Monthly Update

Lindsell Train Investment Trust PLC
11 May 2006


                                        The Lindsell Train Investment Trust PLC
                                                 As at 31st March 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 138.02
Net Asset Value                                                       GBP 134.50
Premium (Discount)                                                        (2.6%)
Market Capitalisation                                                 GBP 26.9mn
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                +4.0
Share Price TR%                      +18.5    -19.8      -8.7        +20.6           +27.5                +6.2
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
Share Price TR%         -3.0 +7.5 +1.5
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                                                            20.5
Preference Shares                                                14.2
Equity - Media                                                   12.8
Equity - Banks & Investment Co.                                   5.7
Equity - Leisure & Ent.                                          10.8
Equity - Food & Beverage                                         27.7
Equity - Consumer Goods                                           1.7
Investment Fund                                                  20.7
Cash & Equivalent                                               (14.1)
Total                                                            100.0
Source: Lindsell Train


Top 10 Holdings                                                 % of NAV
HBOS 9.25% Non Cum                                                11.1
Lindsell Train Global Media (Dist)                                10.8
Barr AG                                                           9.5
Cadbury Schweppes                                                 8.0
US Gov Treasury 6.25%                                             8.0
Diageo                                                            7.6
21/2% Consolidated Loan Stock                                     7.2
Wolverhampton & Dudley Breweries                                  5.9
Lindsell Train Ltd                                                5.7
UK Treasury 2.5%                                                  5.3
Source: Lindsell Train


Fund Exposure         Bonds     Prefs        Equity          Funds              Cash                  % of NAV
UK %                   12.5      14.2         47.8            4.6              (14.1)                   65.0
USA %                  8.0        -            1.5             -                5.2                     14.7
Europe (ex UK) %        -         -            4.4             -               (2.5)                    1.9
Japan %                 -         -            5.0            5.3              (2.7)                    7.6
Global %                -         -             -             10.8               -                      10.8
Total                  20.5      14.2         58.7            20.7             (14.1)                  100.0
Source: Lindsell
Train


Fund Manager's Comments

As this note is written your Company's share price stands at a record high of £137.5, having gained over 8.0% for
calendar 2006. That rise exceeds that of the NAV in the period, which is up 4.0%. This outperformance by the shares
reflects a narrowing of the discount to NAV and, we hope, increasing confidence that Lindsell Train Limited can grow
its business further in 2006, such growth being valuable for your Company, because of its 25.0% stake in that business.
Certainly, investment performance for the first quarter is encouraging in this regard, with both our UK Equity and
Japan Equity long only accounts beating their benchmarks. Meanwhile, the Japan Long/Short has recovered somewhat and
the Media Fund is the star of the whole stable, with a gain in NAV of over 11.5% for year-to-date. Lindsell Train
Limited has recently instructed its lawyers to prepare a prospectus for a UK Equity OEIC, which it hopes to establish
before the end of the first half. The performance pedigree of our UK equity process makes us hopeful that, in time, a
substantial vehicle can be grown.

The investment trust's NAV performance has slowed very recently, primarily because of a setback in government bond
prices, which have sold off after a terrific run at the back end of 2005. Our strategic views on bonds are discussed
below, at the end of the 'think piece' which follows. Short term, we expect bond prices to bounce, as the rising cost
of money and energy crimps consumers' disposable income and corporate profits, particularly in the US. Elsewhere, of
note in March was a welcome rally in the price of our largest equity holding, A.G. Barr, after well-received final
results. The shares have gained 15.0% from a recent low and we and the market, it appears, were gratified by another
10.0% dividend increase from this profitable company, with the prospect of more to come.

We hope the following note is instructive - we certainly learned a great deal from the book in question.

I've just worked through Dimson, Marsh and Staunton's magnum opus, 'Triumph of the Optimists. 101 Years of Global
Investment Returns', which must now supersede all previous surveys of such matters, so comprehensive and magisterial is
its achievement. Everything anyone might wish to know about stock, bond and currency returns since 1900 is there and a
lot more besides.

