Monthly Update

Lindsell Train Investment Trust PLC 18 August 2005 The Lindsell Train Investment Trust PLC As at 31st July 2005 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 125.50 Net Asset Value GBP 125.97 Premium (Discount) (0.4%) Market Capitalisation GBP 25.1mn Benchmark (21/2% Con Ann Avg Yield +4.6%) +0.4 Source: Bloomberg; NAV-Lindsell Train. Share Price quoted is closing mid price. See Benchmark definition. Performance History (based in 2000 2001 2002 2003 2004 YTD 2005 GBP) Net Asset Value % n/a +3.2 -9.6 +3.1 +23.7 +11.9 Share Price % n/a +18.5 -19.8 -8.7 +20.6 +26.0 Source: S&P Micropal. Based in GBP. Performance years listed Jan - Dec. Launch date 22 Jan 2001. 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. 2004 Performance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net Asset Value % +1.8 +3.3 +0.3 +2.3 -0.1 +2.1 -2.0 +4.8 +3.8 +1.4* +0.0* +3.7 Share Price % -2.3 +6.0 -0.6 +0.6 +2.3 +2.7 +0.5 +0.5 +8.6 +3.0 -1.9 +0.0 Source: S&P Micropal unless otherwise indicated. Based in GBP. Performance years listed Jan - Dec. Launch date 22 Jan 2001. With dividends reinvested. *Source: Lindsell Train Limited. 2005 Performance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net Asset Value % +1.4 +0.3 +1.7 +0.8 +3.0 3.0 +1.1 - - - - - Share Price % +8.9 +3.6 -3.5 +1.8 +2.7 +9.6 +0.4 - - - - - Source: S&P Micropal unless otherwise indicated. Based in GBP. Performance years listed Jan - Dec. Launch date 22 Jan 2001. 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 24.0 Preference Shares 14.2 Equity - Media 8.6 Equity - Banks & Investment Co. 4.6 Equity - Leisure & Ent. 9.6 Equity - Food & Beverage 26.6 Investment Fund 22.7 Cash & Equivalent (10.3) Total 100.0 Source: Lindsell Train Top 10 Holdings % of NAV US Gov Treasury 6.25% 10.9 HBOS 9.25% Non Cum 10.8 Barr AG 10.6 Lindsell Train Global Media (Dist) 9.9 Lindsell Train Japan (Dist) 8.6 Cadbury Schweppes 7.8 21/2% Consolidated Loan Stock 7.5 Diageo 6.4 Wolverhampton & Dudley Breweries 5.8 UK Treasury 2.5% 5.6 Source: Lindsell Train Fund Exposure Bonds Prefs Equity Funds Cash % of NAV UK % 13.1 14.2 42.3 4.2 (10.4) 63.4 USA % 10.9 - 1.5 - 3.7 16.1 Europe (ex UK) % - - 1.8 - (0.5) 1.3 Japan % - - 3.8 8.6 (3.1) 9.3 Global % - - - 9.9 - 9.9 Total 24.0 14.2 49.4 22.7 (10.3) 100.0 Source: Lindsell Train Fund Manager's Comments July was an unhelpful month for your NAV, with the reversal of two trends that assisted for the first six months of the year - namely the rally of the US Dollar against Sterling and the bull market in long-dated Anglo-Saxon government bonds. Moreover, the continued gains in oil and hard commodity prices have become a negative for your Company. Understandably, investors have begun to see these increases as de facto tax hikes for global consumers and, as a result, many 'non-commodity' company share prices have been drifting, even relatively insulated businesses, such as our favourites, Cadbury and Diageo. We think it unlikely, however, that all these three headwinds will be sustained against us indefinitely and may already be turning. In particular, we expect that any continued spiral in the oil price really will hit consumer confidence worldwide and lead to a further sharp decline in inflation expectations, boosting government bond prices. The recent, for many unanticipated, cut in UK short interest rates seems to point to such an outcome. UK base rate reductions are very interesting for your Company. First, they are immediately value-creating. The Trust is moderately levered, at c 10.0% and the debt is bank borrowing, paid at floating rates. Any drop in the cost of borrowing increases the amount of income we earn from the investment portfolio, albeit modestly in this instance. Next, the cut in interest rates leaves the yields available on gilts and, particularly, preference shares looking even more attractive to income-seeking institutions and private investors. All our fixed interest assets have bounced in price in early August, after the rate cut and we hope for more. Finally, the cut is a signal that the long British consumer boom is waning. With falling house prices and a deteriorating fiscal outlook we think that further rate reductions and a wobbly Sterling look plausible. An end to the recent rally in Sterling would certainly help the NAV. A final thought - if UK house price deflation proves contagious - and US real estate values look distinctly bubble-like to many, including Alan Greenspan - then the world might really begin to look rather different, as deflationary forces kick in, with serious implications for the pricing of