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Marriott International Growth Fund Marriott International Funds Plc. Marriott International Growth Fund News Marriott Int Growth comment - Mar 19 Monday, 10 June 2019 Fund Manager Comment Global equity markets have staged a remarkable comeback in 2019 after a dismal end to last year. Performance tables are no longer drenched in red and most markets are in positive territory year-to-date, confounding those who cashed in early. Patience it seems, is indeed a virtue, as too is a strong stomach needed to tolerate the gyrations which seem to define modern equity investing. The explanation for last year's market fall has been the main reason for this year's rise. Like it or not, the US Federal Reserve Bank is still the leading influencer of global monetary policy. In 2018, higher US interest rates badly affected nearly all market classes. This year, the Fed's policy U-turn has had the opposite effect. Last December's 'dot-plot' projection for two interest rate hikes in 2019 has been changed to precisely none. The Fed now expects just one quarter point rise in 2021. Markets (the ultimate judge and jury) actually think that the Fed could even cut rates later this year. Such a simple explanation for the drama experienced over the last few months seems to be too easy. Of course, there are many other sub-plots going on behind the scenes. For instance, corporate results year-to-date have generally been quite good. The market, however, has become accustomed to the gentle manipulation of quarterly earnings expectations, so much so that in the US at least there are typically few earnings 'surprises' any more. As a consequence, greater attention than ever is paid to the accompanying statement from the CEO. This information is 'in the market' in an instant, of course, and we still find it far more valuable to speak to the management one-on-one or attend annual general meetings when boards are frequently put on the spot by grumpy shareholders with time on their hands. These days, we are awash with data, yet markets still seem able to only concentrate on one thing at a time. In December, talk was of a growing crisis between the US and China as Trump declared his support of trade tariffs and investors quickly calculated the impact. Today, the US-China talks barely merit a mention. The US president remains obsessed with building a Mexican wall and the like, whilst the UK and Europe are obsessed with Brexit. Both areas are complex for entirely different reasons. The exoneration of Trump by the Robert Mueller report into collusion with the Russian government strengthens the Republican's grip on power as the 2020 election campaign approaches. In the case of Brexit, currency markets in particular seem to have given up predicting any outcome, good or bad. Politicians have dug themselves into such a deep hole that Brexit may be deferred for some time to come. Just about every outcome is possible, from a second 'people's' referendum, to a customs union or simply revoking Article 50, meaning no Brexit at all. A 'no-deal' Brexit would be the worst option in the near term, but the current crop of politicians must realise that few of them would keep their jobs, if ever this came to pass. The investing world, therefore, remains as it typically does; frustrating and unpredictable. Thankfully, despite the noise, the companies in our funds show much more stability when it comes to earnings and dividend growth. There are some tricky areas. Profit margins, for instance, are sometimes a little thinner than we would like, and valuations are relatively full. With inflation still very low, however, it is often hard for businesses to justify price rises when consumers now expect the opposite. The world is also getting smaller. The list of sectors into which we are happy to invest seems to shrink every year whilst the number of basket-case economies, Venezuela being the latest but certainly not the last, reduces the investable universe, even before we have studied individual balance sheets. There are, nonetheless, still many companies which pass through our filtering process and are well placed to benefit from future economic growth. Macro-wise, global GDP is forecast to reach 3.3% this year and slightly more in 2020. Modest, perhaps, but still significant relative to short-term interest rates and inflation in most major markets. As ever, therefore, there is still plenty to go for, especially for those looking for reliable income streams where equities still command a significant yield over cash and government bonds, a state of affairs which is likely to prevail for some time to come.   Marriott Int Growth comment - Jun 16 Wednesday, 12 October 2016 Fund Manager Comment Investment commentaries for the second quarter of 2016 will be dominated by discussion over the consequences of the decision by the UK electorate to leave the EU. The immediate market reaction was to devalue sterling by around 10% whilst the Euro also fell against the Dollar by around 6%. Parity looms large. Overuse of the word 'plunge' by the media in the aftermath of the Brexit result suggested that equity markets around the world were in freefall. Whilst markets did at first react badly to the unexpected result, the subsequent rally in all but certain narrow sub-sectors of the market is far more logical and less well reported. UK housebuilders and property companies have generally fallen in value and stayed down as evidence emerged quite quickly that a number of projects were being shelved until the outlook for a post-Brexit Britain became more certain. Shares in domestic UK banks also fell, in part thanks to their close links to the residential housing market and the almost immediate tightening of mortgage criteria as a result of the vote. Bank profit margins are also likely to be thinner as interest rates either stay low or are cut by the Bank of England, anxious to avoid tipping the economy into a self-induced recession. However, outside of these sectors, for investors measuring performance in US Dollars the post-Brexit quarter end figures were mildly encouraging. Global equities ended the quarter up by 0.3%; once again, the US led markets higher with a gain of 1.9% recorded by the S&P500 Index. Government bonds were strong, not for any particularly technical reason, more because of a general post-Brexit flight to safety which also saw the price of gold rise by 7.3% during the quarter. The Marriott Growth Fund rose by 3.2% during the quarter and has now gained 7.4% year to date in Dollar terms. The fact that the Growth Fund is invested largely into international equities rather than domestic UK or European companies, meant that it was well positioned to take advantage of the post-Brexit climate as investors bought the Dollar and gravitated towards quality, income and Dollar earners, all themes which we have favoured for some time. Brexit aside, the climate for equity investors is subdued. Interest rates in the UK and Europe are destined to remain close to zero for the foreseeable future. Even in the US, where the authorities have been promising rate rises for some time, the so-called interest rate 'dots' (predictions of rate rises by the Fed) have been disrupted by weaker than expected economic data whilst the turbulent political landscape should mean that the Fed will be even less inclined to make waves of their own. The supportive monetary backdrop, however, disguises the fact that GDP growth is universally lacklustre and inflation stubbornly low. In the UK, the latest sterling devaluation will create some inflationary pressure as the cost of imports moves up and the higher oil price appears to have found equilibrium at around $50 a barrel. This will be expensive for savers; bank interest rates at zero and rising inflation means that they are guaranteed to lose money in real terms. Government bonds are equally unattractive for all but the most pessimistic investors whilst, these days, corporate bonds can often be equity-like in behaviour without the comfort of a plentiful secondary market. Once again, this leaves income orientated international equities as the investment instrument of choice to combat inflation, provide liquidity if necessary, and generate a regular return through uninterrupted dividend flows.   Marriott Int Growth comment - Jun 14 Friday, 29 August 2014 Fund Manager Comment Major equity markets have experienced a measured six month trading period in the first half of 2014. In sterling terms, US equities led the way with a gain of 3.1%, but year to date, both UK and European equities are in modestly negative territory. This is thanks in no small part to the strength of the Pound which has gained 3.3% against the Dollar and 4% against the Euro. The surprise package has been the performance of bond markets. Sterling bonds have gained 3.5% over the six month period to the end of June whilst global bonds have gained 2.1%. When US Federal Reserve Bank chairman trigged a 'taper tantrum' last May by announcing that the end of quantitative easing was in sight, most investors reasoned that the next move for bond prices would be down, as yields rose to compensate for the likely ensuing hike in interest rates. Their conclusion was probably right but their timing was some 12 months early. Now, however, with both central banks on either side of the Atlantic openly speaking about tightening rates, the end of an unprecedented period of cheap money is fast approaching. Whilst, logically, this should already have been factored into valuations, the likelihood is that markets will correct when the first hike eventually arrives for the circular reason that the reaction to such a move is itself uncertain. We will be in short term unchartered territory and this could create an interesting buying opportunity. Elsewhere, large companies have enjoyed a reasonable period of growth after underperforming smaller companies in 2014. Again, this move in 2014 was surprising as smaller companies typically suffer more in a rising interest rate environment as the cost of debt rises and the availability of bank loans declines. However, GDP growth has been far better than expected. In the UK it may well breach the 3% level in 2014 and with sterling strong, domestic, non exporting UK companies have been generally doing well. Latterly, the quest for yield has also been uppermost in investors' minds, hence the recent rotation into safer territory in anticipation of the long awaited rate hikes. As the artificial reasons for keeping rates lower for longer than necessary dissipates, so central banks will find themselves reacting to the return of the old enemy, inflation. In recent times, central banks have been far more concerned about deflation, or falling prices, and have been keen to stimulate the economy as required. This has meant lower rates and extended QE in the US, UK and most spectacularly of all in Japan where the process has coined its own name - Abenomics. In Europe, however, deflation remains a real worry. GDP growth is patchy and although the eurozone crisis has abated, growth is elusive, even in Germany and especially in France and Italy which are both struggling with a top heavy government and lack of investment. The UK is probably in the sweet spot right now with good growth rates, low interest rates and a small amount of inflation. The strength of the currency is a worry for exporters, however. We have seen a couple of major companies warn on profits for forex related issues (i.e. sterling strength) and this will continue if exchange rates remain at their current elevated levels. All things being equal, we believe that we are at the start of a good period for equity markets, rate hikes notwithstanding. Unemployment is falling, corporate growth is in evidence and rates will be low for some time to come, even if they settle at a higher level than today. Geopolitical risks, as ever, remain but it is worth noting that the situation in the Crimean Peninsula and the Ukraine has abated and that Russian equities have regained nearly all of the ground lost in the early days of the crisis. This was almost unthinkable just 3 or 4 months ago.   