The Prudential Income Fund distributed 7.6491 cpu and produced a total return of 13% for the year ending 30 September 2014. The current positioning of the Prudential Income Fund looks to: 1) maximise investors' exposure to first world multinational blue chip companies; 2) only expose investors to domestic companies with the ability to grow their dividends in difficult economic conditions; and 3) avoid exposure to fixed interest bonds and property due to high levels of capital risk. This positioning is a direct reflection of Marriott's house view and has contributed towards the fund achieving income growth approximately in line with inflation over the last decade as well as a 4 Plexcrown rating for risk-adjusted performance.

The decision to maximise investors offshore exposure has served investors well in 2014. American and UK economic data continues to confirm a sustainable economic recovery in these regions which has been reflected in good stock market performance particularly in the US. Returns have also been bolstered by the depreciation of the Rand relative to first world currencies. Notwithstanding strong price appreciation, valuations of certain multi-national blue chip companies remain attractive with dividend yields at or above historic averages.

Domestically, economic conditions remain subdued endorsing our decision to only expose investors to companies which provide basic necessities or offer value to consumers. These companies have track records demonstrating an ability to grow their profits and dividends irrespective of interest rate or business cycles.

The balance of the portfolio is invested in high yielding instruments which are all likely to perform well in a rising interest rate environment. The portfolio's floating corporate debt, preference shares and cash will produce more income as interest rates rise whilst providing capital stability. The income and capital growth from inflation linked bonds is also likely to be relatively attractive as inflation is set to remain elevated for the remainder of the year. The fund is also ideally positioned to take advantage of investment opportunities in the bond and property markets as the normalisation of monetary policy in first world markets is likely to continue exerting upward pressure on the yields of these two asset classes.

The Prudential Income Fund distributed 7.4263 cpu in June and is currently yielding approximately 3.7%. The current positioning of the Prudential Income Fund looks to: 1) maximise investors' exposure to first world multinational blue chip companies; 2) only expose investors to domestic companies with the ability to grow their dividends in difficult economic conditions; and 3) avoid exposure to fixed interest bonds and property due to high levels of capital risk. This positioning is a direct reflection of Marriott's house view and has contributed towards the fund achieving income growth approximately in line with inflation over the last decade as well as a 4 Plexcrown rating for risk-adjusted performance.

High yielding instruments make up approximately 40% of the portfolio, all of which are likely to perform well in the current rising interest rate environment. The portfolio's floating corporate debt, preference shares and cash will produce more income as interest rates rise whilst providing capital stability. The income and capital growth from inflation linked bonds is also likely to increase with the anticipated rise in consumer inflation. The fund is also ideally positioned to take advantage of investment opportunities in the bond and property markets as the normalisation of monetary policy in first world markets is likely to continue exerting upward pressure on the yields of these two asset classes.

To achieve inflation hedged income and capital growth the fund has approximately 60% exposure to equities, both locally and offshore. The fund's offshore exposure is maximised at 25%, in line with Prudential Guidelines due to the attractive yields currently offered by multinational companies listed on first world exchanges. In addition to more attractive valuations, both the US and the UK are showing signs of a sustainable economic recovery whilst emerging market economic growth rates continue to decline. Domestic equity exposure remains low at 35% with emphasis given to companies offering basic necessities or value to consumers.

The Prudential Income Fund distributed 7.4263 cpu in March and is currently yielding approximately 3.8%. The yield has been achieved by combining high yielding asset classes with equities, both locally and offshore. The portfolio is ideal for retirement planning as it produces a relatively high income yield together with income and capital growth that should keep up with inflation over the long term. The fund also has a 5 plexcrown rating for risk adjusted performance.

High yielding instruments make up approximately 40% of the portfolio - all of which are likely to perform well in the current rising interest rate environment. The portfolio's float floating corporate debt, preference shares and cash will all produce more income as interest rates rise whilst providing capital stability. The income and capital growth from inflation linked bonds is also likely to increase with the anticipated rise in consumer inflation. The fund is also ideally positioned to take advantage of investment opportunities in the bond and property markets as the "tapering" of Quantitative Easing in first world markets is likely to continue exerting upward pressure on the yields of these two asset classes.

To achieve inflation hedged income and capital growth the fund has approximately 60% exposure to equities, both locally and offshore. The companies included in the portfolio tend to focus on basic necessities, enjoy country wide or global distribution and have strong balance sheets and consumer brands. Consequently, these companies are able to produce reliable and growing dividends regardless of challenging economic conditions ensuring a more predictable outcome. The fund's offshore exposure is maximised at 25%, in line with Prudential Guidelines due to the attractive yields currently offered by first world mega cap companies. In addition to more attractive valuations, both the US and the UK are showing signs of a sustainable economic recovery whilst emerging market economic growth rates continue to decline. Domestic equity exposure remains low at 35%. Recent data continues to suggest that South Africa's economic prospects remain subdued and with dividend yields still below historic averages an increase in local equity exposure is not yet warranted.

The Prudential Income Fund distributed 7.4263 cpu in December and is currently yielding approximately 4%. The yield has been achieved by combining high yielding asset classes with equities, both locally and offshore. The portfolio is ideal for retirement planning as it produces a relatively high income yield together with income and capital growth that should keep up with inflation over the long term.

High yielding asset classes make up approximately 40% of the fund and include floating corporate debt, preference shares, fixed deposits and inflation linked bonds - all of which present investors with a low level of capital risk. The decision not to hold any fixed interest bonds and property has served investors well in 2013. Both of these asset classes experienced significant volatility during the latter half of the year as it became apparent that the US central bank bond-buying program known as quantitative easing was beginning to come to an end. The program, which is designed to stimulate the economy, has served the secondary purpose of supporting financial market performance in recent years - particularly the global bond market. With upward pressure being exerted on fixed interest bond and property yields the Prudential Income Fund is well positioned to take advantage of investment opportunities in these asset classes.

To achieve inflation hedged income and capital growth the fund has approximately 60% exposure to equities. The fund's offshore exposure is maximised at 25%, in line with Prudential Guidelines due to the high yields currently offered by first world mega cap companies. This exposure has produced good capital returns for investors during the year as well as a relatively high level of income. Domestic equity exposure remains low at 35%. Data continues to suggest that South Africa's economic prospects remain subdued and with dividend yields still well below historic averages an increase in local equity exposure is not yet warranted.