Half Yearly Report

RNS Number : 0339O

Ruffer Investment Company Limited

27 February 2009

 



RUFFER INVESTMENT COMPANY LIMITED

Investment Objective and Policy

To achieve a positive total annual return, after all expenses, of at least twice the Bank of England base rate 5 per cent as at 1 July 2008 and 2 per cent as at 31 December 2008) by investing in internationally listed or quoted equities or equity related securities (including convertibles) and bonds which are issued by corporate issuers, supra-nationals or government organisations.

Financial Highlights

			31.12.08
			Buying Price		Net Asset Value
Redeemable participating preference shares			1.480	†	1.509*

† The price an investor would be expected to pay in the market (London Stock Exchange).

* This is the Net Asset Value for valuation purposes as at 31.12.08. The Fund is valued weekly, and at month end.

Company Information

Incorporation Date		01.06.04
Launch Date		08.07.04 (C shares: 29.09.05)
Initial Net Asset Value		98p per share (98p per 'C' share)**
Launch Price		100p per share (100p per 'C' share)
Accounting dates		Interim			Final
		31 December			30 June
		(Unaudited)			(Audited)

**On 12 December 2005, the 'C' shares were converted into redeemable participating preference shares in the Company at a ratio of 0.83 14 redeemable participating preference shares for each 'C' share, in accordance with the conversion method in the Placing and Offer for Subscription Document.

Investment Manager's Report

For the period from 1 July 2008 to 31 December 2008

In the six month period from 1 July to 31 December 2008 the asset value of the Company rose in capital terms from 131.3p to 150.9p* which, together with a dividend of 1.25p, represents a total return of 15.9%, compared to the objective return of 4.18%, being twice the Bank of England base rate over the period. Since launch on 8 July 2004 the Company has returned 63.0%**, including dividends.

The portfolio is constructed to preserve capital in just the type of financial dislocation that we have recently witnessed and to deliver a decent return irrespective of market conditions. It is not by avoiding risk that we seek to preserve capital in difficult times, but by holding a wide range of risk assets that can deliver positive returns even when stock markets are falling. By preserving capital in the first ten months of the year at a time when the FTSE All Share fell by 31% on a total return basis (in all it fell 40% to its low on 21 November 2008), we were able to take benefit from the market rally in both equities and index-linked bonds (alongside the weakness of sterling) towards the end of the year with the result that November and December saw the NAV gain 16.0% on a total return basis.

During the period we have seen the transformation from a financial crisis into a sharp economic deceleration. The authorities have focused on shoring up the banking system and pumping liquidity into financial markets to try to keep financing available for the housing market, reduce systemic risk, maintain liquidity in the wholesale money and repo markets, and maintain the confidence of bank depositors. We believe these actions are a necessary evil to ward off the threat of a deflationary slump, though more action may well be required. The credit bubble has to deflate, and while this is being reflected initially as a deflationary force, we remain convinced that the economic pressures will push authorities into actions that allow inflation and negative real interest rates to dissipate the debt burden. As such, the Company now holds 40% in index-linked bonds, spread across the UK, US and Japan. This includes a 10% holding in the UK index-linked 2013, a switch from the UK 5% 2012.

A significant change to the Company during the period has been to exit completely our holdings denominated in Swiss francs. Having long been held as a safe haven currency for just such a period of market turmoil as we have recently experienced, during September we decided that there was a very real threat to the safe haven nature of the Swiss franc from the fragility of its global investment banks, and so covered the majority of our Swiss currency exposure and hedged it into yen. The liabilities of the Swiss banks are about nine times the size of Switzerland's GDP and we could no longer be sure that the banks would remain intact. We only have to look at the situation in Iceland to see what damage this might do to a currency. We took steps in October and November to sell our Swiss bonds - first the short- dated, which were little more than cash equivalent denominated in the Swiss franc, and, later in the month, our exposure to the long end of the market. We also started gradually selling down Swisscom on the basis that its attraction was as much the currency as the stock. We completed the sale of Swisscom in December, at satisfactory levels.

