The Marriott Income Fund will continue with its current asset allocation exposure to low term cash deposits with a term to maturity of approximately 65 days. This is to ensure capital stability and to take advantage of the high interest rate environment. The portfolio is currently not exposed to bonds and property as these asset classes remain at relatively low yields with a continued risk of capital loss. The portfolio is only exposed to the top five South African banks by way of ordinary deposits and has imposed a maximum exposure of 30% to any one bank. There is no exposure to credit risk transfer instruments or to asset backed deposits to ensure the lowest risk possible for our Investors.

It is our view that interest rates will remain at these high levels as a result of continued inflationary pressure.

The Marriott Income Fund will continue with its current asset allocation exposure to near term only cash deposits (with a term to maturity of ±50 days) to ensure capital stability and to take advantage of the high interest rate environment. The portfolio is currently not exposed to bonds and property as these asset classes remain at relatively low yields with a continued risk of capital loss. It is our view that interest rates will continue to rise as a result of continued inflationary pressure. The fund remains invested in the five major banking institutions and, at this stage, will not include any other credit instruments. This ensures the lowest risk possible for our Investors.

The rate of consumer inflation continued to increase during the first quarter of 2008. February CPIX figures indicate that inflation had increased to 9.4% during the year. Most of the increase was due to rising food and transport costs. Production inflation also continued to increase and jumped to 11.2% in February.

This continued upward pressure on inflation has increased the likelihood of interest rates being raised by the Reserve Bank in April 2008.

The Marriott Income Fund will continue with its short average term to maturity in order to take advantage of the rising trend in interest rates. The current term is an average of 98 days and will enable Investors to benefit from increases in rates quicker than if the term was longer. It will also continue with its conservative credit policy during this period by only depositing with the five major South African banks.

A number of deposits in the fund with relatively low rates are due to mature in April, and their placement at current rates will increase the yield in the fund in the months ahead.

The fund will hold a minimum of 50% cash.

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

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

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

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

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

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

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