PruLink Singapore Managed Fund wins specialPrulink Pg1-56.FH11 3/20/07 1:27 PM Page 3 Composite ABOUT PRUDENTIAL’S FUND MANAGERS* 3 The PruLink family of funds is managed by the

* PruLink Singapore Managed Fund wins specialAward for the Highest Absolute Returns over 10 years

** Figures as at 31 December 2006# PruLink Singapore Managed Fund

Free Fund Switching facility: Should your investment needs and preferences change, you can takeadvantage of our free fund switch option, switching from one PruLink fund to another, absolutely free.

For more up-to-date information on unit prices of all PruLink funds,visit our website at www.prudential.com.sg

For more information on your policies including the value of your investments and policy details,apply for PRUAccess via our website or call 1800 - 333 0 333

Prulink Pg1-56.FH11 3/20/07 1:27 PM Page 1

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CONTENTS

1

Page

CEO Letter ...................................................................................................................................2

About Prudential’s Fund Managers ...........................................................................................3

Table of Fund Performance ........................................................................................................4

PruLink Singapore Managed Fund ............................................................................................6

PruLink Asian Equity Fund .........................................................................................................8

PruLink Global Equity Fund ......................................................................................................11

PruLink Global Bond Fund ........................................................................................................14

PruLink Global Managed Fund ................................................................................................16

PruLink Global Technology Fund .................................................................................................19

PruLink Pan European Fund ......................................................................................................22

PruLink Protected Global Titans Fund ......................................................................................25

PruLink Asian Reach Managed Fund ........................................................................................28

PruLink China-India Fund ...........................................................................................................31

PruLink Emerging Markets Fund ..........................................................................................................34

PruLink America Fund ...............................................................................................................36

PruLink International Bond Fund ..........................................................................................................38

PruLink Adapt 2015 Fund ..........................................................................................................40

PruLink Adapt 2025 Fund .........................................................................................................43

PruLink Adapt 2035 Fund .........................................................................................................46

PruLink Global Basics Fund .......................................................................................................49

Market Review & Outlook .........................................................................................................52

Schedule of Investments ............................................................................................................57

Statement of Assets and Liabilities ..........................................................................................98

Capital and Income Account ....................................................................................................101

Notes to the Financial Statements ..........................................................................................104

Auditors, Report ......................................................................................................................106


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CEO Letter

2

Dear PruLink Policyholder

Year 2006 will be remembered as a significant year whereby new investment trends have emerged. Many marketsfinished either near or at highs last seen in 2000. But 2006 also saw the sharpest corrections since the currentbull run began in 2003 as investors worried that resurgent inflation and slowing global economic growth wouldundermine equities.

It is notable that while investors accepted that higher oil prices were here to stay, likely over the longer term,they also realised that Asian economies were more and more resilient to the price hikes. These economies werealso more independent of world economic activity and there has been an ongoing “re-rating” of Asia’s equityvaluations as they rise towards global levels.

In 2006, investors were also more discerning about which emerging markets to chase and there was a swingback towards the larger “old world” stocks that had previously missed out on much of the post-May 2003 growth-fuelled rallies.

Also noteworthy, bonds remained remarkably resilient despite recurrent inflation fears. Higher-yielding bondswere the major beneficiaries. This is due to the record low valuation gap between low- and high-risk bondsarising from the slower growth and low inflation environment.

Against this backdrop, I am pleased to report that nearly all our PruLink funds performed well in 2006, someexceptionally well indeed. The PruLink China India Fund rose by over 37%. Both the PruLink Singapore Managedand PruLink Pan European Funds rose over 25%. We took a relatively conservative approach in many of ourbond funds given the generally high valuations and they did not perform as well. The rally in large capitalisedtechnology stocks worked against the PruLink Global Technology Fund, which is biased towards smaller- andmedium-sized companies.

Whilst enjoying a broadly successful year, I would like to remind policyholders to regularly review your investmentswith your Prudential Adviser to ensure you meet your long-term goals. As mentioned earlier, global financialmarkets are undergoing significant changes. This is driven partly by the emergence of China and India.

Many of the old “investment rules” are being bent and could have a major impact on your long-term investmentdecisions. Contrary to past experience, high commodity prices in recent years have not fuelled inflation so thatbonds have remained far more robust than generally anticipated. The strength of emerging markets has alsocaught many by surprise given that these were generally the first to fall during major corrections but theyremained in favour in 2006.

I am happy to say that with Prudential’s diverse range of funds, you have many opportunities to benefit fromthe newly emerging trends. Moreover, our free fund switching policy conveniently allows you to rebalance yourportfolio to suit your changing needs.

We now have a total of 19 PruLink funds including our latest PruLink Currency Income Fund launched in January2007. It is the first investment-linked fund in Singapore to participate in multi-currency interest rate arbitragestrategies. What used to be an investment strategy used by private banking is now available to you. This newfund is in line with our innovative approach and we will continue to introduce more funds so that you can selectfrom an even wider range to tailor to your individual needs.

Today, Prudential remains a market leader, managing one of Singapore’s largest investment-linked insurancefunds with some S$6 billion under management. This reflects strong customer confidence in the investmentexpertise of our fund managers and in the potential of our funds. I would like to take this opportunity tothank you for your continued support and you can be assured that we will continue to manage yourinvestments prudently.

Yours sincerely

Philip SeahChief Executive Officer


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ABOUT PRUDENTIAL’S FUND MANAGERS*

3

The PruLink family of funds is managed by the investment arm of Prudential plc and byselect third party fund managers.

Prudential’s investment arm comprises Prudential Asset Management (Singapore) Limited,Prudential Asset Management (Hong Kong) Limited and M&G Investment Management.The Prudential Group has investment operations in major financial centres around the world,offering investment expertise in equities, bonds, real estate and venture capital. It is amongthe largest fund managers in the world, managing a total of over S$696 billion1.

M&G is an ultimately wholly owned subsidiary of Prudential plc. It was acquired by Prudentialplc in 1999 and is not only the oldest and one of the UK’s largest retail mutual fund managersbut also has specialised in investment management for more than 70 years. Established in1931, M&G introduced Britain’s first ever unit trust and has continued to launch ground-breaking financial products ever since, the most recent being a range of global specialistfunds. M&G’s broad product range includes equity income, growth funds and fixed income.M&G funds are increasingly being offered under the Prulink range of funds.

In Asia, Prudential Asset Management (Singapore), Prudential Asset Management (HongKong) and Prudential Fund Management Services (Singapore) were established to providea more focused approach to investing, new product development and customer servicewithin Asia. Collectively, the three offices not only invest in fixed income securities andequities but also develop new funds aimed at meeting our policyholder’s needs in the Asianregion including Japan, Australasia and the Indian Sub-Continent. The three companieshave a combined staff of 203 people of which 49 are investment professionals. The threework closely together, which allows not only for a better appreciation of regional clientneeds but also enables the investment team to be closer to the markets in which it seeksto identify the best investment opportunities. In addition, the fund managers enjoy directaccess to the extensive global research and fund management resources and capabilities ofthe Prudential Group in Europe, the US and key Asian markets including Japan, China,Taiwan, Korea, India, Malaysia and Vietnam.

The third party managers comprise Fidelity Investments (Singapore) Ltd; Templeton AssetManagement Ltd and the Russell Investment Group Pte Ltd who select the best fundmanagers for the Adapt series of PruLink funds.

Prudential has S$87.5 billion2 of funds under management in Asia, of which S$17.6 billioncomes from Singapore. The PruLink family of funds - the second largest investment-linkedinsurance funds in Singapore - amounts to S$6.0 billion. Of the 18 PruLink funds, the PruLinkSingapore Managed Fund is the largest unitised fund in Singapore, totalling S$2.5 billionwith more than 160,000 investors having invested since its 1992 launch. Prudential AssetManagement (Singapore) Limited is an approved fund manager under the CPF InvestmentScheme and ranks among the top 10 fund managers in the country.

1 Unaudited as at 31 December, 2006.2 All data as at 31 December, 2006.

* Refers to the Prudential Group.


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TABLE OF FUND PERFORMANCE

4

As at 31st December 2006

PruLink Singapore Managed Fund

PruLink Asian Equity Fund

PruLink Global Equity Fund

PruLink Global Bond Fund

PruLink Global Managed Fund

PruLink Singapore Cash Fund

PruLink Global Technology Fund

PruLink Pan European Fund

PruLink Protected Global Titans Fund

PruLink Asian Reach Managed Fund

PruLink China-India Fund

PruLink Emerging Markets Fund

PruLink America Fund

PruLink International Bond Fund

PruLink Adapt 2015 Fund



PruLink Global Basics Fund

Fund%

14.24

11.11

4.27

-1.49

1.53

0.90

2.74

9.07

2.33

4.60

14.86

12.15

3.42

-1.69

5.76

6.53

6.87

8.15

Benchmark%

13.62

11.90

4.91

-1.54

1.66

0.82

2.92

7.75

0.62

4.87

21.73

13.78

3.19

-1.45

5.64

6.49

6.83

7.03

Fund%

20.33

17.62

9.32

0.00

4.83

2.07

6.01

13.81

6.84

10.17

26.90

16.34

6.27

-0.16

9.67

10.94

11.44

8.20

Benchmark%

20.11

19.31

10.06

0.20

5.07

1.65

11.38

14.39

1.24

10.53

38.66

19.85

9.39

0.74

10.46

12.16

12.81

9.79

3-Month 6-Month


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Fund%

25.55

18.96

10.74

-2.54

4.46

3.42

-2.00

26.45

8.69

8.26

37.53

16.83

-1.41

-2.88

11.22

12.43

12.75

NA

Benchmark%

25.34

21.98

11.33

-2.08

4.54

3.28

2.88

24.28

2.50

8.56

54.49

22.34

6.85

-1.70

11.18

12.95

13.68

NA

1-Year

Fund%

58.56

67.64

33.60

-1.99

15.68

6.21

21.08

66.51

10.75

32.16

NA

NA

NA

NA

NA

NA

NA

NA

Benchmark%

59.51

71.12

38.21

-1.48

17.16

6.34

10.35

62.48

7.69

32.86

NA

NA

NA

NA

NA

NA

NA

NA

3-Year

Fund%

80.98

107.75

37.51

22.95

32.43

8.77

-20.12

58.68

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

Benchmark%

79.26

107.08

36.81

24.42

32.60

7.73

-8.45

70.28

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

5-Year

Fund%

92.92

82.78

NA

NA

NA

21.81

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

Benchmark%

45.14

22.60

NA

NA

NA

24.04

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

10-Year

Fund%

210.71

109.72

30.11

27.99

32.71

24.98

-35.93

40.64

9.02

63.93

92.38

41.70

6.14

-6.74

14.79

18.96

21.08

8.21

Benchmark%

147.34

34.40

27.30

32.22

31.83

27.73

-27.38

53.11

12.95

62.11

139.98

60.28

13.19

-4.75

16.88

21.90

24.44

10.53

Since Inception


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FUND OBJECTIVE

The PruLink Singapore Managed Fund aims to maximise total return in the medium to longterm by investing primarily in a portfolio comprising equities and equity-related securitiesof companies listed or to be listed on the Singapore Stock Exchange, and in a diversifiedportfolio of debt securities.

FUND PERFORMANCE

PruLink Singapore Managed FundFor the year ended 31 December 2006, the PruLink Singapore Managed Fund rose25.55%3,which outperformed its benchmark’s 25.34%4 gain. Since its November 1992inception, the Fund has achieved a cumulative return of 210.71%, which compares favourablyagainst the benchmark return of 147.34%. As at 31 December 2006, the Fund’s bid andoffer prices were $2.95175 and $3.10710 respectively.

The Fund’s double digits gains for the year were driven mainly by the strong performanceof the Singapore equity market. The MSCI Singapore Free Index gained almost 36% inSingapore dollar terms, with the index surpassing the previous high of January 2000. Equityprices were buoyant by the generally positive sentiment amid stronger economic performances,the government’s granting of two integrated resort licenses and firmer property andemployment markets. On the fixed income front, local government bonds saw yieldsdeclining in the second half of the year after trending higher in the first half, on expectationsthat the US interest rate hikes was all but over. For the year, domestic equities outperformedbonds by a huge margin. Against this backdrop, the Fund’s strategy to overweight equitiesand underweight bonds was thus rewarding. Apart from the positive asset allocation, theFund’s good stock selection also added significantly to the outperformance against itsbenchmark. In particular, overweight property stocks such as Keppel Land and CityDevelopment benefited the Fund substantially as these stocks rallied amidst a pick up in theresidential property prices and transactions. Likewise, underweight technology stocksincluding Creative Technology, Chartered Semiconductor and Datacraft Asia also workedwell for the Fund, given the weak electronics output and exports. On a negative note, theFund’s overweight in SIA Engineering worked against the Fund as its share price performancelagged the broader market.

In view of 2006’s strong equity performance, we pared the Fund’s equity weightings toslightly overweight. The Singapore equity market’s valuation is no longer looking cheapbut positive macro drives could provide re-rating potential. Domestic bond remainsunattractive in our opinion. Although there may be no near-term impetus for a bond sell-off, current cash rate at between 3% and 3.5% suggest the risk-reward trade off is morein favour of cash over bonds and therefore our underweight stance in the latter.

PRULINK FUNDS

6

Report and Statements of the Managersfor the period from 1 January 2006 to 31 December 2006


3 Performance computed based on bid to bid prices and net of management fees.4 The benchmark comprises 70% MSCI Singapore Free Index and 30% UOB Singapore Government Bond index.


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At a Glance


Launch Date 24 Sep 1992

Bid Price (as at 31 Dec 2006) $2.95175Offer Price (as at 31 Dec 2006) $3.10710

Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Singapore Managed Fund 25.55%70% MSCI Singapore Free Index + 30% UOB All Index 25.34%

Net Investment Return (since launch of fund)Actual PruLink Singapore Managed Fund 210.71%70% MSCI Singapore Free Index + 30% UOB All Index 147.34%

Risk ClassificationNarrowly Focused - Medium to High Risk

Fund Performance* based on Bid Price

Outperformance0.21%0.43%-1.30%0.67%0.93%5.45%3.01%20.42%3.69%0.07%2.38%2.46%-4.04%-4.80%

Year 2006Year 2005Year 2004Year 2003Year 2002Year 2001Year 2000Year 1999Year 1998Year 1997Year 1996Year 1995Year 1994Year 1993

Fund25.55%11.58%13.19%24.03%-7.97%-7.28%-13.77%61.90%2.25%

-19.98%1.85%

10.45%-7.00%42.91%

Benchmark25.34%11.15%14.49%23.36%-8.90%-12.73%-16.78%41.48%-1.44%-20.05%-0.53%7.99%-2.96%47.71%

* Calculation of fund performance starts from 3 Nov 1992.


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FUND OBJECTIVE

The PruLink Asian Equity Fund aims to maximise long-term return by investing in equity andequity-related securities of companies, which are incorporated, or have their primary activity,in Asia ex-Japan. The Asia ex-Japan region includes but is not limited to the followingcountries: Korea, Taiwan, Hong Kong, Philippines, Thailand, Malaysia, Singapore, Indonesia,People’s Republic of China, India and Pakistan. The fund may also invest in depositoryreceipts [including American Depository Receipts (ADRs) and Global Depository Receipts(GDRs)], debt securities convertible into common shares, preference shares and warrants.

FUND PERFORMANCE

PruLink Asian Equity FundThe PruLink Asian Equity Fund rose 18.96%5 over the twelve month review period, whichlagged its MSCI AC Far East Free ex-Japan benchmark’s gain of 21.98%. Since its November1995 inception, the PruLink Asian Equity Fund has achieved a cumulative return of 109.72%,which compares favourably against the benchmark’s 34.40% gain. As at 31 December, 2006,the fund’s bid and offer prices were $1.99234 and $2.09720 respectively.

Asia’s equity markets posted double-digit gains for the fourth consecutive year thanks toa powerful second half rally. China led the region’s stock markets higher, fuelled by a risingwave of liquidity. Valuations in China’s largest sector, financials, seem over-stretchedsuggesting that 2007 will be less rewarding.

Underperformance resulted largely from the Fund’s China underweighting (whichoutperformed) and its Thai overweighting (which underperformed). Singapore, anunderweight, was the largest contributor to relative performance. India, which is offbenchmark, made a strong contribution. China stock selection was good. Key contributingstocks included China Resources Power, which operates electric power stations in China,where demand is strong. Ping An Insurance Group also made a strong contribution. Keydetractors included China Life Insurance, Hong Kong Exchanges & Clearing, which runs HongKong’s stock Exchange, and Korea’s Kookmin Bank.

The Fund bought shares in the Industrial and Commercial Bank of China at its IPO. ICBC isChina’s largest commercial bank and has the most extensive banking distribution networkin the country. The Fund also raised its stake in Cheung Kong Holdings. This company’slarge exposure to Hong Kong residential property is benefiting from an expanding economyand the tapering off of interest rate rises. Increasingly, property projects in China will drivegroup profits.

8


5 Performance computed based on bid to bid prices and net of management fees.


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In the later half of the year, the Fund established a position in Indonesia’s Bumi Resources,a coal mining concern. The company had been heavily sold on concerns at a delay in thesale of an asset and worries surrounding its controlling shareholder’s exposure to an oilexploration accident. The Fund believes the selling has discounted an overtly pessimisticscenario. The Fund also reduced its position in China Mobile. The stock had done exceptionallywell as the competitive environment remained benign. China is poised to issue cellularlicenses to the two incumbent fixed line operators raising the spectre of increased competitionand slower growth.

