is continuing to study the various possibilities, but, under pressure from the German Bundesbank, has not taken action. Only during the darkest months of the euro crisis did it purchase debt paper of governments under threat. Bond markets test the floor

Intense economic doubts, realisation that inflation is as good as dead, and central bank intervention are keeping bond yields at historical lows. On 1 June 2012, US and German ten-year rates reached lows of 1.45% and 1.15%, respectively. Ten-year rates remained close to these low levels for almost a full year. Yields then shot up in the space of a few weeks when former Fed chairman Ben Bernanke hinted toward the end of May 2013 about ‘tapering’ the government bond purchase programme. The Fed and the ECB were able to convince the markets, however, that a sharp rise in bond yields did not fit their scenario and yields fell again. At the end of the reporting period, ten-year US yields stood at 2.50% and German yields at 1.25%. Euro remains strong

The euro crisis has been off the radar for over 18 months. During that period the central banks of the US and the EMU have each placed their own particular stamp on monetary policy, yet despite two important changes, the EUR/USD exchange rate has been no more volatile than in other years. At the end of the period under review the euro was trading at 1.369 US dollars, an appreciation of 4.6% on the year before. Stockmarket recovery continues

The euro crisis and the fear that the European banking sector would collapse as a result cast an almost permanent shadow over the equity markets during the period from April 2010 to October 2011. It was only in the course of 2012 that the mood changed, with better reports on the US labour market. In recent months, reasonably firm PMIs (barometers of business confidence) have strengthened the economic optimism. From June 2012 onwards, the underlying trend in the international stock markets has been unmistakably positive. Overall, the MSCI All Country World (the broadest global index) was up 17.1% year-on-year in euro terms on 30 June 2014. Western Europe continued its catching-up exercise in the traditional markets which had begun in 2012, albeit with varying success (the return of the MSCI Europe Index in euros over this period was +22.5%). Fears that the EMU problems harboured a systemic risk disappeared completely. The cheaper valuation of Europe (compared with the US) most likely provided support. Corporate earnings in Europe have lagged behind considerably, however, since the first quarter of 2012, relative to both forecasts and to the pattern of earnings in the United States. Wall Street ended June 2014 substantially higher than a year previously (S&P 500: +23.4%, Dow Jones: +12.4%). On 1 July 2014 the S&P 500 reached an all-time high.

7

The BEL 20 (+23.5%) performed more or less in line with the other European markets. Retailers are suffering from cut-throat competition, in which newcomers are stealing market share in a heavily saturated market. For the first time, Colruyt had to report a reduced market share and a fall in earnings. Delhaize came out fighting and presented a drastic restructuring plan. The biotech company Thrombogenics couldn’t find a partner, suffered a number of severe setbacks and had to leave the BEL-20. Its place in the index was taken on 23 March 2014 by Bpost. Japan was positive in yen terms (+9.0%), but for the European investor the price gains were largely nullified by the depreciation of the currency (-4.0% in euros). In recent months Tokyo has been losing its gloss. Although inflation has turned positive and there has been a resumption of growth, the deflation expectations have not yet been overturned. The performance of the emerging regions in 2013 remained disappointing, in both absolute and relative terms. The Asian emerging markets (+11.3%) were unable to capitalise fully on their role as the growth engine of the world economy. Doubts about the growth narrative were not confirmed by the state of the indicators but also not dispelled. Worries about possible credit and debt problems in China consequently continued to deter investors. Latin America (+4.1%) was hit by an economic slowdown. The link to the commodity markets is always at the fore in this region. Social unrest in Brazil also scared off foreign investors. Eastern Europe (+6.2%) was likewise a relative disappointment. Russia was likewise not immune to the weakness of European economic growth. In 2014 the political unrest in Ukraine naturally took its toll. The Turkish stock market suffered from the street protests in Istanbul by the secularists and the internal power struggle within the AKP. There were wide sectoral differences in the returns. The best performing sectors included Energy (+24.3%), Technology (+23.8%) and Pharmaceuticals (+22.4%). Consumer Staples (+10.1%), Consumer Discretionary (+14.3%) and Financials (+14.6%) were among the underperformers. Oil companies had become extremely cheap, so their outperformance was attributable to a catch-up process rather than fundamental factors. The sector is struggling with weak profitability and increasingly expensive investments. The technology sector basked in an attractive valuation and improved growth forecasts and profit figures, which greatly exceeded expectations. The recent results season confirmed that sales and profits have been supported by trends like e-commerce, mobile appliances, cloud computing and network upgrades. Their balance sheets are almost free of debt and they have large amounts of cash that they increasingly pay out to shareholders. The flotation of Twitter gave the sector a boost. Pharmaceutical shares had long been shunned due to a lack of product innovation, patent expiry and the reforms to healthcare insurance in the US. In recent months, however, investors began to focus more on the sector’s response to these challenges such as restructuring operations and the sell-off of non-strategic divisions. The shares of food retailers are very cheap, but unfortunately with good reason. They have to contend with Western consumers who have become extremely price-conscious – a new attitude that will not change as long as unemployment remains high. Distributors are trying to turn the tide by means of expensive marketing campaigns. The car industry has risen from the ashes. Following rising sales in the US and in the European luxury segment, even European mass producers of cars are now recording rising sales. European car sales have been severely impacted by the recession, with the mass segment and Southern Europe hit hardest. Problems of overcapacity remain, but profit forecasts are low and we see signs that the recovery in Europe is leading to a turnaround. German luxury car manufacturers generate roughly half their profits in China. Sales of 22 million cars set a new world record in 2013. Demand remained very solid in 2014 too. The German luxury manufacturers are therefore heading for a new record year. Bank stocks enjoyed a breathing space. The results are being awaited in Europe of the ECB’s large-scale scrutiny of the quality of European banks’ credit portfolios (AQR) and the stress tests that will follow.

8

The Real Estate sector (-8.5%) was unable to sustain the strong performance in previous years. The financial turbulence in 2007/08 forced real estate companies to clean up their balance sheets. This accordingly provided the sector with a sound base to make the most of the recovery. The traditional discount against the intrinsic value at which the sector normally trades consequently disappeared, leaving it somewhat overvalued. Outlook