Marriott Int Growth comment - Mar 14 Thursday, 5 June 2014 Fund Manager Comment 2014 has started on a quiet note, at least for the three major markets represented in the Fund (the fourth major market, Japan, has had a dreadful start to 2014). As yet, the problems in the Crimean peninsula and the Ukraine have not had a serious impact on markets, but we are mindful that this could change very quickly. After a stellar 2013, the US has been playing a waiting game in two main areas. Firstly, over the timing of the first interest rate hike for many years and, secondly, whether earnings in 2014 will justify the market rally in 2013. The backdrop for further equity market gains in the US is encouraging. Markets have taken the impending end of Quantitative Easing in their stride, in no small part thanks to the careful policy guidance which the Federal Reserve Bank has been filtering into the market. In other words, there have been no surprises to date, and markets, of course, hate surprises. Newly elected Fed chairman Janet Yellen has been keen to extend the policy of her predecessor in carefully explaining that interest rates may start to rise whilst being sufficiently vague in terms of using any particular data point as a trigger for this to occur. The key economic release to date has been the unemployment rate, which has been widely used by policy makers on both sides of the Atlantic as an excuse to keep interest rates lower for longer. The snag is that the unemployment rate has been falling faster than predicted, whilst the participation rate, defined as the number of people actively seeking work, has also been falling. To confuse matters further, inflation has also been falling in no small part thanks to lower energy costs whilst the wider economy, measured by an abundance of manufacturing data, is still accelerating. What we appear to be faced with, therefore, is a relatively benign investment climate, the biggest threat to which is corporate earnings (or lack of) rather than macro events. We and the market will, therefore, be watching first quarter earnings in April with particular zeal. In the UK, a similar issue exists in terms of the point at which interest rates might start to rise. As in the US, inflation is falling, the recovery is gathering momentum, assisted by a buoyant property market, and the currency is strong. The impending 2015 general election means that politicians are already interfering with open markets more than ever and both the energy and insurance markets have reacted badly to the clumsy, clammy hands of politicians attempting to point score in the run up to electioneering proper. This, and sterling strength, is probably the greatest threat to the UK equity market right now providing that earnings momentum can be sustained. In Europe, every day that goes by without another problem marks a day closer to resolution of the eurozone crisis. The transition from recession to growth is, however, proving to be painfully slow. Unemployment remains stubbornly high and the Euro strong at a time when the peripheral member states need export growth rather than cheap imports. We do not expect any miracles in 2014, however, and our focus within the Fund remains on international companies such as Nestle rather than businesses relying on domestic growth. In summary, therefore, all eyes will be on corporate earnings rather than any major policy shifts. With markets entering a period of stability, dividends will most likely constitute an important component of total returns in 2014 and this remains an area where the Fund is heavily biased.   Marriott Int Growth comment - Sep 13 Monday, 30 December 2013 Fund Manager Comment 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.   Marriott Int Growth comment - Jun 13 Wednesday, 18 September 2013 Fund Manager Comment 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.   Marriott Int Growth comment - Mar 13 Thursday, 23 May 2013 Fund Manager Comment 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 stock market'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 lackluster 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.   Marriott Int Growth comment - Sep 12 Wednesday, 14 November 2012 Fund Manager Comment In our June 2012 commentary, we encouraged investors to build up equity positions in dividend rich sectors such as those contained in the three Marriott International Funds. Valuations were relatively modest and sentiment was low as a result of sustained weakness in most global economies. The third quarter of 2012 has rewarded such an approach, with a return of 7% from global equities in US Dollar terms lifting gains for the year to date to 13.4%. Strangely, not that much has really happened on the ground to justify the swing in confidence which we have experienced in recent weeks. Globally, unemployment remains a serious problem, most notably in the Eurozone, where one quarter of the workforce in Greece and Spain are now out of work. Nor, too, is there ample evidence of green shoots of recovery in any major market. Economic data readings are erratic and suggest that most markets are bumping along the bottom and will continue to do so for the foreseeable future as governments continue to search for a mythical silver bullet to end their respective debt crises. One 'solution' was presented to the market in September in the form of QE 3 or 'QE Infinity', the title given to the latest round of monetary pump priming from the US Federal Reserve Bank. Like most movie sequels, subsequent rounds of QE have been far less convincing than the original. Nonetheless, the promise of low interest rates at least until 2015 together with the determination to improve the cost and availability of credit led to a sharp rally in risk assets, including precious metals, as investors (ourselves included) deduced that higher inflation was a likely consequence of this latest policy move. Whilst we welcomed the market rally which extended into credit markets as well as a predictable (if short lived) rally in raw commodity producers, the fact remains that repaying years of accumulated debt is going to take a considerable time and will not necessarily coincide with any political election cycle. Amidst all of the economic noise, it is easy to forget that a number of businesses continue to go about their work efficiently and profitably. Whilst these businesses are not immune from market cycles, the diversity and quality of their product portfolios means that they can ride out short term volatility, often using their cash flow to enhance earnings by accumulating rivals along the way. Whilst the International Growth Fund has a mandate to invest across a range of asset classes, including fixed interest, the low redemption yields on offer, especially from US, UK and leading European government issues means that this remains an area where we are exercising caution. As a consequence, our asset allocation remains heavily tilted towards quality international equities where net yields remain far higher than equivalent bond yields, with the built in prospect of future growth   Marriott Int Growth comment - Jun 12 Wednesday, 15 August 2012 Fund Manager Comment The second quarter of 2012 was another difficult investment period for investors. Global equities fell as the recovery in the US faltered and the prospects for the Eurozone worsened. Once again, despite appalling fundamentals, government bond yields continued to sink as investors turned to what they considered to be the ultimate safety parachute. The International Growth Fund fell by 2.4% over the second quarter taking the gain over the course of the first half of 2012 to 2.3%. The reason for this latest bout of uncertainty was, one again, Europe. Although some progress appeared to be made at the latest European Summit in June, the fundamental problems remain unresolved. All Eurozone member states currently enjoy the ability to arrange their own tax budgets. As is now widely known, many Eurozone members, for e.g. Greece, have abused this arrangement. The establishment of a central Eurozone fiscal arrangement has been put forward as a way of restoring confidence to the financial system in the longer term by allowing countries to pool risk. This would theoretically reduce borrowing costs for the weaker members as the risk of default would shrink allowing governments to begin repaying debt at more affordable rates. It would also lift equity markets and, by definition, lead the way to a more sustainable economic recovery. There are, however, a number of barriers to this welcome solution. Firstly, some countries, notably Germany, are reluctant to concede fiscal control to, in their view, a less effective central European agency. Secondly, because such a move would involve a change to the original European Treaty of Maastricht, it would almost certainly require individual countries to hold a referendum. Despite Germany's reticence, it is difficult to see how the currently broken Eurozone model can be repaired without fiscal union. For as long as Germany remains unwilling to move in the direction of a federal Europe, we believe that equity markets will remain choppy at best and there may be no quick solution to Eurozone problems. The catalyst to a solution will probably be when Greece completely collapses under the twin burdens of debt and austerity and is forced out of the Eurozone altogether. Greece may be followed by one or two of the other peripheral countries such as Spain and Portugal in quick succession. An alternative is that Germany, unable or unwilling to shoulder responsibility for Southern Eurozone countries, leaves the Eurozone itself and returns to the shelter of the Deutschemark. Whilst in the short term, it is hard to see much evidence of recovery, longer term there remains compelling reasons for building up equity positions in dividend rich sectors. As both the UK and US government embark upon another round of Quantitative Easing, the pressure on government bond yields will, we believe, subside and subside quickly. If there is one major risk to the market today, then we do not believe it rests with equity markets, but with leading government bond yields which we fear will soar once investors decide to move back into riskier assets. In many sectors, wide discounts to underlying asset values persist in the market. These anomalies, whilst frustrating, are part and parcel of equity investing. Dividend pay-outs take away some of the sting whilst a recovery is awaited and selling at rock bottom prices is rarely the best way of creating wealth in the longer term. On the other hand, government bonds and cash deposits guarantee a depletion of capital in real terms at current prices and we remain underweight in bonds whilst continuing to advocate a balanced portfolio of income orientated equities and property shares.   