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Prospectus Executive Summary KFFIX6M48. Fund. Krungsri Fixed Income 6M48 Fund. Mutual Funds. Page 1

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Fund

 

         

Krungsri Fixed Income 6M48 Fund

 

Mutual Funds

KFFIX6M48

Krungsri Asset Management Co., Ltd. Krungsri Asset Management Co., Ltd.

12th Floor Ploenchit Tower, 1st-2nd Zone A, 12th Floor, Ploenchit Tower,

898 Ploenchit Road, 898 Ploenchit Road,

Bangkok 10330 Thailand Bangkok 10330 Thailand

T +66(0) 2657 5757 F +66 (0) 2657 5777 T +66 (0) 2657 5757 F +66 (0) 2657 5777

www.krungsriasset.com www.krungsriasset.com

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Prospectus – Executive Summary

Krungsri Fixed Income 6M48 Fund KFFIX6M48

 As the Fund will make partial investment in offshore fixed income instruments,

o it shall fully hedge against foreign exchange rate risk. Such hedging transactions may incur additional costs, thus slightly reducing the Fund’s overall returns.

o it will be exposed to risks in the country of investment which arise from economic, political, and social changes, government measures, such as capital controls, and additional measures which may be adopted in the event of a crisis. These factors may prevent the Fund from moving funds back into Thailand, thus delaying repayments to be made to Unitholders.

 The Management Company will process the redemption of Investment Units by automatically switching in full all Investment Units of the Krungsri

Fixed Income 6M48 Fund belonging to all Unitholders to the Krungsri Cash Management Fund (the destination fund) on the business day preceding the expiration of the project life, which shall be deemed to have been approved by Unitholders. After the switching of Investment Units to the destination fund, Unitholders may proceed to redeem Investment Units or switch them to another fund in accordance with the conditions specified in the prospectus of the destination fund. The Management Company reserves the right to change the destination fund at its discretion.

 An investment in Investment Units is not a deposit of money. There is risk involved in making investments. Investors are advised to invest in the

Krungsri Fixed Income 6M48 Fund only if they consider that an investment in this fund fits their investment objectives and they are able to accept potential risk associated with the investment.

 In unusual circumstances, investors may receive payment of redemption money later than the period specified in the prospectus.

 Investors are advised to study the information contained in the prospectus for a thorough understanding and keep the prospectus for future

reference. Should there be any question or concern, investors are advised to make inquiries prior to subscribing for Investment Units. Key Features

Fund Name: Krungsri Fixed Income 6M48 Fund (KFFIX6M48)

Type of Fund Project: Fixed income fund, with less diversification than the benchmarking index and auto-redemption at the average annual rate of no less than 2.95 percent of the initial investment funds

Estimate of the Fund’s returns:

(1) Instruments expected to be chosen for investment

Security / Issuer Credit Rating

Approximate

Yield Proportion to fund size of security Duration

ST-D issued by Thanachart Bank PCL. AA-/TRIS 2.90% 19% 6 months

ST-D issued by CIMB Thai Bank PCL. AA-(tha)/Fitch 2.85% 19% 6 months B/E issued by Ayudhya Capital Auto lease PLC. A+/TRIS 2.85% 19% 6 months Deposit of Commercial Bank of Qatar (Qatar) A1/ P-1/ Moody’s 3.30% 10% 6 months Deposit of Standard Chartered Bank (Singapore) AA-/ A-1+/ S&P’s 3.30% 10% 6 months Deposit of Union National Bank (United Arab Emirates) A1/ P-1/ Moody’s 3.40% 23% 6 months (2) The Fund’s total expenses amount to an approximate annual rate of 0.13 percent of the net asset value. The Fund yields an average annual return of approximately 2.95 percent of the initial investment funds.

