Although the International Growth Fund can invest into bonds (and, indeed, has done so many times in the past), the current weighting to this asset class is zero. Whilst the rotation out of bonds and into equities has not yet begun in earnest, it is hard to make a good case for locking into yields which will invariably lose money in real terms over most investment time periods. Bonds have, of course, been suffering a poor year to date as the threat of higher cash yields and the possible tapering of Quantitative Easing have all pushed bond yields higher and prices lower. We expect to maintain our zero weighting for some time to come.

Equities have been a net beneficiary of this move, in part because other asset classes appear unattractive but also because economic growth should lead to a more benign backdrop against which equities can prosper. Property shares, where this Fund has a 15% weighting, have not yet benefited from the latest equity market rally. Higher borrowing costs have led to nervousness over the extent to which property companies can maintain margins but we think that this fear is misplaced. Most of the companies in the Fund have recapitalised themselves significantly over the last few years since the 2008 banking crisis and enjoy high occupancy rates and strong balance sheets. We think that a re-rating will occur sooner rather than later, underpinned by economic growth in the US and UK, where most of our holdings are located.

The Marriott International Growth Fund fell by 1.8% in US Dollar terms during June. Global equities fell by 2.9% with strongest performances coming once again from the US. Emerging markets were again relative laggards, falling by 6.8% in US Dollar terms over the same period.

Global equities weakened during the month as US Treasury yields rose on worries that the Federal Reserve Bank was considering tapering off its programme of Quantitative Easing, buying bonds in exchange for improved liquidity in the banking system. By the end of June, US 10 year Treasury yields had risen to 2.5% from a low point of 1.6% just a few weeks earlier. This led to a sell off across the investable universe, from bonds to equities, commodities and even gold as investors reined in borrowing in anticipation of higher interest rates and shifted into short-term risk free assets (cash).

Whilst the rise in bond yields has been quite sudden, we have long argued that government bond markets appeared to be distorted and that a yield of less than 2% was effectively locking in a loss in real terms, after stripping out the impact of inflation. Bond markets have been driven higher in part by the Quantitative Easing process and technically it makes sense for prices to reverse if this process is coming to an end.

After a strong few months for equity markets, some consolidation is likely at current levels whilst the market digests the latest raft of economic data and analysts begin to sharpen their pencils in anticipation of the second quarter earnings figures due out in July and August. These will give a better indication as to whether the recovery is filtering through to companies in the form of better profits and higher margins. With income still high on many investors' agenda, we still expect support for the strong dividend paying companies in the Fund, notwithstanding that valuations in a number of instances no longer offer the value they did in 2012.

The Marriott International Growth Fund gained 8.2% in US Dollar terms during the first quarter of 2013. This performance reflected a generally strong period for global equity markets whilst a number of other asset classes, notably government bonds, lost ground. Whilst the Fund has the ability to invest into fixed interest securities, the zero weighting in this asset class reflects our generally cautious attitude towards government debt in particular whilst more attractive yields can be found elsewhere and in international equities in particular. The Fund's performance was distorted to some extent by currency movements, notably the strength of the US Dollar which gained nearly 7% against sterling and 3% against the Euro since the start of the year. This dampened returns from internationally diversified portfolios measured in dollars but had the opposite effect on non-dollar denominated accounts. Global equities rose by 6.6% during the quarter led by the US and Japan. Once again, emerging markets were relative laggards falling by 1.9% in dollar terms over the same period.

The Fund remained consistently above its yield benchmark throughout the period, ending the quarter with a gross yield of 3.5%, ahead of the 1.9% composite benchmark drawn from the JP Morgan Global Government Bond Index and the S&P500 equity index.

The strength of the equity market was at odds with the disappointing economic news from the UK and, in particular, the Eurozone. China, too, is struggling to make the transformation from a rapidly growing emerging market to a world superpower, a problem reflected in the relatively disappointing returns from Asia during the quarter.

On the other hand, the US economy continues to gain momentum. Whilst the pace of growth is subdued by historic standards, it is growth nonetheless and much of the stockmarket's recent strength has been based on the assumption that US growth will eventually lead to a global recovery. Certainly, despite the problems in Cyprus, the Eurozone crisis feels very much like yesterday's story even if the core problems still remain.

Japanese equities enjoyed a stellar quarter, however, even after allowing for the sharp depreciation in the value of the Yen. In a concerted attempt to stimulate the lacklustre Japanese economy, the newly elected central bank Governor, with the support of newly elected Prime Minister Shinzo Abe, has embarked upon a course of aggressive quantitative easing. This policy has flooded the market with liquidity and driven Japanese equities higher (and the Yen lower). Shock economic tactics of this nature depend upon economic recovery arriving sooner rather than later and we are not convinced. Japan remains one of the highest indebted nations in the world and has been on a downwards spiral since the late 1980s.