Half Yearly Report

RNS Number : 7801H

Ruffer Investment Company Limited

26 February 2010

 



RUFFER INVESTMENT COMPANY LIMITED

HALF YEARLY REPORT

The Company has today, in accordance with DTR 6.3.5, released its Interim Financial Report for the six months ended 31st December 2009. The Report will shortly be available from the Company's website www.ruffer.co.ukand will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is located at:

Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

Investment Objective and Policy

To achieve a positive total annual return, after all expenses, of at least twice the Bank of England base rate (0.5% for the period ended 31 December 2009) 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

     31.12.09

Offer Price                     Net Asset Value

Redeemable participating preference shares                  1.775†                           1.703*

† 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 31.12.09. 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 0.8314 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 2009 to 31 December 2009

In the six month period from 1 July 2009 to 31 December 2009 the asset value of the Company rose in capital terms from 152.6p* to 170.3p* which, together with a dividend of 1.5p, represents a total return of 12.6%, compared to the target return of 0.5%, which is the six monthly return of twice the Bank of England base rate over the period - the base rate was unchanged at 0.5% throughout the period. Over the same period the FTSE All Share gained 26.5% on a total return basis. Since launch on 8 July 2004 the Company has returned 87.7%,** including dividends.

During the second half of the year equities built further on the gains made since the March low. Governments and central banks have pumped enormous liquidity into the financial system in an attempt to avoid a 1930's style deflation, and the quantitative easing and other stimuli are having the desired effect. Confidence has returned to markets and equities have staged a strong rally as a result.

This sharp move up in risk assets around the world has been a function of excess liquidity, resulting in high levels of correlations across markets and asset classes. All of this is short-term, and we are yet to see how markets will behave once the economic stimuli are removed. The risk is that tighter monetary conditions will reveal the true frailty of demand, and risk appetite. Therefore there is a risk that the correlations will be maintained on the downside when the emergency measures are withdrawn. Our thoughts are that, much like in 2008, currencies could provide a safe haven against correlated market falls. The Federal Reserve has been more aggressive than most in its policies over the last 12 months and the lowering of interest rates to between 0-1⁄4% has seen the US Dollar become the funding currency of choice, weakening whilst equity markets have forged ahead. Any unwinding of the risk-seeking 'carry trades', could see the US Dollar recover, perhaps quite sharply. A hint of its potential came with the Dubai crisis which resulted in a temporary equity sell-off and a sharp appreciation of the US Dollar. The US Dollar now makes up over 20% of the portfolio.

The holdings in Japan have continued to disappoint as Japanese equities have substantially underperformed global markets. Having been the only major central bank not to expand its balance sheet in the last year, the Bank of Japan is now seeking to actively stimulate spending, which should be positive for both the economy and the stock market. We feel further supported in this view by the Japanese authorities engineering their interest rates to be below those of the US in an attempt to take over as the favoured carry-trade currency. A combination of Yen weakness, economic recovery and government stimuli could make Japanese equities a rather more rewarding investment in 2010.

Elsewhere in the portfolio we have continued to reduce our more economically sensitive positions (Deutsche Post, Invensys and Swedish Krone) in favour of investments in companies offering high yields combined with rock-solid balance sheets (BP, Tesco, Kao, Vodafone). We feel these names could benefit from any continuation of the market rally as investors, reacting to the near zero returns on cash and improving economic news, search for comparatively stable high-yielders.

Our belief is that 2009 will prove to have been the calm between two storms. We have navigated the difficult markets of 2008, and we have fared adequately in what have been comparatively benign markets over the last year. This coming year could well be another difficult one. Whilst central bankers still talk about the importance of inflation targeting, we expect them to remain unmoved in terms of interest rates, with the result that a period of negative real rates will be ushered in. This is the cure for the ills of excessive debts that is unfolding upon us - but for the saver it is more of a curse than a cure. For this reason we remain positioned with a significant weighting in index-linked bonds, which should protect the value of the portfolio in this environment.

Ruffer LLP

February 2010

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

**The Calculation of the Total Return includes an amount of 3.626 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 31.12.09                         Bid Price

Offer           Bid           From          From

Price        Price        Launch    30.06.09

£                £                %               %

Shares                                    1.775          1.760         + 76.00        +13.70

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	Net Asset	Number of Shares
		Value	Value per Share	In Issue
		£	£
	31.12.09	155,503,106	1.697*	91,629,703
	30.06.09	135,603,281	1.521	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 1.703 using mid market values. Bid prices are presented as fair value in the Financial Statements.