(3) The abovementioned instruments are designated as investment grade in either the issue rating category or the issuer rating category. (4) The Management Company may, at its discretion, readjust its selection of target investment-grade instruments in favor of higher credit quality that are not disclosed above. The example includes, but not limited to, debt securities of Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Doha Bank (DHBK), Bank of China (BoC), Standard Chartered Bank (HongKong), Abu Dhabi Commercial Bank (ADCB) , Export-Import Bank of Korea (KEXIM), Suhyup Bank (NFFC), Korea Development Bank (KDB), Kookmin Bank (KB), Korea Monetary Stabilization Bond, Thai Government Debt Securities, B/E issued by Supalai PCL., B/E issued by Phatra Leasing PCL., B/E issued by Land and House PCL. and/or other debt securities under KSAM investment universe.

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Note:

Should changes in the market conditions prevent the realization of the investment plans, the auto-redemption and/or return rate payable to Unitholders may be different from what has been specified. The instruments selected for investment, investment ratios, return estimates, and the Fund’s expenses are subject to change as the Management Company deems fit.

Objective of the Fund Project: To encourage investment in the money market and to generate appropriate returns by investing funds from general and institutional investors in accordance with the investment policy specified in the Fund Project

Investment Policy:

The Fund will consider investing in any one or more of the following debt instruments:

1. The Fund may invest in Thai government instruments, for instance (a) treasury bills, (b) government bonds or bonds issued by the Bank of Thailand, (c) bonds, bills of exchange, promissory notes, and debentures or certificates representing the rights to purchase debentures issued, drawn, certified, avalized, or guaranteed by the Ministry of Finance or the Financial Institutions Development Fund, and/or deposits, financial instruments, or any other debt instruments issued, drawn, certified, avalized, endorsed, or guaranteed by a bank established under a specific law, a commercial bank, or a finance company, and/or debt instruments issued, certified, avalized, endorsed, or guaranteed by a general private company, where the instruments themselves or their issuer, certifier, aval giver, endorser, or guarantor is designated as investment grade in either the issue rating category or the issuer rating category. If such instruments are subordinated debt, their issue rating must be designated as investment grade.

2. The Fund may invest offshore in debt instruments and/or deposits issued, certified, avalized, or repayment-guaranteed by the government, a state enterprise, a financial institution, and/or a high-quality private entity, where such instruments are designated as investment grade in either the issue rating category or the issuer rating category. If such instruments are subordinated debt, their issue rating must be designated as investment grade.

3. The Fund may hold non-investment grade debt instruments only when such debt instruments were designated as investment grade at the time of the Fund’s acquisition.

4. Investment in derivatives will be made only for hedging purposes. The Management Company shall fully hedge against foreign exchange rate risk for all of the Fund’s offshore investments.

5. The Fund may consider investing in other securities or assets, or generating returns by other means, as permitted by the notifications of the Office of the SEC.

6. In the case of unavailability of optimum instruments following the initial public offering, the Management Company reserves the right to dissolve the Fund. In such case, the Management Company shall refund subscription money to investors within three business days of the business day following the last day of the initial public offering.

Project Life: Approximately six months, ± 30 days, commencing on the day of registering the asset pool as a mutual fund. The Management Company shall notify Unitholders of the expiration date of the Fund Project within 15 days of such registration date by posting an announcement at the offices of the Management Company and the supporters and/or through relevant electronic media. In the case of a holiday, notification shall be given on the following business day.

Date of Approval to Set up and Manage the Fund: December 11, 2012

Management Company: Krungsri Asset Management Company Limited

Floors 1-2 Zone A and Floor 12, 898 Ploenchit Tower, Ploenchit Road, Lumpini Sub-district, Pathumwan District, Bangkok 10330

Tel. 0-2657-5757; Fax: 0-2657-5777;

Email : krungsriasset.clientservice@krungsri.com

Capital of the Fund Project: Baht 1,600 million. Investment Units to be offered during the initial public offering may exceed the Fund Project’s capital by up to 15 percent, or Baht 240 million. In the event that the Management Company offers Investment Units exceeding the Fund Project’s capital (applying the green shoe option) but not in full 15% of the Fund Project’s capital, the Management Company reserves the right to close the offering and proceed to register the asset pool as a mutual fund before the specified expiration of the offering period without prior notice to Unitholders.