Prudential believes that domestic investment and consumption within ex-Japan Asia willremain healthy in 2007. Equity valuations seem generally fair, but several stocks in Chinaand India have moved into expensive territory; China’s insurance sector, for example, is themost expensive in the region. Key risks are that profit margins are at cyclical highs andremain vulnerable. Thailand’s flirtation with capital controls highlights the broader issueof policy risk associated with Asia’s strengthening currencies and that exports remain asignificant driver of regional economies.


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At a Glance


Launch Date 1 Oct 1995


Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Asian Equity Fund 18.96%MSCI AC Far East Free Ex Japan Index 21.98%

Net Investment Return (since launch of fund)Actual PruLink Asian Equity Fund 109.72%MSCI AC Far East Free Ex Japan Index 34.40%

Risk ClassificationNarrowly Focused - Higher Risk


Outperformance-3.02%-0.27%0.77%-0.28%2.23%5.31%5.62%13.06%6.78%7.22%3.43%

Year 2006Year 2005Year 2004Year 2003Year 2002Year 2001Year 2000Year 1999Year 1998Year 1997Year 1996

Fund18.96%23.84%13.80%41.65%-12.51%7.39%

-29.46%71.54%0.82%

-32.84%6.55%

Benchmark21.98%24.11%13.03%41.93%-14.74%2.08%

-35.08%58.48%-5.96%-40.06%3.12%

* Calculation of fund performance starts from 1 Nov 1995.


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FUND OBJECTIVE

The PruLink Global Equity Fund aims to maximise long-term total return by investing in equitysecurities listed or to be listed on global stock exchanges. These exchanges would include,but are not limited to, the major exchanges located in North America, Europe and Asia Pacific.

FUND PERFORMANCE

PruLink Global Equity FundThe PruLink Global Equity Fund rose 10.74%6 over the twelve month review period,underperforming its MSCI World Free benchmark’s gain of 11.33%. Since its February 1999inception, the fund has posted a cumulative return of 30.11%, which compares favourablyagainst its benchmark 27.30% gain. The Fund’s bid and offer prices as at 31 December 2006were S$1.23349 and S$1.29841 respectively.

The Fund recorded some good gains from both market allocation and successful NorthAmerican stock selection, but these gains could not overcome the major drag exerted byits market-weight exposure to Japan, which underperformed significantly. Being underweightthe US market (which underperformed the world index) and overweight both Asia (excludingJapan) and Europe (both of which outperformed) worked in the fund’s favour. (Early in2006, the Fund had reduced its US underweight and Asian overweight so as to increase itsexposure to Europe).

At the stock level, successful North American stock selection reflected that Sub-Fund’s valuestyle over a period when such stocks swung back into favour, especially during the finalquarter. The European Sub-Fund had an excellent year, returning 33% in dollar terms; anexposure to Volvo was particularly advantageous. But this Sub-Fund slightly underperformedits benchmark largely because of a lack of exposure to highly indebted stocks and stocksthat benefited from investors’ higher risk tolerance. In Asia, stock selection detracted valuemostly because of the Fund’s underweighting Hong Kong listed China companies, whichdespite showing little value in many instances, still rallied strongly. In Japan, the main dragson performance were general finance, automobiles and steels. The fund used price weaknessin the general finance sector to increase its exposure.

No immediate change to the overall fund tilts is envisaged. Within the North American Sub-Fund, the largest overweights remain the consumer discretionary and financials sectors.The European arm continues to look for large cap value stocks with strong balance sheetsas the fund manager feels that the market is not pricing in enough of a premium for financialrisk or liquidity risk. Within Asia, while the fund manager believes that aggregate regionalvaluations reflect much of the good news, he is broadly constructive on Asia’s macro-




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economic outlook and believes that equity returns will reflect underlying earnings growthprovided the investment environment remains benign. In Japan, the fund is investing inattractively valued stocks that are exposed to domestic sectors rather than exporters despitethe cheap yen. Overall, the fund manager believes that the Japanese economy is on relativelysound footing and that domestic consumption will accelerate, albeit off a low base. Animmediate concern is that renewed interest in the export related stocks could hurt the fund’sshort-term performance given its lack of exposure to these stocks. As the export sectorappears expensive, the fund will retain its present stance.


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Outperformance-0.59%-4.24%1.12%-2.21%4.35%6.39%1.75%

Year 2006Year 2005Year 2004Year 2003Year 2002Year 2001Year 2000

Fund10.74%7.83%

11.89%28.76%-20.07%-6.07%-8.10%

Benchmark11.33%12.07%10.77%30.97%-24.42%-12.46%-9.85%

* Calculation of fund performance starts from 1 Feb 1999.

Feb

-99

Jul-

99

Feb

-00

Jul-

00

Feb

-01

Jul-

01

Feb

-02

Jul-

02

Feb

-03

Jul-

03

Feb

-04

Jul-

04

Feb

-05

Jul-

05

Feb

-06

Jul-

06

Dec

-06

At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Global Equity Fund 10.74%MSCI World Free Index 11.33%

Net Investment Return (since launch of fund)Actual PruLink Global Equity Fund 30.11%MSCI World Free Index 27.30%

Risk ClassificationBoardly Diversified - Higher Risk



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FUND OBJECTIVE

The PruLink Global Bond Fund aims to maximise total return through investment in a diversifiedportfolio of debt securities denominated in any currency. While the manager has power tohedge currency risk, the Fund will seek to invest primarily in securities so as to give exposureto major developed market currencies.

FUND PERFORMANCE

PruLink Global Bond FundThe PruLink Global Bond Fund fell 2.54%7 in 2006, which was behind its Citigroup WorldGovernment Bond benchmark’s loss of 2.08% in Singapore dollar terms. Since its February1999 inception, the PruLink Global Bond Fund achieved a cumulative return of 27.99%; itsbenchmark rose 32.22%, representing a 4.23% underperformance. The Fund’s bid and offerprices as at 31 December 2005 were $1.21593 and $1.27992 respectively.

The Citigroup World Government Bond Index finished the review period marginally higherin US dollar terms, following a volatile year. A weak US dollar however, translated into adecline of 2.08% for the Fund’s benchmark in Singapore dollar terms. The Fund’sunderperformance for the year was due mainly to its strategy of overweighting Europeanbonds. Despite a fall in oil prices which reduced headline inflation, the continued strengthof economic growth in the UK and Europe unsettled bonds in those countries. The Bank ofEngland and the European Central Bank raised interest rates to offset pressures on coreinflation which remained above their target levels. On a positive note, overweight US Treasuriesin the second half of the year added value. In securities selection, the Fund’s bond picks inthe UK detracted value although they were more than mitigated by its strong US bond selectionas the Fund was short duration in the first half of the year, which worked well as bond yieldsrose sharply over the May to June period.

Looking forward, bond markets in Europe and Japan could be subject to disappointment ifinterest rates rise more than expected. The US bond market appeared fairly valued at thestart of 2007, although one should bear in mind that the US Federal Reserve Board has notconclusively rejected the option of rising rates should the need arise. Overall, Prudentialbelieves that the global economic background and valuations remain supportive of equities,which continue to offer better value than bonds. However, we do see some value in longdated US bonds. Japanese government bonds will likely come under further downwardpressure as the Bank of Japan edges its way towards interest rates rises.




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At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Global Bond Fund -2.54%Salomon World Government Bond Index -2.08%

Net Investment Return (since launch of fund)Actual PruLink Global Bond Fund 27.99%Salomon World Government Bond Index 32.22%

Risk ClassificationBroadly Diversified - Low to Medium Risk


Outperformance-0.46%0.42%-0.51%-0.03%-0.72%0.07%-0.95%


Fund-2.54%-4.72%5.55%

12.48%11.53%5.55%3.72%

Benchmark-2.08%-5.14%6.06%12.51%12.25%5.48%4.67%


Feb

-99

Jul-

99

Feb

-00

Jul-

00

Feb

-01

Jul-

01

Feb

-02

Jul-

02

Feb

-03

Jul-

03

Feb

-04

Jul-

04

Feb

-05

Jul-

05

Feb

-06

Jul-

06

Dec

-06


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FUND OBJECTIVE

The PruLink Global Managed Fund aims to maximise total return in the medium to long termby investing primarily in a portfolio comprising of equities and equity-related securities ofcompanies listed or to be listed on global stock exchanges, and in a diversified portfolio ofdebt securities denominated in any currency.

FUND PERFORMANCE

PruLink Global Managed FundThe PruLink Global Managed Fund rose 4.46%8 over the twelve month review period, whichwas marginally below its benchmark’s 4.54%9 rise. Since its February 1999 inception, thePruLink Global Managed Fund has returned a cumulative 32.71%, which marginally outperformedits benchmark’s 31.83% gain. The Fund’s bid and offer prices as at 31 December 2006 were$1.24751 and $1.31316 respectively.

Being overweight equities and underweight bonds was a major boost to the Fund over thereview period. Within equities, fund allocation between markets was good, with the majordrag being Japan’s market-weighted exposure (which not only underperformed but alsodragged on performance as investors chased highly valued, exporting stocks to which theFund has limited exposure). Being overweight both Europe and Asia (which outperformedthe world index) and underweight the US (which underperformed), worked in the Fund’sfavour. Although there were pockets of good stock selection, notably in North America (whichbenefited as investors swung back to “old world” value stocks), benefits from good stockselection elsewhere were less pronounced. European equities had a good year, with themarket rising significantly, but selected stocks tended to move in line with the market (withnotable exceptions). In Asia, stock selection was a drag as the Fund was underweight theexpensive Hong Kong listed China companies that surged during the second half. Althoughunderweighting bonds benefited the Fund, as did a second half year overweighting of USTreasuries, overweighting European bonds detracted more than those gains. Individual UKbond picks detracted value, although this was more than offset by strong US bond selection.

Looking forward, no immediate change to the overall fund tilts is envisaged. Within equities,the North American Sub-Fund’s largest overweights remain the consumer discretionary andfinancials sectors. The European arm continues to look for large cap value stocks with strongbalance sheets as the fund manager feels that the market is not sufficiently discounting futurefinancial or liquidity risks. Within Asia, the Fund believes that while regional valuationsdiscount much of the good news, equity returns will still reflect underlying earnings growth(provided the investment environment remains benign). In Japan, the fund is investing indomestic value stocks despite the cheap yen (thus risking some short-term underperformance


8 Performance computed based on bid to bid prices and net of management fees.9 50% MSCI World Free Index and 50% Citigroup World Government Bond Index


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17

should investors continue chasing already expensive exporting stocks). European and Japanesebonds could suffer disappointment should interest rates rise by more than expected. The USbond market appears fairly valued, although one should bear in mind that the US FederalReserve Board has not conclusively rejected the option of rising rates again should the needarise. Overall, Prudential believes that both global economic background and valuationsremain supportive of equities, which offer better value than bonds (although we see somevalue in long dated US bonds). Japanese government bonds will likely come under furtherdownward pressure as the Bank of Japan edges its way towards rate rises.


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Outperformance-0.08%-0.29%0.76%-0.26%1.07%3.47%0.76%


Fund4.46%1.82%8.76%19.16%-3.93%-0.32%-2.61%

Benchmark4.54%2.11%8.00%19.42%-5.00%-3.79%-3.37%


Feb

-99

Jul-

99

Feb

-00

Jul-

00

Feb

-01

Jul-

01

Feb

-02

Jul-

02

Feb

-03

Jul-

03

Feb

-04

Jul-

04

Feb

-05

Jul-

05

Feb

-06

Jul-

06

Dec

-06

At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Global Managed Fund 4.46%50% MSCI World Free Index + 50% Salomon World Government Bond Index 4.54%

Net Investment Return (since launch of fund)Actual PruLink Global Managed Fund 32.71%50% MSCI World Free Index + 50% Salomon World Government Bond Index 31.83%

Risk ClassificationBroadly Diversified - Medium to High Risk



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FUND OBJECTIVE

The investment objective of the PruLink Global Technology Fund is to maximise long-termreturns through investment in equities and equity-related securities of companies around theworld with innovative products, processes or services. These investments include, but are notrestricted to, those companies whose provision or use of technology gives them a strategicadvantage in the market.

FUND PERFORMANCE

PruLink Global Technology FundThe PruLink Global Technology Fund fell 2.00%10 while its FTSE World Info Tech benchmarkrose 2.88% over the review period. Since its 4 May 2001 inception, the Fund has fallen 35.93%.In comparison, its benchmark has declined 27.38% over the same period. The Fund’s bid andoffer prices as at 31 December 2006 were $0.60869 and $0.64072 respectively.

After a shaky start to the year, shares in technology companies posted healthy gains. Confidencerose steadily against a backdrop of favourable earnings growth, healthy balance sheets andtakeover activity.

The 10 largest constituents of the technology index outperformed from August onwards.This can be explained by a bounce-back following a period of relative underperformance andgeneralist fund managers increasing their exposure to technology stocks mainly throughbuying larger companies. The Fund remains happy with its bias towards medium and smallersized companies, believing that this area offers a greater number of undervalued companiesthat can grow profits through innovation.

Exposure to poorly performing online gaming stock Sportingbet was a significant dragon return. The arrest of Sportingbet’s chief executive at a US airport sent the company’sshare price lower. At September end, the company received a further blow when the USSenate passed a bill curbing internet gaming. Despite this setback, the manager continuesto hold Sportingbet believing that investors’ worries are exaggerated. A holding inChinese water treatment company Bio-Treat Technology also dampened performancewhen the share price fell approximately 30% following an August profit warning. Aftervisiting the company in November, the manager believes Bio-Treat Technology hasattractive growth prospects.

The Fund benefited from a consolidation in the technology sector through its positions inFreescale Semiconductor, Radstone Technology and ATI Technologies as all three companiesaccepted takeover bids. Rumours that chip giant Intel was preparing to bid for graphicsdeveloper Nividia Corp sent shares in the latter soaring. A holding in Greek betting company



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Intralot also benefited the fund. The business won a contract to run South Africa’s nationallottery and is preparing to bid for the British lottery licence.

Holdings in Freescale Semiconductor, Radstone Technology and ATI Technologies were closedfollowing their respective takeover bids. The Fund exited France Telecom, SCI Entertainmentand Neteller where prospects no longer looked attractive. The proceeds funded new positionsincluding biotechnology firms Martek Biosciences and Myriad Genetics. Martek Biosciencesproduces nutritional supplements and food ingredients. The manager believes that itspartnerships with leading food manufacturers Kellogg’s and General Mills offer tremendousgrowth opportunities. Myriad Genetics, which makes therapeutic and diagnostic products, isan attractively valued firm with a strong product pipeline.


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May

-01

No

v-01

May

-02

No

v-02

May

-03

No

v-03

May

-04

No

v-04

May

-05

No

v-05

May

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No

v-06

At a Glance


Launch Date 1 Apr 2001


Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Global Technology Fund -2.00%FTSE World IT Index 2.88%

Net Investment Return (since launch of fund)Actual PruLink Global Technology Fund -35.93%FTSE World IT Index -27.38%



Outperformance-4.88%11.93%3.76%-2.15%-10.98%

Year 2006Year 2005Year 2004Year 2003Year 2002

Fund-2.00%20.98%2.12%

43.64%-54.07%

Benchmark2.88%9.05%-1.64%45.79%-43.09%

21

* Calculation of fund performance starts from 4 May 2001.


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22


FUND OBJECTIVE

The investment objective of the PruLink Pan European Fund is to maximise long-term totalreturn by investing in equity and equity-related securities, which are incorporated, or havetheir area of primary activity, in Europe (including United Kingdom). The fund may also investin depository receipts [including American Depository Receipts (ADRs) and Global DepositoryReceipts (GDRs)], debt securities convertible into common shares, preference shares andwarrants.

FUND PERFORMANCE

PruLink Pan European FundThe Fund rose 26.45%11 over the review period, outperforming its FTSE World Europe (includingUK) benchmark’s 24.28% gain. Since its 4 May 2001 inception, the PruLink Pan European Fundhas returned a cumulative 40.64%. The bid and offer prices of the Fund, as at 31 December,2006, were $1.33608 and $1.40640 respectively.

European equities raced ahead in 2006 against a backdrop of buoyant takeover activity andsolid earnings growth. Although May’s volatility and worries briefly halted the rally, investorssoon regained their nerve. Taking heart from a flurry of takeover activity, improving economicdata from Europe’s biggest economies and easing inflationary pressures, investors’ appetitefor risk strengthened. This renewed bout of confidence was accompanied by a shift into cyclicalsectors in the December quarter.

Leading 2006’s contributors was Vallourec, a French manufacturer of tubes for oil companies.Shares in the company benefited from high energy prices and healthy spending on servicesby the oil industry’s major players. The Fund’s position in Dutch employment agency USGPeople also had a positive contribution. The integration of Solvus, an employment businessacquired by USG People in 2005, has gone smoothly and boosted earnings. An improvedeconomic outlook and falling unemployment, in particular Germany, also aided the company’sshare price. Shares in Irish drinks manufacturer and distributor C&C Group rallied, as thecompany’s UK roll-out of Magner’s Cider proved to be hugely successful with sales beatingexpectations. Sentiment was boosted also by strong third quarter profits.

In contrast, online gambling operator Sportingbet dragged on performance as the arrest ofSportingbet’s chief executive at a US airport sent the company’s share price lower. At the endof September, Sportingbet was delivered a further blow as the US Senate passed a bill curbinginternet gaming. The fund manager opted to close this position. Further sales included Germanautomotive and defence conglomerate Rheinmetall and National Bank of Greece. Shares inDusseldorf-based Rheinmetall gained nearly 60% over the two years to September 2006 thanksto restructuring efforts. The fund manager took profits. A holding in National Bank of Greece



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was closed due to concerns about increasing pressure on margins and the integration ofTurkish bank Finansbank.