Share Price Range

	Highest		Lowest
Accounting	Offer Price		Bid Price
Period to:	£		£
31.12.09	1.830		1.555
30.06.09	1.570		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

	Highest		Lowest
Accounting	NAV		NAV
Period to:	£		£
31.12.09	1.714		1.518
30.06.09	1.526		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

			Market	% of
		Holding at	Value	Total Net
Stock name	Currency	31.12.09	£	Assets
UK Index-Linked Gilt 1.25% 22/11/2017	GBP	11,500,000	13,347,727	8.57
US Treasury Inflation Indexed 2.375%
Bond 15/01/2025	USD	12,250,000	9,179,353	5.90
UK Index-Linked Gilt 1.25% 22/11/2055	GBP	5,762,000	8,718,361	5.61
US Treasury Inflation Indexed 1.625%
Bond 15/01/2015	USD	11,000,000	8,020,150	5.16
Ruffer Illiquid Strategies Fund **	GBP	6,725,000	6,755,619	4.34
US Treasury Inflation Indexed 1.75%
Bond 15/01/2028	USD	10,850,000	6,648,052	4.28
CF Ruffer Baker Steel Gold Fund**	GBP	2,381,330	5,578,505	3.59
BT Group Plc	GBP	3,559,500	4,801,766	3.09
UK Index-Linked Gilt 1.875% 22/11/2022	GBP	4,000,000	4,652,344	2.99
Vodafone Group Plc	GBP	3,150,000	4,517,100	2.90

**CF Ruffer Baker Steel Gold Fund and Ruffer Illiquid Strategies Fund are classed as related parties as they share the same Investment Manager as the Company.

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 report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting;"

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

(a)       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

(b)       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

25 February 2010                               25 February 2010

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 2009 which comprises the statement of financial position, unaudited statement of comprehensive income, unaudited statement of changes in equity, unaudited statement of cash flow 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. 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 2009 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

25 February 2010

Statement of Financial Position

	Notes	(Unaudited) 31.12.09		(Audited) 30.06.09
		£		£
ASSETS
Cash and cash equivalents		3,646,280		4,960,204
Unrealised gain on open forward foreign currency contracts		1,478,252		3,727,334
Receivables		576,123		7,445,243
Financial assets at fair value through profit or loss		150,377,001		119,837,264
Total Assets		156,077,656		135,970,045
EQUITY
Capital and reserves attributable to the
Company's shareholders
Management share capital	3	2		2
Net assets attributable to holders of
redeemable participating preference shares		155,503,106		135,603,281
Total Equity		155,503,108		135,603,283
LIABILITIES
Payables		277,002		254,472
Unrealised loss on open forward foreign currency contracts		297,546		112,290
Total Liabilities		574,548		366,762
Total Equity and Liabilities		156,077,656		135,970,045
Net assets attributable to holders of redeemable
participating preference shares (per share)		1.697		1.521

The unaudited condensed financial statements were approved at a Board Meeting on 25 February 2010 and signed on behalf of the Board of Directors by:

Christopher Spencer                                       Wayne Bulpitt

Unaudited Statement of Comprehensive Income

				01.07.09 to	01.07.08 to
				31.12.09	31.12.08
	Notes	Revenue	Capital	Total	Total
		£	£	£	£
Bank interest income		3,002	-	3,002	104,402
Fixed interest income		424,890	-	424,890	720,219
Dividend income		1,195,912	-	1,195,912	1,118,260
Net gains on financial assets
at fair value through profit or loss		-	17,514,853	17,514,853	19,943,037
Other losses		-	(1,022,404)	(1,022,404)	(2,078,415)
Total investment income		1,623,804	16,492,449	18,116,253	19,807,503
Management fees		(166,893)	(500,679)	(667,572)	(596,265)
Expenses		(244,071)	(157,178)	(401,249)	(408,632)
Total operating expenses		(410,964)	(657,857)	(1,068,821)	(1,004,897)
Operating profit before taxation		1,212,840	15,834,592	17,047,432	18,802,606
Withholding tax		(135,436)	-	(135,436)	(154,129)
Operating profit after taxation and
increase in net assets attributable to
holders of Redeemable participating preference shares		1,077,404	15,834,592	16,911,996	18,648,477
Basic and diluted earnings per share *		1.20p	17.69p	18.89p	20.92p

* 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 89,518,018 (31.12.08: 89,129,703).