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Par Value: Baht 10.00

Number of Investment Units: 160,000,000 Units

Date and Time of Initial Public Offering: December 12 - 17, 2012

Initial Public Offering Price: Baht 10.00

Minimum Value for Initial Subscription: Baht 10,000.00

Subscription Date and Time after Initial Public Offering: None

Switching of Investment Units: Apart from the specified auto-redemption, outward switching from the Fund is not allowed. Inward switching is allowed only from the Krungsri Cash Management Fund, the Krungsri Cash Plus Fund, the Krungsri Money Fund and the Krungsri Star Plus Fund by 3.30 pm on the last day of the initial public offering.

Your Investment 1. What kind of investment is this Fund suitable for?

- This Fund is suitable for those who desire higher returns than they normally receive from deposits and who are able to invest for a period of approximately six months.

 

2. What type of assets will the Fund invest in?

- Please refer to “Investment Policy” on page 3.

3. What will investors receive from their investments?

- Unitholders will have an opportunity to obtain returns in the form of profit from the increased value of Investment Units due to interest or the difference in prices of instruments in which the Fund invests. For instance, if the investor subscribes for Investment Units during the initial public offering at the price of Baht 10.00 per Unit, and the value of Investment Units later increases to Baht 10.50 per Unit, the investor then earns a profit of Baht 0.50 per Unit. Unitholders of this Fund will receive such profit through auto-redemption and the redemption of all Investment Units upon the expiration of the Fund. Such profit is non-taxable for individual investors.

4. What factors may significantly affect investors’ investment funds?

- The Fund is exposed to risk relating to the ability of the invested instruments to repay principal and interest when due. However, most of the instruments selected for investment by the Management Company are of high quality and great stability and have maturity of approximately six months, which is similar to the project life. In addition, the Fund will hold such instruments until they mature. As a result, the Fund is unlikely to be affected by the said risk.

   

5. How is the risk associated with investment in this Fund different from that associated with investment in other mutual funds with different investment policies?

Risk Spectrum of this fund which classified by instruments investing

Money Market fund which invest in onshore investment

only

Money Market fund which invest in partial offshore

investment

Government

bond fund Fixed income fund Mixed fund Equity fund sector fund Industry investment Alternative fund

Remark: Risk Spectrum of debt instruments is classified by credit risk only

Risk / Low complex Risk / High complex

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Risk Spectrum which classified by foreign currency hedging or investing in foreign currency

Fully hedge 100% Partial hedge Hedging up to

fund manager Non-hedge Investing foreign currency in

 

 

6. Which benchmark should be used to evaluate the Fund’s performance? How long should investors invest in the Fund?

The following return averages, with the investment proportion for each of the instruments taken into consideration, will be used as the benchmarks:

- For deposits, financial instruments, or any other debt instruments issued, drawn, certified, avalized, endorsed, or guaranteed by a bank established under a specific law, a commercial bank, or a finance company, and/or debt instruments issued, certified, avalized, endorsed, or guaranteed by a general private company, where the instruments themselves or their issuer, certifier, aval giver, endorser, or guarantor: Return rate of the six-month Corporate Bond Yield Curve, rated BBB on the day of investment and announced by the Thai Bond Market Association (ThaiBMA); and/or

- For Thai government instruments, for instance (a) treasury bills, (b) government bonds or bonds issued by the Bank of Thailand, (c) bonds, bills of exchange, promissory notes, and debentures or certificates representing the rights to purchase debentures issued, drawn, certified, avalized, or guaranteed by the Ministry of Finance or the Financial Institutions Development Fund: Return rate of the fixed-maturity government bond with maturity of approximately six months as of the day of investment; and/or

- For foreign government bonds: Return rate of the government bond of the country in which the Fund invests, with maturity of approximately six months as of the day of investment, adjusted by the cost of hedging against foreign exchange rate risk for the purpose of converting the return amount to the Thai Baht at the rate quoted for the day of investment; and/or

- For foreign private-sector debt instruments: Return rate of the private-sector bond of the country in which the Fund invests, with maturity of approximately six months as of the day of investment, plus the spread for private-sector debt instruments with maturity of approximately six months and rated BBB on the day of investment, and adjusted by the cost of hedging against foreign exchange rate risk for the purpose of converting the return amount to the Thai Baht at the rate quoted for the day of investment

It should be noted that investors will be required to maintain their funds in the Fund throughout its project life, which is approximately six months.