Conversely, we felt that the yen would perform well for us in a number of eventualities, particularly as our play on deflation - if nothing is done by the central authorities, the pressure points will drive the yen sharply upwards. Significant strength in the yen against the dollar could make Japan feel compelled to intervene in currency markets. Such action could involve selling yen and buying dollar assets just as the supply of US treasuries becomes conveniently more available as a result of the various US bail-outs and stimulus packages - a mutually beneficial outcome for the two parties.

We now have 30% of the portfolio invested in Japan, split equally between index-linked bonds and
equities. We currently favour the high beta financials above the utilities which served us so well in  2008 when the yen was strong and deflationary fears were around. The financials, in addition to the Japanese index-linked bonds, are in place to take advantage of an intervention by the Japanese authorities we mentioned above (good for dollar, bad for yen, good for stock markets, and particularly good for Japanese financials). The Japanese index-linked bonds were bought at attractive anomalous prices due to the unwinding of inflation hedging trades. Equity managers had hedged their inflation risk by using a long index-linked bond and short conventional trade. As the markets began to focus on deflation, this trade unwound globally but this had a more exaggerated effect in Japan due to the relative illiquidity of the index-linked market.

December saw the Company end the year on a high note, with the best ever month in terms of performance. The equities generally made good progress, helped by the direction of the market, but it was the index-linked holdings, the yen and gold which were the star performers. The aim at the beginning of 2009 is to avoid giving back some of the gains that we have made in the second half of 2008. To defend our position we have put more equity risk into the portfolio to benefit from a possible sustained rally in equities at the expense of defensive stocks and currencies. In October and November we took advantage of the weakness in equity markets to add to holdings in BP, Annaly, Kraft, Johnson & Johnson, Invensys and Mitsubishi UFJ, to name a few. We have also recently banked a fair amount of the profit in the yen exposure. We think that sterling is likely to rally in the first part of this year, and so we have reduced our exposure to foreign currencies to one third of the portfolio.

Ruffer LLP

9 January 2009

*Value reported to the London Stock Exchange, using mid market price.

**The calculation of the total return includes an amount of 1.872 pence per share which represents the notional amount by which dividends paid to date would have grown if they had not been paid out as dividends but reinvested within the Company.

Company Performance

	Price		Change in
	at 31.12.08		Buying Price
	Buying	Selling	From	From
	Price	Price	Launch	30.06.08
	£	£	%	%
Shares	1.480	1.450	+ 48.00	+ 14.73

Prices are published in the Financial Times in the 'Investment Companies' section, and in the Daily Telegraph's 'Share Prices & Market Capitalisations' section under 'Investment Trusts'.

Fund Size

	Net Asset Value £	Net Asset Value per Share £	Number of Shares In Issue
31.12.08	134,151,707	1.505*	89,129,703
30.06.08	116,617,351	1.308	89,129,703**
30.06.07	123,690,774	1.166	106,117,074
30.06.06	126,375,613	1.191	106,117,074
30.06.05	55,935,077	1.119	50,000,000

* Value reported to the London Stock Exchange was 1.509 using mid market values. Bid prices are presented as fair value in the Financial Statements.

** 16,987,371 shares were redeemed on 29 November 2007.

Share Price Range

Accounting	Highest Buying Price	Lowest Selling Price
Period to:	£	£
31.12.08	1.480	1.250
30.06.08	1.300	1.085
30.06.07	1.260	1.110
30.06.06	1.300	1.120
30.06.05	1.140	1.000

Net Asset Value Range Accounting	Highest NAV	Lowest NAV
Period to:	£	£
31.12.08	1.509	1.266
30.06.08	1.333	1.176
30.06.07	1.211	1.166
30.06.06	1.234	1.122
30.06.05	1.122	0.976

Past performance is not a guide to the future. The value of the shares and the income from them can go down as well as go up and one may not get back the amount originally invested.

