Monthly Briefing August 2003

Lindsell Train Investment Trust PLC
12 September 2003

The Lindsell Train Investment Trust PLC
As at 28th August 2003

Fund Objective
To maximise long-term total returns subject to the avoidance of loss of absolute value and with a minimum
objective to maintain the real purchasing power of Sterling capital, as measured by the annual average yield
on the 2.5% Consolidated Loan Stock.


Share Price                            GBP 92.50
Net Asset Value                        GBP 97.76
Premium (Discount)                        (5.4%)
Market Capitalisation                 GBP 18.5mn

Source: Bloomberg; NAV - LTL
Performance (based in GBP)         Aug        Jul        Jun         YTD       Since Launch
NAV                               +1.7%      +2.0%      -0.9%       +4.7%          -2.2%
Share Price                       +2.2%      -1.1%      -4.2%       -2.6%          -7.5%

Source: Bloomberg. Based in GBP.

Top 10 Holdings                        % NAV                 Industry Breakdown                     % NAV
US Gov Treasury 6.25%                  21.0                  Bonds                                  36.2
Lindsell Train Japan (Dist)            12.3                  Preference Shares                      12.9
Lindsell Train Global Media (Dist)     10.9                  Equity - Media                          9.4
21/2% Consolidated Loan Stock           8.6                  Equity - Banks & Investment Co.         4.0
HBOS 9.25% Non Cum                      8.0                  Equity - Leisure & Entertainment        8.9
Barr AG                                 8.0                  Equity - Food & Beverage               22.3
Glenmorangie plc A&B                    6.6                  Investment Fund                        23.2
UK Treasury 2.5%                        6.6                  Cash & Equivalent                     (16.9)
Cadbury Schweppes                       5.7                  Total                                  100.0
HBOS 6.125% Non Cum                     4.9

Geographical Breakdown                   % NAV              Currency Exposure                    % NAV
Bonds                                    36.2               USD                                   51.0
                 UK              15.2                       JPY                                   0.6
                 US              21.0                       EUR                                   0.5
Preference                               12.9               GBP                                   47.9
Shares                                   44.6               Total                                100.0
Equities         UK              33.5
                 US               4.6
                 Japan            4.2
                 Europe           2.4
                                         23.2
Funds            LT Japan        12.3
                 LT Global Media 10.9
                                        (16.9)
Cash &
Equivalent
Total                                    100.0


Fund Manager's Comments

We have taken a number of measures recently to boost the income generated by the trust. We sold the US index
linked long bond and invested the proceeds into the US conventional long bond, which expires in 2030. In
doing so we raised the yield on this 5% of the portfolio by approximately 2.5%. At the same time we realised
the profit from the out-performance of the inflation linked over the conventional that had occurred over the
last two and a half years since we bought both. We put this out-performance down to the lingering fear of
inflation on the part of the majority of investors. When switching money out of equities into bonds over the
last two years investors did so cautiously. They bought short dated issues and hedged their bets by buying
inflation linked bonds, as they suspected that the extent of monetary ease by Central Banks might ultimately
rekindle inflation. Now that Central banks, notably the US Federal Reserve, have reduced rates so far, this
fear is now well priced into markets, with inflation linked yields having fallen more than conventional ones.
Our belief is that even with the unprecedented low levels of short term interest rates no increase in
inflation will result from the Federal Reserve's or any other Central Bank's action and indeed the trend
towards, or fear of, mild deflation will continue. When investors recognise this conventional bonds that now
yield 5.5% nominal and 4.6% real (if deflated by the US GDP deflator) should vastly out-perform the lower
yielding inflation linked bonds.

The recent rise in long-term interest rates has encouraged us to add to our holdings of the UK irredeemable
bonds and the HBOS preference shares, both of which we were able to buy at what we regard as highly
attractive yields, 4.9% and 6.5% net. Our ability to buy more of the preference shares has been made possible
by selling our complete position in HBOS ordinary, where we were bothered by the risk of a decline in banking
credit quality should UK house prices decline materially particularly given the scale of our exposure to the
group. Nonetheless, despite tempting fate, we will be staggered if HBOS fails to pay its preference dividends
even if the ordinary is cut. We used the HBOS proceeds to add to our holding in Diageo, which not only
yielded more than HBOS ordinary, but also has recently reported satisfactory results increasing its dividend
by 7.5%.

