Changes to the PruSelect Fund Range 2008

Following the OBSR Fund Ratings meeting on 11th December 2008, OBSR have decided to upgrade the Rating for the AXA Framlington Health fund to AA. The fund previously held an A Rating and was downgraded in 2007 from AA on concerns over the departure of the manager of the AXA Framlington Biotech fund, Gareth Powell, who also had an input into the AXA Framlington Health fund. OBSR have monitored the team's progress and this upgrade is in acknowledgement of the valuable resource added in the biotechnology area since Andy Smith joined in April 2008 to take over the AXA Framlington Biotech fund. Furthermore, Gemma Game joined the team in October 2007 from Merrill Lynch, where she was a healthcare analyst. Dr Deane Donnigan continues to be the fund's lead manager and the previous manager, Anthony Milford, also continues to be involved. In recognition of the size and depth of experience in the team, OBSR now believe that the fund merits an AA Rating.

Following the OBSR Fund Ratings meeting on 11th December 2008, OBSR have decided to award the Newton Balanced fund an A Rating. The fund is managed by Iain Stewart, Director of Investment Management (Global Funds), who has worked at Newton for over 20 years and has a proven track record managing multi-asset funds. He is heavily involved in the development of the global investment themes used to drive the wider Newton investment house process and he reflects these themes boldly within the Balanced fund but within the mandate and risk controls of the fund. The regard OBSR have for the manager and the Newton investment process leads them to award this OBSR Fund Rating.

Following the announcement that Leslie Jones is to retire in April 2009, OBSR has suspended the Rating on the Old Mutual Japanese Select fund. The fund previously held an OBSR AA Rating. The management of the fund will pass to Old Mutual Asset Managers' quantitative strategies team and therefore, OBSR has decided to suspend the Rating pending further discussion with Old Mutual.

Following the OBSR Fund Ratings meeting on 13th November 2008, OBSR have decided to award the BlackRock UK Absolute Alpha fund an A Rating. The fund is managed by Mark Lyttleton and Nick Osborne who aim to produce a positive return in all markets by investing in UK equities and by using the wider investment powers permitted under UCITS III regulations whilst reducing the volatility associated with a traditional long-only UK equity fund. Given the return profile they have achieved, even in the more volatile market conditions of late, and combined with well thought out and insightful portfolio construction, OBSR feel confident that the fund now warrants this OBSR Fund Rating.

Following the OBSR Fund Ratings meeting on 13th November 2008, OBSR have downgraded the Artemis Capital fund and the Artemis European Growth fund to AA. These funds previously held a AAA Rating. OBSR have explained that the funds have both been suffering from a sustained period of underperformance and they have been monitoring the situation carefully for some time. OBSR understand that quantitative driven investment processes such as SmartGARP will struggle at inflexion points and at times of increased market volatility but they feel that the underperformance over the past 18 months against the funds' benchmarks, the FTSE All-Share and the FTSE World Europe ex UK indices respectively, simply cannot be ignored. Given the protracted period of underperformance versus these benchmarks and appropriate peer groups and the resulting deterioration in their risk-reward profiles, OBSR feel that a AA Rating is a more appropriate manifestation of their level of conviction in both cases.

New Star have decided to suspend dealing temporarily in the New Star International Property Fund until further notice. The consequence of the dealing suspension is that, for the time being, investors cannot redeem or buy shares in the fund.

New Star Asset Management has announced today that it plans to restructure its business and reduce costs as a consequence of the downturn in the markets. Furthermore, New Star has amended its bank covenants in response to the unsettled trading environment.

OBSR is seeking further clarification of this situation and to this end will be speaking to New Star in the coming days. In the meantime, OBSR have not made any changes to the OBSR Fund Ratings for the rated New Star funds.

It has been announced that Ted Scott is to be away from work for three months while he is treated for and recuperates from a condition resulting from a previous skiing injury. In his absence, Hilary Aldridge and Phil Doel have been appointed as co-managers with immediate effect. Ms Aldridge has worked with Mr Scott on the funds since joining F&C in 2001 and will continue to focus on small and mid cap stocks and Mr Doel, who manages the OBSR A Rated F&C UK Opportunities fund, will look after the large cap stock selection and contribute to the overall strategy of the two funds. The funds' A Ratings remain unaltered at this stage and OBSR will be meeting with Ms Aldridge and Mr Doel in the near future.

OBSR wishes Mr Scott a speedy recovery and return to work.

OBSR has been advised that the Invesco Perpetual Monthly Income Plus fund will reside in the IMA £ Strategic Bond category. Invesco's rationale is that the fund manager wishes to maintain flexibility to invest across corporate bond markets wherever the most attractive opportunities can be identified. The IMA £ Strategic Bond sector provides the most flexibility in this regard. Prior to the IMA's recent review of fixed income sectors, this fund sat in the IMA UK Other Bond sector which was abolished following the IMA's recent review of fixed income sectors.

Following the announcement on 29th October 2008 that Patrick Armstrong, Head of Investment Selection, and Ana Cukic-Munro, Head of Portfolio Strategy and Construction, are no longer managing the multi-manager fund range, OBSR has withdrawn the ratings from these funds.
Michael Pinggera is joining Insight as Head of the Multi Asset Group. He joins from Credit Suisse where he was Head of Multi Asset Class Solutions. Reza Vishkai, Head of Alternatives, continues to oversee the Multi Asset Group. Steve Waddington, Eugene Fostiak and James de Bunsen also remain in the team.

OBSR has removed the rating from the M&G High Yield Corporate Bond fund. The fund previously held an A-Rating but this was suspended in August 2007 following a change of fund manager. OBSR knows the new fund manager Jim Leaviss from his work on the A-Rated M&G Gilt & Fixed Interest fund, and he is also the Head of M&G's Retail Fixed Interest Team. OBSR have met him on a number of occasions to discuss his plans for the M&G High Yield Corporate Bond fund for which he has adopted a flexible approach, aiming to use his macro insights to help with overall fund positioning. OBSR are impressed with Mr Leaviss and the M&G fixed interest team and process, however they feel that more time is necessary to monitor this fund and consider whether a Rating is appropriate. Therefore OBSR has derated the fund but will continue to monitor Mr Leaviss' progress. The M&G Gilt & Fixed Interest fund retains its OBSR A Rating.

OBSR has reinstated the OBSR A Rating for the Investec Global Energy fund. The fund's previous AA Rating was suspended in February 2008 when Investec announced that it had elected to bring the management of the fund in-house. The mandate was previously outsourced to Guinness Asset Management. The managers of the fund are now Mark Lacey and Jonathan Waghorn and following a number of meetings with the new managers, OBSR's level of conviction now warrants the reinstatement of the Rating at A. Mr Lacey and Mr Waghorn joined Investec from Goldman Sachs and both have considerable experience in this specialist area with a demonstrable record of success. OBSR believe their investment process to be well articulated and considered and they are confident in their ability to add value over the longer-term in this field.