Monthly Update

Lindsell Train Investment Trust PLC 21 March 2006 The Lindsell Train Investment Trust PLC As at 28th February 2006 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 132.50 Net Asset Value GBP 136.33 Premium (Discount) (2.8%) Market Capitalisation GBP 26.5mn Benchmark (21/2% Con Ann Avg Yield +4.4%) +0.4 Source: Bloomberg; NAV-Lindsell Train. Share Price quoted is closing mid price. See Benchmark definition. Performance History (based in 2001 2002 2003 2004 2005 YTD 2006 GBP) Net Asset Value TR% +3.2 -9.6 +3.1 +23.7 +16.5 +3.2 Share Price TR% +18.5 -19.8 -8.7 +20.6 +27.5 +4.5 Source: LTL and S&P Micropal. Performance years listed Jan - Dec. Launch date 22 Jan 2001. TR=Total Return (with dividends reinvested) *Source: Lindsell Train Ltd. Past performance is not a guide to future performance. The price of units and the income from them may go down as well as up. Investors may not get back what they invested. 2005 Performance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net Asset Value TR% +1.4 +0.3 +1.7 +0.2 +3.4 +2.9 +0.0 +0.2 +1.0 -1.5 +2.3* +2.9 Share Price TR% +8.6 +3.5 -3.4 +1.8 +2.6 +9.3 +0.4 -2.3 +2.4 -3.9 +1.2 +4.0 Source: LTL and S&P Micropal unless otherwise indicated. Performance years listed Jan - Dec. Launch date 22 Jan 2001. TR=Total Return (with dividends reinvested) *Source: Lindsell Train Ltd. 2006 Performance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net Asset Value TR% +0.9 +1.9 Share Price TR% -3.0 +7.5 Source: LTL and S&P Micropal unless otherwise indicated. Performance years listed Jan - Dec. Launch date 22 Jan 2001. TR=Total Return (with dividends reinvested) *Source: Lindsell Train Ltd. Past performance is not a guide to future performance. The price of units and the income from them may go down as well as up. Investors may not get back what they invested. Industry Breakdown % of NAV Bonds 22.2 Preference Shares 14.7 Equity - Media 11.7 Equity - Banks & Investment Co. 5.8 Equity - Leisure & Ent. 10.7 Equity - Food & Beverage 27.5 Equity - Consumer Goods 1.6 Investment Fund 20.5 Cash & Equivalent (14.7) Total 100.0 Source: Lindsell Train Top 10 Holdings % of NAV HBOS 9.25% Non Cum 11.4 Lindsell Train Global Media (Dist) 10.8 Barr AG 9.3 US Gov Treasury 6.25% 8.6 Cadbury Schweppes 8.1 21/2% Consolidated Loan Stock 7.7 Diageo 7.4 Lindsell Train Ltd 5.8 UK Treasury 2.5% 5.7 Wolverhampton & Dudley Breweries 5.7 Source: Lindsell Train Fund Exposure Bonds Prefs Equity Funds Cash % of NAV UK % 13.5 14.7 46.5 4.5 (14.4) 64.8 USA % 8.7 - 1.5 - 5.0 15.2 Europe (ex UK) % - - 4.3 - (2.5) 1.8 Japan % - - 5.0 5.2 (2.8) 7.4 Global % - - - 10.8 - 10.8 Total 22.2 14.7 57.3 20.5 (14.7) 100.0 Source: Lindsell Train Fund Manager's Comments The net asset value continued to make upward progress through February ending the month up 1.9%. The share price recovered as well, narrowing the discount to 2.8%. Performance was driven by a steady if unspectacular advance from some of the core consumer franchises, Cadbury, Diageo where we have large positions of 7.5% in each and Heineken where we have a lesser position of 2.5%. All three companies announced 2005 results which, we believe reinforced the predictability and stability of the cash flows these companies generate. Cadbury's results demonstrated how accretive the purchase of Adams, the chewing gum and medicated sweet business, was in 2003. Cadbury's financed the purchase with new debt, gearing the balance sheet to 1.5x equity. Now, just two years later, the return on equity has increased from 20% to 26% and the gearing should fall to 1x equity by the end of 2006. At the current price the free cash flow yield is c6%, 1.5x the bond yield and we think dividends can grow at 5% as they did over the last 10 years. Diageo, which owns 8 of the top 20 spirits brands (and a 35% interest in a 9th), is now a pure drinks company following the divestments of the last 3 years. As we have pointed out before, the company operates one of the largest share repurchase programmes of any British company. As these have been taking place at cash flow yields at 6% (where the yield is today) and above, these repurchases have been highly accretive for shareholders. Over the last 5 years the company has distributed 70% of net earnings to shareholders as dividends. Adding repurchases to this figure, the total return, in buybacks and dividends, has been 140%. Heineken announced better than expected results, which was frustrating for us as we are still building our investment in the company. Although we admire the Heineken brand we have doubts about the management strategy of expanding though the acquisition of local brands of lesser quality at what may prove to be high prices. While this strategy prevails and the management has provided no indication otherwise, we feel that the extra risk that our concerns may be correct was well compensated with the 7-8% free cash flow yield, the price we were able to accumulate the shares last year. Now, the yield has dropped to nearer 6.5% following the recent share price gain. We continue to think that all these shares represent some of the more undervalued assets in the Trust, a situation that is unlikely to persist if the compounding effect of high free cash flow yields continues and especially if investors sense that earning gains elsewhere in the market are less buoyant than in prior years. Another consumer franchise that has performed well for the Trust lately is Nintendo, up 21.1% in 2006. Sales of its handheld console, Nintendo DS, have surpassed all expectations in Japan and look like continuing, following the launch of a sleeker version the 'Nintendo Lite'. The company's stated intent of broadening its customer base by designing games that appeal to women and older people seems to be working. This means that the company's 2005 performance is likely prove