Marriott Int Growth comment - Mar 12 Monday, 21 May 2012 Fund Manager Comment The first quarter of 2012 marked a return to relative normality for international markets. This time, it was corporate rather than geopolitical issues which finally gave equity markets a genuine reason to rally. However, the macro background was significantly helped by the European Central Bank whose latest Long Term Refinancing Operation eased the pressure on Europe's liquidity starved banks in a stroke. The International Growth Fund gained nearly 5% in Dollar terms against a backdrop of broadly rising global stock markets. On the other hand, international bond markets suffered as yields drifted higher, depressing prices as investors sold down low yielding Government bonds. It is 30 years since bond investors on both sides of the Atlantic have experienced a decade of negative returns and for much of this time bonds have outperformed equities, defying the general history of stock-market investing. Perhaps more interesting is the fact that so many major pension funds have become obsessed with bond investment at the expense of equities and few bond traders will have ever experienced a deep bond bear market. From an economic perspective, initially it does not appear to make sense that bonds should start to under-perform at a time of lacklustre economic growth. Markets are, of course, nothing if not forward thinking. If one was to use history as an example, the economic stagnation of the 1930s proved to be far more lucrative for equity investors than for bond investors. Historically, longer term equity rallies begin when equities look cheap, not when economies are robust and today, the yield comparisons between bonds and equities make the argument for equities quite compelling. Since the start of the century, traditional measurements of equity valuations have been distorted by one major crisis after the other. Whilst this is all part of the risk element of equity markets, investors cannot be blamed for suffering fatigue from the eurozone crisis, the banking crisis, the housing crisis, 9/11 and so on. The eurozone crisis has, of course, yet to be fully resolved and we expect more turbulence as the year progresses. Nonetheless, the backdrop for equity markets looks a little better than the same time last year and we remain overweight in equities (including quoted property companies) relative to bonds. To a greater extent, this position is determined by low bond yields and the negative real returns on offer here after the impact of inflation is discounted. On the other hand, equity yields are generally good to excellent. Corporate cash balances in our core sectors are healthy meaning that dividend cover is improving and companies are already pricing in dividend increases which, in a normal cycle, provides protection against inflation. The downside of a high equity approach in the near term is volatility. The Fund's concentration on high yielding blue chip companies does, however, dampen this volatility whilst the resulting cash flow from dividends smoothes returns over the medium and longer term. In terms of regional exposure, the Fund maintains a higher weighting to the US and UK at the expense of Europe. We still expect GDP growth in the US in 2012 to outpace all other major markets whilst the relatively low level of exports which the US sends to Europe will provide some insulation from the fallout in the eurozone. In the absence of so many credible alternatives, we remain of the view that high yielding blue chip equities across a range of diversified sectors remains the investment of choice in the current climate.   Marriott Int Growth comment - Dec 11 Monday, 19 March 2012 Fund Manager Comment The International Growth Fund gained 0.9% in Dollar terms in 2011 against a backdrop of broadly declining global stock markets. The MSCI World Index fell by 6.9% during the year due to slowing economic growth and the impact of the Euro zone crisis. After two years of under-performance, value and yield orientated blue chip companies had a good year in relative terms, which translated into positive returns for the Fund for the whole of 2011. The Fund remains overweight equities relative to bonds (fixed interest). Whilst we do not expect interest rates to rise in the near term in any major market, Government bonds are well priced and the scope for gains is small whilst the threat of a correction is high. Investors should be wary of any market which has been driven higher purely on grounds of fear and the heights to which the US Government market has been propelled (as well as the Dollar) suggests a level of risk aversion which can be reversed very quickly. We do not, however, expect the Euro zone crisis to abate any time soon. Greece appears to be edging towards an exit and this will mean further volatility and protracted pain for Europe's banks where we have virtually no exposure. The Fund instead tends to concentrate on holding companies in staple businesses such as food, property, drink and telecommunications. Such sectors are often dominated by higher yielding companies, in part because they have been steadily increasing dividends over the past few years whilst their share prices have remained static. The Fund is now yielding 4.6% gross and is edging towards 5% as we look to lock in attractive yields on lower days for the market (of which there have been plenty in 2011). In terms of regional exposure, the Fund has a higher weighting to the US and UK at the expense of Europe. We expect GDP growth in the US in 2012 to outpace all other major markets whilst the relatively low level of exports, which the US sends to Europe, will provide some insulation from the fallout in the Euro zone. Emerging markets, on the other hand, had a bad 2011, falling on average by 20% in sterling terms as investors reduced risk. Whilst we do not have any direct exposure to such markets, all of the underlying constituents of the Fund have important subsidiaries in these regions which we expect to drive growth in the medium terms as the balance of economic power continues to shift eastwards and, in the case of America, towards the south.   Marriott Int Growth comment - Sep 11 Thursday, 22 December 2011 Fund Manager Comment The third quarter of 2011 represented one of the most difficult quarters in financial markets since the collapse of Lehman Brothers marked the emotional low point of the banking crisis in 2008. In some ways, these latest falls were worse, coming as they did at a time when markets were starting to show modest signs of recovery. In the event, the massive structural issues facing Greece and the lack of firm leadership by the European authorities precipitated a flight to safety to US and UK government bonds, despite the low interest yields on offer and the prospect of guaranteed negative real returns. Whilst low yielding sovereign debt markets in the US and UK appear to be overvalued, corporate bond markets have been negatively affected by the recent market turbulence. Excluding financial borrowers whose debt has been weak for more fundamental reasons, a major cause of corporate bond price weakness has been illiquidity accompanied by a relative lack of transparency in pricing thinly traded bond issues. These are difficult times for bond investors and we remain underweight, preferring government index linked issues for safety and very short dated corporate issues for yield although neither represents especially good value, in our view. The majority of equities in our International Funds have exceptionally strong balance sheets and remain long term safe havens because of the defensive nature of their earnings, their liquidity and their high dividend yield. They, however, have been subject to high levels of volatility. Liquidity is generally considered to be a strong attribute of any security but in times of crisis it can be a hindrance as hedge funds and large programme traders sell their most liquid assets to meet margin calls, irrespective of the fundamentals. Certain sectors have been avoided. For example, we continue to avoid bank stocks as over-regulation and, in many instances government ownership, will subdue earnings for some years to come. Whilst Europe's problems have been reflected in the dire falls in their equity markets over the quarter, America at least is showing a little more resilience. The latest US GDP numbers show a modest improvement in this economy although the fragility of this recovery will not be helped by the recent surge in the Dollar. Whether committing fresh capital to equity markets or reinvesting income, it is important to remember that the most attractive buying opportunities often occur in an asset class when the majority of investors are fearful, become forced sellers or have just given up. Recent acquisitions by a number of major quoted companies show that they see excellent value in the stock market. United Technologies, for example, paid a near 40% premium to the market price to acquire aircraft components manufacturer Goodrich whilst Hewlett Packard paid a similar premium for the UK software company Autonomy. A surprising number of deals of this nature are currently taking place whilst the number of new issues has all but dried up. For investors who are prepared to be patient, equity market falls of this magnitude represent an opportunity rather than a threat and we are selectively adding to holdings on those on weaker days of the market.   