7. Does the Fund have an investment guarantor or protection for its principal? How?

- The Fund has neither an investment guarantor nor protection for its principal.

Frequently Asked Questions and Answers about the Investment

Q : What is the minimum investment amount? How are Investment Units calculated?

A : The minimum investment amount is Baht 10,000. The calculation of the number of Investment Units is based on the par value of Baht 10 per Unit. Thus, you will receive 1,000 Units.

KFFIX6M48

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Q : How can I invest in the Fund?

A : You may subscribe for Investment Units only during the initial public offering from December 12 - 17, 2012 through the Management Company or the selling or redeeming supporters appointed by the Management Company. Payment may be made in cash, or by check or draft. In the case of check payment, checks must be crossed “account payee only” and made payable to the following:

(1) For subscription orders placed through the Bank of Ayudhya, to the “Investment Unit Subscription Account of the Krungsri Fixed Income 6M48 Fund,” a savings or current account to be opened by the Management Company at the Bank of Ayudhya

(2) For subscription orders placed through the Management Company or other selling or redeeming supporters, to the “Investment Unit Subscription Account of the Krungsri Fixed Income 6M48 Fund,” a savings or current account to be opened by the Management Company at the Bank of Ayudhya, or the “Investment Unit Subscription Account of Krungsri Asset Management,” a savings or current account to be opened by the Management Company at the Bank of Ayudhya, Siam Commercial Bank, Bangkok Bank, Kasikorn Bank, CITIBANK (Bangkok Branch), UOB Bank, Standard Chartered Bank (Thai), Krung Thai Bank, TMB Bank, Thanachart Bank, Land and Houses Retail Bank, Kiatnakin Bank, and Thai Credit Retail Bank

Q : How can I redeem my Investment Units?

A : This Fund does not permit regular redemption during the project life. The Management Company will process the redemption by automatically switching in full all Investment Units of the Krungsri Fixed Income 6M48 Fund belonging to all Unitholders to the Krungsri Cash Management Fund (the destination fund) on the business day preceding the expiration of the project life. (The Management Company reserves the right to change the destination fund at its discretion.) On such switching day, auto-redemption will be carried out at the average annual rate of no less than 2.95 percent of the initial investment funds, and all remaining Investment Units of the Fund shall be redeemed for an automatic switching to the destination fund, which shall be deemed to have been approved by Unitholders. In carrying out the said redemption, the Management Company shall use the redemption price at the end of the transaction day for the calculation.

After the automatic switching, Unitholders shall receive investment units of the destination fund on the following business day and may then redeem the investment units or switch them to other funds in accordance with the conditions set out in the prospectus of the destination fund.

Q : How can I monitor the value of my Investment Units?

A : You can check the value of your Investment Units from the Management Company’s web site.

Q : Who is the Fund’s custodian and ensures the Management Company’s compliance with the investment agreements? A : Standard Chartered Bank (Thai) Public Company Limited, Tel: 0-2724-5265

Q : Who is the Fund’s auditor?

A : Mrs. Suvimol Krittayakien, or Mrs. Vilairat Rojnuckarin, or Miss Somjintana Pholhirunrat D I A International Audit Co., Ltd, Tel: 0-2259-5300

Q : Who is responsible for preparing an accurate list of Unitholders to ensure correct payment and allotment of Investment Units? A : Krungsri Asset Management Company Limited, Tel: 0-2657-5757

Q : What is the procedure for filing a complaint?

