In this annual report, we focus on three core themes that underpin our commitment to providing investors with predictable outcomes.
Our income portfolios delivered their best annual returns in over a decade. The Core Income Fund (Class C) returned 13%, generating a 10% real return above inflation, while continuing to provide the reliable yield our investors depend on. This extends a ten-year track record in which Marriott has consistently outperformed the SA multi-asset income sector average, money market funds, and inflation.
Our equity portfolios performed in line with our expectations, though they lagged broader market averages – the Dividend Growth Fund (Class A) returned 10%, the Balanced Fund of Funds (Class C) returned 12%, and our International Share Portfolios delivered approximately 7% in Sterling terms, 15% in Dollars.
The reason for the lag is straightforward. In South Africa, mining stocks rose roughly 130% over the past twelve months. Resources, Prosus, and Naspers now account for approximately half the JSE. In the United States, AI-related companies drove around 80% of equity returns. The top ten stocks in the S&P 500 represent a larger share of the index than at any point in modern history.
We don't own mining stocks. We're underweight AI. Market returns were concentrated in these areas.
Our goal is to deliver more predictable income and return outcomes.
Predictability requires investment in businesses with durable competitive advantages, consistent cash generation, and the ability to pay and grow dividends through economic cycles. It also requires us to be in industries where the future can be reasonably assessed.
Mining doesn't qualify – commodity prices are volatile and largely unforecastable. A mining company's earnings can double or halve based on forces outside anyone's control. Strong recent performance doesn't change the underlying nature of the industry.
Emerging technology doesn't qualify for a different reason. The AI industry is transformative. We recognise that and we've rebuilt our own research process around it – but transformative and predictable are different things.
When an industry is in a state of rapid evolution, it is impossible to predict with certainty which companies will dominate, which business models will prevail, or how value will ultimately be distributed across the ecosystem. Today’s market leaders may not be tomorrow's winners. The history of technology is consistent on this point: early pioneers often fail to endure, while late entrants frequently capture the majority of the long-term value.
This isn't a view on whether AI stocks will rise or fall. It's a statement about predictability. We invest in what we can reasonably assess, and we cannot reasonably assess how an emerging industry will settle.
Recent reporting has highlighted another layer of complexity. Much of the trillion-dollar AI boom traces back to a web of interconnected transactions between a handful of companies – chip makers investing in AI developers who commit to buying their chips, cloud providers funding startups who rent their servers. Nvidia invests $100 billion in OpenAI. OpenAI signs a $300 billion deal with Oracle for data centres. Oracle spends billions on Nvidia chips. The capital circles back. The pattern echoes the late 1990s. The circular nature of the flow raises an obvious question: is this sustainable?
Valuation compounds the issue further. Many AI stocks trade at multiples requiring not just success but dominance, sustained for decades. These may prove correct. But they are assumptions about an uncertain future, not observations about a demonstrable present.
As such, we remain underweight AI. Not because we doubt AI’s importance. Because we doubt anyone’s ability to predict who wins, at what margin, and whether current prices reflect a future that may never arrive.
Something unusual is happening in equity markets and it deserves attention.
Concentration in the S&P 500 is now at an all-time high. The top ten companies account for approximately 40% of the index – roughly double the level seen in 2015. This exceeds the concentration at the peak of the dot-com bubble and before the Global Financial Crisis.
This pattern has played out before. During the dot-com bubble, technology stocks surged and the market-cap-weighted S&P meaningfully outpaced the equal-weight index, only to unwind sharply when sentiment shifted. A similar dynamic preceded the 2008 financial crisis, when financials became heavily concentrated. Each period demonstrated the same lesson: narrow leadership can amplify downside risk when conditions change.
We're not going to try and predict when or whether this concentration unwinds. We're simply observing that it exists, that it's unprecedented, and that it changes what index exposure actually means.
When most of the index depends on a small number of stocks underpinned by a single narrative, diversification disappears. What remains is overexposure to the valuations and extraordinary expectations of just a few names. For investors seeking predictable outcomes, benchmarks have therefore become problematic. Beating 'the market' now simply reflects positioning on this narrow group. We are not trying to beat an index that has become concentrated. We are trying to deliver reliable income and sustainable growth. These are different goals, and in years like this one, they produced different numbers.
The graphic below shows how the top ten companies in the S&P 500 have recently been dominated by a handful of technology and AI-related companies, whereas historically the pattern of leadership included diversified sectors like energy, consumer staples, and manufacturing.
We don't make market predictions. We observe that extreme concentration has historically been unstable and that valuations requiring exceptional assumptions have historically corrected. Emerging industries have historically sorted winners from losers in ways that weren't visible at the time.
In the meantime, speculative capital has created a gap. In 2025, high-quality US stocks returned less than one-seventh of "unprofitable tech," which was up 70 per cent. Money has chased debt-laden, loss-making companies on AI hopes – and ignored established sectors with quality businesses e.g. healthcare and consumer staples that generate cash.