In the spring of 2013, the US and European barometers measuring confidence among business leaders slipped to just above freezing (US) or well below (EMU). They have risen sharply from these low levels in the past year. The US yardstick has already reached a level that equates to a growth rate of approximately 3%. In Germany, the IFO, the leading index of business confidence, has risen to one of the highest levels observed in the last 30 years. Business confidence in Southern Europe has also begun to thaw. What is surprising is that consumer confidence is following this trend so early in the cycle, and also going through a strong recovery. We are therefore expecting US growth to remain positive but rather modest (2–2.5% y-o-y in the coming quarters) as pay increases are barely keeping pace with inflation and budgetary policy has now finally (and probably for several years) struck down the path of austerity. The recovery of the housing market and corporate investment could be sustained. How strong growth will be in 2014 will depend largely on two factors: labour market trends and inflation. Employment has been running at 2% year-on-year in the US in recent months. If that rhythm can be maintained in the months ahead too – and there is no reason to believe it won’t – it will lay a healthy foundation for growing household purchasing power. Real consumer spending growth could work out a little higher if inflation remains lower than 2.5%. That too is eminently achievable: no one is forecasting inflation of more than 2% for the US. Europe is creeping out of recession. The budgetary plans, tighter lending policy of the banks and major uncertainty among consumers and producers will continue to depress growth. Annualised growth of no more than 1–1.5% is being forecast for the coming months. This is not a reason for euphoria, but better than negative growth. Deflation or depression scenarios, which frequently dominate bond market sentiment, are not however justified. Recent years have laid the foundation for a more sustainable growth in 2014 and beyond. US households have trimmed back their debt level significantly, the savings rate has already increased considerably and loan servicing (instalments and interest payments combined) now accounts for only 10% of household budgets (the lowest level in fifteen years – it was at 12.5% four years ago). Households are gradually moving towards a position where they can spend more of their money on consumption. The explosive growth in earnings between 2009 and 2013 bolstered companies’ already substantial cash positions. During the crisis investments were scaled back heavily, With the foundations being laid for a catch-up process. In the US, Republicans and Democrats have reached a compromise over budget policy. The funding of the federal government is assured until March 2015. The sharpest edges of the multi-year austerity plan have been filed down. The fact that a source of uncertainty has been eliminated and that the Fed is at liberty to conduct the monetary policy it deems to be suitable, is probably more important than the direct effects of the cutbacks on economic growth – which are certainly not excessive. The Fed believes the time has come to adjust its extremely flexible monetary policy. Its repurchasing programmes for government bonds and other debt paper have been injecting unprecedented amounts of liquidity in the hope that banks will convert them into loans on terms that are not unduly harsh. This policy was successful and, in the eyes of the US central bank, the economic recovery is suficiently sustainable to gradually taper off the liquidity injections. For as long as policy rates remain extremely low – and that will most likely be the case for the next twelve months – monetary policy will, however, remain loose and geared to growth. Either way, the Fed will keep long-term rates low and banish any fears of deflation. Today’s world is one of two-speed economies. The mature industrialised economies (US, Europe, Japan) still find themselves in a low-growth environment, with no underlying inflationary pressure, persistently low interest rates and runaway public finances. The picture in the emerging markets is altogether different. Strong economic growth has already created inflationary pressure in Asia. Appropriate monetary policy is therefore required: sometimes restrictive (as in 2011) and at other times stimulatory (as at present).

9

One of the major challenges for this decade will be the further development of consumption in China and the rest of Asia. This can contribute to a more balanced world economic order. It will not only reduce the region’s dependence on exports but, at least as importantly, will have an effect on international capital flows. More consumption in China will mean lower savings and higher imports, including from the US and Europe. That will help the West to ‘grow out’ of its debt problems. The euro crisis has receded into the background, but many problems remain to be resolved. In 2014 attention will focus on the large-scale survey being conducted by the ECB into the quality of European banks’ credit portfolios. This survey, now in full swing, will need to be followed by stress tests (examining whether the banks’ capital buffers are sufficient for crises to be survived) and will need to provide the ECB with sufficient information for it to discharge its task as pan-European regulator as from November. Frankfurt’s main hope is that the analysis will restore trust between the European banks to such an extent that they will normalise their interbank relationships. At the level of budgetary discipline the reins are being eased. Control over national budgets has been tightened, but the standards have become less absolute and allow considerable room for manoeuvre. Full use is being made of that room in the current election year. The present level of money market interest rates, at (virtually) zero, will continue for a long time to come. There is no urgent macroeconomic reason to adopt a more restrictive policy so long as the economic situation in the West remains weak and there is no sign of any real inflationary pressure. Inflation has long ceased to be a reason for concern. On the contrary: if anything, inflation is too low, rather than a threat, making anxiety about growth and – as far as the ECB is concerned – preventing the euro crisis from flaring up, all the greater. Although the ECB is probably still striving for a normal short-term rate of 3% for the euro area (its official target for inflation in the euro area is 2%), that has now become a very long-term objective and is totally ruled out in the short term (horizon year-end 2015). The ECB’s main concern at present is not the level of its interest rates but the way in which these low rates percolate through into market rates in Southern Europe. It is here that low interest rates are the most needed – and also where market rates remain the highest. We think the central banks in the US, the UK and Japan will wait a long time before raising their key rates. The US central bank has unofficially (an earlier official announcement has since been retracted) suggested mid-2015 as the earliest possible time for an increase in interest rates. Bond yields have most likely bottomed out. It would be logical for yields to increase again from their current record lows, on the back of an improved economic environment (or an ongoing reduction in the downside risks to growth). As a result, the market might, in the months ahead, start to anticipate tighter monetary policy in 2015 or later. No significant increase in interest rates is likely in the course of the following months, however. Fearful of the negative consequences for growth, the central banks will avoid any such hike by scaling back their asset-purchasing programmes. The default risk premium in the corporate bond market has fallen very steeply in recent years. At its present level, it provides appropriate compensation for the debtor risk. Much more narrowing of spreads is therefore not on the cards, even though most companies have a very healthy financial structure. Rate spreads within the EMU have narrowed sharply and are gradually starting to correctly reflect the differences in quality of the various governments as debtors. Given the ongoing problems of the euro, an increase in risk aversion and volatility of the rate spreads cannot be ruled out. Thanks to the continuing strength of expansion in the emerging markets, the global economy could post growth of 3.6% in 2014 (+2.8% in 2013). This is one of the reasons why corporate earnings could continue to grow in the coming quarters at a rate of 8–10% – faster than in the recent past. The strong earnings growth is also attributable to sustained wage restraint. Maintaining purchasing power is now about all that is on offer. There is virtually no question of real wage rises. In brief, every one-cent increase in revenue translates (almost) entirely into an extra cent of profit, rather than into higher pay.

10

The money market rate won’t increase rapidly and bond yields are at historical lows. Everything seems to point to shares being the most attractive investment option for the months ahead. The lack of alternatives is not, of course, sufficient reason to increase the market valuation. For that to happen, investors will need to be more willing to taking risk. Shares are no longer as cheap as they were a while ago. Based on forecast earnings for the coming 12 months, the price/earnings ratio is 16.9 for the S&P 500 index and 14.3 for the MSCI Europe. That looks reasonable: not really cheap, but not expensive either. Equities are, however, still dirt-cheap compared with bonds. The earnings yield – the inverse of the price/earnings ratio – is currently 7.00% for the MSCI Europe, an unprecedented premium of 575 basis points above German yields. Edited to 3 July 2014

11

1.3 AGGREGATED BALANCE SHEET (IN EUR)

Balance sheet layout 30/06/2014 (in the currency of the bevek)

30/06/2013 (in the currency of the bevek)

TOTAL NET ASSETS 153.206.407,84 169.792.604,18

II. Securities, money market instruments, UCIs and derivatives

A. Bonds and other debt instruments a) Bonds 186.075,00 a} Collateral received in the form of bonds 5.037.165,27 18.164.091,06 C. Shares and similar instruments a) Shares 154.243.727,14 168.030.944,25 Of which securities lent 4.828.877,25 16.880.949,00 D. Other securities 27,60 49.579,72 F. Derivative financial instruments m) Financial indices Futures and forward contracts (+/-) 2.726,50

