Fund Objective

The investment objective of the PRU Asian Balanced Fund is to maximise total return in the medium to long term by investing in a portfolio comprising of equities of companies in the Asian ex-Japan region, and quality corporate bonds and other fixed income securities issued in the United States market.

Market Overview	As of 01-Aug-2010
Asian ex-Japan stock markets rose in July as three key factors boosted investor faith in the global economy − good second-quarter earnings, better-than-expected economic data and hopes that China will ease its monetary tightening policy. Meanwhile, investment grade bonds generated positive total returns in July, as positive earnings announcements and better clarity regarding US financial regulation and European bank capital levels helped buoy risk asset classes. Earnings releases consistently exceeded expectations throughout the month. The Fund rose 1.7% (bid-to-bid basis) in Singapore dollar terms for the month compared to its benchmark’s gain of 1.2%. Asian equities were up for the month, whilst US credit markets underperformed. As a result, the preference for Asian equities aided relative returns. The Asian equity underlying fund outperformed its benchmark by a good margin in July while the US credit underlying funds were small underperformers. At an aggregate level, equity valuations are about fair to slightly attractive. At the same time, the fund manager remains cautious on the outlook for earnings and investor risk appetite given signs of a slowdown in the growth momentum. Credit spreads continue to offer good value relative to government bonds. However, as the fund manager believes that Asian equities can provide better returns compared to US credit in the near term, he is overweight equities out of credit.

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