New positions were established in German metal distributor Kloeckner and FLSmidth, a leadingsupplier of cement technology. The fund manager believes Kloeckner is a well-run companythat should benefit from restructuring, while FLSmidth is rapidly expanding its presence infast-growing developing markets, including Latin America and India. The Fund consolidatedits exposure to financials by moving assets out of smaller banks into larger and more stablebusinesses. This included selling holdings in Marfin Financial and initiating holdings in Swissfinancial services groups UBS and Credit Suisse.


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-01

No

v-01

May

-02

No

v-02

May

-03

No

v-03

May

-04

No

v-04

May

-05

No

v-05

May

-06

No

v-06

24

At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Pan European Fund 26.45%FTSE Eurotop 300 Index 24.28%(Since inception to 16 Mar 2005)/FTSE World Europe (incl UK) Index (Since 17 Mar 2005).

Net Investment Return (since launch of fund)Actual PruLink Pan European Fund 40.64%FTSE Eurotop 300 Index 53.11%(Since inception to 16 Mar 2005)/FTSE World Europe (incl UK) Index (Since 17 Mar 2005).



Outperformance2.17%-2.16%3.12%-6.74%-3.33%

Year 2006Year 2005Year 2004Year 2003Year 2002

Fund26.45%10.56%19.11%29.00%-26.13%

Benchmark24.28%12.72%15.99%35.74%-22.80%



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FUND OBJECTIVE

The investment objective of the PruLink Protected Global Titans Fund is to achieve long-termcapital growth by gaining exposure to top global multinational companies through the DowJones Global Titans 50 IndexSM while at the same time providing protection against the bidprice of the Fund falling below the floor level of 95% of its bid price as at the start of eachfloor period, such period to be more than 12 months but less than 13 months.

FUND PERFORMANCE

PruLink Protected Global Titans FundThe PruLink Protected Global Titans Fund (S$) gained 8.69%12 over the twelve months reviewperiod, outperforming its CPF Ordinary Account interest rate benchmark, which yielded 2.50%.Since its 18 January 2002 inception, the Fund has posted a gain of 9.02%. The bid and offerprices of the Fund as at 31 December, 2006 were $1.09018 and $1.14755 respectively.

The year started well with equities surging. Investors focused on growth markets, despitefears that rising oil prices and higher US interest rates could impede global economic growth. Sentiment reversed sharply in May, as these inflation and growth fears intensified. By endJuly, investors decided that not only were these fears unfounded but also that growth remainedfirmly intact. With optimism being boosted by a growing belief that the US Federal ReserveBoard had all but ended its rate hikes and peaking oil prices, equity markets resumed theirsustained rallies.

Against this background, the Dow Jones Global Titans 50 Index performed significantly betterthan it had over the preceding three years when the larger “old world” stocks (that comprisethe Global Titans Index) lagged. The 2006 May sell-off resulted in investors taking a secondlook at larger companies – and they apparently liked what they saw. Although the emergingmarkets again led the second half 2006 charge, there was a far wider degree of investordiscrimination not evident earlier. Investors returned to the larger stocks, such that the GlobalTitans Index rallied over 17% from its July low, just behind the world index.

The Fund participated in the upside in the Dow Jones Global Titans 50 IndexSM via acontract on the index. The outperformance reflected the rally in this index despite theMay sell-off.

The equity market outlook appears encouraging for 2007. Although Prudential does notanticipate a repeat of the gains seen in 2006, the omens are encouraging. The US economy isheading for the “soft” economic landing long forecast, Japan’s equity market rally seems poisedto resume as valuations retreat to “value territory” (following 2005’s exuberance), and theEurozone’s economic recovery keeps being extended as better economic data emerges. Against


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26

this background, the relative attractiveness of the larger stocks to be found in the Global TitansIndex is increasingly attractive as emerging market valuations creep inexorably higher.

There remain several areas that could create trouble. The much-softer oil prices seen in early2007 may not continue. Stronger US growth has raised the possibility that the US FederalReserve Board could raise interest rates again despite expectations to the contrary. Overall,the outlook remains encouraging. With investors recognising the attractions of larger globalcompanies, the Fund starts 2007 in a better position than it has for several years.


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27

At a Glance


Launch Date 16 Jan 2002


Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Protected Global Titans Fund 8.69%CPF- Ordinary Account Interest Rate 2.50%

Net Investment Return (since launch of fund)Actual PruLink Protected Global Titans Fund 9.02%CPF- Ordinary Account Interest Rate 12.95%

Risk ClassificationBroadly Diversified - Low to Medium Risk


Outperformance6.19%-4.17%1.13%0.46%

Year 2006Year 2005Year 2004Year 2003

Fund8.69%-1.67%3.63%2.96%

Benchmark2.50%2.50%2.50%2.50%

* Calculation of fund performance starts from 18 Jan 2002.

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Jan

-07


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FUND OBJECTIVE

The PruLink Asian Reach Managed Fund aims to maximise total return in the medium- tolong-term by investing primarily in a portfolio comprising equities and equity-related securitiesof companies which are incorporated, or have their area of primary activity, in securities ofcompanies which are incorporated, or have their area of primarily activity, in Asia Pacific ex-Japan, and quality corporate bonds and other fixed income/debt securities denominated inUS dollar, issued in the US market (including “Yankee” and “Global” bonds).

FUND PERFORMANCE

PruLink Asian Reach Managed FundThe Fund rose 8.26%13 over the review period, which was marginally lower than its compositebenchmark’s 8.56% gain. Since its inception on 24 February 2003, the Fund has achieved acumulative return of 63.93%, outperforming its benchmark’s 62.11% gain. As at 31 December2006, the Fund’s bid and offer prices were $1.55733 and $1.63929 respectively.

Asia’s equity markets posted double-digit gains for the fourth consecutive year. China ledfuelled by rising domestic liquidity and hopes that taxes on domestic businesses will be cut.Thailand’s stock market fell sharply in December because of political jitters and the centralbank’s on-again, off-again move to impose capital controls. Despite this, the Thai market roseover 11.5% over the year. US corporate bonds rallied over much of 2006 on the same supportivefundamentals. A low level of corporate bond supply led to tighter credit spreads.

Good asset allocation was the year’s top performance contributor. Being overweight Asianequities, underweight both high investment grade US corporate bonds and investment gradeUS bonds, worked in the Fund’s favour. Within the Asian sub-Fund, being underweight China(which outperformed) and overweight Thailand (which underperformed) created performancedrags, although the China stocks held contributed strongly. Taiwan stock selection was good.These contributions were insufficient to prevent stock selection elsewhere from being overallmajor performance drags.

The Fund bought shares in the Industrial and Commercial Bank of China. The bank has China’smost extensive banking distribution network giving it cheap capital and a large exposure tocorporate customers. The Fund raised its stake in Cheung Kong Holdings, whose large exposureto Hong Kong residential property is benefiting from an expanding economy and the taperingoff of interest rate rises. The position Hong Kong Electric was closed as the manager believesthat the stock had not fully discounted a likely trimming of the rate of return on assets thatthe Hong Kong government allows regulated electric utilities.


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29

Both bond Sub-Funds maintained their risk positions in structured products, areas, we believe,that will add to risk-adjusted returns versus lower rated corporate bonds. The overweight infinancials was increased as a means of avoiding the leveraging corporate activity occurring inthe industrials. We also chose to go down the capital structure for financial names we like, asa means of adding yield to the fund. We anticipate this being a core strategy throughout 2007.

Prudential believes that domestic investment and consumption within ex-Japan Asia willremain healthy even if exports are pinched by a global economic slowdown. Equity valuationsseem generally fair, but some stocks in China and India have moved into expensive territory.Technical factors continue to dominate the US bond market. While corporate profitabilityand growth remain intact, low risk premia and rich valuations suggest that a higher qualityportfolio will benefit over the coming 12 months.


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At a Glance


Launch Date 13 Jan 2003


Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Asian Reach Managed Fund 8.26%50% MSCI AC Far East Fr ex Japan Index; 30% Merrill Lynch US Corporates, 8.56%A2 Rated and Above; 20% Merrill Lynch US Corporates BBB3-A3 Rated

Net Investment Return (since launch of fund)Actual PruLink Asian Reach Managed Fund 63.93%50% MSCI AC Far East Fr ex Japan Index; 30% Merrill Lynch US Corporates, 62.11%A2 Rated and Above; 20% Merrill Lynch US Corporates BBB3-A3 Rated

Risk ClassificationNarrowly Focused - Medium to High Risk


Outperformance-0.30%-0.53%0.23%

Year 2006Year 2005Year 2004

Fund8.26%

13.54%7.52%

Benchmark8.56%14.07%7.29%


Feb

-03

Au

g-0

3

Feb

-04

Au

g-0

4

Feb

-05

Au

g-0

5

Feb

-06

Au

g-0

6

Dec

-06


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31



FUND OBJECTIVE

The investment objective of the PruLink China-India Fund is to maximise long-term total returnby investing primarily in equity and equity-related instruments of corporations, which areincorporated in, or listed in, or operating principally from, or carrying on significant businessin, or derive substantial revenue from, or whose subsidiaries, related or associated corporationsderive substantial revenue from, the People’s Republic of China (PRC) and the Republic ofIndia (India).

FUND PERFORMANCE

PruLink China-India FundThe PruLink China-India Fund rose 37.53%14 for the twelve month review period, trailing itsbenchmark comprising 50% MSCI China Index and 50% MSCI India Index, which gained54.49%. Since its 3 August 2004 inception, the PruLink China-India Fund has risen 92.38%while its benchmark has risen 139.98%. As at 31 December 2006, the bid and offer prices ofthe Fund were $1.82760 and $1.92378 respectively.

Both equity markets rose significantly in 2006, being supported by: healthy investor sentiment,demand for emerging market shares and a positive view of the longer term economic growthoutlook for each economy. Each market’s ascent was interrupted by the May correction(especially front runner India), but thereafter both experienced constant and sustained rallies(especially China).

Fund market allocation contributed positively to relative performance. The fund remainedoverweight China until November, when sustained market strength prompted a move towardsa slight underweighting against the benchmark. The fund remained underweight the Indianmarket throughout 2006, as market strength rendered good-value stocks increasingly rare.This underweight narrowed slightly in the second half, after May’s correction provided abuying opportunity.

A key performance drag was the fund’s cash position. The fund had maintained a substantialcash holding in early 2006, as valuations looked increasingly expensive. This cash position wasreduced when May’s correction presented a buying opportunity. The fund’s relative performancealso suffered as a result of stock selection in China. Much of the rally in Chinese equitiesoccurred in the financial sector - a sector in which the fund has been underweight given verydemanding valuations. The December rally pushed valuations even higher; the fund remainsunderweight here.


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The predominant investment “themes” included a move away from richly valued sectors, anda move away from small caps in favour of large caps. The fund established 29 new positionsover the year. In China, positions were established in property developers Agile Property,Kowloon Development, Shimao Property and Shui On Land Ltd. This property theme wasaugmented by the addition of India’s Unitech and Mahindra Gesco. The fund participated inthe world’s largest IPO to date (Industrial and Commercial Bank of China), and also establisheda large position in India’s Reliance Industries.

The fund liquidated 25 holdings, mainly in China, as valuations soared. It took profits in PingAn Insurance and China Construction Bank, among others. In India, it sold several holdingsin the financial sector, including Jammu and Kashmir Bank, and the Industrial DevelopmentBank of India.

Prudential considers both markets to be highly valued at the aggregate level. We neverthelessbelieve that a compelling investment case can be made for each market given their longer-term structural growth stories. The key remains the ability to identify value on a stock-by-stock basis.


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At a Glance


Launch Date 21 Jun 2004


Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink China-India Fund 37.53%50% MSCI China Index and 50% MSCI India Index 54.49%

Net Investment Return (since launch of fund)Actual PruLink China-India Fund 92.38%50% MSCI China Index and 50% MSCI India Index 139.98%



Outperformance-16.96%-8.39%

Year 2006Year 2005

Fund37.53%22.94%

Benchmark54.49%31.33%

* Calculation of fund performance starts from 3 Aug 2004.

Au

g-0

4

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Dec

-06


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34

FUND OBJECTIVE

The investment objective of the PruLink Emerging Markets Fund is to seek long-termcapital growth by investing mainly in equity securities of emerging market companies, orthose companies which derive a significant proportion of their revenues or profits fromemerging economies.

FUND PERFORMANCE

The Prulink Emerging Markets Fund returned 16.83% in 2006, and the benchmark MSCIEM (Emerging Markets) Index returned 22.34% over the same period. Since its May 2005inception, the Fund returned 41.70%, compared to its benchmark, which returned 60.28%.As at 31 December 2006, the Fund’s bid and offer prices were $1.34616 and $1.41701respectively.

Emerging markets recorded strong performances in the final quarter of 2006, leading theasset class to end 2006 at a historical high. Lower risk premiums, a robust macroeconomicenvironment, significant fund inflows and new equities issuances continued to attractdomestic and foreign investors to emerging markets. Latin American markets were the topperformers during the period as key countries such as Brazil, Mexico and Argentina continuedto report good economic growth, improve their fiscal positions and benefit from healthyexport demand. Stronger local currencies led Eastern European markets such as the CzechRepublic, Hungary, Poland and Turkey to record higher gains in US$ terms. Similarly, SouthAfrican returns also benefited from a weaker US dollar. In Asia, investors remained drawnto China’s growth story with the MSCI China jumping 35.9% in US$ terms. Elsewhere in theregion, the imposition of capital controls and almost immediate reversal of policies to excludethe equity market coupled with the military coup earlier in September led to the Thai marketto underperform its regional peers.

Expectations of a soft landing in the US economy, a pause in US interest rate hikes andan improved global environment should support emerging markets. The correction in oilprices in the last few months has impacted oil-exporting markets such as Russia and Mexico.However, we expect oil prices to remain firm because of geopolitical and bottleneckproblems. The role of emerging markets in the global economy has grown significantlyin recent years and we expect this trend to continue in the future. While companies haverecorded significant price appreciation, corporate earnings have also increased allowingvaluations to remain attractive. The opportunities are plentiful with strong fundamentalssupporting the long-term uptrend of these markets. Moreover, many companies areexperiencing strong growth and there are many upcoming IPOs in markets such as Chinaand Russia which warrant attention.



Composite

May

-05

Sep

-05

Feb

-06

Jul-

06

Dec

-06

35

At a Glance


Launch Date 19 April 2005


Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Emerging Markets Fund 16.83%MSCI EM (Emerging Markets) Index 22.34%

Net Investment Return (since launch of fund)Actual PruLink Emerging Markets Fund 41.70%MSCI EM (Emerging Markets) Index 60.28%

Risk ClassificationNarrowly Focused; Higher Risk




Year 2006Year 2005

Fund16.83%21.28%


Benchmark

Prulink Emerging Market Fund


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36

FUND OBJECTIVE

The investment objective of the PruLink America Fund is to invest principally in US equitysecurities. Currently, the fund aims to produce capital growth by investing in a diversifiedportfolio of primarily US companies. The fund is broadly diversified by company size andindustry sector.

FUND PERFORMANCE

The Prulink America Fund returned -1.41% in 2006, and the benchmark S&P 500 returned6.85% over the same period. Since its May 2005 inception, the Fund returned 6.14%,compared to its benchmark, which returned 13.19%. As at 31 December 2006, the Fund’sbid and offer prices were $1.00830 and $1.06136 respectively.

US stock returns got off to a fast start in the beginning of 2006, with broad based gainsacross categories. Up until May, the stocks of industries benefiting from the globalindustrial boom continued to rally. This included stocks in the energy, metals, mining,construction and machinery. The second quarter of 2006 proved volatile for US equitiesas concerns intensified regarding inflationary pressures and the Federal Reserve. Themarket changed direction in the second half of the year. The S&P 500 Index reached itshighest level in six years and the Dow Jones Industrial Average touched a record all-timehigh during the fourth quarter as investor confidence was bolstered by robust corporateearnings and a spate of M&A activity.

The Federal Open Market Committee maintained its benchmark Federal Funds rate at5.25%. The committee stated in December that while inflation risks remain, the economyis likely to grow at a “moderate pace” in the coming quarters.

The fund continues to be well-diversified, including companies offering steady growth atgood valuation levels, as well as others exhibiting higher growth at reasonable valuation.It also has some cyclical exposure, where the manager has high conviction in performance,regardless of the economic environment.



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At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink America Fund -1.41%Standard & Poor's 500 Index 6.85%

Net Investment Return (since launch of fund)Actual PruLink America Fun 6.14%Standard & Poor's 500 Index 13.19%

Risk ClassificationNarrowly Focused; Higher Risk



Outperformance-8.26%1.72%

Year 2006Year 2005

Fund-1.41%7.65%

Benchmark6.85%5.93%

May

-05

Sep

-05

Jan

-06

May

-06

Sep

-06

Dec

-06

Benchmark

Prulink America Fund


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38

FUND OBJECTIVE

The investment objective of the PruLink International Bond Fund is to invest in internationalmarkets to maximise performance measured in US Dollars. Currently, the fund aims toprovide an income together with the possibility of capital growth from an internationalportfolio of high-quality fixed interest securities including government bonds, Eurobonds,corporate bonds and those issued by supranational bodies.

FUND PERFORMANCE

The Prulink International Bond Fund returned -2.88% in 2006, and the benchmark LehmanBrothers Global Aggregate G5 ex-MBS Index returned -1.70% over the same period. Sinceits May 2005 inception, the Fund returned -6.74%, compared to its benchmark whichreturned -4.75%. As at 31 December 2006, the Fund’s bid and offer prices were $0.88596and $0.93258 respectively.