better than expected. What is less clear today is whether Nintendo will have the same success in expanding the markets in the USA and Europe, which traditionally record sales 3 times higher than Japan. It makes the US March launch of the 'brain teasing' games that have sold so well in Japan over the end of last year so important for the company, as these were the ones that drove the adult sales. On top of all this Nintendo will launch its new console with its revolutionary controller this autumn. With so many initiatives ongoing it is perhaps not so surprising that the shares have been firmer of late, not least because the potential for more success introduces an 'optionality' in our investment that could have a dramatic effect on cash flows and business value were they to pay off. While we wait we earn a 2% yield, not bad for a Japanese company, especially one with so much potential. We initiated a new position in February in Clarins, a family controlled, French cosmetics company with a 50 year heritage. We have followed the company for some time and regret not taking advantage of the low prices the company traded at in 2002 and 2003. Nevertheless we accessed an opening position at a market capitalisation 1.7x the company's sales. We think this, as an initial entry point, could still prove to represent exceptional value. Like other consumer franchises the cosmetics business benefits from low raw material costs but bears high distribution and marketing expenses. Clarins' products are distributed worldwide in 123 different countries. The cost of this global reach for a € 1bn sales company is, we suspect, much greater, proportionately, compared with larger quoted competitors, like L'Oreal or Estee Lauder. This explains Clarins' lower level of profit margin than one might otherwise expect. Despite this, the global expansion of the brand, which has been ongoing from 1974, is raising awareness, providing a base for growth at higher margins in years to come, as worldwide market share builds. 60% of Clarins' sales are beauty products (predominantly skin care and some make-up) and 40% perfumes. The company aims to sell to the high/mid market: high quality, high efficacy but affordable. As a result of its market positioning, we think Clarins cosmetics products are ' aspirational' in that even though they are expensive, they are affordable to the mass market in search for quality. By steering away from exclusivity, a characteristic many other cosmetic brands actively seek, the company widens its net of potential customers. Ageing population profiles in many developed countries provides a helpful demographic background to sales, a dynamic that has not gone unnoticed by others, including Alan Lafley, the CEO of Proctor and Gamble, who in a recent FT interview, signalled that the future growth of his company was likely to be dominated by ' beauty', which he defined as a $150bn business growing at 10% per annum. Few consumer businesses have this growth profile. Actual transactions, as a guide to the value of Clarins in the industry are few and far between. The latest was Kao's purchase of Kanebo Cosmetics in Japan for 2x sales. Not only was Kanebo an inferior business to Clarins, we think, but was probably bought from a government agency at a more favourable price that if it had been a successful independent company, making Clarins at 1.7x much better value. Although the company's dividend yield is only 1.5%, the dividend has grown an impressive 16.8% per annum over the last 20 years and 11.5% over the last 5 years, illustrating the favourable growth characteristics of the industry. Fund Manager Launch Date Denomination Nick Train 22 Jan 2001 GBP Year End Dividend Benchmark 31st Mar Ex Date: June The annual average yield on the 21/2% Payment: August Consolidated Loan Stock. The Board Management Fees Registered Address Rhoddy Swire Standard Fee: 0.65% Lindsell Train Investment Trust Michael Mackenzie Performance Fee: 10% of annual increase Springfield Lodge, Colchester Road Donald Adamson in the share price, plus dividend, Chelmsford above the gross annual yield of the 2 ESSEX CM2 5PW 1/2% Consolidated Loan Stock. ISIN Secretary Listing GB0031977944 Phoenix Administration Services Limited London Stock Exchange Bloomberg LTI LN Disclaimer This document is intended for use by persons who are authorised by the UK Financial Services Authority ('FSA') and those who are permitted to receive such information in the UK. The information contained in this document does not constitute an offer or invitation to buy or sell any investments. Nothing in this document constitutes investment, legal, tax or other advice. Lindsell Train and/or persons connected with it may have an interest in this investment. The value of any investment in securities or funds and the income generated from them may go down as well as up and are not guaranteed. Past performance cannot be used as a guide or guarantee of future performance. You may not get back the original amount you have invested. Changes in foreign exchange rates may cause the value of your investment to go up or down. Some funds with higher gearing may be subject to higher volatility and the investment value may change substantially. The net asset value (NAV) performance of an investment trust is not the same as its market share price performance. Issued by Lindsell Train Limited Authorised and regulated by the Financial Services Authority 21 Mar 2006 LTL 000-034-2b Lindsell Train Limited 35 Thurloe Street, London SW7 2LQ Tel. +44 20 7225 6400 Fax. +44 20 7225 6499 enquiry@lindselltrain.com www.lindselltrain.com Lindsell Train Limited is authorised and regulated by the Financial Services Authority. This information is provided by RNS The company news service from the London Stock Exchange

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