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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
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Table of contents
1. General information on the Bevek KBC Equity Fund
1.1. Organisation of the Bevek KBC Equity Fund
1.2. Management report
1.2.1. Information for the shareholders1.2.1.1. Securities
Financing Transactions (SFTs)1.2.1.2. General strategy for hedging
the exchange rate risk1.2.1.3. Social, ethical and environmental
aspects1.2.1.4. Synthetic risk and reward indicator1.2.1.5. Ongoing
charges1.2.1.6. Existence of fee sharing agreements and
rebates1.2.1.7. Existence of fee sharing agreements and
rebates1.2.1.8. Recurrent fees and charges
1.2.2. General market overview
1.3. Auditor's report
1.4. Aggregate balance sheet
1.5. Aggregate profit and loss account
1.6. Summary of recognition and valuation rules1.6.1. Summary of
the rules1.6.2. Exchange rates
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1. General information on the Bevek1.1. Organisation of the
BevekRegistered office
2 Havenlaan - B-1080 Brussels, Belgium.
Date of incorporation21 March 1991
LifeUnlimited.
Board of directors of the BevekName Function Mandat
Patrick Dallemagne Financial Director CBC Banque SA,Avenue
Albert 1er 60, B-5000 Namur
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
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Names and positions of the natural persons to whom the
executivemanagement of the management company has been
entrusted
Name TitleJohan Lema President of the Executive CommitteeTiny
Ergo Managing 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
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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;
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- 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.
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Remuneration policy and remuneration paid by the
managementcompanyGeneral:
The KBC group has a specific management structure, under which
KBC Group NV and the various groupcompanies are brought together
within one or more business units, for operational purposes.KBC
Asset Management NV is part of the KBC Asset Management product
factory within the KBC group'sInternational Markets Business
Unit.
In 2010, the KBC group introduced the KBC Remuneration Policy,
which lays down general remuneration guidelinesfor all staff and
specific guidelines for those employees who could have a material
impact on the risk profile of thecompany. Further information about
the remuneration policy is available in the 'KBC Asset Management
GroupCompensation Report', which you can read at
https://kbcam.kbc.be/en/about-us. The compensation report
includesinformation from the level of the KBC Asset Management
group entities about the remuneration principles andcontains
remuneration figures for the relevant fiscal year according to EU
and national legislation. The reportcomprises the following
sections:
- Overview of remuneration - Risk adjustments - Corporate
governance - Information provided on remuneration
Remuneration paid by the management company for book yearendings
on 31 December 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.
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List of sub-funds and share classes of KBC Equity FundThe table
below contains an overview of the sub-funds sold and their share
classes. If no share class is mentionedfor a sub-fund, that means
that only capitalisation- and/or distribution units are
available.The characteristics of the different share classes are
given in the prospectus.
Name1 America
Classic Shares Classic Shares CSOB CZK Institutional B
Shares
2 Belgium3 Buyback America
Classic Shares Institutional B Shares
4 Buyback Europe Classic Shares Institutional B Shares
5 Central Europe Classic Shares Institutional B Shares
6 Commodities & Materials Classic Shares Institutional B
Shares
7 Consumer Durables Classic Shares Classic Shares CSOB CZK
Institutional B Shares
8 CSOB Akciovy fond dividendovych firem9 Emerging Europe
Classic Shares Institutional B Shares
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
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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
Classic Shares Institutional B Shares
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
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30 New Shares31 Oil
Classic Shares Institutional B Shares
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
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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.
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1.2. Management report1.2.1. Information for the
shareholders
Pursuant to Article 96 of the Companies Code, information is
supplied regarding the following:• The balance sheet and profit and
loss account provide a true and fair view of the performance and
results of the
undertaking for collective investment. The ‘General market
overview’ section includes a description of 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
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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.
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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.
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- 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.
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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
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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
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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
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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
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1.3. Auditor's report
21
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KBC Equity Fund NVDocument subtitle= Verdana Heading 12 0/0
single
Deloitte Bedrijfsrevisoren / Reviseurs d’Entreprises
KBC Equity Fund NVBevek under Belgian law, category
UCITSStatutory auditor’s report to the shareholders’ meeting for
the year ended31 December 2018 – Annual accountsThe original text
of this report is in Dutch
22
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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
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KBC Equity Fund NVBevek under Belgian law, category UCITS | 31
December 2018
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.
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KBC Equity Fund NVBevek under Belgian law, category UCITS | 31
December 2018
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.
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KBC Equity Fund NVBevek under Belgian law, category UCITS | 31
December 2018
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
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KBC Equity Fund NVBevek under Belgian law, category UCITS | 31
December 2018
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
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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
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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
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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
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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
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1.6. Summary of recognition and valuation rules1.6.1. Summary of
the rules
Summary of the valuation rules pursuant to the Royal Decree of
10 November 2006 on the accounting, annualaccounts and periodic
reports of certain open-ended undertakings for collective
investment.The assets of the various sub-funds are valued as
follows:• When purchased or sold, securities, money market
instruments, units in undertakings for collective
investment and financial derivatives are recorded in the
accounts at their acquisition price or sale price,respectively. Any
additional expenses, such as trading and delivery costs, are
charged directly to the profitand loss account.
