Sentry Select Capital Corp., as manager of Sentry Select MBS Adjustable Rate Income Fund II, today announced that Fixed Income Discount Advisory Co. (FIDAC) has resigned as investment manager of Mortgage-Backed Securities Limited Partnership. The fund obtains exposure to the LP through a forward agreement.

FIDAC’s resignation will become effective on July 14.

FIDAC advised that the reason for its resignation was the impact of the fund’s annual redemption right and mandatory market purchase program, as well as market conditions, which have reduced the LP’s capital to a size that makes it uneconomic for the LP to obtain financing to leverage the LP’s capital according to the LP’s investment objectives.

Sentry Select has identified several other investment managers that manage funds with similar investment strategies and expects to be able to engage a new manager prior to July 14.

Due to the reduction of capital in the LP resulting from the fund’s April 2008 annual redemption, combined with current market conditions that have resulted in reduced availability of credit, leverage in the fund has been reduced and is currently 1.15:1. As such, it is anticipated that the distribution on the fund’s units for the remainder of the quarter will primarily be a return of capital.

Sentry Select is considering changing the structure of the fund with the goal of improving the performance of the fund and enhancing the likelihood of the fund remaining a viable, attractive investment for the life of the fund. Such changes would be subject to unitholder approval and may be subject to regulatory approval.