IV. Receivables and payables within one year A. Receivables a) Accounts receivable 797.080,33 78.055,39 b) Tax assets 973.670,80 c) Collateral 48.572,50 139.360,00 B. Payables a) Accounts payable (-) -261.406,61 -206.051,62 c) Borrowings (-) -2.082.361,86 -694.425,76 d) Collateral (-) -5.037.165,27 -18.164.091,06

V. Deposits and cash at bank and in hand A. Demand balances at banks 467.970,57 1.276.366,25

VI. Accruals and deferrals A. Expense to be carried forward 70.793,29 86.379,55 B. Accrued income 93.867,55 80.490,11 C. Accrued expense (-) -174.589,17 -207.839,51

TOTAL SHAREHOLDERS' EQUITY 153.206.407,84 169.792.604,18

A. Capital 145.352.310,69 162.137.121,48

B. Income equalization -139.082,75 -383.198,42

D. Result for the period 7.993.179,90 8.038.681,12

12

Off-balance-sheet headings

I Collateral (+/-)

I.A Collateral (+/-) I.A.A

Securities/market instruments 5.037.165,27 18.164.091,06

I.A.B

Cash at bank and in hand/deposits 48.572,50 139.360,00

III Notional amounts of futures and forward contracts III.A Purchased futures and forward contracts 659.737,50 III.B Written futures and forward contracts -219.156,00

IX Financial instruments lent 4.828.877,25 16.880.949,00

13

1.4 AGGREGATED PROFIT AND LOSS ACCOUNT (IN EUR)

Income Statement 30/06/2014 (in the currency of the bevek)

30/06/2013 (in the currency of the bevek)

I. Net gains(losses) on investments A. Bonds and other debt instruments a) Bonds 85.530,13 36.875,00 C. Shares and similar instruments a) Shares 5.694.663,16 3.758.775,89 D. Other securities -14.972,34 -276.576,38 F. Derivative financial instruments l) Financial indices Futures and forward contracts 10.087,49 10.512,03 H. Foreign exchange positions and transactions b) Other foreign exchange positions and

transactions 98,05 510,15

II. Investment income and expenses A. Dividends 3.426.346,65 5.487.687,62 B. Interests a) Securities and money market instruments 163.292,07 108.253,60 b) Cash at bank and in hand and deposits -487.538,46 1.284,54 C. Interest on borrowings (-) -11.071,78 -3.122,44

IV. Operating expenses A. Investment transaction and delivery costs (-) -15.940,99 -48.130,66 B. Financial expenses (-) -4.270,02 -2.366,72 C. Custodian's fee (-) -59.044,30 -69.702,11 D. Manager's fee (-) a) Financial management -549.845,78 -664.566,86 b) Administration and accounting management -78.549,22 -94.938,05 E. Administrative expenses (-) -2.337,52 -2.874,80 F. Formation and organisation expenses (-) -11.546,63 -17.770,57 G. Remuneration, social security charges and

pension -868,00 -868,00

H. Services and sundry goods (-) -6.603,20 -9.954,99 J. Taxes -69.302,96 -85.045,52 K. Other expenses (-) -74.946,45 -89.300,61

Income and expenditure for the period Subtotal II + III + IV 2.217.773,41 4.508.584,43

V. Profit (loss) on ordinary activities before tax 7.993.179,90 8.038.681,12

VII. Result for the period 7.993.179,90 8.038.681,12

14

1.5 SUMMARY OF ACCOUNTING POLICIES

1.5.1 SUMMARY OF RULES

Summary of the valuation rules pursuant to the Royal Decree of 10 November 2006 on the accounting, annual accounts 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 profit and loss account.

After initial recognition, securities, money market instruments and financial derivatives are measured at fair value on the basis of the following rules: o Securities that are traded on an active market without the involvement of third-party

financial institutions are measured at fair value using the closing price; o Assets that have an active market which functions through third-party financial

institutions that guarantee 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 supply bid prices (e.g., JP Morgan, iBoxx, MSCI, etc.), the mid-prices are used to measure debt instruments, as provided for in the Notes to the aforementioned Royal Decree. The method to correct these mid-prices and generate the bid price is not used, as it is not reliable enough and could result in major fluctuations.

o Securities whose last known price is not representative and securities that are not admitted to official listing or admitted to another organised market are valued as follows: When measuring these securities at fair value, use is made of the current fair value

of similar assets for which there is an active market, provided this fair value is adjusted to take account of the differences between the assets concerned.

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

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

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

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

Liquid assets, including assets on demand at credit institutions, obligations on current account vis-à-vis credit institutions, amounts payable and receivable in the short term that are not represented by negotiable securities or money market instruments (other than vis-à-vis credit institutions), tax assets and liabilities, are measured at nominal value. Other amounts receivable in the longer term that are not represented by negotiable securities are measured at fair value. Impairment is applied to assets, amounts to be received and receivables if there is uncertainty that they will be 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 the previous paragraph to ensure that any change in their value, or risks inherent in the asset in question, are taken into account.

The income arising from securities lending is recognised as the lending rate and is included on an accruals basis in the profit and loss account 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 the sub-fund at the last known mid-market exchange rate.

15

DIFFERENCES

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

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

1.5.2 EXCHANGE RATES

1 EUR = 30/06/2014

30/06/2013

0,8007 GBP 0,857 GBP

16

Semi-Annual report as at 30th June 2014

TABLE OF CONTENTS

2. Information on KBC Multi Track Netherlands

2.1. Management report 2.1.1. Launch date and subscription price 2.1.2. Stock exchange listing 2.1.3. Aim and distinctive features of the investment policy 2.1.4. Financial portfolio management 2.1.5. Distributors 2.1.6. Index and benchmark 2.1.7. Policy conducted during the financial year 2.1.8. Future policy 2.1.9. 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 2.4.2. Change in the composition of the assets 2.4.3. Value of commitments in respect of financial derivatives positions 2.4.4. Evolution of the number of subscriptions, repayments and the net asset value 2.4.5. Return figures 2.4.6. Expenses 2.4.7. Notes to the financial statements and other data

17

18

2 INFORMATION ON KBC MULTI TRACK NETHERLANDS

2.1 MANAGEMENT REPORT

2.1.1 LAUNCH DATE AND SUBSCRIPTION PRICE

Launch date: 25 November 1996 Initial subscription price: 250 NLG Currency: EUR

2.1.2 STOCK EXCHANGE LISTING

Not applicable.

2.1.3 GOAL AND KEY PRINCIPLES OF THE INVESTMENT POLICY

SUB-FUND’S OBJECT:

The main objective of this sub-fund is to generate the highest possible return for its shareholders by investing directly 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 POLICY:

PERMITTED 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 and regulations and consistent with the sub-fund's object. The sub-fund shall invest no more than 10% of its assets in units of other undertakings for collective investment.

