The Freehold Income Trust ('FIT')

Fund objective

The investment objective of the Freehold Income Trust is to provide a secure and stable investment primarily through acquiring freehold ground rents which offer an attractive income stream and capital growth prospects. A ground rent is the payment made by the lessee of a property to the freeholder of that property. It represents the underlying freehold interest in a property which is subject to a lease for a period of time usually between 99 and 999 years.

Highlights

• Total return of 6.02% for the year ended 31 March 2012.
• Income yield of 5.26% (net of fees) for the year ended 31 March 2012. Target yield 4.25%.
• Annual compound return of 6.22% over past five years to 31 March 2012 (Based on a bid to bid basis, income reinvested.
• Unbroken 19 years track record of positive returns
• Fund size of £156.1 million as at 30 November 2012
• Secure, stable income stream and capital growth prospects
• Owns circa 64,000 freehold investments
• Relatively low volatility
• Unregulated collective investment scheme and outside the protections of the UK regulatory systems and compensation under the FSCS.

Key Risks

• No guarantees can be given in respect of either income or capital gains.
• Past performance is not a reliable indicator of future results.
• The value of any investment in the Fund can go down as well as up. Investors may not get back the full amount invested.
• The values ascribed to properties for valuation purposes will generally be a matter of the valuer's opinion, may fluctuate up or down and may not be realisable.
• Comparative to other asset classes, such as equities and bonds, property is an illiquid asset class. Under certain markets conditions investors seeking to redeem their holdings may experience significant restrictions or delays.
• Investment is only open to informed and experienced investors.

Impressive track record

FIT v IMA Gilts: 10 years from 30.11.2002 to 30.11.2012

Source: Lipper Hindsight as at 30 November 2012. Total return including Annual Management Charge but excluding initial charges

Past performance is not a reliable indicator of future returns.

Stable income returns

FIT's income stream has historically proved very reliable. As a result of the payment of the ground rent being secured by recourse to the full value of the leasehold, defaults have proved very rare. In the event of a default, the owner of the ground rent has precedence over all other creditors, including mortgage lenders and HMRC.

Furthermore, with around 63,200 ground rents in the portfolio, each paying an average of only £120, FIT's income stream is highly diverse and insensitive to the performance of any one particular tenant.

This security of income is part of the reason why FIT's returns have historically been delivered with a low level of volatility, comparative to the returns delivered by other funds and asset classes.

FIT as a diversifier

FIT's returns have also been historically lowly correlated to those delivered by other asset classes, which means that FIT has the potential to act as an effective portfolio diversifier.

Who should invest?

This fund is targeted at experienced investors seeking a long-term holding as part of their fixed income strategic asset allocation for:

• Pensions, including SIPPS and SSAS
• Mainstream portfolio management
• Charities
• Trusts
• Non-taxpayers
• Offshore Bonds
• Clients seeking steady, predictable income

Structure

• Open ended UK unauthorised unit trust
• Launched April 1993
• Target gross distributable income of 4.25% p.a. - 6 monthly - May & November
• Monthly dealing (20th of each month)
• Income and Accumulation Units available
• Minimum subscription: £5,000
• Maximum level of Gearing 67% of Gross Asset Value
• For current level of Gearing - see the factsheet under 'Adviser Documents'.

Fees and Commissions

Initial Fee and Initial Commission

In advance of the introduction of the Retail Distribution Review, with effect from 10:00 am on 20 December 2012, TIME Investments will no longer pay introductory commission to UK based authorised financial advisers from the initial charge on new subscriptions.

Trail Commission

TIME Investments will cease to pay annual trail commission on the value of the Units in FIT and FET created from the 21 January 2013 dealing day and thereafter.