kbc bonds -...

Annual report as at 30th September 2013

KBC BONDS Investment Company with Variable Capital (SICAV) Luxembourg

R.C.S. Luxembourg B 39 062

The report is the English translation of the report in French. In case of a discrepancy of content and/or meaning between the French and English versions, the French version shall prevail. No subscription can be received on the basis of this financial report. Subscriptions are only valid if made on the basis of the current issue prospectus and the key investor information document ("KIID") accompanied by the subscription form, the latest annual report and the most recent semi-annual report, if published thereafter.

KBC BONDS

Contents

1

Organisation ..................................................................................................................................................... 3

General information ......................................................................................................................................... 8

Additional information for the investors in Germany, in Austria, in Belgium and in Switzerland ........... 9

Financial climate ............................................................................................................................................. 11

Report of the réviseur d'entreprises agréé .................................................................................................. 17 Consolidated statement of net assets .......................................................................................................... 19

Consolidated statement of operations and other changes in net assets ................................................. 20

KBC BONDS INCOME FUND ......................................................................................................................... 21 Investment policy and outlook ...................................................................................................................... 21 Statement of net assets ................................................................................................................................ 22 Statement of operations and other changes in net assets ........................................................................... 23 Statistical information .................................................................................................................................... 24 Statement of investments and other net assets ........................................................................................... 25

KBC BONDS CAPITAL FUND ........................................................................................................................ 26 Investment policy and outlook ...................................................................................................................... 26 Statement of net assets ................................................................................................................................ 27 Statement of operations and other changes in net assets ........................................................................... 28 Statistical information .................................................................................................................................... 29 Statement of investments and other net assets ........................................................................................... 30

KBC BONDS HIGH INTEREST ....................................................................................................................... 31 Investment policy and outlook ...................................................................................................................... 31 Statement of net assets ................................................................................................................................ 32 Statement of operations and other changes in net assets ........................................................................... 33 Statistical information .................................................................................................................................... 34 Statement of investments and other net assets ........................................................................................... 37

KBC BONDS EMERGING MARKETS ............................................................................................................ 41 Investment policy and outlook ...................................................................................................................... 41 Statement of net assets ................................................................................................................................ 42 Statement of operations and other changes in net assets ........................................................................... 43 Statistical information .................................................................................................................................... 44 Statement of investments and other net assets ........................................................................................... 46

KBC BONDS CORPORATES EURO .............................................................................................................. 49 Investment policy and outlook ...................................................................................................................... 49 Statement of net assets ................................................................................................................................ 50 Statement of operations and other changes in net assets ........................................................................... 51 Statistical information .................................................................................................................................... 52 Statement of investments and other net assets ........................................................................................... 54

KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES) ....................................... 58 Statement of net assets ................................................................................................................................ 58 Statement of operations and other changes in net assets ........................................................................... 59 Statistical information .................................................................................................................................... 60 Statement of investments and other net assets ........................................................................................... 62

KBC BONDS CONVERTIBLES ...................................................................................................................... 63 Investment policy and outlook ...................................................................................................................... 63 Statement of net assets ................................................................................................................................ 64 Statement of operations and other changes in net assets ........................................................................... 65 Statistical information .................................................................................................................................... 66 Statement of investments and other net assets ........................................................................................... 69

KBC BONDS

Contents (continued)

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KBC BONDS INFLATION - LINKED BONDS ................................................................................................. 73 Investment policy and outlook ...................................................................................................................... 73 Statement of net assets ................................................................................................................................ 74 Statement of operations and other changes in net assets ........................................................................... 75 Statistical information .................................................................................................................................... 76 Statement of investments and other net assets ........................................................................................... 78

KBC BONDS EUROPE .................................................................................................................................... 79 Investment policy and outlook ...................................................................................................................... 79 Statement of net assets ................................................................................................................................ 80 Statement of operations and other changes in net assets ........................................................................... 81 Statistical information .................................................................................................................................... 82 Statement of investments and other net assets ........................................................................................... 84

KBC BONDS CORPORATES USD ................................................................................................................. 85 Investment policy and outlook ...................................................................................................................... 85 Statement of net assets ................................................................................................................................ 86 Statement of operations and other changes in net assets ........................................................................... 87 Statistical information .................................................................................................................................... 88 Statement of investments and other net assets ........................................................................................... 90

KBC BONDS EMERGING EUROPE (formerly KBC BONDS CENTRAL EUROPE ) .................................. 93 Investment policy and outlook ...................................................................................................................... 93 Statement of net assets ................................................................................................................................ 94 Statement of operations and other changes in net assets ........................................................................... 95 Statistical information .................................................................................................................................... 96 Statement of investments and other net assets ........................................................................................... 99

KBC BONDS GLOBAL EMERGING OPPORTUNITIES .............................................................................. 101 Investment policy and outlook .................................................................................................................... 101 Statement of net assets .............................................................................................................................. 102 Statement of operations and other changes in net assets ......................................................................... 103 Statistical information .................................................................................................................................. 104 Statement of investments and other net assets ......................................................................................... 105

KBC BONDS EMU SHORT ........................................................................................................................... 107 Statement of net assets .............................................................................................................................. 107 Statement of operations and other changes in net assets ......................................................................... 108 Statistical information .................................................................................................................................. 109 Statement of investments and other net assets ......................................................................................... 110

KBC BONDS EMU SHORT MEDIUM ........................................................................................................... 111 Statement of net assets .............................................................................................................................. 111 Statement of operations and other changes in net assets ......................................................................... 112 Statistical information .................................................................................................................................. 113 Statement of investments and other net assets ......................................................................................... 114

KBC BONDS STRATEGIC EMERGING MARKETS .................................................................................... 115 Investment policy and outlook .................................................................................................................... 115 Statement of net assets .............................................................................................................................. 116 Statement of operations and other changes in net assets ......................................................................... 117 Statistical information .................................................................................................................................. 118 Statement of investments and other net assets ......................................................................................... 119

Notes to the financial statements ............................................................................................................... 121

KBC BONDS

3

Organisation

Registered office 11, rue Aldringen L-1118 LUXEMBOURG Board of Directors Chairman Wouter VANDEN EYNDE Managing Director KBC ASSET MANAGEMENT S.A. 2, avenue du Port B-1080 BRUSSELS Directors Karel DE CUYPER Head of KBC ASSET MANAGEMENT S.A. 5, place de la Gare L-1616 LUXEMBOURG Rafik FISCHER Director KBL EUROPEAN PRIVATE BANKERS S.A. 43, boulevard Royal L-2955 LUXEMBOURG Frank JANSEN Senior Fund Manager KBC ASSET MANAGEMENT S.A. 5, place de la Gare L-1616 LUXEMBOURG Management Company KBC ASSET MANAGEMENT S.A. 5, place de la Gare L-1616 LUXEMBOURG Board of Directors of the Management Company Chairman Luc GIJSENS Managing Director KBC GROUP S.A. 2, avenue du Port B-1080 BRUSSELS (since 1st January 2013) Danny DE RAYMAEKER Managing Director KBC GROUP S.A. 2, avenue du Port B-1080 BRUSSELS (until 31st December 2012)

KBC BONDS

Organisation (continued)

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Directors Ivo BAUWENS General Manager KBC GROUP RE S.A. 5, place de la Gare L-1616 LUXEMBOURG Dirk MAMPAEY President of the Executive Committee KBC ASSET MANAGEMENT S.A. 2, avenue du Port B-1080 BRUSSELS (since 1st January 2013) Christiaan STERCKX Managing Director KBC ASSET MANAGEMENT S.A. 2, avenue du Port B-1080 BRUSSELS Wouter VANDEN EYNDE Managing Director KBC ASSET MANAGEMENT S.A. 2, avenue du Port B-1080 BRUSSELS Johan LEMA President of the Executive Committee KBC ASSET MANAGEMENT S.A. 2, avenue du Port B-1080 BRUSSELS (until 31st December 2012) Conducting officers of the Management Company Karel DE CUYPER Dirk MAMPAEY (since 1st January 2013) Wouter VANDEN EYNDE Johan LEMA (until 31st December 2012) Central administration KBC ASSET MANAGEMENT S.A. 5, place de la Gare L-1616 LUXEMBOURG Delegated central administration KREDIETRUST LUXEMBOURG S.A. 11, rue Aldringen L-2960 LUXEMBOURG

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Custodian and principal paying agent KBL EUROPEAN PRIVATE BANKERS S.A. 43, boulevard Royal L-2955 LUXEMBOURG Cabinet de révision agréé DELOITTE Audit Société à responsabilité limitée 560, rue de Neudorf L-2220 LUXEMBOURG Financial services and paying agents in Austria ERSTE BANK DER ÖSTERREICHISCHEN SPARKASSEN AG Graben 21 A-1010 VIENNA in Belgium CBC BANQUE S.A. 5, Grand Place B-1000 BRUSSELS CRELAN NV (formerly CENTEA S.A.) 180, Mechelsesteenweg B-2018 ANTWERP (until 30th April 2013) KBC BANK S.A. 2, avenue du Port B-1080 BRUSSELS in Czech Republic ČESKOSLOVENSKÁ OBCHODNÍ BANKA, A.S. Praha 5, Radlická 333/150 CZ-15057 PRAGUE 5 in France CM-CIC SECURITIES 6, avenue de Provence F-75009 PARIS in Germany KBC BANK DEUTSCHLAND AG 16, Wachtstrasse D-28195 BREMEN in Hungary K&H BANK NYRT. Vigado tér 1 H-1051 BUDAPEST

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for the following sub-funds: - KBC BONDS HIGH INTEREST - KBC BONDS CORPORATES EURO - KBC BONDS CONVERTIBLES - KBC BONDS INFLATION - LINKED BONDS - KBC BONDS CORPORATES USD in Luxembourg KBL EUROPEAN PRIVATE BANKERS S.A. 43, boulevard Royal L-2955 LUXEMBOURG in the Netherlands KBC BANK NL 92, Watermanweg NL-3067 GG ROTTERDAM in Poland KREDYT BANK S.A. Ul. Kasprzaka 2/8 PL-01-211 WARSAW in Slovakia ČESKOSLOVENSKÁ OBCHODNÍ BANKA, A.S. Laurinska 1 815 63 BRATISLAVA in Switzerland RBC INVESTOR SERVICES BANK S.A. Esch-sur-Alzette, Zurich Branch Badenerstrasse, 567 CH-8048 ZURICH Legal representatives in Austria ERSTE BANK DER ÖSTERREICHISCHEN SPARKASSEN AG Graben 21 A-1010 VIENNA in Belgium KBC ASSET MANAGEMENT S.A. 2, avenue du Port B-1080 BRUSSELS in Czech Republic ČSOB INVESTIČNÍ SPOLEČNOST, A.S. člen skupiny ČSOB Radlická 333/150 CZ-15057 PRAGUE 5 in France CM-CIC SECURITIES 6, avenue de Provence F-75009 PARIS

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in Germany KBC BANK DEUTSCHLAND AG 16, Wachtstrasse D-28195 BREMEN in Hungary K&H INVESTMENT FUND MANAGEMENT Vigado tér 1 H-1051 BUDAPEST

for the following sub-funds: - KBC BONDS HIGH INTEREST - KBC BONDS CORPORATES EURO - KBC BONDS CONVERTIBLES - KBC BONDS INFLATION - LINKED BONDS - KBC BONDS CORPORATES USD in the Netherlands KBC BANK NL 92, Watermanweg NL-3067 GG ROTTERDAM in Poland KBC TOWARZYSTWO FUNDUSZY INWETYCYJNYCH S.A. Ul. Chmielna 85/87 PL-00-805 WARSAW in Slovakia KBC Asset Management NV Pobočka zahraničnej správ.spol. Medená 22 811 02 BRATISLAVA in Switzerland RBC INVESTOR SERVICES BANK S.A. Esch-sur-Alzette, Zurich Branch Badenerstrasse, 567 CH-8048 ZURICH

KBC BONDS

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General information

KBC BONDS (the "SICAV") is a "Société d'Investissement à Capital Variable" under Luxembourg law, established for an unlimited period at Luxembourg on 20th December 1991. The SICAV is governed by the Part I of the amended Law of 17th December 2010 relating to Undertakings for Collective Investment and by the Council Directive 2009/65/EC as amended. The articles of incorporation of the SICAV as well as their amendments were published in the "Mémorial, Recueil des Sociétés et Associations" and have been filed with the "Registre de Commerce et des Sociétés de Luxembourg" where copies are available. The SICAV’s primary objective is to pursue the highest possible appreciation in value of the capital invested, in accordance with the principle of risk diversification. Distribution policy Within each sub-fund of the SICAV, all shares issued are either distribution shares or capitalisation shares. Within each category of shares, some sub-categories of shares can be created, characterized by their currency, their fees or by any other characteristic. Distribution shares entitle their holder to a dividend, whereas the share of the results attributable to capitalisation shares is not paid out but is accumulated. The Board of Directors of the SICAV decided, from 1st October 2012, that for the shares of the sub-category "USD frequent dividend" of the sub-funds KBC BONDS HIGH INTEREST and KBC BONDS EMERGING EUROPE, a dividend will be paid monthly in USD for an amount equal to 1/12th dividend yield of the previous financial year. The latest annual and semi-annual reports, the complete prospectus, the KIID and the articles of incorporation of the SICAV can be obtained free of charge from the SICAV’s registered office, from the institutions responsible for providing financial services, from the paying agents and from the legal representatives. The following sub-funds are currently offered: - KBC BONDS INCOME FUND in EUR - KBC BONDS CAPITAL FUND in EUR - KBC BONDS HIGH INTEREST in EUR - KBC BONDS EMERGING MARKETS in USD - KBC BONDS CORPORATES EURO in EUR - KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES)

in EUR

- KBC BONDS CONVERTIBLES in EUR - KBC BONDS INFLATION - LINKED BONDS in EUR - KBC BONDS EUROPE in EUR - KBC BONDS CORPORATES USD in USD - KBC BONDS EMERGING EUROPE (formerly KBC BONDS CENTRAL EUROPE)

in EUR

- KBC BONDS GLOBAL EMERGING OPPORTUNITIES in EUR - KBC BONDS EMU SHORT in EUR - KBC BONDS EMU SHORT MEDIUM in EUR - KBC BONDS STATEGIC EMERGING MARKETS (initial subscription NAV date: 5th June 2013)

in EUR

With effect on 18th March 2013, the Board of Directors has decided to modify the name of the following sub-funds:

- KBC BONDS EURO CANDIDATES into KBC BONDS EUROPE EX-EMU, - KBC BONDS CENTRAL EUROPE into KBC BONDS EMERGING EUROPE.

KBC BONDS

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Additional information for the investors in Germany, in Austria, in Belgium and in Switzerland

Additional information for the investors in Germany The fiscal data concerning all the shares and categories of shares of the SICAV are available within four months following the year-end and may be directly visualised on the following internet site of KBC BANK DEUTSCHLAND AG www.kbcfonds.de. The statement of changes in the investment portfolio for the period in reference to the report is available free of charge at the German paying and information agent, KBC BANK DEUTSCHLAND AG, Wachtstrasse 16, D-28195 BREMEN. Moreover, the complete prospectus, the KIID, the articles of incorporation of the SICAV, the semi-annual and annual reports in paper form are available there free of charge. In supplement, copies of the following documents may be inspected there during usual business hours on any bank business day:

- the domiciliation agreement; - the agreement of appointment of the Management Company; - the custodian agreement; - the paying agent agreement.

The conversion, subscription and redemption prices are available at the paying and information agent. Additional information for the investors in Austria Place where the shareholders ("investors") may obtain the prescribed documents and information in reference to paragraphs 34, 35 and 38 InvFG: ERSTE BANK DER ÖSTERREICHISCHEN SPARKASSEN AG, Graben 21, A-1010 VIENNA, phone 0043 (0) 50100 12139, fax 0043 (0) 50100 9 12139. The complete prospectus, the KIID, the articles of incorporation of the SICAV, the semi-annual and annual reports as well as the prices of subscriptions and redemptions are available and other data and documents may be consulted there. Additional information for the investors in Belgium In Belgium, the financial services for KBC BONDS are provided by: - CBC BANQUE S.A., 5, Grand Place, B-1000 BRUSSELS - CRELAN NV (formerly CENTEA S.A.), 180, Mechelsesteenweg, B-2018 ANTWERP (until 30th April 2013) - KBC BANK S.A., 2, avenue du Port, B-1080 BRUSSELS. The investors may contact any of these institutions’ branches to obtain the prospectus, subscribe to shares in the SICAV, redeem their shares or obtain payment on their coupons. The investors are asked to refer to the Belgian appendix of the prospectus, which explains all the terms and conditions that apply to them.

http://www.kbcfonds.de/

KBC BONDS

Additional information for the investors in Germany, in Austria, in Belgium and in Switzerland (continued)

10

Additional information for the investors in Switzerland For the distribution of shares of the SICAV in Switzerland, RBC INVESTOR SERVICES BANK S.A., Esch-sur-Alzette, Zurich Branch, Badenerstrasse, 567, CH-8048 ZURICH, acts as Representative of the SICAV in Switzerland and assumes payment service on behalf of the SICAV. The complete prospectus, the KIID, the articles of incorporation, the semi-annual and annual reports of the SICAV as well as the list of purchases and sales made on behalf of the securities portfolio of the SICAV are available free of charge in paper form at the Representative in Switzerland.

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Financial climate

General investment climate 1st October 2012 – 30th September 2013 Doubts about the sustainability of the economic recovery continued to shape investor sentiment, but sentiment began to turn more positive during the summer months. Europe shook off the recession and the euro crisis released its stranglehold. Major steps were taken in the United States to reform the federal budget, seemingly without adversely affecting economic growth too much. Strong economic growth in Asia created export opportunities for American and European businesses. The economic tightrope Although more jobs have been created than lost in the US since 2010, the rate of employment growth remains on the low side. The situation improved for a while at the start of 2013, but these gains were wiped out towards the end of the reporting period. Pay rises have barely outstripped inflation. Taken together, these two factors ensured that US household purchasing power grew to only a very limited extent and so contributed very modestly to economic growth. The latter was therefore limited (+1.8% growth year-on-year in the four quarters to the second three months of 2013). However, the US economy is fundamentally much stronger than the modest growth figure suggests. An impressive programme of tax increases and spending cuts came into effect on 1st January 2013, which had generated fears at the end of 2012 that it would stifle growth. The reality turned out very differently. The US economy did not fall into the 'fiscal abyss'. Growth was unaffected, though remained modest, while the budget deficit reduced spectacularly. The recession in the euro area, which was caused by the euro crisis and had persisted since the fourth quarter of 2011, came to an end. The second quarter of 2013 finally brought a return to positive growth (an annualised +1.1%), and saw the general rise in unemployment come to an end. Consumer and producer confidence are recovering quite strongly, surprisingly even in the hard-hit countries of Southern Europe. 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 back to the foreground. In recent years, however, domestic demand (due to a rapidly growing middle class with a high consumption rate) and intra-regional trade within Asia have been playing an increasingly important role. The region is better armed to deal with financial crises than it was in the past. Public finances are healthy, the balance of payments is generally neutral (China actually has an astronomical surplus) and the internal savings buffer is high. Asia’s economic development no longer depends on fickle foreign capital. Talking out the euro crisis Government bonds have lost their aura of being 'risk-free'. Greece, Ireland, Portugal and Cyprus were no longer able to finance their sovereign debt through the usual channels and are under the curatorship of the troika of the ECB, EU and IMF, which are now the principal financiers of these countries. Private bond-holders were obliged to accept a rescheduling of the Greek government debt. Deposit-holders in Cyprus are being required to help defray the cost of cleaning up the banking sector. Italy and Spain were also regularly in the firing line, but managed to hold onto the confidence of bond-holders, albeit at a higher price than in the past. During the storms, a number of rules of the currency union were reformed. Once the sense of urgency had subsided, it proved almost impossible to get all 17 members of the euro-orchestra playing the same tune. The ESM became operational after much delay. The new budget treaty, which only came into force on 1st January 2013, is already being questioned. The negotiations on the formation of a banking union are proving tricky.

KBC BONDS

Financial climate (continued)

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European banks, which have traditionally been faithful investors in government bonds, were oversensitive to the consequences of the euro crisis and the devaluation of their bond portfolios, after having already seen their capital base shrink substantially due to the credit crisis in 2008-2009. The euro crisis could therefore easily have ended up as a systemic crisis, something that the ECB wanted to avoid at all costs. The central bank launched several programmes to secure and strengthen the flow of liquidity to the sector. In September 2012 the ECB issued a solid assurance 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 functioning once again. Interest rate spreads between the EMU partners narrowed. The debt restructuring in Greece, the debacle in Cyprus and a deep political crisis in Italy were all unable to cause lasting damage to the trend of growing confidence. Instead of pumping liquidity into the market, the ECB was able to largely unwind earlier liquidity injections. Commodity markets correction The Arab Spring and the power struggle in Libya pushed the price of Brent oil to 126 USD a barrel at the end of April 2011. The balance of supply and demand over the last two and a half 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 (e.g. the embargo on Iranian oil exports and, more recently, the threat of war in Syria). At the end of September 2013 the price of a barrel of crude oil was USD 109. 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 of 20–30%. This too could be interpreted as a sign of increasing doubts about the economy. Inflation cooled as a result. 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 August 2013. Inflation in the EMU dipped from 3% to 1.3% in the same period. A policy of (almost) free money and other unconventional measures 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, but when Mario Draghi took over as president on 1st November 2011, the ECB jumped on the bandwagon of monetary easing. Its key rate currently stands at 0.50%. The interest rate policy did not lead to a sustained economic recovery, however. The Fed therefore explored the scope for other measures, intervening directly on the bond markets and buying up large amounts of debt paper in an attempt to keep the long-term rate low as well. It is currently buying up government bonds and mortgage loans to the tune of 85 billion USD a month, but this activity will reduce over the coming months; precisely when will depend on the economic context, according to the Fed. The ECB began pursuing a similar policy, though much later and for a shorter period, buying up short-dated Spanish and Italian bonds in August 2011. As part of its LTRO programme, the ECB made very cheap credit facilities available to the banks in December 2011 and again in February 2012, which invested the money (again) in Spanish and Italian government paper. When the interbank market came back to life at the start of 2013, many banks repaid the loans they had drawn down.

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Bond markets volatile Serious doubts about the economy and the ongoing euro crisis have pushed US and German bond rates down since March 2011. This trend continued until well into the spring of 2013. On 1st June 2012, US and German ten-year rates hit lows of 1.45% and 1.15% respectively. Ten-year rates remained close to these low levels (lower than inflation) for almost a full year. After Fed chairman Ben Bernanke dropped a hint at the end of May 2013 about scaling back the government bond purchase programmes, bond yields shot up in June. At the end of the period under review, ten-year yields stood at 2.65% in the US and 1.80% in Germany. Bond portfolios were restructured substantially during the euro crisis. Debt paper issued by under-fire European governments was dumped, in spite of the international guarantees, and replaced by German paper. The tensions within the euro area also had an impact on Belgian-German yield spreads. The days when Belgium could borrow money on the same terms as Germany are long gone. The Belgium-German spread peaked at 365 basis points on 25th November 2011, but fell thereafter more steeply than the average in the euro area. On 30th September 2013, bond investors were satisfied with a premium of 80 basis points for their ‘Belgium risk’. There have been no significant bankruptcies in the business sector in recent years. The solvency and liquidity of non-financial companies have seldom been as strong as they are at present. This has led to a spectacular fall in credit spreads in recent years, and this trend continued in the reporting period. Every reserve currency has its problems In a year when the central banks in the US and the EMU each had different emphases in their monetary policy, the EUR/USD exchange rate was no more volatile than in other years. The euro was trading at USD 1.352 at the end of sect member 2013, which is roughly the same rate as 2012 year-end. The euro is being hurt by a lack of cohesion in the EMU, but the dollar also has its problems. The image of the global reserve currency suffered from the effects of QE2, QE3 and TWIST, acronyms which stood for an explosion in the money supply. The rise of the yen – a notable feature in recent years – was finally halted as the Japanese government’s policy of talking down the currency bore fruit. On 30 September 2013, the yen was already 11.2% lower against the dollar than at year-end 2012, when the Abe government came to office. Other Asian countries perceived this as a dangerous currency war. The currencies of the emerging economies also came under pressure when the Fed began to drop hints about an early tapering of its extremely accommodative monetary policy. Investments in emerging economies were repatriated in anticipation of higher interest rates in the US. The Brazilian real, South African rand and Turkish lira, not coincidentally currencies of countries with high external deficits, fell particularly sharply. Outlook The US and European barometers of business leader confidence had fallen over the last two years, to reach levels either just above (US) or well below (EMU) freezing point in the months March – May 2013, but have risen sharply from these low levels in recent months. The barometer in the US has already reached a level that equates to a growth rate of more than 3.5%. The IFO, the leading index of business confidence in Germany, has risen to a level that is among the top 20% of observations 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.

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We are therefore expecting US growth to remain positive but rather modest (around 2% 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 fragile recovery of the housing market and corporate investment could be sustained. How strong the growth proves to be will depend largely on the dynamic of the labour market. In recent months employment in the US has grown by around 150,000 new jobs each month. That would need to be 200,000, and preferably more, to achieve growth of +2%. 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 at most +1% is being forecast for the coming months. That is no cause for euphoria, but is at least better than negative growth. Deflation or depression scenarios, which regularly dominate bond market sentiment, are not however justified. The foundations for more sustainable growth in 2014 and beyond have been laid in recent years. 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 10.5% of household budgets (the lowest level in 15 years – it was still 12.4% three 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 2012 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, who dominate the House of Representatives, and Democrats, who have a majority in the Senate, take completely different views on the budget policy to be pursued. Republicans are moreover refusing to vote on any law relating to the Federal finances unless it contains a clause scaling back the reforms to social security. Failure to reach agreement on an adjustment in the existing legislation means that a number of automatic triggers come into play, which impose restrictions on policy from 1st January 2013 for a period of ten years. To counter this, the Fed is pursuing an extremely accommodative monetary policy. Its purchase programme for government bonds and other debt paper means unprecedented amounts of liquidity are being injected into the market, thus avoiding the banks having to think too much about their own solvency and applying overly strict lending criteria as a result, which would undermine economic growth. These cash injections will either find their way into the real economy or generate inflationary expectations. In any case they will keep long 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. The 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). One of the major challenges for this decade will be the further development of consumption in China and the rest of Asia. That could help bring about a more balanced economic world 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.

KBC BONDS


15

The euro crisis continues to simmer. The support funds for Greece, Portugal and Ireland will be exhausted by 2014. Ireland might be able to begin financing itself via the capital market again, but that option seems to be ruled out for Portugal and Greece. There is even open talk of a possible second debt restructuring programme for Greece. More fundamentally, three years after the onset of the Greek drama, the EMU rules remain vague, unclear, incomplete and sometimes contradictory. National sovereignty is a difficult fortress to conquer, and as soon as the immediate urgency has faded, reforms are kicked into the long grass. The banks will need to strengthen their capital base further to ensure the stability of the financial system, so that there is a sufficient buffer to offset reserves and unforeseen write-downs. This will remain high on the agenda this year and in the coming years. Europe has already taken any number of measures with this in mind. Examples include the almost 2 000 billion EUR that were set aside in the space of two years to ensure continuity of funding for European governments; the introduction of stress tests to establish whether the banks have sufficient capital to cope with a new and serious crisis; the gradual introduction of new and stricter capital requirements under Basel III; and making ESM reserves available for direct loans to ailing European banks. Maintaining a (virtually) zero money market rate also fits with this. 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. The central banks are conducting a policy of low interest rates and have totally given up their resistance to quantitative easing measures. They are intervening directly on the capital markets on a large scale. By buying bonds and other debt instruments, they are having a direct influence on the bond yield in certain market segments, ensuring secondary trading (for instance, in paper issued by governments in which the market could lose confidence) and flooding the financial system with cash. Concern about inflation has given way to worries about the economic situation and stemming the euro crisis. The ECB is probably still striving for a normal short rate of 3% for the euro area (its official target for inflation in the euro area is 2%), but that has now become a very long-term objective and is totally ruled out in the short term. The ECB is more likely to cut – where this is still possible – than raise its key rate in the coming months. The first rate hike is not expected until the second half of 2014 at the earliest. In our opinion, the central banks in the US, the UK and Japan will wait even longer before raising their key rates. The US Federal Reserve has already officially postponed the earliest date for a rate hike to mid-2015. The official stance is that the key rate will not be increased so long as unemployment (currently 7.3% of the working population) is above 6.5%. Bond yields may well have bottomed out, at least as regards issues of German Bunds or US Treasuries. It would be logical for yields to increase again from the 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 2014 or 2015. A number of unconventional measures will first be withdrawn in the US; only after that can the market begin to anticipate a normalisation of the key rate. This rate increase need not, however, be very big. The central banks will avoid this, if necessary by deploying their monetary bazookas. 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 in the euro area will probably remain volatile for a long time yet due to the many problems that have yet to be solved. Luxembourg, 3rd October 2013 The Board of Directors Note: The information in this report represents historical data and is not an indication of future results.

KBC BONDS


16

Société à responsabilité limitée au capital de 35.000 EUR RCS Luxembourg B 67.895

17

Deloitte Audit Société à responsabilité limitée 560, rue de Neudorf L-2220 Luxembourg B.P. 1173 L-1011 Luxembourg Tel: +352 451 451 Fax: +352 451 452 992 www.deloitte.lu

Report of the réviseur d'entreprises agréé To the Shareholders of KBC BONDS Following our appointment by the general meeting of the shareholders on 12th December 2012, we have audited the accompanying financial statements of KBC BONDS and of each of its sub-funds, which comprise the statement of net assets and the statement of investments and other net assets as at 30th September 2013 and the statement of operations and other changes in net assets for the year then ended, and a summary of significant accounting policies and other explanatory notes to the financial statements. Responsibility of the Board of Directors of the SICAV for the financial statements The Board of Directors of the SICAV is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements and for such internal control as the Board of Directors of the SICAV determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Responsibility of the réviseur d’entreprises agréé Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the réviseur d’entreprises agréé’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the réviseur d’entreprises agréé considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

Report of the réviseur d'entreprises agréé (continued)

18

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors of the SICAV, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of KBC BONDS and of each of its sub-funds as of 30th September 2013, and of the results of their operations and changes in their net assets for the year then ended in accordance with the Luxembourg legal and regulatory requirements relating to the preparation of the financial statements. Other matter Supplementary information included in the annual report has been reviewed in the context of our mandate but has not been subject to specific audit procedures carried out in accordance with the standards described above. Consequently, we express no opinion on such information. However, we have no observation to make concerning such information in the context of the financial statements taken as a whole. For Deloitte Audit Cabinet de révision agréé Jean-Philippe Bachelet, Réviseur d’entreprises agréé Partner

10th December 2013 560, rue de Neudorf L-2220 LUXEMBOURG

KBC BONDS

Consolidated statement of net assets (in EUR) as at 30th September 2013

The accompanying notes are an integral part of these financial statements.

19

Assets Securities portfolio at market value 3,801,845,071.06 Cash at banks 36,395,518.74 Other liquid assets 3,465,086.75 Receivable on sales of securities 16,661,489.73 Receivable on treasury transactions 102,427.97 Receivable on issues of shares 2,193,942.26 Income receivable on portfolio 62,077,981.28 Interest receivable on bank accounts 287.56 Unrealised gain on future contracts 382,145.99 Unrealised gain on forward foreign exchange contracts 353,486.32 Other receivables 2,548.08

Total assets 3,923,479,985.74

Liabilities Bank liabilities 489,495.00 Other liquid liabilities 0.04 Payable on purchases of securities 14,767,837.33 Payable on treasury transactions 106.79 Payable on redemptions of shares 3,906,074.04 Unrealised loss on future contracts 12,528.81 Unrealised loss on forward foreign exchange contracts 19,013.39 Interest on bank liabilities and expenses payable 5,089,230.55

Total liabilities 24,284,285.95

Net assets at the end of the year 3,899,195,699.79

KBC BONDS

Consolidated statement of operations and other changes in net assets (in EUR) from 1st October 2012 to 30th September 2013


20

Income Dividends, net 19,223.40 Interest on bonds and other debt securities, net 173,972,131.28 Interest on bank accounts 35,924.60 Commissions received 22,356,113.27 Other income 742,195.59 Total income 197,125,588.14

Expenses Management fees 39,387,665.48 Custodian fees 1,984,926.12 Banking charges and other fees 42,486.39 Transaction fees 34,208.51 Central administration costs 2,609,283.25 Professional fees 39,725.98 Other administration costs 288,095.48 S&P fees 20,234.57 Subscription duty ("taxe d'abonnement") 1,062,835.15 Other taxes 3,330,935.65 Interest paid on bank liabilities 146,461.79 Other expenses 205,154.95 Total expenses 49,152,013.32

Net investment income 147,973,574.82

Net realised gain/(loss) - on securities portfolio 90,068,019.65 - on future contracts 638,033.35 - on forward foreign exchange contracts 3,601,684.01 - on foreign exchange 953,249.04

Realised result 243,234,560.87

Net variation of the unrealised gain/(loss) - on securities portfolio -235,875,737.64 - on future contracts 458,648.42 - on forward foreign exchange contracts 890,600.61

Result of operations 8,708,072.26

Dividends paid -37,779,998.24

Subscriptions 3,974,787,441.69

Redemptions -4,342,707,444.48

Total changes in net assets -396,991,928.77

Total net assets at the beginning of the year 4,321,692,917.54

Revaluation difference -25,505,288.98

Total net assets at the end of the year 3,899,195,699.79

KBC BONDS INCOME FUND

Investment policy and outlook from 1st October 2012 to 30th September 2013

21

Generally, the US put in a better economic performance that Europe, and it became clear during the financial year that the fear of recession was unfounded. What's more, there are signs that the Fed will scale back is purchase of financial assets during the second half of 2013. These two factors are pushing up yields in the US. Economic growth remained very weak in Europe during the financial year, and was even negative in a few countries. Nevertheless, Europe appears to be emerging from the doldrums slowly but surely thanks to the economic growth in German. The measures taken everywhere to reduce budget deficits took their toll. The Southern European countries, in particular, suffered badly from the measures that were imposed upon them. Fortunately the words of the president of the ECB at the end of August had the desired effect: he declared that the bank would do whatever it takes to defend the euro, following which spreads between ‘core’ countries like Germany and the European periphery narrowed significantly. As a result, yields in Europe remained historically low. Economic activity remained highly depressed, leaving little scope for higher interest rates, while diminished fear of investing in more risk-exposed countries also meant that yields tended to fall as demand rose. The exchange rate for the dollar against the euro fluctuated significantly, but the fluctuation remained limited overall, at between 1.28 and 1.36 EUR/USD. The yen, by contrast, weakened sharply and sterling also lost ground against the euro. We do not expect any fundamental shifts in the market in the months ahead. Interest rates in the core countries have reached such low levels that it is reasonable to fear that this cannot continue. That view is not supported, however, by the latest economic figures. Periphery spreads have been tightening but higher volatility remains around the corner as headlines are expected to keep blowing hot and cold. In short: a cautious investment policy seems the most appropriate. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".