RESTRICTIONS OF THE INVESTMENT POLICY:

The 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 solving temporary liquidity problems.

PERMITTED DERIVATIVES TRANSACTIONS:

Derivatives 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 or swaps 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 such transactions. Subject to the applicable laws and regulations and the articles of association, the sub-fund will always seek to conclude the most effective transactions. All costs associated with the transactions will be charged to the sub-fund and all income generated will be paid to the sub-fund. If the transactions result in a risk in respect of the counterparty, this risk can be hedged by using a margin management system that ensures that the sub-fund is the beneficiary of security (collateral) in the form of cash or investment grade bonds. When calculating the value of the bonds, a margin will be applied that varies depending on their residual term to maturity and the currency in which they are denominated. The relationship with the counterparty 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 to the currency. Where derivatives are used, they must be easily transferable and liquid instruments. Using derivatives does not, therefore, affect liquidity risk. Furthermore, using derivatives does not affect the portfolio's allocation across regions, industry sectors or themes. As a result, they have no effect on concentration risk. Derivatives may not be used to protect capital, either fully or partially. They neither increase nor decrease capital risk. In addition, using derivatives has no effect on credit risk, settlement risk, custody risk, flexibility risk or inflation risk or risk dependent on external factors.

19

STRATEGY SELECTED

The assets are invested primarily in the shares of Dutch companies.

RISK CONCENTRATION

Dutch shares.

INDEX-TRACKING:

The objective of the sub-fund is to track the composition of an index in accordance with and within the limits of Article 63 of the Royal Decree of 12 November 2012 on certain public undertakings for collective investment.

Index/indices in question: AEX index. Index tracking method: physical replication using optimised sampling: the index is tracked using a selection of shares in the index in order to best replicate the index. In addition, an optimisation algorithm is used that balances the risk and the return of each of the portfolio positions, so optimising the selection. The sub-fund may also make limited use of synthetic replication by way of futures, primarily in order to cushion the effects of buying and selling and to avoid the attendant transaction charges. The index is rebalanced every quarter. The more often an index is rebalanced, the greater the potential impact on the transaction charges within the sub-fund. Given normal market conditions, the expected tracking error is between 0% and 1%. Possible causes of this tracking error could be the method used to track the index, transaction charges, dividend reinvestment, the general costs charged to the sub-fund, any income from lending financial instruments.

If the composition of the index is no longer sufficiently diversified or if the index is no longer sufficiently representative of the market it relates to or if the value and composition of the index is no longer published in a suitable manner, the management company will inform the Board of Directors without delay. The Board of Directors will consider what action to take in the interest of investors and may convene a general meeting of shareholders in order to amend the investment policy.

LENDING FINANCIAL INSTRUMENTS:

The sub-fund may lend financial instruments within the limits set by law and regulations. This takes place within the framework of a securities lending system managed by either a principal or an agent. If it is managed by a principal, the sub-fund has a relationship only with the principal of the securities lending system which acts as counterparty and to whom title to the loaned securities is transferred. If it is managed by an agent, the sub-fund has a relationship with the agent (as manager of the system) and with one or more counterparties to whom title to the loaned securities is transferred. The agent acts as intermediary between the sub-fund and the counterparty or counterparties. This lending does not affect the 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 the 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. margin management system is used to ensure that the sub-fund is at all times the beneficiary of financial security (collateral) in the form of cash or other or other specific types of securities with a low risk, such as government bonds. The actual value of the collateral in the form of specific types of securities with a low risk must at all times exceed the actual value of the loaned securities by 5%, in case the principal or the counterparty does not return similar securities. When calculating the value of the specific types of securities with a low risk provided as collateral, a margin of 3% is applied, which should prevent a negative change in price resulting in their actual value no longer exceeding the actual value of the securities. The value of the collateral in the form of cash must at all times equal the actual value of the loaned securities.

20

If the 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 period not exceeding twelve months, provided that the registered office of the credit institution is situated within a member state of the EEA, or if the registered country is established in a third country, provided that it is subject to prudential supervisory rules which the FSMA considers as being equivalent to the rules under European Law.

- money market funds as described in the ESMA Guidelines CESR/10-049 dated 19 May 2010 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 the terms and conditions set out in the Royal Decree of 7 March 2006 on securities lending by certain undertakings for collective investment.

Reinvesting in this way can eliminate the credit risk to which the sub-fund is exposed concerning the collateral in respect of the financial institution where the cash account is held, but there is still a credit risk in respect of the issuer or issuers of the debt instrument or instruments. The management company may delegate implementation of the reinvestment policy to a third party, including the agent managing the securities lending system. By lending securities, the sub-fund can generate additional income, which might consist of a fee paid by the principal or (if the sub-fund uses an agent) the counterparty to the management company 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 of the charges for the clearing services provided by KBC Bank NV, the charges paid to the management company for setting up and monitoring the system for lending securities, the charges for margin management, the charges associated with cash and custody accounts and cash and securities transactions, the fee paid for any management of reinvestments and, if the sub-fund uses an agent, the fee paid to the agent – this income is paid to the sub-fund. The relationship with the counterparty or counterparties is governed by standard international agreements.

VOLATILITY OF THE NET ASSET VALUE:

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

GENERAL STRATEGY FOR HEDGING THE EXCHANGE RATE RISK:

In order to protect its assets against exchange rate fluctuations and within the limitations laid down in the articles of association, the sub-fund may perform transactions relating to the sale of forward currency contracts, as well as the sale of call options and the purchase of put options on currencies. The transactions in question may relate solely to contracts traded on a regulated market that operates regularly, is recognised and 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, the sub-fund may also sell currencies forward or exchange them in private transactions with prime financial institutions specialising in such transactions.

SOCIAL, ETHICAL AND ENVIRONMENTAL ASPECTS:

Investments 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 containing depleted uranium. In addition, as of 31 March 2014 no new investments may be made in financial instruments issued by companies that do not have an anti-corruption policy and that have been given a negative score in a thorough screening for corruption in the last two years. A company has no anti-corruption policy if it cannot be demonstrated that it has an acceptable policy concerning the fight against corruption. An acceptable policy should be made public and must at least state that bribery will not be tolerated and that the law will be followed in this respect. The screening will be based on a generally accepted and independent 'Social, ethical and environmental factors' database. In this way, not only is a purely financial reality represented, but also the social reality of the sector or region. Where relevant, please refer to 'Information concerning the Bevek – Tax treatment' in the prospectus to find out more about the application of European and Belgian tax provisions.

21

2.1.4 FINANCIAL PORTFOLIO MANAGEMENT

There is no delegation of the portfolio.

2.1.5 DISTRIBUTORS

KBC Asset Management S.A., 5, Place de la Gare, L-1616 Luxembourg.

2.1.6 INDEX AND BENCHMARK

See ‘Sub-fund’s investment policy’. Tracking error for the capitalisation share (ISIN-code: BE0161292785) calculated in the currency of the share. Tracking error: 0.26% The tracking error is the annualised volatility of the differences between the daily returns of the unit in question and those of the benchmark index.

