individual savings account

Key Features Prudential ISA Ex PEP Prudence ISA Prudential Unit Trusts Prudential OEIC (Incorporating the Simplified Prospectus for Prudential Unit Trusts and Prudential Investment Funds (1)) Issued by Prudential Unit Trusts Limited and Prudential Personal Equity Plans Limited 30 April 2009 Introduction The Financial Services Authority is the independent financial services regulator. It requires us to give you this important information to help you to decide whether the Prudential products listed in this document are right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. This Key Features document is valid for use from 30 April 2009. You should ensure that you have an up-to-date copy before you invest. If you are in any doubt about the contents of this Key Features document, you should consult your Financial Adviser if you have one. It provides information about your investment, such as: > > > > The type of investment you may be considering. The amount you can invest. The charges we make and how they affect your investment. The amount you could receive when you cash in your investment. Some of the words we have used in this Key Features document are investment terms. These are explained later in this document in our ‘Jargon Buster’ section on page 12. Any words appearing in the ‘Jargon Buster’ section are highlighted throughout this Key Features document in BOLD CAPITALS. 2 Key Features Contents 4 Simplified Prospectus 4 Aims 4 Your investment 4 Risk factors Questions & answers 5 What are the different types of ISA? 5 How much can I invest? 6 Where is my money invested? 6 What are the charges? 7 How much will the advice cost? 7 What about tax? 7 What is the tax position of the Trusts? 8 How will I know how my investment is doing? 8 Can I change the Trust in which I have invested? 8 Can I transfer my ISA? 8 Can I change my mind? 9 What might I get back? 9 Can I take money out? 9 What happens to my investment if I die? 10 How to contact us 10 Other information 12 Jargon buster Appendix A – The Trusts Appendix B – Portfolio Turnover Rate Appendix C – The effect of charges and expenses Appendix D – Prudential Customer Agreement Key Features 3 Simplified Prospectus This document constitutes the Simplified Prospectus for the Prudential Unit Trusts and Prudential OEIC funds (the TRUSTS) that are available for investment. It has been prepared in accordance with the Financial Services Authority (FSA) Handbook of Rules and Guidance. Your investment There is no set term. You invest for as long as you wish. However, we recommend that you hold your investment for at least five years. Prudential Trusts A Prudential Trust is an investment where your money is pooled with other investors’ money and put into STOCKS AND SHARES or FIXED INTEREST SECURITIES, or both. A Trust can be set up in joint names of up to four holders (aged 18 or over). You can choose an account designation for a Trust, for example the initials of a child. Prudential ISA The Prudential ISA is a stocks and shares ISA which invests in STOCKS AND SHARES and FIXED INTEREST INVESTMENTS through the range of Trusts. An ISA is a tax-efficient investment. No personal Income Tax or Capital Gains Tax is payable on income or growth (subject to future legislative changes). You can invest if you are resident or ordinarily resident in the UK for tax purposes and aged 18 or over. There is no upper age limit. You can only set up an ISA in your own name. Joint ISAs are not available. If you live abroad you are unable to invest in an ISA (unless you are a Crown employee or married to or in a civil partnership with a Crown employee and therefore ordinarily resident for UK tax purposes). If you have invested in an ISA before moving abroad and are no longer contributing to your ISA, your money invested will continue to receive the tax benefits. Ex Maxi Prudential ISA, Ex PEP Prudential ISA and Ex PEP Prudence ISA You may not make any further subscriptions or transfer ISAs from other managers to these products, but the money you have invested will retain its tax benefits while it remains in your ISA. You can change your choice of TRUSTS if you wish and can either take or reinvest your income. Aims The Trusts You can choose for the Trusts to give you: Risk factors You should consider the following risk factors before investing: The value of your investment and any income from it may fall as well as rise and you may not get back your original investment. Past performance is not a guide to future performance. The level of income is not fixed and may vary. Investments held in specialist Trusts, such as Trusts investing primarily in a specific geographic region or a specific asset class, may have more concentrated portfolios and will therefore carry a higher risk to CAPITAL and be potentially more volatile than Trusts investing in a more diversified portfolio. A rising rate of inflation will have the effect of reducing the actual value of any gain by an equivalent amount. The current tax regime applicable to investors in COLLECTIVE INVESTMENT SCHEMES is not guaranteed and may change in the future. > > > Long term CAPITAL GROWTH, or a regular income, or a combination of both. Prudential ISA The aim of the Prudential ISA is to allow you to invest money without having to pay Income Tax and Capital Gains Tax on any income or growth. You can choose for the Prudential ISA to give you: > > > CAPITAL GROWTH with tax advantages, or an income with tax advantages, or a combination of both. 4 Key Features When you cash in your investment, you may get back less than you have invested because: Questions & answers Regular amounts If you wish to invest a regular monthly amount: > > > Investment performance could be lower than shown in Appendix C. Our charges could be higher than shown in Appendix C. Changes in currency rates may cause the value of the investment to fall. What are the different types of ISA? A Stocks and Shares ISA > > > > > If you invest in a STOCKS AND SHARES ISA you cannot invest in another STOCKS AND SHARES ISA during the same TAX YEAR. The Prudential ISA is a STOCKS AND SHARES ISA. You can invest from £50 up to £600 a month in the Prudential ISA. You can increase your regular amount from £5 a month. Your money will be invested for growth (GROWTH OPTION). Payment by Direct Debit will be collected on or immediately after the tenth day of each month. > Further information on these risk factors can be found in the Prospectus. Risk factors related to specific Trusts are detailed in Appendix A, The Trusts. A Cash ISA > If you invest in a Cash ISA you cannot invest in another Cash ISA in the same TAX YEAR. Prudential do not currently offer a Cash ISA. Transferring your existing ISA to us > > The value of the transfer must be at least £500. Subsequent transfers can be made from £250. The transfer must be in cash. We will carry out all the paperwork for you free of charge (although your existing ISA Manager may take a charge for carrying out the transfer). How much can I invest? Prudential ISA > > > The overall ISA limit for each TAX YEAR is £7,200 for each individual investor. This limit is subject to legislative change. The maximum you can invest in the Prudential ISA is £7,200 per TAX YEAR, subject to any subscriptions you may make into a Cash ISA elsewhere. > Prudential Trusts Single payments > There is a minimum investment of £500 into each Trust. There is no maximum investment. You can top up your single payment at any time by completing the ‘Adding to or Changing Your Investment’ form. This is subject to a minimum of £250 into a Trust you already hold and £500 into a new Trust. Single payments If you wish to invest a single payment: > > > You can invest a single payment from £500 up to £7,200. You can top-up existing single payments from £250 into a Trust, by completing the “Prudential ISA Top Up Application Form”. Key Features 5 Regular amounts If you wish to invest a regular monthly amount: If you want a regular income You should select a Trust which offers the INCOME OPTION. You will need to tick the INCOME OPTION box on your application form. Prudential Trusts will distribute income from interest-bearing holdings on an effective yield basis. For more information, please see the relevant Prospectus. If you choose the growth option You will need to tick the GROWTH OPTION box on your application form. Within the GROWTH OPTION your choice of Trust will determine which unit/share type you will receive: > You can invest from £50 a month into any Trust (except the Prudential Maximum Income Trust). You can increase your regular amount from £5 a month. Your money will be invested for growth (GROWTH OPTION). Payments by Direct Debit will be collected on or immediately after the tenth day of each month. We must receive any changes to your Direct Debit instructions at least ten business days before the next payment is due. > > > For each Trust in which you invest, please tick either income or growth (unless the Trust is specified as a GROWTH OPTION only). You can only choose one option per Trust. For Trusts offering both Growth and Income, if neither/both options are ticked then Growth will be allocated for that Trust. If you want a fixed income Ex PEP Prudential ISA If you have selected the GROWTH OPTION, you can take a fixed income of between 0.5% and 10% of your investment. For full details, please refer to the Customer Agreement. Please note that the regular withdrawal of capital will limit growth or erode capital. When you buy units/shares with an ExDistribution price you will not be entitled to the next distribution of income. An Ex-Distribution price will be indicated on our website by an XD. We send you full details of your investment when you first invest or transfer to Prudential. Please note that CERTIFICATES will not be issued. You will also be sent a statement of your investment every six months. > > On receipt of your application and funds we will buy units/shares at the next available UNIT/SHARE PRICE. ACCUMULATION UNITS/SHARES are units/shares where any income produced will be retained in the Trust for growth, increasing the value of each unit/share. INCOME REINVESTED UNITS any income received will be automatically reinvested to purchase further units. Where is my money invested? You can choose from 25 Prudential Trusts (23 in the Prudential ISA and 7 in the Ex PEP Prudence ISA). Your choice will depend on whether you wish to receive an income (INCOME OPTION) or invest for growth (GROWTH OPTION). Our range of Trusts enables you to invest in one geographic region or spread your investment across world stockmarkets. Full details of the Trusts can be found in Appendix A, The Trusts. Your choice of Trust will determine which option (Income or Growth) and Unit/Share Type (Income or Accumulation) you can select. All Trusts offer the GROWTH OPTION, and the majority of Trusts offer both INCOME and GROWTH OPTIONS. Appendix A, The Trusts, shows the option(s) and unit/share type(s) available for each Trust. > Where a Trust offers both ACCUMULATION UNITS and INCOME REINVESTED UNITS, you will receive ACCUMULATION UNITS in this Trust if you select the GROWTH OPTION, unless: What are the charges? In order to set up and run your investment, we make the following charges: > You are an existing investor who already holds INCOME REINVESTED UNITS. You specify on application that you wish to receive INCOME REINVESTED UNITS. > > We deduct an initial charge from your investment before it is used to buy units/shares in your chosen Trust. The level of this charge depends on the Trust you invest in. All charges are shown for each Trust in Appendix A, The Trusts. 6 Key Features > An ANNUAL MANAGEMENT CHARGE will be taken from income for all Trusts, except where otherwise stated. It is calculated and paid fortnightly in advance based on the mid-market value of the NET ASSETS of the Trust. Prudential Unit Trusts In order to protect the interests of the ongoing holders a dilution levy may be applied on the purchase and/or redemption of units. For more information on our dilution policy please see the relevant Prospectus. Other annual charges The Trusts will incur other annual charges such as TRUSTEE/ DEPOSITARY fees and expenses, custody fees, audit fees and certain other operational expenses which are based on the value of the Trust and taken from income. > > There is no need to declare the growth or income on your tax return. If you die, your ISA value forms part of your estate for Inheritance Tax purposes. Interest distributions (on certain Trusts which invest in FIXED INTEREST INVESTMENTS) are subject to Income Tax of 20%, however we pay such distributions to you gross. After an investment has been made, the first distribution of income includes an element of equalisation. Equalisation is the amount of income included in the price an investor pays for units/shares. When income is subsequently paid out to an investor, this proportion of the distribution is not subject to tax and therefore does not qualify for a tax reclaim under the ISA scheme. Further details can be obtained from Customer Relations (please see page 10 for details). > Prudential ISA/Trusts > If you are a regular investor, we deduct an initial charge from each monthly contribution, except where otherwise stated. If you stop or suspend your payments, your investment will still incur an ANNUAL MANAGEMENT CHARGE and OTHER EXPENSES (as detailed in Appendix A, The Trusts). If you require full details of all the charges applicable to each Trust please contact Customer Relations on 0845 783 5500. > How much will advice cost? If you have received financial advice Your Financial Adviser will give you details about the cost. The amount will depend on the size of your investment and, in the case of regular savings, the period for which you make them. It will be paid for out of the charges. Any commission payable will be disclosed in your Welcome Pack. If you have not received any financial advice If you are unsure whether this product is suitable for you, please seek financial advice. If you would like further information about this, please contact Customer Relations or visit our website at www.pru.co.uk Stamp duty reserve tax (SDRT) This applies to surrenders and certain transfers of units/shares. SDRT is technically a liability of the TRUSTEE/DEPOSITARY of the Trust but in practice it will be covered by a charge to the Trust. For further details please see the Prospectus. Dilution policy The actual cost of purchasing or selling a Trust’s assets may deviate from the midmarket value used in calculating the Trust’s unit/share price and may have an adverse reaction on the value of the Trust. Prudential OEICS In order to protect the interests of the ongoing holders, a dilution adjustment may be made on the purchase and redemption of shares. This has the effect of moving the single price up or down from the mid-price, known as ‘swinging’. The change protects existing holders from being disadvantaged. Prudential Trusts Your individual tax liability arising from income received and/or realised capital gains from your investment depends on your personal tax situation and may be subject to legislative change. For more information we would recommend you contact a suitably qualified adviser. What about tax? The following information is merely a guide and is based on our understanding of current UK tax legislation. Prudential ISA What is the tax position of the Trusts? Income Each Trust will be liable to Corporation Tax on its taxable income less allowable expenses at the lower rate of Income Tax (currently 20%). Capital Gains Capital gains accruing to a Trust will be exempt from UK tax. > You pay no personal Income Tax or Capital Gains Tax on investment growth or income. Key Features 7 How will I know how my investment is doing? To find out the value of your investment, simply multiply the number of units/shares you hold in your Trust(s) by the SINGLE PRICE. The SINGLE PRICE for each Trust is shown on our website www.pru.co.uk but you should note that these relate to the VALUATION POINT of the previous day. Alternatively, for the current prices or an up-to-date valuation, please contact Customer Relations on 0845 783 5500. The SINGLE PRICE of units/shares is normally calculated at 12.00 noon on each business day. This is known as the Trusts’ VALUATION POINT. We will send statements every six months to show how your investment is doing. If you would like to receive a copy of the latest Annual and, if more recent, Interim LONG or SHORT REPORT of your chosen Trust, free of charge, before investing, please contact Customer Relations on 0845 783 5500. Current estimated YIELDS are shown on our website www.pru.co.uk You can also obtain details from Customer Relations. (Please see page 10 for details.) Prudential Trusts We will also send you a copy of the Annual and Interim SHORT REPORT for your Trust every year. Prudential ISA If you are an existing Prudential ISA Mortgage Plan holder we will send you an annual review of the performance of your investment with regard to the possible future rate of return. Can I change the Trust in which I have invested? You can switch all or part of your investment between the Trusts (detailed in Appendix A, The Trusts). Your first switch must be at least £500 in each Trust. Switches after this must be at least £250. If you are only switching part of your investment you must leave at least £500 in the Trust you are switching from. There is no charge made for switching between Trusts. If you are an existing Prudential ISA Mortgage Plan holder, you can only switch between the Prudential Global Growth Trust and the Prudential Managed Trust within your ISA Mortgage. To switch between Prudential Trusts please write to Customer Relations. You can find the address details on page 10. You may only transfer in amounts from an existing ISA. If we receive dividends, tax credits or interest worth less than £5 from your previous ISA, we may refund these amounts to you by cheque. Amounts exceeding £5 will automatically be reinvested into your Prudential ISA. Transfer from Prudential You can transfer all or part of your Prudential ISA to another company’s STOCKS AND SHARES ISA. If you transfer the current TAX YEAR’S investments you must transfer the full amount. We do not make a charge for transferring your ISA, but your new ISA Manager may make a charge for receiving this money. Please let us know that you wish to transfer by writing to Customer Relations. The address is on page 10. Can I transfer my ISA? You can transfer all or part of your money at any time. If you do so, you will not lose any tax benefits. Transfer to Prudential You can transfer all or part of your existing ISA from another ISA Manager to the Prudential ISA. To do this, you will need to complete and return an ‘ISA Transfer Application and Transfer Authority Form’. We will carry out all the paperwork for you free of charge (although your existing ISA Manager may make a charge for carrying out the transfer). The transfer must be in cash and you should note that your investment will be OUT OF THE MARKET between the sale of your existing ISA investment and the purchase of your Prudential ISA investment. Can I change my mind? Once you have invested in a Prudential ISA or Trust we will send you a Welcome Pack which contains a cancellation reminder. If you wish to cancel you should return the completed form to Customer Relations. The address is on page 10. You should post it within 30 days from the date you received the reminder, or within 30 days from the day you received your Key Features document and Customer Agreement (if you did not receive them before taking out the investment), whichever is the later. 