Statement of net assets (in EUR) as at 30th September 2013


22

Assets Securities portfolio at market value 47,347,193.04 Cash at banks 118,295.96 Other liquid assets 76,905.61 Receivable on sales of securities 227,540.33 Income receivable on portfolio 689,382.16 Interest receivable on bank accounts 2.35 Unrealised gain on future contracts 10,866.14

Total assets 48,470,185.59

Liabilities Payable on redemptions of shares 60,914.79 Interest on bank liabilities and expenses payable 52,340.93

Total liabilities 113,255.72

Net assets at the end of the year 48,356,929.87

Number of distribution shares outstanding 161,789.0830 Net asset value per distribution share 298.89


Statement of operations and other changes in net assets (in EUR) from 1st October 2012 to 30th September 2013


23

Income Interest on bonds and other debt securities, net 1,860,008.73 Interest on bank accounts 123.21 Commissions received 4,071.16 Total income 1,864,203.10

Expenses Management fees 374,372.50 Custodian fees 29,772.44 Banking charges and other fees 3,764.95 Transaction fees 471.95 Central administration costs 38,718.00 Professional fees 965.09 Other administration costs 5,546.95 Subscription duty ("taxe d'abonnement") 26,182.07 Other taxes 36,015.92 Interest paid on bank liabilities 2,432.33 Other expenses 2,461.88 Total expenses 520,704.08


Net realised gain/(loss) - on securities portfolio 158,731.46 - on future contracts -44,952.91 - on forward foreign exchange contracts 11,538.25 - on foreign exchange -25,118.64


Net variation of the unrealised gain/(loss) - on securities portfolio -4,442,271.68 - on future contracts 9,901.27

Result of operations -2,988,673.23


Subscriptions 227,356.02

Redemptions -7,546,008.48


Total net assets at the beginning of the year 60,335,578.43

Total net assets at the end of the year 48,356,929.87


Statistical information (in EUR) as at 30th September 2013

Annual returns were calculated for the last 3 consecutive financial years. For sub-funds / share types launched or liquidated during the financial year, the corresponding annual return has not been calculated. The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the SICAV.


24

Total net assets - as at 30.09.2013 48,356,929.87 - as at 30.09.2012 60,335,578.43 - as at 30.09.2011 67,686,932.80 Portfolio Turnover Rate (in %) - as at 30.09.2013 21.74 Number of distribution shares - outstanding at the beginning of the year 185,702.5412 - issued 732.0156 - redeemed -24,645.4738 - outstanding at the end of the year 161,789.0830 Net asset value per distribution share - as at 30.09.2013 298.89 - as at 30.09.2012 324.90 - as at 30.09.2011 315.98 Performances of distribution shares (in %) - as at 30.09.2013 -5.38 - as at 30.09.2012 6.49 - as at 30.09.2011 4.88 TER per distribution share (in %) - as at 30.09.2013 0.97 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 9.00 Shares outstanding at dividend date 185,702.5412


Statement of investments and other net assets (in EUR) as at 30th September 2013


25

Currency Number / nominal value

Description Cost Market value % of total net assets

Investments in securities

Transferable securities admitted to an official stock exchange listing

Bonds

EUR 1,500,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 1,500,000.00 1,503,775.46 3.11 EUR 3,600,000 Deutschland 4% Ser 07 07/04.01.18 4,039,549.75 4,127,400.00 8.54 EUR 2,000,000 Deutschland 4.75% Ser 0301 03/04.07.34 1,999,000.00 2,708,600.00 5.60 EUR 1,600,000 Espana 5.85% 11/31.01.22 1,557,000.00 1,793,520.00 3.71 EUR 1,200,000 Espana 6% 98/31.01.29 1,368,929.58 1,355,760.00 2.80 EUR 250,000 France 3.5% 10/25.04.20 261,115.00 280,250.00 0.58 EUR 2,200,000 France 2.5% BTAN 09/12.01.14 2,220,702.00 2,214,762.00 4.58 EUR 1,850,000 France 5.5% OAT 98/25.04.29 2,260,903.50 2,428,680.00 5.02 EUR 4,500,000 Italia 4.25% BTP 03/01.02.19 4,473,556.87 4,673,475.00 9.66 EUR 1,300,000 Italia 4.75% BTP 12/01.05.17 1,299,259.00 1,380,210.00 2.85 EUR 400,000 Oesterreich 3.8% EMTN 03/20.10.13 432,000.00 400,660.00 0.83 EUR 400,000 Poland 4.2% EMTN 05/15.04.20 397,540.00 445,380.00 0.92

21,809,555.70 23,312,472.46 48.20

GBP 355,000 United Kingdom 4.25% T-Stock 06/07.12.27 442,400.29 481,774.88 1.00 GBP 400,000 United Kingdom 4.75% T-Stock 04/07.12.38 532,841.81 586,767.83 1.21 GBP 150,000 United Kingdom 5% T-Stock 01/07.03.25 195,061.62 217,572.66 0.45 GBP 250,000 United Kingdom 8% T-Stock 95/07.12.15 453,158.17 347,845.56 0.72 GBP 500,000 United Kingdom 8% T-Stock 96/07.06.21 1,040,695.13 843,141.44 1.74

2,664,157.02 2,477,102.37 5.12

JPY 200,000,000 EIB 1.4% Sen 05/20.06.17 1,517,565.56 1,575,462.57 3.26 JPY 290,000,000 Japan 2.1% Ser 53 01/20.12.21 2,662,132.33 2,455,340.00 5.08 JPY 260,000,000 Japan 2.3% Ser 3 00/20.05.30 2,320,445.66 2,239,918.07 4.63

6,500,143.55 6,270,720.64 12.97

USD 1,250,000 US 6.125% T-Bonds 99/15.08.29 1,632,752.35 1,261,935.97 2.61 USD 1,700,000 US 6.25% T-Bonds 00/15.05.30 1,330,195.64 1,745,774.06 3.61 USD 3,450,000 US 7.25% T-Bonds 86/15.05.16 3,063,971.81 3,000,047.62 6.20 USD 2,000,000 US 7.5% T-Bonds 94/15.11.24 2,490,016.85 2,160,250.79 4.47 USD 2,100,000 US 8% T-Bonds 91/15.11.21 1,997,899.18 2,223,224.19 4.60

10,514,835.83 10,391,232.63 21.49

Total bonds 41,488,692.10 42,451,528.10 87.78

Transferable securities dealt in on another regulated market

Bonds

JPY 120,000,000 Japan 1.5% Ser 41 98/20.03.19 747,622.28 965,297.52 2.00 USD 5,100,000 US 1.75% T-Notes Ser G-2014 09/31.01.14 3,843,303.76 3,790,198.37 7.84 Total bonds 4,590,926.04 4,755,495.89 9.84

Other transferable securities

Bonds in default of payment

CHF 3,650,000 Swissair Group 0.125% Conv 98/07.07.05 1,876,868.75 140,169.05 0.29 Total bonds in default of payment 1,876,868.75 140,169.05 0.29

Total investments in securities 47,956,486.89 47,347,193.04 97.91

Cash at banks 118,295.96 0.24

Other net assets/(liabilities) 891,440.87 1.85

Total 48,356,929.87 100.00

KBC BONDS CAPITAL FUND


26

Generally, the US put in a better economic performance that Europe, and it became clear during the financial year that the fear of recession was unfounded. What's more, there are signs that the Fed will scale back is purchase of financial assets during the second half of 2013. These two factors are pushing up yields in the US. Economic growth remained very weak in Europe during the financial year, and was even negative in a few countries. Nevertheless, Europe appears to be emerging from the doldrums slowly but surely thanks to the economic growth in German. The measures taken everywhere to reduce budget deficits took their toll. The Southern European countries, in particular, suffered badly from the measures that were imposed upon them. Fortunately the words of the president of the ECB at the end of August had the desired effect: he declared that the bank would do whatever it takes to defend the euro, following which spreads between ‘core’ countries like Germany and the European periphery narrowed significantly. As a result, yields in Europe remained historically low. Economic activity remained highly depressed, leaving little scope for higher interest rates, while diminished fear of investing in more risk-exposed countries also meant that yields tended to fall as demand rose.The exchange rate for the dollar against the euro fluctuated significantly, but the fluctuation remained limited overall, at between 1.28 and 1.36 EUR/USD. The yen, by contrast, weakened sharply and sterling also lost ground against the euro. We do not expect any fundamental shifts in the market in the months ahead. Interest rates in the core countries have reached such low levels that it is reasonable to fear that this cannot continue. That view is not supported, however, by the latest economic figures. Periphery spreads have been tightening but higher volatility remains around the corner as headlines are expected to keep blowing hot and cold. In short: a cautious investment policy seems the most appropriate. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




27

Assets Securities portfolio at market value 49,139,373.73 Cash at banks 536,611.63 Other liquid assets 153,551.19 Receivable on sales of securities 80,726.91 Receivable on issues of shares 2,479.05 Income receivable on portfolio 568,647.25 Unrealised gain on future contracts 29,834.58


Liabilities Bank liabilities 2.11 Payable on redemptions of shares 81,326.95 Interest on bank liabilities and expenses payable 67,239.62



Number of capitalisation shares outstanding 62,703.0320 Net asset value per capitalisation share 802.59

Number of distribution shares outstanding 95.0000 Net asset value per distribution share 400.34




28


Expenses Management fees 474,309.16 Custodian fees 38,055.68 Banking charges and other fees 200.05 Transaction fees 1,824.32 Central administration costs 49,489.39 Professional fees 1,066.09 Other administration costs 7,472.65 Subscription duty ("taxe d'abonnement") 32,534.05 Other taxes 41,468.57 Interest paid on bank liabilities 9,033.88 Other expenses 3,087.78 Total expenses 658,541.62


Net realised gain/(loss) - on securities portfolio -2,151,830.25 - on future contracts -408,103.22 - on forward foreign exchange contracts 20,557.94 - on foreign exchange -51,442.03

Realised result -947,078.54



Dividends paid -

Subscriptions 12,757,949.63









29

Total net assets - as at 30.09.2013 50,362,655.66 - as at 30.09.2012 73,966,615.56 - as at 30.09.2011 80,335,292.69 Portfolio Turnover Rate (in %) - as at 30.09.2013 16.57 Number of capitalisation shares - outstanding at the beginning of the year 87,173.7179 - issued 15,448.0413 - redeemed -39,918.7272 - outstanding at the end of the year 62,703.0320 Net asset value per capitalisation share - as at 30.09.2013 802.59 - as at 30.09.2012 847.88 - as at 30.09.2011 796.02 Performances of capitalisation shares (in %) - as at 30.09.2013 -5.34 - as at 30.09.2012 6.51 - as at 30.09.2011 3.21 TER per capitalisation share (in %) - as at 30.09.2013 0.96 Number of distribution shares - outstanding at the beginning of the year 127.0000 - issued 0.0000 - redeemed -32.0000 - outstanding at the end of the year 95.0000 Net asset value per distribution share - as at 30.09.2013 400.34 - as at 30.09.2012 422.94 - as at 30.09.2011 397.07 Performances of distribution shares (in %) - as at 30.09.2013 -5.34 - as at 30.09.2012 6.52 - as at 30.09.2011 3.13 TER per distribution share (in %) - as at 30.09.2013 0.96




30





Bonds

EUR 1,800,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 1,800,000.00 1,804,530.55 3.58 EUR 1,000,000 Belgium 4% OLO Ser 49 07/28.03.17 1,000,766.54 1,107,375.00 2.20 EUR 3,000,000 Deutschland 4% Ser 07 07/04.01.18 3,489,360.00 3,439,500.00 6.83 EUR 1,800,000 Espana 4.1% Sen 08/30.07.18 1,650,509.61 1,892,340.00 3.76 EUR 1,200,000 Espana 6% 98/31.01.29 1,397,467.15 1,355,760.00 2.69 EUR 4,850,000 France 3.5% 10/25.04.20 5,168,777.47 5,436,850.00 10.80 EUR 700,000 France 1.75% BTAN 12/25.02.17 702,576.00 724,535.00 1.44 EUR 5,000,000 Italia 4.75% BTP 11/01.09.21 4,872,861.54 5,231,500.00 10.39 EUR 800,000 Italia 5.5% BTP 12/01.09.22 859,312.00 866,480.00 1.72 EUR 2,300,000 Japan Fin Org for Muni 4.5% Ser INT 04/27.05.14 2,297,171.00 2,355,775.00 4.68

23,238,801.31 24,214,645.55 48.09

GBP 500,000 United Kingdom 4.75% T-Stock 04/07.12.38 663,210.17 733,459.79 1.46 GBP 650,000 United Kingdom 5% T-Stock 01/07.03.25 986,961.51 942,814.85 1.87 GBP 500,000 United Kingdom 8% T-Stock 96/07.06.21 1,062,253.68 843,141.44 1.67

2,712,425.36 2,519,416.08 5.00

JPY 150,000,000 EIB 1.4% Sen 05/20.06.17 1,138,174.17 1,181,596.92 2.35 JPY 20,000,000 Japan 1.5% Ser 300 09/20.03.19 208,682.49 160,882.92 0.32 JPY 40,000,000 Japan 2.1% Ser 53 01/20.12.21 391,478.59 338,667.58 0.67 JPY 315,000,000 Japan 2.3% Ser 3 00/20.05.30 2,216,423.28 2,713,746.88 5.39 JPY 100,000,000 Japan 3.1% Ser 37 97/20.09.17 1,027,877.74 840,266.78 1.67

4,982,636.27 5,235,161.08 10.40

USD 1,925,000 US 6.125% T-Bonds 99/15.08.29 2,428,649.63 1,943,381.38 3.86 USD 1,500,000 US 6.25% T-Bonds 00/15.05.30 1,489,247.09 1,540,388.88 3.06 USD 3,200,000 US 7.25% T-Bonds 86/15.05.16 2,661,932.64 2,782,652.88 5.52 USD 3,550,000 US 8% T-Bonds 91/15.11.21 3,641,371.38 3,758,307.55 7.46

10,221,200.74 10,024,730.69 19.90

Total bonds 41,155,063.68 41,993,953.40 83.39


Bonds

JPY 285,000,000 Japan 1.5% Ser 41 98/20.03.19 1,884,089.90 2,292,581.61 4.55 USD 1,000,000 US 1.25% T-Notes Ser K-2019 12/30.04.19 780,755.75 725,914.47 1.44 USD 5,200,000 US 4.25% T-Notes Ser E-2014 04/15.08.14 4,167,069.54 3,980,994.83 7.90

4,947,825.29 4,706,909.30 9.34

Total bonds 6,831,915.19 6,999,490.91 13.89



CHF 3,800,000 Swissair Group 0.125% Conv 98/07.07.05 1,963,320.33 145,929.42 0.29 Total bonds in default of payment 1,963,320.33 145,929.42 0.29


Cash at banks 536,611.63 1.07

Bank liabilities -2.11 0.00


Total 50,362,655.66 100.00

KBC BONDS HIGH INTEREST


31

The Bonds High Interest sub-fund aims to invest in bonds denominated in currencies with higher interest rates than the European level, and almost entirely from top-quality issuers. The sub-fund had a weak financial year, driven primarily by the sharp appreciation of the euro against most high-yield currencies. In trade-weighted terms, the European single currency appreciated by more than 5% in the past financial year. Overall, the prices of the bonds in the portfolio also decreased in value. The financial year can be split into two parts. The sub-fund performed very strongly between October and mid-May. The quest for a higher return pushed yields to new lows in many emerging-country bond markets in the first half of the financial year. However, the prospect of a possible scaling back of quantitative easing in the US later this year caused rates to rise sharply again in the second half of the year, and put pressure mainly on the currencies of those emerging countries with large external imbalances. Over the financial year as a whole, the Indian rupiah, Turkish lira, Brazilian real, Peruvian new sol, Malaysian ringgit and Colombian peso – which depreciated by more than 10% against the euro – weighed particularly heavily on the sub-fund's net asset value. We expect the normalisation of monetary policy in the US to continue to cause increased volatility in the next financial year. As a result, currencies of countries with large external imbalances – such as Brazil, Indonesia, India, Turkey and South Africa – could continue to experience particular pressure. Generally, we believe the euro is still very expensive, and prefer USD-related currencies such as the Mexican peso and Korean won in the portfolio. We have also increased the positions of the US dollar itself and sterling in the portfolio to the detriment of higher yielding, but also more volatile, currencies such as the Turkish lira. This should result in the sub-fund recording a more stable performance. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




32

Assets Securities portfolio at market value 970,575,434.54 Cash at banks 12,849,682.05 Other liquid assets 242,719.69 Receivable on sales of securities 3,547,723.54 Receivable on treasury transactions 17,175.01 Receivable on issues of shares 517,931.15 Income receivable on portfolio 16,738,988.16 Unrealised gain on forward foreign exchange contracts 292,254.17

Total assets 1,004,781,908.31

Liabilities Payable on purchases of securities 6,005,796.48 Payable on redemptions of shares 934,168.17 Interest on bank liabilities and expenses payable 1,368,336.07



Number of capitalisation shares outstanding 139,855.7955 Net asset value per capitalisation share 1,926.95


Number of capitalisation shares "Institutional B Shares" outstanding 272,591.0000 Net asset value per capitalisation share "Institutional B Shares" 1,928.32

Number of capitalisation shares "Institutional Shares" outstanding 150,479.5758 Net asset value per capitalisation share "Institutional Shares" 683.89

Number of distribution shares "USD frequent dividend" outstanding 8,693.4459 Net asset value per distribution share "USD frequent dividend" USD 492.77




33

Income Interest on bonds and other debt securities, net 46,290,841.60 Interest on bank accounts 20,487.56 Commissions received 4,019,162.79 Other income 119,367.90 Total income 50,449,859.85

Expenses Management fees 10,861,758.01 Custodian fees 443,375.04 Banking charges and other fees 4,057.93 Transaction fees 8,271.62 Central administration costs 586,641.23 Professional fees 7,989.12 Other administration costs 63,771.95 S&P fees 10,410.93 Subscription duty ("taxe d'abonnement") 254,748.51 Other taxes 922,050.94 Interest paid on bank liabilities 27,358.40 Other expenses 45,398.76 Total expenses 13,235,832.44


Net realised gain/(loss) - on securities portfolio 220,661.12 - on future contracts -4,000.00 - on forward foreign exchange contracts 972,336.76 - on foreign exchange 973,614.13


Net variation of the unrealised gain/(loss) - on securities portfolio -82,479,047.91 - on forward foreign exchange contracts 875,080.80












34

Total net assets - as at 30.09.2013 996,473,607.59 - as at 30.09.2012 1,036,564,687.60 - as at 30.09.2011 866,756,230.70 Portfolio Turnover Rate (in %) - as at 30.09.2013 16.29 Number of capitalisation shares - outstanding at the beginning of the year 145,976.6351 - issued 19,798.0818 - redeemed -25,918.9214 - outstanding at the end of the year 139,855.7955 Net asset value per capitalisation share - as at 30.09.2013 1,926.95 - as at 30.09.2012 2,046.31 - as at 30.09.2011 1,825.98 Performances of capitalisation shares (in %) - as at 30.09.2013 -5.83 - as at 30.09.2012 12.07 - as at 30.09.2011 -1.28 TER per capitalisation share (in %) - as at 30.09.2013 1.36 Number of distribution shares - outstanding at the beginning of the year 194,404.1968 - issued 88,092.9088 - redeemed -33,231.2266 - outstanding at the end of the year 249,265.8790 Net asset value per distribution share - as at 30.09.2013 382.16 - as at 30.09.2012 423.43 - as at 30.09.2011 396.86 Performances of distribution shares (in %) - as at 30.09.2013 -5.85 - as at 30.09.2012 12.04 - as at 30.09.2011 -1.29 TER per distribution share (in %) - as at 30.09.2013 1.37 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 17.50 Shares outstanding at dividend date 194,404.1968 Number of capitalisation shares "Institutional B

Shares"

- outstanding at the beginning of the year 280,387.0000 - issued 433,791.0000 - redeemed -441,587.0000 - outstanding at the end of the year 272,591.0000


Statistical information (in EUR) (continued) as at 30th September 2013



35

Net asset value per capitalisation share "Institutional B Shares"

- as at 30.09.2013 1,928.32 - as at 30.09.2012 2,046.86 - as at 30.09.2011 - Performances of capitalisation shares "Institutional B

Shares" (in %)

- as at 30.09.2013 -5.79 - as at 30.09.2012 - - as at 30.09.2011 - TER per capitalisation share "Institutional B Shares"

(in %)

- as at 30.09.2013 1.31 Number of capitalisation shares "Institutional Shares" - outstanding at the beginning of the year 105,329.2365 - issued 48,637.6741 - redeemed -3,487.3348 - outstanding at the end of the year 150,479.5758 Net asset value per capitalisation share "Institutional

Shares"

- as at 30.09.2013 683.89 - as at 30.09.2012 720.95 - as at 30.09.2011 639.11 Performances of capitalisation shares "Institutional

Shares" (in %)

- as at 30.09.2013 -5.14 - as at 30.09.2012 12.81 - as at 30.09.2011 -0.79 TER per capitalisation share "Institutional Shares" (in

%)

- as at 30.09.2013 0.62 Number of distribution shares "USD frequent

dividend"

- outstanding at the beginning of the year 14,087.5879 - issued 253.7939 - redeemed -5,647.9359 - outstanding at the end of the year 8,693.4459 Net asset value per distribution share "USD frequent

dividend"

- as at 30.09.2013 USD 492.77 - as at 30.09.2012 USD 519.18 - as at 30.09.2011 USD 507.88 Performances of distribution shares "USD frequent

dividend" (in %)

- as at 30.09.2013 -0.85 - as at 30.09.2012 7.46 - as at 30.09.2011 -2.86





36

TER per distribution share "USD frequent dividend" (in %)

- as at 30.09.2013 1.27 Dividends paid to distribution shares "USD frequent

dividend"

Ex-dividend date 01.10.2012 Dividend per share USD 2.10 Shares outstanding at dividend date 14,087.5879 Ex-dividend date 02.11.2012 Dividend per share USD 1.85 Shares outstanding at dividend date 13,433.8021 Ex-dividend date 03.12.2012 Dividend per share USD 1.85 Shares outstanding at dividend date 12,088.3599 Ex-dividend date 02.01.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 11,784.9691 Ex-dividend date 01.02.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 10,978.2954 Ex-dividend date 01.03.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 10,858.8571 Ex-dividend date 02.04.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 10,772.4771 Ex-dividend date 02.05.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 10,552.6812 Ex-dividend date 03.06.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 10,021.3542 Ex-dividend date 01.07.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 9,630.4865 Ex-dividend date 01.08.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 9,508.6104 Ex-dividend date 02.09.2013 Dividend per share USD 1.85 Shares outstanding at dividend date 8,914.9612




37





Bonds

AUD 10,000,000 Cie de Financement Foncier 5.5% MTN 05/22.09.15 5,362,826.39 7,140,646.33 0.71 BRL 4,405,000 Bank Nederlandse Gemeenten NV 10.25% EMTN Ser813

09/03.12.13 1,491,817.31 1,464,803.28 0.15

BRL 24,000,000 EBRD 5.5% EMTN Sen 12/16.10.15 9,047,000.98 7,451,772.16 0.75 BRL 5,000,000 EBRD 9% GMTN Gl Sen Dual Curr 11/28.04.14 2,095,482.47 1,661,081.86 0.17 BRL 9,000,000 EBRD 9.5% Sen 09/06.11.13 2,827,941.32 2,989,797.86 0.30 BRL 32,000,000 EIB 5.5% EMTN Sen 12/25.09.15 10,197,811.36 9,854,373.72 0.99 BRL 4,745,000 EIB 8.25% EMTN 10/29.11.13 1,593,385.53 1,574,159.88 0.16 BRL 25,000,000 Export & Development Canada 5.125% Ser 12-26 Tr2

12/31.07.14 9,568,469.59 8,039,649.48 0.81

BRL 24,000,000 IADB 5.25% Dual Curr Ser 415 Sen 12/19.07.16 6,855,985.01 7,157,177.42 0.72 BRL 26,000,000 IBRD 10% Ser 10395 10/21.01.15 10,534,961.99 8,725,077.24 0.88 BRL 15,000,000 IBRD 6% Ser 10929 13/15.09.16 4,588,300.00 4,556,701.08 0.46 BRL 5,000,000 IBRD 9.5% EMTN Dual Curr Ser 10423 10/02.03.17 2,119,636.71 1,641,534.39 0.16 BRL 19,000,000 Intl Fin Facility for Immun 7.81% EMTN RegS Se18

11/24.03.14 7,224,906.60 6,267,044.84 0.63

BRL 10,000,000 Intl Finance Corp 6% EMTN Ser 1236 13/15.12.16 2,882,180.56 3,009,895.94 0.30 BRL 4,880,000 KFW AG 11.75% 06/15.12.14 2,225,733.64 1,664,727.15 0.17 BRL 7,000,000 KFW AG 7.25% EMTN Reg S Sen Dual Curr 12/10.09.14 2,166,567.18 2,288,308.23 0.23 BRL 10,000,000 Nordic Investment Bank 6% EMTN Dual Currency Sen

13/29.01.16 3,674,710.46 3,089,291.68 0.31

BRL 10,000,000 Swedish Export Credit 6.5% EMTN Sen 13/20.09.16 3,689,262.90 3,046,271.81 0.31 BRL 14,995,000 Swedish Export Credit 7% EMTN Sen 12/10.05.16 5,427,342.86 4,669,752.89 0.47

88,211,496.47 79,151,420.91 7.97

CNY 38,000,000 Asian Development Bank 2.85% EMTN Ser HK 10/21.10.20 4,456,336.95 4,461,052.33 0.45 CNY 50,000,000 China 1.85% Reg S Sen 12/29.06.15 6,312,725.35 5,968,440.16 0.60 CNY 20,000,000 China 2.56% Reg S Sen 12/29.06.17 2,533,897.24 2,388,601.33 0.24 CNY 65,000,000 Swedish Export Credit 2.375% Sen 12/01.06.15 8,243,236.47 7,823,379.64 0.78

21,546,196.01 20,641,473.46 2.07

COP 27,750,000,000 Colombia 9.85% 07/28.06.27 16,873,784.98 14,356,324.57 1.44 COP 7,000,000,000 IBRD 4% EMTN Sen 12/15.08.14 3,175,540.31 2,722,562.80 0.27 COP 4,980,000,000 IBRD 8% Ser10422 Tr 4 11/02.03.20 2,506,888.16 2,222,340.05 0.22

22,556,213.45 19,301,227.42 1.93

EUR 10,000,000 Belgium 1.25% Ser 69 13/22.06.18 9,800,000.00 9,986,500.00 1.00 EUR 10,000,000 Belgium 2.25% OLO Reg S Ser 68 13/22.06.23 9,527,200.00 9,730,000.00 0.98 EUR 30,000,000 Belgium 4.25% Ser 65 12/28.09.22 33,606,466.66 34,458,000.00 3.46 EUR 10,000,000 Oesterreich 3.9% Sen 05/15.07.20 11,451,400.00 11,513,000.00 1.16 EUR 5,000,000 Poland 5.25% EMTN 10/20.01.25 5,900,000.00 5,816,750.00 0.58

70,285,066.66 71,504,250.00 7.18

GBP 42,000,000 United Kingdom 1.25% T-Stock 13/22.07.18 48,317,893.11 49,584,503.98 4.98 GBP 7,000,000 United Kingdom 1.75% T Stock 12/07.09.22 7,729,284.90 7,844,591.61 0.79 GBP 10,000,000 United Kingdom 2.25% Sen 13/07.09.23 11,252,270.46 11,468,637.53 1.15 GBP 5,000,000 United Kingdom 3.5% Reg S T-Stock 13/22.07.68 5,903,850.38 5,993,047.61 0.60

73,203,298.85 74,890,780.73 7.52

IDR 27,400,000,000 Export-Import Bank Korea (The) 8.4% EMTN Reg-S 11/06.07.16

2,362,610.55 1,725,679.72 0.17

IDR 80,000,000,000 Export-Import Bank Korea 6.6% EMTN Ser 1010 10/04.11.13

6,545,792.12 5,047,159.62 0.51

IDR 20,000,000,000 IADB 4.5% EMTN Sen 13/04.02.16 1,563,912.16 1,177,491.90 0.12

10,472,314.83 7,950,331.24 0.80


Statement of investments and other net assets (in EUR) (continued) as at 30th September 2013


38



KRW 45,000,000,000 Korea 2.75% Ser 1709 12/10.09.17 30,495,491.77 30,686,744.24 3.08 KRW 30,000,000,000 Korea 2.75% Ser 1803 13/10.03.18 20,255,476.30 20,412,202.70 2.05 KRW 10,000,000,000 Korea 2.75% Ser 02750-1606 13/10.06.16 6,544,679.03 6,872,790.02 0.69 KRW 18,000,000,000 Korea 3% Ser 2303 Sen 13/10.03.23 12,409,638.72 11,997,755.22 1.20 KRW 5,000,000,000 Korea 3.5 Ser 0350-1703 12/10.03.17 3,398,682.55 3,503,642.68 0.35 KRW 12,000,000,000 Korea 3.5% Ser 350-1406 Sen 11/10.06.14 7,946,068.34 8,320,875.59 0.83 KRW 10,000,000,000 Korea 3.75% Ser 0375-2206 12/10.06.22 7,504,860.76 7,089,576.81 0.71 KRW 18,000,000,000 Korea 4.25% Ser 1409 04/10.09.14 10,381,546.95 12,560,936.18 1.26

98,936,444.42 101,444,523.44 10.17

MXN 95,000,000 Bank Nederlandse Gemeenten NV 4.5% EMTN Sen 13/22.01.18

5,532,093.08 5,310,294.81 0.54

MXN 90,000,000 General Electric Capital Corp 4.125% EMTN Reg S 13/15.05.17

4,991,345.22 5,056,569.64 0.51

MXN 180,000,000 IADB 7.5% Ser 155 07/05.12.24 10,289,494.17 11,136,122.80 1.12 MXN 150,000,000 IADB 8% EMTN Ser 113 06/26.01.16 9,827,570.00 9,269,156.84 0.93 MXN 16,350,000 IBRD 0% Ser GDIF 07/19.09.22 417,627.49 572,090.52 0.06 MXN 55,000,000 Intl Finance Corp 6% EMTN Sen 11/28.01.16 3,300,448.29 3,255,290.72 0.33 MXN 2,110,000 Mexico 10% Bonos M30 06/20.11.36 14,350,732.14 15,636,388.12 1.57 MXN 700,000 Mexico 10% Ser M 20 05/05.12.24 5,884,026.71 5,185,580.64 0.52 MXN 355,000 Mexico 6% Bonos Ser M 10/18.06.15 2,144,663.32 2,068,442.92 0.21 MXN 500,000 Mexico 8% Bonos 06/17.12.15 3,099,018.41 3,052,307.78 0.31 MXN 1,300,000 Mexico 8.5% Bonos Ser 11 30 09/18.11.38 9,105,517.26 8,398,776.07 0.84 MXN 250,000,000 Mexico 8.5% Bonos Ser M 10 09/13.12.18 16,522,665.56 16,304,589.16 1.64 MXN 1,350,000 Mexico 8.5% Bonos Ser M 20 09/31.05.29 9,012,650.10 8,871,085.74 0.89 MXN 6,000,000 Rabobank Nederland NV 8.75% EMTN 06/24.01.17 429,184.42 383,362.02 0.04

94,907,036.17 94,500,057.78 9.51

NOK 11,180,000 Bank Nederlandse Gemeenten NV 2.375% EMTN Reg S 13/20.12.18

1,364,001.26 1,339,277.83 0.13

NOK 100,000,000 Bank Nederlandse Gemeenten NV 3.25% EMTN 1013 12/02.02.17

13,293,425.28 12,516,676.13 1.26

NOK 150,000,000 EIB 3% EMTN Reg S Sen 12/22.05.19 18,866,820.73 18,482,950.23 1.85 NOK 140,000,000 EIB 3.75% EMTN Sen 11/31.10.18 18,431,661.94 17,863,872.90 1.79 NOK 203,760,000 EIB 4.25% EMTN 08/19.05.17 27,701,593.87 26,482,687.29 2.65 NOK 30,000,000 Kommunalbanken A/S 2.25% EMTN Reg S Ser 4236