2.1.7 POLICY PERSUED DURING THE FINANCIAL YEAR

Doubts about the sustainability of the economic recovery shaped investor sentiment for a long time, but sentiment began to turn more positive during the summer months of 2013. Europe shook off the recession, the euro crisis lost its stranglehold, the US easily digested a severe austerity programme and Japan broke out of its negative deflation spiral. The stock markets responded warmly to the economic optimism. The recession in the EMU, precipitated by the euro crisis and going back as far as the fourth quarter of 2011, came to an end. From the second quarter of 2013 onwards positive growth figures were at last recorded again and the overall unemployment rate stopped rising. Consumer and business confidence are recovering quite strongly, surprisingly enough even in the hard-hit countries of Southern Europe. Western Europe continued to catch up in the traditional markets, a movement which had begun in 2012, albeit with varying success (the return of the MSCI Europe Index in euros over this period was +22.5%). Fears that the EMU’s problems harboured a systemic risk disappeared completely. The cheaper valuation of Europe (compared with the US) most likely provided support. However, corporate earnings in Europe have lagged considerably behind since the first quarter of 2012 relative both to forecasts and to the pattern of earnings in the United States. Wall Street was much higher at the end of June 2014 than a year earlier (S&P 500 up 23.4% and Dow Jones up 12.4%). On 1 July 2014, the S&P 500 reached an all-time high.

2.1.8 FUTURE POLICY

Europe is creeping out of recession. The budgetary plans, tighter lending policy of the banks and major uncertainty among consumers and producers will continue to depress growth. Limited growth is forecast for the months ahead. This is not a reason for euphoria, but better than negative growth. Deflation or depression scenarios are not, however, justified. The euro crisis has receded into the background, but many problems remain to be resolved. In 2014, attention will focus on the large-scale review being conducted by the ECB into the quality of European banks’ loan portfolios. That review, now in full swing, will need to be followed by stress tests (examining whether the banks’ capital buffers are sufficient for crises to be survived) and will need to provide the ECB with enough information to allow it to carry out its task as pan-European regulator as from November. Frankfurt’s main hope is that the review will restore trust among the European banks to such an extent that they will normalise their interbank relationships. At the level of budgetary discipline the reins are being eased. Control over national budgets has been tightened, but the standards have become less absolute and allow considerable room for manoeuvre. Full use is being made of that room in the current election year.

22

2.1.9 SYNTHETIC RISK AND REWARD INDICATOR

6 on a scale of 1 (lowest risk) to 7 (highest risk). The value of a share can decrease or increase and the investor may not get back the amount invested. In accordance with Commission Regulation (EU) No. 583/2010, a synthetic risk and reward indicator has been calculated. This indicator provides a quantitative measure of the sub-fund's potential return and the risk involved, calculated in the currency in which the sub-fund is denominated. It is given as a figure between 1 and 7. The higher the figure, the greater the potential return, but also the more difficult it is to predict this return. Losses are possible too. 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 from the past. Data from the past is not always a reliable indicator of future risk and return.

23

2.2 BALANCE SHEET

Balance sheet layout 30/06/2014 (in the currency of the sub-fundt)

30/06/2013 (in the currency of the sub-fund )

TOTAL NET ASSETS 23.509.642,26 22.811.348,17

II. Securities, money market instruments, UCIs and derivatives

A. Bonds and other debt instruments a) Bonds a} Collateral received in the form of bonds 1.570.543,64 C. Shares and similar instruments a) Shares 24.062.402,42 22.821.321,61 Of which securities lent 1.458.898,02 D. Other securities 27,60 49.433,09 F. Derivative financial instruments m) Financial indices Futures and forward contracts (+/-) -650,00

IV. Receivables and payables within one year A. Receivables a) Accounts receivable 1.113,62 1.005,09 c) Collateral 20.000,00 8.800,00 B. Payables a) Accounts payable (-) -84.914,45 -60.347,33 c) Borrowings (-) -501.132,47 -5.813,85 d) Collateral (-) -1.570.543,64

V. Deposits and cash at bank and in hand A. Demand balances at banks 22.359,01 -405,76

VI. Accruals and deferrals A. Expense to be carried forward 11.124,85 10.835,67 B. Accrued income 9.101,82 12.612,72 C. Accrued expense (-) -29.790,14 -26.093,07

TOTAL SHAREHOLDERS' EQUITY 23.509.642,26 22.811.348,17

A. Capital 22.539.910,24 22.301.880,35

B. Income equalization -5.836,35 -4.849,76

D. Result for the period 975.568,37 514.317,58

24

Off-balance-sheet headings

I Collateral (+/-)

I.A Collateral (+/-) I.A.A Securities/market instruments 1.570.543,64 I.A.B Cash at bank and in hand/deposits 20.000,00 8.800,00

III Notional amounts of futures and forward contracts

III.A Purchased futures and forward contracts 413.250,00

IX Financial instruments lent 1.458.898,02

25

2.3 PROFIT AND LOSS ACCOUNT

Income Statement 30/06/2014 (in the currency of the sub-fund)

30/06/2013 (in the currency of the sub-fund)

I. Net gains(losses) on investments C. Shares and similar instruments a) Shares 898.047,79 598.377,06 D. Other securities -14.986,97 -276.716,33 F. Derivative financial instruments l) Financial indices Futures and forward contracts -1.590,00 -15.370,00 H. Foreign exchange positions and transactions b) Other foreign exchange positions and

transactions 98,05 510,15

II. Investment income and expenses A. Dividends 213.636,58 321.406,37 B. Interests a) Securities and money market instruments 11.749,69 15.399,35 b) Cash at bank and in hand and deposits 241,71 41,41 C. Interest on borrowings (-) -1.102,51 -426,06

IV. Operating expenses A. Investment transaction and delivery costs (-) -2.936,87 -9.727,48 B. Financial expenses (-) -666,97 -295,26 C. Custodian's fee (-) -9.275,83 -8.743,55 D. Manager's fee (-) a) Financial management -83.833,08 -82.938,57 b) Administration and accounting management -11.976,08 -11.848,31 E. Administrative expenses (-) -141,13 -287,90 F. Formation and organisation expenses (-) -2.696,29 -2.182,22 G. Remuneration, social security charges and

pension -131,52 -108,26

H. Services and sundry goods (-) -2.107,34 -1.895,05 J. Taxes -11.642,41 -9.899,85 K. Other expenses (-) -5.118,45 -977,92

Income and expenditure for the period Subtotal II + III + IV 93.999,50 207.516,70

V. Profit (loss) on ordinary activities before tax 975.568,37 514.317,58

VII. Result for the period 975.568,37 514.317,58

26

2.4 COMPOSITION OF THE ASSETS AND KEY FIGURES

2.4.1 COMPOSITIONS OF THE ASSETS OF KBC MULTI TRACK NETHERLANDS

Name Quantity on 30/06/2014

Cur rency

Price in currency

Evaluation (in the currency of the

sub-fund)