Top Ten Holdings

		Holding at	Market Value	% of Total Net
Stock name	Currency	31. 12.08	£	Assets
Treasury Index-Linked 2.50%
07/03/2013	GBP	5,350,000	12,859,742	9.59
Treasury Index-Linked 1.25%
22/11/2017	GBP	10,500,000	11,420,129	8.51
US Index-Linked Treasury Bond
2.375% 15/01/2025	USD	12,250,000	9,624,272	7.17
Japan Index-Linked Bond 1.30%
10/09/2017	JPY	1,245,000,000	8,556,029	6.38
Japan Index-Linked Bond 1.40%
10/03/2018	JPY	1,124,000,000	7,562,928	5.64
Annaly Capital Management	USD	600,000	6,614,502	4.93
Treasury 4.25% 07/03/2011	GBP	6,000,000	6,313,740	4.71
Gold Bullion Securities 0%
Undated Notes	GBP	100,000	5,956,529	4.44
Mitsubishi UFJ Financial Group	JPY	1,170,000	4,928,412	3.67
Nippon Telegraph & Telephone	JPY	1,300	4,668,077	3.48

Responsibility Statement

Responsibility statement of the directors in respect of the half-yearly financial report We confirm that to the best of our knowledge:

• the condensed set of half-yearly financial statements has been prepared in accordance with International Accounting Standards (IAS) 34 Interim Financial Reporting;

• this half-yearly management report includes information detailed in the Investment Manager's Report and Notes to the condensed half-yearly financial statements which provides a fair review of the information required by:

• DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of principal risks and uncertainties for the remaining six months of the year; and

• DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board,

Christopher Spencer    

Wayne Bulpitt

26 February 2009       

Independent Review Report to Ruffer Investment Company Limited

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half- yearly financial report for the six months ended 31 December 2008 which comprises the balance sheet, statement of operations, statement of changes in equity, cash flow statement and summary of significant accounting policies and other explanatory notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the company are prepared in accordance with International Financial Reporting Standards (IFRS). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting'.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom.

A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

MOORE STEPHENS Chartered Accountants Town Mills South

La Rue Du Pre

St Peter Port

Guernsey GY1 3HZ.

26 February 2009

Balance Sheet

ASSETS Cash and cash equivalents Unrealised gain on open forward foreign currency contracts  Receivables Financial assets at fair value through profit or loss Total Assets EQUITY Capital and reserves attributable to the Company's shareholders  Management share capital Net assets attributable to holders of redeemable participating preference shares Total Equity LIABILITIES Payables Unrealised loss on open forward foreign currency contracts Total Liabilities Total Equity and Liabilities Net assets attributable to holders of redeemable participating preference shares (per share)		(Unaudited) 31.12.08 £11,444,274 - 1,405,011 124,889,507	(Audited) 30.06.08 £4,314,396 9,172 1,663,321 112,05 7,710
		137,738,792	118,044,599
		2 134,151,707	2 116,617,351
		134,151,709	116,617,353
		273,443 3,313,640	1,427,246 -
		3,587,083	1,427,246
		137,738,792	118,044,599
		1.505	1.308

The unaudited condensed financial statements were approved at a Board Meeting on 26 February 2009 and signed on behalf of the Board of Directors by:

Christopher Spencer    

Wayne Bulpitt

Statement of Operations (Unaudited)