12/12.12.17 3,763,405.35 3,651,075.97 0.37

NOK 120,000,000 Neder Waterschapsbank NV 3.375% EMTN Sen 12/03.04.17

16,010,299.46 15,098,877.84 1.51

99,431,207.89 95,435,418.19 9.56

PHP 300,000,000 EIB 5% EMTN Sen 10/03.08.15 5,669,368.45 5,447,677.10 0.55 PHP 175,000,000 Export-Import Bank Korea (The) 4% EMTN Reg-S Sen

10/26.11.15 3,090,233.54 3,082,829.58 0.31

8,759,601.99 8,530,506.68 0.86

PLN 20,000,000 Poland 0% Ser 0114 11/25.01.14 4,759,723.05 4,698,889.54 0.47 PLN 40,000,000 Poland 0% Ser OK0714 12/25.07.14 9,376,799.51 9,272,298.58 0.93 PLN 20,000,000 Poland 3.75% Ser PS 0418 12/25.04.18 4,987,024.08 4,737,243.95 0.47 PLN 10,000,000 Poland 4.75% Ser PS0417 12/25.04.17 2,497,115.55 2,461,311.82 0.25 PLN 94,000,000 Poland 5.25% Ser 1017 06/25.10.17 23,958,107.42 23,554,725.68 2.37 PLN 13,125,000 Poland 5.75% Ser 0429 08/25.04.29 3,164,491.04 3,449,544.73 0.35 PLN 50,000,000 Poland 6.25% Ser DS1015 04/24.10.15 12,911,891.13 12,550,417.41 1.26 PLN 50,000,000 Poland Government Bd 5.5% Ser 1019 08/25.10.19 13,174,428.35 12,728,576.05 1.28 PLN 25,000,000 Rabobank Nederland NV 5% EMTN 09/21.08.14 5,976,583.93 6,008,799.40 0.60

80,806,164.06 79,461,807.16 7.98

RUB 100,000,000 EIB 6.5% 10/15.12.15 2,319,957.96 2,284,889.00 0.23 RUB 1,000,000,000 EIB 6.75% EMTN Sen 07/13.06.17 25,002,967.75 22,885,389.82 2.30 RUB 75,000,000 IBRD 6.5% Ser 10795 GDIF 12/26.07.19 1,971,207.74 1,703,230.08 0.17 RUB 150,000,000 KFW AG 6.75% EMTN Sen 12/25.09.17 3,697,923.81 3,441,534.21 0.34

32,992,057.26 30,315,043.11 3.04

SKK 20,000,000 KBC Ifima NV 4.01% EMTN Sub 05/18.05.16 573,323.25 645,605.65 0.06 SKK 60,000,000 KBC Ifima NV 4.05% EMTN 05/21.12.20 1,548,865.92 1,701,683.33 0.17




39



2,122,189.17 2,347,288.98 0.23

THB 100,000,000 Ministry of Finance 3.625% Sen 10/16.06.23 2,404,451.55 2,312,529.20 0.23 THB 100,000,000 Ministry of Finance 3.65% Sen 10/17.12.21 2,425,720.18 2,325,625.63 0.23

4,830,171.73 4,638,154.83 0.46

TRY 10,000,000 EIB 5.375% EMTN Sen 13/23.01.17 4,147,675.99 3,362,769.13 0.34 TRY 7,500,000 EIB 5.75% EMTN Sen 13/03.04.18 3,111,382.08 2,479,339.07 0.25 TRY 7,500,000 IBRD 10% EMTN Ser 10421 10/02.03.17 3,721,019.07 2,879,759.18 0.29 TRY 10,000,000 KFW AG 14.5 % EMTN 07/26.01.17 5,526,722.59 4,282,361.93 0.43 TRY 5,000,000 Swedish Export Credit 10.5% EMTN Ser 2587 05/30.09.15 2,444,096.25 1,889,868.22 0.19 TRY 5,000,000 Swedish Export Credit 5.5% EMTN Sen 13/23.01.17 2,154,944.32 1,677,914.40 0.16

21,105,840.30 16,572,011.93 1.66

USD 3,000,000 CEZ AS 4.25% Reg S 12/03.04.22 2,289,331.75 2,218,108.11 0.22 USD 5,000,000 Poland 3.875% Sen 10/16.07.15 4,005,804.41 3,881,396.64 0.39 USD 5,000,000 Poland 5% Gl Sen 05/19.10.15 4,124,183.75 3,989,285.06 0.40 USD 10,000,000 Poland 6.37% 09/15.07.19 8,755,593.93 8,629,595.42 0.87 USD 5,000,000 Qatar (State of) 6.4% Reg-S Sen 09/20.01.40 4,314,059.40 4,316,460.37 0.43 USD 7,000,000 Qatar (State of) 6.55% Ser REGS 09/09.04.19 6,267,771.50 6,191,243.31 0.62

29,756,744.74 29,226,088.91 2.93

Total bonds 765,284,870.39 743,051,031.10 74.58

Asset backed securities

DKK 1,012,509.304 Nykredit Realkredit A/S 6% Ser 3C 96/01.10.29 141,228.30 156,809.57 0.02 DKK 203,148.76 Realkredit Danmark A/S 6% 99/01.10.32 27,101.04 30,917.30 0.00 Total asset backed securities 168,329.34 187,726.87 0.02


Bonds

COP 13,000,000,000 IBRD 3.875% Ser GDIF 12/10.09.15 5,573,414.77 5,071,656.40 0.51 EUR 12,000,000 Slovakia 4.35% Ser 216 10/14.10.25 12,155,895.45 13,329,480.00 1.34 MYR 28,000,000 Malaysia 3.314% Ser 12/0005 12/31.10.17 7,127,521.59 6,295,554.99 0.63 MYR 30,000,000 Malaysia 3.418% Ser 0112 12/15.08.22 7,445,699.97 6,606,427.00 0.66 MYR 70,000,000 Malaysia 3.434% Ser 0211 11/15.08.14 16,422,283.30 15,927,823.98 1.60 MYR 10,000,000 Malaysia 3.835% Ser 0110 10/12.08.15 2,351,972.19 2,291,960.88 0.23 MYR 10,000,000 Malaysia 4.262% Ser 06/0001 06/15.09.16 2,523,018.26 2,320,539.52 0.23 MYR 27,000,000 Malaysia 4.378% Ser 0902 09/29.11.19 6,635,447.64 6,346,905.80 0.64 MYR 87,000,000 Malaysia 5.094% Ser 04/002 04/30.04.14 21,525,366.38 19,965,712.45 2.00

64,031,309.33 59,754,924.62 5.99

PEN 17,841,000 Peru 6.95% Reg-S Sen 08/12.08.31 5,620,526.57 5,067,513.27 0.51 PEN 93,000,000 Peru 7.84% Reg-S Sen 05/12.08.20 30,156,429.48 28,523,007.65 2.86

35,776,956.05 33,590,520.92 3.37

THB 1,095,000,000 Ministry of Finance 3.25% 11/16.06.17 27,954,772.46 25,846,109.22 2.59 THB 500,000,000 Ministry of Finance 3.45% 11/08.03.19 12,576,891.53 11,797,866.56 1.18

40,531,663.99 37,643,975.78 3.77

TRY 2,150,000 General Electric Capital Corp 15.75% EMTN 08/16.04.18 1,048,472.69 961,271.26 0.10 USD 12,000,000 Abu Dhabi (Emirate of) 6.75% Ser REGS 09/08.04.19 10,960,880.19 10,868,501.76 1.09 USD 45,000,000 US 0.5% T-Notes Ser AM-2016 13/15.06.16 34,218,947.24 33,233,794.81 3.33 USD 20,000,000 US 2.5% Ser E-2023 13/15.08.23 14,543,963.64 14,639,525.22 1.47

59,723,791.07 58,741,821.79 5.89

Total bonds 218,841,503.35 209,093,650.77 20.97




40




Bonds

PEN 60,000,000 Peru 8.6% Sen 05/12.08.17 21,269,092.98 18,243,025.80 1.83 Total bonds 21,269,092.98 18,243,025.80 1.83

Total investments in securities 1,005,563,796.06 970,575,434.54 97.40

Cash at banks 12,849,682.05 1.29

Other net assets/(liabilities) 13,048,491.00 1.31

Total 996,473,607.59 100.00

KBC BONDS EMERGING MARKETS


41

The sub-fund invests in foreign debt issued in USD by central governments in a number of emerging markets of varying quality. The benchmark for this portfolio is the JP Morgan EMBIplus index, of which Latin America accounts for around 47%, Europe for 36%, Asia 15% and Africa 3%. The performance of the sub-fund is driven primarily by two factors - the pattern of US government bond yields and the risk premiums the Emerging Markets have to pay on top of that. Following a number of very strong years, the sub-fund has experienced a difficult financial year. The prospect of a possible scaling back of quantitative easing in the US not only caused US government bond yields to soar but also resulted in higher risk premiums. Countries with large external imbalances – such as Indonesia, Turkey and Ukraine – were especially hard hit. As a result, the yield on emerging country bonds rose from a low of 4.5% towards the beginning of the year to more than 6% at the end of the financial year. This resulted in the bond fund posting a negative return this financial year. On top of this, European investors had to contend with the depreciation of the USD against the EUR (almost 5%). After a surge in yields on US government bonds and risk premiums, rates are attractive again (currently 6%). In addition, we expect the USD to gain ground against the euro in tandem with the US economic recovery. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".


Statement of net assets (in USD) as at 30th September 2013


42

Assets Securities portfolio at market value 580,293,790.52 Cash at banks 6,360,210.78 Other liquid assets 712,471.61 Receivable on sales of securities 3,883,326.67 Receivable on issues of shares 602,698.28 Income receivable on portfolio 9,640,727.58 Unrealised gain on future contracts 238,125.00


Liabilities Payable on purchases of securities 6,041,702.78 Payable on redemptions of shares 235,274.12 Interest on bank liabilities and expenses payable 975,400.58



Number of capitalisation shares outstanding 93,533.7691 Net asset value per capitalisation share 1,923.36




Statement of operations and other changes in net assets (in USD) from 1st October 2012 to 30th September 2013


43

Income Interest on bonds and other debt securities, net 23,810,261.52 Interest on bank accounts 690.69 Commissions received 2,450,905.81 Other income 542,597.00 Total income 26,804,455.02

Expenses Management fees 5,132,989.20 Custodian fees 211,540.46 Banking charges and other fees 9,601.66 Transaction fees 20,108.60 Central administration costs 276,225.55 Professional fees 3,882.57 Other administration costs 26,417.67 S&P fees 13,293.84 Subscription duty ("taxe d'abonnement") 200,477.66 Other taxes 487,274.48 Interest paid on bank liabilities 3,289.93 Other expenses 40,238.33 Total expenses 6,425,339.95


Net realised gain/(loss) - on securities portfolio 5,779,177.69 - on future contracts 1,571,005.40 - on foreign exchange -4,114.21







Total changes in net assets 212,191,934.51




Statistical information (in USD) as at 30th September 2013



44

Total net assets - as at 30.09.2013 594,478,972.96 - as at 30.09.2012 382,287,038.45 - as at 30.09.2011 658,741,577.86 Portfolio Turnover Rate (in %) - as at 30.09.2013 60.96 Number of capitalisation shares - outstanding at the beginning of the year 77,865.9860 - issued 44,169.7987 - redeemed -28,502.0156 - outstanding at the end of the year 93,533.7691 Net asset value per capitalisation share - as at 30.09.2013 1,923.36 - as at 30.09.2012 2,034.63 - as at 30.09.2011 1,674.86 Performances of capitalisation shares (in %) - as at 30.09.2013 -5.47 - as at 30.09.2012 21.48 - as at 30.09.2011 0.76 TER per capitalisation share (in %) - as at 30.09.2013 1.49 Number of distribution shares - outstanding at the beginning of the year 290,007.4151 - issued 75,808.2420 - redeemed -78,654.2395 - outstanding at the end of the year 287,161.4176 Net asset value per distribution share - as at 30.09.2013 648.61 - as at 30.09.2012 719.09 - as at 30.09.2011 633.07 Performances of distribution shares (in %) - as at 30.09.2013 -5.47 - as at 30.09.2012 21.47 - as at 30.09.2011 0.75 TER per distribution share (in %) - as at 30.09.2013 1.50 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 33.00 Shares outstanding at dividend date 290,007.4151 Number of capitalisation shares "Institutional B

Shares"



Statistical information (in USD) (continued) as at 30th September 2013



45


- as at 30.09.2013 1,926.43 - as at 30.09.2012 2,037.09 - as at 30.09.2011 - Performances of capitalisation shares "Institutional B

Shares" (in %)


(in %)

- as at 30.09.2013 1.51


Statement of investments and other net assets (in USD) as at 30th September 2013


46





Bonds

USD 5,000,000 African Export-Import Bank 3.875% Sen 13/04.06.18 4,964,100.00 4,909,500.00 0.83 USD 500,000 African Export-Import Bank 5.75% EMTN Sen 11/27.07.16 500,652.17 523,209.30 0.09 USD 1,000,000 Argentina 8.75% Ser1 10/02.06.17 959,000.00 828,800.00 0.14 USD 5,150,000 Argentina Step-up Ser $par 05/31.12.38 1,922,863.09 1,823,100.00 0.31 USD 4,575,000 Argentina VAR Ser DIS 05/31.12.33 4,648,783.45 4,099,806.64 0.69 USD 3,000,000 Bancolombia SA 5.95% Sen 11/03.06.21 3,189,750.00 3,063,300.00 0.52 USD 2,000,000 BNDES 5.75% Reg S 13/26.09.23 1,997,740.00 2,005,100.00 0.34 USD 2,500,000 Brazil 12.25% Sen Gl 00/06.03.30 4,718,750.00 4,214,375.00 0.71 USD 10,000,000 Brazil 4.875% Sen 10/22.01.21 10,575,000.00 10,717,000.00 1.80 USD 30,000,000 Brazil 5.625% 09/07.01.41 29,300,769.23 30,052,500.00 5.05 USD 5,000,000 Brazil 7.125% 06/20.01.37 5,737,500.00 5,900,500.00 0.99 USD 4,500,000 Colombia 11.75% 00/25.02.20 6,440,162.53 6,517,350.00 1.10 USD 7,000,000 Colombia 6.125% 09/18.01.41 7,901,140.00 7,640,500.00 1.29 USD 750,000 Colombia 7.375% 06/18.09.37 991,581.16 939,637.50 0.16 USD 5,000,000 Comision Federal de Electr CFE 5.75% Reg-S 12/14.02.42 5,215,000.00 4,658,000.00 0.78 USD 2,000,000 Croatia 6.25% Reg S 12/27.04.17 2,220,000.00 2,113,200.00 0.36 USD 5,500,000 Croatia 6.375% Sen 11/24.03.21 5,599,017.86 5,696,900.00 0.96 USD 4,000,000 Croatia 6.625% Reg S 10/14.07.20 4,240,000.00 4,234,600.00 0.71 USD 1,000,000 Eskom Holdings SOC Ltd 6.75% Reg S Ser 1 13/06.08.23 991,070.00 1,031,450.00 0.17 USD 3,000,000 Eurasian Development Bank 4.757% Reg S Sen 12/20.09.22 3,062,500.00 2,823,150.00 0.47 USD 2,000,000 Eurasian Development Bank 5% MTN Reg S Sen 13/26.09.20 1,966,200.00 1,978,300.00 0.33 USD 1,000,000 Gaz Capital SA 5.999% Reg-S 11/23.01.21 1,000,000.00 1,051,050.00 0.18 USD 4,000,000 Gaz Capital SA 7.288% LPN Gazprom OAO Ser 12 07/16.08.37 4,270,000.00 4,337,400.00 0.73 USD 3,000,000 Ghana (Republic of) 7.875% Reg S Sen 13/07.08.23 2,974,530.00 2,936,250.00 0.49 USD 1,500,000 GPN Capital SA 4.375% LPN Reg-S Sen 12/19.09.22 1,500,000.00 1,387,200.00 0.23 USD 5,250,000 Grupo Financiero Bancomer SA 6.75% Reg-S 12/30.09.22 5,599,925.00 5,512,500.00 0.93 USD 3,000,000 Hungary 4.75% 05/03.02.15 3,096,000.00 3,082,050.00 0.52 USD 4,000,000 Hungary 5.375% Sen 13/21.02.23 3,740,000.00 3,897,200.00 0.66 USD 2,500,000 Hungary 6.25% 10/29.01.20 2,362,784.69 2,671,375.00 0.45 USD 5,000,000 Hungary 6.375% Sen 11/29.03.21 5,175,000.00 5,332,750.00 0.90 USD 3,500,000 Hungary 7.625% Sen 11/29.03.41 3,697,500.00 3,774,750.00 0.63 USD 5,000,000 Iceland 5.875% Reg-S Sen 12/11.05.22 5,535,000.00 5,151,835.50 0.87 USD 1,000,000 Indian Oil Corp Ltd 5.75% EMTN Sen 13/01.08.23 1,000,000.00 964,750.00 0.16 USD 5,000,000 Indonesia 3.375% GMTN Reg S Sen 13/15.04.23 4,062,500.00 4,304,000.00 0.72 USD 3,000,000 Indonesia 3.75% Reg S 12/25.04.22 3,105,000.00 2,716,500.00 0.46 USD 5,000,000 Indonesia 6.875% 08/17.01.18 5,487,500.00 5,607,000.00 0.94 USD 1,500,000 Indonesia 7.75% Sen Reg S 08/17.01.38 2,293,050.00 1,712,025.00 0.29 USD 6,350,000 Indonesia 8.5% 05/12.10.35 9,035,145.07 7,749,857.50 1.31 USD 5,000,000 Lukoil Intl Fin BV 4.563% Reg S Sen 13/24.04.23 4,812,000.00 4,678,250.00 0.79 USD 4,000,000 Majapahit Holdings BV 7.75% Reg S Sen 06/17.10.16 4,370,000.00 4,443,400.00 0.75 USD 7,500,000 Mexico 4.75% Ser A Tr 26 12/08.03.44 7,488,750.00 6,804,000.00 1.14 USD 5,000,000 Mexico 5.75% Sen Tr 24 10/12.10.2110 4,555,362.72 4,745,250.00 0.80 USD 2,500,000 Mexico 6.75% MTN 04/27.09.34 2,839,796.40 2,973,500.00 0.50 USD 10,000,000 Mexico 8.3% 01/15.08.31 12,976,926.94 13,645,000.00 2.30 USD 6,000,000 Nigeria 6.375% Reg S Sen 13/12.07.23 5,979,430.00 6,090,000.00 1.02 USD 3,000,000 Northern Lights 3 BV 7% LPN 12/16.08.19 3,307,500.00 3,230,700.00 0.54 USD 1,000,000 Panama 6.7% Sen 06/26.01.36 1,360,000.00 1,149,150.00 0.19 USD 5,750,000 Panama 9.375% Sen 99/01.04.29 7,287,872.81 8,163,562.50 1.37 USD 4,000,000 Peru 6.55% Sen 07/14.03.37 4,487,780.00 4,723,400.00 0.79 USD 5,000,000 Peru 8.75% 03/21.11.33 6,803,441.44 7,191,625.00 1.21 USD 3,000,000 Petrobras Global Finance BV 5.625% Sen 13/20.05.43 2,880,000.00 2,517,300.00 0.42 USD 5,000,000 Petroleos De Venezuela SA 5.25% Reg S Sen 07/12.04.17 4,000,000.00 3,992,500.00 0.67 USD 5,250,000 Philippines 10.625% 00/16.03.25 7,330,532.41 8,006,250.00 1.35 USD 8,500,000 Philippines 9.5% 05/02.02.30 12,600,432.69 12,661,600.00 2.13 USD 1,000,000 PT Pertamina (Persero) 5.625% Reg S Sen 13/20.05.43 1,000,000.00 789,750.00 0.13 USD 2,000,000 PT Pertamina (Persero) 6% Reg S Sen 12/03.05.42 2,080,000.00 1,635,500.00 0.27 USD 5,000,000 PTTEP Canada Intl Fin Ltd 6.35% Reg-S Sen 12/12.06.42 5,098,341.25 5,184,750.00 0.87 USD 2,500,000 Republic of Namibia 5.5% Reg-S Sen 11/03.11.21 2,643,269.23 2,531,375.00 0.43 USD 5,000,000 Romania 4.375% EMTN Reg S Sen 13/22.08.23 4,700,000.00 4,789,250.00 0.81


Statement of investments and other net assets (in USD) (continued) as at 30th September 2013


47



USD 500,000 Rosneft Intl Finance Ltd 4.199% Loan Reg S Sen 12/06.03.22 500,000.00 461,900.00 0.08 USD 3,000,000 RSHB Capital SA 5.298% Reg S Sen 12/27.12.17 3,187,500.00 3,088,350.00 0.52 USD 11,750,000 Russia 12.75% 98/24.06.28 20,168,818.26 20,339,250.00 3.42 USD 5,000,000 Russia 4.5% Reg-S 12/04.04.22 5,010,000.00 5,121,750.00 0.86 USD 5,000,000 Russia 5% Reg S 10/29.04.20 5,287,500.00 5,373,000.00 0.90 USD 5,000,000 Russia 5.625% Reg S 12/04.04.42 4,950,000.00 5,130,750.00 0.86 USD 17,667,292.69 Russia Step-up 00/31.03.30 20,604,835.87 20,865,956.03 3.51 USD 1,000,000 Ruwais Power Co 6% Reg S 13/31.08.36 1,000,000.00 1,035,895.00 0.17 USD 5,000,000 SB Capital SA 5.25% LPN Sherbank Reg S 13/23.05.23 4,518,750.00 4,594,750.00 0.77 USD 5,000,000 Slovenia 5.5% Reg S Sen 12/26.10.22 5,051,875.00 4,668,000.00 0.79 USD 2,500,000 Slovenia 5.85% Reg S Sen 13/10.05.23 2,446,930.00 2,382,125.00 0.40 USD 5,000,000 South Africa 4.665% Sen 12/17.01.24 4,697,500.00 4,867,500.00 0.82 USD 4,000,000 South Africa 5.5% 10/09.03.20 4,470,568.25 4,305,200.00 0.72 USD 3,750,000 South Africa 6.25% Sen 11/08.03.41 3,782,040.50 3,960,562.50 0.66 USD 3,000,000 South Africa 6.875% 09/27.05.19 3,780,000.00 3,446,100.00 0.58 USD 4,500,000 Transnet Ltd 4% Reg-S Sen 12/26.07.22 4,029,075.00 4,017,600.00 0.68 USD 5,000,000 Turk Eximbank 5.375% Reg-S 11/04.11.16 5,125,000.00 5,186,250.00 0.87 USD 1,000,000 Turkey 6% 11/14.01.41 1,265,640.00 967,950.00 0.16 USD 5,000,000 Turkey 6.75% 10/30.05.40 4,937,500.00 5,270,750.00 0.89 USD 4,000,000 Turkey 7% 06/26.09.16 4,550,000.00 4,452,400.00 0.75 USD 4,000,000 Turkey 7.25% 08/05.03.38 5,598,000.00 4,463,000.00 0.75 USD 7,850,000 Turkey 7.375% 05/05.02.25 9,064,793.79 8,928,590.00 1.50 USD 12,100,000 Turkey 7.5% 09/07.11.19 13,739,298.22 14,026,320.00 2.36 USD 7,550,000 Turkey 8% Sen 04/14.02.2034 8,875,584.36 9,003,375.00 1.51 USD 3,000,000 Turkiye Halk Bankasi AS 4.875% Reg S Sen 12/19.07.17 3,189,000.00 3,021,900.00 0.51 USD 3,000,000 Turkiye Is Bankasi AS 5.1% Reg-S Sen 11/01.02.16 3,030,000.00 3,092,700.00 0.52 USD 5,000,000 Ukraine 6.25% Reg S Sen 11/17.06.16 4,681,250.00 4,326,500.00 0.73 USD 7,000,000 Ukraine 6.58% Sen 06/21.11.16 6,465,350.00 6,083,700.00 1.02 USD 1,000,000 Ukraine 7.95% Reg S 11/23.02.21 1,051,250.00 857,850.00 0.14 USD 3,000,000 UniCredit Luxembourg SA 5.1875% LPN Sen 10/13.10.15 3,045,000.00 3,072,750.00 0.52 USD 5,000,000 VEB Finance Plc 6.8% VneshconmBk RegS 10/22.11.25 5,200,000.00 5,294,750.00 0.89 USD 7,000,000 Venezuela 5.75% Reg-S 05/26.02.16 6,482,500.00 6,335,000.00 1.07 USD 11,000,000 Venezuela 6% Reg S 05/09.12.20 7,737,500.00 7,988,750.00 1.34 USD 1,000,000 Venezuela 7% 03/01.12.18 675,000.00 838,050.00 0.14 USD 4,500,000 Venezuela 7% Reg S 07/31.03.38 3,453,750.00 2,936,250.00 0.50 USD 3,000,000 Venezuela 7.65% Sen Reg S 05/21.04.25 2,355,000.00 2,159,850.00 0.36 USD 12,000,000 Venezuela 7.75% REGS 09/13.10.19 9,583,550.14 9,930,000.00 1.67 USD 7,000,000 Venezuela 9% Reg S 08/07.05.23 4,634,220.55 5,670,210.00 0.95 USD 5,000,000 Venezuela 9.25% 97/15.09.27 4,100,000.00 4,076,250.00 0.69 USD 5,000,000 Venezuela 9.25% Reg S 08/07.05.28 4,000,000.00 3,919,000.00 0.66 USD 5,000,000 Venezuela 9.375% 04/13.01.34 3,987,500.00 3,961,250.00 0.67 USD 5,000 Venezuela VAR 90/15.04.20 0.00 124,375.00 0.02 Total bonds 499,989,030.08 497,551,342.47 83.68

Sukuk

USD 5,000,000 Perus Penerbit Indo II 4% Sukuk Tr Reg-S 11/21.11.18 4,896,000.00 4,887,500.00 0.82 USD 9,000,000 Turkey 2.803% Reg S Sen 12/26.03.18 8,692,500.00 8,497,800.00 1.43 USD 7,000,000 Wakala Global Sukuk Bhd 4.646% Reg S 11/06.07.21 7,989,600.00 7,403,200.00 1.25 Total sukuk 21,578,100.00 20,788,500.00 3.50




48




Bonds

USD 5,000,000 Akbank 5.125% Reg S Sen 10/22.07.15 5,110,000.00 5,143,500.00 0.87 USD 1,000,000 Bahrain 6.125% Reg S Sen 13/01.08.23 994,470.00 1,005,000.00 0.17 USD 3,000,000 Banco Credito Peru Panama Br 5.375% Reg S Sen 10/16.09.20 3,073,880.00 3,045,000.00 0.51 USD 5,379,000 Banco de Bogota SA 5.375% Reg S Sub 13/19.02.23 5,219,365.00 5,012,959.05 0.84 USD 5,000,000 Banco Santander SA Inst Bca Mu 4.125% Reg S Sen

12/09.11.22 4,806,830.00 4,641,500.00 0.78

USD 200,000 BBVA Banco Continental SA 3.25% Reg S Sen 13/08.04.18 198,850.00 196,150.00 0.03 USD 5,000,000 BNDES 6.5% Ser Reg S 09/10.06.19 5,475,000.00 5,450,250.00 0.92 USD 11,000,000 Brazil 2.625% Sen 12/05.01.23 9,545,500.00 9,645,350.00 1.62 USD 2,000,000 Caixa Economica Federal 3.5% MTN Reg S Tr 770 12/07.11.22 1,665,000.00 1,657,300.00 0.28 USD 2,500,000 Caixa Economica Federal 4.5% Reg S Sen 13/03.10.18 2,483,325.00 2,490,000.00 0.42 USD 2,500,000 Development Bk of Kazakhstan 4.125% Reg S Sen 12/10.12.22 2,484,900.00 2,301,875.00 0.39 USD 4,000,000 Indonesia 11.625% Ser REGS 09/04.03.19 5,748,018.98 5,325,000.00 0.90 USD 5,000,000 PKO Finance AB 4.63% Loan Reg S 12/26.09.22 4,762,500.00 4,918,750.00 0.83 USD 1,000,000 Turkey 6.875% 06/17.03.36 1,084,000.00 1,065,550.00 0.18 USD 1,500,000 Ukraine 7.8% Reg S Sen 12/28.11.22 1,500,000.00 1,256,250.00 0.21 USD 5,500,000 Venezuela 8.25% REGS 09/13.10.24 3,816,988.37 4,140,400.00 0.70 Total bonds 57,968,627.35 57,294,834.05 9.65


Bonds

USD 5,000,000 1MDB Global Investments Ltd 4.4% Sen 13/09.03.23 4,620,000.00 4,659,114.00 0.78 Total bonds 4,620,000.00 4,659,114.00 0.78


Cash at banks 6,360,210.78 1.07


Total 594,478,972.96 100.00

KBC BONDS CORPORATES EURO


49

Investors were chiefly looking for returns in the period under review. Corporate bonds initially posted a healthy return, but some of the gains were subsequently reversed. The first part of the reporting period was relatively problem-free: US economic statistics were strong and Latin America and Asia did not disappoint either. At the same time, the crisis in Europe became less acute. This favourable climate persisted until the Italian elections, which produced an unexpected political stalemate that briefly panicked investors. The markets recovered quickly, however, and confidence returned. Late spring heralded a new period of risk aversion. The Chinese economy put in a disappointing performance, with weak export figures and a decline in investment. And the government also made it clear that it was unlikely to implement large-scale stimulus measures this time round. In the meantime, the US central bank indicated that it would probably start to scale back its quantitative easing programme in 2013. The symbolic effect – the end of an unprecedented cycle of money creation – was major. Investors sold off riskier assets on a large scale. The credit spread widened. Although the markets recovered to some extent, there was no return to the low spreads seen in May. Initially the credit spread on European corporate bonds shrank to 125 basis points. The spread stood at 140 basis points at the end of the reporting period. Fears of the scaling back of bond purchases by the US central bank put particular pressure on the credit market. Segments that are considered to be riskier, such as subordinated bonds and emerging market bonds, suffered most. The economic data were stronger towards the end of the reporting period. Emphasis was placed within the fund on subordinated paper, in both the financial and non-financial sectors. Because of the low key rates, investors continued to seek out bonds with a higher yield. What’s more, we expect most companies to exercise their call options. Companies in European peripheral countries were also overweighted. The fund's positions were not fundamentally altered recently. Central banks will hold interest rates down to continue to support economic activity. However, we do believe that German long rates will tend to rise. An improving European economy and the still low interest rates mean there is a greater risk of rates increasing. We have therefore underweighted loans with longer maturities so as to take advantage of this expected trend. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




50

Assets Securities portfolio at market value 904,554,176.34 Cash at banks 8,757,833.10 Other liquid assets 973,905.10 Receivable on issues of shares 877,006.65 Income receivable on portfolio 18,526,882.44 Unrealised gain on future contracts 90,400.00


Liabilities Other liquid liabilities 0.04 Payable on purchases of securities 749,730.00 Payable on redemptions of shares 1,659,483.10 Interest on bank liabilities and expenses payable 1,163,292.00





Number of capitalisation shares "Institutional B Shares" outstanding 859,953.0000 Net asset value per capitalisation share "Institutional B Shares" 772.68




51

Income Interest on bonds and other debt securities, net 52,807,005.39 Interest on bank accounts 1,376.59 Commissions received 9,862,490.65 Total income 62,670,872.63

Expenses Management fees 10,061,455.86 Custodian fees 519,232.05 Banking charges and other fees 9,881.32 Transaction fees 4,491.08 Central administration costs 687,929.62 Professional fees 9,236.37 Other administration costs 57,857.72 Subscription duty ("taxe d'abonnement") 221,734.77 Other taxes 936,208.24 Interest paid on bank liabilities 13,786.76 Other expenses 48,533.88 Total expenses 12,570,347.67


Net realised gain/(loss) - on securities portfolio 44,973,142.60 - on future contracts 21,500.00





Subscriptions 1,481,566,231.19

Redemptions -1,877,016,628.21








52

Total net assets - as at 30.09.2013 930,207,698.49 - as at 30.09.2012 1,270,249,378.85 - as at 30.09.2011 1,142,728,665.85 Portfolio Turnover Rate (in %) - as at 30.09.2013 -41.72 Number of capitalisation shares - outstanding at the beginning of the year 81,314.3045 - issued 51,725.0704 - redeemed -56,624.9510 - outstanding at the end of the year 76,414.4239 Net asset value per capitalisation share - as at 30.09.2013 772.13 - as at 30.09.2012 733.07 - as at 30.09.2011 652.97 Performances of capitalisation shares (in %) - as at 30.09.2013 5.33 - as at 30.09.2012 12.27 - as at 30.09.2011 -3.79 TER per capitalisation share (in %) - as at 30.09.2013 1.09 Number of distribution shares - outstanding at the beginning of the year 681,322.4284 - issued 40,549.6994 - redeemed -199,572.7576 - outstanding at the end of the year 522,299.3702 Net asset value per distribution share - as at 30.09.2013 395.82 - as at 30.09.2012 389.79 - as at 30.09.2011 365.33 Performances of distribution shares (in %) - as at 30.09.2013 5.33 - as at 30.09.2012 12.23 - as at 30.09.2011 -3.79 TER per distribution share (in %) - as at 30.09.2013 1.08 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 14.00 Shares outstanding at dividend date 681,322.4284 Number of capitalisation shares "Institutional B

Shares"

- outstanding at the beginning of the year 1,289,026.0000 - issued 1,880,721.0000 - redeemed -2,309,794.0000 - outstanding at the end of the year 859,953.0000





53


- as at 30.09.2013 772.68 - as at 30.09.2012 733.16 - as at 30.09.2011 - Performances of capitalisation shares "Institutional B

Shares" (in %)

- as at 30.09.2013 5.39 - as at 30.09.2012 - - as at 30.09.2011 - TER per capitalisation share "Institutional B Shares"