% owned by

UCI

% portfolio

% Net

assets

NET ASSETS

SECURITIES PORTFOLIO

Shares

Exchange-listed shares

France

GEMALTO NV - 4.782,00 EUR 75,700 361.997,40 1,50 1,54

RODAMCO UNIBAIL - 6.630,00 EUR 212,450 1.408.543,50 5,85 5,99

Luxembourg

ARCELORMITTAL - 68.043,00 EUR 10,830 736.905,69 3,06 3,13

Netherlands

A.K.Z.O. NOBEL - 16.324,00 EUR 54,750 893.739,00 3,71 3,80

AEGON - 140.055,00 EUR 6,374 892.710,57 3,71 3,80

ASML HOLDING NV - 24.377,00 EUR 68,010 1.657.879,77 6,89 7,05

BOSKALIS WESTMINSTER (AMS) 5.748,00 EUR 41,885 240.754,98 1,00 1,02

CORIO N.V. - 6.630,00 EUR 37,300 247.299,00 1,03 1,05

DELTA LLOYD - 13.160,00 EUR 18,540 243.986,40 1,01 1,04

FUGRO NV CVA 5.424,00 EUR 41,815 226.804,56 0,94 0,97

HEINEKEN - 15.665,00 EUR 52,430 821.315,95 3,41 3,49

ING GROEP NV - 262.065,00 EUR 10,260 2.688.786,90 11,18 11,44

KON. AHOLD - 63.300,00 EUR 13,710 867.843,00 3,61 3,69

KONINKLIJKE D.S.M. NV (AMS) 12.324,00 EUR 53,190 655.513,56 2,72 2,79

KONINKLIJKE KPN NV - 218.236,00 EUR 2,661 580.726,00 2,41 2,47

KONINKLIJKE PHILIPS ELECTRONICS N.V. - 63.866,00 EUR 23,175 1.480.094,55 6,15 6,30

OCI NV - 6.724,00 EUR 28,500 191.634,00 0,80 0,82

RANDSTAD HOLDING (AMS) 7.963,00 EUR 39,590 315.255,17 1,31 1,34

REED ELSEVIER NV - 47.337,00 EUR 16,750 792.894,75 3,30 3,37

SBM OFFSHORE NV (AMS) 13.324,00 EUR 11,785 157.023,34 0,65 0,67

TNT EXPRESS NV - 34.916,00 EUR 6,610 230.794,76 0,96 0,98

UNILEVER CVA 111.062,00 EUR 31,955 3.548.986,21 14,75 15,10

WOLTERS KLUWER - 20.421,00 EUR 21,620 441.502,02 1,84 1,88

ZIGGO BV - 10.638,00 EUR 33,770 359.245,26 1,49 1,53

U.K.

ROYAL DUTCH SHELL PLC -A- 132.942,00 EUR 30,240 4.020.166,08 16,71 17,10

Total shares 24.062.402,42 100,00 102,35

Options and futures

Exchange-listed futures

Netherlands

AEX JUL 14 5,00 EUR 413,250 413.250,00 1,72 1,76

Suspense accounts (futures)

Netherlands

AEX JUL 14 -413.900,00 EUR 1,000 -413.900,00 -1,72 -1,76

Total options and futures -650,00 0,00 0,00

27

Rights

Netherlands

DELTA LLOYD CP 26/05/14 1,00 EUR 0,610 0,61

U.K.

ROYAL DUTCH SHELL PLC CP 14/05/14 79,00 EUR 0,342 26,99

Total rights 27,60

TOTAL SECURITIES PORTFOLIO 24.061.780,02 100,00 102,35

CASH AT BANK AND IN HAND

Demand accounts

Belgium

KBC GROUP EURO -501.132,47 EUR 1,000 -501.132,47 -2,13

KBC GROUP GBP 522,21 GBP 1,000 652,19 0,00

Total demand accounts -500.480,28 -2,13

Managed futures accounts

Belgium

KBC GROUP EURO FUT REK 21.706,82 EUR 1,000 21.706,82 0,09

Total managed futures accounts 21.706,82 0,09

TOTAL CASH AT BANK AND IN HAND -478.773,46 -2,04

OTHER RECEIVABLES AND PAYABLES

Receivables

Belgium

KBC GROUP EUR RECEIVABLE 1.113,62 EUR 1,000 1.113,62 0,01

Netherlands

KBC CLEARING NV DEKKING EUR 20.000,00 EUR 1,000 20.000,00 0,09

Total receivables 21.113,62 0,09

Payables

Belgium

KBC GROUP EUR PAYABLE -84.914,45 EUR 1,000 -84.914,45 -0,36

Payables -84.914,45 -0,36

TOTAL RECEIVABLES AND PAYABLES -63.800,83 -0,27

OTHER Interest receivable EUR 7.212,36 0,03

Accrued interest EUR 1.889,46 0,01

Expenses payable EUR -29.790,14 -0,13

Expenses to be carried forward EUR 11.124,85 0,05

TOTAL OTHER -9.563,47 -0,04

TOTAL NET ASSETS 23.509.642,26 100,00

28

Geographic breakdown (as a % of securities portfolio)

31/12/2012 30/06/2013 31/12/2013 30/06/2014

France 7,02 9,20 8,58 7,36 U.K. 13,71 14,74 13,56 16,71 Luxembourg 4,62 3,25 4,28 3,06 Netherlands 74,65 72,81 73,58 72,87 Total 100,00 100,00 100,00 100,00

Sector breakdown (as a % of securities portfolio)

31/12/2012 30/06/2013 31/12/2013 30/06/2014

Cyclicals 28,75 27,37 27,52 29,60 Consum(cycl) 17,48 18,19 17,14 13,55 Cons.goods 24,81 23,41 20,56 21,77 Financials 13,45 13,64 16,85 15,90 Technology 5,91 9,17 9,02 8,39 Telecomm. 2,03 0,65 2,15 3,91 Real est. 7,57 7,57 6,88 6,88 Unit trusts 0,00 0,00 -0,12 0,00 Total 100,00 100,00 100,00 100,00

Currency breakdown (as a % of net assets)

31/12/2012 30/06/2013 31/12/2013 30/06/2014

EUR 100,00 100,00 100,00 100,00 Total 100,00 100,00 100,00 100,00

29

2.4.2 CHANGES IN THE COMPOSITION OF THE ASSETS OF KBC MULTI TRACK NETHERLANDS (IN THE CURRENCY OF THE SUB-FUND)

1st half of year Year

Purchases 2.244.506,02 2.244.506,02 Sales 4.615.731,18 4.615.731,18 Total 1 6.860.237,20 6.860.237,20 Subscriptions 471.553,16 471.553,16 Redemptions 2.777.721,69 2.777.721,69 Total 2 3.249.274,85 3.249.274,85 Monthly average of total assets

24.135.315,96 24.135.315,96

Turnover rate 14,96 % 14,96 %

1st half of year Year

Purchases 2.244.506,02 2.244.506,02 Sales 4.615.731,18 4.615.731,18 Total 1 6.860.237,20 6.860.237,20 Subscriptions 471.553,16 471.553,16 Redemptions 2.777.721,69 2.777.721,69 Total 2 3.249.274,85 3.249.274,85 Monthly average of total assets

25.240.894,40 25.240.894,40

Corrected turnover rate 14,31 % 14,31 %

The table above shows the capital volume of portfolio transactions. This volume (adjusted to take account of total subscriptions and redemptions) is also compared to the average net assets at the beginning and end of the period. A figure close to 0% implies that the transactions relating to the securities or transactions relating to the assets (excluding deposits and cash) in a given period only involve subscriptions and redemptions. A negative percentage shows that subscriptions and redemptions entailed few, if any, transactions in the portfolio. Active asset management may result in high turnover rates (monthly percentage >50%). The detailed list of transactions is available for consultation free of charge at the registered office of the Bevek or fund at Havenlaan 2, 1080 Brussels.

