Bangkok--30 Nov--Fitch Ratings Fitch Ratings has today assigned a National Bond Fund Rating of ‘AA-(tha)/V5(tha)’ (AA minus(tha)/V5(tha)) to AYF Medium Term Fixed Income Dividend Fund (AYFMTDIV), managed by Ayudhya Fund Management Company Limited (AYF). A National Fund Credit Rating of ‘AA-(tha)’ (AA minus(tha)) indicates that the fund has high credit quality standards relative to other bond funds in Thailand, in terms of portfolio assets, diversification, investment management, operational capabilities, and the respective policies of the company for controlling the credit quality of the fund. Bond funds with a National Volatility of ‘V5(tha)’ are considered to have moderate market risk relative to other bond funds in Thailand, and their total returns are likely to vary across a broad range of interest rate scenarios. AYFMTDIV is a fixed income fund that has a dividend policy to pay at least 90% of its profit, at least on an annual basis. Its investment objective is to provide medium term investments in highly rated fixed income securities, including those issued by the government, state agencies, financial institutions and corporates. The fund must hold at least 50% of its net asset value (NAV) in government securities, or issues guaranteed by the government. The minimum credit rating of assets to be invested is ‘A-(tha)’ (A minus (tha)) or equivalent. The fund has set single-issuer limits for each security based on the rating of the issuer. The single-issuer limit for non-government ‘AAA(tha)’-rated issuers is 15% of the fund’s NAV. The limit is reduced to 7.5% for ‘AA(tha)’-rated issuers, and 5% for ‘A(tha)’-rated issuers. The portfolio duration of the fund is limited to three years, although the current duration is much lower. At the end of October 2007 (endOct07), the fund invested 86% of its NAV in ‘AAA(tha)’-rated assets, of which 91% were government securities. Portfolio duration was 0.72 years, whereby about 80% of the fund’s NAV were investment in securities which will mature within a year. The concentration risk from large unit holders of the fund is relatively high: the top five largest investors accounted for 77% of the fund’s NAV at endOct07. The fund manager, however, mitigates this risk by having regular communication with large investors to prepare for their redemption schedules. Fitch notes that the management team appears experienced and capable, although the industry is subject to risk of turnover of key staff. Its operational controls are adequate to perform the required investment practices. The asset manager, AYF, is a Thailand-based asset management company, 100%-owned by Bank of Ayudhya. At end-October 2007, AYF had THB51.5 billion in assets under management, 81% in mutual funds investment, 12% in provident funds and the remaining in private funds. Contacts: Napachak Phasukavanich, Lertchai Kochareonrattanakul, Vincent Milton, Bangkok, +662 655 4755.