(in %)

- as at 30.09.2013 1.03




54





Bonds

EUR 5,000,000 ABN AMRO Bank NV 4.75% EMTN Sen 12/11.01.19 4,986,600.00 5,693,250.00 0.61 EUR 3,700,000 ABN AMRO Bank NV 7.125% EMTN 12/06.07.22 4,176,859.15 4,280,530.00 0.46 EUR 9,700,000 Allianz Finance II BV VAR EMTN 11/08.07.41 10,028,207.48 10,804,830.00 1.16 EUR 2,000,000 America Movil SAB de CV 3.259% Sen 13/22.07.23 2,030,380.00 1,993,500.00 0.21 EUR 2,000,000 America Movil SAB de CV VAR Ser A 13/06.09.73 1,989,260.00 2,000,000.00 0.21 EUR 6,750,000 Anheuser-Busch InBev SA 8.625% EMTN 09/30.01.17 7,842,231.52 8,411,850.00 0.90 EUR 7,404,000 Aquarius and Inv Zurich VAR EMTN 13/02.10.43 6,971,491.67 7,328,849.40 0.79 EUR 1,800,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 1,800,205.92 1,804,530.55 0.19 EUR 3,850,000 Atlantia SpA 3.375% EMTN 10/18.09.17 3,710,707.00 4,050,970.00 0.43 EUR 4,000,000 Atlantia SpA 4.5% EMTN 12/08.02.19 4,204,830.00 4,384,600.00 0.47 EUR 7,000,000 Atlantia SpA 5.625% EMTN 09/06.05.16 7,440,109.09 7,719,950.00 0.83 EUR 2,500,000 Autoroutes du Sud de la France 4% EMTN Sen 11/24.09.18 2,617,750.00 2,775,750.00 0.30 EUR 1,500,000 Axa SA VAR EMTN Sub 06/06.07.Perpetual 1,530,000.00 1,550,625.00 0.17 EUR 4,000,000 Axa SA VAR EMTN Sub Ser 26 07/05.10.Perpetual 3,249,250.00 4,147,000.00 0.45 EUR 4,500,000 Axa SA VAR Sub 10/16.04.40 4,110,275.06 4,746,825.00 0.51 EUR 3,500,000 Bank of America Corp 4.75% EMTN Sen 10/03.04.17 3,607,800.00 3,878,175.00 0.42 EUR 5,500,000 Bank of America Corp 7% EMTN 09/15.06.16 6,214,328.68 6,340,400.00 0.68 EUR 4,500,000 Barclays Bank Plc 6% EMTN Ser 164 Tr 1 08/23.01.18 4,400,107.50 5,024,250.00 0.54 EUR 3,500,000 Barclays Bank Plc 6.625% EMTN 11/30.03.22 3,669,484.87 4,018,875.00 0.43 EUR 4,000,000 BAT Holdings BV 4% EMTN 10/07.07.20 4,092,200.00 4,490,800.00 0.48 EUR 2,000,000 BAT Intl Finance Plc 4.875% EMTN 09/24.02.21 2,441,740.00 2,358,900.00 0.25 EUR 1,800,000 Bayer AG VAR Sub 05/29.07.2105 1,795,170.32 1,865,790.00 0.20 EUR 2,000,000 BBVA Senior Finance SA 4.375% EMTN Sen 12/21.09.15 1,997,520.00 2,097,400.00 0.23 EUR 3,000,000 BBVA Senior Finance SA 4.875% EMTN Reg-S Sen

11/15.04.16 3,021,410.00 3,199,950.00 0.34

EUR 3,525,000 BG Energy Capital Plc VAR Sen 12/30.11.72 3,735,019.85 3,893,186.25 0.42 EUR 2,000,000 BMW Finance NV 1.5% EMTN Ser 761 Sen 12/05.06.18 2,038,080.00 2,014,100.00 0.22 EUR 7,000,000 BMW Finance NV 3.25% EMTN 12/14.01.19 6,983,760.00 7,571,200.00 0.81 EUR 1,500,000 BNP Paribas SA 2.875% Sen 12/27.11.17 1,495,485.00 1,580,550.00 0.17 EUR 7,000,000 BNP Paribas SA 3.5% EMTN Sen 11/07.03.16 7,161,000.00 7,427,000.00 0.80 EUR 3,000,000 Bord Gais Eireann 3.625% EMTN Reg S Sen 12/04.12.17 3,201,592.00 3,197,400.00 0.34 EUR 1,600,000 BPCE SA 2.875% EMTN 10/22.09.15 1,533,348.57 1,661,520.00 0.18 EUR 3,000,000 Bq Fédérative Crédit Mutuel 5% EMTN 03/30.09.15 3,162,930.00 3,207,150.00 0.34 EUR 1,500,000 British American Tobacco Plc 3.625% EMTN 11/09.11.21 1,493,820.00 1,640,100.00 0.18 EUR 3,400,000 Casino Guichard Perrachon 3.311% EMTN Sen 13/25.01.23 3,524,250.00 3,355,630.00 0.36 EUR 6,500,000 Casino Guichard Perrachon 3.994% EMTN Sen 12/09.03.20 7,046,640.00 6,957,275.00 0.75 EUR 2,000,000 Casino Guichard Perrachon 4.726% EMTN Sen 11/26.05.21 2,077,040.00 2,214,700.00 0.24 EUR 2,350,000 CEZ AS 4.5% EMTN 10/29.06.20 2,670,305.00 2,677,590.00 0.29 EUR 3,800,000 Cie Fin et Ind des Autoroutes 5% 06/24.05.21 4,069,420.00 4,482,100.00 0.48 EUR 10,800,000 Citigroup Inc 3.5% EMTN Ser 24 05/05.08.15 10,613,412.54 11,314,620.00 1.22 EUR 2,700,000 Citigroup Inc 5% Sen 04/02.08.19 2,398,668.38 3,111,075.00 0.33 EUR 3,000,000 Citigroup Inc 7.375% EMTN Sen 09/04.09.19 3,533,190.00 3,838,650.00 0.41 EUR 500,000 Cloverie PLC VAR EMTN 12/01.09.42 495,645.00 594,075.00 0.06 EUR 1,000,000 Credit Agricole SA 5.875% EMTN 09/11.06.19 1,038,700.00 1,136,800.00 0.12 EUR 8,000,000 Credit Suisse Intl 4.75% EMTN Sen 09/05.08.19 8,112,938.18 9,246,800.00 0.99 EUR 2,200,000 DAA Finance Plc 6.5872% 08/09.07.18 2,537,425.00 2,581,040.00 0.28 EUR 6,500,000 Daimler AG 4.125% EMTN 10/19.01.17 7,051,070.00 7,136,025.00 0.77 EUR 2,000,000 Danske Bank A/S 3.875% EMTN Sen 11/18.05.16 1,957,000.00 2,138,200.00 0.23 EUR 750,000 Danske Bank A/S VAR Reg S Sub 13/04.10.23 749,730.00 750,787.50 0.08 EUR 5,800,000 Deutsche Bank AG 5% EMTN 10/24.06.20 5,701,013.33 6,355,930.00 0.68 EUR 2,500,000 Deutsche Telekom Intl Fin BV 4.25% EMTN 10/13.07.22 2,593,750.00 2,806,625.00 0.30 EUR 3,500,000 Deutsche Telekom Intl Fin BV VAR EMTN 03/29.03.18 4,124,238.12 4,287,850.00 0.46 EUR 7,000,000 DnB Bank ASA 4.375% Sen 11/24.02.21 7,236,680.00 7,897,050.00 0.85 EUR 1,250,000 DnB Bank ASA 4.75% EMTN Reg-S 12/08.03.22 1,240,077.27 1,340,187.50 0.14 EUR 8,000,000 E.On Intl Finance BV 5.5% EMTN 07/02.10.17 9,254,927.50 9,347,600.00 1.00 EUR 2,900,000 E.On Intl Finance BV 5.75% EMTN 08/07.05.20 3,500,542.77 3,601,365.00 0.39 EUR 4,100,000 Electricité de France 3.875% EMTN 12/18.01.22 4,367,199.00 4,524,760.00 0.49 EUR 7,000,000 Electricité de France 4% EMTN 10/12.11.25 6,872,320.00 7,671,300.00 0.82 EUR 1,000,000 Electricité de France 4.5% EMTN Sen 10/12.11.40 1,059,000.00 1,107,750.00 0.12




55



EUR 750,000 Electricité de France 5.625% EMTN Ser 56 Tr 1 03/21.02.33 799,125.00 947,925.00 0.10 EUR 1,250,000 ELM BV VAR Sub 06/25.11.Perpetual 1,112,083.14 1,287,562.50 0.14 EUR 4,000,000 Enel Finance Intl SA 3.625% EMTN Sen 12/17.04.18 4,159,700.00 4,184,800.00 0.45 EUR 5,750,000 ENI SpA 3.75% EMTN 12/27.06.19 6,268,337.50 6,218,625.00 0.67 EUR 2,250,000 ENI SpA 4.25% EMTN 12/03.02.20 2,569,725.00 2,476,687.50 0.27 EUR 2,000,000 ENI SpA 4.75% EMTN Ser 3 07/14.11.17 2,185,722.50 2,253,900.00 0.24 EUR 2,800,000 ENI SpA 5% EMTN 09/28.01.16 2,964,037.35 3,051,300.00 0.33 EUR 3,000,000 Fortum Oyj 6% EMTN Sen 09/20.03.19 3,601,800.00 3,636,300.00 0.40 EUR 8,300,000 Gas Natural Capital Mks SA 5.125% EMTN R-S S7 T1

09/02.11.21 8,870,756.00 9,130,830.00 0.98

EUR 1,000,000 Gas Natural SDG SA 5% EMTN 12/13.02.18 994,130.00 1,112,100.00 0.12 EUR 1,350,000 Gaz Capital SA 5.875% 05/01.06.15 1,449,136.60 1,444,230.00 0.16 EUR 13,000,000 Gaz Capital SA 6.605% EMTN Gazprom 07/13.02.18 14,130,148.63 14,850,550.00 1.60 EUR 3,000,000 GDF Suez 1.5% EMTN Ser 12/20.07.17 3,063,000.00 3,048,450.00 0.33 EUR 1,000,000 GDF Suez 3.5% EMTN 10/18.10.22 1,095,000.00 1,094,950.00 0.12 EUR 5,000,000 GDF Suez FRN 13/10.07.Perpetual 4,917,100.00 5,043,500.00 0.54 EUR 7,000,000 GE Capital European Funding 2.625% EMTN Reg S

13/15.03.23 6,949,600.00 6,934,550.00 0.75

EUR 1,000,000 GE Capital European Funding 2.875% EMTN Reg S 12/18.06.19

997,130.00 1,049,300.00 0.11

EUR 2,000,000 GE Capital European Funding 4.25% EMTN 10/01.03.17 2,091,200.00 2,197,900.00 0.24 EUR 6,319,000 GE Capital Trust IV VAR Ser REGS 10/15.09.66 5,813,010.52 6,324,244.77 0.68 EUR 5,000,000 General Electric Capital Corp 6% EMTN Sen 08/15.01.19 5,345,040.84 6,024,250.00 0.65 EUR 1,000,000 Glencore Finance SA Step-up EMTN Ser 12 12/03.04.18 995,830.00 1,091,250.00 0.12 EUR 4,000,000 Goldman Sachs Group Inc 4.5% EMTN Sen 11/09.05.16 4,081,056.00 4,321,800.00 0.47 EUR 5,000,000 Goldman Sachs Group Inc 4.5% Sen 06/23.05.16 4,990,000.00 5,407,250.00 0.58 EUR 3,625,000 Goldman Sachs Group Inc 4.75% Sub 06/12.10.21 2,766,530.07 3,870,231.25 0.42 EUR 2,000,000 HBOS Plc 4.875% Sub 03/20.03.15 1,993,280.00 2,075,600.00 0.22 EUR 3,000,000 Henkel AG & Co KGaA Step-up Sub 05/25.11.2104 3,021,107.14 3,175,350.00 0.34 EUR 1,000,000 Hera SpA 4.5% Sen 09/03.12.19 1,064,300.00 1,098,500.00 0.12 EUR 1,000,000 Hera SpA 5.2% EMTN Sen 13/29.01.28 1,138,000.00 1,082,850.00 0.11 EUR 8,000,000 Hit Finance BV 5.75% Reg S 11/09.03.18 8,990,268.00 9,172,000.00 0.99 EUR 5,500,000 HSBC Bank Plc 3.875% EMTN 11/24.10.18 5,639,714.13 6,117,925.00 0.66 EUR 2,500,000 HSBC Holdings Plc 6% EMTN 09/10.06.19 2,539,080.56 2,892,500.00 0.31 EUR 4,500,000 HSBC Holdings Plc 6.25% EMTN Ser 11 Tr 1 08/19.03.18 4,626,900.00 5,200,425.00 0.56 EUR 2,000,000 HSBC Holdings Plc VAR EMTN 100124 1,997,560.00 2,022,700.00 0.22 EUR 4,000,000 Hutchison Whampoa Ltd 3.625% Sen 12/06.06.22 4,342,560.00 4,260,000.00 0.46 EUR 4,000,000 Iberdrola Finanzas SA 4.625% EMTN 11/07.04.17 4,389,600.00 4,362,000.00 0.47 EUR 7,100,000 Iberdrola Intl BV 4.25% EMTN 12/11.10.18 7,463,345.00 7,704,210.00 0.83 EUR 5,000,000 Iberdrola Intl BV 4.5% EMTN 12/21.09.17 5,512,500.00 5,452,750.00 0.59 EUR 7,250,000 Imperial Tobacco Finance Plc 4.5% EMTN Sen 11/05.07.18 7,434,419.55 8,123,625.00 0.87 EUR 6,000,000 ING Bank NV 4.25% EMTN Sen 12/13.01.17 6,188,550.00 6,548,100.00 0.70 EUR 7,750,000 ING Bank NV VAR EMTN Sub 05/16.09.20 6,880,555.56 7,805,025.00 0.84 EUR 5,750,000 ING Bank NV VAR EMTN Sub 08/29.05.23 5,574,622.45 6,321,262.50 0.68 EUR 5,000,000 Intesa Sanpaolo SpA 3.75% EMTN REGS Ser 541 09/23.11.16 4,955,625.00 5,121,500.00 0.55 EUR 2,700,000 Intesa Sanpaolo SpA 4.125% EMTN Sen 10/14.04.20 2,491,314.39 2,753,325.00 0.30 EUR 1,500,000 Intesa Sanpaolo SpA 4.375% EMTN Reg S Sen 12/15.10.19 1,528,260.00 1,547,250.00 0.17 EUR 7,500,000 Intesa Sanpaolo SpA 4.75% EMTN Ser 356 GMTN 07/15.06.17 7,317,333.80 7,921,500.00 0.85 EUR 4,000,000 IPIC GMTN Ltd 3.625% EMTN Reg-S Sen 12/30.05.23 4,085,315.00 4,053,000.00 0.43 EUR 5,700,000 Johnson & Johnson 4.75% Sen 07/06.11.19 6,560,648.62 6,798,105.00 0.73 EUR 3,000,000 JPMorgan Chase Bank NA VAR Sub 06/30.11.21 2,708,432.14 3,140,700.00 0.34 EUR 2,000,000 KBC Ifima NV 4.5% EMTN Ser 4221 12/27.03.17 1,995,400.00 2,200,000.00 0.23 EUR 2,000,000 Koninklijke DSM NV 4% EMTN 05/10.11.15 2,141,860.00 2,140,500.00 0.23 EUR 5,500,000 Koninklijke KPN NV 4.5% EMTN Sen 11/04.10.21 6,040,030.00 6,062,925.00 0.65 EUR 5,000,000 KPN NV 4.75% EMTN Sen 06/17.01.17 5,540,000.00 5,514,500.00 0.59 EUR 3,000,000 Linde Finance BV 3.125% EMTN 11/12.12.18 2,974,470.00 3,256,950.00 0.35 EUR 4,000,000 Linde Finance BV VAR 06/14.07.66 4,418,890.71 4,478,600.00 0.48 EUR 2,000,000 Lloyds Bank Plc 4.625% EMTN 12/02.02.17 2,055,000.00 2,218,600.00 0.24 EUR 5,500,000 Lloyds Bank Plc 5.375% EMTN 09/03.09.19 6,037,320.00 6,501,000.00 0.70 EUR 2,000,000 Lloyds Bank Plc 6.375% EMTN 09/17.06.16 2,119,860.00 2,281,200.00 0.25 EUR 800,000 Lloyds Bank Plc 6.5% 10/24.03.20 849,920.00 909,800.00 0.10 EUR 4,000,000 Morgan Stanley 4.5% EMTN GMTN Sen 11/23.02.16 3,779,886.23 4,282,200.00 0.46 EUR 2,000,000 Morgan Stanley 5.375% EMTN 10/10.08.20 2,198,600.00 2,319,300.00 0.25 EUR 5,000,000 Morgan Stanley 6.5% Ser G 08/28.12.18 5,803,091.67 6,031,000.00 0.65




56



EUR 8,000,000 Morgan Stanley Group Inc 4.375% EMTN Ser G 06/12.10.16 6,800,945.45 8,643,200.00 0.92 EUR 3,500,000 Munich Reinsurance Co VAR EMTN 11/26.05.41 3,373,028.00 4,018,175.00 0.43 EUR 2,000,000 National Australia Bank Ltd VAR EMTN Sen 08/26.06.23 2,139,740.00 2,356,500.00 0.25 EUR 2,500,000 National Grid Plc 4.375% EMTN Ser 14 Tr 1 05/10.03.20 2,900,416.67 2,872,625.00 0.31 EUR 1,600,000 Nederlandse Gasunie NV 2.625% EMTN Reg S Ser 8

12/13.07.22 1,654,675.00 1,636,880.00 0.18

EUR 5,000,000 Nordea Bank AB 3.25% EMTN 12/05.07.22 5,047,500.00 5,290,250.00 0.57 EUR 4,500,000 Nordea Bank AB 4% EMTN Sen 12/11.07.19 4,789,455.00 5,016,150.00 0.54 EUR 3,500,000 Nordea Bank AB 4.625% EMTN 12/15.02.22 3,817,380.00 3,745,525.00 0.40 EUR 3,000,000 Oi SA 5.125% EMTN Regs Sen 10/15.12.17 3,321,000.00 3,070,650.00 0.34 EUR 5,500,000 Orange 3% EMTN 12/15.06.22 5,680,710.00 5,594,875.00 0.60 EUR 2,500,000 Orange 3.375% EMTN 10/16.09.22 2,650,750.00 2,618,625.00 0.28 EUR 7,000,000 Pemex Project Fding Mast Trust 5.5% 05/24.02.25 8,103,987.50 7,981,400.00 0.86 EUR 5,500,000 Petrobras Intl Fin Co Ltd 4.875% EMTN Sen 11/07.03.18 6,003,858.93 5,889,400.00 0.63 EUR 3,000,000 Philip Morris Intl Inc 2.875% Sen 12/30.05.24 3,122,400.00 3,029,100.00 0.33 EUR 1,500,000 Pohjola Bank Plc 5.75% EMTN 12/28.02.22 1,499,655.00 1,760,550.00 0.19 EUR 5,000,000 Procter & Gamble Co 2% Reg-S Sen 12/16.08.22 5,019,500.00 4,917,500.00 0.53 EUR 9,000,000 Rabobank Intl Equity Deriv 4% EMTN Sen 12/11.01.22 9,503,835.00 9,975,150.00 1.07 EUR 6,000,000 Rabobank Nederland NV 4.125% EMTN 12/14.09.22 6,248,325.00 6,172,200.00 0.66 EUR 5,600,000 Rabobank Nederland NV 4.125% EMTN Sen 10/14.01.20 5,722,819.45 6,264,160.00 0.67 EUR 2,000,000 Rabobank Nederland NV 5.875% Sub 09/20.05.19 2,112,500.00 2,310,600.00 0.25 EUR 5,000,000 Repsol Intl Finance BV 4.875% EMTN 12/19.02.19 5,317,750.16 5,501,000.00 0.59 EUR 9,400,000 Repsol SA 4.25% EMTN 11/12.02.16 9,811,186.05 9,987,500.00 1.07 EUR 5,500,000 Roche Holdings Inc 5.625% EMTN 09/04.03.16 5,999,613.75 6,153,675.00 0.66 EUR 9,000,000 Royal Bank of Scotland Gr Plc 5.375% EMTN Sen 09/30.09.19 10,087,420.00 10,452,150.00 1.12 EUR 5,700,000 Royal Bank of Scotland Plc 4.875% EMTN Sen 10/15.07.15 5,866,636.28 6,092,730.00 0.65 EUR 500,000 RWE AG VAR Sen 10/28.09.Perpetual 479,500.00 506,675.00 0.05 EUR 11,500,000 Santander Intl Debt SA 4.5% EMTN Sen 11/18.05.15 11,645,742.84 12,024,975.00 1.29 EUR 5,000,000 Santander Issuances SA Unipers VAR EMTN 07/24.10.17 4,834,023.44 4,703,750.00 0.50 EUR 7,950,000 Siemens Financieringsmaatsc NV VAR 06/14.09.66 7,682,134.13 8,556,585.00 0.92 EUR 3,000,000 Skandinaviska Enskilda Banken 4% EMTN 12/12.09.22 3,176,970.00 3,161,700.00 0.34 EUR 2,000,000 Snam SpA 2% EMTN 12/13.11.15 2,044,000.00 2,030,200.00 0.22 EUR 6,360,000 Snam SpA 3.875 EMTN 12/19.03.18 6,742,425.00 6,760,680.00 0.73 EUR 4,000,000 Snam SpA 5% EMTN 12/18.01.19 4,612,400.00 4,449,800.00 0.48 EUR 1,500,000 Société Générale 4.25% EMTN 12/13.07.22 1,489,110.00 1,680,150.00 0.18 EUR 3,000,000 Standard Chartered Plc 3.875% Sen 11/20.10.16 3,140,455.00 3,237,600.00 0.35 EUR 2,000,000 Svenska Handelsbanken AB 2.25% EMTN Sen 12/14.06.18 1,990,700.00 2,059,600.00 0.22 EUR 9,000,000 Svenska Handelsbanken AB 4.375% EMTN Sen 11/20.10.21 9,253,677.85 10,316,700.00 1.11 EUR 1,500,000 Telecom Italia SpA 5.25% EMTN 10/10.02.22 1,409,245.01 1,475,025.00 0.16 EUR 3,000,000 Telecom Italia SpA 7% EMTN Sen 11/20.01.17 3,224,085.00 3,271,950.00 0.35 EUR 2,500,000 Telefonica Emisiones SA 3.661% EMTN 10/18.09.17 2,320,000.00 2,601,250.00 0.28 EUR 2,000,000 Telefonica Emisiones SA 3.987% EMTN Sen 13/23.01.23 1,997,440.00 1,947,700.00 0.21 EUR 5,000,000 Telefonica Emisiones SA 4.797% EMTN 12/21.02.18 5,251,950.00 5,419,000.00 0.58 EUR 8,500,000 Telefonica Emisiones SA 5.496% EMTN 09/01.04.16 8,779,191.69 9,209,325.00 0.99 EUR 2,600,000 Telefonica Emisiones SA 5.811% EMTN Sen 12/05.09.17 3,005,600.00 2,907,840.00 0.31 EUR 1,500,000 Telenor ASA 2.75% EMTN Sen 12/27.06.22 1,491,855.00 1,539,450.00 0.17 EUR 3,360,000 Terna Rete Elettr Nazional SpA 4.125% EMTN Sen 12/17.02.17 3,635,647.83 3,611,664.00 0.39 EUR 4,000,000 Terna Rete Elettr Nazionale SpA 4.875% EMTN 09/03.10.19 4,591,200.00 4,528,800.00 0.48 EUR 2,200,000 Toronto-Dominion Bank (The) 5.375% EMTN Sen 08/14.05.15 2,374,084.78 2,374,020.00 0.26 EUR 8,000,000 UBS AG Jersey Branch 4.75% EMTN Sen 07/07.06.17 8,288,666.67 9,029,600.00 0.97 EUR 3,000,000 UBS AG London 6% EMTN Sen 08/18.04.18 3,677,700.00 3,590,250.00 0.39 EUR 9,550,000 Unicredit SpA 4.875% EMTN Ser 5Y 12/07.03.17 10,010,800.00 10,090,625.50 1.08 EUR 720,000 Vale SA 4.375% EMTN 10/24.03.18 792,720.00 788,040.00 0.08 EUR 1,500,000 Vattenfall Treasury AB VAR 05/29.06.Perpetual 1,516,500.00 1,557,600.00 0.17 EUR 2,000,000 VEB Finance Plc 3.035% LPN Vneghe Reg S 13/21.02.18 2,000,000.00 1,974,600.00 0.21 EUR 3,200,000 Veolia Environnement SA 4.625% EMTN 12/30.03.27 3,404,746.00 3,500,640.00 0.38 EUR 1,500,000 Veolia Environnement SA 6.75% EMTN 09/24.04.19 1,837,500.00 1,871,850.00 0.20 EUR 1,500,000 Veolia Environnement SA VAR 13/16.04.Perpetual 1,496,835.00 1,468,650.00 0.16 EUR 1,750,000 Vinci SA VAR Sub 06/13.11.Perpetual 1,700,493.42 1,847,562.50 0.20 EUR 2,000,000 Vivendi 4.125% EMTN Sen 12/18.07.17 2,166,300.00 2,159,200.00 0.23 EUR 5,300,000 Vivendi 4.875% EMTN Sen 11/30.11.18 5,829,660.00 5,932,555.00 0.64 EUR 4,000,000 Vodafone Group Plc 5% EMTN Sen 03/04.06.18 4,524,965.67 4,660,400.00 0.50 EUR 3,000,000 Volkswagen Intl Finance NV VAR Sub 31/09.04.Perpetual 2,976,390.00 3,013,650.00 0.32 EUR 5,000,000 Volkswagen Leasing GmbH 3.25% EMTN 11/10.05.18 5,087,650.00 5,394,000.00 0.58




57



EUR 4,800,000 Volkswagen Leasing GmbH 3.375% EMTN 11/03.06.16 4,824,480.00 5,107,680.00 0.55 EUR 7,000,000 Voto Votoran Ov Tra Op V Ltd 5.25% RegS 10/28.04.17 7,490,000.00 7,462,000.00 0.80 EUR 3,500,000 Westpac Banking Corp 4.25% EMTN Sen 09/22.09.16 3,666,250.00 3,825,675.00 0.41 EUR 7,700,000 WPP Plc 6.625% EMTN 08/12.05.16 8,352,809.34 8,816,115.00 0.95 EUR 2,000,000 Xstrata Finance Dubai Ltd VAR EMTN Sn Ser 7 12/19.11.18 1,992,160.00 2,003,300.00 0.22 EUR 6,500,000 Zurich Finance (USA) Inc 6.5% EMTN 09/14.10.15 7,064,384.60 7,231,575.00 0.78 Total bonds 789,632,490.38 828,635,431.72 89.06

Bonds related to a basket of shares

EUR 12,000,000 KBC Ifima NV 6% Lk Basket Of Shs Ser 3740 09/05.02.14 11,940,000.00 12,285,672.00 1.32 Total bonds related to a basket of shares 11,940,000.00 12,285,672.00 1.32


Bonds

EUR 4,250,000 ENEL SpA 5.625% EMTN Ser 36 07/21.06.27 4,378,746.67 4,522,000.00 0.49 EUR 500,000 GE Capital Trust II VAR Reg S Sub 10/15.09.67 488,650.00 517,525.00 0.06 EUR 500,000 GTECH SpA 3.5% Reg-S Sen 12/05.03.20 496,135.00 516,300.00 0.06 EUR 2,000,000 KBC Ifima NV 2.125% EMTN Sen 13/10.09.18 1,994,560.00 2,008,400.00 0.22 EUR 900,000 NGG Finance Plc VAR Sub 13/18.06.76 919,847.77 892,170.00 0.10 EUR 1,500,000 Suez Environnement Co VAR 21.09.Perpetual 1,419,738.53 1,544,475.00 0.17 Total bonds 9,697,677.97 10,000,870.00 1.10


Bonds

EUR 4,500,000 Arcade Finance Plc FRN E Ser 2008-17 Tr 1 08/14.05.14 4,349,400.00 3,760,200.00 0.40 EUR 4,000,000 Arcade Finance Plc FRN Ser 2008-17 Mez Sec Falcon

08/14.05.14 4,002,985.20 4,000,278.40 0.43

EUR 6,700,000 D-Star Finance Plc FRN Ser 2008-5 Mez Sec Falcon 08/14.05.14

6,703,228.74 6,700,466.32 0.72

EUR 26,067,000 D-Star Finance Plc VAR E Ser 2008-5 08/14.05.14 24,108,360.10 21,732,057.90 2.34 Total bonds 39,163,974.04 36,193,002.62 3.89

Open-ended investment funds

Investment funds (UCI)

EUR 20,000 KBC Participation Europe Fin Bond Opp Cap 7,806,260.72 17,439,200.00 1.87 Total investment funds (UCI) 7,806,260.72 17,439,200.00 1.87


Cash at banks 8,757,833.10 0.94

Bank liabilities -0,04 0,00

Other net assets/(liabilities) 16.895.689,01 1.82

Total 930,207,698.49 100.00

KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES)



58

Assets Securities portfolio at market value 53,248,876.54 Cash at banks 371,705.90 Other liquid assets 119,503.52 Income receivable on portfolio 567,362.94 Unrealised gain on future contracts 56,600.00


Liabilities Payable on redemptions of shares 109,102.89 Unrealised loss on forward foreign exchange contracts 19,013.39 Interest on bank liabilities and expenses payable 73,485.83









59


Expenses Management fees 458,841.80 Custodian fees 33,820.10 Banking charges and other fees 1,653.86 Transaction fees 181.33 Central administration costs 43,976.46 Professional fees 1,018.06 Other administration costs 11,322.13 Subscription duty ("taxe d'abonnement") 25,430.95 Other taxes 65,303.65 Interest paid on bank liabilities 1,006.16 Other expenses 3,736.98 Total expenses 646,291.48


Net realised gain/(loss) - on securities portfolio 2,969,999.07 - on future contracts -40,173.42 - on forward foreign exchange contracts -87,943.17 - on foreign exchange -47,884.17


Net variation of the unrealised gain/(loss) - on securities portfolio -7,418,318.81 - on future contracts 56,600.00 - on forward foreign exchange contracts -19,013.39












60

Total net assets - as at 30.09.2013 54,162,446.79 - as at 30.09.2012 61,810,597.12 - as at 30.09.2011 69,619,886.15 Portfolio Turnover Rate (in %) - as at 30.09.2013 127.47 Number of capitalisation shares - outstanding at the beginning of the year 15,320.4178 - issued 199.7273 - redeemed -5,956.3186 - outstanding at the end of the year 9,563.8265 Net asset value per capitalisation share - as at 30.09.2013 921.72 - as at 30.09.2012 966.94 - as at 30.09.2011 876.92 Performances of capitalisation shares (in %) - as at 30.09.2013 -4.68 - as at 30.09.2012 10.27 - as at 30.09.2011 -0.84 TER per capitalisation share (in %) - as at 30.09.2013 1.05 Number of distribution shares - outstanding at the beginning of the year 89,356.0543 - issued 4,104.6457 - redeemed -22,632.2738 - outstanding at the end of the year 70,828.4262 Net asset value per distribution share - as at 30.09.2013 462.62 - as at 30.09.2012 501.35 - as at 30.09.2011 473.69 Performances of distribution shares (in %) - as at 30.09.2013 -4.68 - as at 30.09.2012 10.25 - as at 30.09.2011 -0.85 TER per distribution share (in %) - as at 30.09.2013 1.06 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 16.00 Shares outstanding at dividend date 89,356.0543 Number of capitalisation shares "Institutional B

Shares"






61



Shares" (in %)


(in %)

- as at 30.09.2013 1.04




62





Bonds

BGN 2,000,000 KBC Ifima NV 7.6% EMTN Ser 3595 08/30.07.15 1,022,421.21 1,140,301.77 2.11 CHF 1,000,000 EIB 3.375% Sen 07/15.10.27 1,057,905.88 973,543.71 1.80 CHF 2,000,000 KFW AG 2.125% 06/15.02.16 1,770,339.38 1,712,587.18 3.16 CHF 2,200,000 KFW AG 2.5% EMTN 05/25.08.25 2,154,960.77 1,996,193.58 3.69 CHF 300,000 KFW AG 2.75% Sen 07/16.02.37 331,876.65 290,102.14 0.54

5,315,082.68 4,972,426.61 9.19

CZK 2,000,000 Czech Republic 3.4% Ser 60 10/01.09.15 80,536.75 82,433.14 0.15 CZK 10,000,000 Czech Republic 3.85% Ser 61 10/29.09.21 457,079.05 438,875.53 0.81 CZK 70,000,000 Czech Republic 4.6% Ser 41 03/18.08.18 2,998,488.14 3,164,402.20 5.84 CZK 22,000,000 Czech Republic 5.7% Ser 58 09/25.05.24 1,155,996.61 1,122,337.89 2.07 CZK 15,000,000 KBC Ifima NV 3.87% EMTN Sub 05/18.05.16 502,094.70 593,966.65 1.10

5,194,195.25 5,402,015.41 9.97

DKK 7,000,000 Denmark 1.5% 12/15.11.23 944,849.98 899,948.41 1.66 DKK 14,500,000 Denmark 3% T-Bond 11/15.11.21 2,186,084.79 2,152,710.51 3.97