Marriott Int Growth comment - Jun 11 Thursday, 8 September 2011 Fund Manager Comment Market sentiment in the second quarter of 2011 was dominated by Europe and, in particular, the threat posed by a Greek default. After weeks of procrastinating, the European Union and the International Monetary Fund eventually agreed to bail out Greece after the Greek parliament had agreed to implement an austerity package designed to reduce their crippling level of debt. Ironically, Greece's problems saw the Euro rally during the quarter, by 2.2% against sterling and by 2.4% against the Dollar perhaps as a result of the expectation that Greece was likely to be expelled from the eurozone and that the Euro would be much stronger as a consequence. A more likely view, is the possibility of a Euro style Brady bond package of the type used to bail out a number of emerging markets in the late 1980s. (Brady bonds were issued as special bonds backed by the US Treasury and allowed the countries concerned to restructure their finances without defaulting). A Euro version would throw a lifeline to many of the banks currently exposed to the Greek crisis and also provide a solution to the problems faced by other fragile Eurozone members such as Ireland and Portugal. It would, however, require decisive action by the EU and the IMF. Elsewhere, equity market returns have been driven as much by currency movements as by genuinely improving fundamentals. In sterling and dollar terms, global equities gained just 0.4% over the quarter after a promising start derailed by the Euro crisis. Bond investors fared better. Sterling bonds rallied by 2.6% and Dollar bonds by 2.5% as investors decided that interest rates were likely to remain lower for longer. Certainly, there was little rush to buy equities although with inflation still significantly above trend, government bond (and cash) investors appear to be resigned to accepting negative real returns. Equity valuations in general are fair, but the dividend yields of securities in the Marriott portfolios are attractive. In our view, higher yielding equities in carefully selected blue chip names represent the most sensible way to combat inflation at present. We expect this theme to gather momentum over the rest of the year, as investors focus their equity selections on well-known names in their domestic markets, particularly those paying a good dividend yield. We expect interest rates to remain lower in the UK, Europe and the US for far longer than is generally being recognised. Central banks may use any softening in inflation data as an excuse for this strategy but the reality is that benign neglect of their domestic currencies and any subsequent devaluation is a relatively easy and painless way of improving current account deficits, helping exports and therefore lowering unemployment, something the Obama administration will be desperate to achieve before the 2012 election campaign gets underway. International equities should benefit in this environment and here, The Marriott International Growth Fund is especially well positioned   Marriott Int Growth comment - Mar 11 Wednesday, 25 May 2011 Fund Manager Comment The Marriott Global Income Fund is currently yielding 3.7% from a portfolio of four investment grade corporate bonds and a small investment in a US Dollar cash fund. After several quarters of falling yields and rising prices, major global bond markets fell back in the final quarter of 2010 as investors reacted to the announcement of a second round of Quantitative Easing. Ten year US Government bond yields quickly moved out from 2.4% to nearly 3.4% in October as concerns rose over the possibility of rising inflation caused by the release of liquidity into the economy and the recognition that, as economic growth accelerates, interest rates are likely to be slowly tightened, possibly as soon as mid 2011. The four bonds held by the Fund are intentionally short dated. Whilst this has a modest effect on running yields (the current yield curve is slightly positive, favouring longer dated issues from a yield perspective) we believe that this is more than adequately offset by the fact that shorter dated issues will be less impacted by higher inflation and rising interest rates, themes which we expect to feature strongly as 2011 progresses. We have also intentionally remained in Dollar denominated issues. Whilst we have the ability in the Fund to buy and hold bonds in other major currencies, none look particularly appealing to us at this stage in the cycle and, given the Dollar denomination of the portfolio, we would prefer to stay currency neutral in the absence of any conviction that holding euros or sterling, for example, would produce a superior return without additional risk.   Marriott Int Growth comment - Dec 10 Thursday, 24 February 2011 Fund Manager Comment Momentum has carried through into the final quarter of 2010 encouraged by the second round of Quantitative Easing in the US. The similarities with the stock market rally in the early years of the 21st century are uncanny. Then, equities rose on the back of low interest rates and easy credit. This led to a credit bubble, the collapse of which nearly brought the global banking system to its knees. Today, the easy credit has gone but low interest rates remain and conventional monetary stimulus has been replaced by the latest round of a $600bn spending programme by the Fed in an attempt to pump prime a lacklustre US economy. This is a high risk strategy. No one knows for certain whether such stimulus will work or what the longer term consequences will be. In our view, the outcome should provide a major lift to the equity market but the consequences are likely to be a combination of higher inflation and a weaker US Dollar. This would be politically and economically desirable for the US economy whose export market will receive a boost whilst simultaneously providing support for asset classes such as equities, precious metals and property prices. It will, however, not be good for US bond markets, particularly at the longer end of the yield curve. This is not an issue with which we have to grapple for this fund, but we would otherwise remain very wary of this sector, inflation proofed issues aside. Investors looking for yield should continue to look towards quality equities to provide an alternative income stream to bond markets with built in protection against inflation. It rarely pays to 'fight the Fed' and with GDP and manufacturing data continuing to improve, we believe that this equity market rally has some way to go. The recent US mid term elections have proved to the incumbent Democrats that the voting public are interested in the economy first and foremost and we expect the Obama administration to stop at nothing to make things happen before the next presidential elections in 2012.   Marriott Int Growth comment - Jun 10 Wednesday, 8 September 2010 Fund Manager Comment The Dollar denomination of the Marriott International Growth Fund has subdued returns from international equities in the Fund in the second quarter of 2010. The flight to quality has benefited the traditionally risk averse currencies such as the Dollar and the Yen whilst the Euro in particular has been sold down aggressively on the back of the ongoing debt crisis in the Euro zone. Our cash and bond holdings in the Fund have been weighted in favour of the Dollar and we have long since sold any Euro denominated bonds. As the global economy slowly improves, we expect equity markets to reflect a return to growth in higher prices. However, volatility is still very high and the turbulence which we have experienced in May and June to date will continue for the foreseeable future. Cash flow remains paramount to our stock selection to support dividend payments both now and in future quarters. In summary, we expect modest growth in corporate profits for the rest of 2010. The jobless recovery in the US and the debt crisis in the Euro zone will prevent any meaningful market rally from developing any time soon and put more emphasis on dividend payouts as a critical component of total returns.   Marriott Int Growth comment - Mar 10 Thursday, 24 June 2010 Fund Manager Comment The International Growth Fund has in recent months been cutting back exposure to conventional bond markets in the face of rising inflation. Latest figures show that we were right to be concerned. Inflation has rebounded vigorously over the course of the last few months as energy prices and sales taxes have been moving higher. We expect this momentum to continue as the year progresses and for interest rates to begin rising gradually in the US by the 4th quarter of the year. This may not necessarily be unfavourable for equities; indeed some inflation should be broadly positive for the real assets invested into by the Fund namely international equities and property companies. In the meantime, our dividend streams remain robust.   Marriott Int Growth comment - Dec 09 Tuesday, 23 March 2010 Fund Manager Comment After a strong period of recovery in late 2009, it would be reasonable to expect some consolidation within the fund in 2010. However, those businesses which have led the market higher in recent months have often been those companies which were hardest hit by the credit crisis and whose weakened balance sheets prevent them from paying dividends which are the lifeblood of the Marriott International Growth Fund. As a result, whilst the Fund fell in value in 2008, the falls were muted compared with large sections of the market. Conversely, recovery was also a relatively modest affair set against the performance of certain sectors in 2009, notably financials and technology. This is to be expected in a fund of this nature where Marriott's income focused investing style seeks dependable growth and steady income streams rather than the cyclical boom and bust of riskier areas of the market. Marriott looks for businesses which can outperform through a variety of market cycles remaining focused on fundamental value, old fashioned cash flow and strong management teams, attributes which lead to medium and longer term performance in more difficult times as well as in periods of rising markets.   Marriott Int Growth comment - Sep 09 Wednesday, 9 December 2009 Fund Manager Comment The Marriott International Growth Fund enjoyed a good October in absolute as well as relative terms. Dollar weakness provided favourable momentum for the fund and most securities in the fund performed reasonably well against a backdrop of falling equity indices. Profit taking at the end of the month ended several weeks of rising markets and we now expect equities to remain range bound as the year progresses. On the one hand, we appear to be through the worst of the credit crisis although the banking industry in the UK and US still has to suffer the indignity of government interference and likely break-up of several major names such as Lloyds TSB and Royal Bank of Scotland. On the other hand, Q3 results from S&P500 companies have been largely better than expected and fears that Q2 results had been flattered by one off items have been wide of the mark. Nonetheless, valuations are now offering fair rather than good value and we expect most of our returns between now and the year end to be generated by income rather than capital gains.   