Monthly Update 30th June 2003
Lindsell Train Investment Trust PLC
14 July 2003
The Lindsell Train Investment Trust PLC
As at 30th June 2003
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 91.50
Net Asset Value GBP 94.22
Premium (Discount) (2.9%)
Market Capitalisation GBP 18.3mn
Source: Bloomberg; NAV - LTL
Performance (based in GBP) Jun May Apr YTD Since Launch
NAV -0.9% +3.4% +1.1% +0.9% -5.8%
Share Price -4.2% +0.0% +0.0% -3.7% -8.5%
Source: Bloomberg. Based in GBP.
Top 10 Holdings % NAV Industry Breakdown % NAV
US Gov Treasury 6.25% 15.8 Bonds 36.8
Lindsell Train Japan (Dist) 12.4 Preference Shares 13.9
Lindsell Train Global Media (Dist) 10.4 Equity - Media 8.0
HBOS 9.25% Non Cum 8.4 Equity - Banks & Investment Co. 4.2
21/2% Consolidated Loan Stock 8.0 Equity - Leisure & Entertainment 8.1
Barr AG 7.5 Equity - Food & Beverage 20.8
US Gov Treasury IL 3.875% 7.2 Investment Fund 22.9
Glenmorangie plc A&B 6.7 Cash & Equivalent (14.7)
UK Treasury 2.5% 5.8 Total 100.0
Cadbury Schweppes 5.6
Geographical Breakdown % NAV Currency Exposure % NAV
Bonds 36.8 USD 52.6
UK 13.8 JPY 0.1
US 23.0 EUR (0.1)
Preference GBP 47.4
Shares 13.9 Total 100.0
Equities 41.2
UK 31.1
US 4.7
Japan 3.6
Europe 1.8
22.9
Funds LT Japan 12.4
LT Global Media 10.4
(14.7)
Cash &
Equivalent
Total 100.0
Fund Manager's Comments
At the Annual General Meeting yesterday we agreed to provide more information
for our shareholders on the attribution of investment returns. The Chairman has
provided a summary breakdown of the returns and costs in his annual statements.
However, we will review some highlights on a quarterly basis in these monthly
reviews.
In the 3 months to 30th June 2003 the Company's NAV increased in value by 3.6%.
It would have been up by 6.1% were it not for the further increase in value of
Sterling versus the US dollar (+5%). Equities contributed the most to returns
with the three most influential shares being Reuters (+80%), AG Barr (+14%) and
Glenmorangie (+20%). Lindsell Train and Nintendo were the only securities that
fell in value. Long term fixed interest contributed half as much as equities.
The HBOS and Halifax preference shares did the best with a total return of 8 and
10% respectively.
Since 1997 it has been unusual for equities to appreciate at the same time as
bonds, although for the 30 years prior to that date it was the norm. During
those 30 years falling long-term interest rates were generally considered a sign
of expanding financial liquidity, that would in due course migrate to the real
economy and equity prices. However, recently falling long-term interest rates
have been seen as an indicator of falling inflationary expectations, which
constrain nominal growth of corporate sales and, in turn, exert a depressing
influence on equity prices. The attribution above shows that, for a quarter at
least, investors were willing to believe that the extended fall in interest
rates in late May and early June was stimulatory enough, at least in the USA, to
generate a positive chain of events, similar to the 1980's, but lacking of late.
Whether it continues is less certain.
Following the Company's recent annual general meeting we reviewed with
shareholders the results and prospects for both the quoted investments held by
the Company and the one unquoted investment, the 25% shareholding in Lindsell
Train Limited. Our discussion on the quoted investments revealed nothing new. We
emphasized many of our favourites, discussed at length in prior monthly reviews,
and commented on the prospects for the now sizable holdings in AG Barr and
Glenmorangie.
In our discussion of Lindsell Train we updated shareholders on the progress of
the business since the Company's year-end. It has been broadly positive. In
particular, the Global Media Fund is now performing better and has recovered
some of the value lost earlier in the year, but more significantly the assets
under management in the Long UK Equity product had, at the beginning of July,
risen to £99m. As a result, total funds under management for Lindsell Train were
£144m, a rise of 50% from the £96m quoted in the annual report. This change is
likely to be reflected in the Directors value of the Lindsell Train holding
soon. You may remember that this valuation is based on a formula published in
the Company's prospectus and updated quarterly. The new value may reverse a good
deal of last quarters 19% decline caused, in the main, by the fall in our funds
under management, reflecting the weak markets of late last and early this year.
Valuing unquoted equities is especially problematic, but nonetheless necessary
as the Directors endeavour to arrive at the most accurate value of the net
assets of the Company. At a minimum the valuation methodology gives shareholders
a transparent, informed and independent view of the worth of the business. What
we also highlighted in our discussion of Lindsell Train Limited was that last
year was the first time it had paid a dividend. The fact that this represented
the first tangible benefit from the Company's ownership in Lindsell Train is, we
think, highly significant. The dividend was 3.7% of the Company total gross
income last year, yet Lindsell Train's value in the portfolio was 3.3%. Our job
as employees and co owners of Lindsell Train is expand its contribution to the
gross income over the years to come.
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
Payment: August on the 21/2% Consolidated
Loan Stock.
The Board Management Fees Registered Address
Rhoddy Swire Standard Fee: 0.65% p.a. Lindsell Train Investment
Michael Mackenzie Performance Fee: 10% of annual Trust
Donald Adamson increase in the share price, plus 77A High Street
Michael Lindsell dividend, Brentwood
above the gross annual yield of ESSEX DM14 4RR
the 21/2% Consolidated Loan Stock.
Sedol No Bloomberg
3197794 LTI LN
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 authorised and regulated by the Financial Services
Authority.
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