	Revenue	Capital	01.07.08 to 31.12.08 Total	01.0 7.07 to 31.12.07 Total
	£	£	£	£
Bank interest income	104,402	-	104,402	126,936
Fixed interest income	720,219	-	720,219	1,186,514
Dividend income	1,118,260	-	1,118,260	322,325
Net gains on financial assets at fair value through profit or loss	-	19,943,037	19,943,037	7,956,538
Other (losses)/gains	-	(2,078,415)	(2,078,415)	216,747
Total investment income	1,942,881	17,864,622	19,807,503	9,809,060
Management fees	(149,066)	(447,199)	(596,265)	(624,941)
Expenses	(231,829)	(176,803)	(408,632)	(305,606)
Total operating expenses	(380,895)	(624,002)	(1,004,897)	(930,547)
				8,878,513
Operating profit before taxation	1,561,986	17,240,620	18,802,606	8,878,513
Withholding tax	(154,129)	-	(154,129)	(73,595)
Operating profit after taxation and increase in net assets attributable to holders of redeemable participating
preference shares	1,407,857	17,240,620	18,648,477	8,804,918
Basic and diluted earnings per share*	1.58p	19.34p	20.92p	8.54p

* Basic and diluted earnings per share are calculated by dividing the operating profit after taxation and increase in net assets attributable to holders of redeemable participating preference shares by the weighted average number of redeemable participating preference shares. The weighted average number of shares for the period is 89,129,703 (31.12.07: 103,070,425).

Statement of Changes in Equity (Unaudited)

	01.07.08 to 31.12.08 £	01.0 7.07 to 31.12.07 £
Net assets attributable to holders of redeemable participating preference shares at the start of the period	116,617,351	123,690,774
Movement due to issues and redemptions of shares:
Redemption of redeemable participating preference shares	-	(20,727,990)
Net decrease from share transactions	-	(20,727,990)
Increase in net assets attributable to holders of redeemable participating preference shares from operations	18,648,477	8,804,918
Distributions to holders of redeemable participating preference shares	(1,114,121)	(1,326,463)
Increase in net assets attributable to holders of redeemable participating preference shares from operations (after distributions)
	17,534,356	7,478,455
Net assets attributable to holders of redeemable participating preference shares at the end of the period
	134,151,707	110,441,239

Cash Flow Statement (unaudited)

	01.07.08 to 31.12.08 £	01.0 7.07 to 31.12.07 £
Cash flows from operating activities
Purchase of financial assets and settlement of financial liabilities	(53,413,821)	(42,926,0 73)
Proceeds from sale of investments (including realised gains)	57,530,919	64,811,885
Redemptions of shares	-	(20,727,990)
Other receivables	75,683	-
Amount paid to brokers	(104,277)	(104,277)
Bank interest received	104,402	131,542
Fixed interest income received	1,099,417	1,003,264
Dividends received	921,689	302,345
Withholding tax	(74,667)	(73,595)
Operating expenses paid	(1,046,112)	(1,093,670)
Foreign exchange gains	3,150,766	216,747
Net cash generated from operating activities	8,243,999	1,540,178
Cash flows from financing activities
Dividends paid	(1,114,121)	(1,326,463)
Net cash flow from financing activities	(1,114,121)	(1,326,463)
Net increase in cash and cash equivalents	7,129,878	213,715
Cash and cash equivalents at beginning of the period	4,314,396	346,711
Cash and cash equivalents at end of the period	11,444,274	560,426

Notes to the Condensed Financial Statements

1.   Significant accounting policies

Basis of accounting

The condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. They have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities held at fair value through profit or loss, and in accordance with the Principal Documents and applicable Guernsey Law.

This half-yearly financial report, covering the period from 1 July 2008 to 31 December 2008, is not audited.

In order to better reflect the activities of an investment company supplementary information which analyses the income statement between items of a revenue and capital nature has been presented within the Income Statement.

The same accounting policies and methods of computation have been applied to the condensed interim financial statements as in the Annual Financial Report at 30 June 2008. The presentation of the interim financial statements is consistent with the Annual Financial Report.

The Unaudited Condensed Financial Statements do not include all the information and disclosures required in the Annual Financial Report and should be read in conjunction with the Annual Financial Report for the year ended 30 June 2008.

The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the interim financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.

The Company operates in an industry where significant seasonal or cyclical variations in total income are not experienced during the financial year.

