Problem with itunes to iphone playlist sync

I've noticed a problem when creating a smart playlist using ratings.

Here is an example playlist:

Match all the following rules:

Genre contains Blues

Album Rating is greater than 3 stars.

In iTunes it will generate a playlist of 712 songs.

When my iPhone syncs i only see 505 songs.

Now my iTunes library consists songs ripped from CD (AAC Audio File) , songs purchased through iTunes, and Apple Music AAC audio files.

I've been able to determine the the songs missing on the iPhone are the Apple Music Audio Files.

As a quick check I created the following test playlist:

Match all of the following rules:

Date Added is in the last 1 weeks.

I get 153 songs in both iTunes and on the iPhone and I the lest does include the Apple Music AAC audio files so it seems to be an issue with just ratings and these files.

The reason for this list is to download my highest rated albums for offline use.

Anybody else experiencing this and/or have any ideas?

Thanks

Darcy