Unaudited Statement of Changes in Equity

		01.07.09 to	01.07.08 to
		31.12.09	31.12.08
		£	£
Net assets attributable to holders of redeemable
participating preference shares at the start of the period		135,603,281	116,617,351
Movement due to issues and redemptions of shares:
Proceeds from redeemable participating
preference shares issued		4,324,775	-
Net decrease from share transactions		4,324,775	-
Increase in net assets attributable to holders of redeemable
participating preference shares from operations		16,911,996	18,648,477
Distributions to holders of redeemable
participating preference shares		(1,336,946)	(1,114,121)
Increase in net assets attributable to holders of redeemable
participating preference shares from operations (after distributions)		15,575,050	17,534,356
Net assets attributable to holders of redeemable
participating preference shares at the end of the period		155,503,106	134,151,707

Unaudited Statement of Cash Flow

	01.07.09 to		01.07.08 to
	31.12.09		31.12.08
	£		£
Cash flows from operating activities
Purchase of financial assets and settlement of financial liabilities	(60,251,539)		(53,413,821)
Proceeds from sale of investments (including realised gains)	47,226,655		57,530,919
Other receivables	6,725,000		75,683
Amount paid to brokers	(157,178)		(104,277)
Bank interest received	3,002		104,402
Fixed interest income received	451,026		1,099,417
Dividends received	1,313,896		921,689
Withholding tax	(146,555)		(74,667)
Operating expenses paid	(877,994)		(1,046,112)
Foreign exchange gain	1,411,934		3,150,766
Net cash (used in)/generated from operating activities	(4,301,753)		8,243,999
Cash flow from financing activities
Dividends paid	(1,336,946)		(1,114,121)
Proceeds from issue of redeemable participating preference shares	4,324,775		-
Net cash flow generated from/(used in) financing activities	2,987,829		(1,114,121))
Net (decrease)/increase in cash and cash equivalents	(1,313,924)		7,129,878
Cash and cash equivalents at beginning of the period	4,960,204		4,314,396
Cash and cash equivalents at end of the period	3,646,280		11,444,274

Notes to the unaudited Condensed Financial Statements

1.  Significant accounting policies

Basis of accounting

The unaudited condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard 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 2009 to 31 December 2009, 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 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 2009.

Except as described below, the same accounting policies and methods of computation have been applied to the condensed interim financial statements as in the annual financial statements at 30 June 2009. The presentation of the interim financial statements is consistent with the annual financial report.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning on or after 1 January 2009.

·   IAS 1 (revised), 'Presentation of financial statements' - effective 1 January 2009. The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statements of changes in equity, requiring 'non-owner changes in equity' to be presented separately from the owner changes in equity in a statement of comprehensive income. As a result the Company presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. As the change in the accounting policy only impacts presentation aspects, there is no impact on the earnings per share.

·   IFRS 8, 'Operating segments' was effective from 1 January 2009. IFRS 8 replaces IAS 14, 'Segment reporting', and aligns segment reporting with the requirements of the US standard SFAS 131, 'Disclosures about segments of an enterprise and related information'. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The segment information is therefore reported in a manner that is more consistent with the internal reporting provided to the chief operating decision-maker.

The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board that makes strategic decisions.

·   IFRS 7 'Improving Disclosures about Financial Instruments' was effective from 1 January 2009. These amendments require the Company to present certain information about financial instruments measured at fair value in the statement of financial position. In the first year of application, comparative information need not be presented for the disclosures required by the amendment. Accordingly, the disclosure for the fair value hierarchy is only presented for the 30 June 2010 year end.

This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities.

The fair value hierarchy has the following levels:

·   Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

·   Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices); and

·   Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2009, but are not currently relevant for the Company.

·   IAS 23 (amendment), 'Borrowing costs'.

·   IFRS 2 (amendment), 'Share-based payment'.

·   IAS 32 (amendment), 'Financial instruments: Presentation'.

