The Marriott High Income Fund produced a total return of 4.8% for the 12 months ending September 2013. This return has been in line with money market returns of approximately 5.0%. In 2012 the performance of inflation linked bonds, equities and preference shares improved the total return of the fund. This year inflation linked bonds (15% exposure) have been impacted by the recent volatility in bond markets stemming from Ben Bernanke's "tapering comments". These comments suggested a slowdown in quantitative easing resulting in higher bond yields and falling capital values. With upward pressure being exerted on fixed interest bond and property yields the fund's conservative positioning will protect investors from further capital volatility and afford investors the opportunity to reinvest at higher yields. The current yield of inflation linked bonds of approximately 1.6% combined with continued inflationary pressures, still warrants the inclusion of inflation linked bonds in the portfolio.

The Marriott High Income Fund has been positioned to assist retired investors who need a high level of income during this protracted period of low interest rates, whilst not exposing investors to unwarranted capital risk. The fund's 8% income yield has been achieved by including high yielding bank deposits (premium NCDs) with a known capital loss to the fund of approximately 3%.

We are optimistic given recent market events that an opportunity to reinvest back into property and fixed interest bonds will present itself over the medium term which will significantly improve the income producing ability and return outlook for the fund. In the interim we continue to urge capital sensitive investors to draw a money market related rate and to re-invest the excess income to ensure capital stability during this period of low interest rates and volatile markets. For investors who require a higher level of income, the capital loss will be predictable and can therefore be managed sensibly. If an investor can draw a lower level of income we suggest considering utilising a combination of the three managed funds to achieve a desired level of income yield and income growth.

Recent market events have resulted in a global sell-off of bonds. The SA 10 year bond yield has moved out from 6.2% to 7.7% in approximately 60 days resulting in capital losses for investors of approximately 8%. This highlights the risks associated with paying too much for an income stream and endorses the defensive position of the fund.

Despite the recent market volatility and interest rates being at the lowest level in 40 years, the Marriott High Income Fund produced a total return of 7.1% for the 12 months ending June 2013. This return significantly exceeded money market returns of approximately 5.1%.

The Marriott High Income Fund has been positioned to assist retired investors who need a high level of income during this protracted period of low interest rates, whilst not exposing investors to unwarranted capital risk. The fund's 8% income yield has been achieved by including high yielding bank deposits (premium NCDs) with a known capital loss to the fund of approximately 3%.

Our 2013 return expectation for the fund is in the region of 5%. With local markets being expensive, we feel investors will be best served by a conservative asset allocation positioned to withstand a potential market correction. Capital sensitive investors are therefore recommended to draw a money market related rate and to re-invest the excess income. The re-investing of income will help ensure capital stability during this period of low interest rates and volatile markets. For investors who require a higher level of income, the capital loss will be predictable and can therefore be managed sensibly.

Despite interest rates being at the lowest level in 40 years, the Marriott High Income Fund produced a total return of 7.5% for the 12 months ending March 2013. This return significantly exceeded money market returns of approximately 5.3%.

The Marriott High Income Fund has been positioned to assist retired investors who need a high level of income during this protracted period of low interest rates, whilst not exposing investors to unwarranted capital risk. The fund's 8% income yield has been achieved by including high yielding bank deposits (premium NCDs) with a known capital loss to the fund of approximately 3%.

Our 2013 return expectations for the Marriott High Income Fund is in the region of 5%. With local markets being expensive, we feel investors will be best served by a conservative asset allocation positioned to withstand a potential market correction. This will allow investors to re-invest their capital into markets when valuations are more favourable and secure higher yields to fund their retirement.

Capital sensitive investors are therefore recommended to draw a money market related rate and to re-invest the excess income. The re-investing of income will help ensure capital stability during this period of low interest rates and volatile markets. For investors who require a higher level of income, the capital loss will be predictable and can therefore be managed sensibly.

Money in the bank is currently yielding approximately 4.5% - the lowest it has been for more than 30 years. This low interest rate environment has put significant strain on retired investors needing to draw an income from their investments. The Marriott High Income Fund has been positioned to assist retired investors needing a high level of income during this difficult time. The distribution of the fund was 7.25 cpu (8% annual yield) in December and has been kept elevated to help retired investors who need the extra income. This high level of income has been achieved by including high yielding bank deposits (premium NCDs) with a known capital loss to the fund of approximately 3%. Without these instruments the fund would yield close to 5% with relative capital stability.

To partially offset the capital loss created by the premium NCDs, government inflation linked bonds and high yielding equities have been included in the portfolio to provide capital growth. Listed real estate and fixed interest bonds have been avoided as we feel their current low yields present investors with significant capital risk.

The inclusion of high yielding equities and inflation linked bonds has successfully dampened the price loss and resulted in a 9.3% annual total return for the year ending December 2012. This total return compares favourably to the 5.4% total return of the average money market fund over the same period.

Despite the improved performance of the Fund, capital sensitive investors are still recommended to draw a money market related rate and to re-invest the excess income. The re-investing of income will help ensure capital stability during this period of low interest rates and volatile markets.