www.kbcam.com1

Global Investment Opportunities in Water

TBLI Conference Europe -2009 Steven Falci, CFA – Vice President Sustainable Investment

22

World’s Changing Demographic

Profile

World’s Changing Demographic

Profile

Natural Resources: Supply/Demand

Imbalance

Natural Resources: Supply/Demand

Imbalance

Investment Solutions

Regulation Emissions Targets Renewables Targets Tax Incentives Water Standards

Infrastructure Water Delivery Energy Grid Energy Efficient Building Transportation

Clean Technology Energy Generation Energy Storage Energy Efficiency Water Quality

Global Mega Trends &Sustainable Investment Solutions

Climate Change: Operating in a

Carbon ConstrainedWorld

Climate Change: Operating in a

Carbon ConstrainedWorld

3

KBCAM Environmental Strategies

KBCAM Water

KBCAM Alternative

Energy

KBCAM Climate Change

KBCAM Agribusiness

KBCAM Global Environmental

Solutions

December 2000 December 2000 February 2007 April 2008 July 2009

Rising Water Demand

Constrained Supply

Regulatory divers to support water

quality

Need to update & extend

infrastructure

Increased global energy demand

Limited supply of fossil fuels

Climate Change

Falling costs of renewable energy

Security of Fuel Supply

Demographic changes

Drive to limit emissions

Political, legislative and regulatory push

Clean tech advancements contributing to

solutions

Growing, more affluent

population

Changing diets and increased consumption

Supply of arable land constrained by urbanisation

Structural investment in

machinery and irrigation to

increase yield

Demographic Changes

Natural Resource Supply/Demand

imbalance

Climate Change

44

Investment Thesis - Water

Investment Opportunities

Drivers

Demand GrowthSupply

ProblemsSupply

Problems RegulationRegulation Technological AdvancementTechnological Advancement

Demand GrowthDemandGrowthDemandGrowth

55

Natural Resource Demand

Source: UN Population Division, FAO, USDA, EIA, WRI, UN Joint Database, Goldman Sachs Research Estimates

World development indices 1950 to 2030E (rebased to 100)

1950

= 1

00

900

800

700

600

500

400

300

200

100

0

1950 1960 1970 1980 1990 2000 2010E 2020E 2030E

PopulationEnergy demand

Urban population

Grain consumption

Real GDP per capitaCarbon emissions

Projections

66

Water Demand

Sources: U.S. Census Bureau, German Ministry of Environment

1990 1940 1950 1960 1970 1980 1990 1995 2000 2010 2025

1000

900

800

700600

500

400

300

200

100

0

Global Water Consumption

Rel

ativ

e G

row

th r

ate

Global Population

77

Water Supply

Water has NO substitute

Underground29%

Lakes &Rivers<1%

Frozen70%

FreshWater3%

Oceans97%

88

Regulation

Stricter quality standards and enforcement Water Framework Directive in Europe US Water Resources Development Act, EPA New national standards for drinking water quality in China Renewed focus on wastewater treatment

Issues around water on the agenda for policymakers

Proactive regulation to encourage investment

99

Technology

Innovative technology solutions Desalination UV Filtration Metering Efficiency Leakage Water Quality Testing

1010

Infrastructure Spending

Source: OECD estimates

17%

10%

-2%

34%

49%42%

X% Growth in annual average spending

Telecoms ElectricityT&D

Electricitygeneration

WaterRailRoad

US

$bn

0

100

200

300

400

500

600

700

800

2000 – 2010E 2010 – 2020E

Annual average infrastructure spending 2000–10E & 2010–20E

1111

Identifying opportunities in the Water Cycle

Stage 4 Secondary disinfection

treatment prior to discharge into the

environment

Stage 3 Residential, commercial

and industrial water use

Stage 2

Filtration andDisinfectionprocess

Stage 1 Sources of water: ground or surface water

1212

Identifying the Global Sectors

Investment Opportunities

Drivers

Demand GrowthSupply

ProblemsSupply

Problems RegulationRegulation Technological AdvancementTechnological AdvancementDemand Growth

DemandGrowthDemandGrowth

DistributionDistribution InfrastructureInfrastructure Technology SolutionsTechnology Solutions

No bottled waterNo bottled water

1313

Strategic Positioning

Source: KBCAM, Data as at

31.09.09.