·   IFRIC 13, 'Customer loyalty programmes'.

·   IFRIC 15, 'Agreements for the construction of real estate'.

·   IFRIC 16, 'Hedges of a net investment in a foreign operation'.

·   IAS 39 (amendment), 'Financial instruments: Recognition and measurement'.

·   IFRS 3 (revised), 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures', effective for annual periods beginning on or after 1 July 2009. The Company does not have any joint ventures.

·   IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the Company, as it has not made any non-cash distributions.

·   IFRIC 18, 'Transfers of assets from customers', effective for transfers of assets received on or after 1 July 2009. This is not relevant to the Company, as it has not received any assets from customers.

2.  Distribution to shareholders

Any dividend will be declared semi-annually in September and March each year. An interim dividend of 1.5p per share (£1,336,946) was declared on 23 September 2009 and paid on 23 October 2009 in respect of the period from 1 January 2009 until 30 June 2009. An interim dividend of 1.50p per share in respect of the half year ending 31 December 2009 was declared on 25 February 2010. The dividend is payable on 26 March 2010 to shareholders of record on 05 March 2010.

3.  Share capital account

				31.12.09		30.06.09
Authorised Share Capital				£		£
100 Management Shares of £1.00 each				100		100
200,000,000 Unclassified Shares of 0.01p each				20,000		20,000
75,000,000 C Shares of 0.1p each				75,000		75,000
				95,100		95,100

	Number of shares		Share Capital
	31.12.09	30.06.09	31.12.09	30.06.09
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	89,129,703	8,913	8,913
Redeemed during the period/year	2,500,000	-	4,324,775	-
Balance as at end of period/year	91,629,703	89,129,703	4,333,688	8,913

Purchase of Own Shares by the Company

An ordinary resolution was granted on 26 November 2009 which authorised the Company in accordance with The Companies (Guernsey) Law 2008 to make purchases of its own shares as defined in that Ordinance of its Participating Shares of 0.0lp 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 Buy-back 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 of the Company in 2010 or, if earlier, on the expiry of 15 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.

Blocklisting and additional shares issued

During the period application was made to the Financial Services Authority and to the London Stock Exchange for 8,912,969 ordinary shares of 0.01pence each, which rank pari passu with the existing ordinary shares in issue, to be admitted to the Official List under a general corporate purposes blocklisting facility.

Under the blocklisting facility, 2,500,000 new redeemable participating preference shares of £0.01 each had been allotted and issued as at 31 December 2009.

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 Investment Management Agreement will continue in force until determined by the Investment Manager or the Company giving to the other party thereto not less than 12 months notice. The market value of all related investment funds are deducted from the Net Asset Value of the Company before the calculation of management fees on a monthly basis.

The Company has six 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.

Each Director was paid a fee of £20,000 (30.06.09: £20,000) per annum, except for the Chairman who was paid £28,500 (30.06.09: £28,500).

Total Directors' fees for the period, including the outstanding Directors' fees due to Directors at the end of the period, are detailed below.

	01.07.09 to 31.12.09		01.07.08 to 31.12.08
	£		£
Directors' fees for the period	64,250		54,250
Payable at end of the period	32,125		26,816

Shares held by related parties

As at 31 December 2009, Directors of the Company held the following numbers of shares beneficially:

	31.12.09		30.06.09
Directors	Shares		Shares
Wayne Bulpitt	20,000		20,000
Jeannette Etherden	36,627		36,627
Christopher Spencer	14,157		14,157
Ashe Windham	62,906		62,906

As at 31 December 2009, Jonathan Ruffer, Chief Executive of the Investment Manager and his immediate family owned 384,000 (30.06.09: 384,000) shares in the Company.

As at 31 December 2009, the Investment Manager held 20,902,251 (30.06.09: 23,377,637) shares on behalf of its discretionary clients in the Company.

As at 31 December 2009 the Company held investments in three related investment funds valued at £16,609,184 (30.06.09: 7,710,237). Refer to the Portfolio Statement for details.

Peter Luthy and Wayne Bulpitt, directors of the Company also act as directors in another investment company managed by the Investment Manager.

5.  Segment reporting

The Board of Directors makes the strategic resource allocations on behalf of the Company. The Company has determined the operating segments based on the reports reviewed by the Board, which are used to make strategic decisions.