2.   Distribution to shareholders

Any dividend will be declared semi-annually in September and March each year. An interim dividend of 1.25p per share (£1,114,121) was declared on 24 September 2008 and paid on 24 October 2008 in respect of the period from 1 July 2007 to 30 June 2008. An interim dividend of 1.5p per share in respect of the year ending 30 June 2009 was declared on 26 February 2009. The dividend is payable on 27 March 2009 to shareholders of record on 6 March 2009.

3. Share capital and share premium

Authorised Share Capital 100 Management Shares of £1.00 each 200,000,000 Unclassified Shares of 0.01p each 75,000,000 C Shares of 0.1p each

31.12.08 £ 100 20,000   75,000   ----- 95,100 -----

30.06.08 £ 100 20,000 75,000 ----- 95,100 -----

	Number of shares		Share Capital
	31.12.08	30.06.08	31.12.08	30.06.08
Issued Share Capital			£	£
Management Shares
Management Shares of £1.00 each	2	2	2	2
Equity Shares
Redeemable Participating Preference
Shares of 0.01p each:
Balance at start of period/year	89,129,703	106,117,074	8,913	10,612
Redeemed during the period	-	(16,987,371)	-	(1,699)
Balance as at end of period/year	89,129,703	89,129,703	8,913	8,913
			31.12.08	30.06.08
			£	£
Share Premium Account
Balance at 1 July 2008/1 July 2007			-	66,430,850
Redeemed during the period			- -------	(20,726,291)
			-	45,704,559
Transferred to distributable reserves			- -------	(45,704,559) ------------
Balance at 31 December 2008/30 June 2008			- --------	- --------

Purchase of Own Shares by the Company

A special resolution was granted on 4 December 2008 which authorised the Company in accordance with The Companies (Purchase of Own Shares) Ordinance, 1998 to make purchases of its own shares as defined in that Ordinance of its Participating Shares of 0.01p each, provided that:

(i)     the maximum number of Shares the Company can purchase is no more than 14.99% of the Company’s issued share capital:

(ii)    the minimum price (exclusive of expenses) which may be paid for a Share is 0.01p, being the nominal value per share;

(iii)   the maximum price (exclusive of expenses) which may be paid for the Share is an amount equal to the higher of (i) 105% of the average of the middle market quotations for a Share taken from the London Stock Exchange Daily Official List for the 5 business days immediately preceding the day on which the Share is purchased and (ii) the price stipulated in Article 5(i) of the Buy­back and Stabilisation Regulation (No 2237 of 2003);

(iv)      purchases may only be made pursuant to this authority if the Shares are (at the date of the proposed purchase) trading on the London Stock Exchange at a discount to the lower of the undiluted or diluted Net Asset Value;

(v)        the authority conferred shall expire at the conclusion of the Annual General Meeting Company in 2009 or, if earlier, on the expiry of 12 months from the passing of this resolution, unless such authority is renewed prior to such time; and

(vi)      the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract.

At the board of Directors meeting held on 18 September 2008 the Directors agreed not to offer the redemption facility for this year.

4. Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Directors are responsible for the determination of the investment policy of the Company and have overall responsibility for the Company's activities.

The Company is managed by Ruffer LLP, an independent business incorporated in the United Kingdom as a limited liability partnership. The Company and the Investment Manager have entered into a Management Agreement under which the Investment Manager has been given responsibility for the day-to-day discretionary management of the Company's assets (including uninvested cash) in accordance with the Company's investment objective and policy, subject to the overall supervision of the Directors and in accordance with the investment restrictions in the Management Agreement and the Articles of Association. The Manager receives an annual fee.

The Company has five non-executive directors, all independent of the Investment Manager.

The Directors of the Company are remunerated for their services at such a rate as the Directors determine provided that the aggregate amount of such fees does not exceed £150,000 per annum. Total Directors' fees for the period, including the outstanding Directors' fees due to Directors at the end

of the period, are detailed below.