Marriott Int Growth comment - Jun 09 Wednesday, 16 September 2009 Fund Manager Comment Equity Market Review Some of the momentum from earlier in the quarter was lost over the month of June. Opinions are very divided over the reason behind this modest correction in a number of markets. In some quarters it is felt it is too early to assume an immanent economic recovery is assured. The recent rally, largely driven by China stockpiling and indeed recording some early success with its stimulus packages may be inadequate to fully offset the deep seated problems in the west. The rebalancing of portfolios also appears to be largely complete for this stage of the economic and market cycle. Further evidence of the recovery is required before further tactical asset allocation can take place and therefore both economic and corporate data will be closely scrutinised over the summer months. Unfortunately the World index has been held back by the modest 3% return form the US equity market and this does mean global investors will pay increasing attention to US economic data in order to gain a better understanding on how the economy is progressing and the role it will play as far as the rest of the world is concerned. Although there is a risk that markets may move sideways for a period, one should not underestimate the number of opportunities that are available. Bond Market Review Having reached the half way point for 2009 it is interesting reviewing the recent past. Few would have anticipated that the economic backdrop could be so changed. Interestingly recent economic data has confirmed the economic downturn in the UK started in April 2008 and not July as previously believed. Even the Bank of England with its sophisticated data collection program failed to pick up on the fact that the economy was rapidly loosing momentum. Looking ahead, the potential pressures consumers and business alike now face should not be underestimated. With annual GDP for the year to June 2009 falling 4.9% we now have confirmation that the UK economy has experienced its worst slowdown since the Great Depression. Revised Q1 data also confirmed a 2.4% contraction which was significantly worse than the 1.9% estimate. Although there are signs of recovery in certain areas, this has to be expected given the severity of the slowdown and the extent of the inventory drawdown which now appears to have almost run its course. Although signs of a UK recovery remain elusive we can gain comfort from the growing evidence that shows the economy is at least stabilising. Central Bankers rightly remain deeply concerned over the downside risks facing their economies given the monetary and fiscal stimulus which is currently lending support can not go on indefinitely. Investors in the developed bond markets therefore continue to wrestle with the dilemma over what increasingly appears a lengthy period of low interest rates being offset by the same governments having the ability to finance a very expensive bailout where recovery is by no means assured. As a result government bond markets have generally been well supported over the month having retreated earlier in the quarter although we do anticipate sentiment to swing widely as emotions change. The US bond market has been the main exception as concerns over the Dollar persist.   Marriott Int Growth comment - Mar 09 Tuesday, 12 May 2009 Fund Manager Comment Equity Market review March has been a month of mixed emotions as far as the equity markets are concerned. Returns have generally been very good with investors being rewarded handsomely in the majority of markets and there is little doubt sentiment improved as the period progressed. However, the fact that many markets touched new lows in the early part of the month does indicate that the economic downturn still has some way to go. There had been faint hopes a recovery may have been forthcoming in some key economies as soon as Q3, however the stage does increasingly appear set for Q4. The question we are asking is if now is the time to buy for the recovery or indeed if this latest rally is an opportunity to take profits/cut losses and move into cash. Before answering this question we need to look back to find the cause of the rally. The turning point in the equity markets came when Citigroup informed investors that it was profitable in January and February. Other banks have since followed suit both in terms of comments and actions (for example by buying in subordinated debt). As a result investors increasingly feel the banks are, at long last, now getting back in control of their own destiny. Given a strong banking sector is a vital ingredient for every economy, it is understandable why the markets have reacted in such a way. Beyond the banking sector there is little doubt many other companies will be reporting some very distressed numbers which will clearly highlight the degree of the slowdown. Many are still likely to fail or indeed need to be reconstructed and there is little doubt shareholders in some entities may still suffer some quite serious pain. It will not however be the numbers investors focus upon as companies report, although it will be these that make the press headlines. At this stage in the cycle the key part of any announcement will be the outlook, with the chairmans' statements being scrutinised for evidence the underlying business is starting to improve. A broad selection of "green shoots" would be a very positive factor although given the strength in many commodity markets recently, there is a risk of anything less being a disappointment. However, ultimately, the determination of the governments to resolve the downturn cannot be doubted and whilst we may have to be patient, we can to a degree be relatively relaxed that the first stage of the recovery is almost assured. It is after this that the real questions and investment dilemmas will arise as the cost burden for the global stimulus fall on individuals and business alike. The economic slump will result in massive change. For example, the developing world will undoubtedly increasingly demand a greater voice when it comes to determining global policies given the vulnerability they have experienced as a result of problems in the west. Many poor countries have suffered badly and require urgent assistance in order to avoid becoming an even bigger burden on the west. Finally, many countries are increasingly uneasy over the impact of the world's reserve currency being the US dollar, especially given the way the Americans are now printing money in order to stimulate a recovery and therefore devaluing other countries' reserves. Whilst this is not a new call, the rationale is now much stronger. As long as the US remains in the driving seat, this will not occur, but the global credit crunch will result in a long expected power shift with America's influence being diluted much sooner than expected just a few years ago and change at some point is almost inevitable. At this point it is impossible to evaluate the implications, however with such a backdrop we do gain comfort by investing in a broad spread of names with a global perspective in key sectors. The single asset class approach, if correct, will reap great returns, however as we go through this transition it is a much higher risk strategy than in the past. Therefore, to conclude, we firmly believe it is prudent to continue to drip feed cash into the global equity markets in order to take full advantage of the diversity of the income stream which ultimately feeds the dividend cash flow. We believe this will be a very valuable resource as a major global transition starts to takes place. Bond Market Review The positive returns recorded over the past month in many of the bond markets were of little surprise given that governments remain focussed on doing whatever it takes to turn their respective economies. Economic data for Q4 continues to highlight the extent of the slowdown with real GDP in the US falling by an annualised 6.2% in Q4 and little improvement expected until Q2 2009. With interest rates likely to remain at least static until this recovery has been assured, the broad bond markets should be well underpinned. In the UK, support was forthcoming from a number of directions. The 0.5% Base Rate cut in March to an all-time low of 0.5% was perhaps the most surprising news. There had been growing calls for savers to be offered some assistance given many are now having to utilise capital in order to make ends meet, and of course it was the lack of saving that caused the problem in the first instance. However, given that government still believes yields in the corporate bond market are too high, a further rate cut may encourage savers to take on a little more risk by locking into what we believe to be some very attractive corporate bond yields. Falling bond yields would also make raising finance for business much cheaper and the Government could do with all the help it can get in this respect. On the other side of the equation, there is also scant evidence to suggest recent rate cuts are being passed on in full to anything other than a few fortunate borrowers who have unconstrained tracker mortgages. With little real competition in the UK banking industry as a whole, current central bank interest rate policy must be creating a very profitable backdrop for the high street banks. This, we believe will feed through to their balance sheets and ultimately allow more accessible borrowing which is of paramount importance to turn the economy. However, few bank executives believe that government will be so obliging for long. Tighter regulation is sure to follow once the economy starts to turn. Further limited bond market support was also forthcoming from the Bank of England's corporate bond purchase programme. Although the intentions appear prudent, the response was muted with only £142-million being traded over the first week. Fortunately, banks have now started to take advantage of the depressed prices of their subordinated debt by buying stock. Whilst we have felt this area of investment appeared extraordinarily cheap, there has been ongoing concern over the risk of default and general lack of other buyers. In effect there has been, until recently, almost a complete stand-off amongst investors as everyone appeared to believe someone else knew something they didn't. The fact banks are now buying the debt implies their balance sheets have improved dramatically and the debt is cheap. Other investors are now sure to follow and therefore one can look forward to further recovery in the UK corporate bond sector. The outlook for gilts is however clouded by the first failed auction in ten years. We simply do not know if this was just a one-off or indeed if investors generally are fully weighted in government debt. Should it be the latter, then the implications could be far reaching for both the UK and potentially the US. Both have massive funding requirements.   