8 Key Features If you cancel and the value of your investment has fallen, you will not get all your money back. The amount you receive will be the value of your investment less the amount of any fall. If you choose to invest regularly you will receive the first payment back in full. Prudential ISA If you transfer your ISA to Prudential and you decide to cancel, we will try to transfer your ISA back to your previous ISA Manager. The amount which will be transferred back may be less than was transferred to us if the value of your investment has fallen. If we are unable to transfer your ISA back to your previous ISA Manager, we will sell the investment and send the cash to you. You should note that once this has happened you will lose your ISA tax advantages. Your statutory right to cancel is 14 days and is included in our 30 day cancellation period. > > The amount of our charges. Any income or withdrawals you have taken. What happens to my investment if I die? Prudential ISA > > Please see examples of the effect of charges on your investment in Appendix C. If you want to cash in your investment, please write to Customer Relations. The address is on page 10. We will send you a cheque within four business days of the date we sell the units/shares in your investment. Prudential ISA You must remember that once you have cashed in your STOCKS AND SHARES ISA you will not be able to open another STOCKS AND SHARES ISA until the following TAX YEAR. Prudential ISA/Trusts If you pay a regular monthly amount you must tell us that you want to cash in and cancel your Direct Debit at least ten business days before your next payment date. Your ISA and the tax benefits end from the date of death. The value of your investment will be transferred out of the ISA into a Prudential Trust, but will stay invested in the same Trust(s). Your money will stay invested until we receive instructions from the executor(s) of your estate. > If we have paid gross distributions after your death but before notice of your death is received by us it is the responsibility of your Personal Representatives to advise HM Revenue & Customs when administering your estate. Prudential Trusts Your investments will form part of your estate. Following instructions from your executors we can either cash in or transfer your investment to your beneficiaries. What might I get back? You will get back the current value of your investment at the time units/shares are sold. There is no guaranteed amount. The price at which we sell units/shares in your investment is the UNIT/SHARE PRICE at the VALUATION POINT following receipt of your written instructions. The amount you receive will depend on many factors: Can I take money out? You can make a full or partial withdrawal from your investment at any time subject to: > > A minimum of £250 from each Trust at any time. A balance of at least £500 remaining in each Trust. Prudential ISA Please note that you cannot reinvest this money if you have already invested the maximum amount for the current TAX YEAR. > > The amount you have invested. The performance of your chosen Prudential Trust. Key Features 9 How to contact us If you would like to request product literature or require additional information on a new or further investment: Call the Investment Helpline free on 0800 072 6159 8am-6pm – Monday to Friday 9am-1pm – Saturday For all other service enquiries relating to your existing investment: Call Customer Relations on (local rate number) 0845 783 5500 8am-6pm – Monday to Friday For your security and to improve the quality of our service, we may record and monitor telephone calls. If you would like to invest online or request product literature: Visit our website at: www.pru.co.uk Or please write to: Customer Relations Prudential Unit Trusts Limited PO Box 9022 Chelmsford CM99 2WA Other information Terms and conditions Your rights as a customer are set out in the Customer Agreement. Terms and Conditions may change subject to a notice period detailed in the Customer Agreement. How to register a complaint We hope you never need to complain, but if you do, please write to us or telephone us at: Customer Relations Prudential Unit Trusts Limited PO Box 9022 Chelmsford CM99 2WA Telephone: 0845 783 5500 Copies of our complaints handling procedures are available from the address or telephone number quoted above. For your security and to improve the quality of our service, we may record and monitor telephone calls. If you are not satisfied with the way we deal with your complaint, you can contact The Financial Ombudsman Service. Their address is South Quay Plaza, 183 Marsh Wall, London E14 9SR. Making a complaint will not affect your legal rights. Law The law of England and Wales will apply to this plan. All information we provide will be in English. Manager/authorised corporate director The Trusts described in this document are managed by Prudential Unit Trusts Limited. The manager of the Ex PEP Prudence ISA is Prudential Personal Equity Plans Limited. Registered Office: Laurence Pountney Hill, London EC4R 0HH. Prudential Unit Trusts Limited and Prudential Personal Equity Plans Limited are authorised and regulated by the Financial Services Authority, whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS, and are entered on the Financial Services Authority’s register. Registered numbers 122008 and 122011 respectively. Prospectus This Key Features document gives a summary only of the Prudential ISA, Ex PEP Prudence ISA, Prudential Unit Trusts, and Prudential OEIC. For more detailed information, please refer to the Customer Agreement. More detailed information is contained in the Prospectus which is available free of charge upon request. Independent auditor PricewaterhouseCoopers LLP, Hays Galleria, 1 Hays Lane, London SE1 2RD. Investment adviser M&G Investment Management Limited (unless otherwise stated), Laurence Pountney Hill, London EC4R 0HH. Authorised and regulated by the Financial Services Authority. 10 Key Features Trustee/Depositary The assets of Prudential Trusts are looked after by the TRUSTEE/DEPOSITARY who is The Royal Bank of Scotland plc, Trustee and Depositary Services, The Broadstone, 50 South Gyle Crescent, Edinburgh EH12 9UZ. Authorised and regulated by the Financial Services Authority. Anti-Money laundering Prudential may verify your identity electronically when buying or selling units/shares. For further information please see Part 1 Section 28 of the Customer Agreement. If money is not invested immediately Prudential ISA Any money paid in respect of this application will be held in a client money bank account if it is not possible for us to complete the investment and open the ISA as a result of our error. If this happens, you will receive units/shares based upon the lower of the UNIT/SHARE PRICES on the date of investment or the date on which the investment should have been made had no delay occurred. The exception will be in those instances where your cheque is returned directly to you. Please note that in these circumstances, you will not be entitled to receive any interest. Compensation Qualified advisers will recommend products that are suitable for you. You may have a right to compensation, if we or another authority decide that you have bought a plan following an adviser’s recommendation, which was not suitable for your needs at that time and which has resulted in financial loss. Please contact Customer Relations for more information. We are covered by the Financial Services Compensation Scheme. You may be entitled to compensation from the scheme if we cannot meet our obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for 100% of the first £30,000 and 90% of the next £20,000, so the maximum compensation is £48,000. Further information about compensation arrangements is available from the Financial Services Compensation Scheme, 7th Floor, Lloyds Chambers, 1 Portsoken Street, London E1 8BN. Key Features 11 Jargon Buster These definitions are those provided by Prudential for the purpose of this Key Features document and are not necessarily accepted as industry-wide definitions. ACCUMULATION SHARES – shares in an OEIC where any income is retained in the Trust, increasing the value of each share. ACCUMULATION UNITS – shares in a UNIT TRUST where any income is retained in the Trust, increasing the value of each unit. ANNUAL MANAGEMENT CHARGE (AMC) – is the charge we take out of our Trust to cover our expenses. For additional information on the ANNUAL MANAGEMENT CHARGE please see Appendix A on page 14. AUTHORISED CORPORATE DIRECTOR (ACD) – an Authorised Corporate Director is a regulated entity, performing a task within an OEIC structure similar to a MANAGER of a Unit Trust scheme. CAPITAL – the amount you invest. CAPITAL GROWTH – the amount you could gain on top of the amount you invest. CASH ISA – a tax-efficient deposit based savings account. The value of your investment at any time depends on the interest rate which applies. CERTIFICATES – documents showing your right to ownership of the units/shares held in the Trust. Please note that CERTIFICATES will not be issued. COLLECTIVE INVESTMENT SCHEMES – TRUSTS or sub-funds of Open Ended Investment Companies (OEICs). DEPOSITARY – the DEPOSITARY acts as a custodian of an OEIC’s assets on behalf of shareholders and watches their interests generally. This is similar to the TRUSTEE of a UNIT TRUST. FIXED INTEREST INVESTMENTS/SECURITIES – investments in government and corporate bonds, which pay a set amount of interest. They do not depend so much on changes in the stockmarket and therefore offer more security but less growth potential than STOCKS AND SHARES/EQUITIES. Payments of income to unit/shareholders from Trusts which invest mainly in FIXED INTEREST SECURITIES are known as interest distributions. (Trusts investing mainly in equities pay dividend distributions.) FUND OF FUNDS – a TRUST which invests in at least five other COLLECTIVE INVESTMENT SCHEMES from one or more investment companies. The FUND OF FUNDS Trusts are Prudential Growth, Prudential Managed and Prudential (Invesco Perpetual) Managed Trusts. GROWTH OPTION – where you have chosen to reinvest your income for growth. You can do this by using ACCUMULATION UNITS/SHARES or by having INCOME REINVESTED UNITS/SHARES. INCOME OPTION – where you have elected to receive an income. INCOME REINVESTED UNITS – units in a UNIT TRUST where any income received is automatically reinvested to buy more units. INCOME SHARES – shares in an OEIC where any income is paid out to investors. INCOME UNITS – units in a UNIT TRUST where any income is paid out to investors. INVESTMENT ADVISERS – are responsible for the day to day investment decisions of the Trust. LONG REPORT – A document which outlines the progress and activities of a particular TRUST, including the financial statements and a complete breakdown of the portfolio. In the case of an OEIC, the document contains this information for each sub-fund as well as the aggregated financial statements for the whole OEIC. MANAGER – a MANAGER is a regulated entity, performing a task within a UNIT TRUST structure similar to an AUTHORISED CORPORATE DIRECTOR of an OEIC. NET ASSETS – the value of the Trust after expenses and charges are deducted. OEIC – Open Ended Investment Company. The modern version of a UNIT TRUST. Your money is pooled with other investors’ money and put into different asset types, for example STOCKS AND SHARES. OTHER EXPENSES – costs in addition to your fund charges such as TRUSTEE/DEPOSITARY fees and expenses, custody fees, audit fees and certain other operational expenses which are deducted from income. OUT OF THE MARKET – the value of your investment stays the same in cash terms while it is not invested in the stockmarket. 12 Key Features SECURITIES – financial instruments which you can trade on the world’s stockmarkets, for example, EQUITIES and bonds. SHARE PRICE – where you invest in an OEIC, your money will be invested in a number of shares. The SHARE PRICE is how much each share is worth. The TRUSTS only have one SHARE PRICE called the SINGLE PRICE. The SHARE PRICE is calculated by dividing the NET ASSETS by the number of shares in issue. SHORT REPORT – A document which outlines the progress and activities of a particular TRUST, but does not include the financial statements or a complete breakdown of the portfolio. SINGLE PRICE – the price at which you can buy and sell units/shares. STOCKS AND SHARES/EQUITIES – an investment in companies listed on the world’s stockmarkets. When you buy STOCKS AND SHARES/EQUITIES, you buy part of a company. The value of your investment at any time depends on how the companies it invests in are doing and changes in the stockmarkets around the world. STOCKS AND SHARES ISA – these have the potential for a higher return than a CASH ISA over the medium to long term, but with increased risk. They also take advantage of periods of strong stockmarket growth. TAX YEAR – the 12 month period running from 6 April to 5 April. TRACK/TRACKING – aiming to achieve the same returns as a chosen share Index. TRUSTEE – an independent financial institution which holds the assets of the UNIT TRUSTS and oversees the duties of the MANAGER. TRUST(S) – a generic term for both a UNIT TRUST investment and an OEIC investment, unless otherwise stated. UNIT PRICE – your money will be invested in a number of units within a Unit Trust. The UNIT PRICE is how much each unit in your Unit Trust is worth. The Prudential Trusts have only one UNIT PRICE, called the SINGLE PRICE. The UNIT PRICE is calculated by dividing the NET ASSETS by the number of units in issue. UNIT TRUST – an investment where your money is pooled with other investors’ money and put into different asset types, for example STOCKS AND SHARES. VALUATION POINT – when we work out how much your Trust is worth. UNIT/SHARE PRICES are calculated at the VALUATION POINT (normally at 12.00 noon on each business day). YIELDS – showing the distribution income as a percentage of the amount you invest. Key Features 13 APPENDIX A The Trusts Information about Prudential Unit Trusts and sub-funds of Prudential Investment Funds (1) are shown on pages as indicated below. Product availability Trust Name UT IF1 UT UT UT UT UT UT UT UT UT UT UT UT IF1 UT UT UT UT UT UT UT UT UT UT Cash Haven Trust Cautious Managed Growth Fund Corporate Bond Trust Distribution Trust Equity Income Trust Ethical Trust European Index Tracker Trust European Trust Global Balanced Trust Global Growth Trust Growth Trust International Growth Trust (Invesco Perpetual) Managed Trust Japanese Trust Managed Defensive Fund Managed Funds Tracker Trust Managed Trust Maximum Income Trust (Newton) Higher Income Trust (Newton) Managed Trust North American Trust Pacific Markets Trust Small Companies Trust UK Growth Trust UK Index Tracker Trust Page 15 16 18 19 20 21 22 23 24 25 26 27 28 29 30 32 33 34 35 36 37 38 39 40 41 Prudential ISA N/A                 N/A        Prudential OEIC/UT                          Ex PEP Prudence ISA N/A N/A   N/A N/A N/A  N/A  N/A  N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A   N/A Key: UT: Unit Trust IF1: A sub-fund of Prudential Investment Funds (1) OEIC 14 Key Features Prudential Cash Haven Trust The Prudential Cash Haven Trust is authorised by the Financial Services Authority (FSA) with effect from 11 April 1990. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The investment objective of the Trust is to produce a high income return combined with a high level of security. The scheme property may include (but is not restricted to) investments in cash deposits, floating rate notes, short dated bonds, and other short-term interest rate sensitive instruments. Units available for investment For the Prudential Cash Haven Trust there are two options available for investment: Income Income is paid on or before 5 April and on or before 5 January, 5 July and 5 October, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 0.50% 1.00% 0.08% The Annual Management Charge and all other annual charges are taken from Income. > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Performance 4.5 4 3.5 3 2.5 3.1 2.7 2.3 to end December each year Prudential Cash Haven Trust > 4.0 3.8 3.1 3.3 2.9 2.9 Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income if neither/both options are ticked then Growth will be allocated for this Trust. 