2.4.3 AMOUNT OF COMMITMENTS IN RESPECT OF FINANCIAL DERIVATIVES POSITIONS

NAME Currency Value in

currency

In the currency of the sub-fund

Lot-size

Transaction

date

KBCCLEAR DEKKING EUR

EUR 20.000,00 20.000,00 N/A 30.06.2014

AEX 14/07/2014 EUR 413.250,00 413.250,00 200,00 30.06.2014

30

2.4.4 CHANGES OF THE NUMBER OF SUBSCRIPTIONS AND REDEMPTIONS AND THE NET ASSET VALUE

Period Change in number of shares in circulation

Year Subscriptions Redemptions End of period

Cap. Dis. Cap. Dis. Cap. Dis. Total 2012 - 06 20.312,98 8.002,00 21.710,59 15.616,76 126.071,85 41.020,26 167.092,11

2013 - 06 2.066,26 1.706,00 19.520,58 9.071,33 108.617,53 33.654,93 142.272,46

2014 - 06 4.176,22 2.156,00 20.406,45 7.898,05 92.387,30 27.912,88 120.300,18

Period Amounts received and paid by the UCI

(in the currency of the sub-fund)

Year Subscriptions Redemptions

Capitalization Distribution Capitalization Distribution 2012 - 06 3.138.550,11 893.579,95 3.165.151,11 1.769.860,97

2013 - 06 346.792,50 212.183,99 3.247.829,99 1.156.563,02

2014 - 06 805.048,70 314.357,94 3.972.846,49 1.148.920,68

Period Net asset value

End of period (in the currency of the sub-fund)

Year Of the sub-fund Of one share

Capitalization Distribution 2012 - 06 23.393.306,08 148,50 113,90

2013 - 06 22.811.348,17 170,24 128,38

2014 - 06 23.509.642,26 207,57 155,22

31

2.4.5 PERFORMANCE FIGURES

Cap Div

ISIN code Cur-

rency

1 Year 3 Years* 5 Years* 10 Years* Since launch*

Share classes

Bench mark

Share classes

Bench mark

Share classes

Bench mark

Share classes

Bench mark

Launch Date

Share classes

CAP BE0161292785 EUR 21.93% 23.18% 9.16% 10.34% 12.67% 13.87% 4.35% 5.50% 30/04/2001 -0.06%

DIV BE0161293791 EUR 21.92% 23.18% 9.15% 10.34% 12.67% 13.87% 4.34% 5.50% 30/04/2001

Risk warning: Past performance is not a guide to future performance. * Return on annual basis.

32

The bar chart shows the performance for full financial years. The figures do not take account of any restructuring. Calculated in EUR (ex NLG). the return is calculated as the change in the net asset value between two dates expressed

as a percentage. In the case of units that pay dividends, the dividend is incorporated geometrically in the return.

Calculation method for date D, where NAV stands for net asset value: Capitalisation units (CAP) Return on date D over a period of X years:

[NAV(D) / NAV(Y)] ^ [1 / X] - 1 where Y = D-X

Return on date D since the start date S of the unit: [NAV(D) / NAV(S)] ^ [1 / F] - 1 where F = 1 if the unit has existed for less than one year on date D where F = (D-S) / 365.25 if the unit has existed for longer than one year on date D

Distribution units (DIV) Return on date D over a period of X years:

[ C * NAV(D) / NAV(Y)] ^ [1 / X] - 1 where Y = D-X

Return on date D since the start date S of the unit: [ C * NAV(D) / NAV(S)] ^ [1 / F] - 1 where F = 1 if the unit has existed for less than one year on date D where F = (D-S) / 365.25 if the unit has existed for longer than one year on date D

where C is a factor that is determined for all N dividends between the calculation date D and the reference date. For dividend i on date Di with value Wi:

Ci = [Wi / NAV(Di)] + 1 i = 1 ... N

from which C = C0 * .... * CN. If the interval between the two dates exceeds one year, the ordinary return calculation is

converted into a return on an annual basis by taking the nth square root of 1 plus the total return of the unit.

The return figures shown above do not take account of the fees and charges associated with the issue and redemption of units.

These are the performance figures for capitalisation and distribution shares.

33

2.4.6 COSTS

Ongoing charges: * Distribution: 1.089% Capitalization: 1.078%

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

EXISTENCE OF COMMISSION SHARING AGREEMENTS

The Management Company, or where applicable, the appointed manager has entered into a Commission Sharing Agreement with one or more brokers for transactions in shares on behalf of one or more sub-funds. This agreement specifically concerns the execution of orders and the delivery of research reports. For more information, please see the ‘General’ section of the annual report.

FEE-SHARING AGREEMENTS AND REBATES:

The 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 60% if the distributor is an entity of KBC Group NV or to between 35% and 70% if the distributor is not an entity of KBC Group NV. However, in a small number of cases, the distributor’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 undertakings for collective investment that are not managed by an entity of KBC Group NV, and receives a fee for doing so, it will pay this fee to the undertaking for collective investment. Fee-sharing does not affect the amount of the management fee paid by the sub-fund to the management company. This management fee is subject to the limitations laid down in the articles of association. The limitations may only be amended after approval by the general meeting of shareholders. The management company has concluded a distribution agreement with the distributor in order to facilitate the wider distribution of the sub-fund's units by using multiple distribution channels. It is in the interests of the holders of units, the sub-fund and of the distributor for the largest possible number of units to be sold and for the assets of the sub-fund to be maximised in this way. In this respect, there is therefore no question of any conflict of interest.

2.4.7 NOTES TO THE FINANCIAL STATEMENTS AND OTHER DATA

Fee for managing the investment portfolio: 0.7% per annum calculated on the basis of the average total net assets of the sub-fund, no management fee is charged on assets invested in underlying undertakings for collective investment managed by a financial institution of the KBC group. The administration agent’s fee is payable at the end of each month and is calculated on the basis of the average total net assets of the sub-fund. Auditor's fee: 1786 EUR per year. This fee is not including VAT and can be indexed on an annual basis in accordance with the decisions of the general meeting. The custody fee is calculated on the value of the securities held in custody by the custodian on the final banking day of the preceding calendar year, except on those assets invested in underlying undertakings for collective investment managed by a financial institution of the KBC group. The custody fee is paid at the beginning of the calendar year.