I can summarise the book in a couple of sentences. 'Equities good, government bonds disappointing.' and 'Anglo-Saxon
economies have been good places to commit long term capital.' This is all uncontroversial stuff, albeit of value when
presenting 'the case for equities' to first time investors. As always though, the challenge for professional investors
is to work out how to make actual forward-looking money from the backward-looking data and I want to highlight the
facts in the book that surprised me and made me think harder about that challenge.

The authors analysed returns from 16 capital markets between 1900 and 2000 (101 years!). These markets made up c 90.0%
of global equity market capitalisation in 1900 - interestingly not far from their combined weight at the end of the
period too. The other 10.0% of global market capitalisation in 1900 comprised then fashionable emerging markets like
China and Russia, which shortly after crashed and burned to nothing. Things will be different this time round - won't
they? The real return on equities was positive for all 16 countries, typically at a level of 4-6.0% per annum
compounded. Belgium was the poorest performer, with an annualised real total return of 2.5% and Sweden the best,
returning 7.6% per annum real. Nothing much good has ever come out of Belgium. The difference between these two
performances is eye-popping. A local unit of Belgian currency invested into domestic equities in 1900 grew to 12.3
units by 2000, meanwhile, a Swedish currency unit would have attained a value of just under 1,700. The gap illustrates
the power of our old friend - compound interest. Relatively small divergences in annual, compounded returns over many
years result in dramatic differences in terminal wealth.

Over the period as a whole it appears that resource rich countries with an Anglo-Saxon business culture did best, with
the top five markets being, in ascending order, Canada, US, South Africa, Australia and Sweden. The UK and Netherlands
were 6th equal, with annualised total real returns of 5.8% - both trading-oriented societies. Away from former British
colonies, I didn't know that the oldest, formal stock exchange in the world is the Paris bourse, established in 1724,
63 years before Amsterdam. Stocks had been dealt in an organised way in London since 1698, but it wasn't until 1801
that the LSE obtained its constitution and own building. The early establishment of Paris did not guarantee competitive
returns in the Twentieth Century, though, with France's 3.8% per annum rate only half that of the best performer. As a
general proposition, the worst equity markets were those associated with countries that lost wars and particularly with
the inflation that accompanies lost wars. Italy, Germany and even Japan were amongst the poorer performers. Add France
- arguably also the loser of two Twentieth Century wars - to those three and you have the countries in the sample of 16
with the worst inflation experiences in the century. Not surprisingly, the government bonds of these four also did much
worse than the average.

I assumed that the relevance of natural resources had waned with the century, as the real prices of many commodities
fell during the period. The recent gains in commodity prices and these competitive returns from resource rich markets
are making me rethink that assumption. It looks clear that access to, or control of, key resources is a good correlate
for strong capital market returns. Both Germany and Japan are famously short of natural resources, particularly energy.
Indeed, their bellicosity, that in the end damaged their capital market performance, was in part inspired by their
desire to gain preferential access to strategic reserves of resources. It would be a brave bet to assume the 21st
century will work out differently, but one man who seems to be prepared to make that call is Sheik Ahmed Zaki Yamani,
the former Saudi oil minister. As chairman of the Centre for Global Energy Studies, he recently said 'We have seen the
future: the main source of energy will be hydrogen. It will be the end of the oil era.' Mind you, at the same time he
also noted of oil - 'The price will remain high for some time until the major oil consumers will be able to be
independent from oil, especially from the Gulf region.' BP is not yet a short, then, except perhaps on a fifty year
view.