2 1.5 1 0.5 0 -0.5 -1 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested -0.3 The cumulative performance over the last 10 years is 31.3%. Past performance is no guarantee of future performance. Information as at the end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 15 Prudential Cautious Managed Growth Fund The Prudential Cautious Managed Growth Fund is a sub-fund of Prudential Investment Funds (1) Open-Ended Investment Company (OEIC). The company is UK authorised with variable capital, established for an unlimited duration. Prudential Investment Funds (1) was authorised by the Financial Services Authority (FSA) with effect from 8 February 2007. Prudential Investment Funds (1) currently has two sub-funds available for investment. The base currency of the Trust is pounds sterling. Investment objective The Fund's objective is to deliver longterm total return (the combination of income and growth of capital). Policy for achieving objective The Fund aims to achieve its objective through asset allocation unconstrained by any benchmark. The Fund may invest globally either directly or via other collective investment schemes in assets including transferable securities, debt instruments, money market instruments, cash, near cash, deposits, derivatives, and indirectly in property. Derivative instruments may be used for both investment purposes and efficient portfolio management. The Fund will invest no more than 60% of the portfolio in equities. Specific risk factors The Fund may invest in a number of different asset types in various proportions. The risks associated with each asset type are shown below. Derivatives The Fund may use derivatives for investment purposes as well as for efficient portfolio management. To the extent that derivatives are used for investment purposes, the net asset value of the fund may at times be volatile. Although the Investment Adviser will select the counterparties with which it enters into derivative transactions with due skill and care, there will be residual risk that the counterparty may default on its obligations or become insolvent. Fixed interest securities The value of the fixed interest securities held will fall in the event of a default or perceived increased credit risk of an issuer. Yields of the fixed interest securities held may vary and the level of income may fluctuate. High-yielding bonds are generally issued by companies with lower credit ratings. They are more likely to default on their payments than traditional corporate bonds but offer a higher yield in return. Property It is anticipated that rental growth will take place for any property investments. Rent default could have an adverse impact on the performance of rental growth. The value of any property holdings is generally determined by the opinion of a standing independent valuer and is therefore subjective. Property investments can be relatively illiquid compared to bonds and equities. Liquidity is a measure of how easily an investment can be traded. Shares available for investment For the Prudential Cautious Managed Growth Fund, there are two options available for investment: > INCOME OPTION – You should select Income Shares if you want a regular income. GROWTH OPTION – Accumulation Shares: any income received will be retained in the Fund for growth, increasing the value of each share. > Please tick either Income or Growth on the application form. You can choose one option per Fund. As the Fund offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Fund. 16 Key Features Income Income is paid annually on or before 31 December. Charges and expenses Initial charge Annual Management Charge Other annual charges 5.00% 1.35% 0.27%* *All other charges relate to an Administration Fee of 0.15%, and a Custodian Charge. The Custodian Charge can range between 0.001% and 0.30%. The Annual Management charge and all other annual charges are taken from income. Performance 2 0 -2 -4 -6 -8 10 12 14 16 18 20 -17.3 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested to end December each year Prudential Cautious Managed Growth Fund The cumulative performance since launch is -14.9%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 17 Prudential Corporate Bond Trust The Prudential Corporate Bond Trust is authorised by the Financial Services Authority (FSA) with effect from 12 June 1995. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The objective of the Trust is to maximise the long-term return in sterling from capital and net income combined by investment in a portfolio consisting wholly or mainly of bonds issued by UK companies. Specific risk factors The value of your investment will fall in the event of a default or perceived increased credit risk of an issuer. YIELDS may vary and the level of income may fluctuate. When the historic yield is higher than the underlying yield it means income is paid at the expense of capital. Units available for investment For the Prudential Corporate Bond Trust there are two options available for investment: Income Income is paid on or before 31 July and on or before 31 January, 30 April and 31 October, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 3.25% 1.25% 0.18% The Annual Management Charge and all other annual charges are taken from Income. Performance 8 6 4 2 0 -2 -2.6 -4 -0.8 -2.8 to end December each year Prudential Corporate Bond Trust 7.5 5.5 5.2 4.0 5.2 6.7 > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Income Reinvested Units: any income received will be automatically reinvested to purchase further units. 1.4 > Please tick either Income or Growth on the Application Form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. 18 Key Features Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested The cumulative performance over the last 10 years is 32.7%. Past performance is not a guide to future performance. Information as at the end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Prudential Distribution Trust The Prudential Distribution Trust is authorised by the Financial Services Authority (FSA) with effect from 15 February 1994. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to provide a rising income together with a steady capital growth over the longer-term. The Trust aims to generate a yield greater than that of the FTSE All-Share Index. Specific risk factors The Annual Management Charge is taken from the Trust’s capital. Whilst this maximises the Trust’s yield, it could limit growth or erode its capital. The value of the Trust’s holdings of fixed interest securities may go up and down as interest rates change. If interest rates rise the value is likely to fall and vice versa. Units available for investment For the Prudential Distribution Trust there are two options available for investment: Income Income is paid on or before 7 March and on or before 7 June, 7 September and 7 December, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 3.00% 1.50% 0.11% The Annual Management Charge is taken from Capital. All other annual charges are taken from Income. Performance 20 15 10 5 0 -5 -10 -15 -20 -18.2 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested to end December each year Prudential Distribution Trust 12.9 14.2 10.0 3.8 -0.9 -0.2 12.4 8.4 > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. > -7.8 Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. The cumulative performance over the last 10 years is 33.9%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 19 Prudential Equity Income Trust The Prudential Equity Income Trust is authorised by the Financial Services Authority (FSA) with effect from 24 April 1985. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The aim of the Scheme is to provide a high and increasing income from a portfolio at least 85 per cent of which will normally consist of the equity-type securities of UK companies in all economic sectors. The Manager will seek to maintain the gross yield on the fund, before expenses, at a level which is significantly in excess of the dividend yield on the FTSE All-Share Index. Specific risk factor The Annual Management Charge is taken from the Trust’s capital. Whilst this maximises the Trust’s yield, it could limit growth potential or erode its capital. Units available for investment For the Prudential Equity Income Trust there are two options available for investment: Income Income is paid on or before 31 March and on or before 30 September, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.17% The Annual Management Charge is taken from Capital. All other annual charges are taken from Income. Performance to end December each year Prudential Equity Income Trust 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 24.0 22.1 17.6 12.3 3.2 -0.1 -6.1 15.8 > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Income Reinvested Units: any income received will be automatically reinvested to purchase further units. > -18.9 -25.7 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. The cumulative performance over the last 10 years is 35.1%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 20 Key Features Prudential Ethical Trust The Prudential Ethical Trust is authorised by the Financial Services Authority (FSA) with effect from 18 February 1999. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The objective is to maximise the total long-term return by investment in a portfolio wholly or mainly invested in equity-type securities of companies which satisfy a prescribed set of ethical criteria. Inter alia, these criteria will include prohibitions on investments in: a) company groups which derive more than 33% of their reported annual turnover from the fossil fuel industries; b) company groups which derive any turnover from the production of tobacco or tobacco products; and c) company groups which have been involved in the sale or production of nuclear weapons systems. Other things being equal, the investment adviser to the Trust will favour SECURITIES of companies which promote equality of opportunity and take positive action to protect the environment. Units available for investment For the Prudential Ethical Trust there is one type of unit available for investment: Income Income is paid on or before 30 June and on or before 31 December, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.20% The Annual Management Charge and all other annual charges are taken from Income. Performance 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -40 -45 to end December each year Prudential Ethical Trust 26.4 19.1 14.0 13.3 -3.4 -8.4 -18.3 -26.5 -39.6 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested > GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. The cumulative performance since launch is -33.3%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 21 Prudential European Index Tracker Trust The Prudential European Index Tracker Trust is authorised by the Financial Services Authority (FSA) with effect from 3 April 2001. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The Fund is designed to track the FTSE World Europe Index. The Fund will track the FTSE World Europe Index by using a stratified sampling process. This involves holding the largest index constituents in the correct index weight and a representative sample of the remaining index constituents. For the purpose of efficient portfolio management Index futures may be used to gain exposure to that Index. Specific risk factors As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. The value of the Trust will depend on the performance of the FTSE World Europe Index and the success of the Trust in TRACKING that Index. Units available for investment For the Prudential European Index Tracker Trust there are two options available for investment: Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income if neither/both options are ticked then Growth will be allocated for this Trust. Income Income is paid on or before 21 April and on or before 21 October, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 0.00% 0.80% 0.00% The Annual Management Charge is taken from Income. Performance 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -25.8-25.3 -26.3 -25.3 11.4 13.1 to end December each year Prudential European Index Tracker FTSE World Europe Index Prudential European Index Tracker Trust 24.2 25.6 21.5 23.1 17.0 18.3 12.8 12.9 > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested > The cumulative performance since launch is 12.7%. The cumulative performance for FTSE World Europe Index is 20.9% over the same period. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 22 Key Features Prudential European Trust The Prudential European Trust is authorised by the Financial Services Authority (FSA) with effect from 10 September 1985. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to achieve high capital growth through investment in a range of European (excluding UK) securities, mainly equities. Income is a secondary consideration. The Trust has the flexibility to move between countries and markets and will seek to take advantage of the variations in investment conditions which occur on a day to day basis. Specific risk factors As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Political factors can affect the stockmarket in certain countries in which the Trust may be invested. Therefore, the performance of the Trust may rise or fall more frequently than other Trusts. Units available for investment For the Prudential European Trust there are two options available for investment: > GROWTH OPTION – Within the Growth Option you can choose between: Accumulation Unit: any income received will be retained in the Trust for growth, increasing the value of each unit. Income Reinvested Units: any income received will be automatically reinvested to purchase further units. Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. Income Income is paid on or before 21 July and on or before 21 January, if applicable, each year. Charges and expenses You will receive Accumulation Units if you select the Growth Option, unless: Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.18% > You are an existing investor who already holds Income Reinvested Units. You specify on application that you wish to receive Income Reinvested Units. > The Annual Management Charge and all other annual charges are taken from Income. Performance 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -29.6 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested to end December each year Prudential European Trust 24.6 14.8 6.6 21.4 12.0 15.8 14.1 > INCOME OPTION – You should select Income Units if you want a regular income. -17.5 -20.9 The cumulative performance over the last 10 years is 25.9%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 23 Prudential Global Balanced Trust The Prudential Global Balanced Trust is authorised by the Financial Services Authority (FSA) with effect from 12 June 1995. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The objective is to maximise the longterm return in sterling from capital and net income combined by investment in a portfolio consisting wholly or mainly of equity and fixed interest securities (including bonds, convertibles and preference shares) of companies throughout the world. The Trust will normally have a higher weighting in UK equities with the remainder being invested elsewhere around the world, principally in continental Europe, the USA and the Far East. Specific risk factors As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. The value of the Trust’s holdings of fixed interest securities may go up and down as interest rates change. If interest rates rise the value is likely to fall and vice versa. Units available for investment For the Prudential Global Balanced Trust there is one option available for investment: Income Income is paid on or before 30 June and on or before 31 December, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.04% The Annual Management Charge and all other annual charges are taken from Income. Performance 25 20 15 10 5 0 -5 -10 -15 -20 -25 -2.4 -11.5 -17.4 -20.3 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested to end December each year Prudential Global Balanced Trust 22.5 17.2 18.7 6.3 8.6 6.3 > GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. The cumulative performance over the last 10 years is 19.0%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 24 Key Features Prudential Global Growth Trust The Prudential Global Growth Trust is authorised by the Financial Services Authority (FSA) with effect from 7 January 1986. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims for longer-term capital growth through a portfolio of international equities. Up to 50% of the Scheme Property will be invested in the major overseas equity markets, and a minimum of 50% will be invested in UK companies, predominantly those having an overseas orientation. Specific risk factors As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Political factors can affect the stockmarkets in certain countries in which the Trust may be invested. Therefore, the performance of the Trust may rise or fall more frequently than other Trusts. Units available for investment For the Prudential Global Growth Trust there are two options available for investment: Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. Income Income is paid on or before 21 September and on or before 21 March, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 5.50% 2.00% 0.03% The Annual Management Charge and all other annual charges are taken from Income. Performance 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -26.3 -26.0 -12.8 -4.5 6.2 8.8 3.5 to end December each year Prudential Global Growth Trust 22.3 19.0 19.5 > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Income Reinvested Units: any income received will be automatically reinvested to purchase further units. > Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested The cumulative performance over the last 10 years is -5.6%. Past performance is not a guide to future performance. Information as at end of December 2008.Past performance is net of tax and does not include the effect of subscription fees. Key Features 25 Prudential Growth Trust The Prudential Growth Trust is authorised by the Financial Services Authority (FSA) with effect from 17 February 2000. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The Trust is a fund of funds investing in M&G’s range of authorised collective investment schemes. Its sole objective is to achieve long-term capital growth. The Trust will have significant holdings in schemes investing in UK and overseas equities. Specific risk factor As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Units available for investment For the Prudential Growth Trust there is one option available for investment: Income Income is paid on or before 10 August each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 5.00% 1.50% 0.27% The Annual Management Charge and all other annual charges are taken from Income. Performance 40 30 20 10 0 -10 -20 -30 -16.3 -23.3 -24.2 to end December each year Prudential Growth Trust > GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. 28.3 17.8 27.7 17.7 12.9 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested The cumulative performance since launch is 14.8%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 26 Key Features Prudential International Growth Trust The Prudential International Growth Trust is authorised by the Financial Services Authority (FSA) with effect from 24 April 1985. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to achieve steady capital growth over the medium and longer-term by spreading investments across a broad range of international equities and fixed interest securities. The proportion invested in each country is changed depending on the outlook for the markets. Not more than 20% of the Scheme Property may be invested in the UK. Specific risk factors As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Political factors can affect the stockmarkets in certain countries in which the Trust may be invested. Therefore, the performance of the Trust may rise or fall more frequently than other Trusts. Units available for investment For the Prudential International Growth Trust there are two options available for investment: > GROWTH OPTION – Within the Growth Option you can choose between: Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Income Reinvested Units: any income received will be automatically reinvested to purchase further units. allocated for this Trust. Income Income is paid on or before 7 September and on or before 7 March, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.34% You will receive Accumulation Units if you select the Growth Option, unless: > > You are an existing investor who already holds Income Reinvested Units. You specify on application that you wish to receive Income Reinvested Units. The Annual Management Charge and all other annual charges are taken from Income. Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be Performance 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -24.9 -3.0 -11.4 5.5 6.5 to end December each year Prudential International Growth Trust 18.5 19.5 20.0 3.8 > INCOME OPTION – You should select Income Units if you want a regular income. -22.0 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested The cumulative performance over the last 10 years is -0.1%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 27 Prudential (Invesco Perpetual) Managed Trust The Prudential (Invesco Perpetual) Managed Trust is authorised by the Financial Services Authority (FSA) with effect from 18 January 1999. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The objective of the Trust is to maximize the total long-term return by investment in a portfolio of units and/or shares in regulated collective investment schemes which will provide exposure wholly or mainly to equity-type securities. The majority of the equity exposure of the Fund will be in the UK. Up to 15% of the underlying funds may be invested in collective investment schemes which invest in non-equity-type securities. Investment policy The Trust is a ‘FUND OF FUNDS’ investing mostly in UK equity funds managed by Invesco Perpetual. Units available for investment For the Prudential (Invesco Perpetual) Managed Trust there is one option available for investment: Income Income is paid on or before 31 January and on or before 31 July, if applicable, each year. Investment adviser The INVESTMENT ADVISER is Invesco Fund Managers Limited. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.85% 0.23% The Annual Management Charge and all other annual charges are taken from Income. Performance 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -18.5 -23.3 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested to end December each year Prudential (Invesco Perpetual) Managed Trust 24.3 16.4 8.2 23.3 16.9 4.4 > GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. -7.1 The cumulative performance since launch is 56.1%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 28 Key Features Prudential Japanese Trust The Prudential Japanese Trust is authorised by the Financial Services Authority (FSA) with effect from 10 September 1985. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to achieve long-term capital growth through investment in a wide range of Japanese securities. The portfolio covers a variety of sectors which are strategically selected because of their long-term growth potential. Specific risk factor As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Units available for investment For the Prudential Japanese Trust there are two options available for investment: You will receive Accumulation Units if you select the Growth Option, unless: Investment adviser The INVESTMENT ADVISER is Prudential Asset Management (Singapore) Limited. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.03% > You are an existing investor who already holds Income Reinvested Units. You specify on application that you wish to receive Income Reinvested Units. > Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. Income Income is paid on or before 21 October and on or before 21 April, if applicable, each year. The Annual Management Charge and all other annual charges are taken from Income. Performance 70 60 to end December each year > INCOME OPTION – You should select Income Units if you want a regular income. 67.2 Prudential Japanese Trust > GROWTH OPTION – Within the 50 Growth Option you can choose 40 between: 30 Accumulation Units: any income 20 received will be retained in the Trust 10 for growth, increasing the value of each unit. 0 Income Reinvested Units: any -10 income received will be automatically -20 reinvested to purchase further units. -30 -40 37.1 19.2 3.8 -9.7 -26.8 -19.0 -28.6 3.1 -12.6 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested The cumulative performance over the last 10 years is -2.4%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 29 Prudential Managed Defensive Fund The Prudential Managed Defensive Fund is a sub-fund of Prudential Investment Funds (1) Open-Ended Investment Company (OEIC). The company is UK authorised with variable capital, established for an unlimited duration. Prudential Investment Funds (1) was authorised by the Financial Services Authority (FSA) with effect from 8 February 2007. Prudential Investment Funds (1) currently has two sub-funds available for investment. The base currency of the Trust is pounds sterling. Investment objective The Fund's objective is to deliver longterm total return (the combination of income and growth of capital) with a bias towards income. Policy for achieving objective The Fund aims to achieve its objective through asset allocation unconstrained by any benchmark. The Fund may invest globally either directly or via other collective investment schemes in assets including transferable securities, debt instruments, money market instruments, cash, near cash, deposits, derivatives, and indirectly in property. Derivative instruments may be used for both investment purposes and efficient portfolio management. The Fund will invest no more than 35% of the portfolio in equities. Specific risk factors The Fund may invest in a number of different asset types in various proportions. The risks associated with each asset type are shown below. Derivatives The Fund may use derivatives for investment purposes as well as for efficient portfolio management. To the extent that derivatives are used for investment purposes, the net asset value of the Fund may at times be volatile. Although the Investment Adviser will select the counterparties with which it enters into derivative transactions with due skill and care, there will be residual risk that the counterparty may default on its obligations or become insolvent. Fixed interest securities The value of the fixed interest securities held will fall in the event of a default or perceived increased credit risk of an issuer. Yields of the fixed interest securities held may vary and the level of income may fluctuate. High-yielding bonds are generally issued by companies with lower credit ratings. They are more likely to default on their payments than traditional corporate bonds but offer a higher yield in return. Property It is anticipated that rental growth will take place for any property investments. Rent default could have an adverse impact on the performance of rental growth. The value of any property holdings is generally determined by the opinion of a standing independent valuer and is therefore subjective. Property investments can be relatively illiquid compared to bonds and equities. Liquidity is a measure of how easily an investment can be traded. Shares available for investment For the Prudential Managed Defensive Fund, there are two options available for investment: > INCOME OPTION – You should select Income Shares if you want a regular income. GROWTH OPTION – Accumulation Shares: any income received will be retained in the Trust for growth, increasing the value of each share. > Please tick either Income or Growth on the application form. You can choose one option per Fund. As the Fund offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Fund. 30 Key Features Income Income is paid annually on or before 31 December. Charges and expenses Initial charge Annual Management Charge Other annual charges 5.00% 1.35% 0.27%* *All other charges relate to an Administration Fee of 0.15%, and a Custodian Charge. The Custodian Charge can range between 0.001% and 0.30%. The Annual Management charge and all other annual charges are taken from income. Performance 1 to end December each year Prudential Managed Defensive Fund 0 -1 -2 -3 -3.4 -4 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested The cumulative performance since launch is -0.6 %. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 31 Prudential Managed Funds Tracker Trust The Prudential Managed Funds Tracker Trust is authorised by the Financial Services Authority (FSA) with effect from 18 February 1999. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The objective is to maximise the total long-term return by matching, as closely as possible, the composition of a variety of stock and bond indices, such that the overall asset allocation reflects the major asset classes (those consisting of 5% or more of the Fund) of the median Pension Balanced Managed Fund (as defined by the Association of British Insurers and measured by Lipper). Specific risk factors As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. The value of the Trust’s holdings of fixed interest securities may go up and down as interest rates change. If interest rates go up the value is likely to fall and vice versa. Yields may vary and the level of income may fluctuate. Units available for investment For the Prudential Managed Funds Tracker Trust there is one option available for investment: Income Income is paid on or before 30 September and on or before 31 March, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.40% 0.03% The Annual Management Charge and all other annual charges are taken from Income. Performance 20 15 10 5 0 -5 -10 -15 -20 -25 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested to end December each year Prudential Managed Funds Tracker Trust 16.2 8.6 18.4 9.7 6.0 -2.7 -10.9 -19.1 -19.5 > GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. The cumulative performance since launch is 5.9%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 32 Key Features Prudential Managed Trust The Prudential Managed Trust is authorised by the Financial Services Authority (FSA) with effect from 12 May 1989. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The Trust aims to achieve long-term capital growth. The investments of the Trust will be restricted to investment in schemes managed by PUTL or another manager within the Prudential Group. Specific risk factor As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Units available for investment For the Prudential Managed Trust there is one option available for investment: Income Income is paid on or before 21 April each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 3.00% 1.50% 0.35% The Annual Management Charge and all other annual charges are taken from Income. > GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Performance 25 20 15 10 5 0 -5 -10 -15 -20 -25 -19.4 -21.0 -2.2 -9.8 to end December each year Prudential Managed Trust 20.1 18.4 11.0 21.3 11.4 4.9 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested The cumulative performance over the last 10 years is 25.5%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 33 Prudential Maximum Income Trust The Prudential Maximum Income Trust is authorised by the Financial Services Authority (FSA) with effect from 4 January 1990. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The Scheme aims to provide a gross return comparable with that available from time to time on retail sterling deposits with UK banks and building societies from a portfolio consisting of bonds issued by the UK government, local authorities, building societies and other major companies. Specific risk factors Yields may vary and the level of income may fluctuate. Units available for investment For the Prudential Maximum Income Trust there are two options available for investment: Income Income is paid on or before 31 March and on or before 30 September, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 2.50% 0.50% 0.01% > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Income Reinvested Units: any income received will be automatically reinvested to purchase further units. > Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. The Annual Management Charge and all other annual charges are taken from Income. Performance 6 5 4 3 2 1 0 -1 -2 -3 -4 -2.7 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested to end December each year Prudential Maximum Income Trust 4.6 4.9 5.0 3.5 1.8 4.0 3.2 3.6 3.5 The cumulative performance over the last 10 years is 36.2%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 34 Key Features Prudential (Newton) Higher Income Trust The Prudential (Newton) Higher Income Trust is authorised by the Financial Services Authority (FSA) with effect from 18 January 1999. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The objective is to maximise the total long-term return by investment in a portfolio consisting wholly or mainly of UK equities, with an overall yield at least 10% higher than the market yield on the FTSE All-Share Index. Specific risk factor The Annual Management Charge is taken from the Trust’s capital. Whilst this maximises the Trust’s yield, it could limit growth or erode its capital. Units available for investment For the Prudential (Newton) Higher Income Trust there are two options available for investment: Income Income is paid on or before 31 July and on or before 31 January, if applicable, each year. Investment adviser The INVESTMENT ADVISER is Newton Fund Managers Limited. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.70% 0.02% The Annual Management Charge is taken from Capital. All other annual charges are taken from Income. Performance 35 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -13.8 -21.2 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested to end December each year Prudential (Newton) Higher Income Trust 28.1 19.6 18.7 > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Income Reinvested Units: any income received will be automatically reinvested to purchase further units. 15.9 10.0 > -0.2 -1.0 Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. The cumulative performance since launch is 67.8%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 35 Prudential (Newton) Managed Trust The Prudential (Newton) Managed Trust is authorised by the Financial Services Authority (FSA) with effect from 18 January 1999. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The objective is to maximise the total long-term return by investment in a portfolio wholly or mainly invested in equity-type securities with approximately two thirds of the equity exposure of the Fund being obtained in the UK. Up to 15% of the Fund may be invested in non equity-type securities. Specific risk factor As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Units available for investment For the Prudential (Newton) Managed Trust there is one option available for investment: Income Income is paid on or before 31 January and on or before 31 July, if applicable, each year. Investment adviser The INVESTMENT ADVISER is Newton Fund Managers Limited. Charges and Expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.70% 0.02% The Annual Management Charge and all other annual charges are taken from Income. Performance 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -16.8 -25.5 -26.7 -3.6 10.3 to end December each year Prudential (Newton) Managed Trust 22.2 20.9 15.2 11.6 > GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested The cumulative performance since launch is 26.5%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 36 Key Features Prudential North American Trust The Prudential North American Trust is authorised by the Financial Services Authority (FSA) with effect from 10 September 1985. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to achieve long-term capital growth by investing in North American securities. Specific risk factor As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Units available for investment For the Prudential North American Trust there are two options available for investment: You will receive Accumulation Units if you select the Growth Option, unless: Income Income is paid on or before 7 July and on or before 7 January, if applicable, each year. Investment adviser The INVESTMENT ADVISER is PPM America Inc. Charges and Expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.05% > You are an existing investor who already holds Income Reinvested Units. You specify on application that you wish to receive Income Reinvested Units. > Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. The Annual Management Charge and all other annual charges are taken from Income. > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Within the Growth Option you can choose between: Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Income Reinvested Units: any income received will be automatically reinvested to purchase further units. Performance 20 15 10 5 0 -5 -10 -15 -20 -25 -30 25 -27.8 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested to end December each year Prudential North American Trust > 16.6 14.0 1.2 -2.6 -0.3 1.7 3.0 -4.2 -19.0 The cumulative performance over the last 10 years is -23.3%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 37 Prudential Pacific Markets Trust The Prudential Pacific Markets Trust is authorised by the Financial Services Authority (FSA) with effect from 23 May 1990. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to produce capital growth through investment of at least 80% of the property of the Scheme in eastern markets excluding Japan. Investment will primarily be in major markets such as Australia, Hong Kong, Singapore and Thailand, but to a lesser extent this Scheme may invest in emerging markets such as The Philippines, Taiwan and South Korea. Specific risk factors As the Trust holds overseas investments, exchange rate fluctuations may affect both income and capital values. Political factors can affect the stockmarket in certain countries in which the Trust may be invested. Therefore, the performance of the Trust may rise or fall more frequently than other Trusts. Units available for investment For the Prudential Pacific Markets Trust there are two options available for investment: > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Within the Growth Option you can choose between: Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Income Reinvested Units: any income received will be automatically reinvested to purchase further units. > Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. Income Income is paid on or before 21 March and on or before 21 September, if applicable, each year. Investment adviser The INVESTMENT ADVISER is Prudential Asset Management (Singapore) Limited. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.23% You will receive Accumulation Units if you select the Growth Option, unless: > > You are an existing investor who already holds Income Reinvested Units. You specify on application that you wish to receive Income Reinvested Units. Performance 60 to end December each year The Annual Management Charge and all other annual charges are taken from Income. Prudential Pacific Markets Trust 54.6 35.1 40 33.7 25.1 20 0.0 10.6 13.7 0 -20 -23.2 -16.4 -33.8 -40 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested The cumulative performance over the last 10 years is 86.7%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 38 Key Features Prudential Small Companies Trust The Prudential Small Companies Trust is authorised by the Financial Services Authority (FSA) with effect from 24 September 1986. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to achieve above average long-term capital growth through investment in a wide range of predominantly UK smaller companies. (Up to 20% of the value of the property of this Scheme may be invested overseas). This Scheme will be concerned with identifying sound, fast-growing small companies across a wide range of market sectors. Income will be of secondary importance. Investment policy The Trust is concerned with identifying sound, fast-growing small companies across a wide range of market sectors. Income is of secondary importance. Specific risk factor The value of smaller companies may change more than larger companies’ shares. Units available for investment For the Prudential Small Companies Trust there are two options available for investment: Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Income Reinvested Units: any income received will be automatically reinvested to purchase further units. You will receive Accumulation Units if you select the Growth Option, unless: Income Income is paid on or before 21 December and on or before 21 June, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.16% > > You are an existing investor who already holds Income Reinvested Units. You specify on application that you wish to receive Income Reinvested Units. The Annual Management Charge and all other annual charges are taken from Income. Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. Performance to end December each year Prudential Small Companies Trust 70 60 50 40 30 20 10 0 -10 -20 -30 -40 -50 60.9 35.8 31.4 28.1 25.6 1.0 -3.3 -21.0 -24.9 -41.8 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Within the Growth Option you can choose between: > The cumulative performance over the last 10 years is 56.1%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 39 Prudential UK Growth Trust The Prudential UK Growth Trust is authorised by the Financial Services Authority (FSA) with effect from 24 April 1985. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy This Trust aims to achieve capital growth over the longer-term from a range of mostly UK investments (up to 20% of the property of the Scheme may be invested overseas) including both equities and fixed interest securities. The Scheme’s portfolio is broadly based and well balanced with a significant part invested in the shares of "blue chip"companies. Units available for investment For the Prudential UK Growth Trust there are two options available for investment: Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. Income Income is paid on or before 7 October and on or before 7 April, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 4.75% 1.50% 0.17% The Annual Management Charge and all other annual charges are taken from Income. > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Within the Growth Option you can choose between: Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. Income Reinvested Units: any income received will be automatically reinvested to purchase further units. Performance 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -26.6 -31.0 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., last 10 years, % return, bid to bid, net income reinvested to end December each year Prudential UK Growth Trust > 16.9 18.6 18.5 11.8 5.4 8.6 -3.7 -12.7 You will receive Accumulation Units if you select the Growth Option, unless: > You are an existing investor who already holds Income Reinvested Units. You specify on application that you wish to receive Income Reinvested Units. > The cumulative performance over the last 10 years is -10.5%. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. 40 Key Features Prudential UK Index Tracker Trust The Prudential UK Index Tracker Trust is authorised by the Financial Services Authority (FSA) with effect from 3 April 2001. The Trust has been established for an unlimited duration. The base currency of the Trust is pounds sterling. Investment Objective and Policy The fund is designed to track the FTSE 100 Index.The fund will track the FTSE 100 Index. For the purposes of efficient portfolio management the fund may hold derivatives in order to gain exposure to that Index.The fund will aim so far as practicable to replicate the Index by holding the stocks which constitute it. However, if the Index weighting of a particular security exceeds the maximum which the fund is permitted by The Regulations to hold, the fund’s holding will be capped at that level and its exposure will to that extent diverge from the Index. Investment policy The Trust will TRACK the FTSE 100 Index by aiming so far as practicable to hold the same percentage weighting in stocks as the index. However, if the index weighting of a particular security exceeds the maximum which the Trust is permitted by the regulations to hold, the Trust’s holding will be capped at that level. Specific risk factors The value of the Trust will depend on the performance of the FTSE 100 Index and the success of the Trust in TRACKING that Index. Units available for investment For the Prudential UK Index Tracker Trust there are two options available for investment: Income Income is paid on or before 21 April and on or before 21 October, if applicable, each year. Charges and expenses Initial charge Annual Management Charge Other annual charges 0.00% 0.50% 0.00% > INCOME OPTION – You should select Income Units if you want a regular income. GROWTH OPTION – Accumulation Units: any income received will be retained in the Trust for growth, increasing the value of each unit. > The Annual Management Charge is taken from Income. Please tick either Income or Growth on the application form. You can choose one option per Trust. As the Trust offers both Growth and Income, if neither/both options are ticked then Growth will be allocated for this Trust. Performance 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -24.0 -22.2 -28.8 -28.3 -5.1 -8.2 -15.1 -14.1 9.1 to end December each year Prudential UK Index Tracker Trust FTSE 100 index 20.8 14.3 14.4 Prudential UK Index Tracker 17.8 17.9 19.2 11.2 6.7 7.4 Dec 98- Dec 99- Dec 00- Dec 01- Dec 02- Dec 03- Dec 04- Dec 05- Dec 06- Dec 07Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Source: Morningstar, Inc., years since launch, % return, bid to bid, net income reinvested The cumulative performance since launch is -7.0%. The cumulative performance for FTSE 100 Index is 0.6% over the same period. Past performance is not a guide to future performance. Information as at end of December 2008. Past performance is net of tax and does not include the effect of subscription fees. Key Features 41 Appendix B Portfolio Turnover Rate The Portfolio Turnover Rate (PTR) is a ratio that reflects the volume of trading within the Trust over the course of a year. The PTR is calculated by taking the sum of all transactions in securities, deducting the sum of all transactions in units/shares of the Trust and dividing the result by the average of total net assets. Hence, the formula for calculating PTR as specified by the Financial Services Authority is as follows: (Purchases of securities + Sales of securities) – (Subscription of shares + Redemptions of shares) (Average fund value over 12 months) Portfolio Turnover Rate % 36.73 56.12 106.70 65.65 34.18 119.90 10.32 2.08 65.21 50.44 47.44 63.49 4.75 57.90 14.44 45.25 21.31 98.70 55.04 68.51 76.46 88.77 60.26 24.43 -54.34 Within the fund management industry, a PTR of between 100% and 200% is generally considered to be the acceptable norm for an actively managed retail fund. Turnover above the 200% figure may be caused by the appointment of a new manager or a change in the Trusts investment objective that necessitates a significant restructuring of the portfolio. On occasion, the PTR could even be a negative figure. This occurs when a Trust has more inflows/outflows than purchases/sales of stocks. The PTR varies between Trusts depending on the manager’s investing style as well as on the investment objectives of the Trust. Some types of Trusts tend to have low turnover rates while others have high rates. For example, trackers have low turnover rates as the stocks in these Trusts are generally held for a longer investment timeframe and are not actively traded. Conversely, more aggressively managed, active Trusts have higher turnover rates as the stocks are generally held for a shorter timeframe to take advantage of short-term share price differences. The PTR shows the likely impact on the Trust of transaction costs, costs incurred when buying and selling investments. Transaction costs vary from country to country, are dependent on the markets and the value of the stock involved and, where levied, currently range from £4 to £80. Transaction costs are paid by the Trust. Transaction costs for buying and selling fixed interest investments are generally lower than for equity investments, so the impact on a fixed interest Trust of a high PTR is less than an equivalent rate on an equity Trust. x 100 Trust name Prudential Cash Haven Prudential Cautious Managed Growth Prudential Corporate Bond Prudential Distribution Prudential Equity Income Prudential Ethical Prudential European Index Tracker Prudential European Prudential Global Balanced Prudential Global Growth Prudential Growth Prudential International Growth Prudential (Invesco Perpetual) Managed Prudential Japanese Prudential Managed Prudential Managed Defensive Prudential Managed Funds Tracker Prudential Maximum Income Prudential (Newton) Higher Income Prudential (Newton) Managed Prudential North American Prudential Pacific Markets Prudential Small Companies Prudential UK Growth Prudential UK Index Tracker 42 Key Features Calculated on 5 February 2009 31 October 2008 30 November 2008 7 January 2009 31 January 2009 31 October 2008 21 February 2009 21 November 2008 31 October 2008 21 January 2009 10 December 2008 7 January 2009 30 November 2008 21 February 2009 21 February 2009 31 October 2008 31 January 2009 31 January 2009 30 November 2008 30 November 2008 7 November 2008 21 January 2009 21 October 2008 7 February 2009 21 February 2009 Appendix C The effect of charges and expenses The following figures should be taken into account when considering the impact of charges on your investment. The Reduction in Yield calculation assumes a growth rate of 6.0% when held in a Trust or 7.0% when held in an ISA on an investment held for ten years and takes into account the impact of the initial charge. The Total Expense Ratio (TER) is calculated twice a year and shows the relevant annualised operating expenses of each unit/share type from the most recent reporting period as a single percentage of the average net asset value for that unit/share type over the same period. The TER does not take into account the initial charge and excludes brokerage fees, taxes and linked charges and costs incurred from buying underlying investments. The tables which follow show the effect of charges for each Prudential Trust based on a single investment of £1,000 and a regular investment of £100 a month assuming growth for Trusts of 6.0% a year (3% for Prudential Cash Haven Trust, 5.3% a year for Prudential Corporate Bond Trust and 4.1% a year for Prudential Maximum Income Trust) and for ISAs of 7.0% a year (6.2% a year for Prudential Corporate Bond Trust). The growth rate is not guaranteed. It is purely used for the purposes of demonstrating the effect of charges on a sample investment. Fixed Interest We have used the following Trust as an example: Prudential Corporate Bond Trust (Trust) Income Option What you might get back Investment growth after charges End Investment Effect of of year to date deductions Income Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £46 £75 £107 £202 £38 £114 £191 £383 £968 £970 £972 £976 2.9% 3.3% 3.7% Growth Option What you might get back Investment growth after charges End of year Investment to date Effect of deductions Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £46 £77 £113 £231 £1000 £1,090 £1,180 £1,440 3.0% 3.4% 3.8% Regular Monthly Amount 1 3 5 10 £1,200 £3,600 £6,000 £12,000 £48 £195 £422 £1,433 £1,180 £3,700 £6,430 £14,300 1.9% 2.8% 3.5% The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £202 if an income is taken, £231 if the income distributions are reinvested and £1,433 on a regular monthly amount. Putting it another way, this would have the same effect as bringing investment growth from 5.3% a year on a single payment down to 3.7% for income taken, 3.8% for income reinvested and 3.5% for a regular monthly amount. Key Features 43 Fixed Interest (continued) Prudential Corporate Bond Trust (ISA) The effect of total charges and expenses, based on a single investment of £1,000, on our Fixed Interest Trusts would, over ten years, bring the illustrated investment growth rate used down to the following growth rates: Income Option What you might get back Investment growth after charges Income Option – income taken Assumed Growth Rate End Investment Effect of of year to date deductions Income Name of Trust Trust Growth Rate TER Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £50 £86 £126 £251 £47 £140 £233 £464 £964 £959 £954 £942 3.4% 3.9% 4.2% Prudential Cash Haven Prudential Corporate Bond Prudential Maximum Income ISA Prudential Corporate Bond 3.0% 5.3% 4.1% 2.1% 3.7% 3.4% 1.12% 1.43% 0.52% 6.2% 4.2% 1.43% Growth Option What you might get back Investment growth after charges Growth Option – income reinvested Assumed Growth Rate End of year Investment to date Effect of deductions Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £50 £89 £136 £298 £1010 £1,100 £1,210 £1,520 3.5% 4.0% 4.3% Trust Name of Trust Growth Rate TER Prudential Cash Haven Prudential Corporate Bond Prudential Maximum Income ISA Prudential Corporate Bond 3.0% 5.3% 4.1% 2.1% 3.8% 3.4% 1.12% 1.43% 0.52% Regular Monthly Amount (ISA only) 1 3 5 10 £1,200 £3,600 £6,000 £12,000 £50 £216 £485 £1,756 £1,190 £3,730 £6,530 £14,700 2.5% 3.4% 4.0% 6.2% 4.3% 1.43% The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £251 if an income is taken, £298 if the income distributions are reinvested and £1,756 on a regular monthly amount (ISA only). Putting it another way, this would have the same effect as bringing investment growth from 6.2% a year on a single payment down to 4.2% for income taken, 4.3% for income reinvested and 4.0% for a regular monthly amount (ISA only). 