34

Exercising voting rights. If necessary, relevant and in the interest of the shareholders, the management company will exercise the voting rights attached to the shares in the Bevek’s portfolio. The management company will adhere to the following criteria when determining how it stands relative to the items on the agenda that are put to the vote: - Shareholder value may not be adversely affected. - Corporate governance rules, especially with regard to the rights of minority shareholders, must be respected. - The minimum standards with regard to sustainable business and corporate social responsibility must be met. The list of companies for which voting rights are exercised is available at the registered office of the Bevek. Financial derivatives on financial indices The following financial indices were used as the underlying for financial derivatives: The AEX index is a weighted, in principle non-dividend-protected equity index, calculated by Euronext Indices BV. The AEX index acts primarily as a continuous indicator of market trends on Euronext Amsterdam. It was first introduced on 1 January 1983 with a starting value of 100. The value of the index on 31 December 1998 was 1 186.38. On 4 January 1999, the index was adjusted based on the NLG to EUR conversion rate, giving a value after conversion of 538.36. Euronext Indices BV is responsible for calculating the index. The AEX index is made up of approximately 25 shares weighted by their market capitalisation and taking account of their free marketability. Euronext Indices BV holds all ownership rights with respect to the index. Euronext Indices BV in no way underwrites, guarantees or collaborates in the issue and offering of shares of this institution for collective investment. Euronext Indices BV disclaims any liability for the issue and offering of shares of this institution for collective investment. The AEX index is published every day in De Tijd, L’Echo, The Financial Times and The Wall Street Journal Europe. The value and, if available for distribution, the composition of the aforementioned financial indices may be obtained from the branches providing the financial service. Securities lending In accordance with the Royal Decree of 7 March 2006 concerning securities lending, the undertaking for collective investment has taken out securities loans with a principal to whom the full title of the loaned securities was transferred, without recording this transfer of ownership in the accounts. For the period from 1 January 2014 to 30 June 2014, the fee for securities lent comes to 9,273.41 EUR. Direct and indirect charges are deducted from this income. These charges are set at a flat rate of 35% of the fee received and consist of the charges for the clearing services provided by KBC Bank, the charges paid to the management company for setting up and monitoring the system for lending securities, the charges for margin management and the charges associated with cash and custody accounts and cash and securities transactions. The undertaking for collective investment receives 65% of the fee received for securities lent. The detailed list of securities lending transactions carried out can be obtained from the registered office of the collective investment undertaking at 2 Havenlaan, 1080 Brussels.

35

Semi-Annual report as at 30th June 2014

TABLE OF CONTENTS

2. Information on KBC Multi Track Belgium

2.1. Management report 2.1.1. Launch date and subscription price 2.1.2. Stock exchange listing 2.1.3. Aim and distinctive features of the investment policy 2.1.4. Financial portfolio management 2.1.5. Distributors 2.1.6. Index and benchmark 2.1.7. Policy conducted during the financial year 2.1.8. Future policy 2.1.9. 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 2.4.2. Change in the composition of the assets 2.4.3. Value of commitments in respect of financial derivatives positions 2.4.4. Evolution of the number of subscriptions, repayments and the net asset value 2.4.5. Return figures 2.4.6. Expenses 2.4.7. Notes to the financial statements and other data

36

37

2 INFORMATION ON KBC MULTI TRACK BELGIUM

2.1 MANAGEMENT REPORT

2.1.1 LAUNCH DATE AND SUBSCRIPTION PRICE

Launch date: 30 April 2001 Initial subscription price: 1000 BEF Currency: EUR

2.1.2 STOCK EXCHANGE LISTING

Not applicable.

2.1.3 GOAL AND KEY PRINCIPLES OF THE INVESTMENT POLICY

SUB-FUND’S OBJECT:

The main objective of this sub-fund is to generate the highest possible return for its shareholders by investing directly 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 POLICY:

PERMITTED 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 and regulations and consistent with the sub-fund's object. The sub-fund shall invest no more than 10% of its assets in units of other undertakings for collective investment.

RESTRICTIONS OF THE INVESTMENT POLICY:

The 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 solving temporary liquidity problems.

PERMITTED DERIVATIVES TRANSACTIONS:

Derivatives 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 or swaps 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 such transactions. Subject to the applicable laws and regulations and the articles of association, the sub-fund will always seek to conclude the most effective transactions. All costs associated with the transactions will be charged to the sub-fund and all income generated will be paid to the sub-fund. If the transactions result in a risk in respect of the counterparty, this risk can be hedged by using a margin management system that ensures that the sub-fund is the beneficiary of security (collateral) in the form of cash or investment grade bonds. When calculating the value of the bonds, a margin will be applied that varies depending on their residual term to maturity and the currency in which they are denominated. The relationship with the counterparty 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 to the currency. Where derivatives are used, they must be easily transferable and liquid instruments. Using derivatives does not, therefore, affect liquidity risk. Furthermore, using derivatives does not affect the portfolio's allocation across regions, industry sectors or themes. As a result, they have no effect on concentration risk. Derivatives may not be used to protect capital, either fully or partially. They neither increase nor decrease capital risk. In addition, using derivatives has no effect on credit risk, settlement risk, custody risk, flexibility risk or inflation risk or risk dependent on external factors.

38

STRATEGY SELECTED

The assets are invested primarily in the shares of Belgian companies.

RISK CONCENTRATION

Belgian shares.

INDEX-TRACKING:

The objective of the sub-fund is to track the composition of an index in accordance with and within the limits of Article 63 of the Royal Decree of 12 November 2012 on certain public undertakings for collective investment.

Index/indices in question: Bel20 Settlement Index. Index tracking method: physical replication using optimised sampling: the index is tracked using a selection of shares in the index in order to best replicate the index. In addition, an optimisation algorithm is used that balances the risk and the return of each of the portfolio positions, so optimising the selection. The sub-fund may also make limited use of synthetic replication by way of futures, primarily in order to cushion the effects of buying and selling and to avoid the attendant transaction charges. The index is rebalanced every quarter. The more often an index is rebalanced, the greater the potential impact on the transaction charges within the sub-fund. Given normal market conditions, the expected tracking error is between 0% and 1%. Possible causes of this tracking error could be the method used to track the index, transaction charges, dividend reinvestment, the general costs charged to the sub-fund, any income from lending financial instruments.

If the composition of the index is no longer sufficiently diversified or if the index is no longer sufficiently representative of the market it relates to or if the value and composition of the index is no longer published in a suitable manner, the management company will inform the Board of Directors without delay. The Board of Directors will consider what action to take in the interest of investors and may convene a general meeting of shareholders in order to amend the investment policy.

LENDING FINANCIAL INSTRUMENTS:

The sub-fund may lend financial instruments within the limits set by law and regulations. This takes place within the framework of a securities lending system managed by either a principal or an agent. If it is managed by a principal, the sub-fund has a relationship only with the principal of the securities lending system which acts as counterparty and to whom title to the loaned securities is transferred. If it is managed by an agent, the sub-fund has a relationship with the agent (as manager of the system) and with one or more counterparties to whom title to the loaned securities is transferred. The agent acts as intermediary between the sub-fund and the counterparty or counterparties. This lending does not affect the 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 the sub-fund’s assets.

- The return of securities similar to the securities that have been len