It is worth questioning the future of dominant industry sectors, like oil, though, because the 101 years saw radical
changes in the constituents of stock markets. In 1900 one sector made up 50.0% of the value of the 100 largest UK
corporations and 63.0% of the top hundred US. By 2000 these weights had declined to 0.3 and 0.2% respectively. The
industry in question is, of course, railroads - the great growth industry of the Nineteenth Century. Back in 1900, Oil,
Pharmaceuticals and Information Technology had nigh on zero weights in the US/UK markets, but over 25.0% of the whole
by 2000. What really interests me is not so much which sectors emerged over the course of the period, because I am not
so optimistic about my ability to pick winners in, say, the nanotechnology space. What really interests me is which
industries saw their share of market capitalisation hold reasonably stable over very long periods, because these have,
therefore, provided the most certain and least risky areas through which to have participated in the long term
propensity for equity markets to go up. Three UK sectors really stand out as having 'legs'. These are Banks and Finance
(15.4% of the 1900 market by value and 16.8% by 2000), Utilities (3.1% and 3.6%, with a distorting period in public
ownership, of course) and Breweries and Distillers (3.9% and 2.1%). I expect that in another 100 years time these
crucial economic functions - financing the growth of national and international economies, supplying energy and water
and slaking the thirst of the workers - will still be rewarded with substantive stock market weightings.

As is well known, dividends are a crucial component of long term returns. The book reinforces this truth. In the US,
nominal total returns per annum from equities were 10.1% and almost identical for the UK. However, with dividends
excluded those nominal returns fall to 5.4% per annum for the US and 5.1% for the UK. Nearly half the nominal returns
have been delivered in the form of dividends. Analysis of dividends and, particularly dividend growth does present
something of a wake-up call for investors though, at least for those hoping to get rich quick. The fact is dividends
grow more slowly than I expected - meaning that long periods of time are often required for steady dividend growth to
work into really attractive long run returns. Of the 16 countries in the sample, only 7, less than half, delivered any
real dividend growth at all over the period. Sweden came out top, with real dividend growth for the 101 years of 2.3%
per annum. Perhaps not coincidentally, Sweden was, as we have seen, the best performing market over the period. What is
it that I've missed about Sweden, an economy I've only ever registered in the past as the unholy spawning ground of
ABBA and Sven? The worst dividend record amongst global stock markets is that of Japan. Japanese dividends actually
declined by an average of 3.3% real per annum over the century. Real dividend growth in the US averaged 0.6% per annum
and 0.4% in the UK - not obviously exciting, but much better than the average.

Again, the proposition that dividends can not grow faster than real GDP for any sustained period (otherwise profits as
a proportion of GDP would rise indefinitely) is confirmed. Indeed, there was only one economy that delivered real
dividend growth above GDP per capita growth over the century - South Africa. Nowhere else was high GDP growth
associated with high dividend growth at all. This is another way of observing the counter-intuitive truth, that high
GDP growth is not necessarily correlated with high returns from capital markets. Over the twentieth century, the three
fastest growing economies among the sample were Japan (3.9% per annum GDP growth per capita), Italy (2.8%) and Spain
(2.6%) - yet real dividend growth was negative for all three and each delivered total returns for the period toward the
lower end of the sample. As the authors say - 'GDP can grow without generating wealth gains to equity holders.' This is
a very important consideration and one thinks of the poor returns from Chinese equities over the past decade as further
corroboration. The Chinese Shanghai Index is still below its 1997 levels, despite all that economic growth.
Capital-friendly social attitudes and laws, as well as decent growth, are required to create wealth, at least for
minority owners. The United States - perhaps the most capital-friendly society on the planet - poses major questions
for global investors today. The Twentieth Century very much belonged to the USA. Over the period, the US equity market
delivered 6.7% per annum real, turning $1 into $711. The World excluding the US returned 5.2% per annum real, growing
$1 into an impressive, but much smaller, $162. Meanwhile, the US Dollar rose in value against 14 out of the 16 other
currencies. Only the Swiss Franc really made headway, rising 1.2% per annum on average against it. Sterling declined
against the mighty greenback by 1.2% per annum since 1990. Is it obvious why Sterling's bear market should have come to
an end? We know that many UK institutional investors are significantly underweight US assets. This may well turn out to
be correct, but it goes against the lessons of history.