The purchases of fixed interest help to maintain the Company's percentage exposure to it at a time when
prices are weak and when our equities are doing better, but, as we have mentioned before we need to be
vigilant not to generate too much unfranked income (income from fixed interest, but not from preference
shares) lest we pay tax on the excess of it above our expenses. One significant expense for the company is
the cost of our £3.4m of short-term borrowing currently costing approximately 4.25% per annum. Recently we
have increased the gearing from 10% (at the end of March) to 17%. For every £5 we invest in unfranked income
we strive to invest £1 in franked income, which should keep our unfranked income in line with our expenses
whilst at the same time boosting materially the income of the Company.
The only asset that we have bought since the end of March that patently does not satisfy our high income
aspiration is Nintendo. Nintendo's yield is 1.4%, not so bad in Japan where bond yields are the same, but
wholly lacking compared to the yield on most other assets we own. We are tolerant of this largely because the
Company, more than any other we own, generates prodigious free cash flow. At today's price the free cash flow
yield on enterprise value is currently almost 15%. This is mainly because Nintendo has such large cash
reserves. Last year the company used 10% of these reserves to buy back shares at price within 10% of todays,
an action that we judge to be highly accretive for existing shareholders. It is probably not realistic to
assume that all the Company's cash will distributed to shareholders in this way or indeed through higher
dividend payments because it is prudent for the company to retain some cash capital, given the fast changing
nature of technology and the balance sheet strength of some of its competitors, e.g. Microsoft. However even
if we assume that 50% of Nintendo's cash does not 'really' belong to us (i.e. it must be held in reserve for
unforeseen business threats), still the free cash flow yield is just under 10%, which remains very
competitive against almost any company we might invest in, anywhere in the world. We don't know when but
retain the belief that Nintendo will provide greater ongoing tangible returns to investors probably, at the
same time as its cross shareholders liquidate their holdings.

So far this year, the investing activity described above, together with the ongoing dividend increases from
the companies we own, has helped increase our gross income forecasts for the first half of our fiscal year by
5% from £372,000 to £389,000.





Fund Manager                   Launch Date                             Denominated Currency
Nick Train                     22 January 2001                         GBP


Year End                       Dividend                                Benchmark
31st March                     Ex-date:   June                         The annual average yield
                               Payment:   August                       on the 21/2% Consolidated
                                                                       Loan Stock.


The Board                      Management Fees                         Registered Address
Rhoddy Swire                   Standard Fee: 0.65% p.a.                Lindsell Train Investment
Michael Mackenzie              Performance Fee: 10% of annual          Trust
Donald Adamson                 increase in the share price, plus       77A High Street
Michael Lindsell               dividend,                               Brentwood
                               above the gross annual yield of         ESSEX  DM14 4RR
                               the 21/2% Consolidated Loan Stock.


Sedol No                       Bloomberg
3197794                        LTI LN




Disclaimer
The contents in this document is solely for information purposes only. The information contained herein does
not constitute an offer or invitation to buy or subscribe any securities or funds in any jurisdiction in
which such distribution is not authorised. Nothing in this document constitutes investment, legal, tax or
other advice and cannot be relied upon in making any investment decision. Applications to invest in some of
the funds must only be made on the basis of offer documents which may only be available for private
circulation. The information contained in this document is published in good faith and neither Lindsell Train
Limited nor any other person so connected assumes any responsibility for the accuracy or completeness of such
information as provided. No representation is made or assurance given that any statements made, views,
projections or forecasts are correct or that objectives will be achieved.  Lindsell Train and/or persons
connected with it may have an interest in the Fund.  The value of investments and the income from them may go
down as well as up and are not guaranteed. Past performance is no guarantee of future performance. You may
not get back the amount you invested. Foreign exchange rates may cause the value of investments to go up or
down. Investments may be subject to higher volatility in certain funds and the investment value may fall
suddenly and substantially.

                                           Lindsell Train Limited
                                     35 Thurloe Street, London  SW7 2LQ
                                Tel. [phone]  Fax. [phone]
                                [e-mail]  www.lindselltrain.com

           Lindsell Train Limited is authorised and regulated by the Financial Services Authority.

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