• After initial recognition, securities, money market
instruments and financial derivatives are measured at fairvalue on
the basis of the following rules:
• Securities that are traded on an active market without the
involvement of third-party financialinstitutions are measured at
fair value using the closing price;
• Assets that have an active market which functions through
third -party financial institutions thatguarantee continuous bid
and ask prices are measured using the current bid price set on that
market.However, since most international benchmarks use mid-prices,
and the data providers cannot supplybid prices (e.g., JP Morgan,
iBoxx, MSCI, etc.), the midprices are used to measure debt
instruments,as provided for in the Notes to the aforementioned
Royal Decree. The method to correct thesemidprices and generate the
bid price is not used, as it is not reliable enough and could
result in majorfluctuations.
• Securities whose last known price is not representative and
securities that are not admitted to officiallisting or admitted to
another organised market are valued as follows:
1 When measuring these securities at fair value, use is made of
the current fair value of similarassets for which there is an
active market, provided this fair value is adjusted to takeaccount
of the differences between the assets concerned.
2 If no fair value for similar assets exists, the fair value is
calculatedon the basis of other valuation techniques which make
maximumuse of market data, which are consistent with generally
accepted economic methods andwhich are verified and tested on a
regular basis.
3 If no organised or unofficial market exists for the assets
beingvalued, account is also taken of the uncertain character of
these assets, based on the riskthat the counterparties involved
might not meet their obligations.
• Shares for which there is no organised or unofficial market,
and whose fair value cannot becalculated reliably as set out above,
are measured at cost.Impairment is applied to these shares if there
are objective instructions to this end.
• Units in undertakings for collective investment (for which
there is no organised market) are measuredat fair value using their
last net asset value.
• Liquid assets, including assets on demand at credit
institutions, obligations oncurrent account vis-à-vis credit
institutions, amounts payable and receivable in the short term that
are notrepresented by negotiable securities or money market
instruments (other than vis-à-vis credit institutions), taxassets
and liabilities, are measured at nominal value.Other amounts
receivable in the longer term that are not represented by
negotiable securities are measuredat fair value.Impairment is
applied to assets, amounts to be received and receivables if there
is uncertainty that they willbe paid in full or in part at
maturity, or if the realisation value of this asset is less than
its acquisition value.Additional impairment is recorded on the
assets, amounts to be received and receivables referred to in
theprevious paragraph to ensure that any change in their value, or
risks inherent in the asset in question, aretaken into account.
• The income generated by securities lending is recognised as
other income (Income statement II.B.a.:Investment income and
expenses – Interest – Securities and money market instruments) and
is included onan accruals basis in the income statement over the
term of the transaction.
• Securities issued in a currency other than that of the
relevant sub-fund are converted into the currency of thesub-fund at
the last known mid-market exchange rate.
DifferencesA minor difference may appear from time to time
between the net asset value as published in the press and the
netasset value shown in this report. These are minimal differences
in the net asset value calculated that are identifiedafter
publication.If these differences reach or exceed a certain
tolerance limit, the difference will be compensated. For those
buyingor selling shares in the bevek and for the bevek itself, this
tolerance limit will be a certain percentage of the netasset value
and the net assets, respectively.This tolerance limit is:
• money market funds: 0.25%• bond funds, balanced funds and
funds offering a capital guarantee: 0.50%• equity funds: 1%• other
funds (real estate funds, etc.): 0.50%
32
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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
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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
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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
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36
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2. Information on KBC Equity FundAmerica2.1. Management
report2.1.1. Launch date and subscription price
Classic Shares CapitalisationLaunch date: 17 April 1991Initial
subscription price: 500 USDCurrency: USDClassic Shares
DistributionLaunch date: 17 April 1991Initial subscription price:
500 USDCurrency: USDInstitutional B Shares CapitalisationLaunch
date: 25 November 2011Initial subscription price: 1 230.35
USDCurrency: USDClassic Shares CSOB CZK CapitalisationLaunch date:
28 June 2013Initial subscription price: 1 000 CZKCurrency: CZK
2.1.2. Stock exchange listingNot applicable.
2.1.3. Goal and key principles of the investment policyObject of
the sub-fund
The main objective of this sub-fund is to generate the highest
possible return for its shareholders by investingdirectly or
indirectly in transferable securities. This is reflected in its
pursuit of capital gains and income. To this end,the assets are
invested, either directly or indirectly via correlated financial
instruments, primarily in shares.
Sub-fund's investment policyPermitted asset classes
The sub-fund may invest in securities, money market instruments,
units in undertakings for collective investment,deposits, financial
derivatives, liquid assets and all other instruments insofar as
permitted by the applicable laws andregulations and consistent with
the object as described above.The sub-fund shall invest no more
than 10% of its assets in units of other undertakings for
collective investment.
Restrictions of the investment policyThe investment policy will
be implemented within the limits set by law and regulations.The
sub-fund may borrow up to 10% of its net assets, insofar as these
are short-term 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
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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
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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
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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