The Board is responsible for the Company's entire portfolio and considers the business tohave a single operating segment. The Board's asset allocation decisions are based on a single, integrated investment strategy, and the Company's performance is evaluated on an overall basis.

The internal reporting provided to the Board for the Company's assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of IFRS.

There were no changes in the reportable segments during the period.

As required by IFRS 8, 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 comprehensive income as dividend income received from equities, and interest income received from fixed interest securities and bank deposits.

The statement of cash flow 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 US Dollar, 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 47.38% 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 15.54% in yen denominated assets, 23.74% in US Dollar denominated assets, 35.10% in government index-linked bonds and 4.46% in gold and gold equities.

7.   Subsequent event

Subsequent to 31 December 2009, the following redeemable participating preference shares were allotted and issued under the blocklisting facility.

Date of Issue                                                                                         Number of shares

08 January 2010                                                                           350,000

22 January 2010                                                                           400,000

05 February 2010                                                                         900,000

19 February 2010                                                                      1,200,000

Following these tap issues the Company has the ability to issue a further 3,562,969 shares under the blocklisting facility.

There are now 94,479,703 shares in issue. Therefore, the total voting rights in the Company is 94,479,703.

Portfolio Statement as at 31 December 2009

		Holding	Market	%
		at	Value	of Total
	Currency	31.12.09	£	Net Assets*
Government Index-Linked Bonds 35.10%
(30.06.09 - 40.97%)
United Kingdom
UK Index-Linked Gilt 1.875% 22/11/2022	GBP	4,000,000	4,652,344	2.99
UK Index-Linked Gilt 1.25% 22/11/2055	GBP	5,762,000	8,718,361	5.61
UK Index-Linked Gilt 1.25% 22/11/2017	GBP	11,500,000	13,347,727	8.57
			26,718,432	17.17
Japan
Japan Index-Linked Bond 1.20% 10/03/2017	JPY	625,000,000	4,022,469	2.59
			4,022,469	2.59
United States
US Treasury Inflation Indexed 1.625% Bond 15/01/2015	USD	11,000,000	8,020,150	5.16
US Treasury Inflation Indexed 2.375%  Bond 15/01/2025	USD	12,250,000	9,179,353	5.90
US Treasury Inflation Indexed 1.75% Bond 15/01/2028	USD	10,850,000	6,648,052	4.28
			23,847,555	15.34
Total Government Indexed-Linked Bonds			54,588,455	35.10
Gold Bullion 2.15%
(30.06.09 - 2.03%)
Gold Bullion Securities 0% Undated Notes	GBP	50,000	3,340,249	2.15
Total Gold Bullion			3,340,249	2.15
Warrants 0.77%
(30.06.09 - Nil)
Nomura Europe Finance Euro Stoxx 50 Put Warrant 23/6/10	GBP	7,610	1,200,127	0.77
Total Warrants			1,200,127	0.77
Equities 47.38%
(30.06.09 - 39.15%)
Europe
Finland
Raisio Oyj	EUR	700,000	1,654,336	1.06
			1,654,336	1.06
Sweden
LM Ericsson	SEK	500,000	2,857,715	1.84
			2,857,715	1.84
United Kingdom
Asos Plc	GBP	352,500	1,714,913	1.10
Better Capital Ltd	GBP	1,500,000	1,620,000	1.04
Booker Group Plc	GBP	5,631,000	2,590,260	1.67
BP Plc	GBP	702,020	4,212,118	2.72
BT Group Plc	GBP	3,559,500	4,801,766	3.09
Charles Taylor (Consulting) Plc	GBP	742,936	1,493,301	0.96
Colt Telecom Group Ltd	GBP	1,005,000	1,331,625	0.86
Electrocomponents Plc	GBP	610,000	986,370	0.63
Environmental Recycling Technologies Plc	GBP	500,000	5,000	0.00
London & Stamford Property Ltd	GBP	290,300	342,554	0.22
Prodesse Investment Ltd	GBP	522,369	2,246,187	1.44