	01.07.08 to	01.07.07 to
	31.12.08	31.12.07
	£	£
Directors' fees for the period	54,250	47,890
Payable at end of the period	26,816	23,831

Shares held by related parties

As at 31 December 2008, Directors of the Company held the following numbers of shares beneficially:

Directors	31.12.08 Shares	30.06.08 Shares
Wayne Bulpitt	20,000	20,000
Jan Etherden	36,627	36,627
Christopher Spencer	14,157	14,157

As at 31 December 2008, the Investment Manager held 23,744,685 (30.06.08: 23,738,780) shares on behalf of its discretionary clients in the Company, including 384,000 (30.06.08: 384,000) shares owned by Jonathan Ruffer, Chief Executive of the Investment Manager, and his immediate family.

5.   Segment reporting

As required by IAS 14, the total fair value of the financial instruments held by the Company by each major geographical segment, and the equivalent percentages of the total value of the Company, are reported in the Portfolio Statement.

Revenue earned is reported separately on the face of the Statement of Operations as dividend income received from equities, and interest income received from fixed interest securities and bank deposits.

The Cash Flow Statement separately reports cash flows from operating, investing and financing activities.

6.   Principal risks and uncertainties

In general terms these may be highlighted as including unexpected and sharp appreciation of Sterling against the Japanese yen and other currencies held in the portfolio. A further sudden decline in inflation expectations or a prolonged period of outright deflation across developed economies could also have an adverse impact on the portfolio. Other potential risks include a sharp fall in the price of gold and unexpected stock specific declines in the share prices of the portfolio's equity investments. Equities currently constitute 43.00% of the Company's Net Asset Value, with no single exposure greater than 5.00%. The above risks could specifically affect, among other things, the Company's 30.66% in yen denominated assets, 40.49% in government index-linked bonds and 10.20% in gold and gold equities.