A : Please contact the Management Company at the telephone number 0-2657-5757 or the Office of the SEC’s Help Center at the telephone number 0-2263-6000.

Q : Is there any restriction on the holding of Investment Units?

A : The Fund shall not allot more than one-third of the total Investment Units sold to any group of persons or any same group of persons, except when such group of persons or same group of persons is exempt pursuant to the notifications of the Office of the SEC.

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Risks Associated with Investment in the Fund and Risk Management Guidelines 1. Credit Risk:

This risk involves possible default by the issuers of the debt instruments in which the Fund invests, in case the issuers are unable to repay principal and interest to the Fund when due.

Risk Management Guidelines

The Krungsri Fixed Income 6M48 Fund shall invest in quality debt instruments of general private companies. In this regard, such instruments or their issuers shall be designated as investment grade and may include bank deposits and government debt instruments which carry low risk regarding default on principal and interest repayment. As a result, the Fund carries low credit risk.

2. Liquidity Risk:

This risk involves possible illiquidity of instruments which may cause the Fund to be unable to sell the invested instruments or gain optimum selling prices for the instruments. As a result, investors may be unable to redeem Investment Units at the desired price or time.

Risk Management Guidelines

As the Fund will hold instruments whose term is similar to the term of the project life throughout the term of such instruments without trading them, the Management Company is not exposed to liquidity risk associated with the instruments.

3. Market Risk

This risk involves fluctuation in prices of or returns on instruments due to changes in relevant factors, such as economic, social, and political conditions and the conditions of the money market.

Risk Management Guidelines

The Management Company shall consider diversifying into various instruments in order to determine appropriate investment ratios which are in accordance with the Fund’s investment policy. The Management Company shall select only quality instruments taking into consideration the fundamental factors and issuers’ potential, as well as economic and political conditions and the conditions of the money market which may affect investment in such instruments.

4. Interest Rate Risk:

Generally, there is an inverse relationship between prices of debt instruments and interest rates. Normally, the longer the remaining term of a debt instrument, the greater the effect which the change in interest rates has on its price.

Risk Management Guidelines

It is the Fund’s policy to invest in debt instruments with maturity of approximately six months, which is similar to the project life, and to hold them until they mature. As such, the Fund’s interest rate risk is low.

5. Counterparty Risk:

In the case of over-the-counter investment in derivatives, there is risk of default by the counterparty. Risk Management Guidelines

The Management Company shall select as its counterparty a financial institution with a credit rating within the top three ranks or, in the case of a foreign counterparty, a foreign financial institution whose long-term credit rating is in the investment grade or a financial institution or licensee licensed to operate a derivatives business by the Office of the SEC.

6. Foreign Exchange Rate Risk:

If debt instruments in which the Fund invests repay principal and interest in foreign currencies, the Fund will be exposed to foreign exchange rate risk when conversion of foreign currencies is made into Baht, possibly causing returns to be different from expected.

Risk Management Guidelines

As the Fund aims to invest partly offshore, it is the Fund’s policy to prevent foreign exchange rate risk, in the case of instruments repaying principal and interest and/or other types of returns in a foreign currency, by using currency swaps and/or currency forwards in order to receive returns in Baht at a fixed rate. The Fund shall hedge against possible foreign exchange rate risk in order to avoid fluctuation in returns in Baht.

7. Country Risk:

This risk arises from changes in the country where the Fund invests, for instance, changes in the executive positions of a company or economic policies, political changes, or other circumstances which may lead to an inability to repay debts when due.

Risk Management Guidelines

It is the Fund’s policy to invest in offshore debt instruments whose term is approximately six months and whose issuers are rated as investment grade or higher. Before making an investment, the Management Company shall carefully analyze the various factors which may affect the ability to repay debts of the country where the Fund invests.

