Monthly Briefing 30-4-2002
Lindsell Train Investment Trust PLC
14 May 2002
The Lindsell Train Investment Trust PLC
As at 30th April 2002
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 115.50
Net Asset Value GBP 103.72
Discount (Premium) (11.7%)
Market Capitalisation GBP 23.1mn
Source: Bloomberg
NAV - LT & Bloomberg
Performance
(based in GBP) Apr Mar Feb 1 Year Since Launch
NAV -0.8 -0.3 -0.2 +1.3 +3.4
Share Price -4.9 +1.7 +1.7 -1.3 +'15.5
2.5% Consol Loan Stock +5.1
Annual Average Yield
Source: Bloomberg.
Based in GBP.
Top 10 Holdings
% NAV
US Gov Treasury 6.25% 13.2
Lindsell Train Japan (Dist) 12.6
Lindsell Train Global Media (Dist) 11.9
US Gov Treasury IL 3.875% 7.4
HBOS 6.125% Non Cum 6.8
Cadbury Schweppes 6.2
21/2% Consolidated Loan Stock 5.2
Dow Jones & Co 5.1
Barr (AG) 4.9
UK Treasury 2.5% 4.5
Industry Breakdown
% NAV
Bonds 33.3
Preference Shares 10.9
Media 10.9
Banks & Investment Co. 7.2
Leisure & Tourism 8.3
Food & Beverage 16.0
Investment Fund 24.5
Cash & Equivalent (11.1)
Total 100.0
Geographical Breakdown
% NAV
Bonds 33.3
UK 12.7
US 20.6
Preference Shares 10.9
Equities 42.4
UK 30.1
US 5.7
Japan 4.1
Europe 2.5
Funds 24.5
LT Japan 12.6
LT Global Media 11.9
Cash & Equivalent (11.1)
Total 100.0
Currency Exposure
% NAV
USD 51.2
JPY 0.0
EUR 2.5
GBP 46.3
Total 100.0
Fund Manager's Comments
The NAV fell 0.8% during what proved to be a bad month for equities worldwide.
As a result we ended the month flat on the year, behind our benchmark but ahead
of equity markets that have fallen by 3.8% as measured by MSCI world index in
sterling.
We were disappointed not to make more money from our positions in long term
fixed interest. Although bonds rallied they did so in a half hearted way as
compared to the weakness in equity prices. As we write in early May following a
strong rally in the US market all the gains of last month in US bonds were given
up in a day.
We think bond markets in the US fear the threat of renewed inflation
traditionally implied by the positively sloped yield curve (the difference
between long and short rates). In the UK and the US, markets also fear
inflation associated with the persistent strength of housing and consumption,
both of which proved surprisingly resilient in the face of the economic and
psychological headwinds late last year. It seems that individuals will borrow to
spend so long as their interest payments are covered by their income. Little
regard is paid to the absolute amount of debt they amass. With long-term
interest falling as they did until late last year they were able to comfortably
increase their spending on housing and goods and services though traumatic
times. However now interest rates have risen (approximately 1% for the longest
bonds slightly less for mortgage rates) and the growth in average earnings and
employment has moderated consumers have less excess cash with which to maintain
or increase spending. It is likely that at some point they will be become less
confident and moderate their spending accordingly. Maybe it requires even higher
long-term rates, however when this occurs a huge (approximately 70%) part of
each economy no longer contributes to demand or growth in GNP. It is not clear
how policymakers will respond as they have little direct control on long-term
interest rates although markets might well help them out as at this point
forecasts for inflation should ratchet down. It would be surprising in long-term
bond yields did not reflect it.
We think that it could require a far larger reduction in long-term interest
rates to bolster spending once again especially if, for whatever reason (one
might be falling asset prices- i.e. house prices), individuals were forced to
recognise the scale of the debt burden they have taken on. With no inflation to
reduce its real value, repaying it will seem even more daunting.
Despite the discouraging performance we maintain our bullishness on this
important part of our portfolio (44%) though recognise that entrenched economic
trends, like consumption, borrowing and demand for housing can persist for many
months longer than may seem rational.
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 on
Payment: August the 21/2% Consolidated Loan
Stock.
Sedol No Bloomberg
3001710 LTI LN
The Board Management Fees Registered Address
Rhoddy Swire Standard Fee: 0.65% p.a. Lindsell Train Investment Trust
Michael Mackenzie Performance Fee: 77A High Street
Donald Adamson 10% of annual increase in Brentwood
Michael Lindsell the share price, plus ESSEX DM14 4RR
dividend, above the gross
annual yield of the 21/2%
Consolidated Loan Stock.
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. +44 20 7225 6400 Fax. +44 20 7225 6499
info@lindselltrain.com www.lindselltrain.com
Lindsell Train Limited is regulated by the FSA.
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