Portfolio Statement as at 31 December 2008

				Holding at				Market Value	% of Total
Currency				31.12.08				£	Net Assets*
Fixed Interest 4.71%
(30.06.08 - 38.18%)
United Kingdom
Treasury 4.25% 07/03/2011			GBP	6,000,000				6,313,740	4.71
Total Fixed Interest								6,313,740	4.71
Government Indexed-Linked Bonds 40.49%
(30.06.08 -16.24%)
United Kingdom
Treasury Index-Linked 2.50% 07/03/2013			GBP	5,350,000				12,859,742	9.59
Treasury Index-Linked 1.25% 22/11/2017			GBP	10,500,000				11,420,129	8.51
								24,279,871	18.10
Japan
Japan Index-Linked Bond 1.30% 10/09/2017			JPY	1,245,000,000				8,556,029	6.38
Japan Index-Linked Bond 1.20% 10/03/2017			JPY	625,000,000				4,305,007	3.20
Japan Index-Linked Bond 1.40% 10/03/2018			JPY	1,124,000,000				7,562,928	5.64
								20,423,964	15.22
United States
US Index-Linked Treasury Bond 2.375%
15/01/2025			USD	12,250,000				9,624,272	7.17
								9,624,272	7.17
Total Government Indexed-Linked Bonds								54,328,107	40.49
Gold Bullion 4.44%
(30.06.08 - 3.89%)
Gold Bullion Securities 0% Undated Notes			GBP	100,000				5,956,529	4.44
Total Gold Bullion								5,956,529	4.44
					Holding at			Market Value	% of Total
	Currency				31.12.08			£	Net Assets*
Equities 43.00%
(30.06.08 - 36.04%)
Europe
Finland
Raisio Yhtyma Oyj	EUR				700,000			994,861	0.74
								994,861	0.74
Sweden
Ericsson	SEK				225,000			1,161,645	0.87
								1,161,645	0.87
United Kingdom
Aurora Russia Ltd	GBP				116,300			17,445	0.01
Booker Group Plc	GBP				5,631,000			1,266,975	0.95
BP Plc	GBP				702,020			3,689,114	2.76
BT Group Plc	GBP				1,000,000			1,352,000	1.01
Charles Taylor Consulting	GBP				65,000			162,500	0.12
Colt Telecom Group	GBP				1,000,000			657,500	0.49
Electric and General	GBP				125,000			402,500	0.30
Electrocomponents Plc	GBP				610,000			849,425	0.63
Environ Recycling Plc	GBP				500,000			6,250	0.01
Invensys Plc	GBP				1,200,000			2,055,600	1.53
Prodesse Investment	GBP				522,369			1,462,633	1.09
Qinetiq Group Plc	GBP				231,380			365,002	0.27
Ramco Energy Plc	GBP				350,000			140,000	0.10
Renew Holdings Plc	GBP				131,850			59,333	0.04
Servicepower Technology	GBP				8,860,000			177,200	0.13
Sterling Energy Plc	GBP				51,000,000			1,387,199	1.03
								14,050,676	10.47
Total European Equities								16,207,182	12.08
Australia
Lihir Gold Ltd	AUD				800,000			1,163,818	0.87
Total Australian Equities								1,163,818	0.87
Canada Barrick Gold Corp		Currency USD				Holding at 31.12.08 50,000		Market Value £ 1,276,300	% of Total Net Assets* 0.95
Total Canadian Equities								1,276,300	0.95
United States
Annaly Capital Management		USD				600,000		6,614,502	4.93
Clean Diesel Technologies		USD				201,221		335,893	0.25
Coeur D'Alene Mines Corp		USD				150,000		91,810	0.07
Johnson & Johnson Co		USD				30,000		1,247,366	0.93
Kraft Foods Inc		USD				100,000		1,865,415	1.39
Newmont Mining Corp		USD				147,000		4,161,294	3.10
NRG Energy Inc		USD				98,000		1,579,997	1.18
Total United States Equities								15,896,277	11.85
Asia
Japan
Bank of Yokohama Ltd		JPY				420,000		1,678,942	1.25
Japan Residential Investment		JPY				2,075,000		778,125	0.58
Kao Corp		JPY				75,000		1,553,724	1.16
Mitsubishi UFJ Financial Group		JPY				1,170,000		4,928,412	3.67
Mitsui Fudosan Co		JPY				170,000		1,904,367	1.42
Nippon Building Fund		JPY				65		481,271	0.36
Nippon Telegraph & Telephone		JPY				1,300		4,668,077	3.48
Nomura Holdings		JPY				146,000		813,277	0.61
Seven Eleven Japan Co Ltd		JPY				115,000		2,664,732	1.98
T&D Holdings Inc		JPY				43,900		1,242,910	0.93
								20,713,837	15.44
Thailand
Thai Beverage		SGD				14,240,000		1,306,146	0.97
								1,306,146	0.97
Total Asian Equities								22,019,983	16.41
Holding at     Currency    31.12.08 Africa South Africa Gold Fields Ltd                                                         ZAR           82,600 Gold Fields ADR Rep                                                USD           80,000							Market Value £ 568,605 550,304			% of Total Net Assets* 0.43 0.41
Total African Equities							1,118,909			0.84
Total Equities							57,682,469			43.00
Investment Funds 0.46%
(30.06.08 - 0.81%)
United Kingdom
Herald Worldwide Fund                                               GBP         64,341							608,662			0.46
							608,662			0.46
Total Investment Funds							608,662			0.46
Total financial assets at fair value through profit or loss							124,889,507			93.10
Other net current assets							9,262,202			6.90
Management share capital							(2)			0.00
Total Value of Fund (attributable to redeemable participating preference shares)							134,151,707			100.00

* All percentages relate to net assets attributable to holders of redeemable participating preference shares

General Information

Ruffer Investment Company Limited was incorporated with limited liability in Guernsey under the Companies Law (Guernsey), 1994, as a company limited by shares and as a closed-ended investment company on 1 June 2004. The objective of the Company is to achieve a positive total annual return, after all expenses, of at least twice the Bank of England base rate by investing in internationally listed or quoted equities or equity related securities (including convertibles) and bonds which are issued by corporate issuers, supra-nationals or government organisations.

