The Marriott High Income Fund distributed 9 cpu in September and is currently yielding over 9%. The structure of the portfolio results in the production of stable distributions. Marriott feels that the effects of the recession on property values and bond prices will enable this portfolio to take advantage of lower priced income streams in time. Until this opportunity presents itself, a significant portion of the portfolio has been moved from very short-dated deposits into twelve-month termed deposits. This has had the effect of locking in the yield while interest rates are low. The locking in period enables the portfolio to take advantage of any price weakness that may arise in real assets. As the portfolio moves into its next phase of the investment cycle, so too will the effects of some volatility in its price. As some of these instruments have been purchased at a premium, this will result in some capital volatility, with a maximum capital loss of 3% over the twelve-month period. As investors have enjoyed capital stability for the last two years, combined with high income distributions, this forecast of a high level of income, combined with income stability and a small element of capital volatility, remains very attractive.

The Marriott High Income Fund distributed 9 cpu in June. The recent restructuring of the portfolio will result in the production of stable distributions. The local economy is currently being challenged by the first recession in seventeen years but has been supported by reduced interest rates. Marriott feels that the effects of the recession on property values and bond prices will enable this portfolio to take advantage of lower priced income streams. Until this opportunity presents itself, a significant portion of the portfolio has been moved from very short dated deposits into twelve-month termed deposits. This has had the effect of locking in current rates while interest rates decline. The locking in period will enable the portfolio to take advantage of any price weakness in listed property. As the portfolio moves into its next phase of the investment cycle, so too will the effects of some volatility in its price. As some of these instruments have been purchased at a premium, this will result in some capital volatility, with a maximum capital loss of 3% over the twelve-month period. As investors have enjoyed capital stability for the last two years, combined with high income distributions, this forecast of income stability with a small element of capital volatility remains very attractive.

The Marriott High Income Fund (FoF) distributed 9 cpu in March. The fund remains fully invested in cash, thereby enabling investors to benefit from the highest yields available and capital stability. The February inflation number confirmed our fears that inflation in South Africa would remain stubbornly high for longer than expected with CPI increasing from 8.2% in January to 8.6% in February. Declining fuel inflation has been the main driving force behind the moderation in inflation. What is of concern is that apart from this component of the CPI basket, the majority of goods and services measured year-on-year price increases in excess of 6%. It seems unlikely that the Reserve Bank will continually be able to ignore these pressures when considering future monetary policy easing. The current average term to maturity of the portfolio is approximately 24 days. The fund remains invested in the four major banking institutions and, at this stage, will not include any other credit instruments, ensuring the lowest possible risk for our investors.

The High Income Fund distributed 10 cpu in December. The fund remains fully invested in cash, thereby enabling Investors to benefit from high interest rates and capital stability. CPIX slowed to 12.1% year-on-year in November from 12.4% year-on-year in October. Lower oil prices and a drop in food price growth assisted this moderation. Sustained lower food and oil prices will continue to assist in lowering inflation, however it may remain above the target range for longer due to recent rand weakness and double digit wage settlements.

The current average term to maturity of the portfolio is approximately 30 days. The fund remains invested in the four major banking institutions and, at this stage, will not include any other credit instruments, ensuring the lowest possible risk for our Investors. The recent volatility experienced in property (declined 16% year-to-date) highlights the importance of investing in an actively managed fund that is managed to provide Investors with a high and reliable income and long-term capital growth/preservation.