Dividends matter not only to total returns, though. The evidence from the book strongly supports the received wisdom
that yield and value-oriented investment strategies outperform. Owning low price/book, high dividend yielding equities
has been the way to maximise wealth over the last century. Between 1926-2000, US high yielders gained 12.2% per annum
nominal, compared to the market average of 10.6% and a low yield index of 10.4%. One dollar in those high yielders grew
to $4,948 over the period, again startlingly more than one dollar in the low yielders, which made $1,502. For the UK
the figures are even more extreme. This time between 1990-2000, UK high yielders turned £1 into £61,235, growing at
11.5% per annum, while the lowest yielding amongst the top 100 companies managed 8.6%, turning £1 into £4,046. Why
should this be and will the superiority of 'value and yield' hold into the new century? It appears that in the long run
the bird in the hand - the certainty of the cash dividend- is worth more than the reinvested earnings of the 'growth'
stock, that investors undervalue today's cash return, compared to tomorrow's possible capital appreciation. This
appears plausible, but the effect has been so well known, for so long that I find it hard to understand why it has not
been arbitraged away.

I could double the length of this precis by reviewing bond and bill market performance. I content myself with a couple
of observations. First, perhaps the real surprise is not that government bonds have performed so poorly relative to
equities, as everybody knows. UK equities returned 5.8% per annum real total returns between 1900-2000, while UK gilts
managed only 1.3% per annum (at least a positive real return). What is more surprising is that bonds did so badly
relative to cash, or treasury bills. Across the sample of 16 countries, bonds beat bills by only 0.5% per annum - in
the US by 0.7% per annum and the UK a measly 0.3%. In other words, the return on bonds looks miserable, given the very
considerable volatility of their capital values, not only compared to equities, but also against the certainty of just
leaving savings on deposit. Whatever, we must concur with the authors' conclusion that 'real returns achieved on bonds
over the Twentieth Century turned out to be lower than investors' ex ante expectations.' This is the reason that the
name of the book is 'Triumph of the Optimists'. Risk takers have been rewarded, while 'safe' investments have been
poorly rewarded. You have to wonder why anyone would ever own a bond.

One answer to that last question, of course, is that returns depend on the price that you pay to access any asset. The
authors of the book had previously worked on an analysis of the 'small company effect' both globally and in the UK and
their conclusions led, in part, to the launch of the Hoare Govett Small Companies Index, back in 1987. They note
ruefully that the fanfare that greeted their conclusions about the superiority of investing in small capitalisation
companies coincided uncannily with a temporary peak in small cap performance and they proceeded to underperform through
the 1990's. Of course, a similar effect is apparent in the relative performance of all stocks and bonds since 2000. For
instance, the UK gilt market has a total return of some 44.0% since the start of the new millennium, while the FT
All-share has returned only 12.0%. 'Not fair', the equity bulls might claim - stocks had got overpriced by the end of
the 1990's. But these starting points really do matter. As Dimson et al point out, the dividend yield on the world
equity market in 1990 and again in 1950 was over 5.0%. In 1950 equities were certainly offering a dividend yield higher
than available on government bonds. US governments yielded as little as 1.9% in 1946, before embarking on a 36 year
bear market that carried yields all the way up to 15.0% in 1982 and destroyed government bonds' reputation for 'safety
'. By 2000, the world equity index was itself yielding an all time low, coincidently of 1.9% too and government bonds
were a pariah asset class.

Our bet is that markets are some way through working out the overvaluation of Equity back in 2000 and the concurrent
undervaluation of the 'certainty' associated with Government Bond investing. The government bond content in the
Lindsell Train Investment Trust is down to c20.0%, the lowest since we launched in early 2001. As long term equity
bulls, with our convictions strengthened by this terrific book, we are sure our bond exposure will decline further over
the next few years. As pragmatists too, though, we are grateful that we have earned high real returns from our fixed
interest holdings over the past 5 years, while equities adjusted after the fin de siecle excesses.


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
9 May 2006 LTL 000-035-0b


                                                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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