In the US, a buoyant outlook for growth and further increases in interest rates led bondmarkets lower over the first quarter. However, bond markets in the US weakened in thesecond quarter, as uncertainty about the direction of interest rates continued. The FederalReserve maintained its benchmark rate at 5.25%. Although core inflation remained aconcern, the committee expects the economy to grow at a “moderate pace”.

European bond markets continued to deteriorated over the first six month of 2006. Risingprices and an improving labour market led some investors to raise their forecasts forinterest rates. A fall in oil prices from record levels of $78.4 a barrel in July helped inflationstay below the European Central Bank’s target of 2.0% for a third month in November.Year-on-year consumer prices rose by 1.9%, versus 1.6% in October.

Japanese bonds weakened during the first half of 2006, amid expectations of monetarytightening. At its final policy meeting of 2006, the Bank of Japan maintained interestrates at 0.25%. In its latest monthly economic report, the bank downgraded its view ofpersonal consumption, raising doubts about when it will next raise interest rates.

At an aggregate level, the fund held a short term duration position. In Japan, the positionwas for a long duration, to enable it to take advantage of the steeper yield curve comparedwith the US and Europe. The steeper yield curve allows the fund to take advantage ofthe higher yielding securities in Japan, while eliminating the currency risk through theuse of currency hedges.



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39

At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink International Bond Fund -2.88%LB Glb Agg G5 ex-MBS Index -1.70%

Net Investment Return (since launch of fund)Actual PruLink International Bond Fund -6.74%LB Glb Agg G5 ex-MBS Index -4.75%

Risk ClassificationBroadly Diversified; Low to Medium Risk




Year 2006Year 2005

Fund-2.88%-3.97%

Benchmark-1.70%-3.10%

May

-05

Sep

-05

Jan

-06

May

-06

Sep

-06

Dec

-06

Benchmark

Prulink International Bond Fund


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FUND OBJECTIVE

The investment objective of the PruLink Adapt 2015 Fund is to maximise the Fund’s total valueat the end of the investment horizon, subject to limiting the downside risks. Beyond theinvestment horizon, it aims to balance the goals of capital stability and providing income.The investment horizon would centre around 2015.

FUND PERFORMANCE

PruLink Adapt 2015 FundThe PruLink Adapt 2015 Fund rose 11.22%15 for the year ending 31 December 2006, aheadof its composite benchmark’s gain of 11.18%16 gain. Since its May 2005 inception, the Fundhas achieved a cumulative return of 14.79%, which was behind the benchmark gain 16.88%,(which represents an underperformance of 2.10%). As at 31 December 2006, the Fund’s bidand offer prices were $1.09047 and $1.14786 respectively.

The Fund’s gains for the year were driven mainly by the strong global equity markets’performances. The MSCI World Index finished just shy of its high and was again challengingthe peak levels of 2000. In contrast, global bonds finished the review period marginally higherfollowing a volatile year. Against this backdrop, the Fund’s strategy to overweight equitiesrelative to bonds during the year was constructive. In particular, maintaining a higher exposureto the equity markets of Europe and Asia ex-Japan, as well as domestically, enabled the Fundto benefit from their improving economies. Additionally, the Fund’s domestic equity selectionalso added significantly to relative performance. However, global equities selection contributednegatively to performance. The US, Europe, Japan and Asia ex-Japan (albeit marginally) equitysub-funds underperformed their respective benchmarks. Although the global bond sub-fundalso underperformed its benchmark, the negative securities selection was more than offsetby our decision to fully hedge the foreign currency exposure, which added value.

Looking ahead, the Fund remains overweight equities relative to bonds. It is marginallyoverweight domestic equity. Although Singapore equity market’s valuation is no longerlooking cheap, we believe positive macro drives could provide re-rating potential. Withinglobal equities, Europe/UK is our top overweight markets in view of their attractive valuation,still strong corporate earnings and lower vulnerability to cyclical downturns. We are slightlyoverweight the US and Japan. Valuation of the former has improved and is now undemandingrelative to its history. Although Japan’s valuation is not cheap against its peers, it is attractiverelative to history and domestic interest rates. Moreover, corporate earnings growth andsustained structural economic improvements may surprise investors on the upside. Asianequities valuations are a shade higher than the historical averages but not particularly


15 Performance computed based on bid to bid prices and net of management fees.16 Composite benchmark comprising the MSCI Singapore Free Index, MSCI World Free Index, UOB SingaporeGovernment Bond Index (All), Return on 15-year Singapore Government Securities and Lehman Brothers’ GlobalAggregate Index (hedged to S$) from 1 January 2006 to 30 September 2006. With effect from 1 October 2006,the composite benchmark comprises the MSCI Singapore Free Index, MSCI Japan Index, FTSE World Europe Index,S&P 500 Index, MSCI AC Far East ex-Japan Index, UOB Singapore Government Bond Index (All), Return on 15-yearSingapore Government Securities and Lehman Brothers’ Global Aggregate Index (hedged to S$)


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demanding, and therefore our slight overweight stance in this market. Whilst we continueto prefer equities over bonds, based on their still-attractive medium-term valuation, we aremindful that several market indices have reached historic high levels, and attractive valuationscontinue to be eroded. Equity markets are increasingly vulnerable to inflation and interestrate shocks, as well as risk of waning investor risk appetite. Where appropriate, the Fund willlook to trim its overweight equity positions.


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At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Adapt 2015 Fund 11.22%Composite benchmark comprising the MSCI Singapore Free Index, MSCI Japan Index, 11.18%FTSE World Europe ex UK Index, S&P 500 Index, MSCI AC Far East ex Jpn Index,UOB Singapore Government Bond Index (All), Return on 15-year SingaporeGovernment Securities and Lehman Brothers' Global Aggregate Index (hedged to S$)

Net Investment Return (since launch of fund)Actual PruLink Adapt 2015 Fund 14.79%Composite benchmark comprising the MSCI Singapore Free Index, MSCI Japan Index, 16.88%FTSE World Europe ex UK Index, S&P 500 Index, MSCI AC Far East ex Jpn Index,UOB Singapore Government Bond Index (All), Return on 15-year SingaporeGovernment Securities and Lehman Brothers' Global Aggregate Index (hedged to S$)

Risk ClassificationBroadly Diversified; Medium to High Risk


Outperformance0.04%-1.68%

Year 2006Year 2005

Fund11.22%3.21%



May

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Sep

-05

Jan

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Jun

-06

Dec

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17 Performance computed based on bid to bid prices and net of management fees.18 Composite benchmark comprising the MSCI Singapore Free Index, MSCI World Free Index, UOB SingaporeGovernment Bond Index (All), Return on 15-year Singapore Government Securities and Lehman Brothers’ GlobalAggregate Index (hedged to S$) from 1 January 2006 to 30 September 2006. With effect from 1 October 2006,the composite benchmark comprises the MSCI Singapore Free Index, MSCI Japan Index, FTSE World Europe Index,S&P 500 Index, MSCI AC Far East ex-Japan Index, UOB Singapore Government Bond Index (All), Return on 15-yearSingapore Government Securities and Lehman Brothers’ Global Aggregate Index (hedged to S$)

FUND OBJECTIVE

The investment objective of the PruLink Adapt 2025 Fund is to maximise the Fund’s totalvalue at the end of the investment horizon, subject to limiting the downside risks. Beyondthe investment horizon, it aims to balance the goals of capital stability and provide income. The investment horizon centres around 2025.

FUND PERFORMANCE

PruLink Adapt 2025 FundThe PruLink Adapt 2025 Fund rose 12.43%17 for the year ending 31 December 2006,underperforming its composite benchmark’s18 rise of 12.95%. Since its May 2005 inception,the Fund has achieved a cumulative return of 18.96%, which was behind the benchmark gainof 21.90%, (which represents an underperformance of 2.94%). As at 31 December 2006, theFund’s bid and offer prices were $1.13014 and $1.18962 respectively.

The Fund’s gains for the year were driven mainly by the strong global equity markets’performances. The MSCI World Index finished just shy of its high and was again challengingthe peak levels of 2000. In contrast, global bonds finished the review period marginally higherfollowing a volatile year. Against this backdrop, the Fund’s strategy to overweight equitiesrelative to bonds during the year was constructive. In particular, maintaining a higher exposureto the equity markets of Europe and Asia ex-Japan, as well as domestically, enabled the Fundto benefit from their improving economies. The Fund’s underperformance compared to itsbenchmark was due largely to security selection. Although Singapore equity selection addedsignificantly to relative performance, the overall performance was hindered by the negativeglobal stock picks. The US, Europe, Japan and Asia ex-Japan (albeit marginally) equity sub-funds, all underperformed their respective benchmarks. Although the global bond sub-fundalso underperformed its benchmark, the negative securities selection was more than offsetby our decision to fully hedge the foreign currency exposure, which added value.

Looking ahead, the Fund remains overweight equities relative to bonds. It is marginallyoverweight domestic equity. Although Singapore equity market’s valuation is no longerlooking cheap, we believe positive macro drives could provide re-rating potential. Withinglobal equities, Europe/UK is our top overweight markets in view of their attractive valuation,still strong corporate earnings and lower vulnerability to cyclical downturns. We are slightlyoverweight the US and Japan. Valuation of the former has improved and is now undemandingrelative to its history. Although Japan’s valuation is not cheap against to its peers, it is attractiverelative to history and domestic interest rates. Moreover, corporate earnings growth andsustained structural economic improvements may surprise investors on the upside. Asianequities valuations are a shade higher than the historical averages but not particularly


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At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Adapt 2025 Fund 12.43%Composite benchmark comprising the MSCI Singapore Free Index, MSCI Japan Index, 12.95%FTSE World Europe ex UK Index, S&P 500 Index, MSCI AC Far East ex Jpn Index,UOB Singapore Government Bond Index (All), Return on 15-year SingaporeGovernmentSecurities and Lehman Brothers' Global Aggregate Index (hedged to S$)


Risk ClassificationBroadly Diversified; Medium to High Risk



Year 2006Year 2005

Fund12.43%5.81%



May

-05

Sep

-05

Jan

-06

May

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Au

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6

Dec

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19 Performance computed based on bid to bid prices and net of management fees.20 Composite benchmark comprising the MSCI Singapore Free Index, MSCI World Free Index, Return on 15-yearSingapore Government Securities and Lehman Brothers’ Global Aggregate Index (hedged to S$) from 1 January 2006to 30 September 2006. With effect from 1 October 2006, the composite benchmark comprises the MSCI SingaporeFree Index, MSCI Japan Index, FTSE World Europe Index, S&P 500 Index, MSCI AC Far East ex-Japan Index, Return on15-year Singapore Government Securities and Lehman Brothers’ Global Aggregate Index (hedged to S$)


FUND OBJECTIVE

The investment objective of the PruLink Adapt 2035 Fund is to maximise the Fund’s total valueat the end of the investment horizon, subject to limiting the downside risks. Beyond theinvestment horizon, it aims to balance the goals of capital stability and provide income. Theinvestment horizon centres around 2035.

FUND PERFORMANCE

PruLink Adapt 2035 FundThe PruLink Adapt 2035 Fund rose 12.75%19 for the year ending 31 December 2006,underperforming its composite benchmark’s20 rise of 13.68%. Since its May 2005 inception,the Fund has achieved a cumulative return of 21.08%, which was behind the benchmark gainof 24.44%. As at 31 December 2006, the Fund’s bid and offer prices were $1.15024 and$1.21077 respectively.

The Fund’s gains for the year were driven mainly by the strong global equity markets’performances. The MSCI World Index finished just shy of its high and was again challengingthe peak levels of 2000. In contrast, global bonds finished the review period marginally higherfollowing a volatile year. Against this backdrop, the Fund’s strategy to overweight equitiesrelative to bonds during the year was constructive. In particular, maintaining a higher exposureto the equity markets of Europe and Asia ex-Japan, as well as domestically, enabled the Fundto benefit from their improving economies. The Fund’s underperformance compared to itsbenchmark was due largely to security selection. Although Singapore equities selection addedsignificantly to relative performance, the overall performance was hindered by the negativeglobal stock picks. The US, Europe, Japan and Asia ex-Japan (albeit marginally) equity sub-funds, all underperformed their respective benchmarks. Although global bond sub-fund alsounderperformed its benchmark, the negative securities selection was more than offset by ourdecision to fully hedge the foreign currency exposure, which added value.

Looking ahead, the Fund remains overweight equities relative to bonds. It is marginallyoverweight domestic equity. Although Singapore equity market’s valuation is no longerlooking cheap, we believe positive macro drives could provide re-rating potential. Withinglobal equities, Europe/UK is our top overweight markets in view of their attractive valuation,still strong corporate earnings and lower vulnerability to cyclical downturns. We are slightlyoverweight the US and Japan. Valuation of the former has improved and is now undemandingrelative to its history. Although Japan’s valuation is not cheap against its peers, it is attractiverelative to history and domestic interest rates. Moreover, corporate earnings growth andsustained structural economic improvements may surprise investors on the upside. Asianequities valuations are a shade higher than the historical averages but not particularly


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At a Glance




Net Investment Return (for period under review - 31 Dec 2005 to 31 Dec 2006)Actual PruLink Adapt 2035 Fund 12.75%Composite benchmark comprising the MSCI Singapore Free Index, MSCI Japan Index, 13.68%FTSE World Europe ex UK Index, S&P 500 Index, MSCI AC Far East ex Jpn Index,UOB Singapore Government Bond Index (All), Return on 15-year SingaporeGovernment Securities and Lehman Brothers' Global Aggregate Index (hedged to S$)


Risk ClassificationBoardly Diversified - Higher Risk



Year 2006Year 2005

Fund12.75%7.38%



May

-05

Sep

-05

Jan

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May

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Sep

-06

Dec

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FUND OBJECTIVE

The investment objective of the PruLink Global Basics Fund is to invest wholly or mainly incompanies operating in basic industries (‘primary’and ‘secondary’ industries) and also in companiesthat service these industries. The PruLink Global Basics Fund may also invest in other globalequities. The sole aim of the PruLink Global Basics Fund is long term capital growth.

FUND PERFORMANCE

PruLink Global Basics FundThe PruLink Global Basics Fund ended 8.21%21 higher since its launch on 25th May 2006,underperforming its FTSE Global Basics Composite Index benchmark’s gain of 10.53%. TheFund’s bid and offer prices as at 31 December 2006 were S$1.02796 and S$1.08206 respectively.

May’s sell-off hurt the underlying Fund, the M&G Global Basics Fund, badly given its 50%weighting in commodity stocks. Although commodity stock prices have since bounced offtheir highs, the underlying Fund’s net asset value has risen steadily since its June low.

The top contributor to relative performance was UK mining group Lonmin. Mid-yeartakeover speculation and rising platinum prices boosted shares in both Lonmin and ImpalaPlatinum, another platinum mining group. Share prices received a further November boostwhen platinum prices reached a record high. Shares in Canadian mining group Falconbridge(the Fund’s second largest contributor) climbed on news that the company is to merge withUS mining giant Phelps Dodge. The Fund’s exposure to ‘soft’ commodities paid off. Inparticular, a holding in German potash producer K&S made a positive contribution. Demandfor fertilizer and potash products, especially from developing economies such as China andIndia, is rising.

Exposures to coal mining companies, Centennial Coal, Consol Energy and Peabody Energywere major drags on performance on lower oil and gas prices in the second half year. TheFund remains happy with its holdings in each company and believes that the long-termoutlook remains bright.

The fund manager sold holdings in Canadian diversified mining group First Quantum Mineralsand Australian mining giant BHP Billiton, believing the shares were overvalued. The latterhad made a significant contribution to performance since its 2005 purchase. Profits weretaken in French tire manufacturer Michelin, whose shares rose more than 50% during thesecond half year. The Fund took advantage of share price weakness in Peabody Energy andConsol Energy to boost holdings.

Newcomers included companies whose value is still relatively unrecognised including ScottsMiracle-Gro, a lawn and garden company, and Texas Industries, a US cement manufacturer.




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The former is expanding its presence in Europe. The latter will soon be California’s secondbiggest cement supplier. A position was initiated in Hong Kong & Shanghai Hotels, whichoperates luxury hotels in Asia and the US. The management team has a proven track recordin acquiring good sites, which lays the ground for growth.

The Fund believes that the outlook remains promising. The share prices of many commodityproviders have risen strongly over the past two years and some stocks in this area are lookingovervalued. This means investors need to be more selective. We believe that the outlook forraw materials - in particular coal and platinum - remains robust, supported by high demand.


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Outperformance-2.32%Year 2006

Fund8.21%

Benchmark10.53%


At a Glance




Net Investment Return (since launch of fund)Actual PruLink Global Basics Fund 8.21%FTSE Global Basics Composite 10.53%



May

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Jun

-06

Jul-

06

Au

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6

Sep

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Oct

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MARKET REVIEW & OUTLOOK

Singapore EquitiesThe MSCI Singapore Free Index rose nearly one-third over the review period, outperformingthe regional index (though lagging the exceptional rises seen in China, Indonesia and India).Nevertheless, it was a very good year for equities, and not only on performance grounds.Singapore, for example, saw a strong upward revision of both consensus earnings forecastsand economic growth as the stock market was re-rated higher. Strong economic growthreflected in an ongoing property market boom. All factors fuelled investor interest in equities.

Looking ahead, the economic fundamentals remain robust. Real GDP expanded nearly 6%year-on-year in the third quarter and is on track for 7.75% for the full year. Growth isexpected to ease to 4%-6% in 2007 in view of a US economic slowdown and weaker globaldemand for electronics. Inflation remains benign – consumer prices rose 0.5% in Novemberon the year – but may pick up in 2007 because the government plans to raise the goods andservices tax to 7% from 5%.

