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Marriott International Growth Fund - News

Marriott International Growth Fund

Marriott International Funds Plc.
	Marriott International Growth Fund
		News

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.
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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%.