3,130,934.77 3,052,658.92 5.63

EUR 1,100,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 1,100,000.00 1,102,768.67 2.04 GBP 1,800,000 Italia 6% EMTN 98/04.08.28 3,042,309.52 2,150,295.08 3.97 GBP 6,350,000 United Kingdom 3.75% T-Stock 09/07.09.19 8,858,376.72 8,431,343.29 15.57 GBP 5,800,000 United Kingdom 4.25% T-Stock 09/07.09.39 8,635,416.32 7,894,076.64 14.57 GBP 2,300,000 United Kingdom 4.75% T-Stock 03/07.09.15 3,229,468.52 2,978,463.02 5.50

23,765,571.08 21,454,178.03 39.61

NOK 11,500,000 Norway 3.75% 10/25.05.21 1,792,392.13 1,529,690.40 2.82 NOK 21,000,000 Norway 4.25% 06/19.05.17 3,198,761.13 2,788,704.14 5.15

4,991,153.26 4,318,394.54 7.97

PLN 4,100,000 Poland 0% Ser OK0714 12/25.07.14 950,879.32 950,410.60 1.75 PLN 2,000,000 Poland 4% Ser DS1023 12/25.10.23 519,183.46 456,938.42 0.84 PLN 13,600,000 Poland Government Bd 5.5% Ser 1019 08/25.10.19 3,268,778.78 3,462,172.69 6.39 PLN 1,500,000 Rabobank Nederland NV 5% EMTN 09/21.08.14 358,595.04 360,527.96 0.67

5,097,436.60 5,230,049.67 9.65

SEK 14,500,000 Sweden 2.25% Ser 1056 11/01.06.32 1,781,048.31 1,522,995.70 2.81 SEK 9,000,000 Sweden 3.5% Ser 1054 10/01.06.22 1,219,144.54 1,131,521.28 2.09 SEK 7,000,000 Sweden 4.5% Ser 1049 04/12.08.15 907,079.74 855,464.79 1.58 SEK 15,000,000 Sweden 6.75% Ser 1041 97/05.05.14 1,869,719.88 1,785,181.31 3.30

5,776,992.47 5,295,163.08 9.78

SKK 35,000,000 Rabobank Nederland NV 4.2% EMTN Ser 1559A 06/08.03.26 943,403.65 1,280,919.84 2.36 Total investments in securities 56,337,190.97 53,248,876.54 98.31

Cash at banks 371,705.90 0.69


Total 54,162,446.79 100.00

KBC BONDS CONVERTIBLES


63

Investors were chiefly looking for returns in the period under review. Corporate bonds initially posted a healthy return, but some of the gains were subsequently reversed. The first part of the reporting period was relatively problem-free: US economic statistics were strong and Latin America and Asia did not disappoint either. At the same time, the crisis in Europe became less acute. This favourable climate persisted until the Italian elections, which produced an unexpected political stalemate that briefly panicked investors. The markets recovered quickly, however, and confidence returned. Late spring heralded a new period of risk aversion. The Chinese economy put in a disappointing performance, with weak export figures and a decline in investment. And the government also made it clear that it was unlikely to implement large-scale stimulus measures this time round. In the meantime, the US central bank indicated that it would probably start to scale back its quantitative easing programme in 2013. The symbolic effect – the end of an unprecedented cycle of money creation – was major. Investors sold off riskier assets on a large scale. The credit spreads widened and the stock markets lost ground. Although the markets recovered to some extent, there was no return to the low spreads seen in May. The stock markets then improved again and were trading at record highs at the end of the reporting period. Convertible bonds experienced the positive effects of narrowing credit spreads and the strong stock markets towards the end of the period under review. But the value of both the credit and stock component remained reasonable. US two-year rates were more or less stable at 35 basis points. The duration of the fund is on the low side at roughly two years. The equity tracking averaged 42%. This means that the fund rises or falls by about 42% with the broader stock market. We expect credit spreads to remain largely stable in the months ahead. The combination of more concrete information on the future of quantitative easing and temporary flare-ups in the European crisis might prompt further bouts of risk aversion. The fundamental trend of a recovering world economy and gradual European recovery from the crisis will, however, persist. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




64

Assets Securities portfolio at market value 127,906,992.26 Cash at banks 2,762,266.52 Other liquid assets 959,889.76 Receivable on treasury transactions 85,252.96 Receivable on issues of shares 30,001.22 Income receivable on portfolio 751,402.46


Liabilities Payable on redemptions of shares 242,292.63 Unrealised loss on future contracts 12,528.81 Interest on bank liabilities and expenses payable 229,424.01





Number of capitalisation shares "Euro Hedged" outstanding 16,900.4472 Net asset value per capitalisation share "Euro Hedged" 662.67

Number of distribution shares "Euro Hedged" outstanding 63,756.0000 Net asset value per distribution share "Euro Hedged" 541.41




65

Income Dividends, net 19,223.40 Interest on bonds and other debt securities, net 6,180,696.91 Interest on bank accounts 5,672.45 Commissions received 1,909,947.87 Total income 8,115,540.63



Net realised gain/(loss) - on securities portfolio 24,161,912.87 - on future contracts 360,085.16 - on forward foreign exchange contracts 2,922,599.60 - on foreign exchange -752,442.50














66

Total net assets - as at 30.09.2013 132,011,559.73 - as at 30.09.2012 437,850,030.42 - as at 30.09.2011 173,398,875.58 Portfolio Turnover Rate (in %) - as at 30.09.2013 76.86 Number of capitalisation shares - outstanding at the beginning of the year 53,691.0500 - issued 9,797.3563 - redeemed -16,296.2118 - outstanding at the end of the year 47,192.1945 Net asset value per capitalisation share - as at 30.09.2013 694.37 - as at 30.09.2012 662.96 - as at 30.09.2011 598.13 Performances of capitalisation shares (in %) - as at 30.09.2013 4.74 - as at 30.09.2012 10.84 - as at 30.09.2011 -2.40 TER per capitalisation share (in %) - as at 30.09.2013 1.37 Number of distribution shares - outstanding at the beginning of the year 124,267.0092 - issued 21,529.1689 - redeemed -50,919.5727 - outstanding at the end of the year 94,876.6054 Net asset value per distribution share - as at 30.09.2013 564.15 - as at 30.09.2012 549.15 - as at 30.09.2011 505.48 Performances of distribution shares (in %) - as at 30.09.2013 4.74 - as at 30.09.2012 10.83 - as at 30.09.2011 -2.41 TER per distribution share (in %) - as at 30.09.2013 1.37 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 10.50 Shares outstanding at dividend date 124,267.0092 Number of capitalisation shares "Euro Hedged" - outstanding at the beginning of the year 37,278.4115 - issued 2,853.3203 - redeemed -23,231.2846 - outstanding at the end of the year 16,900.4472





67

Net asset value per capitalisation share "Euro Hedged"

- as at 30.09.2013 662.67 - as at 30.09.2012 598.78 - as at 30.09.2011 561.51 Performances of capitalisation shares "Euro Hedged"

(in %)

- as at 30.09.2013 10.67 - as at 30.09.2012 6.64 - as at 30.09.2011 -4.18 TER per capitalisation share "Euro Hedged" (in %) - as at 30.09.2013 1.35 Number of distribution shares "Euro Hedged" - outstanding at the beginning of the year 86,092.0000 - issued 1,231.0000 - redeemed -23,567.0000 - outstanding at the end of the year 63,756.0000 Net asset value per distribution share "Euro Hedged" - as at 30.09.2013 541.41 - as at 30.09.2012 499.74 - as at 30.09.2011 478.75 Performances of distribution shares "Euro Hedged"

(in %)

- as at 30.09.2013 10.66 - as at 30.09.2012 6.64 - as at 30.09.2011 -4.18 TER per distribution share "Euro Hedged" (in %) - as at 30.09.2013 1.37 Dividends paid to distribution shares "Euro Hedged" Ex-dividend date 01.10.2012 Dividend per share 10.50 Shares outstanding at dividend date 86,092.0000 Number of capitalisation shares "Institutional B

Shares"

- outstanding at the beginning of the year 405,304.0000 - issued 222,473.0000 - redeemed -627,777.0000 - outstanding at the end of the year - Net asset value per capitalisation share "Institutional

B Shares"

- as at 30.09.2013 - - as at 30.09.2012 662.88 - as at 30.09.2011 -





68

Performances of capitalisation shares "Institutional B Shares" (in %)

- as at 30.09.2013 - - as at 30.09.2012 - - as at 30.09.2011 - TER per capitalisation share "Institutional B Shares"

(in %)

- as at 30.09.2013 -




69





Bonds

EUR 1,900,000 Aabar Investments PJSC 4% Conv Daimler 11/27.05.16 1,884,925.49 2,175,899.00 1.65 EUR 800,000 Adidas AG 0.25% Conv 12/14.06.19 860,940.00 980,949.68 0.74 EUR 80,000 Air France KLM 2.03% Conv 13/15.02.23 818,326.56 829,076.00 0.63 EUR 498,600 Alcatel-Lucent 4.25% Conv Sen 13/01.07.18 939,012.16 1,506,519.22 1.14 EUR 600,000 Amorim Energia BV 3.375% Conv GalpEner B Reg S

13/03.06.18 644,250.00 639,580.02 0.48

EUR 2,800,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 2,800,000.00 2,807,047.52 2.13 EUR 15,000 Cap Gemini SA 3.5% Conv 09/01.01.14 580,017.08 646,623.08 0.49 EUR 400,000 Celesio AG 3.75% Conv 09/29.10.14 415,990.00 412,628.00 0.31 EUR 500,000 Celesio Finance BV 2.5% Conv 11/07.04.18 538,750.00 548,250.00 0.42 EUR 21,000 CGG 1.25% Sen Conv 12/01.01.19 706,195.59 660,656.59 0.50 EUR 16,000 CGG 1.75% Conv 11/01.01.16 492,434.81 461,259.33 0.35 EUR 1,500,000 Deutsche Post AG 0.6% Conv Reg Ser DPW 12/06.12.19 1,615,375.00 1,949,250.00 1.48 EUR 9,000 Fonciere des Regions 3.34% Conv Ser FDR 11/01.01.17 753,065.80 828,450.30 0.63 EUR 600,000 GBL SA 0.125% Conv Suez Reg S Ser SEV 12/21.09.15 614,250.00 688,392.00 0.52 EUR 1,600,000 GBL Verwaltung SA 1.25% Conv GDF Reg S Sen 13/07.02.17 1,630,000.00 1,784,368.00 1.35 EUR 4,000 Gecina SA 2.125% Conv Gecina Reg 10/01.01.16 509,655.72 522,365.82 0.40 EUR 170,000 Immofinanz AG 4.25% Conv 11/08.03.18 672,430.32 774,240.96 0.59 EUR 850,000 Industrivaerden AB 1.875% Conv EMTN 11/27.02.17 869,361.11 924,341.00 0.70 EUR 750,000 Industrivaerden AB 2.5% Conv REGS Ser INDU 10/27.02.15 920,329.87 948,667.50 0.72 EUR 500,000 Intl Consolidated Air Gr SA 1.75% Conv Reg S Sen 13/31.05.18 530,625.00 595,185.00 0.45 EUR 900,000 Magyar Nemzeti Vagyonkezel Zrt 4.4% Conv Richter

09/25.09.14 831,778.30 921,150.00 0.70

EUR 10,000 Michelin SA 0% Conv 07/01.01.17 1,375,000.00 1,381,750.00 1.05 EUR 6,000 Misarte 3.25% Conv PPR SA Ser PP 10/01.01.16 964,947.09 1,070,675.56 0.81 EUR 1,000,000 Nokia Oyj 5% Conv Sen 12/26.10.17 1,228,399.19 1,997,980.00 1.51 EUR 400,000 OHL Investment SA 4% Conv OHL Mexico SAB Reg S

13/25.04.18 441,000.00 402,644.00 0.30

EUR 1,050,000 Parpublica Part Pub SGPS SA 5.25% Conv GalpEner 10/28.09.17

979,568.42 1,096,007.54 0.83

EUR 1,000,000 Solidium Oy 0.5% Conv Sen TeliaSonera AB 12/29.09.15 1,016,250.00 1,048,437.50 0.79 EUR 800,000 Steinhoff Finance Hg GmbH 4.5% Conv 11/31.03.18 766,857.14 872,060.00 0.66 EUR 500,000 Steinhoff Finance Hg GmbH 5% Conv 10/22.05.16 543,533.33 580,445.00 0.44 EUR 800,000 Steinhoff Finance Hg GmbH 6.375% Conv Ser SHF 12/26.05.17 835,000.00 882,304.00 0.67 EUR 10,500 Technip SA 0.5% Conv 10/01.01.16 1,011,939.17 1,034,559.94 0.79 EUR 750,000 UCB 4.5% Conv 09/22.10.15 919,819.87 951,945.00 0.72 EUR 4,500 Unibail-Rodamco SE 0.75% Conv 12/01.01.18 1,029,055.19 1,111,750.26 0.84

30,739,082.21 34,035,457.82 25.79

GBP 800,000 British Land (Jersey) Ltd 1.5% Conv 12/10.09.17 984,580.54 1,020,341.40 0.77 GBP 500,000 Intu (JE) Ltd 2.5% Conv Reg S Sen 12/04.10.18 630,800.73 633,431.13 0.48 GBP 400,000 TUI Travel Plc 4.9% Conv REGS SerTT 10/27.04.17 488,117.74 570,835.02 0.43 GBP 400,000 TUI Travel Plc 6% Conv 09/05.10.14 504,945.94 554,414.17 0.42

2,608,444.95 2,779,021.72 2.10

HKD 5,000,000 China Oversea Gr Oc Fin Ca Ltd Step-down Conv 12/21.03.17 592,409.21 580,389.74 0.44 HKD 16,000,000 China Petroleum & Chem Corp 0% Conv 07/24.04.14 1,836,879.67 1,816,338.19 1.38 HKD 8,000,000 Hengan Intl Group Co Ltd 0% Conv Reg S Sen 13/27.06.18 797,360.04 806,801.92 0.61 HKD 6,000,000 Soho China Ltd 3.75% Conv Reg-S 09/02.07.14 711,227.38 750,557.33 0.57 HKD 5,000,000 Tong Jie Ltd 0% Conv Shanghai Ind Hgs Ltd Reg S 13/18.02.18 500,988.32 491,208.68 0.37 HKD 10,000,000 Wharf Finance (2014) Ltd 2.3% Conv Wharf Hgs 11/07.06.14 995,535.27 975,985.43 0.74

5,434,399.89 5,421,281.29 4.11

JPY 60,000,000 ABC-Mart Inc 0% Conv Reg S Sen 13/05.02.18 526,996.76 554,928.58 0.42 JPY 40,000,000 Asahi Glass Co Ltd 0% Conv 09/14.11.14 324,346.07 302,520.15 0.23 JPY 60,000,000 Asahi Group Holdings Ltd 0% Conv 08/26.05.23 579,921.84 566,176.05 0.43 JPY 40,000,000 Asahi Group Holdings Ltd 0% Conv Sen 08/26.05.28 323,238.24 387,107.20 0.29 JPY 35,000,000 Ebara Corp 0% Conv Ser 6 13/19.03.18 348,742.73 345,997.32 0.26 JPY 40,000,000 Lotte Shopping Co Ltd 0% Conv 11/05.07.16 311,015.20 305,572.10 0.23 JPY 120,000,000 Nidec Corp 0% Conv 10/18.09.15 958,018.33 968,460.95 0.73




70



JPY 40,000,000 Nippon Meat Packers Inc 0% Conv Ser 5 10/03.03.14 395,445.18 340,068.53 0.26 JPY 42,000,000 Sawai Pharmaceutical Co Ltd 0% Conv Sen 10/17.09.15 423,321.83 466,311.46 0.35 JPY 50,000,000 Square Enix Hgs Co Ltd 0% Conv 10/04.02.15 383,331.64 381,131.60 0.29 JPY 35,000,000 Takashimaya Co Ltd 0% Conv Reg-S Sen 09/14.11.14 328,181.63 320,131.03 0.24 JPY 90,000,000 Toray Industries Inc 0% Conv 07/12.03.14 715,786.94 678,724.82 0.51 JPY 30,000,000 Yamato Holdings Co Ltd 0% Reg S Conv 11/07.03.16 277,846.16 295,611.07 0.22

5,896,192.55 5,912,740.86 4.46

SGD 500,000 Capitaland Ltd 1.85% Conv Reg S 13/19.06.20 283,610.14 277,938.84 0.21 SGD 500,000 Capitaland Ltd 2.1% Conv Reg S Sen 06/15.11.16 309,024.27 295,006.07 0.22 SGD 1,500,000 Capitaland Ltd 2.875% Conv 09/03.09.16 916,071.80 926,159.19 0.70 SGD 500,000 CapitaMall Trust 2.125% Conv Reg S Sen 11/19.04.14 319,680.28 300,517.01 0.23 SGD 500,000 Keppel Land Ltd Conv 1.875% Sen 10/29.11.15 301,412.84 294,024.03 0.22 SGD 500,000 Ruby Assets Pte Ltd 1.6% Conv AsceREIT Uts 10/01.02.17 363,361.36 339,249.06 0.26

2,493,160.69 2,432,894.20 1.84

USD 700,000 Agile Property Holdings Ltd 4% Conv EMTN Sen 11/28.04.16 493,314.40 518,647.21 0.39 USD 800,000 Asia Cement Corp 0% Conv Far Eastern New Cent 11/27.01.16 580,345.04 589,436.10 0.45 USD 2,700,000 Billion Express Inv Ltd 0.75% Conv ChiUniHk 10/18.10.15 2,159,941.54 2,077,598.37 1.57 USD 600,000 Cathay Financial Hg Co Ltd 0% Conv Reg S Sen 12/14.08.14 521,669.34 538,259.75 0.41 USD 500,000 Celltrion Inc 2.75% Conv Reg S Sen 13/27.03.18 310,735.53 333,024.20 0.25 USD 900,000 China Overseas Finance 0% Conv 07/14.05.14 868,250.15 999,360.80 0.76 USD 750,000 ENN Energy Hgs Ltd 0% Conv Sen 13/26.02.18 629,998.85 631,812.30 0.48 USD 600,000 Giant Great Ltd 3% Conv GuangInv 11/21.07.16 562,895.78 554,443.01 0.42 USD 1,100,000 Glencore Finance SA 5% Conv 09/31.12.14 1,041,647.37 971,527.81 0.74 USD 800,000 Golden Agri-Resources Ltd 2.5% Conv Reg S Sen 12/04.10.17 604,688.64 550,420.10 0.42 USD 900,000 HKEx International Ltd 0.5% Conv HKExcCle Reg S

12/23.10.17 752,464.40 714,486.61 0.54

USD 1,000,000 Lotte Shopping Co Ltd 0% Conv 11/05.07.16 717,415.11 734,426.75 0.56 USD 2,200,000 Lukoil Intl Fin BV 2.625% Conv Sen 10/16.06.15 1,850,377.93 1,809,112.88 1.37 USD 800,000 Olam Intl Ltd 6% Conv 09/15.10.16 742,291.88 568,249.77 0.43 USD 600,000 Pegatron Corp 0% Conv Ser 4938 12/06.02.17 512,308.21 532,357.29 0.40 USD 700,000 Pyrus Ltd 7.5% Conv EmaaProp 10/20.12.15 546,170.95 707,009.05 0.54 USD 400,000 San Miguel Corp 2% Conv Reg S 11/05.05.14 370,027.75 295,677.07 0.22 USD 1,950,000 Shire Plc 2.75% Conv 07/09.05.14 1,707,697.34 1,811,507.85 1.37 USD 2,250,000 Siemens Financierings NV 1.65% cum Wts Ser WW

12/16.08.19 1,741,712.03 1,805,071.12 1.37

USD 2,250,000 Siemens Financieringsmaatsc NV 1.05% Cum Wts 12/16.08.17 1,724,838.37 1,779,881.77 1.35 USD 400,000 SM Investments Corp 1.625% Conv 12/15.02.17 387,239.53 374,284.13 0.28 USD 800,000 Subsea 7 SA 1% Reg-S Sen Conv 12/05.10.17 614,586.89 614,077.22 0.47 USD 500,000 TPK Holding Co Ltd 0% Conv Reg S Sen 12/01.10.17 514,981.27 373,175.69 0.28 USD 600,000 Wistron Corp 0% Conv 12/19.01.15 489,452.67 456,038.80 0.35 USD 400,000 YTL Corp Finance (Labuan) Ltd 1.875% Conv YTL 10/18.03.15 327,589.02 315,782.98 0.24

20,772,639.99 20,655,668.63 15.66

Total bonds 67,943,920.28 71,237,064.52 53.96

Bonds related to a basket of shares

SGD 1,500,000 Temasek Fin III Private Ltd 0% Lk Stand Chart 11/24.10.14 941,963.83 916,171.24 0.70 Total bonds related to a basket of shares 941,963.83 916,171.24 0.70


Bonds

EUR 1,600,000 ENI SpA 0.25% EMTN Sen Conv Galp Energia SGPS B 12/30.11.15

1,648,980.00 1,679,232.00 1.27

EUR 2,000,000 ENI SpA 0.625% Conv Snam Sen 13/18.01.16 2,005,181.82 2,055,560.00 1.56 EUR 6,500 Technip SA 0.25% Conv 11/01.01.17 693,386.78 726,233.48 0.55

4,347,548.60 4,461,025.48 3.38

JPY 40,000,000 Fukuyama Transporting Co Ltd 0% Conv 12/22.03.17 393,502.92 390,733.61 0.30




71



USD 1,350,000 Annaly Capital Management Inc Conv 12/15.05.15 1,059,897.43 1,018,767.41 0.77 USD 2,000,000 Archer-Daniels Midland Co 0.875% Conv Sen 07/15.02.14 1,516,018.55 1,509,477.18 1.14 USD 575,000 Ares Capital Corp 5.75% Conv 11/01.02.16 492,021.28 458,895.26 0.35 USD 800,000 BES Finance Ltd 3.5% EMTN Conv Sen BBradesco

12/06.12.15 657,115.57 635,142.54 0.48

USD 800,000 Boston Prop Ltd Part 3.625% Ser 144A Conv 08/15.02.14 649,924.14 608,874.93 0.46 USD 1,300,000 Cemex SAB de CV 3.25% Ser 144A Conv CemexSAB

11/15.03.16 1,013,880.43 1,230,698.69 0.93

USD 1,125,000 Cemex SAB de CV 3.75% Conv 11/15.03.18 870,354.91 1,088,338.26 0.82 USD 1,350,000 Cemex SAB de CV 4.875% Conv Cemex SAB ADR 10/15.03.15 946,809.22 1,185,276.56 0.90 USD 2,250,000 Cobalt Intl Energy Inc 2.625% Conv Sen 12/01.12.19 1,774,536.28 1,766,580.45 1.34 USD 600,000 Concur Technologies Inc 0.5% Conv Ser 144A 13/15.06.18 499,355.13 543,425.09 0.41 USD 850,000 Covanta Holding Corp 3.25% Conv 10/01.06.14 822,321.37 869,013.12 0.66 USD 900,000 Electronic Arts 0.75% Conv Electronic Arts Inc 12/15.07.16 664,311.02 726,527.62 0.55 USD 900,000 General Cable Corp 4.5% Conv 09/15.11.29 820,466.21 751,736.93 0.57 USD 1,350,000 Goldcorp Inc 2% Conv 09/01.08.14 1,239,242.05 1,010,085.31 0.76 USD 400,000 Gulf Keystone Petroleum Ltd 6.25% Conv Ser GKP 12/18.10.17 294,657.19 308,191.39 0.23 USD 500,000 Hologic Inc 2% Conv 07/15.12.37 385,041.66 370,870.13 0.28 USD 625,000 Hologic Inc 2% Conv Sen 10/15.12.37 570,965.48 522,875.48 0.40 USD 1,525,000 Illumina Inc 0.25% Conv Ser 144A 11/15.03.16 1,101,611.15 1,283,615.58 0.97 USD 2,650,000 Intel Corp 2.95% Conv Sub 06/15.12.35 2,200,456.98 2,123,720.67 1.61 USD 3,050,000 Intel Corp 3.25% Ser 144A Conv 09/01.08.39 3,071,414.83 2,787,563.64 2.11 USD 1,525,000 Intl Game Technology 3.25% Conv 144A 09/01.05.14 1,300,537.65 1,249,820.13 0.95 USD 900,000 Jarden Corp 1.875% Sen Conv 12/15.09.18 731,020.00 799,013.11 0.61 USD 1,000,000 JDS Uniphase Corp 0.625% Conv Ser 144A 13/15.08.33 812,042.08 790,762.97 0.60 USD 600,000 Lam Research Corp 0.5% Conv Sen 12/15.05.16 504,461.61 501,087.01 0.38 USD 600,000 Lam Research Corp 1.25% Conv Ser 12/15.05.18 523,634.25 532,549.05 0.40 USD 1,100,000 Lifepoint Hospitals Inc 3.5% Conv Sen 07/15.05.14 850,998.68 856,945.72 0.65 USD 1,125,000 Linear Technology Corp 3% Conv 07/01.05.27 900,697.54 889,342.33 0.67 USD 1,000,000 MGIC Investment Corp 2% Conv Sen 13/01.04.20 896,907.61 937,890.26 0.71 USD 2,025,000 MGM Resorts Intl 4.25% Sen Conv 10/15.04.15 1,642,243.50 1,902,178.68 1.44 USD 900,000 Micron Technology Inc 1.875% Conv Sen 07/01.06.14 701,418.39 840,476.64 0.64 USD 600,000 National Bank of Abu Dhabi 1% EMTN Conv Reg-S 13/12.03.18 471,823.59 474,867.91 0.36 USD 900,000 Navistar Intl Corp 3% Conv Sen 09/15.10.14 701,940.73 680,029.56 0.51 USD 1,150,000 Newmont Mining Corp 1.25% Conv Sen 07/15.07.14 1,100,229.93 863,742.84 0.65 USD 900,000 Newmont Mining Corp 1.625% Conv 07/15.07.17 808,874.04 734,123.80 0.56 USD 1,350,000 Nuance Communications Inc 2.75% Sen Conv 12/01.11.31 1,144,901.92 1,010,650.25 0.77 USD 675,000 Old Republic Intl Corp 3.75% Conv Sen 11/15.03.18 549,524.25 594,583.59 0.45 USD 850,000 Owens-Brockway Glass Cont Inc 3% Conv Ser 144A

10/01.06.15 662,070.71 649,065.22 0.49

USD 1,500,000 Priceline.com Inc 0.35% Conv 144A 13/15.06.20 1,137,845.71 1,161,814.15 0.88 USD 1,800,000 Priceline.com Inc 1% Conv Sen 13/15.03.18 1,513,015.73 1,716,507.67 1.30 USD 810,000 ProLogis LP 3.25% Conv Sen 11/15.03.15 703,420.27 680,483.80 0.52 USD 1,000,000 Qihoo 360 Technology Co Ltd 2.5% Conv Reg S Sen

13/15.09.18 864,174.34 834,103.08 0.63

USD 1,800,000 Salesforce.com Inc 0.25% Conv Ser 144A 13/01.04.18 1,376,339.87 1,430,103.82 1.08 USD 900,000 Salix Pharmaceutical Ltd 1.5% Conv Ser B 12/15.03.19 692,098.40 818,316.64 0.62 USD 1,770,000 SanDisk Corp 1.5% Conv Sen 10/15.08.17 1,598,688.39 1,731,467.41 1.31 USD 700,000 Shizuoka Bank (The) Ltd 0% Conv Reg S Sen 13/25.04.18 618,665.85 589,667.33 0.45 USD 600,000 SK Hynix Inc 2.65% Conv Sen 10/14.05.15 498,141.54 500,794.38 0.38 USD 900,000 Starwood Property Trust Inc 4.55% Conv Sen 13/01.03.18 757,511.56 692,083.87 0.52 USD 750,000 Teva Pharm Fin LLC 0.25% Conv Sen Ser C 06/01.02.26 603,446.62 576,018.84 0.44 USD 625,000 Trinity Industries Inc 3.875% Conv Sub 06/01.06.36 546,791.54 562,612.23 0.43 USD 625,000 United States Steel Corp 4% Conv US Steel 09/15.05.14 546,344.74 475,120.08 0.36 USD 2,150,000 WellPoint Inc 2.75% Ser 144A Conv 12/15.10.42 1,785,647.69 2,036,101.23 1.54

48,195,859.61 48,911,999.84 37.04

Total bonds 52,936,911.13 53,763,758.93 40.72




72




Bonds

USD 1,525,000 Liberty Interactive Llc 0.75% Conv Ser 144A Sen 13/30.03.43 1,280,278.81 1,275,723.78 0.97 USD 900,000 Molina Healthcare Inc 1.125% Conv 144A 13/15.01.20 723,709.56 714,273.79 0.54 Total bonds 2,003,988.37 1,989,997.57 1.51


Cash at banks 2,762,266.52 2.09


Total 132,011,559.73 100.00

KBC BONDS INFLATION - LINKED BONDS


73

The market for inflation-linkers continued to suffer in the first six months of the financial year from waning demand and limited liquidity. The situation subsequently improved considerably, with narrowing bid/offer spreads and the possibility of trading larger amounts (10 million euros and above) without any problem. The relationship between the pattern of real inflation forecasts and break-even inflation was extremely volatile once again, but the general trend did result in declining break-even rates, which is normal against a backdrop of declining headline inflation. This may be interpreted as a normalisation of the market, as correlations like this had ceased to be automatic. Regulations in France governing savings accounts of the ‘Livret A’ type were modified by raising the upper, non-taxable limit. French citizens responded by shifting cash en masse to this form of saving, generating intense demand for French government bonds linked to French domestic inflation, causing them to outperform paper linked to the European harmonised inflation rate. A substantial proportion of the fund’s strong performance is therefore attributable to our overweighting of these assets. However, this phenomenon is gradually waning and we decreased the overweighting again by the end of the financial year. The return to calm on the bond markets and high real rate on Italian linkers made us decide to overweight these in relation to French linkers. The positive trend in BTPs became the driving force behind fund's outperformance compared to the index in the second half of the financial year. We remain cautious due to the volatility of market sentiment. Inflation is heading down, and is likely to continue to fall in the months ahead, so demand for inflation-linked bonds will remain subdued. However, this market is still intrinsically cheaper than the market for bonds with a nominal interest rate and still merits a place in all bond portfolios. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




74

Assets Securities portfolio at market value 169,772,889.63 Cash at banks 895,296.88 Other liquid assets 20,609.78 Receivable on issues of shares 498.82 Income receivable on portfolio 425,467.44








Number of capitalisation shares "Institutional Shares" outstanding 647,181.4029 Net asset value per capitalisation share "Institutional Shares" 128.75




75

Income Interest on bonds and other debt securities, net 3,263,577.28 Interest on bank accounts 35.48 Commissions received 93,819.37 Other income 14.11 Total income 3,357,446.24

Expenses Management fees 931,229.10 Custodian fees 81,189.00 Banking charges and other fees 972.44 Transaction fees 3.00 Central administration costs 108,003.99 Professional fees 1,970.70 Other administration costs 18,844.40 Subscription duty ("taxe d'abonnement") 57,738.84 Other taxes 157,690.91 Interest paid on bank liabilities 2,500.19 Other expenses 8,345.32 Total expenses 1,368,487.89


Net realised gain/(loss) - on securities portfolio 5,201,778.83


Net variation of the unrealised gain/(loss) - on securities portfolio -3,984,693.70


Dividends paid -935,572.37










76

Total net assets - as at 30.09.2013 170,826,320.03 - as at 30.09.2012 207,629,071.03 - as at 30.09.2011 415,056,764.11 Portfolio Turnover Rate (in %) - as at 30.09.2013 7.17 Number of capitalisation shares - outstanding at the beginning of the year 85,851.6764 - issued 25,694.8278 - redeemed -58,706.3067 - outstanding at the end of the year 52,840.1975 Net asset value per capitalisation share - as at 30.09.2013 877.91 - as at 30.09.2012 866.36 - as at 30.09.2011 791.97 Performances of capitalisation shares (in %) - as at 30.09.2013 1.33 - as at 30.09.2012 9.39 - as at 30.09.2011 -3.42 TER per capitalisation share (in %) - as at 30.09.2013 0.83 Number of distribution shares - outstanding at the beginning of the year 71,967.1053 - issued 3,376.5105 - redeemed -14,924.1822 - outstanding at the end of the year 60,419.4336 Net asset value per distribution share - as at 30.09.2013 653.13 - as at 30.09.2012 657.62 - as at 30.09.2011 613.38 Performances of distribution shares (in %) - as at 30.09.2013 1.32 - as at 30.09.2012 9.40 - as at 30.09.2011 -3.42 TER per distribution share (in %) - as at 30.09.2013 0.84 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 13.00 Shares outstanding at dividend date 71,967.1053 Number of capitalisation shares "Institutional B

Shares"






77



Shares" (in %)


(in %)

- as at 30.09.2013 0.96 Number of capitalisation shares "Institutional Shares" - outstanding at the beginning of the year 556,759.7494 - issued 100,091.6536 - redeemed -9,670.0001 - outstanding at the end of the year 647,181.4029 Net asset value per capitalisation share "Institutional

Shares"

- as at 30.09.2013 128.75 - as at 30.09.2012 126.74 - as at 30.09.2011 115.60 Performances of capitalisation shares "Institutional

Shares" (in %)

- as at 30.09.2013 1.59 - as at 30.09.2012 9.64 - as at 30.09.2011 -3.03 TER per capitalisation share "Institutional Shares"

(in %)

- as at 30.09.2013 0.58




78





Bonds

EUR 5,100,000 Deutschland ILB 11/15.04.18 5,580,343.57 5,689,773.25 3.33 EUR 5,000,000 Deutschland ILB Ser I/L 12/15.04.23 5,212,585.94 5,125,393.13 3.00 EUR 5,500,000 Deutschland VAR Inflation Index 06/15.04.16 6,265,011.49 6,709,958.70 3.93 EUR 8,000,000 Deutschland VAR Lk Inflation Index 09/15.04.20 9,960,604.51 9,852,912.27 5.77 EUR 5,000,000 France ILB OAT 10/25.07.19 5,345,792.22 5,778,016.20 3.38 EUR 2,600,000 France ILB OAT 12/25.07.18 2,591,994.86 2,752,443.56 1.61 EUR 3,000,000 France ILB Ser OAT 10/25.07.22 3,308,098.09 3,405,891.97 1.99 EUR 4,200,000 France VAR OAT Inflation Index 02/25.07.32 6,218,649.49 6,936,919.53 4.06 EUR 7,000,000 France VAR OAT Inflation Index 04/25.07.15 8,046,688.73 8,734,230.40 5.11 EUR 4,300,000 France VAR OAT Inflation Index 07/25.07.40 4,975,546.14 5,573,819.73 3.26 EUR 7,000,000 France VAR OAT Inflation Index 08/25.07.23 8,648,391.02 8,808,415.62 5.16 EUR 3,500,000 France VAR OAT Inflation Index 99/25.07.29 5,475,771.43 6,008,315.20 3.52 EUR 11,000,000 France VAR OAT Lk Eurozone Inflation 04/25.07.20 14,059,836.93 15,320,110.33 8.97 EUR 10,000,000 France VAR OAT Lk French Inflation 05/25.07.17 10,789,171.13 12,008,482.69 7.03 EUR 3,400,000 Italia ILB 09/15.09.41 2,958,644.48 3,035,034.99 1.78 EUR 7,800,000 Italia ILB BPT 11/15.09.26 7,165,742.80 8,099,593.54 4.74 EUR 7,100,000 Italia ILB Ser CPI 10/15.09.21 6,734,775.99 7,250,946.61 4.25 EUR 3,700,000 Italia ILB Ser CPI 11/15.09.16 3,798,796.10 4,003,950.08 2.34 EUR 1,500,000 Italia VAR BTP Lk CPI Ex Tobacco Index 04/15.09.14 1,754,448.76 1,855,567.42 1.09 EUR 4,500,000 Italia VAR BTP Lk CPI Ex Tobacco Index Sen 04/15.09.35 4,424,358.09 4,673,497.50 2.74 EUR 11,500,000 Italia VAR Lk CPI 06/15.09.17 11,985,457.44 13,365,740.40 7.82 EUR 7,600,000 Italia VAR Sen Lk CPI 07/15.09.23 7,450,049.71 8,307,351.93 4.86 EUR 11,000,000 Italia VAR Ser CPI Lk European inflation 08/15.09.19 10,790,109.22 12,134,833.37 7.10 Total bonds 153,540,868.14 165,431,198.42 96.84


Bonds

EUR 4,000,000 France ILB Ser BTNi 11/25.07.16 4,112,790.36 4,341,691.21 2.54 Total bonds 4,112,790.36 4,341,691.21 2.54


Cash at banks 895,296.88 0.52


Total 170,826,320.03 100.00

KBC BONDS EUROPE


79

Economic growth remained very weak in Europe during the financial year, and was even negative in a few countries. Nevertheless, Europe appears to be emerging from the doldrums slowly but surely thanks to the economic growth in German. The measures taken everywhere to reduce budget deficits took their toll. The Southern European countries, in particular, suffered badly from the measures that were imposed upon them. Fortunately the words of the president of the ECB at the end of August had the desired effect: he declared that the bank would do whatever it takes to defend the euro, following which spreads between ‘core’ countries like Germany and the European periphery narrowed significantly. The UK economy also made a weak start to the financial year, but improved noticeably from Q2 2013 onwards, bolstered by a marked recovery in the housing market. The result was a general decline in interest rates in Europe. Economic activity remained highly depressed, leaving little scope for higher interest rates, while diminished fear of investing in more risk-exposed countries also meant that yields tended to fall as demand rose. This situation is mirrored in the fund. The duration was held around 95%, based on the very low level of yields, while holdings of peripheral European countries were brought back in line with the benchmark. Once it became clear that the rally on the periphery was not just a flash in the pan, holdings of Italian government bonds were initially also slightly overweighted once again to benefit from the rate spread, and subsequently the position in Spain was also increased. The weighting of UK bonds remained at the benchmark 20%, and a neutral duration was maintained. We do not expect any fundamental shifts in the market in the months ahead. Interest rates in the core euro area countries have reached such low levels that it is reasonable to fear that this cannot continue. However, the economic statistics do not seem to suggest a substantial recovery in growth. Periphery spreads have been tightening but higher volatility remains around the corner as headlines are expected to keep blowing hot and cold. In short: a cautious investment policy seems the most appropriate. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".

