Fund Objective

The investment objective of the PRU Global Leaders Fund is to maximise long-term total return (the combination of income and growth of capital) by investing in a wide range of global equities that the Manager considers to be leading in their field.The Manager intends to achieve this investment objective by investing all or substantially all of the assets of the PRU Global Leaders Fund into the M&G Global Leaders Fund which shares the same investment objective.

Market Overview	As of 01-Aug-2010
July saw appetite for risk return to global stock markets due to generally better-than-expected quarterly results and a more upbeat report from the International Monetary Fund that raised estimates for global economic growth. Figures from Europe were broadly positive and the bank stress tests provided some transparency into the continent’s banking system. European equities gained, with the euro rallying against the dollar and other major currencies. In contrast, fears over the US recovery persisted due to soft payroll numbers and a moderation in GDP growth in the second quarter, compared with the previous three months. Nonetheless, the US was among the best performing stock markets during July in local currency terms. The Fund rose 5.3% (bid-to-bid basis), underperforming its benchmark which rose 5.5%. As the previous month’s ‘flight to quality’ was reversed and investors again embraced risk, the portfolio’s more economically sensitive holdings featured among the top contributors. These included US industrials group Timken and German steelmaker ThyssenKrupp. After months of heavy falls, shares in oil companies BP and Anadarko Petroleum recovered in July. Defensive sectors, including pharmaceuticals, lagged the market during the month. Merck & Co, Astellas Pharma and Kobayashi Pharmaceuticals were amongst the detractors. Positions in Boral and Yahoo! disappointed in July. A position in TransCanada was sold on valuation grounds, while US oil explorer Mariner Energy left the portfolio after the firm agreed to be taken over by rival Apache in a $2.7 billion deal. Conversely, Canadian diversified mining company Sherritt International entered the portfolio. Meanwhile, the fund manager of the Underlying Fund added existing position in Boral as he took advantage of weaker share price.

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