Monthly Update

Lindsell Train Investment Trust PLC 30 May 2006 The Lindsell Train Investment Trust PLC As at 30th April 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. Net Asset Value GBP 135.48 Share Price GBP 132.50 Premium (Discount) (2.2%) 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 +1.4 Share Price TR% +18.5 -19.8 -8.7 +20.6 +27.5 +3.4 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 +1.2 -1.8 Share Price TR% -3.0 +7.5 +1.5 +3.4 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 19.7 Preference Shares 14.1 Equity - Media 12.5 Equity - Banks & Investment Co. 6.6 Equity - Leisure & Ent. 10.9 Equity - Food & Beverage 28.1 Equity - Consumer Goods 1.8 Investment Fund 20.7 Cash & Equivalent (14.4) Total 100.0 Source: Lindsell Train Top 10 Holdings % of NAV HBOS 9.25% Non Cum 11.0 Lindsell Train Global Media (Dist) 10.9 Barr AG 9.9 Cadbury Schweppes 7.8 Diageo 7.7 US Gov Treasury 6.25% 7.5 21/2% Consolidated Loan Stock 7.0 Lindsell Train Ltd 6.6 Wolverhampton & Dudley Breweries 6.1 Lindsell Train Japan (Dist) 5.2 Source: Lindsell Train Fund Exposure Bonds Prefs Equity Funds Cash % of NAV UK % 12.2 14.1 49.2 4.6 (14.3) 65.8 USA % 7.5 - 1.4 - 5.1 14.0 Europe (ex UK) % - - 4.5 - (2.5) 2.0 Japan % - - 4.8 5.2 (2.7) 7.3 Global % - - - 10.9 - 10.9 Total 19.7 14.1 59.9 20.7 (14.4) 100.0 Source: Lindsell Train Fund Manager's Comments April, the first month of the Company's new financial year proved to be a difficult one. Long-term fixed interest prices continue to decline in the face of recent evidence of continued robust world growth and soaring commodity prices. Further rises in interest rates look probable in the USA and maybe even in the UK. Even though inflation remains subdued with core CPI at 2.3% in the USA and RPI at 2.6% in the UK, bond markets in both countries are doing their job of acting as vigilantes against the threat of future inflation rising more. With Copper up 67% so far this year, average earnings in the US accelerating from a low base and UK property prices advancing once again it is understandable why bond investors should be nervous. We think the markets will do the job of providing restraint so that this current inflation threat will subside leaving the prospect of low or no inflation a reality in due course. However, while the battle is on, rising bond prices provide a stiff headwind for the type of equity assets we own. Most of our equity investments are in steadily rather than dramatically growing businesses whose real intrinsic value lies in the compounding effect of future free cash flows many years from now. As bond prices rise the allure of high current guaranteed nominal yields becomes ever more attractive versus the promise of future dividend income, especially as the current rise in cost of funds will if anything depress demand from consumers and businesses, thereby reducing the probability of the growth in that income today. Although the Company's exposure to the US Dollar is lower than in the past, mainly due to the appreciation of non-dollar assets, it still remains at 31%. Its 5% fall versus Sterling had a negative effect on the net asset value over the last month and was itself the cause of much of the 1.8% fall in the NAV. Thus far most equities have held on or fallen in value marginally. One recent exception is Nintendo, the only Japanese business the company owns directly. The 19% rise in its share price this year is largely attributable to the success that its new handheld game platform, 'Nintendo DS', has had in expanding the gaming population away from young boys in Japan. Recent games have appealed to both girls and older players. As a result sales of the product are booming. Now the company is additionally engaged in the launch of its successor product to the 'Game Cube' (the console plugged in to the TV), now controversially, renamed 'Wii' from 'Revolution' (r's are no good for Japanese pronunciation). At the E3 game show in Los Angeles, a must attend event for all those in the gaming industry, the innovative new console and, above all, its motion sensitive controller was on display and stole the show. The plaudits from those who used it were such that expectations for a successful launch later this year have risen, as have the prospects for the product wresting some market share away from the dominant platform, Playstation, the new version of which will be released at around the same time. Significantly, 'Wii' should be priced at a large discount to Playstation 3, maybe half the price or less, which is another big positive for the system. Nintendo's business model requires minimal capital expenditure, as all software development is expensed and hardware is commissioned from other manufacturers. Over the years the company has amassed a prodigious cash reserve that today amounts to £4bn, which the company describes as precautionary, lest they need to suddenly invest in the face of an unanticipated threat from well resourced competitors (ie. Microsoft and Sony). Some investors have been critical of this practice, claiming, with some justification, that low yielding cash depresses the return on equity of the business, currently only 10%. But in a hint of change, the company first attained this £4bn level in 2001 and have subsequently paid all free cash flows to shareholders either as dividends (up 208% from 2001) or through share buybacks (shares in issue have fallen 10% since 2001), such that, today, the company's shares yield 2.1%, over double the market average. Should the company be able to grow its business from here, as we now suspect, and should the management consider that £4bn is enough precautionary cash to hold, as they seem to have done since 2001, we should expect substantial further shareholder payouts from the company in the future. Fund Manager Launch Date Denomination Nick Train 22 Jan 2001 GBP Year End Dividend Benchmark 31st Mar Ex Date: July The annual average yield on the 21/2% Payment: July 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 22 May 2006 LTL 000-036-5b 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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