KBC BONDS EUROPE



80

Assets Securities portfolio at market value 37,516,276.02 Cash at banks 730,060.78 Receivable on issues of shares 387.05 Income receivable on portfolio 502,018.28








KBC BONDS EUROPE



81


Expenses Management fees 316,853.30 Custodian fees 25,280.21 Banking charges and other fees 854.86 Central administration costs 32,885.82 Professional fees 903.79 Other administration costs 8,981.71 Subscription duty ("taxe d'abonnement") 16,765.42 Other taxes 26,929.48 Interest paid on bank liabilities 280.68 Other expenses 3,335.10 Total expenses 433,070.37


Net realised gain/(loss) - on securities portfolio 285,254.23 - on forward foreign exchange contracts -25,693.60 - on foreign exchange 34,201.77



Result of operations 374,934.43

Dividends paid -584,586.08






KBC BONDS EUROPE




82

Total net assets - as at 30.09.2013 38,658,147.07 - as at 30.09.2012 50,271,055.48 - as at 30.09.2011 51,558,810.42 Portfolio Turnover Rate (in %) - as at 30.09.2013 -2.35 Number of capitalisation shares - outstanding at the beginning of the year 67,585.9400 - issued 2,275.0870 - redeemed -16,319.2990 - outstanding at the end of the year 53,541.7280 Net asset value per capitalisation share - as at 30.09.2013 238.05 - as at 30.09.2012 235.64 - as at 30.09.2011 217.40 Performances of capitalisation shares (in %) - as at 30.09.2013 1.02 - as at 30.09.2012 8.39 - as at 30.09.2011 1.88 TER per capitalisation share (in %) - as at 30.09.2013 0.97 Number of distribution shares - outstanding at the beginning of the year 171,937.0817 - issued 4,095.7360 - redeemed -35,886.7202 - outstanding at the end of the year 140,146.0975 Net asset value per distribution share - as at 30.09.2013 113.51 - as at 30.09.2012 115.77 - as at 30.09.2011 110.60 Performances of distribution shares (in %) - as at 30.09.2013 1.02 - as at 30.09.2012 8.38 - as at 30.09.2011 1.86 TER per distribution share (in %) - as at 30.09.2013 0.97 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 3.40 Shares outstanding at dividend date 171,937.0817 Number of capitalisation shares "Institutional B

Shares"


KBC BONDS EUROPE




83



Shares" (in %)


(in %)

- as at 30.09.2013 0.92

KBC BONDS EUROPE



84





Bonds

EUR 2,800,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 2,802,122.95 2,807,047.52 7.26 EUR 500,000 Belgium 3.5% Ser 63 11/28.06.17 549,980.00 546,100.00 1.41 EUR 1,600,000 Czech Republic 4.125% EMTN Sen 05/18.03.20 1,619,481.08 1,826,720.00 4.73 EUR 750,000 Deutschland 3% 10/04.07.20 794,436.79 844,200.00 2.18 EUR 700,000 Deutschland 3.25% 10/04.07.42 744,117.00 795,620.00 2.06 EUR 1,350,000 EIB 4.625% EMTN Ser INTL 04/15.04.20 1,531,980.00 1,604,610.00 4.15 EUR 900,000 Espana 4.25% 08/31.01.14 921,644.24 910,575.00 2.36 EUR 2,800,000 Espana 5.85% 11/31.01.22 2,761,475.52 3,138,660.00 8.12 EUR 475,000 Finland 4% 09/04.07.25 537,019.55 558,433.75 1.44 EUR 150,000 Finland 4.375% Sen 08/04.07.19 174,944.46 176,355.00 0.46 EUR 900,000 France 4% OAT 04/25.04.14 948,744.00 919,588.50 2.38 EUR 500,000 France 4.50% T-Bond 09/25.04.41 632,356.25 599,900.00 1.55 EUR 500,000 IBRD 3.875% EMTN Ser GDIF 09/20.05.19 527,345.00 572,175.00 1.48 EUR 5,750,000 Italia 5% BTP 11/01.03.22 5,749,082.62 6,039,225.00 15.62 EUR 1,200,000 Italia 5.25% BTP Sen 02/01.08.17 1,258,492.25 1,297,680.00 3.36 EUR 800,000 Nederlandse Waterschapsbank NV 4.25% EMTN 04/16.09.14 865,360.00 830,960.00 2.15 EUR 500,000 Netherlands 4% 05/15.01.37 652,179.21 607,968.95 1.57 EUR 150,000 Oesterreich 1.95% Sen 12/18.06.19 155,196.83 155,685.00 0.40 EUR 850,000 Oesterreich 4.15% 07/15.03.37 890,832.30 1,037,935.00 2.68 EUR 1,700,000 Poland 3.625% EMTN 06/01.02.16 1,695,311.70 1,803,700.00 4.67

25,812,101.75 27,073,138.72 70.03

GBP 1,500,000 EIB 8.75% 95/25.08.17 2,891,936.52 2,283,201.32 5.91 GBP 670,000 United Kingdom 4.25% T-Stock 08/07.12.49 962,948.58 925,197.61 2.39 GBP 760,000 United Kingdom 4.25% T-Stock 09/07.09.39 969,572.88 1,034,396.25 2.68 GBP 1,050,000 United Kingdom 4.75% T-Stock 05/07.03.20 1,542,692.92 1,471,551.71 3.81 GBP 50,000 United Kingdom 5% T-Stock 02/07.09.14 62,280.98 62,366.45 0.16 GBP 1,200,000 United Kingdom 6% T-Stock 98/07.12.28 2,192,174.93 1,939,770.18 5.02

8,621,606.81 7,716,483.52 19.97

SKK 20,000,000 Intesa Sanpaolo SpA 5% EMTN Ser 62 03/24.03.18 669,189.40 671,512.98 1.74 Total bonds 35,102,897.96 35,461,135.22 91.74


Bonds

EUR 1,400,000 Slovakia 4.35% Ser 216 10/14.10.25 1,504,560.00 1,555,106.00 4.02 Total bonds 1,504,560.00 1,555,106.00 4.02


Bonds

EUR 500,000 Arcade Finance Plc FRN Ser 2008-17 Mez Sec Falcon 08/14.05.14

500,100.45 500,034.80 1.29

Total bonds 500,100.45 500,034.80 1.29


Cash at banks 730,060.78 1.89


Total 38,658,147.07 100.00

KBC BONDS CORPORATES USD


85

Investors were chiefly looking for returns in the period under review. Corporate bonds initially posted a healthy return, but some of the gains were subsequently reversed. The first part of the reporting period was relatively problem-free: US economic statistics were strong and Latin America and Asia did not disappoint either. At the same time, the crisis in Europe became less acute. This favourable climate persisted until the Italian elections, which produced an unexpected political stalemate that briefly panicked investors. The markets recovered quickly, however, and confidence returned. Late spring heralded a new period of risk aversion. The Chinese economy put in a disappointing performance, with weak export figures and a decline in investment. And the government also made it clear that it was unlikely to implement large-scale stimulus measures this time round. In the meantime, the US central bank indicated that it would probably start to scale back its quantitative easing programme in 2013. The symbolic effect – the end of an unprecedented cycle of money creation – was major. Investors sold off riskier assets on a large scale. The credit spread widened. Although the markets recovered to some extent, there was no return to the low spreads seen in May. The spread on US corporate bonds first narrowed to 130 basis points above the US 10-year rate. The spread stood at 140 basis points at the end of the reporting period. In the interim, it has increased to 155 basis points. The CDX – the US investment-grade CDS index – ended the period under review at 75 basis points. The US 10-year rate increased by 100 basis points in the second half of the reporting period. The duration was 6.2 years. The yield averaged 3%. We will maintain this position in the months ahead. We expect credit spreads to remain largely stable in the months ahead. The combination of more concrete information on the future of quantitative easing and temporary flare-ups in the European crisis might prompt further bouts of risk aversion. The fundamental trend of a recovering world economy and gradual European recovery from the crisis will, however, persist. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".


Statement of net assets (in USD) as at 30th September 2013


86

Assets Securities portfolio at market value 385,757,144.99 Cash at banks 530,051.27 Other liquid assets 216,776.89 Receivable on sales of securities 2,370,000.00 Receivable on issues of shares 402,451.84 Income receivable on portfolio 4,906,701.78









Statement of operations and other changes in net assets (in USD) from 1st October 2012 to 30th September 2013


87

Income Interest on bonds and other debt securities, net 17,366,294.55 Interest on bank accounts 757.76 Commissions received 5,023,784.17 Total income 22,390,836.48



Net realised gain/(loss) - on securities portfolio -1,737,125.31 - on future contracts -641,258.04 - on foreign exchange 1,554.63











Statistical information (in USD) as at 30th September 2013



88

Total net assets - as at 30.09.2013 393,634,390.76 - as at 30.09.2012 281,366,351.61 - as at 30.09.2011 216,812,426.11 Portfolio Turnover Rate (in %) - as at 30.09.2013 -25.75 Number of capitalisation shares - outstanding at the beginning of the year 49,622.0538 - issued 22,708.9336 - redeemed -15,900.0332 - outstanding at the end of the year 56,430.9542 Net asset value per capitalisation share - as at 30.09.2013 960.08 - as at 30.09.2012 971.55 - as at 30.09.2011 887.68 Performances of capitalisation shares (in %) - as at 30.09.2013 -1.18 - as at 30.09.2012 9.45 - as at 30.09.2011 1.64 TER per capitalisation share (in %) - as at 30.09.2013 1.02 Number of distribution shares - outstanding at the beginning of the year 88,502.5258 - issued 81,882.9015 - redeemed -46,410.2387 - outstanding at the end of the year 123,975.1886 Net asset value per distribution share - as at 30.09.2013 510.00 - as at 30.09.2012 534.09 - as at 30.09.2011 508.94 Performances of distribution shares (in %) - as at 30.09.2013 -1.19 - as at 30.09.2012 9.44 - as at 30.09.2011 1.63 TER per distribution share (in %) - as at 30.09.2013 1.03 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 18.00 Shares outstanding at dividend date 88,502.5258 Number of capitalisation shares "Institutional B

Shares"



Statistical information (in USD) (continued) as at 30th September 2013



89



Shares" (in %)


(in %)

- as at 30.09.2013 0.98


Statement of investments and other net assets (in USD) as at 30th September 2013


90





Bonds

USD 1,150,000 Abbott Laboratories 6.15% Sen 07/30.11.37 1,531,957.37 1,390,729.50 0.35 USD 2,210,000 Alcoa Inc 5.55% Sen 07/01.02.17 2,391,022.87 2,372,214.00 0.60 USD 2,150,000 Altria Group Inc 9.7% 08/10.11.18 2,959,195.16 2,849,502.50 0.72 USD 380,000 Altria Group Inc 9.95% 08/10.11.38 597,837.65 571,425.00 0.15 USD 2,500,000 American Express Co 6.15% Sen 07/28.08.17 2,995,418.65 2,915,500.00 0.74 USD 3,630,000 American Express Cred Corp 2.8% MTN Ser D Tr 75

11/19.09.16 3,822,381.60 3,801,154.50 0.97

USD 5,410,000 American Intl Group Inc 5.05% Sen 06/01.10.15 5,864,086.97 5,826,840.50 1.48 USD 1,340,000 Amgen Inc 5.75% Ser Sen 10/15.03.40 1,516,380.46 1,410,752.00 0.36 USD 2,740,000 Anadarko Petroleum Corp 6.375% Sen 10/15.09.17 3,262,812.44 3,194,018.00 0.81 USD 1,890,000 Apache Corp 6% Sen 07/15.01.37 2,265,289.05 2,083,914.00 0.53 USD 1,870,000 Associates Corp of North Amer 6.95% Sen 98/01.11.18 2,170,059.85 2,197,904.50 0.56 USD 1,410,000 AstraZeneca Plc 6.45% Sen 07/15.09.37 1,828,116.29 1,718,649.00 0.44 USD 5,300,000 AT&T Inc 5.8% Sen 09/15.02.19 6,296,509.29 6,116,465.00 1.55 USD 3,900,000 Banco do Brasil SA 4.5% Ser REGS Tr 15 10/22.01.15 4,068,534.20 4,056,000.00 1.03 USD 2,610,000 Bank of America Corp 5.625% Ser L 10/01.07.20 2,920,418.30 2,921,112.00 0.74 USD 2,360,000 Bank of America Corp 5.7% Sen 12/24.01.22 2,685,451.38 2,643,318.00 0.67 USD 1,780,000 Bank of China Hong Kong Branch 5.55% Ser REGS

10/11.02.20 1,943,767.74 1,930,855.00 0.49

USD 2,930,000 Barclays Bank Plc 6.75% Sen 09/22.05.19 3,546,978.16 3,505,745.00 0.89 USD 3,060,000 BNP Paribas US MTN Program LLC 5% BKNT Tr 714

11/15.01.21 3,355,716.86 3,314,745.00 0.84

USD 3,440,000 Burlington North Santa Fe LLC 5.65% 07/01.05.17 4,010,167.14 3,916,784.00 0.99 USD 3,590,000 Capital One Fin Corp 6.15% Sub 06/01.09.16 4,092,233.24 4,020,441.00 1.02 USD 3,280,000 Citigroup Inc 6.125% Sen 07/21.11.17 3,810,665.03 3,778,683.98 0.96 USD 1,680,000 Citigroup Inc 6.125% Sub 06/25.08.36 1,772,311.83 1,703,173.41 0.43 USD 3,220,000 Coca-Cola Co 3.3% Gl Sen 11/01.09.21 3,543,899.95 3,301,627.00 0.84 USD 1,310,000 Coca-Cola Enterprises Inc 3.5% Sen 10/15.09.20 1,371,791.17 1,326,417.64 0.34 USD 2,390,000 ConocoPhillips 6.5% Sen 09/01.02.39 3,070,486.39 3,023,708.50 0.77 USD 1,600,000 ConocoPhillips 6.95% Sen 99/15.04.29 2,152,919.71 2,021,456.00 0.51 USD 2,760,000 Consolidated Edison Co of New York 5.85% Ser-A

08/01.04.2018 3,271,481.56 3,228,841.20 0.82

USD 2,040,000 CSX Corp 6.25% Sen 08/01.04.15 2,295,486.21 2,203,608.00 0.56 USD 3,700,000 CTBC Bank Co Ltd VAR Reg S Sub 05/17.09.Perpetual 3,756,100.00 3,723,125.00 0.95 USD 3,500,000 CVS Caremark Corp 5.75% Sen 07/01.06.17 4,123,835.88 4,005,925.00 1.02 USD 1,110,000 Daimler Fin North America LLC 8.5% 01/18.01.31 1,673,274.48 1,601,730.00 0.41 USD 2,480,000 Deere and Co 3.9% Sen 12/09.06.42 2,455,705.09 2,193,361.60 0.56 USD 760,000 Deutsche Telekom Intl Fin BV VAR 00/15.06.30 1,130,169.14 1,058,756.00 0.27 USD 2,510,000 DirecTV Hgs Llc Fin Co Inc 5% Sen 11/01.03.21 2,756,240.41 2,605,806.70 0.66 USD 2,400,000 Dow Chemical Co 2.5% Sen 10/15.02.16 2,478,326.32 2,483,400.00 0.63 USD 2,460,000 EnCana Corp 5.9% Sen 07/01.12.17 2,890,847.33 2,825,614.55 0.72 USD 3,400,000 Enterprise Products Operat LLC 6.3% Sen 07/15.09.17 4,036,296.82 3,954,370.00 1.00 USD 2,160,000 Exelon Generation Co LLC 6.2% Sen 07/01.10.17 2,535,975.04 2,474,582.40 0.63 USD 1,350,000 Florida Power Corp 6.4% Sen 08/15.06.38 1,735,143.30 1,649,712.42 0.42 USD 1,520,000 Gaz Capital SA 9.25% Ser REGS 09/23.04.19 1,915,166.67 1,870,208.00 0.48 USD 2,100,000 General Electric Capital Corp 5.5% Sen 10/08.01.20 2,435,397.90 2,381,505.00 0.60 USD 1,910,000 General Electric Capital Corp 5.875% Tr 806 08/14.01.38 2,136,325.76 2,099,643.90 0.53 USD 790,000 Glaxosmithkline Capital Inc 6.375% 08/15.05.38 1,034,204.60 979,244.50 0.25 USD 3,910,000 GlaxoSmithKline Capital Plc 2.85% Sen 12/08.05.22 3,966,669.91 3,744,802.50 0.95 USD 40,000 Goldman Sachs Group Inc 5.35% Sen 06/15.01.16 43,910.79 43,520.00 0.01 USD 1,070,000 Goldman Sachs Group Inc 6.125% Sen 03/15.02.33 1,207,014.51 1,178,230.50 0.30 USD 1,090,000 Goldman Sachs Group Inc 6.75% 07/01.10.37 1,182,962.98 1,136,751.62 0.29 USD 1,060,000 Hess Corp 7.3% Sen 01/15.08.31 1,319,056.71 1,287,635.00 0.33 USD 1,200,000 Hewlett-Packard Co 4.65% Sen 11/09.12.21 1,218,552.00 1,184,640.00 0.30 USD 1,680,000 Home Depot Inc 5.875% Sen 06/16.12.36 2,094,114.81 1,926,204.00 0.49 USD 3,590,000 HSBC Holdings Plc 4% Sen 12/30.03.22 3,793,101.69 3,667,185.00 0.93 USD 2,750,000 HSBC Holdings Plc 5.1% Sen 11/05.04.21 3,085,568.86 3,034,215.25 0.77 USD 1,110,000 Ingersoll Rand Global Hg Co Ltd 6.875% Sen 08/15.08.18 1,353,847.89 1,315,538.70 0.33 USD 3,200,000 Intl Paper Co 7.95% Sen 08/15.06.18 4,058,570.82 3,965,120.00 1.01




91



USD 3,110,000 JP Morgan Chase Bank New York 6% Ser BKNT 07/01.10.17 3,608,498.63 3,554,263.50 0.90 USD 3,180,000 JPMorgan Chase & Co 6% Sen 07/15.01.18 3,708,876.77 3,659,544.00 0.93 USD 700,000 JPMorgan Chase & Co 6.4% Sen 07/02.10.17 838,045.61 816,550.00 0.21 USD 1,750,000 JPMorgan Chase & Co 6.4% Sen 08/15.05.38 2,172,429.54 2,074,365.48 0.53 USD 2,110,000 JPMorgan Chase & Co VAR Ser 1 08/30.10.Perpetual 2,397,275.01 2,302,326.50 0.58 USD 720,000 Kellogg Co 7.45% Ser B 01/01.04.31 965,074.44 925,054.06 0.23 USD 1,190,000 Kinder Morgan Energy Part LP 6.95% DMTN 07/15.01.38 1,431,942.01 1,358,392.79 0.34 USD 2,690,000 Lloyds Bank Plc 5.8% MTN Reg S Tr 2 10/13.01.20 3,040,861.40 3,052,074.00 0.77 USD 2,180,000 Merrill Lynch & Co Inc 6.875% MTN Tr 677 08/25.04.18 2,567,219.23 2,573,067.08 0.65 USD 340,000 Merrill Lynch & Co Inc 7.75% Sub 08/14.05.38 425,600.59 419,254.00 0.11 USD 2,100,000 Metlife Inc 5% Sen 05/15.06.15 2,293,674.26 2,247,559.34 0.57 USD 978,000 Mondelez Intl Inc 6.875% Reg S Sen 12/26.01.39 1,262,434.73 1,197,963.06 0.30 USD 780,000 Mondelez Intl Inc 6.875% Sen 07/01.02.38 1,079,715.60 946,179.00 0.24 USD 800,000 Morgan Stanley 4.875% MTN Sub Ser F 12/01.11.22 809,496.00 800,560.00 0.20 USD 1,760,000 Morgan Stanley 6.25% MTN Ser F 06/09.08.26 1,997,307.15 1,967,416.00 0.50 USD 2,060,000 Nevada Power Co 6.5% Ser S 08/01.08.18 2,546,306.83 2,469,837.00 0.63 USD 330,000 New York Life Insurance Co 6.75% Reg S 09/15.11.39 462,145.76 409,247.55 0.10 USD 3,800,000 News America Inc 5.3% 05/15.12.14 4,131,328.54 4,009,000.00 1.02 USD 1,700,000 Nippon Life Insurance Company VAR Reg S 12/18.10.42 1,725,088.33 1,674,840.00 0.43 USD 3,100,000 Norfolk Southern Corp 3.25% Sen 11/01.12.21 3,221,224.00 3,036,450.00 0.77 USD 700,000 Orange VAR 02/01.03.31 964,649.00 933,415.00 0.24 USD 1,100,000 Pernod-Ricard 4.45% Reg S Sen 11/15.01.22 1,143,923.00 1,133,165.00 0.29 USD 2,000,000 Petrobras Intl Fin Co Ltd 7.875% Sen 09/15.03.19 2,411,731.94 2,312,480.00 0.59 USD 2,750,000 Petroleos Mexicanos 8% Sen Gl 09/03.05.19 3,496,815.67 3,345,925.00 0.85 USD 2,050,000 Petronas Capital Ltd 5.25% Ser REGS 09/12.08.19 2,282,917.52 2,272,322.50 0.58 USD 1,180,000 Pfizer Inc 5.95% Sen 07/01.04.37 1,498,544.72 1,391,043.00 0.35 USD 770,000 Pfizer Inc 7.2% Sen 09/15.03.39 1,146,596.19 1,048,586.00 0.27 USD 850,000 Philip Morris Intl Inc 6.375% Sen 08/16.05.38 1,098,895.72 1,011,712.50 0.26 USD 2,230,000 Procter & Gamble Co 4.7% Sen 09/15.02.19 2,519,107.85 2,532,165.00 0.64 USD 3,800,000 Prudential Financial Inc 4.75% Ser D Tr 33 09/17.09.15 4,134,768.67 4,082,720.00 1.04 USD 1,610,000 QWest Corp 6.875% 93/15.09.33 1,610,584.45 1,561,700.00 0.40 USD 2,660,000 Rio Tinto Finance USA Ltd 6.5% Sen 08/15.07.18 3,187,859.81 3,110,072.00 0.79 USD 1,150,000 Roche Holdings Inc 7% Ser REGS 09/01.03.39 1,613,788.40 1,534,445.00 0.39 USD 3,450,000 Sanofi 4% Sen 11/29.03.21 3,847,969.57 3,655,965.00 0.93 USD 1,350,000 SB Capital SA 5.717% Sen 11/16.06.21 1,464,267.86 1,398,330.00 0.36 USD 2,060,000 Shell Intl Finance BV 6.375% Sen 08/15.12.38 2,690,089.96 2,576,236.00 0.65 USD 1,000,000 Standard Chartered Plc 8.125% Pref 08/27.11.Perpetual 1,060,252.72 1,011,230.00 0.26 USD 650,000 Time Warner Cable Inc 6.75% Sen 09/15.06.39 829,357.95 631,377.50 0.16 USD 1,430,000 Time Warner Inc 7.625% 01/15.04.31 1,906,009.38 1,800,899.10 0.46 USD 2,830,000 Transocean Inc 4.95% 10/15.11.15 3,083,407.51 3,035,458.56 0.77 USD 2,830,000 Union Pacific Corp 4% Sen 10/01.02.21 3,118,193.27 3,004,045.00 0.76 USD 2,060,000 United Health Group Inc 4.375% Sen 12/15.03.42 2,103,446.78 1,897,301.20 0.48 USD 3,500,000 United Technologies Corp 4.5% Sen 10/15.04.20 4,004,979.20 3,877,300.00 0.98 USD 2,730,000 Vale Overseas Ltd 5.625% Sen 09/15.09.19 2,979,113.95 2,982,252.00 0.76 USD 1,030,000 Verizon Communications Inc 6.4% Sen 08/15.02.38 1,269,662.46 1,140,530.33 0.29 USD 1,450,000 Vodafone Group Plc 6.15% 07/27.02.37 1,699,727.32 1,585,865.00 0.40 USD 3,840,000 VTB Capital SA 6.465% Ser REGS 10/04.03.15 4,097,772.40 4,057,536.00 1.03 USD 1,760,000 Wal-Mart Stores Inc 6.5% Sen 07/15.08.37 2,300,843.48 2,188,824.00 0.56 USD 3,700,000 Wells Fargo & Co 5.625% Sen 07/11.12.17 4,186,882.64 4,245,380.00 1.08 USD 3,600,000 Wells Fargo & Co 5.75% MTN Sen Tr 32 08/01.02.18 4,273,471.37 4,163,580.00 1.06 USD 3,180,000 Western Union Co (The) 5.93% 07/01.10.16 3,492,326.01 3,548,244.00 0.90 Total bonds 262,032,257.43 254,300,459.92 64.59


Bonds

USD 1,700,000 Aetna Inc 2.75% Sen 12/15.11.22 1,579,828.70 1,573,180.00 0.40 USD 3,030,000 America Movil SAB de CV 5% Sen 10/16.10.19 3,351,529.98 3,308,608.50 0.84 USD 1,600,000 American Honda Finance Corp 7.625% Ser REGS Tr 8

08/01.10.18 2,066,845.78 1,999,120.00 0.51

USD 620,000 Anheuser Bush Inbe WldWide Inc 8.2% Sen Gtd 11/15.01.39 1,013,915.45 916,701.00 0.23 USD 2,810,000 AON Corp 3.125% Sen 11/27.05.16 2,970,212.18 2,942,536.75 0.75 USD 1,600,000 Aon Plc 3.5% Sen 10/30.09.15 1,669,247.44 1,669,943.92 0.42 USD 1,700,000 AT&T Inc 5.35% Sen 11/01.09.40 1,697,134.00 1,648,065.00 0.42




92



USD 3,900,000 Banco Bradesco Grand Cayman Br 4.1% RegS Tr 7

10/23.03.15 4,040,849.08 4,035,135.00 1.02

USD 2,300,000 Bank of America Funding Corp 5.65% MTN Ser L 08/01.05.18 2,590,441.56 2,593,135.00 0.66 USD 1,500,000 Boston Prop Ltd Part 3.85% Sen 12/01.02.23 1,497,855.00 1,495,425.00 0.38 USD 2,900,000 Bristol Myers Squibb Co 3.25% Sen 12/01.08.42 2,569,443.97 2,316,230.00 0.59 USD 1,100,000 BT Group Plc VAR 00/15.12.30 1,661,633.00 1,646,260.00 0.42 USD 1,400,000 CDP Financial Inc 5.6% Reg S Sen 09/25.11.39 1,765,329.25 1,605,969.68 0.41 USD 3,330,000 Cisco Systems Inc 4.95% Sr 09/15.02.19 3,831,923.89 3,786,210.00 0.96 USD 1,280,000 Comcast Corp 6.95% Sen 07/15.08.37 1,630,462.27 1,611,712.00 0.41 USD 3,710,000 Deutsche Bk AG London 6% Sen 07/01.09.17 4,342,196.90 4,262,604.50 1.08 USD 2,500,000 Discovery Communications LLC 4.375% Sen 11/15.06.21 2,783,062.00 2,616,750.00 0.66 USD 3,000,000 Eaton Corp 2.75% Reg S Sen 12/02.11.22 2,968,386.00 2,786,550.00 0.71 USD 2,300,000 Energy Treansfer Partner LP 3.6% Sen 13/01.02.23 2,145,999.00 2,149,235.00 0.55 USD 2,600,000 Express Scripts Hg Co 3.9% Sen 13/15.02.22 2,717,348.00 2,634,580.00 0.67 USD 2,720,000 Fifth Third Bancorp 3.625% Sen 11/25.01.16 2,928,475.02 2,867,668.80 0.73 USD 1,720,000 Fifth Third Bank 4.75% Ser BKNT Tr 1 05/01.02.15 1,844,263.79 1,807,478.86 0.46 USD 2,450,000 Florida Power & Light Co 4.05% 12/01.06.42 2,513,908.71 2,268,518.70 0.58 USD 1,200,000 General Electric Capital Corp 6.75% 02/15.03.32 1,558,516.66 1,440,300.00 0.37 USD 2,820,000 Goldman Sachs Group Inc 6.15% Sen 08/01.04.18 3,211,212.56 3,229,041.00 0.82 USD 1,600,000 Gr Televisa SA 6.625% Sen 05/18.03.25 1,989,940.19 1,847,040.00 0.47 USD 2,790,000 IBM Corp 4% Sen 12/20.06.42 2,871,594.21 2,514,208.50 0.64 USD 1,930,000 Intuit Inc 5.75% Sen 07/15.03.17 2,202,752.33 2,158,014.44 0.55 USD 3,800,000 KeyCorp 3.75% Ser MTN I 10/13.08.15 4,038,698.32 3,994,614.53 1.01 USD 2,700,000 Kraft Foods Group Inc 3.5% Ser B 13/06.06.22 2,741,868.56 2,672,325.00 0.68 USD 2,550,000 Marathon Oil Corp 6% Sen 07/01.10.17 2,994,877.26 2,934,667.50 0.75 USD 2,850,000 Mc Donald's Corp 3.7% MTN Sen Tr 109 12/15.02.42 2,743,612.07 2,470,522.50 0.63 USD 1,270,000 Medco Health Solutions Inc 2.75% Sen 10/15.09.15 1,329,571.28 1,311,994.07 0.33 USD 1,980,000 Microsoft Corp 4.2% Sen 09/01.06.19 2,253,577.11 2,193,543.00 0.56 USD 800,000 MidAmerican Energy Hgs Co 6.125% Sen 06/01.04.36 923,744.00 904,560.00 0.23 USD 3,600,000 Natl Capital Trust II VAR Reg S 05/17.06.Perpetual 3,707,328.00 3,694,500.00 0.94 USD 1,810,000 NBCUniversal Media LLC 2.875% Sen 11/01.04.16 1,894,017.16 1,894,889.00 0.48 USD 3,920,000 Nomura Holdings Inc 5% Sen 10/04.03.15 4,145,319.02 4,102,280.00 1.05 USD 1,470,000 Oracle Corp 6.125% Sen 09/08.07.39 1,888,235.98 1,751,578.50 0.44 USD 1,370,000 Pacificorp 6% 09/15.01.39 1,725,719.31 1,643,589.00 0.42 USD 2,540,000 Pemex Project Fding Mast Trust 5.75% Sen 09/01.03.18 2,884,516.61 2,827,053.02 0.72 USD 2,750,000 Pepsico Inc 3.6% Sen 12/13.08.42 2,559,053.53 2,289,375.00 0.58 USD 1,690,000 PG & E Corp 6.05% 04/01.03.34 2,106,002.48 1,891,279.00 0.48 USD 2,500,000 Phillips 66 4.3% Sen 12/01.04.22 2,748,486.00 2,562,800.00 0.65 USD 2,800,000 Republic Services Inc 3.8% Sen 11/15.05.18 3,037,112.47 2,990,972.04 0.76 USD 1,730,000 Sabmiller Holdings Inc 4.95% Reg-S Sen 12/15.01.42 1,905,458.08 1,755,431.00 0.45 USD 3,400,000 Simon Property Group LP 5.65% Sen 10/01.02.20 4,017,612.25 3,904,696.00 0.99 USD 2,700,000 Suncor Energy Inc 6.1% Sen 08/01.06.18 3,259,660.51 3,169,675.26 0.81 USD 1,200,000 Target Corp 7% Sen 08/15.01.38 1,637,062.04 1,551,788.40 0.39 USD 2,280,000 Tesco Plc 5.5% 07/15.11.17 2,623,315.84 2,558,958.00 0.65 USD 3,400,000 Time Warner Cable Inc 5.85% Sen 07/01.05.17 3,956,272.68 3,701,920.00 0.94 USD 3,572,000 UBS AG Stamford 4.875% BKNT Sen 10/04.08.20 4,061,479.64 4,000,818.60 1.01 USD 3,110,000 WellPoint Inc 3.125% Sen Tr1 12/15.05.22 3,108,726.26 2,952,634.00 0.75 Total bonds 136,305,633.38 131,456,685.07 33.41


