The Marriott Core Income Fund will continue with its current asset allocation exposure to low-term cash deposits with a current term to maturity of approximately 72 days. This is to ensure capital stability and take advantage of the high interest rate environment. The portfolio is currently not exposed to bonds and property as these asset classes remain at relatively low yields with a continued risk of capital loss. The portfolio is only exposed to the top five South African banks by way of ordinary deposits and has imposed a maximum exposure of 30% to any one bank. There is no exposure to credit risk transfer instruments or to asset-backed deposits.

The Marriott Core Income Fund should form the core income element of any portfolio as it manages your exposure to property, bonds and cash through the interest rate cycles. Over the last five years, the Marriott Core Income Fund has been the ultimate income solution, producing the most income and total return in the Domestic Fixed Interest Varied Specialist category.

The Marriott Core Income Fund will continue with its current asset allocation exposure to near term only cash deposits (with a current term to maturity of ±56 days) to ensure capital stability and take advantage of the high interest rate environment. The portfolio is currently not exposed to bonds and property as these assets classes remain at relatively low yields with a continued risk of capital loss. The Marriott Core Income Fund should form the core income element of any portfolio as it manages your exposure to property, bonds and cash through the interest rate cycles. Over the last five years, the Marriott Core Income Fund has been the ultimate income solution, producing the most Income and Total Return in the Domestic Fixed Interest Varied Specialist category.

The Marriott Core Income Fund changed sectors from the Domestic Asset Allocation Flexible sector to the Domestic Fixed Interest Varied Specialist sector on the 08/06/2008.

The Marriott Core Income Fund will continue with its current asset allocation of exposure only to cash deposits in the near future to ensure capital stability. The fund will keep no exposure to bonds and property while these investments remain at relatively low yields with the resultant risk of capital loss. The Marriott Core Income Fund should form the core income element of any portfolio. A comparison is included below to demonstrate the point of how the Marriott Core Income Fund compares to other income-producing funds (bond, income and money market funds), assuming a client had invested R100, 000 five years ago. To determine average returns, five funds in each of the above-mentioned categories were randomly selected.

Income received
Core Income fund: R58, 537 This equates to 33.9% more income than that produced by the average bond fund, 41.5% more income than that produced by the average money market fund, and 37.3% more income than that produced by the average income fund.

Capital appreciation
The Marriott Core Income Fund enjoyed 22% capital appreciation due to the fact that the funds have been managed over this period by moving into property, bonds and cash at the appropriate times so as to provide the Investor with long-term capital growth. This is in contrast to Money Market funds, income funds and bond funds, which produced little to no capital growth of 0%, 0.23% and 2.65% respectively.

Total return
In summary, the Marriott Core Income Fund's total return is 69% greater than its closest competitor (bond funds). Furthermore, not only has it produced more income and capital growth, it has managed to do so in a consistent fashion, thereby enabling the Investor to budget from month-to-month with the knowledge that the capital is being managed conservatively in this period of market volatility. However, when the opportunity presents itself the fund will be fully invested in property and bonds (as it has been in the past), in order to produce long-term capital growth and continued superior returns.

None, other than the Collective Investment Scheme Control Act.

SA has enjoyed a period of strong growth in 2007 supported primarily by consumer demand and strong fixed investment spending. It would seem most of the sectors that performed well in 2007 will continue this trend in 2008, namely construction and mining.

Inflation looks set to continue its upward trend on the back of higher fuel, food and electricity prices. This will provide further upward pressure. The SA Reserve Bank estimates CPIX peaking at 7.8%. While we believe it may begin to ease from Q3 2008, the risk still remains to the upside.

The MPC looks set to further increase the repo rate by 50 bps in February this year while continuing to maintain its hawkish stance. GDP looks set to slow to 4% this year after year-on-year numbers above 4.5%.

The aftermath of the sub-prime markets fallout will continue to create difficulties in foreign markets and in all likelihood prompt further rate cuts to avoid recession. The fixed income and money market rates have continued their upward trend with twelve month rates trading above 12% and R157 trading at 8.50% (7-year bond).

The Income Funds are receiving the benefit of maintaining a short duration stance allowing us to pick up the benefit of investing into the short-dated investment arena, thereby increasing the returns on the funds.

We continue to remain conservative in our investment philosophy and have exited all investments that may present any unnecessary credit risk to the funds.

The fund will continue to see the benefits of a rising short-dated fixed income market over the next two quarters.