The Company's shares are listed on the London Stock Exchange.

The accounting date of the Company is 30 June in each year. These interim financial statements were authorised for issue on 26 February 2009 by the Directors.

The prices of the shares in the Company are published in The Financial Times in the 'Investment Companies' section, and in the Daily Telegraph's 'Share Prices & Market Capitalisations' section under 'Investment Trusts'.

The Company will be managed and controlled in such a way that it should not be resident in the United Kingdom for United Kingdom tax purposes. Accordingly, and provided that the Company does not carry on a trade in the United Kingdom through a branch or agency situated therein, the Company will not be subject to United Kingdom Corporation Tax or Income Tax.

The Investment Manager receives an annual fee, payable monthly in arrears, at the rate of 1% per annum of the value of the Company on a mid market basis.

The Administrator is entitled to receive an annual fee equal to 0.15% per annum on the first £100 million and 0.10% per annum thereafter on the value of the Company on a mid market basis, subject to a minimum fee of £60,000 per annum.

The Custodian will be entitled to receive agreed safekeeping fees calculated on the basis of a percentage of the value of each holding of securities (which vary dependent on the location of the market on which those securities are traded) together with fixed transaction fees which similarly vary on a market by market basis.

Redemption Facility

The Company has a Redemption Facility (which takes the form of a tender offer to all holders of redeemable participating preference shares) which was made available after 8 July 2007. This facility may operate annually, in November each year, at the discretion of the Directors. Redemptions on any Redemption Date may be restricted to a maximum of 25% in aggregate of the Shares then in issue, with any tender requests from shareholders in excess of this being scaled back pro rata.

In order to address any imbalance in the supply and demand for the shares and to assist in maintaining a narrow discount to the Net Asset Value per share at which the shares may be trading, the Company will at the sole discretion of the Directors:

• purchase shares when deemed appropriate; and

• allow an annual redemption of up to 25% of the issued shares at the prevailing Net Asset Value per Share which commenced in November 2007.

Management and Administration

Directors		Registered Office		Auditors
John de Havilland (Chairman)		Trafalgar Court,		Moore Stephens
Wayne Bulpitt		Les Banques,		Town Mills South,
Jan Etherden		St. Peter Port,		La Rue du Pre,
Peter Luthy		Guernsey,		St. Peter Port,
Christopher Spencer		Channel Islands		Guernsey,
				Channel Islands, GY1 3HZ.
				Solicitors to the Company
Investment Manager		Sponsor and Broker		as to UK law
Ruffer LLP		UBS Limited		Lawrence Graham LLP
80 Victoria Street		1 Finsbury Avenue,		4 More London Riverside,
London, SW1E 5JL		London, EC2M 2PP.		London, SE1 2AU.
Company Secretary,				Advocates to the Company
Administrator and Registrar		CREST Agent		as to Guernsey law
Northern Trust International Fund		Computershare Investor Services		Ozannes
Administration Services		(Channel Islands) Limited		1 Le Marchant Street,
(Guernsey) Limited		Ordnance House,		St. Peter Port,
Trafalgar Court,		31 Pier Road,		Guernsey,
Les Banques,		St. Helier,		Channel Islands, GY1 4HP.
St. Peter Port,		Jersey, JE4 8PW.
Guernsey,
Channel Islands, GY1 3QL
Custodian
RBC Dexia Investor Services Trust
Royal Trust Tower,
12th Floor,
77 King Street West,
PO Box 7500, Station ' A ',
Toronto,
Ontario, M5W 1P9.
Toronto
Ontario M5W 1P9

* Effective 1 January 2009, Cenkos Securities Plc, 6.7.8 Tokenhouse Yard, London EC2R 7AS, replaced UBS Limited as Sponsor and Broker of the Company.

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