As a result of this buoyant situation, equities finished the year on a strong note, with themarket rallying led by property stocks such as Keppel Land, UOL Group and CapitaLand.Technology companies (including Creative Technology, Chartered Semiconductor and Venture)underperformed as the result of weak electronics output and exports. Reflecting thesustained 2006 rally, some valuations were becoming an issue (although not to the extentof some regional markets). By the end of the review period, Singapore equities were tradingat a market price/earnings multiple of 16 times the consensus earnings forecast for 2006.While we believe that the earnings yield remains attractive relative to domestic interestrates and should lend support to equities prices, individual stocks are appearing “rich”. Asa consequence, Prudential likes selected high-yield stocks such as Cambridge Industrial Trustand the Macquarie International Infrastructure Fund, in which we see stable recurringearnings and attractive dividend yields.

Looking forward, the outlook for Singapore equities remains encouraging. We like thebanks for which valuations seem cheap despite recent gains. There are also plenty of stocksavailable in which we see value (such as Jardine Cycle & Carriage that should benefit froma recovery of motor vehicle sales in Indonesia).

Although valuations generally seem attractive, Prudential will trim positions selectively whenstocks do exceedingly well. Into this category fall some of the property stocks, given theirsustained 2006 rallies.


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Regional Equities MarketsReturns in Singapore dollars for the period under review:

Stock Market (In SGD) Currencies (Agst SGD)MSCI Asia Pacific Ex-Japan +22.9%MSCI China Free +68.7% CNY +4.8%MSCI Hong Kong +20.3% HKD +8.7%MSCI India +39.3% INR +6.6%MSCI Indonesia +61.3% IDR -1.0%MSCI Korea +4.4% KRW -0.3%MSCI Malaysia +26.5% MYR +1.2%MSCI Philippines Free +47.3% PHP +0.2%MSCI Singapore Free +35.4% - -MSCI Taiwan +11.6% TWD +7.5%MSCI Thailand +3.0% THB -4.5%Source: Hiport

Asian stock markets ended 2006 on a strong note, outperforming the world’s developedmarkets yet again. The review period saw a major change in attitudes as the China relatedstocks moved convincingly ahead of the pack. The first five months of the review periodbegan with Asian equities rallying strongly. Both China and India had risen by one-third(or more) by early May. Indonesia was not far behind. But May’s resurgent growth andinflation fears resulted in markets globally falling sharply, with those emerging marketsdeemed most at risk (such as those in Asia) hurting most. Thereafter, investors differentiatedbetween markets more closely. China’s strong economic growth and resurgent IPO interest(coupled with India’s increasingly high valuations), focused attention on the China relatedstocks especially as China’s near-manic domestic “A” share market pushed Hong-Kong-listedequities of Chinese companies sharply higher. Indonesia, the Philippines and Singapore allmade lively gains. In contrast, Thailand (weighed by coup and capital control fears) andKorea (burdened by export growth fears) were notable underperformers.

Asia’s economic outlook remains strong. We expect domestic investment and consumptionto cushion any moderation of export growth. We view Asia’s undervalued currencies as notonly keeping export surpluses high but also boosting domestic liquidity, as regional centralbanks resist the pace of currency appreciation (albeit with limited success in some instances).This situation should support equity prices.

Valuations (with some exceptions) appear fair both in absolute terms and relative to theregion’s own history. Some stocks in China and India have moved into expensive territory.China’s insurance sector, for instance, seems to be the most expensive in the region.

Key risks are that profit margins are at cyclical highs and remain vulnerable. Consensusearnings forecasts for export-oriented companies have been declining and forecasts for thecommodity and energy sectors could be vulnerable in light of falling product prices. Thailand’s


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flirtation with capital controls (aimed at stemming the baht’s rise), highlights both thebroader issue of Asia’s strengthening currencies and the limits to which policymakers maybe driven in controlling the rate of ascent.

Equities should still rally into 2007 given the region’s strong macroeconomic fundamentals,the modestly-geared corporate balance sheets and strong liquidity. The medium-term casefor Asian stocks remains intact for much the same reasons, to wit: the strong economicbackdrop, reasonable forecast valuations and ample liquidity. As long as stocks do not “de-rate” and as long as the profit growth forecasts are met, we would be looking for high-single-digit returns in local-currency terms. Given our view of Asian currencies, this wouldtranslate into low-teen returns in US dollars. But all bets are off should risky assets be soldeither because of problems in the credit markets or “risk” events elsewhere.

Global EquitiesReturns in Singapore dollars for the period under review:

Stock Market (In SGD) Currencies (Agst SGD)MSCI AC World +12.1%MSCI North America +6.6% USD +8.4%MSCI UK +20.6% GBP +23.6%MSCI AC Europe +24.1% EUR -3.1%MSCI Japan -1.9% JPY 9.4%MSCI Asia Pacific ex-Japan +22.9% - -MSCI Australia +22.3% AUD +0.9%MSCI New Zealand +8.7% NZD +4.7%Source: Bloomberg

Global equities had another good year. The MSCI World index finished just shy of its highand was again challenging the peak levels of 2000. The rally that first began in May 2003continued strongly into the review period, although resurgent global growth and higherinflation fears resulted in a May sell-off – the largest seen since the rallies first started in2003. Equities strength was encouraging given the peaks to which oil prices had surged.Signals that the US Federal Reserve Board was all but finished with its interest rate hikestriggered a renewed bout of interest in equities generally with this interest gaining momentumtowards the end of the year as the US economy continued to show underlying strength.

Despite oft-stated economic growth fears, investors sought the higher risk, emerging markets.Earlier in the year, the emerging markets of Europe soared, being closely followed by thoseof Latin America. After the May sell-off, interest in these markets tempered as attentionswung towards Asia, especially China. Nevertheless, with the US showing increasing signsof being on target for an economic “soft landing”, interest in the emerging markets generallyagain surged during the December quarter.

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The post-May rally heralded another change. Hitherto, investors had ignored the “oldworld” larger capitalisation stocks, which had lagged. The situation changed during thesecond half, with larger stocks also participating in the rallies. This renewed interest inlarger stocks bodes well for markets such as Japan. This market also lagged throughout thereview period largely, Prudential believes, because investors were too optimistic in 2005towards Japan’s economic prospects. Valuations were driven to expensive levels such that2006 can be viewed as a year in which the market marked time as delivered earnings broughtvaluations back into the fair-to-expensive range. Japan’s recovery remains intact, Prudentialbelieves, although the economic data remains “cloudy”. For this reason, Prudential continuesto focus on the profits forecasts, which have remained broadly unchanged over the year.

Valuations globally are an issue. At the start of 2007, these were again at cyclical highs.The aggregate US valuation, in particular, remains above the world average. It is notablethat even as confidence in the US economy has grown, there has not been an across-the-board rise in US profits forecasts, yet.

The 2007 outlook remains encouraging for equities, although the year may be one ofconsolidation as the rallies of the past year are absorbed. Equities are valued at levels thatleave little room for disappointment. Nevertheless, Prudential remains overweight selectedequities.

Global Fixed IncomeReturns in Singapore dollars for the period under review:

Bond Market (in SGD) Currencies (Agst SGD)Citigroup World Government Bond Index -2.1%Citigroup US Government Bond Index -4.6% USD -7.7%Citigroup EMU Government Bond Index +2.8% Euro -3.1%Citigroup Japan Government Bond Index -8.3% JPY +9.4%Source: Bloomberg on a total return basis

The Citigroup World Government Bond Index finished 2006 marginally higher (when measuredin local currency terms), following a volatile year. Despite a strong second half rally, theindex could not break the downward trend in prices that began after bond prices peakedin early 2003. In Singapore dollar terms, the index fluctuated around a flat trend finishingjust above its April low. The difference between the two measures reflected Singaporedollar strength, which reduced the local currency return.

The review period began with bonds falling steadily. A continuing rise in US interest rates,growing inflation fears and investors focused on growth combined to undermine bondprices per se. The picture changed sharply after the May equity sell-off. With inflationarypressures seemingly under control, investors reasoned that the rise in US interest rates wasall but over and bought bonds.

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Greater confidence in the economic outlook globally resulted in investors moving down thecredit curve. Corporate bonds rallied strongly during the second half with higher risk bondsoutperforming. Within the US, the credit spread between high risk, high yielding “junk”bonds and government bonds again closed, but did not match the record lows achieved inearly 2005.

Despite the bond friendly environment, bonds ended the review period under pricingpressure. Despite a fall in oil prices which reduced headline inflation, the continued strengthof economic growth in the UK and Europe unsettled bonds in those countries. The Bank ofEngland and the European Central Bank raised interest rates to offset pressures on coreinflation which remained above their target levels. Although growth was weaker in the USand Japan and interest rates remained on hold, bond markets in these countries made littleprogress having already priced in expectations that growth would disappoint.

Looking forward, bond markets in Europe and Japan could be subject to disappointmentif interest rates rise more than expected. The US bond market appeared fairly valued at thestart of 2007, although one should bear in mind that the US Federal Reserve Board has notconclusively rejected the option of rising rates should the need arise. Overall, Prudentialbelieves that the global economic background and valuations remain supportive of equities,which continue to offer better value than bonds. We see some value in long dated USbonds. Japanese government bonds will likely come under further downward pressure asthe Bank of Japan edges its way towards interest rates rises.

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SCHEDULE OF INVESTMENTS

57

PRULINK SINGAPORE MANAGED FUND

Investments classified by CountryMarket Value % of Net

SGD AssetsAustralia 8,034,760 0.33Bermuda 24,284,950 0.99Cayman Islands 22,837,500 0.93France 6,224,250 0.25Germany 3,138,350 0.13Iceland 2,487,838 0.10Jersey 7,436,234 0.30Netherlands 6,067,650 0.25Singapore 2,268,210,497 92.25South Korea 493,700 0.02United Arab Emirates 6,755,987 0.27United Kingdom 5,855,005 0.24United States 42,414,100 1.72

Investments classified by IndustryMarket Value % of Net

SGD AssetsAirlines 88,278,960 3.59Banks 715,029,724 29.08Beverages 31,129,718 1.27Commercial Services 19,736,000 0.80Distribution & Wholesale 30,761,760 1.25Electronics 27,193,104 1.10Engineering & Construction 68,287,158 2.78Financial Services 138,728,015 5.64Food 18,378,652 0.75Healthcare Services 18,406,994 0.75Holding Companies 107,887,128 4.39Insurance 12,738,919 0.52Media 56,447,033 2.29Real Estate 347,338,448 14.13Semiconductors 30,270,450 1.23Shipbuilding 28,903,274 1.17Sovereign Government Obligations 313,893,082 12.77Telecommunications 221,390,636 9.00Textiles 12,778,470 0.52Transportation 65,798,597 2.68Others 50,864,699 2.07

Investments classified by Asset Class Market Value % of Net

SGD AssetsEquities 1,758,511,830 71.52Fixed Income Securities 645,123,991 26.24Investment Funds 605,000 0.02Cash & Equivalents 54,556,402 2.22



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Investments by Credit Rating of Debt Securities(by Moody's or equivalents) Market Value % of Net

SGD AssetsAaa 315,127,766 12.82Aa1 7,110,394 0.29Aa2 21,429,014 0.87Aa3 47,564,117 1.93A1 66,568,396 2.71A2 7,750,610 0.32A3 45,917,654 1.87Baa2 10,051,167 0.41Not rated 123,604,873 5.02

Top 10 Holdings as at 31 December 2006Market Value % of Net

SGD AssetsDBS Group Holdings Ltd 241,124,440 9.81Singapore Telecommunications Ltd 219,773,186 8.94United Overseas Bank Ltd 212,399,406 8.64Oversea-Chinese Banking Corporation Ltd 183,067,993 7.45Keppel Corporation Limited 94,327,728 3.84Singapore Airlines Ltd 88,278,960 3.59Capitaland Ltd 71,963,344 2.93Singapore Press Holdings Ltd 56,447,033 2.30City Developments 55,229,493 2.25Singapore Government Obligations 53,572,418 2.18


SGD AssetsDBS Group Holdings Ltd 190,463,180 9.50Singapore Telecommunications Ltd 178,587,788 8.91United Overseas Bank Ltd 168,329,576 8.40Oversea-Chinese Banking Corporation Ltd 167,319,529 8.35Singapore Airlines Ltd 73,352,349 3.66Singapore Press Holdings Ltd 68,690,604 3.43Keppel Corporation Limited 61,814,830 3.08City Developments 41,044,677 2.05Singapore Technologies Engineering Ltd 37,315,550 1.86Capitaland Ltd 35,280,609 1.76

Exposure to Derivatives Market Value % of Net

SGD Assets(i) Market value of derivatives Nil -

(ii) Net gain/(loss) on derivatives realised SGDForward Contracts 607,024

(iii) Net gain/(loss) on outstanding derivatives Nil


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Investments in Collective Investment SchemesPruLink Singapore Managed Fund invests SGD 605,000, equivalent to 0.02% of its net assetvalue, in Macarthurcook Property Securities Fund.

BorrowingsNot applicable

Total Subscriptions and Redemptions for the year ended 31 December 2006Subscriptions Redemptions

SGD 158,400,360 207,360,125

Related Party TransactionsFund management charge of 1% per annum paid to Prudential Assurance Company Singapore(Pte) Ltd.

Annualised Expense Ratio*2006: 1.01% 2005: 1.01%

*The expense ratio does not include (where applicable) charges for insurance coverage,brokerage and other transaction costs, performance fee, foreign exchange gains or losses,front or back-end loads arising from the purchase or sale of collective investment schemesand tax deducted at source or arising out of income received.

Turnover Ratio2006: 54.17% 2005: 37.47%

Any other material information that will adversely impact the valuation of the fundNil

Soft Dollar CommissionNot applicable


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SCHEDULE OF INVESTMENTS

60


PRULINK ASIAN EQUITY FUND


SGD AssetsBermuda 9,896,728 1.02Cayman Islands 20,805,705 2.15China 59,372,838 6.13Hong Kong 181,814,344 18.78India 8,581,025 0.89Indonesia 25,286,581 2.61Malaysia 33,503,296 3.46Philippines 7,294,649 0.75Singapore 91,098,047 9.41South Korea 227,951,870 23.54Taiwan 222,940,051 23.03Thailand 36,465,383 3.77United Kingdom 11,876,120 1.23United States 15,458,760 1.60


SGD AssetsAirlines 11,602,025 1.20Auto Manufactures 6,096,766 0.63Auto Parts & Equipment 8,774,700 0.91Banks 146,595,529 15.14Beverages 6,023,794 0.62Chemicals 12,372,549 1.28Coal 28,329,510 2.93Commercial Services 8,840,591 0.91Computers 43,393,613 4.48Electric Companies 21,171,886 2.19Electrical Equipments 17,803,167 1.84Electronics 59,870,686 6.18Engineering & Construction 8,763,287 0.91Financial Services 43,123,467 4.45Gas 4,810,863 0.50Holding Companies 31,890,255 3.29Insurance 40,673,079 4.20Internet 7,643,690 0.79Media 7,735,620 0.80Miscellaneous Machinery 12,004,242 1.24Multi Industry 48,523,932 5.01Real Estate 117,625,922 12.15Retail 22,138,652 2.29Semiconductors 126,514,226 13.07Telecommunications 88,093,610 9.10Textiles 4,964,080 0.51Transportation 5,602,760 0.58Others 11,362,896 1.17


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Investments classified by Asset ClassMarket Value % of Net

SGD AssetsEquities 952,345,397 98.36Cash & Equivalents 15,830,450 1.64

Investments by Credit Rating of Debt SecuritiesNot applicable


SGD AssetsSamsung Electronics Co Ltd 46,667,411 4.82Cheung Kong Holdings Ltd 33,837,556 3.49Kookmin Bank 27,547,934 2.85Taiwan Semiconductor Manufacturing 26,777,891 2.77Hana Financial Group 23,940,657 2.47City Developments 22,636,747 2.34Swire Pacific Ltd - A 21,320,772 2.20China Mobile Ltd 20,580,832 2.13China Petroleum Holdings 20,386,780 2.11Singapore Telecommunications Ltd 19,693,120 2.03


SGD AssetsSamsung Electronics Co Ltd 75,256,226 8.62Taiwan Semiconductor Manufacturing 35,917,792 4.12Kookmin Bank 35,472,675 4.06Hon Hai Precision Industry 24,574,183 2.82Swire Pacific Ltd - A 24,323,159 2.79China Mobile Ltd 20,767,276 2.38Hana Financial Group 18,638,509 2.14Bangkok Bank (F) 16,874,252 1.93DBS Group Holdings Ltd 16,488,071 1.89Cheung Kong Holdings Ltd 15,593,469 1.79

Exposure to DerivativesMarket Value % of Net

SGD Assets(i) Market value of derivatives Nil -

(ii) Net gain/(loss) on derivatives realised SGD Forward Contracts (13,141)

(iii) Net gain/(loss) on outstanding derivatives Nil

Investments in Collective Investment SchemesNot applicable


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62


Related Party TransactionsFund management charge of 1.3% per annum paid to Prudential Assurance CompanySingapore (Pte) Ltd.


SGD 45,220,898 107,806,155


* The expense ratio does not include (where applicable) charges for insurance coverage,brokerage and other transaction costs, performance fee, foreign exchange gains or losses,front or back-end loads arising from the purchase or sale of collective investment schemesand tax deducted at source or arising out of income received.

