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Opportunities for Medium to Long-Term Capital Investing a company’s capital Many companies are potentially 'cash rich' but with interest rates at historic lows, should directors and their advisers be looking for investments which offer better returns over the medium to long term (5-10 years or more). Investing in a multi-asset investment fund could be an option worth considering. Given the low interest rate environment we are currently in, many businesses could be looking at alternatives to investments where funds are simply held on deposit. It makes sense for companies to have working capital readily accessible and normally the company bank account is the sensible place to deposit funds. However, if they have more on deposit than they need, is it working hard enough for them? Considerations for determining where best to invest company capital: > the likely timeframe of the investment and the returns looking to be achieved > the level of working capital required and the degree to which other investments should be considered to meet your business’ longer term needs. Longer term considerations could include: > Retirement planning – funding pension plans for you and any employees > Future liabilities – replacing staff who retire, updating equipment or moving premises. If you have deposits in excess of working capital needs, and you are aware of long-term needs at specific dates in the future, there are a number of possible investments you could use. Deposit accounts do not put your capital at risk, but an investment does. Deposit accounts allow easy access and an investment doesn't. PruFund – a potential long-term investment solution Prudential's range of PruFund funds offer potential advantages of multi-asset investments with some smoothing of investment returns. continued overleaf Our PruFund funds offer: 1. Access to multi-asset fund investments Multi-asset funds work by spreading your money across a number of different types of assets. These can include company shares, fixed interest bonds, cash and property – from both the UK and abroad. By investing in a number of different assets, the fund manager aims to balance the risk that is being taken. So, if one asset is falling in value then another may be increasing. Of course, there could be times when all the assets in the fund are either rising or falling in value depending on the market conditions at the time. 2. Smoothing process The aim of the smoothing process is to smooth the extreme ups and downs of the markets. The smoothing process sets out an Expected Growth Rate for each PruFund fund and then compares that rate to how each fund is actually performing, making adjustments where necessary. Expected Growth Rate (EGR): the EGRs reflect our view of how we think each PruFund fund will perform over the long term. Each PruFund fund has its own EGR and investments into a PruFund will normally grow daily by the relevant EGR. Although we take a long term view, we do review the rates every three months to allow for any changes, which may mean a change in EGR on a quarterly basis, up or down. The EGR gives a smoothed return and an element of day-to-day predictability. The PruFund range of funds is invested in the Prudential WithProfits Fund. For more information on the PruFund fund range speak to your Financial Adviser. The value of an investment can go down as well as up and you could get back less than you invested. For the range of PruFund funds, what you receive will depend on the value of the underlying investments, the Expected Growth Rates as set by the Prudential Directors, our charges, the smoothing process, if there is a guarantee and when you take your money out. The guarantee if applicable, is applied at the end of the guarantee term specified in your personal illustration document. Unit Price Adjustment (UPA): although we use a long term view of performance to set EGRs, we also have to take into account shorter term performance. On a daily basis, if the shorter term performance differs too much from our current Expected Growth Rate, we would have to amend the value of your fund to ensure we are not returning too much or too little. We call these UPAs and they help to ensure all investors are treated fairly. There may be occasions where we have to suspend the smoothing process for one or more PruFund funds, to protect our With-Profits Fund and the clients invested in it. We may also suspend the smoothing process if unusually large volumes of money enter or leave the funds. When this happens, the smoothed price for the affected fund(s) is set to the unsmoothed price for each day until the smoothing process is reinstated. 3. Guarantees Some of our PruFund funds offer guarantees that protect the value of your initial investment at a set date. These guarantees mean that at the end of the period you choose, the plan will be worth at least the same as the value at the start. There is a charge for this, which is payable throughout the period of the guarantee. For more information, please refer to 'The PruFund Range of Funds: Guarantee options' flyer. www.pru.co.uk “Prudential” is a trading name of The Prudential Assurance Company Limited which is registered in England and Wales. This name is also used by other companies in the Prudential Group. Registered office: Laurence Pountney Hill, London EC4R 0HH. Registered number: 15454. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. PRUF10289 05/2017 This means that if you have a specific objective in mind, such as replacing staff who are retiring, updating equipment or moving premises, you can protect your investment at a future point in time.