LONDON, April 28, 2008 — Results from BNY Mellon Asset Servicing show that balanced pooled funds failed to achieve positive returns during the first quarter of 2008. Over this period the median return for these funds was -7.9%, the first negative return we have seen since Q2 2006.

As a result, despite some stronger results in the previous three quarters, balanced fund performance was also negative over a one year period, with the median fund returning -3.3%. Results were, however, more favourable over longer periods with median returns of 9.3% p.a. and 12.8% p.a. over three and five years respectively. Over these periods, balanced funds achieved median real rates of return, against the Retail Prices Index, of 5.7% p.a. and 9.5% p.a.

All of the equity pooled fund classes within our universe posted negative median returns for Q1 2008. The biggest loss came from Pacific ex Japan funds with a median return of -12.1%, a performance which did, however, beat the index by 1.3%. All the other active Overseas Equity pooled funds within our universe failed to beat their respective benchmarks during the quarter. Japanese Equity pooled fund managers achieved the strongest performance returning -7.9%, closely followed by European ex UK managers with -8.0%. Closer to home, UK Equity pooled fund managers achieved a return of -9.7% over the quarter, marginally outperforming the FTSE All Share which returned -9.9% over the same period.

The few positive returns of the quarter came from bonds and cash, with International Bond pooled fund managers, achieving a return of 9.4% during Q1 2008. Index-Linked Gilt and Cash pooled managers achieved returns of 3.4% and 1.3% respectively. In contrast, UK Bond pooled fund managers returned -1.2% and underperformed the comparative market index by 2.6%.

Property pooled fund managers continued their run of negative performance returning -3.5% during the quarter. Over the year, the median return for these funds was -12.0%.

Allocation to UK equities continues to fall

During the quarter, balanced pooled fund weightings in UK Equities fell by 2.0%, the largest drop we have seen in five years. This can be attributed to a combination of poor relative performance and managers moving money away from the sector. By the end of the quarter, Balanced pooled fund weightings in UK Equities had fallen to an all time low of 41.5%.

Weightings in Overseas Equities also fell during the quarter, most notably in Europe ex UK and Pacific ex Japan Equities where holdings decreased by 0.7% and 0.6% respectively. This was primarily due to managers moving money away from these sectors. Money was moved into North American and Emerging Markets Equities, although poor relative performance meant that, overall, weightings in these sectors decreased marginally.

As weightings in Equities declined, we saw weightings boosted in both Cash and Bonds. In Cash, weightings increased by 1.1%, as a result of both strong relative performance and manager movements into this sector. Within Bonds, weightings in the UK rose by 0.5% to 8.1% over the quarter and International Bonds increased by 0.7% to 2.3%. Weightings in Index-Linked Gilts remained fairly static over the quarter and there was no change to Property weightings, despite some poor performances in recent periods for this sector.

Commenting on the results, Alan Wilcock, BNY Mellon Asset Servicing's Performance and Risk Analytics Manager, said: "Equity market returns in the first quarter of 2008 were one of the worst starts to a year we have see on record. Consequently it is not a surprise that there were no positive returns in the Balanced or UK Equity sections of the survey this quarter".

BNY Mellon Asset Servicing's Pooled Pension Fund Database covers the largest and most representative sample available to UK pension funds' trustees. The company currently covers 76 separate asset managers who manage over pounds Sterling 419 billion in pooled funds, both balanced and specialist.

The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has more than $23 trillion in assets under custody and administration, more than $1.1 trillion in assets under management and services $12 trillion in outstanding debt. Additional information is available at bnymellon.com.