USD 2,500,000 Lehman Brothers Hgs Inc 6.75% 07/28.12.17 2,506,000.00 0.00 0.00 Total bonds in default of payment 2,506,000.00 0.00 0.00


Cash at banks 530,051.27 0.13


Total 393,634,390.76 100.00

KBC BONDS EMERGING EUROPE (formerly KBC BONDS CENTRAL EUROPE )


93

This sub-fund invests primarily in government bonds denominated in the local currencies of the Czech Republic, Poland, Turkey, Slovakia and Hungary. The financial year can be split into two parts. The quest for a higher return pushed yields to new lows in many emerging-country bond markets in the first half of the financial year. However, the prospect of a possible scaling back of quantitative easing in the US later this year caused rates to rise sharply again in the second half of the year, and put pressure mainly on the currencies of those emerging countries with large external imbalances, such as Turkey. The converging economies in Europe benefited recently from the improving economic situation in the euro area. The Czech economy, for instance, came out of recession in the second quarter of 2013, thanks mainly to the stronger demand for exports. In spite of that, domestic demand is still very weak and the Czech Republic is having to contend with high unemployment. The central bank has no further scope for lowering its key rate, as this is already at a rock-bottom 0.05%. There is an ongoing debate about more active intervention on the currency market to improved competitiveness. Hungary's budget deficit is now within the 3% Maastricht limit, and the country was able to free itself from the EU's 'Excessive Deficit Procedure'. Budgetary consolidation did, however, depress economic growth. To offset this, the central bank made monthly rate cuts, bringing interest rates to 3.60% in September. The forint was volatile against the euro in the reporting period. Ultimately, the Hungarian currency depreciated. Following the exemple of the other emerging market currencies. Growth in the Polish economy was weak in the first half of the financial year. This was largely attributable to the weak domestic demand and disappointing exports. The central bank lowered its key rate to 2.5%. As a result, the zloty depreciated against the euro. Domestic demand and exports have firmed again recently in the wake of the improving economic situation in Western Europe. The Turkish economy recovered after a poor Q4 2012, expanding by 3.7% in the first half of 2013. This was driven by strong domestic consumption. Unfortunately, the balance-of-payments current account deficit is still sizeable. The central bank took measures to shrink the deficit by allowing the currency to depreciate and hiking up the interest rate for commercial loans to put a brake on credit growth. The central bank put up the loan rate by a total of 125 bp in July and August, to 7.75%. We expect the normalisation of monetary policy in the US to continue to cause increased volatility in the next financial year. As a result, currencies of countries with large external imbalances – such as Turkey – could continue to experience particular pressure. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




94

Assets Securities portfolio at market value 110,357,928.88 Cash at banks 995,970.92 Other liquid assets 181,522.13 Receivable on sales of securities 2,106,480.55 Receivable on issues of shares 22,870.82 Income receivable on portfolio 2,261,755.31 Interest receivable on bank accounts 285.21 Unrealised gain on forward foreign exchange contracts 61,232.15


Liabilities Bank liabilities 1,481.76 Payable on treasury transactions 106.79 Payable on redemptions of shares 150,989.32 Interest on bank liabilities and expenses payable 201,240.88





Number of capitalisation shares "Institutional B Shares" outstanding 29.0000 Net asset value per capitalisation share "Institutional B Shares" 857.71

Number of distribution shares "USD frequent dividend" outstanding 1,804.3654 Net asset value per distribution share "USD frequent dividend" USD 602.06




95

Income Interest on bonds and other debt securities, net 8,387,174.12 Interest on bank accounts 280.07 Commissions received 52,743.27 Other income 83,420.27 Total income 8,523,617.73

Expenses Management fees 2,087,119.29 Custodian fees 101,607.75 Banking charges and other fees 9,937.49 Transaction fees 158.00 Central administration costs 132,151.37 Professional fees 1,842.39 Other administration costs 21,766.33 Subscription duty ("taxe d'abonnement") 78,744.00 Other taxes 128,579.39 Interest paid on bank liabilities 6,551.65 Other expenses 20,410.01 Total expenses 2,588,867.67


Net realised gain/(loss) - on securities portfolio 7,177,566.44 - on future contracts 67,080.00 - on forward foreign exchange contracts -462,744.53 - on foreign exchange 110,379.75


Net variation of the unrealised gain/(loss) - on securities portfolio -11,098,288.46 - on forward foreign exchange contracts 34,533.20












96

Total net assets - as at 30.09.2013 115,634,227.22 - as at 30.09.2012 256,769,864.62 - as at 30.09.2011 421,039,671.28 Portfolio Turnover Rate (in %) - as at 30.09.2013 129.27 Number of capitalisation shares - outstanding at the beginning of the year 66,222.0446 - issued 7,095.6107 - redeemed -37,096.7439 - outstanding at the end of the year 36,220.9114 Net asset value per capitalisation share - as at 30.09.2013 855.72 - as at 30.09.2012 870.00 - as at 30.09.2011 765.21 Performances of capitalisation shares (in %) - as at 30.09.2013 -1.64 - as at 30.09.2012 13.69 - as at 30.09.2011 -6.35 TER per capitalisation share (in %) - as at 30.09.2013 1.49 Number of distribution shares - outstanding at the beginning of the year 396,831.1432 - issued 5,310.3732 - redeemed -222,438.1653 - outstanding at the end of the year 179,703.3511 Net asset value per distribution share - as at 30.09.2013 466.39 - as at 30.09.2012 498.13 - as at 30.09.2011 458.71 Performances of distribution shares (in %) - as at 30.09.2013 -1.64 - as at 30.09.2012 13.68 - as at 30.09.2011 -6.38 TER per distribution share (in %) - as at 30.09.2013 1.48 Dividends paid to distribution shares Ex-dividend date 01.10.2012 Dividend per share 24.00 Shares outstanding at dividend date 396,831.1432 Number of capitalisation shares "Institutional B

Shares"

- outstanding at the beginning of the year 370.0000 - issued 466.0000 - redeemed -807.0000 - outstanding at the end of the year 29.0000





97



Shares" (in %)


(in %)

- as at 30.09.2013 1.47 Number of distribution shares "USD frequent

dividend"

- outstanding at the beginning of the year 2,457.7341 - issued 32.5526 - redeemed -685.9213 - outstanding at the end of the year 1,804.3654 Net asset value per distribution share "USD frequent

dividend"

- as at 30.09.2013 USD 602.06 - as at 30.09.2012 USD 608.36 - as at 30.09.2011 USD 586.35 Performances of distribution shares "USD frequent

dividend" (in %)

- as at 30.09.2013 3.93 - as at 30.09.2012 9.03 - as at 30.09.2011 -7.92 TER per distribution share "USD frequent dividend"

(in %)

- as at 30.09.2013 1.41 Dividends paid to distribution shares "USD frequent

dividend"

Ex-dividend date 01.10.2012 Dividend per share USD 2.34 Shares outstanding at dividend date 2,457.7341 Ex-dividend date 02.11.2012 Dividend per share USD 2.33 Shares outstanding at dividend date 2,413.8012 Ex-dividend date 03.12.2012 Dividend per share USD 2.33 Shares outstanding at dividend date 2,406.2647 Ex-dividend date 02.01.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 2,346.8990





98

Ex-dividend date 01.02.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 2,151.4855 Ex-dividend date 01.03.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 2,120.7546 Ex-dividend date 02.04.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 2,071.8128 Ex-dividend date 02.05.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 2,057.9655 Ex-dividend date 03.06.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 2,039.6763 Ex-dividend date 01.07.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 1,988.3477 Ex-dividend date 01.08.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 1,934.1845 Ex-dividend date 02.09.2013 Dividend per share USD 2.33 Shares outstanding at dividend date 1,819.0312




99





Bonds

BGN 4,000,000 KBC Ifima NV 7.6% EMTN Ser 3595 08/30.07.15 2,044,842.41 2,280,603.54 1.97 CZK 10,750,000 Czech Republic 3.75% Ser 46 05/12.09.20 386,972.71 471,068.25 0.41 CZK 10,000,000 Czech Republic 4.7% Ser 52 07/12.09.22 412,224.00 465,896.35 0.40 CZK 22,000,000 Czech Republic 5.7% Ser 58 09/25.05.24 1,147,625.14 1,122,337.89 0.97

1,946,821.85 2,059,302.49 1.78

EUR 2,000,000 Croatia 6.5% Sen 09/05.01.15 2,166,800.00 2,100,600.00 1.82 EUR 500,000 Gaz Capital SA 4.364% EMTN LPN Gazprom OAO Sen

13/21.03.25 512,500.00 507,200.00 0.44

EUR 4,000,000 Lithuania 4.85% Reg S 07/07.02.18 4,410,800.00 4,390,800.00 3.79 EUR 3,700,000 Romania 4.875% EMTN Sen 12/07.11.19 3,793,500.00 3,848,000.00 3.33 EUR 1,000,000 Romania 5.25% Ser 1 11/17.06.16 1,065,000.00 1,072,200.00 0.93 EUR 1,000,000 Slovakia 1.5% Ser 226 13/28.11.18 995,220.00 997,100.00 0.86 EUR 1,500,000 Slovakia 4% No 241 10/27.04.20 1,597,716.67 1,682,940.00 1.46 EUR 24,000 Slovenia 4% 07/22.03.18 22,489.20 22,860.00 0.02 EUR 1,000,000 Slovenia 4.125% Ser RS67 10/26.01.20 893,750.00 896,300.00 0.78 EUR 2,000,000 Turkey 5.875% Sen 07/02.04.19 2,330,000.00 2,195,000.00 1.90 EUR 1,300,000 VEB Finance Plc 4.032% LPN Vneshecon Reg S Ser 8

13/21.02.23 1,286,792.00 1,257,295.00 1.09

19,074,567.87 18,970,295.00 16.42

HUF 750,000,000 Hungary 5.5% Ser 16/C 05/12.02.16 2,530,178.59 2,592,032.74 2.24 HUF 190,000,000 Hungary 6% Ser 23/A 07/24.11.23 621,963.29 646,425.10 0.56 HUF 629,210,000 Hungary 6.5% Ser 19/A 08/24.06.19 2,127,989.41 2,244,827.26 1.94 HUF 665,000,000 Hungary 6.75% Ser 17/A 01/24.11.17 2,432,378.00 2,387,498.32 2.06 HUF 213,000,000 Hungary 6.75% Ser 17/B 06/24.02.17 759,004.52 760,921.13 0.66 HUF 100,000,000 Hungary 7% Ser 22A 11/24.06.22 290,346.05 363,141.85 0.31 HUF 695,750,000 Hungary 7.5% Ser 20/A 04/12.11.20 2,711,524.06 2,621,669.49 2.27 HUF 450,000,000 Hungary 7.75% Ser D 15/C 12/24.08.15 1,627,629.50 1,612,195.44 1.39

13,101,013.42 13,228,711.33 11.43

PLN 75,000,000 Poland 0% Ser OK0714 12/25.07.14 17,380,680.49 17,385,559.83 15.04 PLN 12,100,000 Poland 5.25% Ser 1017 06/25.10.17 3,032,576.22 3,032,044.48 2.62 PLN 20,500,000 Poland 5.25% Ser 1020 09/25.10.20 4,950,307.56 5,156,834.17 4.46 PLN 29,000,000 Poland 5.75% Ser 0429 08/25.04.29 7,356,614.85 7,621,851.21 6.59 PLN 26,250,000 Poland 5.75% Ser WS0922 02/23.09.22 6,458,133.32 6,825,754.40 5.90 PLN 12,400,000 Poland Government Bd 5.5% Ser 1019 08/25.10.19 2,952,706.62 3,156,686.86 2.73 PLN 8,500,000 Rabobank Nederland NV 5% EMTN 09/21.08.14 2,088,137.63 2,042,991.79 1.77

44,219,156.69 45,221,722.74 39.11

RUB 71,900,000 Caterpillar Intl Fin Plc 7.5% EMTN Reg-S 12/20.12.15 1,857,961.85 1,649,150.00 1.43 TRY 4,000,000 Akbank 7.5% Reg S Sen 13/05.02.18 1,710,366.66 1,320,487.77 1.14 TRY 3,000,000 SB Capital SA 7.4% LPN Reg S Ser 15 13/04.03.18 1,246,289.49 1,009,543.03 0.87 TRY 21,800,000 Turkey 11% 09/06.08.14 10,120,930.82 8,142,277.36 7.04 TRY 16,000,000 Turkey 7.1% 13/08.03.23 6,672,294.58 5,147,820.20 4.45 TRY 5,000,000 Turkey 9% 11/27.01.16 2,005,988.88 1,844,664.80 1.60 TRY 2,000,000 Turkey 9.5% 12/12.01.22 955,969.10 751,512.79 0.65 TRY 4,000,000 Turkiye Garanti Bankasi AS 7.375% Reg S Sen 13/07.03.18 1,693,164.38 1,313,547.44 1.14

24,405,003.91 19,529,853.39 16.89

Total bonds 106,649,368.00 102,939,638.49 89.03




100




Bonds

EUR 6,000,000 Slovakia 4.35% Ser 216 10/14.10.25 5,956,766.67 6,664,740.00 5.76 TRY 2,000,000 BNP Paribas Fortis Funding 10% EMTN 06/07.04.16 938,777.00 753,550.39 0.65 Total bonds 6,895,543.67 7,418,290.39 6.41


Cash at banks 995,970.92 0.86

Bank liabilities -1,481.76 0.00


Total 115,634,227.22 100.00

KBC BONDS GLOBAL EMERGING OPPORTUNITIES


101

The goal of this sub-fund is to invest in bonds denominated in emerging-country currencies. The sub-fund had a weak financial year, driven primarily by the sharp appreciation of the euro against most high-yield currencies. In trade-weighted terms, the European single currency appreciated by more than 5% in the past financial year. Overall, the prices of the bonds in the portfolio also decreased in value. The financial year can be split into two parts. The sub-fund performed very strongly between October and mid-May. The quest for a higher return pushed yields to new lows in many emerging-country bond markets in the first half of the financial year. However, the prospect of a possible scaling back of quantitative easing in the US later this year caused rates to rise sharply again in the second half of the financial year, and put pressure mainly on the currencies of those emerging countries with large external imbalances. Over the financial year as a whole, the Indian rupiah, Turkish lira, Brazilian real, Peruvian new sol, Malaysian ringgit and Colombian peso – which depreciated by more than 10% against the euro – weighed particularly heavily on the sub-fund's net asset value. We expect the normalisation of monetary policy in the US to continue to cause increased volatility in the next financial year. As a result, currencies of countries with large external imbalances – such as Brazil, Indonesia, India, Turkey and South Africa – could continue to experience particular pressure. Generally, we believe the euro is still very expensive, and prefer USD-related currencies with better fundamentals, such as the Mexican peso and Korean won, in the portfolio. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




102

Assets Securities portfolio at market value 195,514,611.25 Cash at banks 832,212.96 Receivable on sales of securities 3,321,997.61 Income receivable on portfolio 2,833,197.69 Other receivables 2,548.08


Liabilities Payable on purchases of securities 3,547,723.54 Interest on bank liabilities and expenses payable 341,957.78








103

Income Interest on bonds and other debt securities, net 8,378,802.58 Interest on bank accounts 5,306.06 Commissions received 66,399.60 Other income 138,434.88 Total income 8,588,943.12

Expenses Management fees 2,439,846.19 Custodian fees 110,673.32 Transaction fees 128.59 Central administration costs 143,936.70 Professional fees 2,033.25 Other administration costs 11,052.34 Subscription duty ("taxe d'abonnement") 21,258.84 Other taxes 212,553.44 Interest paid on bank liabilities 9,508.11 Other expenses 8,279.86 Total expenses 2,959,270.64


Net realised gain/(loss) - on securities portfolio 5,267,582.93 - on forward foreign exchange contracts 251,032.76 - on foreign exchange -485,221.45




Dividends paid -










104

Total net assets - as at 30.09.2013 198,614,886.27 - as at 30.09.2012 195,006,676.88 - as at 30.09.2011 139,174,718.72 Portfolio Turnover Rate (in %) - as at 30.09.2013 85.39 Number of capitalisation shares - outstanding at the beginning of the year 3,654.2647 - issued 269.0000 - redeemed -647.0001 - outstanding at the end of the year 3,276.2646 Net asset value per capitalisation share - as at 30.09.2013 635.91 - as at 30.09.2012 664.96 - as at 30.09.2011 585.47 Performances of capitalisation shares (in %) - as at 30.09.2013 -4.37 - as at 30.09.2012 13.58 - as at 30.09.2011 0.04 TER per capitalisation share (in %) - as at 30.09.2013 1.49 Number of capitalisation shares "Institutional B

Shares"

- outstanding at the beginning of the year 289,462.0000 - issued 29,830.0000 - redeemed -10,512.0000 - outstanding at the end of the year 308,780.0000 Net asset value per capitalisation share "Institutional

B Shares"


Shares" (in %)


(in %)

- as at 30.09.2013 1.45




105





Bonds

BRL 5,000,000 EBRD 9.5% Sen 09/06.11.13 2,084,196.37 1,660,998.81 0.84 BRL 10,000,000 IBRD 10% Ser 10395 10/21.01.15 3,319,772.02 3,355,798.94 1.69

5,403,968.39 5,016,797.75 2.53

CNY 12,000,000 America Movil SAB de CV 3.5% Sen 12/08.02.15 1,524,201.58 1,456,494.10 0.73 CNY 5,060,000 BP Capital Markets Plc 1.7% EMTN Reg S Sen 11/15.09.14 624,106.34 605,015.71 0.30 CNY 21,000,000 China 1.8% Sen 10/01.12.15 2,596,761.91 2,489,857.49 1.25 CNY 25,000,000 China 1.85% Reg S Sen 12/29.06.15 3,166,031.52 2,984,220.08 1.50 CNY 15,000,000 China 2.56% Reg S Sen 12/29.06.17 1,899,542.95 1,791,450.99 0.90 CNY 20,000,000 KFW AG 2% Sen 12/21.05.14 2,500,212.13 2,408,521.61 1.21 CNY 40,000,000 Swedish Export Credit 2.375% Sen 12/01.06.15 5,074,909.91 4,814,387.46 2.42

17,385,766.34 16,549,947.44 8.31

COP 2,600,000,000 Colombia 12% 05/22.10.15 1,422,175.71 1,153,828.66 0.58 COP 19,000,000,000 Colombia 9.85% 07/28.06.27 11,749,973.25 9,829,555.56 4.95

13,172,148.96 10,983,384.22 5.53

EUR 2,700,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 2,700,000.00 2,706,795.82 1.36 IDR 35,000,000,000 Export-Import Bank Korea (The) 8.3% EMTN Sen 11/15.03.14 2,878,312.10 2,178,762.04 1.10 KRW 70,000,000,000 Korea 3.25% Ser 0325-1412 11/10.12.14 48,296,775.05 48,527,459.29 24.43 KRW 8,000,000,000 Korea 3.25% Ser 0325-1506(12-2) 12/10.06.15 5,573,969.35 5,553,207.54 2.80 KRW 4,800,000,000 Korea 3.5% Ser 350-1406 Sen 11/10.06.14 3,449,618.92 3,328,350.23 1.68

57,320,363.32 57,409,017.06 28.91

MXN 620,000 Mexico 10% Bonos M30 06/20.11.36 4,422,000.98 4,594,578.49 2.31 MXN 1,000,000 Mexico 8% T-Bills Ser M 09/11.06.20 6,266,697.87 6,408,283.10 3.23 MXN 1,200,000 Mexico 8.5% Ser M 10 09/13.12.18 8,253,350.70 7,824,720.95 3.94 MXN 140,000 Mexico 9.5% Ser MI10 05/18.12.14 909,801.41 841,192.75 0.42

19,851,850.96 19,668,775.29 9.90

RUB 50,000,000 Rabobank Nederland NV 6.9% EMTN Sen 07/06.06.17 1,116,065.57 1,118,548.52 0.56 THB 200,000,000 Ministry of Finance 2.8% Sen 10/10.10.17 4,889,419.96 4,618,526.64 2.33 THB 100,000,000 Ministry of Finance 3.65% Sen 10/17.12.21 2,529,553.89 2,325,625.63 1.17

7,418,973.85 6,944,152.27 3.50

ZAR 10,000,000 South Africa 8% Ser R204 04/21.12.18 857,261.92 767,586.60 0.39 Total bonds 128,104,711.41 123,343,767.01 62.09


Bonds

MYR 52,000,000 Malaysia 3.314% Ser 12/0005 12/31.10.17 13,296,475.04 11,691,744.99 5.89 MYR 10,500,000 Malaysia 3.434% Ser 0211 11/15.08.14 2,401,811.97 2,389,173.60 1.20 MYR 21,500,000 Malaysia 3.58% Ser 11/0005 11/28.09.18 5,678,229.11 4,861,739.13 2.45 MYR 7,500,000 Malaysia 3.835% Ser 0110 10/12.08.15 1,763,979.14 1,718,970.66 0.87 MYR 47,000,000 Malaysia 4.262% Ser 06/0001 06/15.09.16 11,513,369.98 10,906,535.74 5.49 MYR 19,000,000 Malaysia 4.378% Ser 0902 09/29.11.19 4,567,564.66 4,466,341.12 2.25 MYR 47,000,000 Malaysia 5.094% Ser 04/002 04/30.04.14 11,669,908.80 10,786,074.54 5.43

50,891,338.70 46,820,579.78 23.58




106



PHP 50,000,000 Philippines 4.95% 10/15.01.21 922,872.35 924,390.20 0.47 THB 535,000,000 Ministry of Finance 3.25% 11/16.06.17 13,556,245.60 12,628,007.70 6.36 THB 500,000,000 Ministry of Finance 3.45% 11/08.03.19 12,837,136.99 11,797,866.56 5.94

26,393,382.59 24,425,874.26 12.30

Total bonds 78,207,593.64 72,170,844.24 36.35


Cash at banks 832,212.96 0.42


Total 198,614,886.27 100.00

KBC BONDS EMU SHORT



107

Assets Securities portfolio at market value 130,601,627.30 Other liquid assets 31,800.87 Receivable on sales of securities 1,756,547.26 Income receivable on portfolio 1,822,659.36


Liabilities Bank liabilities 488,011.13 Payable on redemptions of shares 78,290.39 Interest on bank liabilities and expenses payable 78,004.66




KBC BONDS EMU SHORT



108


Expenses Management fees 877,064.84 Custodian fees 67,018.44 Banking charges and other fees 342.56 Transaction fees 127.39 Central administration costs 87,151.38 Professional fees 1,488.83 Other administration costs 6,231.49 Subscription duty ("taxe d'abonnement") 13,047.69 Interest paid on bank liabilities 982.96 Other expenses 3,148.47 Total expenses 1,056,604.05


Net realised gain/(loss) - on securities portfolio -1,082,664.47 - on future contracts -2,630.00


Net variation of the unrealised gain/(loss) - on securities portfolio -570,136.48


Dividends paid -






KBC BONDS EMU SHORT




109

Total net assets - as at 30.09.2013 133,568,328.61 - as at 30.09.2012 97,669,014.35 Portfolio Turnover Rate (in %) - as at 30.09.2013 93.87 Number of capitalisation shares "Institutional B

Shares"


B Shares"

- as at 30.09.2013 1,045.30 - as at 30.09.2012 1,030.11 Performances of capitalisation shares "Institutional B

Shares" (in %)


(in %)

- as at 30.09.2013 0.84

KBC BONDS EMU SHORT



110





Bonds

EUR 1,500,000 Belgium 2.75% OLO Ser 59 10/28.03.16 1,602,435.00 1,582,995.00 1.18 EUR 4,000,000 Belgium 3.5% Ser 56 09/28.03.15 4,289,713.60 4,190,700.00 3.14 EUR 4,000,000 Belgium 3.75% OLO Ser 46 05/28.09.15 4,325,615.00 4,269,800.00 3.20 EUR 2,000,000 Belgium 8% Ser 23 OLO 95/28.03.15 2,359,975.75 2,228,520.00 1.67 EUR 8,000,000 Deutschland 2.75% 11/08.04.16 8,519,140.00 8,506,400.00 6.37 EUR 2,000,000 Deutschland 3.25% Ser 05 05/04.07.15 2,162,680.00 2,108,780.00 1.58 EUR 3,000,000 Deutschland 3.5% Ser 05 05/04.01.16 3,269,750.00 3,223,980.00 2.41 EUR 2,000,000 Deutschland 6% Ser 2 86/20.06.16 2,329,703.75 2,310,400.00 1.73 EUR 3,000,000 Espana 3% 10/30.04.15 3,012,839.38 3,063,000.00 2.29 EUR 3,500,000 Espana 3.15% 05/31.01.16 3,511,845.00 3,592,575.00 2.69 EUR 2,500,000 Espana 3.25% 10/30.04.16 2,550,934.48 2,570,125.00 1.92 EUR 3,350,000 Espana 3.3% 09/31.10.14 3,391,875.00 3,424,370.00 2.56 EUR 5,000,000 Espana 3.75% 12/31.10.15 5,157,934.17 5,188,000.00 3.88 EUR 4,500,000 Espana 4% 12/30.07.15 4,603,519.32 4,672,350.00 3.50 EUR 4,000,000 France 0.25% OAT 13/25.11.15 3,994,760.00 3,990,200.00 2.99 EUR 4,000,000 France 2.25% 11/25.02.16 4,208,132.86 4,177,400.00 3.13 EUR 3,000,000 France 2.5% 10/25.07.16 3,174,660.00 3,166,500.00 2.37 EUR 4,500,000 France 3% OAT 05/25.10.15 4,809,570.00 4,749,075.00 3.56 EUR 8,000,000 France 3.25% OAT 06/25.04.16 8,675,850.00 8,572,800.00 6.42 EUR 4,500,000 France 3.5% OAT 05/25.04.15 4,859,441.47 4,727,250.00 3.54 EUR 4,950,000 Italia 2.25% BTP Sen 13/15.05.16 4,965,229.38 4,949,505.00 3.71 EUR 4,800,000 Italia 2.75% BTP 12/01.12.15 4,853,960.00 4,871,040.00 3.65 EUR 6,000,000 Italia 3% BTP 10/01.11.15 6,127,455.67 6,117,000.00 4.58 EUR 5,500,000 Italia 3% BTP 10/15.04.15 5,458,743.12 5,610,000.00 4.20 EUR 5,300,000 Italia 3% T-Bonds 10/15.06.15 5,339,562.11 5,401,230.00 4.04 EUR 3,600,000 Italia 6% BPT 11/15.11.14 3,864,493.80 3,787,128.00 2.83 EUR 3,250,000 Netherlands 0% 13/15.04.16 3,234,497.50 3,216,525.00 2.41 EUR 2,500,000 Netherlands 0.75% EMTN 12/15.04.15 2,521,850.00 2,520,750.00 1.89 EUR 1,500,000 Netherlands 3.25% 05/15.07.15 1,617,600.00 1,580,272.50 1.18 EUR 4,000,000 Oesterreich 3.5% EMTN 05/15.07.15 4,331,085.00 4,232,400.00 3.17 Total bonds 123,124,851.36 122,601,070.50 91.79


Bonds

EUR 1,000,000 Arcade Finance Plc FRN Ser 2008-17 Mez Sec Falcon 08/14.05.14

1,000,010.10 1,000,069.60 0.75

EUR 7,000,000 D-Star Finance Plc FRN Ser 2008-5 Mez Sec Falcon 08/14.05.14

7,000,323.30 7,000,487.20 5.24

Total bonds 8,000,333.40 8,000,556.80 5.99


Bank liabilities -488,011.13 -0.37


Total 133,568,328.61 100.00

KBC BONDS EMU SHORT MEDIUM



111

Assets Securities portfolio at market value 97,572,262.06 Cash at banks 179,699.41 Other liquid assets 18,000.00 Receivable on sales of securities 999,504.25 Income receivable on portfolio 1,309,754.42 Unrealised gain on future contracts 18,480.00









112


Expenses Management fees 613,118.55 Custodian fees 46,129.88 Banking charges and other fees 242.05 Transaction fees 32.30 Central administration costs 59,977.33 Professional fees 1,218.62 Other administration costs 5,171.71 Subscription duty ("taxe d'abonnement") 9,497.76 Interest paid on bank liabilities 1.38 Other expenses 2,105.50 Total expenses 737,495.08


Net realised gain/(loss) - on securities portfolio 167,924.20 - on future contracts 2,180.00


Net variation of the unrealised gain/(loss) - on securities portfolio -933,095.86 - on future contracts 18,480.00


Dividends paid -










113

Total net assets - as at 30.09.2013 99,884,335.00 - as at 30.09.2012 57,650,581.92 Portfolio Turnover Rate (in %) - as at 30.09.2013 65.59 Number of capitalisation shares "Institutional B

Shares"


B Shares"

- as at 30.09.2013 1,104.11 - as at 30.09.2012 1,076.30 Performances of capitalisation shares "Institutional B

Shares" (in %)


(in %)

- as at 30.09.2013 0.84




114





Bonds

EUR 5,000,000 Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 5,012,354.03 5,012,584.86 5.02 EUR 1,000,000 Belgium 1.25% Ser 69 13/22.06.18 999,330.00 998,650.00 1.00 EUR 4,750,000 Belgium 4% OLO Ser 49 07/28.03.17 5,301,291.65 5,260,031.25 5.27 EUR 3,000,000 Belgium 4% OLO Ser 52 08/28.03.18 3,466,297.50 3,369,750.00 3.37 EUR 3,000,000 Deutschland 0.25% Ser 166 13/13.04.18 2,943,842.41 2,944,500.00 2.95 EUR 4,000,000 Deutschland 0.5% Ser 163 12/07.04.17 4,035,791.58 4,012,600.00 4.02 EUR 3,325,000 Deutschland 3.75% Ser 06 06/04.01.17 3,765,529.25 3,695,238.75 3.70 EUR 1,000,000 Deutschland 4% Ser 07 07/04.01.18 1,175,350.00 1,146,500.00 1.15 EUR 2,805,000 Deutschland 4.25% 07/04.07.17 3,284,652.66 3,203,871.00 3.21 EUR 3,000,000 Espana 3.8% 06/31.01.17 2,971,285.79 3,126,600.00 3.13 EUR 3,500,000 Espana 4.1% Sen 08/30.07.18 3,645,425.00 3,679,550.00 3.68 EUR 3,000,000 Espana 4.25% 11/31.10.16 3,043,573.72 3,169,800.00 3.17 EUR 3,200,000 Espana 4.5% 12/31.01.18 3,353,714.45 3,412,800.00 3.42 EUR 625,000 Finland 1.875% 11/15.04.17 661,993.33 651,937.50 0.65 EUR 748,000 Finland 3.875% 06/15.09.17 859,581.73 838,395.80 0.84 EUR 9,000,000 France 1% BTAN 12/25.07.17 9,048,077.68 9,055,800.00 9.07 EUR 1,250,000 France 1% OAT 13/25.05.18 1,249,912.50 1,247,625.00 1.25 EUR 3,100,000 France 1% OAT 13/25.11.18 3,045,192.00 3,068,070.00 3.07 EUR 5,000,000 France 3.75% OAT 07/25.04.17 5,634,286.89 5,524,500.00 5.53 EUR 1,208,000 France 4.25% OAT 07/25.10.17 1,397,281.52 1,370,717.60 1.37 EUR 4,200,000 Italia 3.5% 13/01.06.18 4,286,655.00 4,242,840.00 4.25 EUR 4,750,000 Italia 4% BTP 07/01.02.17 4,901,583.42 4,947,600.00 4.95 EUR 1,000,000 Italia 4.5% BTP 07/01.02.18 1,061,085.78 1,052,500.00 1.05 EUR 5,500,000 Italia 4.75% BOT 12/01.06.17 5,646,045.10 5,839,075.00 5.85 EUR 4,550,000 Italia 4.75% BTP 12/01.05.17 4,806,989.98 4,830,735.00 4.84 EUR 1,500,000 Netherlands 1.25% 12/15.01.18 1,535,845.00 1,520,175.00 1.52 EUR 3,250,000 Netherlands 2.5% 11/15.01.17 3,484,331.50 3,446,560.00 3.45 EUR 870,000 Netherlands 4.5% 07/15.07.17 1,033,429.50 990,442.80 0.99 EUR 2,250,000 Oesterreich 3.2% Sen 10/20.02.17 2,484,145.96 2,440,462.50 2.44 EUR 3,000,000 Oesterreich 4.65% Sen Ser 2 03/15.01.18 3,513,939.00 3,472,350.00 3.48 Total investments in securities 97,648,813.93 97,572,262.06 97.69

Cash at banks 179,699.41 0.18


Total 99,884,335.00 100.00

KBC BONDS STRATEGIC EMERGING MARKETS

Investment policy and outlook from 5th June 2013 to 30th September 2013

115

The goal of this sub-fund is to invest in local emerging-country bonds. The sub-fund had a weak financial year, driven primarily by the sharp appreciation of the euro against most high-yield currencies. In trade-weighted terms, the European single currency appreciated by more than 5% in the past financial year. Overall, the prices of the bonds in the portfolio also decreased in value. The financial year can be split into two parts. The sub-fund performed very strongly between October and mid-May. The quest for a higher return pushed yields to new lows in many emerging-country bond markets in the first half of the financial year. However, the prospect of a possible scaling back of quantitative easing in the US later this year caused rates to rise sharply again in the second half of the year, and put pressure mainly on the currencies of those emerging countries with large external imbalances. Over the financial year as a whole, the Indian rupiah, Turkish lira, Brazilian real, Peruvian new sol, Malaysian ringgit and Colombian peso – which depreciated b more than 10% against the euro – weighed particularly heavily on the sub-fund's net asset value. We expect the normalisation of monetary policy in the US to continue to cause increased volatility in the next financial year. As a result, currencies of countries with large external imbalances – such as Brazil, Indonesia, India, Turkey and South Africa – could remain continue to experience particular pressure. Generally, we believe the euro is still very expensive, and prefer USD-related currencies such as the Mexican peso and Korean won in the portfolio. Note: The information in this report represents historical data and is not an indication of future results. It has not been audited or otherwise verified by the "réviseur d'entreprises agréé".