bonds, currencies, equities and, of course, commodities. We've been wallflowers to the commodity price boom, watching on with a mixture of envy and incomprehension as smarter people than us have made big money in assets that we regard as excessively speculative (and that description includes several FTSE 100 constituents). We remember some of our earliest lessons in investment management - 'A mine is a hole in the ground with a liar at the top' or 'The most dangerous phrase in our business is 'It's different this time'' - because these lessons have served us well over the years and because they remain relevant. It is uncanny for us to read the 'new era' justifications for, say, companies benefiting from soaring steel prices so relatively soon after the scuppering of similar Dotcom fantasies (justifications often from the selfsame broker cheerleaders for technology). Hot-rolled steel prices peaked in September 2004 at $756 per ton, today it fetches c$400 - what is your guess for next month? That question leads to our two prime objections to investing in commodity sectors. First, we have always been reluctant to commit to industries or companies whose long term success is tied to commodity prices, because they are, we think, essentially unpredictable. We have a view as to what may happen to the inflation-adjusted price of a bottle of Johnnie Walker Black Label over the next decade - we think it will maintain, or possibly modestly increase its real value, but we have no idea what steel or a barrel of oil will fetch in 2006, let alone 2015 (though we have a suspicion that by the latter date the real price of metals and oil will have fallen, as it did for much of the Twentieth Century, when increased supply soon swamped cyclical demand for commodities). Next, we also stick to perhaps a simplistic view- that if commodity prices are rising, then it is likely that economic growth is accelerating above expectation in some part of the global economy. If so, then we believe we can invest in far more attractive business models, with higher intrinsic returns to equity and better cash generation than (typically) capital-hungry extractive companies. Here are two instances of such attractive models which we own and which offer access to accelerating economic growth. We have, first, been mildly disappointed that Diageo's price has fallen 6.0% since early July, as investors digested a pre-close period trading statement that reaffirmed forecasts, but failed to lead to profit upgrades. We think investors are missing the future growth implications of the fact that Diageo today earns 29.0% of its EBIT from the emerging economies of Latin America, Asia and Africa, where it often has market- leading positions (and, meanwhile, only 2.0% of its EBIT derives from the world's 'problem' economies of France and Germany). In the long run, we see the economic returns to Diageo of delivering increasing volumes of Johnnie Walker to China or India as being far more attractive than, say, Corus or Xstrata's opportunity to deliver steel or coal to the same regions. Reuters' shares too have fallen in July, despite the company's win of a significant contract from the People's Bank of China to establish a foreign currency trading portal. The China Foreign Exchange Trade System (CFETS) is the only organisation licensed to trade forex in China and is based on a version of Reuters' existing electronic trading platform, situated in Shanghai. The portal is likely to be central to the development of a domestic forex market in China and gives Reuters a real chance of dominating this trade. Reuters ' profitability from its provision of currency trading platforms is already exceptional and arguably, the most valuable franchise within the group - the promise of drawing the China currency bloc into its sway is not in the stock price, we believe. The only consolation from the recent share price fall for a long term investor in Reuters is that it means that the £1.0 billion share buyback the company announced with its interim results, now shrinks the equity base by 20.0%, meaning that there is even more growth to share around the remaining holders. 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 77A High Street Donald Adamson in the share price, plus dividend, Brentwood above the gross annual yield of the 2 ESSEX CM14 4RR 1/2% Consolidated Loan Stock. ISIN Bloomberg Listing GB0031977944 LTI LN London Stock Exchange 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 18 Aug 2005 LTL 000-028-9b 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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