44 Key Features Income We have used the following Trust as an example: Prudential Distribution Trust (Trust) Prudential Distribution Trust (ISA) Income Option What you might get back Investment growth after charges Income Option What you might get back Investment growth after charges End Investment Effect of of year to date deductions Income End Investment Effect of of year to date deductions Income Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £45 £78 £114 £223 £48 £143 £238 £471 £966 £958 £950 £931 3.5% 3.9% 4.2% 1 3 5 10 £1,000 £1,000 £1,000 £1,000 Single Payment £49 £89 £136 £285 £48 £145 £242 £487 £972 £976 £981 £993 4.2% 4.6% 4.9% Growth Option What you might get back Investment growth after charges Growth Option What you might get back Investment growth after charges End of year Investment to date Effect of deductions End of year Investment to date Effect of deductions Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £46 £80 £122 £266 £1,010 £1,110 £1,210 £1,520 3.6% 4.0% 4.3% 1 3 5 10 £1,000 £1,000 £1,000 £1,000 Single Payment £49 £93 £147 £342 £1,020 £1,130 £1,250 £1,620 4.2% 4.7% 5.0% Regular Monthly Amount 1 3 5 10 £1,200 £3,600 £6,000 £12,000 £46 £197 £439 £1,578 £1,190 £3,740 £6,540 £14,700 2.6% 3.4% 4.0% 1 3 5 10 Regular Monthly Amount (ISA Only) £1,200 £3,600 £6,000 £12,000 £48 £218 £505 £1,931 £1,190 £3,780 £6,650 £15,200 3.3% 4.1% 4.7% The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £223 if an income is taken, £266 if the income distributions are reinvested and £1,578 on a regular monthly amount. Putting it another way, this would have the same effect as bringing investment growth from 6.0% a year on a single payment down to 4.2% for income taken, 4.3% for income reinvested and 4.0% for a regular monthly amount. The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £285 if an income is taken, £342 if the income distributions are reinvested and £1,931 on a regular monthly amount (ISA only). Putting it another way, this would have the same effect as bringing investment growth from 7.0% a year on a single payment down to 4.9% for income taken, 5.0% for income reinvested and 4.7% for a regular monthly amount (ISA only). Key Features 45 Income (continued) The effect of total charges and expenses, based on a single investment of £1,000, on our Income Trusts would, over ten years, bring the illustrated investment growth rate used (6.0% in a Trust and 7.0% in an ISA) down to the following growth rates: Income Option – income taken A Trust 6.0% to 4.2% 3.7% 3.6% An ISA 7.0% to 4.9% 4.6% 4.5% UK Growth We have used the following Trust as an example: Prudential UK Growth Trust (Trust) Income Option Investment growth after charges Name of Trust Prudential Distribution Prudential Equity Income Prudential (Newton) Higher Income TER 1.59% 1.74% 1.74% End Investment Effect of of year to date deductions Income What you might get back Single Payment 1 3 £1,000 £1,000 £1,000 £1,000 £67 £109 £158 £316 £20 £60 £102 £217 £973 £1,010 £1,060 £1,180 2.6% 3.3% 3.8% Growth Option – income reinvested A Trust 6.0% to 4.3% 3.8% 3.7% An ISA 7.0% to 5.0% 4.7% 4.6% 5 10 TER 1.59% 1.74% 1.74% End of year Name of Trust Prudential Distribution Prudential Equity Income Prudential (Newton) Higher Income Growth Option What you might get back Investment growth after charges Investment to date Effect of deductions Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £67 £110 £162 £338 £993 £1,080 £1,170 £1,450 2.6% 3.3% 3.8% Regular Monthly Amount 1 3 5 10 £1,200 £3,600 £6,000 £12,000 £70 £282 £608 £2,077 £1,160 £3,660 £6,370 £14,200 1.1% 2.4% 3.4% The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £316 if an income is taken, £338 if the income distributions are reinvested and £2,077 on a regular monthly amount. Putting it another way, this would have the same effect as bringing investment growth from 6.0% a year on a single payment down to 3.8% for income taken, 3.8% for income reinvested and 3.4% for a regular monthly amount. 46 Key Features Prudential UK Growth Trust (ISA) The effect of total charges and expenses, based on a single investment of £1,000, on our UK Growth Trusts would, over ten years, bring the illustrated investment growth rate used (6.0% in a Trust and 7.0% in an ISA) down to the following growth rates: Income Option – income taken What you might get back Investment growth after charges Income Option End Investment Effect of of year to date deductions Name of Trust Prudential Small Companies Prudential UK Growth A Trust 6.0% to 3.9% 3.8% 5.5% An ISA 7.0% to 4.8% 4.7% 6.5% TER 1.64% 1.69% 0.51% Income Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £67 £112 £165 £347 £20 £61 £105 £228 £983 £1,040 £1,110 £1,300 3.6% 4.2% 4.7% Prudential UK Index Tracker Growth Option – income reinvested A Trust 6.0% to 3.9% 3.8% 5.5% An ISA 7.0% to 4.8% 4.8% 6.5% Name of Trust Growth Option What you might get back Investment growth after charges TER 1.64% 1.69% 0.51% Prudential Small Companies Prudential UK Growth End of year Investment to date Effect of deductions Prudential UK Index Tracker Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £68 £113 £170 £371 £1,000 £1,110 £1,230 £1,590 3.6% 4.3% 4.8% Regular Monthly Amount (ISA Only) 1 3 5 10 £1,200 £3,600 £6,000 £12,000 £70 £286 £625 £2,207 £1,170 £3,710 £6,530 £14,900 2.1% 3.4% 4.4% The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £347 if an income is taken, £371 if the income distributions are reinvested and £2,207 on a regular monthly amount (ISA only). Putting it another way, this would have the same effect as bringing investment growth from 7.0% a year on a single payment down to 4.7% for income taken, 4.8% for income reinvested and 4.4% for a regular monthly amount (ISA only). Key Features 47 International Growth We have used the following Trust as an example: Prudential European Trust (Trust) Prudential European Trust (ISA) Income Option What you might get back Investment growth after charges Income Option What you might get back Investment growth after charges End Investment Effect of of year to date deductions Income End Investment Effect of of year to date deductions Income Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £64 £101 £144 £281 £21 £63 £108 £229 £975 £1,020 £1,070 £1,200 2.9% 3.5% 4.0% 1 3 5 10 £1,000 £1,000 £1,000 £1,000 Single Payment £67 £112 £165 £346 £21 £64 £110 £238 £982 £1,040 £1,100 £1,290 3.6% 4.2% 4.7% Growth Option What you might get back Investment growth after charges Growth Option What you might get back Investment growth after charges End of year Investment to date Effect of deductions End of year Investment to date Effect of deductions Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £64 £102 £147 £301 £996 £1,080 £1,190 £1,490 2.9% 3.6% 4.1% 1 3 5 10 £1,000 £1,000 £1,000 £1,000 Single Payment £68 £113 £170 £371 £1,000 £1,110 £1,230 £1,590 3.6% 4.3% 4.8% Regular Monthly Amount 1 3 5 10 £1,200 £3,600 £6,000 £12,000 £68 £267 £566 £1,883 £1,170 £3,670 £6,410 £14,400 1.4% 2.7% 3.6% 1 3 5 10 Regular Monthly Amount (ISA Only) £1,200 £3,600 £6,000 £12,000 £70 £286 £625 £2,207 £ 1,170 £3,710 £6,530 £14,900 2.1% 3.4% 4.4% The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £281 if an income is taken, £301 if the income distributions are reinvested and £1,883 on a regular monthly amount. Putting it another way, this would have the same effect as bringing investment growth from 6.0% a year on a single payment down to 4.0% for income taken, 4.1% for income reinvested and 3.6% for a regular monthly amount. The last line in the each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £346 if the income is taken, £371 if the income distributions are reinvested and £2,207 on a regular monthly amount (ISA only). Putting it another way, this would have the same effect as bringing investment growth from 7.0% a year down to 4.7% for income taken, 4.8% for income reinvested and 4.4% for a regular monthly amount (ISA only). 48 Key Features The effect of total charges and expenses, based on a single investment of £1,000, on our International Growth Trusts would, over ten years, bring the illustrated investment growth rate used (6.0% in a Trust and 7.0% in an ISA) down to the following growth rates: Income Option – income taken Name of Trust Trust Prudential Cautious Managed Growth Prudential European Prudential European Index Tracker Prudential Global Growth Prudential International Growth Prudential Japanese Prudential Managed Defensive Prudential North American Prudential Pacific Markets A Trust 6.0% to An ISA 7.0% to TER 4.1% 4.0% 5.3% 3.4% 3.8% 4.1% 4.1% 3.9% 4.1% 4.7% 4.7% 6.1% 4.2% 4.7% 4.8% 4.8% 4.7% 4.7% 1.64% 1.71% 0.81% 2.05% 1.76% 1.53% 1.60% 1.60% 1.72% Growth Option – income reinvested Name of Trust Trust Prudential Cautious Managed Growth Prudential European Prudential European Index Tracker Prudential Global Growth Prudential International Growth Prudential Japanese Prudential Managed Defensive Prudential North American Prudential Pacific Markets A Trust 6.0% to An ISA 7.0% to TER 4.1% 4.1% 5.3% 3.4% 3.9% 4.1% 4.2% 3.9% 4.1% 4.8% 4.8% 6.1% 4.2% 4.7% 4.8% 4.9% 4.7% 4.7% 1.64% 1.71% 0.81% 2.05% 1.76% 1.53% 1.60% 1.60% 1.72% Key Features 49 The following trusts invest for growth only We have used the following Trust as an example: Prudential Ethical Trust (Trust) Growth Option What you might get back Investment growth after charges Prudential Ethical Trust (ISA) Growth Option What you might get back Investment growth after charges End of year Investment to date Effect of deductions End of year Investment to date Effect of deductions Single Payment 1 3 5 10 £1,000 £1,000 £1,000 £1,000 £67 £110 £162 £338 £993 £1,080 £1,170 £1,450 2.6% 3.3% 3.8% 1 3 5 10 £1,000 £1,000 £1,000 £1,000 Single Payment £68 £115 £173 £379 £1,000 £1,110 £1,230 £1,580 3.6% 4.2% 4.7% Regular Monthly Amount 1 3 5 10 £1,200 £3,600 £6,000 £12,000 £70 £282 £608 £2,077 £1,160 £3,660 £6,370 £14,200 1.1% 2.4% 3.4% 1 3 5 10 Regular Monthly Amount (ISA Only) £1,200 £3,600 £6,000 £12,000 £70 £289 £634 £2,248 £1,170 £3,710 £6,520 £14,900 2.0% 3.3% 4.3% The last line in each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £338 and £2,077 on a regular monthly amount. Putting it another way, this would have the same effect as bringing investment growth from 6.0% a year on a single payment down to 3.8% and down to 3.4% for a regular monthly amount. The last line in the each table shows that over ten years the effect of total charges and expenses on a single payment could amount to £379 and £2,248 on a regular monthly amount (ISA only). Putting it another way, this would have the same effect as bringing investment growth from 7.0% a year on a single payment down to 4.7% and 4.3% for a regular monthly amount. The effect of total charges and expenses, based on a single investment of £1,000, on our Growth Trusts would, over ten years, bring the illustrated investment growth rate used (6.0% in a Trust and 7.0% in an ISA) down to the following growth rates: Name of Trust Prudential Ethical Prudential Global Balanced Prudential Growth Prudential (Invesco Perpetual) Managed Prudential Managed Prudential Managed Funds Tracker Prudential (Newton) Managed 50 Key Features A Trust 6.0% to 3.8% 4.1% 4.1% 3.6% 4.2% 4.3% 3.7% An ISA 7.0% to 4.7% 4.8% 4.8% 4.3% 4.9% 4.9% 4.6% TER 1.83% 1.73% 1.65% 2.04% 1.67% 1.46% 1.78% Appendix D Prudential Customer Agreement Part One: General terms 1. INTRODUCTION 1.1 It is important that you retain this Customer Agreement as, together with the Key Features document and Application, it forms the Agreement between you, the investor, and us, Prudential Unit Trusts Limited. The terms described in this Part One apply to any investment you have with us whether directly held, or via an Individual Savings Account (ISA). Additional terms apply to direct investments and the Prudential ISA and these are set out in Parts Two and Three respectively. These terms apply in addition to the Prospectus, Key Features document and Simplified Prospectus (as applicable). These terms are governed by English law. All information we provide will be in English. These terms were last updated on 1 October 2008 and remain valid until otherwise stated. If you are unsure whether you hold the most up-to-date version, please contact us. “AGREEMENT”: these terms and the Key Features document as from time to time amended, together with your Application; “APPLICATION”: your application to subscribe for an Investment whether in writing, by telephone or by internet, as appropriate, completed by you; “BACS”: Bankers Automated Clearing System; “BUSINESS DAY”: any day except a Saturday, Sunday, Bank or Public Holiday, or concessionary company holiday; “CLIENT ACCOUNT”: a Bank account held by us in accordance with the FSA Handbook of Rules and Guidance; “DISTRIBUTION PAY DAYS”: the days on which a Trust pays out its distributable income; “EX MAXI PRUDENTIAL ISA“: a Prudential ISA which was previously designated as a Maxi ISA; “EX PEP PRUDENTIAL ISA“: a Prudential ISA which was previously designated as a Personal Equity Plan (PEP); “FSA”: the Financial Services Authority whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS; “INCOME RECEIPT UNITS”: Units in a Trust whereby all income and any reclaimed tax is paid out; “INCOME REINVESTED UNITS”: Units in a Trust whereby all income and any reclaimed tax is reinvested in further Units; “INVESTMENT”: Units held in Trusts, whether directly or within your Prudential ISA “ISA” your Prudential Individual Savings Account set up and managed under this Agreement; “ISA REGULATIONS”: the Individual Savings Account Regulations 1998 as amended from time to time; “ISA TRUST”: a Trust that we specify as available for investment in the Prudential ISA; “KEY FEATURES DOCUMENT”: the Key Features document for the Prudential ISA and the Prudential range of Trusts, as amended from time to time; “PROSPECTUS”: the document setting out the details for the operation of the Trusts; “PRUDENTIAL ISA”: the Prudential Individual Savings Account – a stocks and shares ISA within the meaning of the ISA Regulations; “SINGLE PRICE”: the price at which Units are bought and sold in your ISA on your behalf and determined in accordance with the Collective Investment Schemes (COLL) Sourcebook as appropriate; “SUBSCRIPTION(S)”: the amount you contribute to your Investment by way of cheque, Direct Debit or debit card payment authorisation or the amount of cash you contribute as a transfer in of an existing ISA from another ISA manager; “TAX YEAR”: from 6 April in any one year until the following 5 April; “TRUST” or “TRUSTS”: an authorised Unit Trust or Open-Ended Investment Company (OEIC) sub-fund that we specify as available for investment; “UNITS”: Such unit(s) or share(s) in a Trust or Trusts that we may specify as available for investment, including any fractions or decimals thereof; “VALUATION POINT”: the time on a business day when the Trust is valued. Reference to any statutory provision or regulation includes any modification or re-enactment. Reference to any regulatory body includes any successor to that body. Any headings and subheadings are not a legally binding part of these Terms. 3. CLASSIFICATION You are classified as a “retail client” as defined in the FSA Rules unless we notify you in writing to the contrary. As a retail client you benefit from the highest level of protection under FSA rules. 4. COMMENCEMENT This Agreement will come into force, subject to your right to cancel, once your valid application form and Subscription or transfer application and transfer authority forms have been accepted by us at our Administration Office at Prudential Unit Trusts Limited, PO Box 9022, Chelmsford CM99 2WA. 1.2 1.3 1.4 2. MEANING OF WORDS Terms used in this Agreement have the following meanings: “WE, US AND OUR”: Prudential Unit Trusts Limited; “YOU, YOUR AND SUBSCRIBER”: an individual who has applied to subscribe for an Investment, to be held directly or through a Prudential ISA ; “ACCUMULATION UNITS”: Units in a Trust whereby all income is retained in the Trust for growth. Any reclaimed tax is reinvested in further Units; “ADMINISTRATION OFFICE”: an address we specify for all instructions to be sent; Key Features 51 5. PRUDENTIAL UNIT TRUSTS LIMITED Prudential Unit Trusts Limited, a company incorporated in England and Wales with registered office at Laurence Pountney Hill, London EC4R 0HH acts as manager or authorised corporate director of the Trust as appropriate and also as manager of the Prudential ISA. We are authorised and regulated by the Financial Services Authority in the conduct of our investment business, and we are entered on the Financial Services Authority’s register, registered number 122008. 