Latest News on PruFund Investment Plan

• Expected Growth Rate (EGR) remains level again for another quarter
• Unit Price Adjustment
• Increase in the charge for the 5th Anniversary Capital Guarantee option

EGR remains level again for another quarter

We announced the latest PruFund Expected Growth Rates (EGR) on 26 August 2008. Once again we are delighted to confirm that the EGR, gross of charges, remain unchanged for the next quarter. They have been maintained at 6.85% pa for the Growth Fund and 6.40% pa for the Growth and Income Fund for another quarter.

Find out the latest rates.

Unit Price Adjustment

The unit price has been adjusted downward by 3.96% for the Growth Fund and by 3.24% for the Growth and Income Fund to reflect the underlying performance of the funds. This is in line with the disclosed smoothing rules and reinforces the fact that the product's innovative and transparent structure is simply behaving as it was designed. It will come as little surprise to most of you that as a result of the current economic climate, the Growth Fund and the Growth and Income Fund's returns have moved outside the parameters of our smoothing formula. To put this in context, the FTSE 100 and Cautious Managed Sector have fallen by 9.93% and 4.7% respectively during the period 22/05/08 - 22/08/08.

Following on from 14 consecutive quarters of sustained growth, including four upward adjustments for the Growth Fund unit price and three upward adjustments for the Growth and Income Fund unit price - this is the first downward adjustment since launch in 2004.

Policyholders who invested on or after 27 May 2008 will not be affected by this price adjustment. Their money is invested in the holding account and will not be transferred into their chosen investment fund until after the price adjustment has been applied.

The PruFund smoothing process is explained in detail in the PruFund adviser guide, reference INVB6589, available from www.pruadviser.co.uk

Want a reminder of how the smoothing process works?

In normal conditions, the PruFund Investment Plan 'smoothed prices' increase in line with the EGRs set at each quarter date. However, the 'smoothed price' (i.e., the price at which policyholders buy units and which determine the amount payable in the event of a claim) is automatically adjusted if it differs from the underlying asset value (the 'unsmoothed price') by more than a specified percentage.

The triggers for these pricing adjustments are as follows:

• On and between the quarter dates: If the 'unsmoothed price' differs from the 'smoothed price' by 10% or more, based on both the actual 'unsmoothed price' and a 5-day rolling average of the 'unsmoothed price', then the 'smoothed price' is adjusted to 102.5% of the 'unsmoothed price' from above or 97.5% of the 'unsmoothed price' from below.
• In addition, at the quarter date: If the 'unsmoothed price' differs from the 'smoothed price' by 5% or more, either above or below, then the 'smoothed price' is moved 50% of the way to the 'unsmoothed price'.

PruFund performance Vs Competitors

Both funds on the PruFund Investment Plan have, including this pricing adjustment, once again continued to produce great results. Here's how PruFund* returns compare with competitors.

PruFund returns are gross of applicable plan charges, including AMC. Other fund performances reflected above may allow for AMC, where this is included in the unit price.

Source: Lipper, bid to bid, net income reinvested but net of fund tax.

*as at close of business 22 August 2008

What it means to policyholders

Growth Fund

For an investment of £30,000 on 14 September 2004, the surrender value on 26 August 2008 would be £38,717, assuming no withdrawals. This would represent a growth of 29%.

Growth and Income Fund

For an investment of £30,000 on 14 September 2004, the surrender value on 26 August 2008 would be £36,947 assuming no withdrawals. This would represent a growth of 23.1%.

Increase in the charge for the 5th Anniversary Capital Guarantee option

We have carried out a review of pricing and as a result, we have increased the charge of PruFund's 5th Anniversary Capital Guarantee option, for new business, from 0.5% pa to 0.6% pa with effect from 29 September 2008. Customers who already have the guarantee or buy this option before 29 September will still have a charge of 0.5% pa applied throughout the 5 year term of the guarantee.

PruFund illustrations will show the new charge of 0.6% pa from 1 September, however we will continue to apply a charge of 0.5% pa for any complete application forms with no outstanding requirements received with a cheque on or before 26 September 2008.

The PruFund 5th Anniversary Capital Guarantee option provides your clients with at least their initial investment on its 5th anniversary, adjusted for any regular or one-off withdrawals taken.

If you would like more information on PruFund please discuss this plan with your Prudential Account Manager.

Further information on the PruFund Investment Plan.

Full terms and conditions are available on request.

The value of your client's plan may fluctuate and there could be times when they may not get back the full amount of their original investment. What they receive will depend upon the value of the underlying investments, the smoothing process, whether they have the 5th Anniversary Capital Guarantee option and when they take their money out. The Capital Guarantee if applicable is applied to your client's plan on the 5th Anniversary.