Turnover Ratio2006: 44.41% 2005: 24.16%




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PRULINK SINGAPORE CASH FUND


SGD AssetsAustralia 249,853 0.52Hong Kong 1,500,000 3.13Iceland 2,497,613 5.21Singapore 10,374,541 21.62South Korea 5,004,350 10.43Sweden 3,496,850 7.29United Arab Emirates 2,002,228 4.17United Kingdom 500,100 1.04United States 2,500,625 5.21


SGD AssetsBanks 10,999,841 22.93Financial Institutions (Non EC) 1,000,950 2.09Financial Services 11,372,244 23.70Food 500,100 1.04Lodging 251,350 0.52Real Estate 1,000,125 2.08Shipbuilding 1,000,350 2.08Sovereign Government Obligations 2,001,200 4.17


SGD AssetsFixed Income Securities 28,126,160 58.62Cash & Equivalents 19,855,111 41.38

Investments by Credit Rating of Debt Securities / Money Market Instruments(by Moody's or equivalents)

Market Value % of NetSGD Assets

Aaa 249,853 0.52Aa3 3,496,850 7.29A1 4,499,841 9.38A2 2,001,200 4.17A3 2,500,625 5.21Baa1 3,003,150 6.26Baa2 3,504,400 7.30Not rated 8,870,241 18.49

SCHEDULE OF INVESTMENTSAs at 31st December 2006


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Investment by Maturity of Money Market InstrumentsMarket Value % of Net

SGD Assets61 - 90 days 3,501,575 7.3091 - 120 days 3,504,400 7.30121 - 180 days 10,367,445 21.61181 - 240 days 2,748,162 5.73241 - 300 days 5,004,578 10.43More than 301 days 3,000,000 6.25


SGD AssetsAB Spintab 3.5% 22/06/2007 3,496,850 7.29Sunshine Assets 3.75% 23/04/2007 3,004,300 6.26Hana Bank 3.67% 30/05/2007 3,003,150 6.26Solitaire Capital Ltd 5% 31/05/2007 2,617,466 5.46Countrywide Financial 3.75% 17/03/2007 2,500,625 5.21Emirates Bank 3.7% 07/09/2007 2,002,228 4.17Glitnir Banki HF 3.7% 31/08/2007 2,002,000 4.17Export Import Bank Korea 0% 10/07/2007 2,001,200 4.17Mapletreelog Treasury Co 29/05/2009 1,500,000 3.13Olam International Ltd SER 26 FRN 14/03/2007 1,000,950 2.09


SGD AssetsHousing & Development Board 4.25% 13/05/2006 1,956,752 9.30Shinhan Bank 2.5% 21/10/2006 1,784,070 8.48Singapore Telecommunications Ltd 3.21% 15/03/2006 1,778,873 8.46Depfa Pfandbrief 4.75% 20/09/2006 1,767,413 8.40Export Import Bank Korea 0% 24/11/2006 1,748,775 8.31Nordea Bank AB 2.08% 30/08/2006 1,487,935 7.07Kim Eng Holdings 2.48% 20/09/2006 991,250 4.71Olam International Ltd S13 FRN 14/03/2006 750,000 3.57Orchard Parksuites Pte Ltd OPS 4.55% 30/03/2006 748,406 3.56Macquarie Bank 2.21% 24/10/2006 743,083 3.53

Exposure to DerivativesNot applicable





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SGD 36,579,817 10,814,711



Turnover Ratio2006: 63.70% 2005: 138.63%




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66

PRULINK GLOBAL EQUITY FUND

Number of Investment Funds Market Value % of NetShares SGD Assets

Singapore

4,173,486 International Opportunities Funds - 102,380,912 99.91World Value Equity Class D


Investments in Collective Investment SchemesPruLink Global Equity Fund invests SGD 102,380,912, equivalent to 99.91% of its net assetvalue, in International Opportunities Funds - World Value Equity Class D.


Related Party Transactions(i) PruLink Global Equity Fund invests SGD 102,380,912, equivalent to 99.91% of its net

asset value, in International Opportunities Funds - World Value Equity Class D. Somedirectors of the International Opportunities Funds, an open-ended investment companyregistered in Luxembourg, are also directors of Prudential Assurance Company Singapore (Pte) Ltd.

(ii) Fund management charge of 1.5% per annum paid to Prudential Assurance CompanySingapore (Pte) Ltd. This charge is included as part of unrealised appreciation/(depreciation)in value of underlying investments as shown in the Capital and Income Account.


SGD 6,198,723 18,043,685



Turnover Ratio2006: 6.56% 2005: 114.50%





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INTERNATIONAL OPPORTUNITIES FUNDS - WORLD VALUE EQUITY


USD AssetsExxon Mobil Corporation 5,529,095 1.70Royal Bank of Scotland Group 4,542,230 1.40BP PLC 4,484,419 1.40General Electric Co 4,448,876 1.40Citigroup Inc 4,369,816 1.40Vodafone Group PLC 3,968,590 1.20Bank of America Corp 3,935,764 1.20Glaxosmithkline PLC 3,776,525 1.20E.on Ag 3,500,052 1.10Microsoft Corporation 3,363,756 1.00


USD AssetsGeneral Electric Company 5,735,970 1.61Exxon Mobil Corporation 5,415,912 1.52Citigroup Inc 5,052,320 1.41BP PLC 4,726,402 1.32HSBC Holdings PLC 4,256,432 1.19Glaxosmithkline PLC 4,130,019 1.16Bank of America Corporation 4,062,872 1.14Nestle SA 4,062,623 1.14American International Group 4,014,710 1.12JP Morgan Chase & Co 3,651,176 1.02


* The expense ratio does not include (where applicable) brokerage and other transaction costs,performance fee, foreign exchange gains/losses, front or back-end loads arising from the purchaseor sale of other schemes and tax deducted at source or arising out of income received.

Turnover Ratio2006: 38.34% 2005: 35.94%


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PRULINK GLOBAL BOND FUND


SGD AssetsAustria 3,291,690 3.34Canada 4,972,529 5.05Cayman Islands 4,265,316 4.33France 1,405,814 1.43Germany 42,166,038 42.81Italy 618,967 0.63Japan 2,733,786 2.78Netherlands 356,337 0.36Norway 4,926,016 5.00Poland 5,065,615 5.14Sweden 696,137 0.71United Kingdom 5,645,664 5.73United States 20,131,577 20.44


SGD AssetsBanks 12,649,866 12.84Financial Services 4,926,016 5.00Government 3,195,911 3.24Insurance 4,265,316 4.33Sovereign Government Obligations 71,238,377 72.33


SGD AssetsFixed Income Securities 96,275,486 97.75Cash & Equivalents 2,213,093 2.25

Investments by Credit Rating of Debt Securities(by Moody's or equivalents) Market Value % of Net

SGD AssetsAaa 62,998,100 63.96Aa1 3,195,911 3.24Aa2 4,884,283 4.96A2 4,075,931 4.14A3 989,684 1.00Not rated 20,131,577 20.45



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SGD AssetsDeutschland Rep DBR 5.25% 04/07/2010 6,728,923 6.83Deutschland Rep DBR 6% 04/07/2007 6,077,007 6.17Deutschland Rep DBR 6% 20/06/2016 5,357,176 5.44US Treasury N/B T 3.875% 15/05/2010 5,060,338 5.14US Treasury N/B T 4.125% 15/05/2015 4,984,383 5.06Eksportfinans EXPT 1.8% 21/06/2010 4,926,016 5.00Rentenbank RENTEN 1.375% 25/04/2013 4,836,455 4.91Deutschland Rep DBR 4.5% 04/01/2013 4,688,241 4.76Bundesschatzanw BKO 2% 15/06/2007 4,645,701 4.72Bayerische Landbank 1.4% 22/04/2013 4,521,721 4.59


SGD AssetsGermany Fed Rep 6% 01/05/2006 7,786,163 7.57Deutschland Rep DBR 5.25% 04/07/2010 7,209,114 7.01Bundes OBL 4.5% 18/08/2006 6,807,025 6.61Pfandbriefstelle Der Oesterr 1.6% 15/02/2011 4,898,212 4.76Bayerische Landbank 1.4% 22/04/2013 4,800,853 4.66Rentenbank 1.375% 25/04/2013 4,735,177 4.60AIG Sunamerica AIG 1.2% 20/03/2008 4,133,973 4.02Tesco Plc TSCO 0.7% 20/09/2006 3,667,655 3.56US Treasury 7.625% 15/11/2022 3,602,363 3.50Ontario Province ONT 1.875% 25/01/2010 3,504,531 3.41


(i) Market value of derivatives SGD AssetsForward Contracts (803) 0.00

(ii) Net gain/(loss) on derivatives realised SGD Forward Contracts (240,200)

(iii) Net gain/(loss) on outstanding derivatives SGD Forward Contracts (803)





Composite

70


SGD 10,718,536 12,513,134



Turnover Ratio2006: 112.26% 2005: 159.21%




Composite

71

PRULINK GLOBAL MANAGED FUND


Singapore

47,854,010 PruLink Global Equity Fund 59,027,443 51.7742,440,076 PruLink Global Bond Fund 51,604,161 45.26

Total Investments 110,631,604 97.03


Investments in Collective Investment SchemesPruLink Global Managed Fund invests SGD 59,027,443 and SGD 51,604,161, equivalent to51.77% and 45.26% of its net asset value, in PruLink Global Equity Fund and PruLink GlobalBond Fund respectively.


Related Party Transactions (i) PruLink Global Managed Fund invests SGD 59,027,443 and SGD 51,604,161, equivalent

to 51.77% and 45.26% of its net asset value, in PruLink Global Equity Fund and PruLinkGlobal Bond Fund respectively.

(ii) Fund management charge of 1% per annum paid to Prudential Assurance CompanySingapore (Pte) Ltd. This charge is included as part of unrealised appreciation/(depreciation)in value of underlying investments as shown in the Capital and Income Account.


SGD 3,698,083 8,393,008



Turnover Ratio2006: 10.63% 2005: 5.88%



Note: Please refer to PruLink Global Equity Fund and PruLink Global Bond Fund for informationon underlying sub-funds.



Composite

72

PRULINK GLOBAL TECHNOLOGY FUND

Number of Investment Funds Market Value % of NetShares SGD Asset

Singapore

264,910,486 PRU Global Technology Fund 152,853,350 99.99


Investments in Collective Investment SchemesPruLink Global Technology Fund invests SGD 152,853,350 equivalent to 99.99% of its netasset value, in PRU Global Technology Fund.


Related Party Transactions(i) PruLink Global Technology Fund invests SGD 152,853,350 equivalent to 99.99% of its

net asset value, in PRU Global Technology Fund.

(ii) Fund management charge of 1.5% per annum paid to Prudential Assurance Company Singapore (Pte) Ltd. This charge is included as part of unrealised appreciation/(depreciation)in value of underlying investments as shown in the Capital and Income Account.


SGD Nil 44,177,413



Turnover Ratio2006: 0.43% 2005: 0.24%





Composite

73

PRU GLOBAL TECHNOLOGY FUND

PRU Global Technology Fund is a feeder fund which feeds into the Luxembourg-domiciledInternational Opportunities Funds - Global Technology Fund.


* The expense ratio does not include (where applicable) brokerage and other transactioncosts, performance fee, foreign exchange gains/losses, front or back-end loads arising fromthe purchase or sale of other schemes and tax deducted at source or arising out of incomereceived.

Turnover Ratio2006: 0.52% 2005: 0.29%

INTERNATIONAL OPPORTUNITIES FUNDS - GLOBAL TECHNOLOGY


USD AssetsSynopsys Inc 2,658,000 2.60Canon Inc 2,535,105 2.50Intralot SA Integrated Lottery Systems & Services 2,500,589 2.40Sony Corporation Npv 2,444,295 2.40Siemens Ag-Reg 2,302,154 2.20Bio-Rad Laboratories-CI A 2,279,550 2.20Philips Electronics NV 2,274,341 2.20Barco New NV 2,159,714 2.10Samsung Electronics Co Ltd 2,076,290 2.00Convergys Corporation 2,070,600 2.00


USD AssetsSamsung Electronics Co Ltd 4,574,568 3.70Hewlett-Packard Company 3,565,887 2.90Siemens Ag-Reg 3,530,704 2.90Sony Corporation Npv 3,335,313 2.70Cadence Design Systems Inc. 3,134,790 2.50Foundry Networks Inc. 3,105,000 2.50BTG Plc 3,099,302 2.50Adaptec Inc 2,658,800 2.20Canon Inc 2,525,321 2.10IG Group Holdings Plc 2,522,849 2.10


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74


PRULINK PAN EUROPEAN FUND


Singapore

28,296,089 PRU Pan European Fund 37,662,094 99.85


Investments in Collective Investment SchemesPruLink Pan European Fund invests SGD 37,662,094, equivalent to 99.85% of its net assetvalue, in PRU Pan European Fund.


Related Party Transactions(i) PruLink Pan European Fund invests SGD 37,662,094, equivalent to 99.85% of its net asset

value, in PRU Pan European Fund.



SGD 9,568,878 5,469,364



Turnover Ratio2006: 10.16% 2005: 12.64%




Composite

75

PRU PAN EUROPEAN FUND

PRU Pan European Fund is a feeder fund which feeds into the Luxembourg-domiciledInternational Opportunities Funds - Pan European Fund.



Turnover Ratio2006: 11.39% 2005: 0.93%

INTERNATIONAL OPPORTUNITIES FUNDS - PAN EUROPEAN


USD AssetsRyanair Holdings Plc 2,833,656 4.50Kloeckner & Co 1,960,172 3.10Credit Suisse Group 1,945,959 3.10Essilor International 1,871,906 3.00FLS Industries A/S-B 1,676,239 2.70Vallourec 1,669,721 2.70DCC Plc 1,645,544 2.60ING Groep NV-CVA 1,608,143 2.60OPAP Sa 1,562,703 2.50Elringklinger Ag 1,537,138 2.40


USD AssetsSportingbet Plc 718,469 3.10Total SA 671,940 2.90Groupe Danone 652,066 2.80Bijou Brigitte Modi Access 636,735 2.70Gn Store Nord 633,258 2.70Millicom International Cellular SA 623,093 2.70National Bank of Greece 609,011 2.60CRH Plc 588,709 2.50Buzzi Unicem Spa 586,391 2.50Douglas Holding AG 576,329 2.50


Composite

76

PRULINK PROTECTED GLOBAL TITANS FUND


Singapore

14,291,086 PRU Protected Global Titans Fund (S$) 15,534,411 99.99


Investments in Collective Investment SchemesPruLink Protected Global Titans Fund invests SGD 15,534,411, equivalent to 99.99% of itsnet asset value, in PRU Protected Global Titans Fund (S$).


Related Party Transactions(i) PruLink Protected Global Titans Fund invests SGD 15,534,411, equivalent to 99.99% of

its net asset value, in PRU Protected Global Titans Fund (S$).



SGD Nil 3,580,993



Turnover Ratio2006: 3.00% 2005: 1.71%





Composite

77

PRU PROTECTED GLOBAL TITANS FUND (S$)


SGD AssetsSingapore T-Bills 0% due 04/01/2007 1,689,985 9.36Sunshine Assets Ltd 3.75% 23/04/2007 1,510,484 8.36Mapletree Treasury Svcs 2.61% due 10/08/2007 1,505,963 8.34Glitnir Bank HF 3.7% due 31/08/2007 1,012,867 5.61Pacific Life Funding LLC 3.61% due 16/04/2007 1,007,567 5.58Solitaire Capital Ltd 5% 31/05/2007 657,061 3.64Singapore T-Bills 0% due 02/05/2007 643,240 3.56Emirates Bank 3.7% due 07/09/2007 506,279 2.80Eksportfinans 2.02% due 05/02/2007 503,245 2.79Countrywide Finl Corp 3.75% due 17/03/2007 257,623 1.43


SGD AssetsSingapore Telecommunications 3.21% due 15/03/2006 2,017,153 9.38Export Import Bank Korea 3.28939% due 25/11/2006 1,501,942 6.99Singapore Treasury Bills 0% due 02/05/2006 1,089,616 5.07Call Dow Jones Global Titans Index 1,019,932 4.74Pacific Life Funding LLC 3.61% due 01/02/2007 1,009,517 4.69Olam International Ltd 3.15533% due 14/03/2006 1,001,996 4.66SMRT Corporation Ltd 3.41% due 21/12/2006 1,001,751 4.65Kim Eng Holdings 2.48% due 20/09/2006 996,680 4.64Shinhan Bank 2.5% due 21/10/2006 994,763 4.63Mapletree Treasury Bill 2.61% due 10/08/2007 992,226 4.61



Turnover Ratio2006: 24.87% 2005: 28.09%


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78


PRULINK ASIAN REACH MANAGED FUND


Singapore

340,978,248 PRU Asian Balanced Fund 533,630,958 99.84


Investments in Collective Investment SchemesPruLink Asian Reach Managed Fund invests SGD 533,630,958, equivalent to 99.84% of itsnet asset value, in PRU Asian Balanced Fund.


Related Party Transactions(i) PruLink Asian Reach Managed Fund invests SGD 533,630,958, equivalent to 99.84% of

its net asset value, in PRU Asian Balanced Fund.

(ii) Fund management charge of 1% per annum paid to Prudential Assurance CompanySingapore (Pte) Ltd. This charge is included as part of unrealised appreciation/(depreciation)in value of underlying investments as shown in the Capital and Income Account.


SGD 172,979,082 61,759,033



Turnover Ratio2006: 0.34% 2005: 1.30%




Composite

79

PRU ASIAN BALANCED FUND

PRU Asian Balanced Fund is a feeder fund which feeds into the Luxembourg-domiciledInternational Opportunities Funds - Asian Equity for its equity participation and InternationalOpportunities Funds - US High Investment Grade Bond and International OpportunitiesFunds - US Investment Grade Bond for its bond participation.