WaterTechnology

WaterInfrastructure

Water/ WasteWater Utilities

Actual

40%

30%

20%

10%

0%

32.335.0

37.335.0

30.4 30.0

Strategic

Sector Weighting

1414

Stock Selection and Portfolio Construction

Financials

• Balance Sheet• Access to capital

• Quality of Earnings

Financials

• Balance Sheet• Access to capital

• Quality of Earnings

Valuation

•FCF Models•Valuation Multiples

Valuation

•FCF Models•Valuation Multiples

Sector Analysis

•Life cycle of sector•Thematic drivers

Sector Analysis

•Life cycle of sector•Thematic drivers

Company Analysis

•Life Cycle of company•Structure & quality of management

•Product & services range •Positioning relative to competitors

Company Analysis

•Life Cycle of company•Structure & quality of management

•Product & services range •Positioning relative to competitors

Portfolio ConstructionStrong Fundamentals

ValuationSector exposure reflect thematic drivers

Desired risk characteristics

Portfolio ConstructionStrong Fundamentals

ValuationSector exposure reflect thematic drivers

Desired risk characteristics

15

Water Fundamentals - 2010

Capital Expenditure 2009 – 15% fall in water equipment 2010 – 2011 strong recovery expected

Emerging Trends for 2010 Restocking Funding – Stimulus / Bond Issuance

Cost cutting efforts poised to increase profitability as demand picks up

Long-terms supply/demand, infrastructure drivers intact

Source: Global Water Intelligence, May 2009

16

Stimulus & Expenditures

Global stimulus spending expected to benefit 2010

$80bn focused on water

Predominantly China and the US

US EPA Water budget set to rise 150%

Green Stimulus ($500bn) – Theme Allocation

EnergyEfficiency

64%

Water16%

Renewable8%

OtherLow Carbon

12%

Buildings 16%Lo C Vech 4%

Rail 24%

Grid 18%

16

17

Attractive Valuation

PE Chart

Source: KBCAM as at 30/09/2009

Dec‘08

25

20

15

10

5

0Jun‘07

Sep‘07

Dec‘07

Mar‘08

Jun‘08

Sep‘08

MSCI World

Water

Jun‘09

Mar‘09

Sept‘09

18

Water in a Global Equity PortfolioAttractive Risk/Return

KBC Water Fund (Gross) DJ UBS Commodity Index MSCI World RI (€) S&P Composite FTSE100

0.00%

10.00%

20.00%

30.00%

-10.00 %

-20.00 %

Tota

l Retu

rn (

Cum

ula

tive in

EU

R)

10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 22.00% 24.00%

Volatility pa

Volatility vs Total ReturnHorizon: 5 Years to September 30 2009

Source: KBCAM and Datastream

KBC Water Fund

1919

Why Invest in Water Strategies?

Long term secular trends driving investment in solutions to environmental challenges

Political and regulatory support continue to grow and support investment

Fiscal stimulus packages are targeting “green” initiatives

Attractive Risk / Return Characteristics

Extremely attractive valuations with stronger outlooks for earnings growth

KBC create portfolios focused on pure-plays which most effectively harness the investment opportunities

that exist in each theme

KBC create portfolios focused on pure-plays which most effectively harness the investment opportunities

that exist in each theme

20

Disclaimers

Important InformationKBC Eco Fund of which KBC Eco Fund Water, KBC Eco Fund Alternative Energy, KBC Eco Fund Climate Change are sub-funds; KBCAM Institutional Fund Plc of which KBC Water and KBC Alternative Energy and KBC Eco Agri Fund are sub-funds are unregulated collective investment schemes for the purposes of the United Kingdom Financial Services and Markets Act 2000 ("the Act") and, as such, their promotion by KBC Asset Management Ltd in the United Kingdom is restricted by section 238 of the Act. Accordingly, this presentation is to be communicated only to and is directed only at existing participants in the scheme and persons falling within the definition of "eligible counterparty" or "professional" in the glossary to the rules of the Financial Services Authority. Units in the scheme are available only to such persons. Persons of any other description should not rely on or act upon the contents of this presentation.

If you are not an existing participant in the scheme and are in any doubt as to whether you fall within the definition of "eligible counterparty" or “professional" you must not rely on or act upon the contents of this presentation unless you have taken professional advice which has confirmed that you fall within one of these definitions.

Cautionary Note The value of investments and the income from them may go down as well as up and you may not get back your original investment. Past performance is not necessarily a guide to future performance. Projected / simulated performance has been included for illustrative purposes and is not necessarily a guide to future performance. The views expressed are those of KBC Asset Management Ltd and should not be construed as investment advice.

KBC Asset Management Ltd is authorised by the Irish Financial Regulator and regulated by the Financial Services Authority for the conduct of UK business