116

Assets Securities portfolio at market value 193,862,731.15 Cash at banks 2,274,242.47 Income receivable on portfolio 4,330,469.38


Liabilities Interest on bank liabilities and expenses payable 210,874.61





Statement of operations and other changes in net assets (in EUR) from 5th June 2013 to 30th September 2013


117


Expenses Management fees 762,897.63 Custodian fees 34,720.63 Central administration costs 45,261.59 Professional fees 1,955.00 Other administration costs 4,605.29 Subscription duty ("taxe d'abonnement") 10,107.84 Interest paid on bank liabilities 40,522.64 Other expenses 47.04 Total expenses 900,117.66


Net realised gain/(loss) - on securities portfolio -268,961.52 - on foreign exchange 1,199,053.61




Dividends paid -




Total net assets at the beginning of the year -






118

Total net assets - as at 30.09.2013 200,256,568.39 Portfolio Turnover Rate (in %) - as at 30.09.2013 3.46 Number of capitalisation shares "Institutional B

Shares"

- outstanding at the beginning of the year 0.0000 - issued 215,233.0000 - redeemed -2,897.0000 - outstanding at the end of the year 212,336.0000 Net asset value per capitalisation share "Institutional

B Shares"

- as at 30.09.2013 943.11 Performances of capitalisation shares "Institutional B

Shares" (in %)

- as at 30.09.2013 - - as at 30.09.2012 - - as at 30.09.2011 - TER per capitalisation share "Institutional B Shares"

(in %)

- as at 30.09.2013 * 1.34 * annualised




119





Bonds

BRL 10,668,000 Asian Development Bank 5.25% EMTN 12/25.09.15 3,647,966.61 3,292,644.04 1.64 BRL 12,000,000 EBRD 5.5% EMTN Sen 12/16.10.15 3,780,028.52 3,725,886.08 1.86 BRL 41,000,000 EBRD 9% GMTN Gl Sen Dual Curr 11/28.04.14 14,892,099.50 13,620,871.23 6.80 BRL 31,830,000 EIB 5.5% EMTN Sen 12/25.09.15 10,023,716.65 9,802,022.36 4.89 BRL 15,000,000 Export & Development Canada 5.125% Ser 12-26 Tr2

12/31.07.14 5,247,496.33 4,823,789.68 2.41

BRL 14,000,000 IBRD 6% Ser 10929 13/15.09.16 3,948,941.47 4,252,921.00 2.12 BRL 25,500,000 Intl Finance Corp 5% GMTN Dual Currency Sen 12/21.12.15 7,640,825.19 7,760,369.13 3.88 BRL 9,000,000 KFW AG 6% EMTN Sen 13/15.03.16 2,592,056.07 2,786,940.07 1.39 BRL 21,400,000 KFW AG 7.5% EMTN 12/12.03.15 7,696,825.44 6,967,959.76 3.48 BRL 10,000,000 Swedish Export Credit 7% EMTN Sen 12/10.05.16 3,508,237.91 3,114,206.66 1.55

62,978,193.69 60,147,610.01 30.02

COP 6,000,000,000 IBRD 3% Ser 10923 13/26.02.15 2,377,116.39 2,307,882.12 1.15 COP 5,000,000,000 IBRD 4% EMTN Sen 12/15.08.14 2,026,755.42 1,944,687.71 0.97 COP 7,000,000,000 IBRD 8% Ser10422 Tr 4 11/02.03.20 3,258,405.29 3,123,771.15 1.56

7,662,277.10 7,376,340.98 3.68

IDR 62,000,000,000 EIB 6% EMTN Sen 10/22.04.14 4,827,665.29 3,843,497.68 1.92 MXN 870,000 Mexico 6% Bonos Ser M 10/18.06.15 5,363,857.43 5,069,141.81 2.53 MXN 3,090,000 Mexico 6.5% Bonos Ser M 11/09.06.22 20,031,561.49 17,963,433.98 8.97 MXN 2,150,000 Mexico 8.5% Bonos Ser 11 30 09/18.11.38 16,155,586.31 13,890,283.51 6.94 MXN 2,930,000 Mexico 9.5% Ser MI10 05/18.12.14 18,862,386.01 17,604,962.59 8.79

60,413,391.24 54,527,821.89 27.23

PHP 250,000,000 EIB 5% EMTN Sen 10/03.08.15 4,558,155.01 4,539,730.92 2.27 RUB 90,000,000 EBRD 6.5% EMTN Sen 12/27.06.17 2,157,286.65 2,059,171.80 1.03 RUB 104,000,000 EBRD 6.75% GMTN Sen 10/12.05.17 2,504,245.93 2,394,434.10 1.20 RUB 100,000,000 EIB 6% EMTN Sen 11/28.01.14 2,367,026.71 2,276,676.54 1.14 RUB 27,000,000 EIB 6.5% 10/15.12.15 647,416.74 616,920.03 0.31 RUB 110,000,000 IBRD 5.25% Ser GDIF 10/24.11.14 2,585,163.20 2,486,653.18 1.24 RUB 191,000,000 IBRD 6.25% Ser 10431 10/11.12.13 4,526,688.66 4,350,195.05 2.17 RUB 100,000,000 KFW AG 6.75% EMTN Sen 12/25.09.17 2,393,305.64 2,294,356.15 1.15 RUB 150,000,000 Rabobank Nederland NV 6.9% EMTN Sen 07/06.06.17 3,502,718.10 3,355,645.56 1.68

20,683,851.63 19,834,052.41 9.92

SIT 450,000,000 LB Baden-Wuerttemberg 5.05% EMTN 04/30.09.14 1,987,162.00 1,962,434.15 0.98 Total bonds 163,110,695.96 152,231,488.04 76.02


Bonds

COP 6,000,000,000 IBRD 3.875% Ser GDIF 12/10.09.15 2,400,270.13 2,340,764.49 1.17 PEN 6,000,000 Peru 6.95% Reg-S Sen 08/12.08.31 1,917,828.11 1,704,225.08 0.85 PEN 106,250,000 Peru 7.84% Reg-S Sen 05/12.08.20 35,568,215.05 32,586,769.50 16.27 PEN 6,000,000 Peru 8.2% Reg-S 09/12.08.26 2,192,199.84 1,958,979.74 0.98

39,678,243.00 36,249,974.32 18.10

Total bonds 42,078,513.13 38,590,738.81 19.27




120




Bonds

PEN 10,000,000 Peru 8.6% Sen 05/12.08.17 3,371,051.62 3,040,504.30 1.52 Total bonds 3,371,051.62 3,040,504.30 1.52


Cash at banks 2,274,242.47 1.14


Total 200,256,568.39 100.00

KBC BONDS

Notes to the financial statements as at 30th September 2013

121

Note 1 - Significant accounting policies a) Presentation of the financial statements The financial statements of the SICAV are established in accordance with the legal and regulatory requirements in force in Luxembourg concerning Undertakings for Collective Investment. b) Valuation of assets

1) The value of cash in hand or on deposit, of bills and demand notes, of accounts receivable, of pre-paid expenses and of dividends and interest announced or payable and not yet received is formed by the nominal value of such assets, unless it appears unlikely that the full value can be received in which case the value will be determined by making such deduction as the Board of Directors considers appropriate to reflect the fair value thereof.

2) The value of all transferable securities and money market instruments traded or listed on a stock exchange is determined on the basis of the last available price unless this price is not representative.

3) The value of all transferable securities and money market instruments traded on another

regulated market is determined according to the last available price.

4) If transferable securities and money market instruments in portfolio on the Valuation Day are not traded or listed on a stock exchange or other regulated market or, if for securities and instruments traded or listed on a stock exchange or other regulated market, the price determined in accordance with the two paragraphs above is not representative of the fair value of such transferable securities and money market instruments, these will be determined on the basis of the foreseeable sale price, as estimated by the Board of Directors prudently and in good faith.

5) UCITS and other UCIs are valued on the basis of the last available net asset value for the UCITS and other underlying UCIs.

6) If, as a result of special circumstances or features, valuation on the basis of the rules set out above becomes impracticable or inaccurate, other generally accepted, verifiable valuation criteria will be applied to obtain a fair value. These criteria shall be determined prudently by the Board of Directors, based on information or other market data. In such circumstances, these assets will be valued according to mathematical or financial models or other alternative valuation methods in order that their fair value on the valuation day may be recorded in the financial statements.

c) Acquisition cost of securities in the portfolio The acquisition cost of the securities held by each sub-fund that are denominated in currencies other than the reference currency of the sub-fund is converted into this currency at the exchange rate prevailing on the date of purchase. d) Net realised gain (loss) on sales of securities The realised gains and losses on sales of securities are determined on the basis of the average acquisition cost.

KBC BONDS

Notes to the financial statements (continued) as at 30th September 2013

122

e) Investment income Dividend income is recorded at the ex-date, net of any withholding tax. Interest income accrued and payable are recorded, net of any withholding tax. f) Return on sukuk Sukuk are certificates of investment or securities representing the rights and obligations of its holders on underlying asset. Their remuneration is based on performance of assets, however, are capped. The remuneration of sukuk is variable depending on the profits earned on its assets or income of the issuer or the borrower. g) Valuation of forward foreign exchange contracts Forward foreign exchange contracts are valued at forward market rates for the remaining period from valuation date to the maturity of the contracts. Unrealised gains or losses are recorded in the statement of net assets. Net variation of unrealised gains and losses and net realised gains and losses are recorded in the statement of operations and other changes in net assets. h) Valuation of futures contracts Futures contracts are posted off-balance sheet and valued at the last settlement or close price on the stock exchanges or regulated markets. Unrealised gains or losses are recorded in the statement of net assets. Net variation of unrealised gains and losses and net realised gains and losses are recorded in the statement of operations and other changes in net assets. i) Formation expenses Formation expenses were amortised on a straight line basis over a period of 5 years. j) Conversion of foreign currencies Cash at banks, other net assets and the valuation of the securities in portfolio expressed in currencies other than the currency of the sub-fund are converted into this currency at the exchange rate prevailing on the date of the report. Income and expenses expressed in currencies other than the currency of the sub-fund are converted into this currency at the exchange rate prevailing on the date of the transaction. Exchange gains and losses are recorded in the statement of operations and other changes in net assets. k) Consolidation The consolidated financial statements of the SICAV are expressed in EUR and are equal to the sum of the corresponding captions in the financial statements of each sub-fund converted into this currency at the exchange rate prevailing at the date of the report. At the date of the report, the consolidation exchange rate is the following: 1 EUR = 1.3532500 USD US Dollar The caption "Revaluation difference" in the consolidated statement of operations and other changes in net assets represents the valuation difference of the net asset of the sub-funds at the beginning of the year with the exchange rate applicable at the date of the report.

KBC BONDS


123

l) S&P fees Only the sub-funds KBC BONDS HIGH INTEREST et KBC BONDS EMERGING MARKETS pay fees to S&P (Standard & Poor's, a Division of the McGraw-Hill Companies) due to the attribution of a rating. These fees are recorded in the caption “S&P fees” in the statement of operations and other changes in net assets. m) Receivable / Payable on treasury transactions The caption "Receivable on treasury transactions" comprises maturities of time deposits, new loans or foreign exchange transactions not yet recorded under the caption "Cash at banks". The caption "Payable on treasury transactions" comprises new time deposits, maturities of loans or foreign exchange transactions not yet recorded under the caption "Cash at banks". At a sub-fund level, the amounts of the captions "Receivable and payable on treasury transactions" are disclosed net in the statement of net assets. n) Transaction costs Transaction costs disclosed under the caption "Transaction fees" in the expenses of the statement of operations and other changes in net assets are mainly composed of transaction fees incurred by the SICAV relating to purchases or sales of securities, of fees relating to liquidation of transactions paid to the custodian bank and of transaction fees on financial and on derivatives instruments. Note 2 - Risk management As required by Circular CSSF 11/512, the Board of Directors needs to determine the global risk exposure of the SICAV either by applying the commitment approach or the VaR approach. In terms of risk management, the Board of Directors of the SICAV decided to adopt the commitment approach as a method of determining the global exposure. Note 3 - Commission for management, distribution and risk management The Board of Directors of the SICAV is responsible for the general investment policy. On the basis of the contract which entered into force on 1st May 2006, the SICAV has appointed KBC ASSET MANAGEMENT S.A. as Management Company within the meaning of Section 15 of the amended Law of 17th December 2010 concerning Undertakings for Collective Investment. With regard to services provided concerning management, distribution and risk management, the Management Company receives an annual fee payable monthly on the average net assets of the sub-funds to the effective rates of: Sub-funds Effective rates - KBC BONDS INCOME FUND 0.70% - KBC BONDS CAPITAL FUND 0.70% - KBC BONDS HIGH INTEREST 1.10% 0.50% for the sub-category "Institutional Shares" - KBC BONDS EMERGING MARKETS 1.20% - KBC BONDS CORPORATES EURO 0.85% since 1st October 2012

0.75% until 30th September 2012 0.60% for the sub-category "Institutional Shares" - KBC BONDS EUROPE EX-EMU 0.75 %

KBC BONDS


124

Sub-funds Effective rates (formerly KBC BONDS EURO CANDIDATES) - KBC BONDS CONVERTIBLES 1.10% - KBC BONDS INFLATION - LINKED BONDS 0.50% 0.50% for the sub-category "Institutional Shares" - KBC BONDS EUROPE 0.70% - KBC BONDS CORPORATES USD 0.75% - KBC BONDS EMERGING EUROPE (formerly KBC BONDS CENTRAL EUROPE)

1.20%

- KBC BONDS GLOBAL EMERGING OPPORTUNITIES 1.20% - KBC BONDS EMU SHORT 0.70% - KBC BONDS EMU SHORT MEDIUM 0.70% - KBC BONDS STATEGIC EMERGING MARKETS (initial subscription NAV date: 5th June 2013)

1.20%

Note 4 - Custodian fees and central administration costs The custodian fees and the central administration costs are paid according to a variable annual rate of commission specified in a fee agreement. Note 5 - Subscription, redemption and conversion fees a) Subscription fee in favour of the financial intermediaries At the end of the initial subscription period, the shares, except the ones of the sub-category “Institutional B Shares”, will be issued at a price corresponding to the net asset value per share, plus a subscription fee up to 2.50% payable by the subscriber in favour of the financial intermediaries. b) Redemption, conversion fee in favour of the sub-funds of the SICAV All shares submitted to redemption, except the ones of the sub-category “Institutional B Shares”, will be redeemed at the net asset value per share at the date of the redemption order receipt subject to deduction of a fee up to 1.00% payable by the seller in favour of the SICAV. Conversion of shares between the sub-funds of the SICAV undertakes at a price equal to the respective net asset values of the shares of the different sub-funds, less a conversion fee, fee equal to a maximum of 0.5% of the net asset value of the sub-fund whose shares are presented for conversion and to a maximum of 0.5% of the net asset value of the new sub-fund in favour of the respective sub-funds. c) Amount intended to cover the acquisition/realisation costs of assets paid by the shareholders of "Institutional B Shares" in favour of the sub-funds of the SICAV The sub-category "Institutional B Shares" is dedicated to investment vehicles, promoted by the KBC group (in this case, the funds of funds). Given the frequency of the transactions operated by these funds, acquisition/realisation costs of the specific assets in favour of the sub-fund of the SICAV were created (as described in the table below): Sub-funds Maximum fees

(in % of net assets per share) - KBC BONDS HIGH INTEREST 0.750 - KBC BONDS EMERGING MARKETS 1.500 - KBC BONDS CORPORATES EURO 1.125

KBC BONDS


125

Sub-funds Maximum fees (in % of net assets per share)

- KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES)

0.500

- KBC BONDS CONVERTIBLES 1.125 - KBC BONDS INFLATION - LINKED BONDS 1.125 - KBC BONDS EUROPE 0.500 - KBC BONDS CORPORATES USD 1.125 - KBC BONDS EMERGING EUROPE (formerly KBC BONDS CENTRAL EUROPE)

0.750

- KBC BONDS GLOBAL EMERGING OPPORTUNITIES 0.750 - KBC BONDS EMU SHORT 0.500 - KBC BONDS EMU SHORT MEDIUM 0.500 - KBC BONDS STATEGIC EMERGING MARKETS (initial subscription NAV date: 5th June 2013)

0.750

These costs are recorded in the caption "Commissions received" in the statement of operations and other changes in net assets. Note 6 - Subscription duty "Taxe d’abonnement" The SICAV is governed by Luxembourg law. Pursuant to the legislation and regulations in force, the SICAV is subject to an annual subscription duty ("taxe d’abonnement") of 0.05% which is payable quarterly and calculated on the basis of the net assets of each sub-fund on the last day of each quarter. The sub-categories "Institutional Shares" and "Institutional B Shares" benefit from the reduced tax of 0.01% in conformity with Article 174 (2) of the amended Law of 17th December 2010. Note 7 - Belgian annual tax The Belgian regulation (the inheritance tax code, tome II bis) imposes to Undertakings for Collective Investment which were authorised to market their shares publicly in Belgium, the payment of an annual tax. This tax amounts to 0.0965% as from 1st January 2013 (0.08% previously) on the total of the net sums invested in Belgium at 31st December of the previous year, starting from their registration with the "Financial Services and Markets Authority" ("FSMA"). The Law of 17th June 2013 regarding tax and financial provisions as well as sustainable development measures (published in the "Moniteur Belge" as of 28th June 2013) increased the rate of annual tax on Undertakings for Collective Investments established by Article 161bis of the Inheritance Tax Code to 0.0965% as from 1st January 2013 and 0.0925% as from 1st January 2014. Undertakings for Collective Investments may complete the payment no later than 30th September 2013 as the aforementioned Law which increased the annual tax to be paid in 2013 is later than the expiry of the deadlines for filing the tax declaration and to pay it, fixed, at the latest, at 31st March each year. The tax of 0.0925% will be paid as at 31st March 2014. This tax is recorded in the caption "Other taxes" of the statement of operations and other changes in net assets.

KBC BONDS


126

Note 8 - Total Expense Ratio ("TER") and Portfolio Turnover rate ("PTR") The TER and the PTR disclosed under "Statistical information" of this report are calculated in accordance with the "Guidelines on the calculation and disclosure of the TER and PTR of collective investment schemes" issued by the Swiss Funds & Asset Management Association "SFAMA" (Swiss Funds Association "SFA" until 30th June 2013) on 16th May 2008. The TER and the PTR are calculated for the last 12 months preceding the date of this report. Transaction fees are not taken into account in the calculation of the TER. The PTR has been calculated according to the following formula (Total 1 - Total 2)/M*100 with Total 1 = Total securities transactions = X + Y

X = Securities purchases Y = Securities sales

Total 2 = Total subscriptions and redemptions = S + T

S = subscriptions T = redemptions S+T: subscriptions and redemptions are netted per NAV calculation day.

M = average net assets

If a performance-related fee is foreseen and has been calculated, the TER is disclosed including this fee. Moreover the performance fee ratio is calculated in percentage of the average net assets for the last 12 months preceding indicated reference date. Note 9 - Statement of changes in investments The statement of changes in investments for the period in reference to the report is available free of charge at the registered office of the SICAV, from the institutions responsible for providing financial services, from the paying agents and from the legal representatives. Note 10 - Securities lending In exchange of securities lent in the forme of "Securities Lending", the SICAV has a guarantee from KBL EUROPEAN PRIVATE BANKERS S.A., in the form of bonds issued by high-quality issuers, whose market value is at least equal to 100% of the global market value of securities lent to KBL EUROPEAN PRIVATE BANKERS S.A. The table below shows the following information for the different Sub-Funds at 30th September 2013;

- The global market value of the securities lent ("Securities Lending")

- The market value of securities received as collateral ("Collateral")

- Net incomes of the SICAV (income on securities lending received by KBL EUROPEAN PRIVATE BANKERS S.A in financial year in relation to the securities lending operations)

- Commissions received by the Management Company of KBL EUROPEAN PRIVATE BANKERS S.A in financial year in relation to the securities lending operations; these commissions cover the charges incurred by the Management Company for the set up and monitoring of the securities lending operations as well as the monitoring of the guarantee received by the SICAV.

KBC BONDS


127

Sub-Fund Currency Global market value of the

securities lending

Market value of the guarantee

"collateral" received

Net incomes of the SICAV

Received commissions by the Management

Company

KBC BONDS INCOME FUND EUR 7,802,948.37 9,693,024.17 4,071.16 1,455.94

KBC BONDS CAPITAL FUND EUR 3,210,200.00 6,510,828.71 1,562.29 510.04

KBC BONDS HIGH INTEREST EUR 65,178,160.06 71,232,808.66 49,052.27 16,476.41 KBC BONDS EMERGING MARKETS USD 75,887,577.30 89,274,190.74 27,124.29 9,718.25 KBC BONDS CORPORATES EURO EUR 89,271,198.75 99,673,016.41 103,768.12 39,565.54 KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES)

EUR 5,321,824.89 6,570,435.01 3,368.95 1,049.04

KBC BONDS CONVERTIBLES EUR 16,560,614.33 19,936,796.04 128,629.44 46,905.69 KBC BONDS INFLATION - LINKED BONDS EUR 11,225,355.58 13,337,430.82 12,674.00 5,418.32

KBC BONDS EUROPE EUR 2,556,750.00 4,221,668.93 4,739.54 1,807.87

KBC BONDS CORPORATES USD USD 18,596,065.00 21,310,314.48 7,668.16 2,416.98 KBC BONDS EMERGING EUROPE (formerly KBC BONDS CENTRAL EUROPE)

EUR 9,081,076.39 14,742,911.42 49,766.48 16,828.88

KBC BONDS EMU SHORT EUR 1,074,660.00 2,621,950.31 - -

KBC BONDS EMU SHORT MEDIUM EUR 3,201,170.00 4,177,619.59 - - For the Sub-Fund KBC BONDS EMU SHORT and KBC BONDS EMU SHORT MEDIUM, no income was recorded and no commission has been received by the Management Company at 30th September 2013 as for these two Sub-Funds the operations of securities lending has been launched in early September 2013 and the incomes and commissions are recorded in the following month. The net incomes of the SICAV on securities lending will be recorded under the caption "Commissions received" in the statement of operations and other changes in net assets. Note 11 - Forward foreign exchange contracts As at 30th September 2013, the sub-funds below are committed in the following forward foreign exchange contracts with KBC BANK S.A.:

KBC BONDS HIGH INTEREST Currency Purchases Currency Sales Maturity Unrealised result

(in EUR) EUR 654,150.59 TRY 1,800,000.00 03.10.2013 -3,268.78 DKK 150,912,145.00 PLN 85,000,000.00 21.10.2013 137,550.42 EUR 7,673,194.46 AUD 11,000,000.00 21.10.2013 83,764.71 EUR 11,898,067.83 PLN 50,000,000.00 21.10.2013 74,207.82 292,254.17

KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES) Currency Purchases Currency Sales Maturity Unrealised result

(in EUR) EUR 791,952.48 NOK 6,400,000.00 01.10.2013 5,744.54 NOK 6,400,000.00 EUR 805,212.75 01.10.2013 -19,004.81 NOK 6,400,000.00 EUR 790,217.89 26.11.2013 -5,753.12 -19,013.39

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KBC BONDS EMERGING EUROPE (formerly KBC BONDS CENTRAL EUROPE) Currency Purchases Currency Sales Maturity Unrealised result

(in EUR) EUR 2,032,889.24 TRY 5,600,000.00 03.10.2013 -12,415.76 PLN 8,400,000.00 EUR 1,990,521.33 03.10.2013 -1,862.37 CZK 415,000,000.00 EUR 16,083,737.75 21.10.2013 48,960.81 EUR 1,732,053.14 RUB 75,000,000.00 21.10.2013 26,549.47 61,232.15 Note 12 - Futures contracts As at 30th September 2013, the sub-funds below are committed in the following futures contracts with Abn Amro Clearing Bk NV:

KBC BONDS INCOME FUND Number of

contracts Denomination Currency Commitments

(in EUR) Unrealised

result (in EUR)

Purchase 2 Euro Bund 10 Years FUT 12/13 EUX

EUR 281,000.00 5,200.00

Purchase 1 Long Gilt Fut 10 Years FUT 12/13 LIFFE

GBP 131,960.08 2,571.74

Purchase 2 US Treasury Bond (Long) FUT 12/13 CBOT

USD 197,118.05 3,094.40

10,866.14

KBC BONDS CAPITAL FUND Number of


(in EUR) Unrealised

result (in EUR)

Purchase 15 Euro BUXL 30 Years FUT 12/13 EUX

EUR 1,882,500.00 30,480.00

Sale 2 Long Gilt Fut 10 Years FUT 12/13 LIFFE

GBP -263,920.17 -5,287.02

Purchase 3 US Treasury Bond (Long) FUT 12/13 CBOT

USD 295,677.07 4,641.60

29,834.58

KBC BONDS EMERGING MARKETS Number of


(in USD) Unrealised

result (in USD)

Purchase 170 US Treasury Note 10 Years FUT 12/13 CBOT

USD 21,486,406.25 475,468.75

Sale 310 US Treasury Note 2 Years FUT 12/13 CBOT

USD -68,282,343.75 -237,343.75

238,125.00

KBC BONDS CORPORATES EURO Number of


(in EUR) Unrealised

result (in EUR)


EUR 5,620,000.00 90,400.00

90,400.00

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KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES) Number of


(in EUR) Unrealised

result (in EUR)


EUR 2,810,000.00 56,600.00

56,600.00

KBC BONDS CONVERTIBLES Number of


(in EUR) Unrealised

result (in EUR)

Purchase 3 AEX Index FUT 10/13 EOE EUR 225,060.00 -2,520.00 Purchase 3 FTSE 100 Index FUT 12/13

LIFFE GBP 230,720.82 -5,364.77

Purchase 1 TOPIX INDEX (TOKYO) FUT 12/13 TSD

JPY 90,120.04 1,581.71

Purchase 2 S&P 500 Composite Index FUT 12/13 CME

USD 618,621.84 -6,225.75

-12,528.81

KBC BONDS EMU SHORT MEDIUM Number of


(in EUR) Unrealised

result (in EUR)

Purchase 12 Euro-BOBL 5 Years FUT 12/13 EUX

EUR 1,493,280.00 18,480.00

18,480.00 The caption "Other liquid assets" in the statement of the net assets contains principally margin calls and guarantee deposits serving to guarantee operations on futures contracts. When the SICAV concludes futures contracts, it deposits and maintains, as collateral, a guarantee deposit with the custodian in accordance with the requirements set by the stock exchange on which the transaction is made. In accordance with the contract, the SICAV agrees to receive from, or pay to, the custodian an amount equal to the daily fluctuation in the value of the contract. The net amount payable to or receivable from the custodian as at 30th September 2013 in addition to or deducted from the collateral originally deposited is recorded under the caption "Other liquid liabilities"/"Other liquid assets" in the statement of net assets. Note 13 - Assets valued according to models As at 30th September 2013, the SICAV held certain assets valued in accordance with the valuation rules set out in note 1-b) 6 to the financial statements, which are based on the valuation rules set by KBC Group and adopted by the SICAV's Board of Directors. The value assigned to these assets may differ from the value that would have been used if there had been a liquid market for these assets. These assets are mainly securities issued by associate entities of KBC Group. The positions in these assets in the respective sub-funds as at 30th September 2013 may be summarised as follows (in % of the net assets of the respective sub-funds): KBC BONDS INCOME FUND Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 3.11 3.11

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KBC BONDS CAPITAL FUND Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 3.58 3.58

KBC BONDS CORPORATES EURO Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 0.19 EUR Arcade Finance Plc FRN E Ser 2008-17 Tr 1 08/14.05.13 0.40 EUR Arcade Finance Plc FRN Ser 2008-17 Mez Sec Falcon 08/14.05.13 0.43 EUR D-Star Finance Plc FRN Ser 2008-5 Mez Sec Falcon 08/14.05.13 0.72 EUR D-Star Finance Plc VAR E Ser 2008-5 08/14.05.13 2.34 4.08

KBC BONDS EUROPE EX-EMU (formerly KBC BONDS EURO CANDIDATES) Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 2.04 2.04

KBC BONDS CONVERTIBLES Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 2.13 2.13

KBC BONDS EUROPE Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 7.26 EUR Arcade Finance Plc FRN Ser 2008-17 Mez Sec Falcon 08/14.05.13 1.29 8.55

KBC BONDS GLOBAL EMERGING OPPORTUNITIES Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 1.36 1.36

KBC BONDS EMU SHORT Currency Denomination % EUR Arcade Finance Plc FRN Ser 2008-17 Mez Sec Falcon 08/14.05.13 0.75 EUR D-Star Finance Plc FRN Ser 2008-5 Mez Sec Falcon 08/14.05.13 5.24 5.99

KBC BONDS EMU SHORT MEDIUM Currency Denomination % EUR Arcade Finance Plc FRN EMTN Ser 2007-2 Tr 1 07/10.05.14 5.02 5.02

The following segragated bonds are issued by SPVs managed by KBC Asset Management S.A., 2, avenue du Port, B-1080 BRUSSELS or one of its subsidiaries:

• Arcade Finance Plc R2, ring-fenced notes issued by Arcade Finance Plc, of which the underlying assets comprise assets acquired according to the terms of a Total Return Swap concluded with Merrill Lynch International.

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• Arcade Finance Plc R17, ring-fenced notes issued by Arcade Finance and/or D-Star Finance Plc R5, ring-fenced notes issued by D-Star Finance Plc, with the following classes:

o Class A AprOct Senior Secured Floating Rate Notes o Class B JanJul Senior Secured Floating Rate Notes o Class C MarSep Senior Secured Floating Rate Notes o Class D Falcon Mezzanine Secured Floating Rate Notes o Class E Falcon Subordinated Variable Coupon Notes

These notes are not listed and are categorised in different classes: a subordinated tranche to which the first losses in the portfolios of Arcade Finance Plc R17 and D-Star Finance Plc R5 are booked (Class E above), followed by a mezzanine tranche (Class D) and 3 senior tranches (Class A, B & C). As at 30th September 2013, Arcade Finance Plc R17 and D-Star Finance Plc R5 invested in shares of N-Vest Fund - 1, a sub-fund of N-Vest Fund, a Luxembourg Specialised Investment Fund (FIS). As at 30th September 2013, N-Vest Fund - 1 invested in a portfolio of money market instruments, bonds, other debt instruments and financial derivatives. These bonds comprise a Tier 1 loan issued by KBC Bank S.A. (KBC 8% 29/05/2049) and ring-fenced notes issued by Arcade Finance Plc R1 and bond issued by Home Loan Invest of which the underlying assets comprise of mortgage loans. The N-Vest Fund 1 portfolio is valued on a held to maturity basis in accordance with the provisions of the prospectus.

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