The 3rd Quarter of 2009 has been another good three months for the Marriott Dividend Growth Fund. A decision was taken in the early part of July to reduce the 30% hedge position due to the unusually high dividend yields of the fund's holdings and the resilience demonstrated by these companies. In hindsight this was a good decision as the fund has increased in value by some 13% since the decision was taken.

South African equity prices and dividends have increased substantially over the last fi ve years. This has proved unsustainable for the majority of businesses listed on South Africa's securities exchange, with dividends falling over 20% year-to-date. This has not been the case for the Marriott Dividend Growth Fund with the majority of the fund's holdings managing to maintain or even increase dividend payouts to shareholders. The four consecutive declines in distribution have been a result of the impact of declining interest rates on the fund's increased cash balance, and not as a result of declining dividend distribution from the underlying portfolio. The relatively large cash weighting has been used to protect the fund against price volatility. With the recent interest rate declines coming to an end, our expectation is for continued distribution growth from this point on. The companies selected for inclusion in the fund have sustainable competitive advantages which enable them to retain and grow their customer base, protect margins, and increase, or at least maintain, their dividend payments despite the current economic downturn. These businesses include household names such as Mr. Price, Spar, Altech, Tiger Brands and Massmart.

South African equity prices and dividends have increased substantially over the last few years. More recently, however, many equity investors have experienced sharp declines in their portfolio values as the market has reflected the deterioration in South Africa's economic environment. This has not been the case for investors in the Marriott Dividend Growth Fund. The fund is currently the top performing general equity unit trust in SA over a 1-year period, providing investors with an 18% positive return over what has been a difficult twelve months. This is an exceptional result, especially when one considers that the South African All Share Index is currently down over 20% year to date, and clearly highlights the benefits of an investment style focusing on income. The fund is ideally positioned for the challenges of 2009 and offers potential new investors the opportunity to invest in some of the more well-established companies in South Africa at unusually high dividend yields. The companies selected for inclusion in the fund have sustainable competitive advantages which enable them to retain and grow their customer base, protect margins, and increase, or at least maintain, their dividend payments despite the current economic downturn. These businesses include household names such as Mr. Price, Spar, Altech, Tigerbrands and Massmart.

The Marriott Dividend Growth Fund changed its sector from the Domestic Equity Varied Specialist sector to the Domestic Equity General sector on the 19/03/2009 and retained its history.

2008's Q3 distribution grew by 8.31% to 41.3833 cpu.

Future Expectations
South African equity prices and dividends have increased substantially over the last few years. The Marriott Dividend Growth Fund has grown its distributions in the last five years by an average of 20.1% per annum and its price has increased by 16% per annum over the same period. However, there have been significant changes in both local and global markets. Despite the recent interest rate and petrol price decreases the South African consumer and businesses remains under pressure. However, valuations at current levels present Investors with the opportunity to invest in quality businesses at yields above their historic averages. Investors need to be patient for this value to be realised as inflation concerns and a challenging economic outlook are likely to keep prices suppressed in the short to medium term. We have maintained our 30% futures position to reduce capital risk. However, in volatile periods investors should try and focus of the quality of the businesses they are invested in and the income streams they provide, remembering that in the long term capital appreciation is ultimately a function of dividend growth.