6. INTERMEDIARIES If you deal with us through an Intermediary you permit us to give that intermediary information about your Investments, unless you instruct us that the intermediary no longer advises you about (any of) them. We may pay initial and renewal commission to the intermediary at our discretion. These commissions are paid by us out of our charges and do not constitute additional charges to your Investment. 7. SUITABILITY AND APPROPRIATENESS We do not provide advisory or discretionary management services under the terms of this Agreement. Please note that we will not assess the suitability or appropriateness of transactions for you or services provided to you and you will not benefit from the protection of the FSA Rules on assessing suitability and appropriateness. You should consult an intermediary if you require investment advice. 8. OVERSEAS INVESTORS 8.1 This information applies to investors who are resident outside the United Kingdom for tax purposes. As a result of legislation implementing the European Savings Directive, we are required to obtain your tax identification number, if you have one, or your place and date of birth. From 1 July 2005, if you hold Units in a Trust which invests more than a specified percentage in interest 9.1 8.2 bearing assets, we will be obliged to report personal details as well as details of your Investment to HM Revenue & Customs at the end of each tax year. This information will then be passed to the tax authorities in the appropriate European Union state(s). We request that all nonUK resident investors provide these details, irrespective of the Trust you initially purchase, to avoid any delay, at a later date, if you switch into a Trust which would be subject to these requirements. Units in the Trusts have not been and will not be registered with the US Securities and Exchange Commission under the United States Securities Act of 1933, as amended, or registered or qualified under the securities laws of any state of the United States and may not be offered, sold, transferred or delivered, directly or indirectly, to any investors within the United States. 10. JOINT SUBSCRIBERS 10.1 We will be treated as having served notice, or sent documents, if we send to only one of the joint Subscribers (see Term 9 (“Notices”) above). We will have discharged our obligations if any money, documents of title, or other property due to joint Subscribers is received by any one of them. If one joint Subscriber dies, the surviving Subscriber or Subscribers will be the only person or persons we recognise as having title to the rights under these Terms. All joint Subscribers should sign any written request or instruction which you send us under these rules, though we have an absolute discretion to act on a request or instruction signed by one or only some of the joint Subscribers and will not incur any liability if we do so. It is not possible to hold a Prudential ISA jointly. 10.2 10.3 10.4 9. NOTICES Any notice we serve on you will be treated as correctly given if we post it or leave it at the address we have for you in our records. This applies even if a subscriber has by then become bankrupt or died, and whether or not we have been notified of this. Notices posted to you will be treated as being served on the second Business Day after we post them provided the envelope has been properly addressed and stamped. Notices you give us will take effect when we have received them. 11. CONFLICTS OF INTEREST 11.1 Introduction We recognise that we have an obligation to you to identify and manage the conflicts of interest that arise within our business. It is a matter of trust and we consider it important for you to know that we will use all reasonable endeavours to ensure we identify these conflicts, look to resolve them and to treat you fairly. We have a number of controls, policies and procedures in place to manage conflicts when providing services or products to you and our staff are required to follow them. This section is a summary of how we go about identifying these conflicts and how we aim to manage them. 9.2 52 Key Features 11.2 Identification of Conflicts of Interest We will take all reasonable steps to identify conflicts of interest that arise in the course of providing investment or ancillary services to clients and shall ensure the fair treatment of clients when a conflict arises. A conflict of interest may arise where there is a conflict between our interests and the duty we owe to a client; or between the differing interests of two or more of our clients. 11.9 effective procedures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients; 11.16 In addition our Staff are subject to other rules and policies including Personal Account Dealing Rules, our Anti-Bribery Policy and the Prudential Group Governance Policy. 11.17 Reviewing and monitoring The Policy will be reviewed regularly and where a conflict is identified which cannot be managed to our satisfaction we shall disclose this to you. Further details of our conflicts policy are available on request. 12. FORCE MAJEURE Whilst we will endeavour to comply with our obligations in a timely manner, provided we have complied with the relevant FSA Rules on business continuity in all relevant respects, we will incur no liability whatsoever for any partial or nonperformance of our obligations by reason of any cause beyond our reasonable control including but not limited to any communications, systems or computer failure, market default, suspension, failure or closure, or the imposition or change (including a change of interpretation) of any law or governmental or regulatory requirement and we shall not be held liable for any loss you may incur as a result thereof. 13. MINIMUM SUBSCRIPTIONS 13.1 Lump Sums The minimum initial investment is £500 per Trust. The minimum additional investment is £250 into a Trust in which you already hold Units. Monthly Savings Plans The minimum monthly Subscription is £50 into each Trust held and you may top up your Investment with a lump sum of £250 per Trust or more, subject to the maximum monthly Subscriptions permitted in the case of an ISA.You may increase or decrease your monthly contributions by amounts of £5 or more per Trust, and multiples Key Features 53 11.3 Types of Conflicts For the purpose of identifying the types of conflict that may arise in the course of providing a service and whose existence may entail a material risk of damage to the interests of a client, we will take into account whether we or any of our employees: 11.4 are likely to make a financial gain, or avoid a financial loss, at the expense of the client; have an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome; have a financial or other incentive to favour the interest of another client or group of clients over the interests of the client; have carried on the same business as the client; or receive or will receive from a person other than the client an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service. Managing Conflicts The procedures adopted to manage conflicts will include: 11.10 the separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or providing services to, clients whose interests may conflict, or who otherwise represent different interests that may conflict; 11.11 the removal of any direct link between the remuneration of relevant persons principally engaged in one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities; 11.12 measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out investment or ancillary services or activities; 11.13 measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate investment or ancillary services or activities where such involvement may impair the proper management of conflicts of interest. 11.14 internal guidance and training on the identification of possible issues of conflict as they arise; and 11.15 escalation procedures for ensuring that issues identified are referred to and considered at the appropriate level within Prudential. 11.5 11.6 11.7 13.2 11.8 thereof, provided that Subscriptions remain within the minimum and maximum permitted limits. Regular monthly Subscriptions are payable by Bank or Building Society Direct Debit normally on, or immediately after, the 10th day of each month. If, under the terms of your original ISA Customer Agreement, you invest a regular monthly amount of less than the minimum set out in this Agreement, you may continue to invest such an amount. 14. CANCELLATION RIGHTS 14.1 After we receive your validly completed application form we will send you a cancellation reminder. If you wish to cancel you should return this to us within 30 days of receiving it, or within 30 days from the day you receive your Key Features document and Customer Agreement (if you did not receive them before taking out the investment), whichever is the latter. Upon cancellation of a lump sum investment you will receive back the original amount of your investment, less any amount by which the value of the investment has fallen at the time we receive your request to cancel. Upon cancellation of a monthly savings plan you will receive back your first Subscription in full. Your statutory right to cancel is 14 days and is included in our 30 day cancellation period. believe that it would not be to your disadvantage. As a consequence of changes to a Trust which do not require the holders’ consent, we can then also make any necessary changes to this Agreement without obtaining your consent. We can also make any necessary changes to take account of any changes to regulatory law or practice without obtaining your consent. Any other change to this Agreement requires your prior consent. 15.2 We may transfer (subject to any necessary regulatory approval) our rights and obligations under this Agreement to another company within the Prudential Group provided that we give you no less than 28 days notice. 16.5 If the bank becomes insolvent, we will have a claim on behalf of our clients against the bank. If, however, the bank cannot repay all of its creditors, any shortfall may have to be shared pro rata between them. 17. SUBSCRIPTIONS Subscriptions will be invested in accordance with the instructions on your application form. As well as your initial lump sum Subscription, you may make additional lump sum Subscriptions to the Trust(s) in which you already hold Units, provided that these additional Subscriptions are at least £250 per Trust, or whatever other minimum that may be prescribed from time to time in the Prospectus. 18. INCOME PAYMENTS AND REINVESTMENT OF INCOME 18.1 Dependent upon which Trust(s) you choose, you may invest in any one of the following per Trust: Accumulation Units or Income Receipt Units or Income Reinvested Units. We may offer additional investment options in the future. If you choose to invest in Accumulation Units we will roll up within the Trust all income distributions in respect of Units held. If you choose to invest in Income Receipt Units each income payment made to you will consist of the total distribution received from the Trust (ISA holders please see section 8 of Part Three). If you choose to invest in Income Reinvested Units your income will be automatically reinvested on the Distribution Pay Days (ISA holders please see section 8 of Part Three). Income will be paid into your nominated Bank or Building Society account via BACS. Fixed income payments will be credited on the 20th day of each relevant month (or the next available Business Day). Fixed income payments commence in the 16. HOW YOUR MONEY MAY BE INVESTED 16.1 You can invest in a choice of Trusts as detailed in the Key Features document. Not all Trusts are ISA Trusts. Your investment choice may be for growth or income. Your choice of Trust will determine which option (Income or Growth) and Unit Type (Income or Accumulation) you can select. Other Trusts may become available for selection from time to time and we may remove existing Trusts from time to time. If any cash is held on your behalf, it will be held for you in a Client Account. Interest is not paid on any such balances. The Client Account will be held in the UK with an authorised bank in accordance with the FSA’s client money rules. The bank will hold the cash on our behalf in a trust account separate to any account used to hold money belonging to us in our own right. We will not, however, be responsible for any acts or omissions of the bank. 16.2 14.2 14.3 16.3 14.4 15. REVISION OF THE AGREEMENT 15.1 We may change the terms and conditions of this Agreement at any time by giving you at least 14 days notice or any longer period required by the FSA, so long as that change does not make your ISA void under the ISA Regulations and we reasonably 16.4 18.2 54 Key Features month following receipt of your instructions. If you choose to receive a fixed income this must apply to all the Trusts in which you are invested, and you must invest in Accumulation Units. 19. SWITCHING Currently you may switch your investment between the Trusts listed in the Key Features document, subject to the restrictions on the type of income options. You may give us your written instructions to switch between Trusts. Customers can switch Trusts providing that the initial switch amount is at least equal to the minimum initial Subscription amount for that Trust; thereafter a minimum of £250 can be switched. Partial switching between Trusts will be subject to there being a remaining residual balance of at least £500 per Trust. To make a switch, we will sell the Units in the Trust you wish to switch from and use the proceeds to buy the new Units. Full switching between Trusts is permitted. 20. BUYING OF UNITS 20.1 Units will be purchased at the Single Price calculated at the Valuation Point immediately after we receive your initial or additional Subscription. Where income distributions are reinvested, Units are purchased at the Single Price calculated at the Valuation Point on the Distribution Pay Days. Purchases of Units may be pooled with those of other investors and transactions placed for the aggregate amount. While in some situations this aggregation may work to your disadvantage, when we purchase Units in accordance with this Agreement, we will always do so on terms at least as favourable as those you would receive if we dealt for you individually. 21. SELLING OF UNITS 21.1 At any time you can send your written instructions to our Administration Office to sell Units for you. Units will be sold at the Single Price calculated at the Valuation Point immediately after we receive your written instructions, or at such later time as specified by you. The minimum value that may be cashed in at any one time is £250. Partial withdrawals will be subject to there remaining a residual balance of at least £500 per Trust. If the remaining value following a withdrawal, transfer or fixed income payment is less than £500 we may require your Investment to be closed. When we calculate the minimum sale and transfer amounts and the remaining value of your Investment following either transaction, we will value investments held under your Investment using their Single Price at the time of the transaction. Following a request to sell Units, a cheque will be sent within four Business Days of the Units being sold. Release of funds by BACS to a Bank will be subject to a charge, details of which can be obtained by contacting us at our Administration Office or telephone number set out in section 26 of this Part One. Sales of Units within your Investment may be pooled with those of other investors and transactions placed for the aggregate amount. While in some situations this aggregation may work to your disadvantage, when we sell Units in accordance with this Agreement, we will always do so on terms at least as favourable as those you would receive if we dealt for you individually. 21.5 We may delay paying any sale proceeds until we know that all Subscriptions made by you have cleared and we have all amounts which you owe us. We may carry out security checks to confirm your identity before we make payment. If a payment has been made by debit card within 120 days of a request to withdraw, we reserve the right to credit the sale proceeds back to the debit card. 21.6 22. CHARGES 22.1 All fees, charges and expenses applicable to your investment are set out in the relevant part of the Key Features document. Please note that other costs including taxes, may arise in relation to your Investment that are not paid by or imposed by us. 21.2 22.2 23. LIABILITY FOR DEFAULT We accept liability for any loss caused by our fraud, negligence or wilful default or that of our nominees. However, we are not liable for any loss caused by any bank in which your cash is held. 24. SPECIAL CIRCUMSTANCES We have the discretion to apply funds to an Investment on a day other than a Business Day. If you are due a payment from us relating to a Subscription paid by debit card we reserve the right to pay direct to that card account and to delay any payment until the expiry of any period during which a Subscription could be reclaimed. 