Turnover Ratio2006: 11.34% 2005: 9.33%

INTERNATIONAL OPPORTUNITIES FUNDS - ASIAN EQUITY


USD AssetsSamsung Electronic Co Ltd 24,043,440 5.60Taiwan Semiconductor Manufacturing 14,271,889 3.30Kookmin Bank 14,126,703 3.30Hon Hai Precision Industry 12,280,996 2.90Hana Financial Holdings 11,718,490 2.70Cheung Kong Holdings Ltd 10,947,138 2.60ICICI Bank Ltd - Spon Adr 9,929,734 2.30Swire Pacific Ltd ‘A’ 9,767,207 2.30China Resources Power Holdings 9,025,766 2.10CNOCC Ltd 8,832,978 2.10


USD AssetsSamsung Electronic Co Ltd 17,670,468 8.40Taiwan Semiconductor Manufacturing 8,313,939 3.90Kookmin Bank 7,426,368 3.50Hon Hai Precision Industry 5,808,645 2.70Swire Pacific Ltd 'A' 5,121,109 2.40Bangkok Bank Public Co-Foreign Reg 4,450,956 2.10China Mobile (Hong Kong) Ltd 4,423,280 2.10Chinatrust Financial Holding 3,969,250 1.90Hana Financial Holdings 3,957,857 1.90ICICI Bank Ltd - Spon Adr 3,713,692 1.80


Composite

80

INTERNATIONAL OPPORTUNITIES FUNDS - US HIGH INVESTMENT GRADE BOND


USD AssetsHSBC Finance 6.4% 17/06/2008 9,774,284 2.40CIT Group Inc 5.8% 28/07/2011 8,956,314 2.20JP Morgan Chase & Co 6.625% 15/03/2012 8,076,480 2.00RBS Capital 4.709% 07/01/2013 6,659,884 1.60JP Morgan Chase MBS FRN 12/12/2044 6,462,492 1.60Bank of America Corp 7.4% 15/01/2011 6,278,540 1.50Walot 2006-1 A2 5.28% 20/04/2010 5,748,106 1.40General Electric Capital Corp 5.5% 28/04/2011 5,569,124 1.30US Bancorp 5.3% 28/04/2009 5,514,636 1.30American Express Credit FRN 02/12/2010 5,514,102 1.30


USD AssetsJP Morgan Chase 6.625% 15/03/2012 8,253,187 2.60US Treasury Note 3.875% 15/02/2013 7,763,128 2.40US Treasury N/B 4% 15/03/2010 6,905,661 2.20Bank of America 7.4% 15/01/2011 6,424,567 2.00US Treasury N/B 4.875% 15/02/2021 5,711,294 1.80American General Finance 5.375% 01/10/2012 5,284,797 1.70JP Morgan & Co 5.75% 15/10/2008 5,098,865 1.60Bank of America Corp 7.125% 15/10/2011 4,833,736 1.50Household Finance 6.4% 17/06/2008 4,773,731 1.50GECC 6.75% 15/03/2032 4,766,761 1.50

INTERNATIONAL OPPORTUNITIES FUNDS - US INVESTMENT GRADE BOND


USD AssetsDr Horton 6% 15/04/2011 3,417,442 1.80Commercial Mortgage Acceptance 6.57% Mbs 15/12/2030 3,009,065 1.60American Express Credit Frn 02/12/2010 2,506,410 1.30General Electric Capital Corp Frn 26/10/2009 2,500,423 1.30Bank of America Mortgage Securities Frn 25/05/2035 2,267,588 1.20JP Morgan Chase MBS FRN 12/12/2044 2,221,481 1.20CIT Group Inc 5.8% 28/07/2011 2,188,190 1.10Countrywide Home Loan 4.25% 19/12/2007 2,176,891 1.10Goldman Sachs Group GSFLOAT FRN 23/12/2009 2,142,473 1.10Morgan Stanley Capital I Mbs 15/04/2038 2,070,884 1.10


USD AssetsUS Treasury Note 4.875% 15/02/2012 10,625,560 5.10Harrahs Operating Co Inc 5.5% 01/07/2010 4,003,124 1.90US Treasury N/B 4% 15/02/2015 3,810,775 1.80Sprint Capital Corp 8.375% 15/03/2012 3,074,443 1.50Commercial Mortgage 6.57% Mbs 15/12/2030 3,062,132 1.50Citibank Credit Care Issuance Trust 4.4% 15/09/2010 2,957,117 1.40Wells Fargo Mortgage Backed 3.540251% 25/09/2034 2,742,122 1.30Nationslink Funding Corp 6.888% 10/11/2030 2,605,475 1.20Anadarko Finance Co 6.75% 15/01/2011 2,572,757 1.20Commercial Mortgage 6.507882% Mbs 15/12/2030 2,567,116 1.20


Composite

81

PRULINK CHINA-INDIA FUND


Singapore

322,713,660 PRU Dragon Peacock Fund 648,009,030 99.85


Investments in Collective Investment SchemesPruLink China-India Fund invests SGD 648,009,030, equivalent to 99.85% of its net assetvalue, in PRU Dragon Peacock Fund.


Related Party Transactions(i) PruLink China-India Fund invests SGD 648,009,030, equivalent to 99.85% of its net asset

value, in PRU Dragon Peacock Fund.



SGD 253,413,954 128,086,879



Turnover Ratio2006: 3.37% 2005: 1.23%





Composite

82

PRU DRAGON PEACOCK FUND

Top 10 Holdings as at 31 December 2006 Market Value % of NetSGD Assets

Infosys Tech Ltd 80,385,090 8.51Reliance Industries Ltd 62,205,083 6.31China Mobile Ltd 53,696,226 5.44ICICI Bank Ltd 52,551,988 5.33CNOOC Ltd 48,011,912 4.87Agile Property Holdings Ltd 37,968,705 3.85China Life Insurance Co Ltd 26,601,963 2.70Oil & Natural Gas Corporation Ltd 25,519,990 2.59Satyam Computer Services 25,060,650 2.54Industrial & Commercial Bank of China 25,032,795 2.54


SGD AssetsCNOOC Ltd 36,515,379 8.44China Mobile (Hong Kong) Ltd 21,977,515 5.08Infosys Technologies Ltd 21,029,551 4.86China Petroleum & Chemical Corporation 19,418,061 4.49Oil & Natural Gas Corporation Ltd 18,439,120 4.26Satyam Computer Services 18,342,329 4.24China Telecom Corporation Ltd 16,716,336 3.87China Construction Bank Corporation 16,401,267 3.79ICICI Bank Ltd 14,603,431 3.38Reliance Industries Ltd 14,138,928 3.27



Turnover Ratio2006: 54.57% 2005: 46.41%


Composite

83

PRULINK EMERGING MARKETS FUND


Luxembourg

6,180,991 Franklin Templeton Investment Funds 314,267,766 99.92- Templeton Emerging Markets Fund


Investments in Collective Investment SchemesPruLink Emerging Markets Fund invests SGD 314,267,766, equivalent to 99.92% of its netasset value, in Franklin Templeton Investment Funds - Templeton Emerging Markets Fund.


Related Party TransactionsFund management charge of 2.1% per annum paid to Prudential Assurance CompanySingapore (Pte) Ltd. This charge is included as part of unrealised appreciation/(depreciation)in value of underlying investments as shown in the Capital and Income Account.


SGD 171,677,739 78,189,681



Turnover Ratio2006: 11.13% 2005: 0.00%





Composite

84

FRANKLIN TEMPLETON INVESTMENT FUNDS - TEMPLETON EMERGING MARKETS FUND


SGD AssetsSamsung Electronics Co. Ltd 99,791,117 4.42PetroChina Co. Ltd., H 80,583,505 3.57Petroleo Brasileiro SA, ADR, pfd 74,964,243 3.32Remgro Ltd 67,553,796 2.99Gazprom, ADR 66,245,186 2.94Akbank TAS 62,590,983 2.77Old Mutual PLC 59,562,094 2.64Taiwan Semiconductor Manufacturing Co. Ltd 55,220,544 2.45LUKOIL, ADR 46,396,341 2.06Companhia Vale do Rio Doce, ADR, pfd., A 45,993,149 2.04


SGD AssetsSamsung Electronics Co. Ltd 68,308,111 4.12PetroChina Co. Ltd., H 43,123,352 2.60Petroleo Brasileiro SA, ADR, pfd 38,387,724 2.32China Mobile (Hong Kong) Ltd., fgn 37,655,657 2.27Remgro Ltd 35,813,313 2.16Anglo American PLC 31,643,168 1.91Old Mutual PLC 29,603,304 1.79Banco Bradesco SA, ADR, pfd 27,016,858 1.63 Hana Financial Group Inc 25,346,930 1.53HSBC Holdings PLC 25,248,232 1.52



Turnover Ratio**2006: 71.18% 2005: 26.21%

** Portfolio turnover rate is the portfolio turnover rate of the corresponding underlyingfunds of Franklin Templeton Investment Funds, and is calculated in accordance with theLuxembourg Commission for the Supervision of the Financial Sector ("CSSF") undertakingsfor collective investment in transferable securities (UCITS) simplified prospectus.


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PRULINK AMERICA FUND


Luxembourg

1,057,876 Fidelity Funds - America Fund 8,194,552 100.32


Investments in Collective Investment SchemesPruLink America Fund invests SGD 8,194,552, equivalent to 100.32% of its net asset value,in Fidelity Funds - America Fund.




SGD Nil 9,694,210



Turnover Ratio2006: 4.33% 2005: 22.73%





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FIDELITY FUNDS - AMERICA FUND

Top 10 Holdings as at 31 October 2006Market Value % of Net

USD AssetsGeneral Electric 129,032,983 6.47Johnson & Johnson 70,608,595 3.54UnitedHealth Group 65,941,231 3.30Google “A” 51,024,609 2.56American International Group 44,679,572 2.24Apple Computer 41,610,686 2.09AT & T 36,384,153 1.82Valero Energy 35,561,878 1.78Altria Group 33,391,759 1.67Wells Fargo 32,179,872 1.61


USD AssetsUnitedHealth Group 124,650,850 5.97American International Group 121,276,469 5.80General Electric 95,756,931 4.58Sprint Fon 93,053,825 4.45Valero Energy 65,249,346 3.12Johnson & Johnson 53,334,740 2.55eBay 47,988,428 2.30Intel 39,604,149 1.90Halliburton 35,882,260 1.72Microsoft 33,055,212 1.58



Turnover Ratio2006: 90.95% 2005: 81.08%


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PRULINK INTERNATIONAL BOND FUND


Luxembourg

22,645,548 Fidelity Funds - International Bond Fund 22,509,675 100.22


Investments in Collective Investment SchemesPruLink International Bond Fund invests SGD 22,509,675, equivalent to 100.22% of its netasset value, in Fidelity Funds - International Bond Fund.




SGD 2,288,338 4,694,222



Turnover Ratio2006: 147.41% 2005: 7.39%





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FIDELITY FUNDS - INTERNATIONAL BOND FUND


USD AssetsFinland 3.875% 15/09/2017 7,719,450 9.26France O.A.T. 3.25% 25/04/2016 5,568,254 6.68UK Treasury 9.00% 12/07/2011 5,059,165 6.07Japan CPI Linked Bond 4 0.50% 10/06/2015 4,675,508 5.61Japan (Issue 207) 0.90% 22/12/2008 3,262,110 3.91Japan Fin Bill 0% 29/01/2007 2,530,701 3.03United States Treasury 2% 15/07/2014 2,457,592 2.95Canada 4% 01/06/2016 2,421,850 2.90United States Treasury 5.125% 30/06/2011 2,148,551 2.58Japan (Issue 35) 0.49% FRN 20/07/2020 1,892,344 2.27


USD AssetsGermany 4.25% 04/07/2014 61,229,650 16.43Germany 2.25% 14/09/2007 16,925,715 4.54Japan 0.90% 22/12/2008 14,246,905 3.82United States Treasury Note 4.00% 31/08/2007 14,110,786 3.79Finland 2.75% 15/09/2010 13,299,862 3.57Japan (Issue 16) 2.50% 20/09/2034 13,281,284 3.56UK Treasury 8.00% 27/09/2013 10,932,566 2.93United States Treasury Note 3.625% 15/01/2010 10,062,830 2.70 Japan CPI Linked Bond 4.050% 10/06/2015 9,844,766 2.64Europaische Hypothekenbank CP 4.05% 25/11/2005 9,450,898 2.54



Turnover Ratio2006: 20.01% 2005: 247.70%


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PRULINK ADAPT 2015 FUND


Singapore

6,521,866 PruLink Singapore Equity Fund 10,301,418 19.717,077,081 PruLink Singapore Bond Fund 7,368,232 14.10

Ireland

46,671 Russell Investment Company 13,508,456 25.85- Global Bond Fund

390,081 Russell Investment Company 8,218,052 15.74- US Equity Fund

27,395 Russell Investment Company 1,674,690 3.20- Continental European Fund

5,443 Russell Investment Company 1,684,343 3.22 - Japan Equity Fund21,268 Russell Investment Company 983,963 1.88

- UK Equity Fund

Luxembourg

87,236 International Opportunities Funds 2,108,316 4.03- Pan European

18,054 International Opportunities Funds 823,268 1.58- Asian Equity

Total Investments in Funds 46,670,738 89.31

3,732,000 Fixed income securities 4,082,304 7.81



(i) Market value of derivatives SGD AssetsForward Contracts 281,136 0.54


(iii) Net gain/(loss) on outstanding derivatives SGDForward Contracts 281,136

Investments in Collective Investment SchemesPruLink Adapt 2015 Fund is a feeder fund which feeds into the PruLink Singapore Equity Fund,Russell Investment Company ("RIC") - US Equity Fund, RIC - Continental European Fund, RIC- Japan Equity Fund, RIC - UK Equity Fund, International Opportunities Funds - Pan Europeanand International Opportunities Funds - Asian Equity for its equity participation; and PruLinkSingapore Bond Fund and RIC - Global Bond Fund for its bond participation.


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Related Party Transactions(i) PruLink Adapt 2015 Fund invests SGD 10,301,418 (19.71%), SGD 7,368,232 (14.10%), SGD

2,108,316 (4.03%) and SGD 823,268 (1.58%) in PruLink Singapore Equity Fund, PruLinkSingapore Bond Fund, International Opportunities Funds - Pan European and InternationalOpportunities Funds - Asian Equity respectively. Some directors of the InternationalOpportunities Funds, an open-ended investment company registered in Luxembourg,are also directors of Prudential Assurance Company Singapore (Pte) Ltd.



SGD 7,486,763 6,325,195



Turnover Ratio2006: 23.11% 2005: 7.84%




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Singapore

19,694,359 PruLink Singapore Equity Fund 31,107,634 20.41770,498 PruLink Singapore Bond Fund 802,196 0.53

Ireland

1,911,792 Russell Investment Company 40,276,759 26.43- US Equity Fund



30,132 Russell Investment Company 9,323,719 6.12- Japan Equity Fund

104,188 Russell Investment Company 4,820,352 3.16- UK Equity Fund

Luxembourg

436,078 International Opportunities Funds 10,539,079 6.92 - Pan European

45,853 International Opportunities Funds 2,090,894 1.37- Asian Equity








Investments in Collective Investment SchemesPruLink Adapt 2025 Fund is a feeder fund which feeds into the PruLink Singapore EquityFund, Russell Investment Company ("RIC") - US Equity Fund, RIC - Continental EuropeanFund, RIC - Japan Equity Fund, RIC - UK Equity Fund, International Opportunities Funds- Pan European and International Opportunities Funds - Asian Equity for its equityparticipation; and PruLink Singapore Bond Fund and RIC - Global Bond Fund for its bondparticipation.



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Related Party Transactions(i) PruLink Adapt 2025 Fund invests SGD 31,107,634 (20.41%), SGD 802,196 (0.53%), SGD

10,539,079 (6.92%) and SGD 2,090,894 (1.37%) in PruLink Singapore Equity Fund, PruLinkSingapore Bond Fund, International Opportunities Funds - Pan European and InternationalOpportunities Funds - Asian Equity respectively. Some directors of the InternationalOpportunities Funds, an open-ended investment company registered in Luxembourg,are also directors of Prudential Assurance Company Singapore (Pte) Ltd.



SGD 70,870,613 8,564,916



Turnover Ratio2006: 8.04% 2005: 9.31%




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Singapore

5,335,626 PruLink Singapore Equity Fund 8,427,728 20.20

Ireland

630,220 Russell Investment Company 13,277,187 31.82- US Equity Fund



9,667 Russell Investment Company 2,991,384 7.17- Japan Equity Fund

33,781 Russell Investment Company 1,562,913 3.75- UK Equity Fund

Luxembourg

150,694 International Opportunities Funds 3,641,952 8.73- Pan European

12,440 International Opportunities Funds 567,291 1.36- Asian Equity








Investments in Collective Investment SchemesPruLink Adapt 2035 Fund is a feeder fund which feeds into the PruLink Singapore EquityFund, Russell Investment Company ("RIC") - US Equity Fund, RIC - Continental EuropeanFund, RIC - Japan Equity Fund, RIC - UK Equity Fund, International Opportunities Funds -Pan European and International Opportunities Funds - Asian Equity for its equity participation;and RIC - Global Bond Fund for its bond participation.



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Related Party Transactions(i) PruLink Adapt 2035 Fund invests SGD 8,427,728 (20.20%), SGD 3,641,952 (8.73%) and

SGD 567,291 (1.36%) in PruLink Singapore Equity Fund, International Opportunities Funds- Pan European and International Opportunities Funds - Asian Equity respectively. Somedirectors of the International Opportunities Funds, an open-ended investment companyregistered in Luxembourg, are also directors of Prudential Assurance Company Singapore(Pte) Ltd.

(ii)Fund management charge of 1.6% per annum paid to Prudential Assurance CompanySingapore (Pte) Ltd. This charge is included as part of unrealised appreciation/(depreciation)in value of underlying investments as shown in the Capital and Income Account.