Marriott Int Growth comment - Dec 08 Friday, 20 March 2009 Fund Manager Comment Portfolio Review Inflation Protected bond exposure maintained at around 12% overall. AAA rated conventional bonds increased and exposure increased to 12%. Equities now approximately 68% of the total. Reduction in exposure to banks whose dividend may be under threat. Increase in Fixed Interest weighting. Defensive sectors still generally preferred, including Energy, Utilities, Tobacco and Telecoms. No real estate exposure in portfolio. Yield Comparison at 31 December 2008: MIGF 5.66% Yield target 2.74% (JPM Global Gov Bond 2.43%, S&P 500 3.04%) US CPI 1.1% year-on-year (2.0% excluding Food and Energy)o Equity Market Review Markets ended the year on a relatively good note after an appalling 2008. In dollar terms, global equities lost 20.9% of their value in 2008 despite double digit rallies in several markets in December. Once again, local currency returns were distorted by some momentous currency movements. In Europe, for example, markets gained a modest 0.75% in December but the swing of the euro against the dollar meant that such a movement translated into a gain of 10.6% in dollar terms. The December rally was triggered by the realisation that interest rates would continue to be cut in all major markets in response to the growing threat of deflation. Ironically, deflation is generally considered to be negative for equity markets but there was a growing sense that the sell-off in October and November in particular had been overdone. Inter-bank rates are beginning to ease and low savings rates will eventually encourage savers to seek yield elsewhere. With the S&P 500, for example, yielding over 3% compared with a US discount rate of 0.5%, there is ample encouragement for investors to look to equities to provide income over bonds. Elsewhere in the world, Asia and emerging markets generally enjoyed something of a rebound from the carnage of the previous few weeks and months, gaining 1.8% and 4.4% respectively in local currency terms. We do not, however, believe that such movements represent anything other than a relief rally at this point. It will take some time for the impact of lower interest rates to filter into the real economy and our inclination remains that of selling critically weakened companies (e.g. banks) into pockets of strength whilst building up positions in more robust businesses with strong cash flow, low debt and a progressive dividend policy on those darker days in the market. From a currency perspective, we believe that sterling is probably in oversold territory and expect some of the recent movements to be reversed, particularly against the dollar, as 2009 progresses. Longer term, we remain nervous of the growing public sector borrowing requirements in most major markets (perhaps with the exception of Japan) but feel that President-elect Obama's spending plans will have a particularly detrimental impact on the US dollar over the medium term once the currency market's present obsession with a flight to safety has run its course. Bond Market Review Government bond markets finished 2008 with a flourish, returning 7.1% in dollar terms in December to bring the total return for the year to 12%. Dollar returns were magnified in December thanks to currency weakness which saw the dollar decline by 10.1% against the euro and by 5.4% against the yen. Against sterling, the dollar continued to make remarkable progress, propelling the gain against the pound to 36% for the whole of 2008. Elsewhere, all major bond markets enjoyed positive returns in December in local currency terms with just the UK market slipping into negative territory when translated into US dollars. Driven by the fear of deflation (negative consumer price inflation), policy makers have been taking aggressive action to avoid such an outcome by cutting interest rates. Official rates in Europe and the UK are likely to follow the lead of the US and Japan effectively down to zero in an attempt to increase the amount of money in the banking system and economy. Whilst in the short-term this has been very good news for government bond holders, such action comes at considerable expense in the form of deteriorating public finances and, eventually, higher taxes. The relatively quick response to the threat of deflation by policy makers will hopefully avoid the experience of Japan which is still recovering from policy failures in the early 1990s. Deflation, therefore, should generally be treated as bad news. Near-term price movements may be good news for bond holders but this is of less significance than the damaging consequences to the wider economy which such a problem would create. Corporate bonds have begun to see pockets of interest from income-conscious investors. As some normality returns to capital markets, we believe that corporate bond markets will benefit, particularly given the low nominal redemption yields on offer from the government market. This should provide much needed breathing space to those companies needing to roll over debt in 2009, although the higher yields on offer from such activity may subdue the underlying equity of those companies in question who will see profits margins fall as borrowing costs rise.   Name Change Wednesday, 26 November 2008 Official Announcement The Marriott International Income Growth Fund has changed its name to the Marriott International Growth Fund 29/09/2008.   Marriott Int Income Growth comment - Jun 08 Monday, 1 September 2008 Fund Manager Comment Portfolio Review o Inflation protected bond exposure maintained at around 10% overall o AAA-rated conventional bonds increased and exposure also maintained at 10% o Equities now approximately 68% of the total o Recent increase in UK weighting with selective purchases of Barclays, Lloyds, HSBC and United Utilities o Defensive sectors still generally preferred, including Energy, Food Producers, Tobacco and Utilities o No real estate exposure in portfolio o Yield Comparison at 30 June 2008: · MIIGF 4.97% · Yield target 3.02% (JPM Global Gov Bond 3.67%, S&P 500 2.38%) · US CPI 4.2% year-on-year (2.3% excluding Food and Energy) Equity Market Review o The Spring equity market rally came to an abrupt end in June as inflation worries resurfaced. In local currency terms, European equity markets slumped 11.1%, whilst the US fell 8.4%, which was its worst June since the Great Depression. In relative terms, the UK held up better, slipping 7.1%, helped by the heavyweight mining and oil sectors. The US dollar saw modest weakness in June, retreating just over 1% and 0.5% against the euro and UK pound sterling respectively o In the face of this bearish sentiment, few sectors remained unscathed. However, with oil prices making new highs and other metals holding on to most of their gains, the commodity stocks retained market leadership. Financial stocks, on the other hand, remained under pressure as further write-downs and continued additional capital raising by a number of major institutions subdued potential bargain hunting. In the US, technology, commodity, materials and export-related stocks continued to outperform on a relative basis, but many of these also showed signs of strain by the end of June o Outside of housing and construction, US economic data has remained relatively resilient. The final Q1 GDP number came in at 1.0% (from a provisional upward revision of 0.9%) and it is still hoped that Federal Reserve stimulus, to date, will begin to have a positive impact by late Q3 2008 o The Federal Reserve now seems to have joined the European Central Bank and the MPC in seeing inflation as the primary threat. With headline CPI now over 4%, the markets are beginning to build in potential interest rate increases. Given the still fragile state of the economy, we believe the Fed will move cautiously, but even so, the target rate may rise by 0.25% in the second half of the year. In Europe, headline inflation has continued to edge higher, suggesting that the ECB will be the most pro-active in raising rates. The UK may be less inclined to increase base rates in the short term, but inflation could remain stubbornly high for longer than originally anticipated. In this environment, markets fear that rising inflation coupled with insipid economic growth could lead to an phenomenon not seen since the 1970s (namely a milder form of 'stagflation') Bond Market Review o June has seen some consolidation in most bond markets as heightened expectations for interest rate increases ebbed towards month-end as risks of a potential recession increased, albeit yields still edged higher in most major markets for the month as a whole o The principal upward driver of yields has been further evidence of mounting inflation pressure, particularly in the UK and Europe, together with a perception that the US economy may avoid going into recession o Despite some moderation from record high prices towards month-end, both energy and food costs have risen substantially and the outlook for inflation therefore will remain a key concern for central banks in coming months o The European Central Bank has sent a clear signal of intent to increase interest rates at their 3 July meeting. This is not necessarily indicative of a series of rate hikes as currently implied by money market yields, however, but rather appears initially intended as a signal of their inflation vigilance to ward off higher pay claims o Interest rates look to be on hold in the US in the near term, but money market yields anticipate a rate rise in both prior to year-end. Despite housing and consumer data remaining weak, the Bank of England may hike rates in Q3 as inflation looks likely to breach its 3% target ceiling for much of 2008 o Increased fears of recession, particularly in the UK and some European markets provides a difficult backdrop for credit markets as default risks increase at times of economic weakness   Marriott Int Income Growth comment - Mar 08 Thursday, 22 May 2008 Fund Manager Comment Portfolio Review o Inflation Protected Bonds increased in UK, US and Europe. Exposure maintained at 10% exposure overall o AAA rated conventional bonds increased and exposure also maintained at 10% o Cash has been allowed to build since the end of the third quarter as the portfolio remained defensively positioned. Equities now approximately o 62% of the total. o Some scope to now add selectively to equities in early 2008 after market weakness. Recent increase in US weighting with purchase of AT&T and Spectra. o Defensive sectors preferred, including Energy, Food Producers, Tobacco and Utilities. o No real estate exposure in portfolio. o Yield Comparison at 31 March 2008: o MIIGF 4.27% o Yield target 2.72% (JPM Global Gov Bond 3.15%, S&P 500 2.29%) o US CPI 4.3% y-o-y (2.3% ex Food & Energy) Equity Market Review o March saw markets head generally lower after a steadier February. The US, ironically, suffered less in local currency terms. The strong euro meant that European markets delivered a positive return in USD terms. o Equity markets remain wary of US sub-prime contagion and mounting evidence of a sharp slowdown in US economic activity o Data shows further softening in the US and recession now a given. Extent and duration still uncertain and the Federal Reserve has made it clear that it is prepared to do what is necessary to support the financial system. Bail out of Bear Stearns may prove to be a watershed. o Weaker dollar exacerbates concerns over headline inflation, especially in the US, but core