RSA Insurance Group Plc	GBP	1,500,000	1,804,500	1.16
Ramco Energy Plc	GBP	350,000	178,500	0.11
ServicePower Technologies Plc	GBP	8,860,000	376,550	0.24
Sterling Energy Plc	GBP	283,333	430,666	0.28
System C Healthcare Plc	GBP	400,000	200,000	0.13
Tesco Plc	GBP	625,000	2,668,750	1.72
Vodafone Group Plc	GBP	3,150,000	4,517,100	2.90
			31,520,160	20.27
Total European Equities			36,032,211	23.17
Australia
Lihir Gold Ltd	AUD	400,000	730,685	0.47
Total Australian Equities			730,685	0.47
Canada
Barrick Gold Corp	USD	50,000	1,219,308	0.78
Total Canadian Equities			1,219,308	0.78
United States
Clean Diesel Technologies Inc	USD	201,221	176,941	0.11
ConocoPhillips	USD	74,000	2,337,976	1.50
Johnson & Johnson	USD	30,000	1,195,096	0.77
Kraft Foods Inc	USD	230,000	3,869,771	2.49
Kroger Co.	USD	285,000	3,623,278	2.33
Total United States Equities			11,203,062	7.20
Asia
Japan
Daiei Inc	JPY	492,000	1,047,265	0.67
Daiwa Securities Group Inc	JPY	247,000	762,354	0.49
ITOCHU Corp	JPY	721,000	3,266,058	2.10
Japan Real Estate Investment REIT Corp	JPY	224	1,017,678	0.65
Japan Residential Investment Co Ltd	JPY	2,850,000	912,000	0.59
Kao Corp	JPY	200,000	2,886,896	1.86
Mitsui & Co Ltd	JPY	120,000	1,046,467	0.67
Nippon Building Fund REIT	JPY	490	2,297,876	1.48
Nippon Telegraph & Telephone Corp	JPY	130,000	3,156,296	2.03
Nomura Holdings Inc	JPY	205,000	925,902	0.60
Sumitomo Mitsui Financial Group Inc	JPY	66,000	1,161,211	0.75
T&D Holdings Inc	JPY	130,000	1,642,139	1.06
			20,122,142	12.95
Thailand
Thai Beverage Plc	SGD	25,248,000	2,728,408	1.75
			2,728,408	1.75
Total Asian Equities			22,850,550	14.70
Africa
South Africa
Gold Fields Ltd	ZAR	120,000	987,945	0.64
Gold Fields ADR Rep	USD	80,000	649,472	0.42
Total African Equities			1,637,417	1.06
Total Equities			73,673,233	47.38
Investment Funds 11.30%
(30.06.09 - 6.22%)
United Kingdom
CF Ruffer Japanese Fund**	GBP	4,287,159	4,275,060	2.75
CF Ruffer Baker Steel Gold Fund**	GBP	2,381,330	5,578,505	3.59
Ruffer Illiquid Strategies Fund **	GBP	6,725,000	6,755,619	4.34
Herald Worldwide Fund	GBP	64,341	965,752	0.62
			17,574,936	11.30
Total Investment Funds			17,574,936	11.30
Total financial assets at fair value through profit or loss			150,377,001	96.70
Other net current			5,126,107	3.30
Management share capital			(2)	0.00
Total Value of Company
(attributable to redeemable participating preference shares)			155,503,106	100.00

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

** CF Ruffer Baker Steel Gold Fund, CF Ruffer Japanese Fund and Ruffer Illiquid Strategies Fund are classed as related parties as they share the same Investment Manager as the Company.

General Information

Ruffer Investment Company Limited was incorporated with limited liability in Guernsey under the Guernsey Companies Law, as a company limited by shares and an authorised 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 25 February 2010 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".

It is the intention of the Board of Directors to conduct the affairs of the Company so as to ensure that it will not become resident in the United Kingdom. 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:

(i)   purchase shares when deemed appropriate; and

(ii)   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,
Ashe Windham		GY1 3QL		Channel Islands, GY1 3HZ
				Solicitors to the Company
Investment Manager		Sponsor and Broker		as to UK law
Ruffer LLP		Cenkos Securities Plc,		Lawrence Graham LLP
80 Victoria Street		6.7.8 Tokenhouse Yard,		4 More London Riverside,
London, SW1E 5JL		London, EC2R 7AS		London, SE1 2AU
Company Secretary,				Advocates to the Company
Administrator and Registrar		CREST Agent		as to Guernsey law
Northern Trust International		Computershare Investor Services		Ozannes
Fund 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

 

END

 

 

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