SGD 15,964,455 5,887,019



Turnover Ratio2006: 19.41% 2005: 11.63%




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RUSSELL INVESTMENT COMPANY - US EQUITY FUND


USD AssetsRussell Invest INIII 62,766,936 3.37General Electric Co 51,065,144 2.74Bank of America Corp 43,094,636 2.31Hewlett Packard Co 35,600,517 1.91Altria Group Inc 33,722,111 1.81Procter & Gamble Co 32,700,576 1.75Google Inc 32,170,975 1.73Citigroup Inc 32,158,395 1.73American International Group Inc 30,817,893 1.65PepsiCo Inc 29,351,588 1.58


USD AssetsGeneral Electric Co 42,642,677 2.90Procter & Gamble Co 32,349,617 2.20Bank of America Corp 30,879,180 2.10Exxon Mobil Corp 27,938,306 1.90Microsoft Corp 26,467,869 1.80PepsiCo Inc 24,997,431 1.70Citigroup Inc 24,997,431 1.70American Express Co 23,526,994 1.60Pfizer Inc 20,586,120 1.40Chevron Corp 20,586,120 1.40



Turnover Ratio2006: 360.57% 2005: 152.67%


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PRULINK GLOBAL BASICS FUND


Singapore

246,395,740 PRU Global Basics Fund 303,559,551 99.75


Investments in Collective Investment SchemesPruLink Global Basics Fund invests SGD 303,559,551, equivalent to 99.75% of its net assetvalue, in PRU Global Basics Fund.


Related Party Transactions(i) PruLink Global Basics Fund invests SGD 303,559,551, equivalent to 99.75% of its net asset

value, in PRU Global Basics Fund.


Total Subscriptions and Redemptions for the period ended 31 December 2006Subscriptions Redemptions

SGD 297,897,324 16,960,837

Annualised Expense Ratio*2006: 1.81% 2005: Not applicable


Turnover Ratio2006: 0.28% 2005: Not applicable





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PRU GLOBAL BASICS FUND

PRU Global Basics Fund is a feeder fund, which feeds into Sterling Class A shares of the M&GInvestment Funds - M&G Global Basics Fund, domiciled in the United Kingdom.

Annualised Expense Ratio*2006: 1.81% 2005: Not applicable


Turnover Ratio2006: 5.82% 2005: Not applicable

M&G GLOBAL BASICS FUND NET ACCUMULATION SHARES IN STERLING CLASS A SHARES


GBP AssetsLonmin 77,889,648 3.77Chevron Corporation 72,853,213 3.52Pilgrims Pride 70,362,002 3.40European Aeronautic Defence & Space 70,153,096 3.39Rio Tinto 65,785,302 3.18K&S AG 62,476,072 3.02Bluescope Steel 60,710,344 2.94CSR 59,764,575 2.89Tullow Oil 58,899,806 2.85Johnson Matthey 53,789,000 2.60


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STATEMENT OF ASSETS AND LIABILITIESAs at 31st December 2006

Singapore Asian SingaporeManaged Fund Equity Fund Cash Fund

$ % $ % $ %

Equities 1,758,511,830 71.52 952,345,397 98.36 0 0.00Fixed Income Securities 645,123,991 26.24 0 0.00 28,126,160 58.62Investments in Funds 605,000 0.02 0 0.00 0 0.00

Value of Investments 2,404,240,821 97.78 952,345,397 98.36 28,126,160 58.62

OTHER ASSETSInterest bearing deposits

and bank balances 39,624,826 1.61 15,708,544 1.62 19,608,320 40.87Accrued and outstanding

interest and dividends 11,238,367 0.46 406,421 0.04 247,470 0.52Other assets 15,991,639 0.65 833,670 0.09 378,584 0.79

Total Assets 2,471,095,653 100.50 969,294,032 100.11 48,360,534 100.80

LIABILITIESOther liabilities (12,298,430) -0.50 (1,118,185) -0.11 (379,263) -0.80

Value of Fund as at31 December 2006 2,458,797,223 100.00 968,175,847 100.00 47,981,271 100.00

Global Global Global Equity Fund Bond Fund Managed Fund

$ % $ % $ %

Fixed Income Securities 0 0.00 96,275,486 97.75 0 0.00Investments in Funds 102,380,912 99.91 0 0.00 110,631,604 97.03

Value of Investments 102,380,912 99.91 96,275,486 97.75 110,631,604 97.03


and bank balances 35,543 0.03 666,515 0.68 3,386,498 2.97Accrued and outstanding

interest and dividends 0 0.00 1,560,919 1.58 1,601 0.00Other assets 229,252 0.22 73,487 0.07 0 0.00

Total Assets 102,645,707 100.16 98,576,407 100.08 114,019,703 100.00

LIABILITIESOther liabilities (173,126) -0.16 (87,828) -0.08 0 0.00

Value of Fund as at31 December 2006 102,472,581 100.00 98,488,579 100.00 114,019,703 100.00


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Global Pan Protected Global Technology Fund European Fund Titans Fund

$ % $ % $ %

Investments in Funds 152,853,350 99.99 37,662,094 99.85 15,534,411 99.99



and bank balances (962,432) -0.63 249,932 0.66 (52,290) -0.33Accrued and outstanding

interest and dividends 0 0.00 0 0.00 0 0.00Other assets 971,238 0.64 35,000 0.09 55,130 0.35

Total Assets 152,862,156 100.00 37,947,026 100.60 15,537,251 100.01

LIABILITIESOther liabilities 0 0.00 (230,000) -0.60 (1,505) -0.01


Asian Reach China-India Emerging Markets Managed Fund Fund Fund

$ % $ % $ %

Investments in Funds 533,630,958 99.84 648,009,030 99.85 314,267,766 99.92



and bank balances 4,480,771 0.84 6,329,168 0.98 675,834 0.21Accrued and outstanding

interest and dividends 0 0.00 0 0.00 0 0.00Other assets 325,007 0.06 0 0.00 124,116 0.04

Total Assets 538,436,736 100.74 654,338,198 100.83 315,067,716 100.17

LIABILITIESOther liabilities (3,965,000) -0.74 (5,369,000) -0.83 (540,370) -0.17


The accompanying notes form an integral part of these financial statements.



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America International Bond Adapt 2015 Fund Fund Fund

$ % $ % $ %

Fixed Income Securities 0 0.00 0 0.00 4,082,304 7.81Investments in Funds 8,194,552 100.32 22,509,675 100.22 46,670,738 89.31



and bank balances (69,086) -0.84 (250,838) -1.12 1,175,547 2.25Accrued and outstanding

interest and dividends 0 0.00 0 0.00 49,897 0.10Other assets 47,692 0.58 208,556 0.93 368,920 0.71

Total Assets 8,173,158 100.06 22,467,393 100.03 52,347,406 100.18

LIABILITIESOther liabilities (4,843) -0.06 (7,184) -0.03 (92,624) -0.18

Value of Fund as at 31 December 2006 8,168,315 100.00 22,460,209 100.00 52,254,782 100.00

Adapt 2025 Adapt 2035 Global Fund Fund Basics Fund*

$ % $ % $ %

Fixed Income Securities 13,050,903 8.56 1,575,166 3.78 0 0.00Investments in Funds 134,106,780 88.00 38,277,301 91.74 303,559,551 99.75



and bank balances 6,377,582 4.19 1,749,774 4.19 4,520,398 1.49Accrued and outstanding

interest and dividends 159,519 0.10 19,253 0.05 0 0.00Other assets 2,304,103 1.51 231,130 0.55 0 0.00

Total Assets 155,998,887 102.36 41,852,624 100.31 308,079,949 101.24

LIABILITIESOther liabilities (3,607,726) -2.36 (129,252) -0.31 (3,774,105) -1.24


*Fund was launched on 18 April 2006



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CAPITAL AND INCOME ACCOUNTFrom 1 January 2006 to 31 December 2006

Singapore Asian SingaporeManaged Fund Equity Fund Cash Fund

$ $ $

Value of Fund as at 1 January 2006 2,004,932,692 872,689,216 21,033,040

Amounts paid to the Fund for creation of units 158,400,360 45,220,898 36,579,817Amounts paid by the Fund for liquidation of units (207,360,125) (107,806,155) (10,814,711)Net cash (out of)/ into Fund (48,959,765) (62,585,257) 25,765,106

Investment income 85,607,257 23,608,285 1,198,459Fund expenses (21,380,287) (14,576,879) (36,956)Net income/ (outgo) 64,226,970 9,031,406 1,161,503

Exchange gain/ (loss) 80,331 (1,388,728) -

Net realised gain/ (loss) on sale of investments 114,067,060 145,947,025 (30,361)

Unrealised appreciation/(depreciation) 324,449,935 4,482,185 51,983in value of investments during the year

Value of Fund as at 31 December 2006 2,458,797,223 968,175,847 47,981,271

Global Global GlobalEquity Fund Bond Fund Managed Fund

$ $ $

Value of Fund as at 1 January 2006 103,816,679 102,913,407 113,812,992

Amounts paid to the Fund for creation of units 6,198,723 10,718,536 3,698,083Amounts paid by the Fund for liquidation of units (18,043,685) (12,513,134) (8,393,008)Net cash (out of)/ into Fund (11,844,962) (1,794,598) (4,694,925)

Investment income 4,785 3,615,100 94,700Fund expenses (1,525,454) (524,994) (832)Net income/ (outgo) (1,520,669) 3,090,106 93,868

Exchange gain/ (loss) - 7,361 -

Net realised gain/ (loss) on sale of investments 2,360,073 (3,921,104) 3,210,022

Unrealised appreciation/(depreciation) 9,661,460 (1,806,593) 1,597,746in value of investments during the year

Value of Fund as at 31 December 2006 102,472,581 98,488,579 114,019,703



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Global Pan Protected GlobalTechnology Fund European Fund Titans Fund

$ $ $


Amounts paid to the Fund for creation of units - 9,568,878 -Amounts paid by the Fund for liquidation of units (44,177,413) (5,469,364) (3,580,993)Net cash (out of)/ into Fund (44,177,413) 4,099,514 (3,580,993)

Investment income 4,503 2,416 589Fund expenses (2,165,071) (461,951) (91,379)Net income/ (outgo) (2,160,568) (459,535) (90,790)

Exchange gain/ (loss) - - -

Net realised gain/ (loss) on sale of investments 11,598,701 1,356,141 265,602

Unrealised appreciation/(depreciation) (13,550,092) 6,371,856 1,161,480in value of investments during the year


Asian Reach China-India Emerging MarketsManaged Fund Fund Fund

$ $ $


Amounts paid to the Fund for creation of units 172,979,082 253,413,954 171,677,739Amounts paid by the Fund for liquidation of units (61,759,033) (128,086,879) (78,189,681)Net cash (out of)/ into Fund 111,220,049 125,327,075 93,488,058

Investment income 30,832 19,421 65,147Fund expenses (3,408,911) (7,288,235) (2,933,051)Net income/ (outgo) (3,378,079) (7,268,814) (2,867,904)

Exchange gain/ (loss) - - -

Net realised gain/ (loss) on sale of investments 4,780,334 10,672,874 5,410,108

Unrealised appreciation/(depreciation) 38,012,024 154,915,576 37,898,953in value of investments during the year





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America International Bond Adapt 2015Fund Fund Fund

$ $ $


Amounts paid to the Fund for creation of units - 2,288,338 7,486,763Amounts paid by the Fund for liquidation of units (9,694,210) (4,694,222) (6,325,195)Net cash (out of)/ into Fund (9,694,210) (2,405,884) 1,161,568

Investment income 1,321 735,144 158,019Fund expenses (97,175) (94,757) (577,919)Net income/ (outgo) (95,854) 640,387 (419,900)

Exchange gain/ (loss) - - 95,231

Net realised gain/ (loss) on sale of investments 274,511 (2,733,466) 1,653,661

Unrealised appreciation/(depreciation) (589,325) 1,298,227 3,835,537in value of investments during the year


Adapt 2025 Adapt 2035 Global BasicsFund Fund Fund*

$ $ $

Value of Fund as at 1 January 2006 76,147,169 27,612,417 -

Amounts paid to the Fund for creation of units 70,870,613 15,964,455 297,897,324Amounts paid by the Fund for liquidation of units (8,564,916) (5,887,019) (16,960,837)Net cash (out of)/ into Fund 62,305,697 10,077,436 280,936,487

Investment income 405,942 62,018 216,635Fund expenses (1,242,235) (380,418) (1,892,967)Net income/ (outgo) (836,293) (318,400) (1,676,332)

Exchange gain/ (loss) 169,733 52,540 -

Net realised gain/ (loss) on sale of investments 1,809,225 661,956 1,908,751

Unrealised appreciation/(depreciation) 12,795,630 3,637,423 23,136,938in value of investments during the year/period


*Capital and Income Account from 18 April 2006 to 31 December 2006.



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These notes form an integral part of the financial statements.

1 Summary of Significant Accounting Policies

(a) The financial statements are expressed in Singapore dollars.

(b) Income and expenses are accounted for on an accrual basis, dividends being creditedto income when equities are quoted ex-date.

(c) Monetary assets and liabilities in foreign currencies are translated into Singaporedollars at exchange rates approximate to those ruling at the balance sheet date.Transactions in foreign currencies are translated at rates ruling on transaction dates.Translation differences are dealt with through the Capital and Income Account.

(d) Purchases and sales of investments are recognised on trade date - the date on whichthe Company commits to purchase or sell the asset.

(e) All investments of PruLink Funds are valued at the last known transacted prices on31 December 2006. Unquoted fixed income securities are valued at the prevailingprices quoted by banks and brokers. The resulting net gain or loss is dealt withthrough the Capital and Income Account.

(f) The costs of disposal of investments are determined on the weighted average costbasis. All gains and losses are dealt with in the Capital and Income Account asthey arise.

2 Units in Issue

The number of units in issue following the unit deal as at 31 December 2006 is:

Singapore Managed Fund 832,994,327Asian Equity Fund 485,948,513Singapore Cash Fund 38,392,251Global Managed Fund 91,397,105Global Equity Fund 83,075,181Global Bond Fund 80,998,122Pan European Fund 28,229,493Global Technology Fund 251,129,192Protected Global Titans Fund 14,250,506Asian Reach Managed Fund 343,197,000China-India Fund 355,092,103Emerging Markets Fund 233,646,427America Fund 8,101,000International Bond Fund 25,351,201Adapt 2015 Fund 47,919,290Adapt 2025 Fund 134,842,608Adapt 2035 Fund 36,273,401Global Basics Fund 296,026,328

NOTES TO THE FINANCIAL STATEMENTS


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NOTES TO THE FINANCIAL STATEMENTS

3 Net Asset Value/Bid Price

The Net Asset Value (which is the bid price) per unit as at 31 December 2006 is:

Singapore Managed Fund S$2.95175Asian Equity Fund S$1.99234Singapore Cash Fund S$1.24976Global Managed Fund S$1.24751Global Equity Fund S$1.23349Global Bond Fund S$1.21593Pan European Fund S$1.33608Global Technology Fund S$0.60869Protected Global Titans Fund S$1.09018Asian Reach Managed Fund S$1.55733China-India Fund S$1.82760Emerging Markets Fund S$1.34616America Fund S$1.00830International Bond Fund S$0.88596Adapt 2015 Fund S$1.09047Adapt 2025 Fund S$1.13014Adapt 2035 Fund S$1.15024Global Basics Fund S$1.02796


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We have audited the financial statements of PruLink Funds (set out on pages 98 to 103), whichcomprise the Statements of Assets and Liabilities as at 31 December 2006, Capital and IncomeAccount for the period from 1 January 2006 (or date of commencement of the respective PruLinkFunds, whichever is later) to 31 December 2006, and a summary of significant accounting policiesand other explanatory notes, as set out on pages 104 to 105.

The Company’s directors are responsible for the preparation and fair presentation of thesefinancial statements in accordance with the stated accounting policies. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due tofraud or error; selecting and applying appropriate accounting policies; and making accountingestimates that are reasonable in the circumstances.

Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with Singapore Standards on Auditing. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the Company’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the Company’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of accounting estimates made by the directors, as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion.

In our opinion, the financial statements present fairly, in all material respects, the state of affairsof PruLink Funds as at 31 December 2006 and their results for the period ended on that date,in accordance with the stated accounting policies.

Our report is intended solely for the use of the Company and our duties are owed solely to theCompany. We do not accept responsibilities and we expressly disclaim liability for loss occasionedto any third parties acting or refraining from acting as a result of our report.

This report relates solely to the financial statements of PruLink Funds and does not extend tothe financial statements of the Company as a whole.

KPMGCertified Public Accountants

Singapore9 March 2007

AUDITORS’ REPORTTo Prudential Assurance Company Singapore (Pte) Limited

Directors , responsibility for the financial statements

Auditors , Responsibility

Opinion

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Established in 1848 in the United Kingdom, Prudential plc is now one of the world’s

leading retail financial products and services companies, with nearly S$700 billion*

worth of funds under management worldwide. Prudential Singapore was set up in 1931,

and is a wholly-owned subsidiary of Prudential plc. We offer a comprehensive range of

life insurance and investment-linked products to meet the needs of our customers.

To find out more, contact your Prudential Adviser or call our PruCustomer Line at

1800-333 0 333 today. Alternatively, you can visit our website at www.prudential.com.sg

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*Unaudited as at 31 December 2006 (Please see overleaf)

Documents

PruLink Singapore Managed Fund wins specialPrulink Pg1-56.FH11 3/20/07 1:27 PM Page 3 Composite ABOUT PRUDENTIAL’S FUND MANAGERS* 3 The PruLink family of funds is managed by the