inflation is still contained. In the UK, the Bank of England warns that inflation could still breach the 3.0% ceiling in 2008. The ECB also remains focused on fighting inflation. o Results to date generally more positive than anticipated and valuations pricing in a slowdown in earnings. Non-financial results have exceeded forecasts on average, but scope for equity market rally is capped by ongoing credit market woes. First quarter US corporate earnings reporting season begins in earnest in the next few weeks. o UK and European Bank results provide some reassurance and dividend increases have been seen in most cases, but outlook for 2008 will be challenging as economies slow. Bond Market Review o Government bond markets benefit from poor US economic data, indicating increased risk of recession. Flight to safety benefits government and ultra-high grade issues, but corporate spreads initially widen as caution remains over extent of impact from sub-prime sector and credit crunch, before this starts to reverse during the second half of the month. o US Federal Reserve continues to be flexible and proactive in response to threats to broader economy - January cuts were followed by a further 75bp cut in March. Huge amounts of liquidity also pumped into the system to unfreeze credit markets. Fed rates have now fallen to 2.25% from 5.25% and a likely further reduction of 50bp towards the end of April is now priced in as data remains soft. o Rapid US interest rate cuts leads to very steep yield curve. US two-year note yield falls to 1.8%, implying further rate cuts to come, but 10y yield of 3.6% indicates inflation expectations to return thereafter. o High yield sector remains under pressure and spreads remain wide as extent of economic slowdown uncertain. Some value is starting to emerge. Corporate spreads peak in mid March but bail out of Bear Stearns triggers a marked narrowing over the following two weeks. o Recent bond purchases all rated AAA to benefit from safe haven buying. o UK Gilts hampered as increased inflation pressures limits scope for interest rate cuts from the Bank of England and yield curve disinverts. Nevertheless, expectations of a further 25bp cut have increased and this may be at the next meeting in mid-April rather than May. o European rates on hold as ECB reiterates hawkish bias ahead of annual wage rounds, but market anticipates easing will be required as economies slow later in the year. o Interbank rates had stabilised, but 3-month Libor begins to rise again, despite relatively reassuring annual results from the major banks.   Marriott Int Income Growth comment - Dec 07 Tuesday, 26 February 2008 Fund Manager Comment Inflation Protected bonds increased in UK, US and Europe. Exposure maintained at 10% exposure overall o AAA rated conventional bonds increased and exposure also maintained at 10% o Cash has been allowed to build during the final quarter of 2007 as the portfolio remained defensively positioned. Portfolio has outperformed equity markets during this quarter o Some scope to now add selectively to Equities in early 2008 after market weakness o Defensive sectors preferred, including Energy, Food Producers, Tobacco and Utilities o No real estate exposure in portfolio o Yield Comparison at 31st December 2007: o MGIIF 4.09% o Yield target 2.74% (JPM Global Gov Bond 3.46%, S&P 500 2.01%) o US CPI 4.3% y-o-y (2.3% ex Food & Energy)   Marriott Int Income Growth comment - Sep 06 Tuesday, 14 November 2006 Fund Manager Comment The funds continue to generate above-inflation income growth in US dollars, mainly as a result of recent strong economic growth, particularly in the United States. The current forward yield of 4.0% compares favourably with the 2.8% yield generated by averaging the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. The fund continues to focus on investing in companies (whether industrial, financial or real estate) in the US, UK and Europe where the current dividend yield and future income growth prospects will ensure that the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation in the long-term. While average market dividend yields remain low (although they have been rising for the past 2 years) we believe there is currently an opportunity to lock in good dividend yields from some of the world's leading companies. As a result, the fund's exposure to equities has been maintained at 78.4%, while the fund's bond and property exposure has been reduced marginally and now stands at 9.8% and 7% respectively, with the balance in cash. Based on the current income yield of 4.0% (pre-tax), an expected yield in 5 years time of between 3.5% and 4.5% and income growth in US dollars of between 4% and 6% per annum, we are forecasting total returns of between 7% and 14% per annum. Click here for original article   Marriott Int Income Growth comment - Mar 06 Friday, 12 May 2006 Fund Manager Comment Distribution At the end of March, the fund paid a semi-annual distribution of 1.48 US cents per unit, representing growth of 35% over the corresponding 6- month period last year. Not all of the growth achieved during this period is sustainable, due to a number of special dividends from securities in the fund as well as from the significant growth in assets during the 6 months between September 2005 and February 2006. Stripping out the impact of special dividends and asset growth, the fund did achieve sustainable income growth in excess of 5% as the growth in the world economy translated into inflation-beating income growth for the equity and real estate securities in the fund. Future Income The fund is likely to produce above-average income growth over the medium-term, based on current economic growth projections in the regions in which the fund is invested (i.e. the United States, the United Kingdom and Europe). The initial forward yield of 4.1% compares favourably with the 2.7% yield generated by averaging the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. Capital Over time, the fund will produce capital growth in line with the growth in income. Over shorter periods there is likely to be more volatility with prices rising and falling as sentiment changes. Factors which influence investor sentiment include, but are not limited to, changes in interest rates, political instability, rising & falling inflation and fluctuations in exchange rates. The fund will look for companies (whether industrial, financial or real estate) in the US, UK and Europe where the current dividend yield and future income growth prospects will ensure that the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation in the long-term. While average market dividend yields remain low (although they have risen significantly over the past 2 years) we believe there is currently an opportunity to lock in good dividend yields from some of the world's leading companies. As an example, the fund's 27% exposure to UK financial and industrial companies is yielding in excess of 4.1%, with income growth expected to average around 5% per annum over the next 5 years. For diversification, the fund holds investment grade sovereign and corporate bonds. While producing a known level of income, these bonds may be subject to capital fluctuations, particularly if central banks continue to raise official interest rates in the US and Europe. As a result of strong income growth having not yet translated into higher prices (i.e. initial yields are now higher), the fund's exposure to equities has been increased further and now stands at 81%. The fund's bond exposure has been maintained at around 12%, while the real estate exposure continues to reduce (as prices rise) and now stands at just 7%. Based on the current income yield of 4.1% (pre-tax), an expected yield in 5 years time of between 3.5% and 4.5%, and income growth in US Dollars of between 4% and 6% per annum, we are forecasting total returns of between 7% and 14% per annum.   Marriott Int Income Growth comment - Dec 05 Monday, 13 March 2006 Fund Manager Comment Distribution At the end of September 2005, the fund paid a semi-annual distribution of 2.39 cents per unit, representing growth of 19.5% over the comparable period last year. This level of income growth is not sustainable and we would expect the rate of growth to move quickly to our longer-term forecast of 5% per annum. Future Income The fund is currently yielding 4.2% (gross), which compares favourably with the 2.5% yield generated by the average of the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. The equity and listed real estate components of the fund are expected to generate income growth in excess of US consumer inflation (currently approximately 2%) over the next 3 to 5 years. Capital Strong equity and listed real estate markets in the US, UK and Europe enabled the fund to produce capital growth in US dollars in excess of 20% during the course of 2003 and 2004. We will continue to look for companies (whether industrial, financial or real estate) and industries in the US, UK and Europe where the current dividend yield and future income growth prospects will ensure the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation. While average market dividend yields remain low (although they have risen significantly over the past 2 years) we believe there is currently an opportunity to lock in good dividend yields from some of the world's leading companies. As an example, the fund's 25% exposure to UK financial and industrial companies is yielding in excess of 4.0%, with income growth expected to average around 5% per annum over the next 5 years. For diversification, the fund holds bonds that are limited to investment grade sovereign and corporate issues. While producing a known level of income, these bonds may be subject to capital fluctuations, particularly if central banks raise interest rates further. The fund's exposure to equities is 75%, while bond exposure is 13% and real estate exposure has been reduced to under 10%. Based on the current income yield of 4.2% (pre-tax), an expected yield in 5 years time of between 3.8% and 4.2%, and income growth in US dollars of between 4% and 6% per annum, we are forecasting total returns of between 9% and 13% per annum.   