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Expenses Charged to Subscribers, Unitholders, or the Fund

1. Expenses charged to subscribers or Unitholders (percent of the value of Investment Units) 1.1 Front-end fee

- During the initial public offering: - After the initial public offering:

None None

1.2 Back-end fee None

1.3 Switching fee  - Inward switching fee - Outward switching fee

None None 2. Expenses charged to subscribers or Unitholders (as actually incurred)

2.1 Fee for transferring Investment Units Not exceeding Baht 10 per 1,000 Investment Units The fraction of 1,000 units is considered as 1,000 units. 3. Expenses charged to the Fund (annual percentage of the total asset value less the total liabilities value, except the management fee, the

fund supervisor fee, and the registrar fee, on the date of the calculation)

3.1 Management fee Not exceeding 1.50

3.2 Trustee fee Not exceeding 0.07

3.3 Registrar fee Not exceeding 0.15

3.4 Expense for procuring a guarantor None

3.5 Expense for offshore custody of securities or assets As actually incurred but not exceeding 0.10 1/

3.6 Other expenses 2/ As actually incurred

4. Expenses for advertising, public relations, and sales promotion

4.1 During the initial public offering Included in the management fee

4.2 After the initial public offering None

5. The maximum rate for all fees and expenses charged by the Fund shall not exceed the annual rate of 1.82 percent of the Fund’s net asset value as of the date of the calculation.

Notes:

1/ This expense is calculated as a yearly percentage of the Fund’s average net asset value per year. At the discretion of the Management Company, such expense may be amortized either in full at once or gradually over an accounting period when such expense is incurred, or over another amortization period deemed appropriate.

2/ Other expenses which are less than or equal to 0.01 percent per annum of the total asset value less the total liabilities value, except the management fee, the fund supervisor fee, and the registrar fee, on the date of the calculation.

Comparison of Investment Ratios

Type of Securities General Mutual Funds Krungsri Fixed Income 6M48 Fund Investment

Grade

Not exceeding 15.00 percent of the fund’s net asset value in the case of investment in a general company, and not exceeding 20.00 percent of the fund’s net asset value in the case of investment in a financial institution

Not exceeding 25.00 percent of the Fund’s net asset value in the case of investment in a general company, and not exceeding 25.00 percent of the Fund’s net asset value in the case of investment in a financial institution

Investment Grade means (1) debt instruments issued by banks which are established under a specific law, commercial banks, or finance companies, (2) local debt instruments with credit ratings in the investment grade, (3) derivatives which meet the criteria prescribed by the Office of the SEC, or (4) foreign debt instruments as specified in the Fund Project, etc.

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Caveat / Advice

The Mutual Fund is a juristic person separate from the Management Company. Therefore, Krungsri Asset Management Company Limited has no obligation to compensate for the loss of the Krungsri Fixed Income 6M48 Fund. The performance of the Krungsri Fixed Income 6M48 Fund does not depend upon the financial status or performance of Krungsri Asset Management Company Limited. 

The Krungsri Fixed Income 6M48 Fund makes less diversified investments when compared to those made by general fixed income funds. Therefore, the Krungsri Fixed Income 6M48 Fund carries higher risk relating to concentration of investments in any one particular company.

Krungsri Asset Management Company Limited may invest in other securities or assets for and on behalf of itself, in the same way as it does for and on behalf of the Mutual Fund. In this regard, the Management Company shall establish an operational system to prevent conflicts of interest in order to ensure fairness to Unitholders.

Investors may obtain further information by requesting the prospectus from Krungsri Asset Management Company Limited or the selling or redeeming supporters.

Investors may obtain information relevant to investment decision making, such as business transactions with connected persons, from the Office of the SEC or its website at http://www.sec.or.th.

The Management Company allows its employees to invest in securities for their own interests provided that they conform to ethical codes and notifications of the Association of Investment Management Companies, and disclose such investment to the Management Company in order to allow the Management Company to supervise their trading of securities. 

Investors may study voting guidelines and methods of exercising voting rights at the offices of the Management Company and the selling or redeeming supporters.

Investors are advised to verify that the person offering Investment Units is approved by the Office of the SEC and to request to see his/her license issued by the Office of the SEC.

References

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