"The best time to buy quality stocks is now – a generational opportunity in otherwise bubbly markets."
– Ruchir Sharma, Chair of Rockefeller International, Financial Times, December 2025
If these observations prove correct, our positioning will seem notably foresighted. If they don't, we’ll continue doing what we do. Our outcomes depend on the businesses we own, not on whether concentration persists or unwinds.
There is a clear difference between investing in an emerging industry and adopting a technology. We are underweight AI-related stocks because the competitive landscape is still volatile and hard to forecast. We are embracing the tools because they make us better at what we already do.
Traditional research works like this: analysts spend most of their time gathering information, reading filings, tracking updates, processing data. Remaining time goes to interpretation and judgement.
We've reversed this. AI handles the structural layer – reading every document, monitoring every update, applying our framework uniformly across every company we follow. Our analysts focus on interpretation, context, and decision-making. We call this the Analyst Elevation Principle – AI provides the base; analysts add the value.
The cost of analytical intelligence is falling. Within a few years, most firms will have access to capable AI tools. The differentiator will not be having AI, but whether your process is designed to extract enduring advantage from it.
Many firms are retrofitting AI, adding it to workflows built for a different era. The result is often faster administration, but the underlying research model remains constrained by human capacity – incremental improvement rather than transformation.
We could have taken the same route. Instead, we made a deliberate choice to redesign our research process from first principles. We asked what research should look like when AI accelerates the data-heavy, repetitive work and humans concentrate on judgement, context, and accountability. The answer was fundamentally different from what existed before.
That choice matters. The edge shifts from simply having information to structuring it well; from processing speed to interpretive quality; and from large teams doing routine tasks to focused teams doing essential work. The architecture is in place, and its benefits should compound from here.
Quality businesses that reliably grow dividends deliver more predictable long-term outcomes. This was true when we started. It’s true now. Our philosophy is unchanged but our capacity to execute it has step-changed.
Our equity returns lagged because markets were concentrated in areas we exclude – mining and emerging technology. Our income delivery remained consistent.
We've invested substantially in our research architecture. This means we now monitor more companies, detect changes earlier, and apply our framework with greater consistency than any traditional process allows.
Markets are concentrated to historic levels, meaning some valuations are assuming outcomes that haven’t yet happened. Will the environment shift? Whether the environment shifts or not, our positioning relies on quality businesses doing what they do best, not on markets or speculation.
Please see the latest commentary on each fund in our factsheets, available on our website.
| As at 31 December 2025 | Total Return | Income Produced# | ||||
| 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | |
| First World Equity Feeder Fund (A) | 0.5% | 6.9% | 7.2% | R19 548 | R70 916 | R114 526 |
| Sector Average (Global – Equity – General) | 6.5% | 16.1% | 10.2% | R2 944 | R13 295 | R16 518 |
| Dividend Growth Fund (R) | 10.9% | 11.4% | 10.0% | R23 442 | R101 449 | R166 977 |
| Sector Average (SA – Equity – General) | 29.8% | 16.4% | 15.6% | R24 775 | R86 112 | R159 283 |
| *Annualised #Assuming R1,000,000 invested Source: ProfileData | ||||||
| As at 31 December 2025 | Total Return GBP* | Total Return USD* | Total Return EUR* | ||||||
| 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | |
| ISP – Income Growth Portfolio | 7.3% | 5.7% | 7.4% | 15.0% | 9.6% | 7.1% | 1.7% | 6.3% | 8.0% |
| *Annualised Gross of Investment Management Fee Source: Bloomberg | |||||||||
| As at 31 December 2025 | Total Return USD |
| Since inception (31 March 2025) | |
| Smart International Equity Portfolio (SIEP) | 18.80% |
| Performance is gross of fees and withholdings tax Source: Marriott & Bloomberg | |
| As at 31 December 2025 | Total Return | Income Produced# | ||||
| 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | |
| Core Income Fund (A) | 12.9% | 11.2% | 8.6% | R75 796 | R248 129 | R364 740 |
| Core Income Fund (C – LISPs only) | 13.2% | 11.5% | 8.9% | R78 667 | R256 802 | R378 689 |
| High Income Fund (A) | 12.6% | 11.0% | 8.5% | R73 849 | R243 070 | R358 224 |
| High Income Fund (C) | 12.9% | 11.3% | 8.8% | R76 725 | R251 773 | R372 181 |
| Income Fund (R) | 12.2% | 10.7% | 8.3% | R79 387 | R251 507 | R357 802 |
| Sector Average (SA – Multi Asset – Income) | 11.6% | 10.5% | 8.8% | R72 077 | R230 544 | R335 760 |
| *Annualised #Assuming R1,000,000 invested Source: ProfileData | ||||||
| As at 31 December 2025 | Gross Return Since Inception (18 December 2023) | ||
| Currency | Cummulative Return | Annualised Return | |