Marriott Int Income Growth comment - Sep 05 Monday, 21 November 2005 Fund Manager Comment Distribution At the end of September 2005, the fund paid a semi-annual distribution of 2.39 cents per unit, representing growth of 19.5% over the comparable period last year. This level of income growth is not sustainable and we would expect the rate of growth to move quickly to our longer-term forecast of 5% per annum. Future Income The fund is currently yielding 4.2% (gross), which compares favourably with the 2.4% yield generated by the average of the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. The equity and listed real estate components of the fund are expected to generate income growth in excess of US consumer inflation (currently approximately 3%) over the next 3 to 5 years. Capital Strong equity and listed real estate markets in the US, UK and Europe enabled the fund to produce capital growth in US dollars in excess of 20% during the course of 2003 and 2004. We will continue to look for companies (whether industrial, financial or real estate) and industries in the US, UK and Europe where the current dividend yield and future income growth prospects will ensure the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation. While average market dividend yields remain low (although they have risen significantly over the past 2 years) we believe there is currently an opportunity to lock in good dividend yields from some of the world's leading companies. As an example, the fund's 25% exposure to UK financial and industrial companies is yielding in excess of 4.3%, with income growth expected to average around 5% per annum over the next 5 years. For diversification, the fund holds bonds that are limited to investment grade sovereign and corporate issues. While producing a known level of income, these bonds may be subject to capital fluctuations, particularly if central banks raise interest rates further. The fund's exposure to equities is 74%, while bond exposure is 14% and real estate exposure has been reduced to under 10%. Based on the current income yield of 4.2% (pre-tax), an expected yield in 5 years time of between 3.8% and 4.2%, and income growth in US dollars of between 4% and 6% per annum, we are forecasting total returns of between 9% and 13% per annum.   Marriott Int Income Growth comment - Jun 05 Monday, 15 August 2005 Fund Manager Comment Distribution At the end of March 2005, the fund paid a semi-annual distribution of 1.14 cents per unit, representing growth of 14% over the comparable period last year. This level of income growth is not sustainable and we would expect the rate of growth to move quickly to our longer-term forecast of 5% per annum. Future Income The fund is currently yielding 4.1% (gross), which compares favourably with the 2.4% yield generated by the average of the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. The equity and listed real estate components of the fund are expected to generate income growth in excess of US consumer inflation (currently approximately 3%) over the next 3 to 5 years. Capital Strong equity and listed real estate markets in the US, UK and Europe enabled the fund to produce capital growth in US dollars in excess of 20% during the course of 2003 and 2004. We will continue to look for companies (whether industrial, financial or real estate) and industries in the US, UK and Europe where the current dividend yield and future income growth prospects will ensure the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation. While average market dividend yields remain low (although they have risen significantly over the past 2 years) we believe there is currently an opportunity to lock in good dividend yields from some of the world's leading companies. As an example, the fund's 23% exposure to UK financial and industrial companies is yielding in excess of 4.5%, with income growth expected to average around 5% per annum over the next 5 years. For diversification, the fund holds bonds that are limited to investment grade sovereign and corporate issues. While producing a known level of income, these bonds may be subject to capital fluctuations, particularly if central banks raise interest rates further. The fund's exposure to equities is 68%, while bond exposure has reduced to 14% and real estate exposure has been reduced further to 10%. Based on the current income yield of 4.1% (pre-tax), an expected yield in 5 years time of between 3.8% and 4.2%, and income growth in US dollars of between 4% and 6% per annum, we are forecasting total returns of between 9% and 13% per annum.   Marriott Int Income Growth comment - Mar 05 Thursday, 19 May 2005 Fund Manager Comment Distribution At the end of March 2005, the fund paid a semi-annual distribution of 1.14 cents per unit, representing growth of 14% over the comparable period last year. This level of income growth is not sustainable and we expect the rate of growth to move quickly to our longer-term forecast of 5% per annum. Future Income The fund is currently yielding 4.2% (gross), which compares favourably with the 2.5% yield generated by the average of the S&P 500 dividend yield and the yield of the JP Morgan Global Government Bond Index. The equity and listed real estate components of the fund are expected to generate income growth in excess of US consumer inflation (currently approximately 3%) over the next 3 to 5 years. Capital Strong equity and listed real estate markets in the US, UK and Europe enabled the fund to produce capital growth in US dollars in excess of 20% during the course of 2003 and 2004. We will continue to look for companies (whether industrial, financial or real estate) and industries in the US, UK and Europe where the current dividend yield and future income growth prospects will ensure the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation. While average market dividend yields remain low (although they have risen significantly over the past 2 years) we believe there is currently an opportunity to lock in good dividend yields from some of the world's leading companies. As an example, the fund's 26% exposure to UK financial and industrial companies is yielding close to 6%, with income growth expected to average around 6% per annum over the next 5 years. For diversification, the fund holds bonds which are limited to investment grade sovereign and corporate issues. While producing a known level of income, these may be subject to capital fluctuations, particularly if central banks raise interest rates further. The fund's exposure to equities is 70%, while bond exposure has been maintained at 13% and real estate exposure has been reduced further to 10%. Based on the current income yield of 4.2% (pre-tax), an expected yield in 5 years time of between 3.8% and 4.2%, and income growth in US dollars of between 4% and 6% per annum, we are forecasting total returns of between 9% and 13% per annum.   Marriott Int Income Growth comment - Dec 04 Wednesday, 16 February 2005 Fund Manager Comment Distribution At the end of September 2004, the fund paid a semi-annual distribution of 2.0 cents per unit bringing the total distribution for 2004 to 3.0 cents. This cannot be compared to the 1.3 cents distribution paid in 2003 as it related to a six-month trading period. Future Income The fund is currently yielding 4.2% (gross), which compares favourably with the 2.4% yield generated by the average of the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. The equity and listed real estate components of the fund are expected to generate income growth in excess of US consumer inflation over the next 3 to 5 years. Capital Strong equity and listed real estate markets in the US, UK and Europe enabled the fund to produce capital growth in US dollars in excess of 20% during the course of 2003 and 2004. We will continue to look for companies (whether industrial, financial or real estate) and industries in the US, UK and Europe where the current dividend yield and future income growth prospects will ensure the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation. While average market dividend yields remain low (although they have risen significantly over the past 2 years) we believe there is currently an opportunity to lock in good dividend yields from some of the world's leading companies. As an example, the fund's 25% exposure to UK financial and industrial companies is yielding close to 6%, with income growth expected to average around 6% per annum over the next 5 years. For diversification, the fund holds bonds which are limited to investment grade sovereign and corporate issues. While producing a known level of income, these may be subject to capital fluctuations, particularly if central banks raise interest rates further this year and next. The fund's exposure to equities is 69%, bonds is 13% and real estate is 13%.   Marriott Int Income Growth comment - Sep 04 Wednesday, 20 October 2004 Fund Manager Comment Distribution At the end of September 2004, the fund paid a semi-annual distribution of 2.0 cents per unit bringing the total distribution for 2004 to 3.0 cents. Future Income The fund is currently yielding 4.3% (gross), which compares favourably with the 2.5% yield generated by the average of the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. The equity and listed real estate components of the fund are expected to generate income growth in excess of US consumer inflation over the next 3 to 5 years. Capital Strong equity and listed real estate markets in the US, UK and Europe enabled the fund to produce capital growth in US dollars in excess of 10% during the course of 2003 and 2004. The fund manager's will continue to look for value opportunities in the US, UK and European equity markets to ensure the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation. Securities will be included on the basis of the relative relationship between their current dividend yields and their future dividend growth prospects. The fund's bond holdings are limited to investment grade sovereign and corporate issues and while producing a known level of income may be subject to capital fluctuations. In the short-term there may be capital declines if central banks globally raise interest rates this year. The funds exposure to equities is 60%, bonds is 21% and real estate is 15%.   Marriott Int Income Growth comment - Aug 04 Wednesday, 15 September 2004 Fund Manager Comment Distribution At the end of March 2004, the fund paid its second semi-annual distribution, which amounted to 1.0 cents per unit. Future Income The fund is currently yielding 4.3% (gross), which compares favourably with the 2.6% yield generated by the average of the S&P 500 dividend yield and the yield on the JP Morgan Global Government Bond Index. The equity and listed real estate components of the fund are expected to generate income growth in excess of US consumer inflation over the next 3 to 5 years. Capital Strong equity and listed real estate markets in the US, UK and Europe enabled the fund to produce capital growth in US dollars in excess of 10% during the course of 2003. The fund manager's will continue to look for value opportunities in the US, UK and European equity markets to ensure the fund not only produces a distributable income stream, but also provides capital growth in excess of US consumer inflation. Securities will be included on the basis of the relative relationship between their current dividend yields and their future dividend growth prospects. The fund's bond holdings are limited to investment grade sovereign and corporate issues and while producing a known level of income may be subject to capital fluctuations. In the short-term there may be capital declines if central banks globally, raise interest rates this year. The funds exposure to equities is 50%, bonds is 21% and real estate is 15%.

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