The increase followed a 25 per cent rise to pounds 15.3bn in the group's funds under management compared with the same period last year.
However, M&G's share of the unit trust market dipped from 10.9 to 10.2 per cent.
Sir David Money-Coutts, group chairman at M&G, said: "Over the six-month period, [our] revenue grew by 14 per cent to pounds 70m, a record high for the Group. The increase was mainly in our annual fee revenue and was the result of the rise in the FT-SE All Share Index over the period."
Sir David added: "We ... expect the balance of our revenues to shift in favour of annual fees away from initial charges."
In recent years, M&G has moved away from levying initial charges on its PEPs. If policyholders dispose of their investment they face exit charges on a sliding scale.
Compensation payments of about pounds 200,000 each were made to Tony Shearer and Alan Oddie, former chief operating officer and managing director of M&G's life and pensions arm respectively.
Mr Shearer left in January after a clash of personalities with managing director David Morgan. Mr Oddie departed in March after his operations area was amalgamated with the unit trust business. M&G stressed yesterday that the payments were part of the group's obligations to both employees, who were on 12-month contracts.
David Watson, finance director, said that sales of PEPs and unit trusts had been affected by new competition and a combination of the rising popularity of index-tracking and guaranteed funds. M&G had invested in smaller companies and recovery stocks, impacting slightly on performance and on sales.
The continuing economic recovery should ensure improving returns from M&G's portfolio of recovery stocks, Mr Watson said.