| Smart International Income Portfolio – Dollar Portfolio | USD | 11.0% | 5.2% |
| Smart International Income Portfolio – Sterling Portfolio | GBP | 9.6% | 4.6% |
| Performance is gross of fees and withholdings tax Source: Marriott | |||
| As at 31 December 2025 | Total Return | Income Produced# | ||||
| 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | |
| International Real Estate Feeder Fund (A) | -6.2% | 1.6% | 2.9% | R31 836 | R110 850 | R174 155 |
| Sector Average (Global – Real Estate – General) | -5.7% | 4.3% | 4.1% | R12 041 | R41 404 | R70 455 |
| *Annualised #Assuming R1,000,000 invested Source: ProfileData | ||||||
| As at 31 December 2025 | Total Return GBP | ||
| 1 year | 3 years* | 5 years* | |
| First World Hybrid Real Estate plc (A) | 8.7% | 2.1% | 3.8% |
| *Annualised Gross of Investment Management Fee Source: Marriott | |||
| As at 31 December 2025 | Total Return | Income Produced# | ||||
| 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | |
| Property Income Fund (A) | 26.7% | 16.5% | 15.6% | R62 199 | R204 748 | R379 915 |
| Sector Average (SA – Real Estate – General) | 27.6% | 20.4% | 18.5% | R50 199 | R183 092 | R351 111 |
| *Annualised #Assuming R1,000,000 invested Source: ProfileData | ||||||
| As at 31 December 2025 | Total Return | Income Produced# | ||||
| 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | |
| International Growth Feeder Fund (A) | 0.5% | 5.4% | 5.8% | R22 688 | R77 424 | R121 839 |
| Sector Average (Global – Multi Asset – Flexible) | 3.3% | 11.8% | 8.1% | R2 857 | R9 936 | R14 370 |
| Worldwide Fund (A) | 5.6% | 8.0% | 7.2% | R28 539 | R101 525 | R155 907 |
| Worldwide Fund (C) | 6.2% | 8.6% | 7.8% | R34 298 | R120 169 | R187 916 |
| Sector Average (Worldwide – Multi Asset – Flexible) | 11.6% | 14.8% | 10.6% | R12 671 | R44 292 | R60 902 |
| Balanced Fund (A) | 12.2% | 11.0% | 8.5% | R44 521 | R153 897 | R240 381 |
| Balanced Fund (C) | 12.8% | 11.6% | 9.1% | R50 306 | R172 171 | R270 561 |
| Sector Average (SA – Multi Asset – High Equity) | 19.0% | 14.8% | 12.7% | R25 950 | R95 451 | R158 324 |
| Essential Income Fund (C) | 22.7% | 16.8% | 13.0% | R64 374 | R219 676 | R363 069 |
| Sector Average (SA – Multi Asset – Flexible) | 20.1% | 14.5% | 13.1% | R30 979 | R106 656 | R175 309 |
| *Annualised #Assuming R1,000,000 invested Source: ProfileData | ||||||
| As at 31 December 2025 | Total Return GBP* | Total Return USD* | Total Return EUR* | ||||||
| 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | 1 year | 3 years* | 5 years* | |
| ISP – Balanced Portfolio | 7.9% | 5.1% | 6.8% | 15.7% | 9.0% | 6.5% | 2.3% | 5.6% | 7.3% |
| *Annualised Gross of Investment Management Fee Source: Bloomberg | |||||||||
Sources
Collective investment schemes are generally medium to long-term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future performance. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. If required, the manager may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Forward pricing is used. The ruling price of the day is calculated at approximately 15h00 SA time each day. Purchase and repurchase requests must be received by the manager by 15h00 SA time each business day. Prices are published on a daily basis on the Marriott website, www.marriott.co.za. Unit trusts are calculated on a net asset value basis. Net asset value is the value of all assets in the portfolio including any income accrual and less any permissible deductions from the portfolio. Marriott does not provide any guarantees with respect to the capital or the return of the portfolio. A schedule of fees and charges and maximum commissions is available on request from Marriott. Where initial fees are applicable, these fees are deducted from the investment consideration and the balance invested in units at the net asset value. Commissions and incentives may be paid and if so, would be included in the overall costs. Different classes of units apply to the fund and are subject to different fees and charges. Declaration of income accruals are monthly. Performance figures are based on lump sum investment. Individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. Past performance is not indicative of future performance. This portfolio may be closed to new investors in order to manage it more efficiently in accordance with its mandate. The TER shows the percentage of the average Net Asset Value of the portfolio that was incurred as charges, levies and fees relating to the management of the portfolio. A higher TER ratio does not necessarily imply poor return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. Transaction Costs are a necessary cost in administering the Financial Product and impacts Financial Product returns. It should not be considered in isolation as returns may be impacted by many other factors over time including market returns, the type of Financial Product, the investment decisions of the investment manager and the TER. Marriott Unit Trust Management Company (RF)(Pty) Ltd is a member of the Old Mutual Investment Group. Old Mutual is a member of the Association for Savings and Investment South Africa (ASISA).
Please note that where the term 'yield/yields' is used, these are historic yields
Local
Offshore