21.3 20.2 21.4 Key Features 55 25. COMPLAINTS AND COMPENSATION 25.1 Complaints If you have any complaints about your investment please write with details to: The Manager Customer Relations Prudential Unit Trusts Limited PO Box 9022, Chelmsford CM99 2WA Telephone: 0845 783 5500 For your security and to improve the quality of our service we may record or monitor telephone calls. We will look into your complaint and report back to you. If you remain dis-satisfied you may refer the matter to the: Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR 25.2 Compensation We are covered by the Financial Services Compensation Scheme. You may be entitled to compensation from the scheme if we cannot meet our obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for 100% of the first £30,000 and 90% of the next £20,000, so the maximum compensation is £48,000. Further information about compensation arrangements is available from the: Financial Services Compensation Scheme, 7th Floor Lloyds Chambers 1 Portsoken Street London E1 8BN 27. IMPORTANT NOTES 27.1 All instructions required to be given in writing under this Agreement must be delivered to our Administration Office by post or by hand. Transmissions by facsimile or other electronic means alone are not acceptable. We have the right to effect transactions in which we or any associated company might have a material interest or which might involve a conflict of interest. Neither we nor any associated company are liable to account to you for any profit, commission or other remuneration we or any associated company receive as a result of effecting such transactions. A summary of our policy regarding conflicts of interest can be found in section 11 of this Part One. 29. STATEMENTS We will maintain a record of your Investment. If you are a retail client we will send you at six monthly intervals a statement giving details of each transaction made in the last six month period and the value of your investment at the statement date. Statements are currently sent out in April and October, although this is subject to change. 27.2 Part Two: Direct Investment Terms The terms set out in this Part Two apply in addition to the terms set out in Part One but only in relation to an investment you make directly into the Trusts. 1. APPLYING TO INVEST IN THE TRUSTS Please see the section headed “Where is my money invested?” of the Key Features document for details of the methods available to you for applying to invest in the Trusts and for making additional contributions. 2. CONFIRMATIONS Once your application has been processed, we will issue you and your intermediary, if you have one, with a formal acknowledgement. We do not issue certificates of title. 3. INCOME Please see the relevant part of the Key Features document for details of your options for investing in Income or Growth Units. 4. SWITCHING BETWEEN FUNDS Please see the section headed “Can I change the Trust in which I have invested?” of the Key Features document for details of how you may switch between Trusts. 5. WITHDRAWALS You can withdraw part or all of your investment at any time (subject to minimum limits). For more details see the section headed “Can I take money out?” in the Key Features document. 28. ANTI-MONEY LAUNDERING As a result of legislation in force in the United Kingdom to prevent money laundering, firms conducting investment business are responsible for compliance with money laundering regulations. In certain circumstances investors may be asked to provide proof of identity when buying or selling Units or we may seek to verify identity electronically. Normally this will not result in any delay in carrying out instructions but should we request additional information, this may mean that instructions will not be carried out until the information is received. In these circumstances we may refuse to issue or redeem Units, release the proceeds of redemption or carry out such instructions. 26. RISK WARNINGS Your attention is drawn to the risk warnings in the section headed “Risk Factors” in the Key Features document. 56 Key Features Part Three: ISA Terms Once this Agreement comes into force, we will manage your ISA as a stocks and shares ISA in accordance with your instructions, this Agreement and the ISA Regulations. If this Agreement conflicts with the ISA Regulations, the latter will prevail. We will only delegate to another party our duties under this Agreement if we are satisfied that the other party is competent to carry out those duties. 1. CANCELLATION In the event that you cancel your ISA you remain eligible to invest in another ISA of the same type in the same tax year, subject to the cancellation being completed within sufficient time. 2. OWNERSHIP OF UNITS 2.1 The Units held in your ISA are beneficially owned by you. You may not use your Units as security for a loan and we do not issue documents of title. All Units purchased on your behalf will be registered in the name of, and held by, Staple Nominees Limited on trust. Staple Nominees Limited is not an authorised person under the Financial Services and Markets Act 2000. It can only hold Units and does not carry on business in its own right. The ultimate holding company of both Staple Nominees Limited and Prudential Unit Trusts Limited is Prudential P.L.C. We register your investments in the same name as our other ISA clients and do not identify individual investments by separate certificates. From time to time, as part of normal settlement procedures, where investments are pooled we may use your and other clients’ investments to settle transactions. Should we become insolvent, this arrangement could cause delay in recovering your investments or increased risk of loss. 3. HOW YOUR ISA MAY BE INVESTED The Prudential ISA currently offers investment in a choice of Trusts as detailed in the Key Features document. The Trusts are permitted investments in accordance with the ISA Regulations. If a Trust is no longer available in the Prudential ISA, to preserve the tax status of your ISA we reserve the right to switch your investment into a nominated default Trust. If such an event occurs we shall attempt to contact you to advise you of the options available to you. 4. SUBSCRIPTIONS 4.1 Subscriptions will be invested in The Prudential ISA in accordance with the instructions set out in your Application. In subsequent Tax Years you do not need to recomplete an application form, unless you have not made any Subscriptions to your ISA in the previous Tax Year. Lump sum Subscriptions can be made by the following methods – cheque, Switch or Delta Card. Regular contributions can only be made by Direct Debit. If we accept your Application to open a Prudential ISA other than through an application form sent to our Administration Office, we will send you a copy of the declaration which you make under the ISA Regulations. If this copy is incorrect and/or false, you must notify us of any correction within 30 days from the date we send the copy. Unless the changes make the ISA void, then we will send a revised declaration which takes effect from the date of your original declaration. Lump sum and/or regular monthly Subscriptions can be made into the Trusts. As well as your initial lump sum Subscription, you may make additional lump sum Subscriptions to the Trust(s) in which you already hold Units, provided that these additional Subscriptions are at least £250 per Trust, or whatever other minimum that may be prescribed from time to time in the Prospectus. The current maximum Subscription is shown in the Key Features document. The Ex Maxi Prudential ISA and the Ex PEP Prudential ISA are closed to Subscriptions. 4.4 You may transfer to us all or part of an ISA from another ISA manager, as detailed in section 14 of this Part Three. You may only transfer in amounts from an existing ISA and may not supplement the transferred amount from other sources. If any cash is held on your behalf, it will be held for you in a Client Account. Interest is not paid on any such balances. 4.2 5. INVESTMENT OPTIONS: YOUR CHOICE OF TRUST IN THE PRUDENTIAL ISA The Prudential ISA currently offers investments in a choice of Trusts. Subject to the terms of this Agreement and to meeting the minimum Subscription levels set out in section 14 of Part One, you choose which of the Trusts detailed in the Key Features document you wish to subscribe to, the unit/share type and how much you wish to subscribe subject to the maximum permitted investment limits in the case of the Prudential ISA. Other Trusts may become available for selection from time to time and we may remove existing Trusts from time to time. 6. INCOME PAYMENTS AND REINVESTMENT OF INCOME 6.1 If you choose to invest in Accumulation Units we will roll up within the Trust all income distributions in respect of Units held under your ISA. Prudential ISA You may not hold Income Receipt Units if you are making regular monthly Subscriptions. 2.2 4.3 6.2 Key Features 57 6.3 Ex PEP Prudential ISA – Fixed Income Option If you have chosen to take fixed income payments from your Ex PEP Prudential ISA, we will pay them to you as requested either monthly or quarterly. The payments will be your choice of a percentage of your original investment or the value of your investment at the time you start receiving the income. You may choose to take at least 0.5% per year but not more than 10% per year (using 0.5% steps). The fixed income payments are achieved by encashing Units to the value of your chosen level of fixed income payment. Confirmations of these individual transactions will not be sent, but details will be shown on half yearly statements. Income will be paid into your nominated Bank or Building Society account via BACS. Fixed income payments will be credited on the 20th of each relevant month (or the next available Business Day). Fixed income payments commence in the month following receipt of your instructions. If you choose to receive a fixed income you must invest in Accumulation Units or Income Reinvested Units. investments) will be paid to you gross. The value of any tax benefits is dependent on your personal circumstances. The tax position of ISAs is that which applies currently and is subject to legislative change. 9. LENDING AND BORROWING ON YOUR BEHALF We may not lend cash, investments and rights to a third party and we may not borrow on your behalf against the security of investments held under your ISA. 10. LIABILITY FOR DEFAULT We accept liability for any loss caused by our fraud, negligence or wilful default or that of Staple Nominees Limited. However, we are not liable for any loss caused by any bank in which your cash is held. 11. TRANSFERRING YOUR ISA 11.1 Transfers In You may transfer to us all or part of an ISA from another ISA manager, provided the transfer is in cash. We apply the cash when we receive it to buy Units in the Prudential ISA. The minimum amount you may transfer in from an existing ISA is £500. Subsequent transfers into a Trust in which you are currently invested may be of amounts of at least £250. Before we can accept the transfer of an ISA for you or add a transferred value to your Prudential ISA we must receive a duly completed transfer application at our Administration Office. If we receive amounts up to the value of £5 in respect of dividends and tax credits from your previous ISA, we reserve the right to return these to you in the form of a cheque. Amounts exceeding £5 will automatically be invested into your Prudential ISA. We do not accept transfers into the Ex Maxi Prudential ISA or the Ex PEP Prudential ISA. 11.2 Transfers Out At any time you may transfer your ISA in part, subject to a residual balance of £500 per Trust, or in full, to a different ISA manager. We require a completed transfer form and satisfactory written evidence that the ISA manager to whom it is to be transferred is approved in accordance with the ISA Regulations. We will sell your Investment immediately following receipt of this documentation, or at such later time as specified by you, and pay the proceeds to the new ISA manager. 12. CLOSING YOUR ISA 12.1 You may close your ISA at any time by giving written notice to our Administration Office of your intention to do so. For monthly ISA Subscriptions we must receive notice at least seven Business Days before the next payment due date otherwise we will be unable to stop that payment. Your ISA will be closed without affecting transactions, such as tax claims from HM Revenue & Customs, already started on your behalf. Once we have received written notice of your intention to close your ISA, we will sell the Units at the Single Price calculated at the Valuation Point immediately after we receive your written instructions and send you a cheque for the sale proceeds within four Business Days of the Units being sold. If, when you close your ISA, there are any sums which are due to you but not immediately payable, we will send such sums to you following the Distribution Pay Days. 12.2 12.3 7. BUYING OF UNITS Where any tax reclaimed from HM Revenue & Customs is reinvested on your behalf, Units are purchased at the Single Price calculated at the Valuation Point on the date we receive the tax reclaim monies from HM Revenue & Customs. 8. TAXATION As an ISA, any proceeds from your investment are completely free of personal Income Tax and Capital Gains Tax, regardless of your individual tax status. Please note that, under current legislation, we are not permitted to claim any tax credits on dividend distributions. Interest distributions (on certain Trusts which invest primarily in fixed interest 58 Key Features 12.4 12.5 After you have closed your ISA we reserve the right to retain any sum of less than £1 which we receive in respect of a tax claim carried out on your behalf. If an ISA Subscription has been made by debit card within 120 days of a request to close your ISA, we reserve the right to credit the sale proceeds back to the debit card. We may close your ISA on giving you three months’ written notice of our intention to do so. You will then have the option to transfer your ISA to a different ISA manager. Upon notification of the death of the ISA holder, the ISA will cease and Units will be transferred into a Unit Trust/OEIC holding in the same Trust until instructions are received from the executors of the deceased’s estate. If we have reclaimed tax for you after your death but before notice of your death is received by us it is the responsibility of your Personal Representatives to advise HM Revenue & Customs of such sums when administering your estate. HM Revenue & Customs will notify you if all or part of your ISA is no longer exempt from tax for failing to satisfy the ISA Regulations. If your whole ISA is no longer exempt from tax it immediately closes. 13. MANAGER’S REPORTS AND PROSPECTUS Please contact us if you wish to receive the interim and annual Manager’s Reports of any of our Trusts and/or a copy of the Prospectus. 14. IMPORTANT NOTES 14.1 All instructions required to be given in writing under this Agreement must be delivered to our Administration Office by post or by hand. Transmissions by facsimile or other electronic means alone are not acceptable. We do not offer a Cash ISA. Any investment that was previously designated by us as CAT Standard will continue to adhere to the CAT Standard. 15.5 12.6 Selling Units and Subscription Breaks We reserve the right to notify your mortgagee in writing if, at any time, you sell all or part of the units in your ISA or cease making Subscriptions. You should remember that any lapse in paying Subscriptions may result in a higher Subscription being required when you decide to resume payments. Mortgage Review We will review the performance of your investment after three years and every year thereafter, in order to check whether your investment is on target to repay your mortgage loan. 12.7 15.6 14.2 14.3 12.8 15. ADDITIONAL TERMS FOR FORMER PRUDENCE GOLD MORTGAGE ISA/PRUDENCE GOLD MORTGAGE PEP HOLDERS ONLY 15.1 No new Prudence Gold Mortgage ISAs/Prudence Gold Mortgage PEPs are currently available. However, you may continue to invest into your current ISA, in the Prudential Global Growth Trust or the Prudential Managed Trust. Subscriptions The minimum monthly Subscription is £30 (or £15 for joint mortgages). The minimum additional lump sum Subscription is £250 or £200 for joint mortgages. Switching Switching is permitted between the Prudential Global Growth Trust and Prudential Managed Trust only. Charges No initial charge is levied on Subscriptions to your ISA. 12.9 15.2 12.10 If all or part of your ISA is no longer exempt from tax we hold any affected Units to your order outside your ISA. We may retain sufficient cash to meet any tax liability for which we must account to HM Revenue & Customs under the ISA Regulations. We may sell any Units which we held in your ISA to meet such liability as soon as is reasonably practicable. 15.3 15.4 Key Features 59 www.pru.co.uk The Trusts are Prudential Unit Trust and Prudential OEIC Funds. The Prudential (Invesco Perpetual) Managed, Prudential (Newton) Higher Income and Prudential (Newton) Managed Trusts are managed on our behalf by the fund management group stated. They should not be confused with the same or similar named funds or unit trusts offered independently by these fund management groups. The units in the Prudential UK Index Tracker and Prudential European Index Tracker Trusts are not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ("FTSE") or by the London Stock Exchange Limited ("the Exchange") or by The Financial Times Limited ("FT") and neither FTSE nor Exchange nor FT makes any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE 100 Index or the FTSE World Europe Index ("the Index") and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTSE. However, neither FTSE nor Exchange nor FT shall be liable (whether in negligence or otherwise) to any person for any error in the Index and neither FTSE nor Exchange nor FT shall be under any obligation to advise any person of any error therein. “FTSE™”, “FT-SE®” and “Footsie®” are trade marks of the London Stock Exchange Limited and The Financial Times Limited and are used by FTSE International Limited under licence. “All-Share” and “All-World” are trade marks of FTSE International Limited. “Prudential” is a trading name of Prudential Unit Trusts Limited and Prudential Personal Equity Plans Limited. This name is also used by other companies within the Prudential Group, which between them provide a range of financial products including life assurance, pensions, savings and investment products. Prudential Unit Trusts Limited and Prudential Personal Equity Plans Limited are registered in England and Wales under numbers 1796126 and 2059989 respectively. Registered Office at Laurence Pountney Hill, London EC4R 0HH. Authorised and regulated by the Financial Services Authority. UNIK6334 APR 09 / 25464