Interim Results

Ruffer Investment Company Limited
17 March 2006


RUFFER INVESTMENT COMPANY LIMITED

Investment Manager's Report
For the period ended 31 December 2005

Investment Objective

The principal 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 (4.5
per cent as at 31 December 2005) by investing in internationally listed or
quoted equities or equity related securities (including convertibles) and bonds
which are issued by corporate issuers, supra-national or government
organisations.

Investment Review

In the six month period from 30 June 2005 to 31 December 2005 the Company
recorded a positive total return (net of fees and expenses) of 7.8% compared to
the objective return of 4.5%, being twice the time weighted Bank of England base
rate over the period. The NAV per share rose 7.4% during the same period and a
dividend of 0.5p was paid.

Since launch on the 8th July 2004, the Company has recorded a positive total
return of 24% and the NAV per share has risen by 23% with dividends totalling
1.0p being paid.

During the interim period under review, the size of the portfolio more than
doubled through a C share issue, which were converted into ordinary shares in
the middle of December on the basis of 0.831 'old' shares for each C share. The
result of this issue has been to create an investment company now capitalised at
around £130 million. The hope is that this figure will increase substantially
over the coming years, through capital appreciation rather than further money
raising.

Over the course of the period, the portfolio had a more cautious flavour than it
did six months ago. The shape of the portfolio is pretty much the same as it was
at that point, but the position in oil stocks was reduced, and the proceeds -
and considerably more than the proceeds - were put into gold shares, with
acquisitions in Gold Fields, Placer Dome, RandGold Resources and more shares in
Coeur d'Alene mines (more silver than gold). These have punched very much above
their weight, and we have managed to hold our nerve in this sector. The last
purchase was of the Gold Bullion Securities ETF on 15 December.

The portfolio enjoyed two takeovers during the period, P&O and Placer Dome.

We have introduced the Norwegian currency into the portfolio in the form of a
2009 bond, and a smallish holding of index linked gilts. We are skittish on this
latter asset class; it seems to us to be exactly the right area for
consideration, but it is wholly wrongly priced at the long end of the market,
and pretty expensive at the short end.

The Japanese holdings continued to do well. We sold Ajinomoto in September,
which had underperformed, and switched into the railway sector. There was a
happy moment when we owned Central Japan Railway, East Japan Railway and West
Japan Railway, representing a full house, perhaps. The heavy concentration in
utility investments in Japan was to take advantage of the fact that the internal
rates of return of Japanese utilities were extraordinarily attractive compared
with the similar returns of Western utilities; the opportunity came about
because the Japanese utilities paid little by way of dividend, so their
attractions were masked. This anomaly has been corrected to a fair extent, but
we think there is further to go.

Investment Outlook

There are no changes to our themes in the portfolio at the moment. It has become
easy to make money again, which we regard as synonymous with danger. The risk
assets in the portfolio are now concentrated into Japan and gold. Most of the
equities represent stories of specific risk, and we remain of the view that this
balance of risk to reward is appropriate in these naughty times.

Ruffer LLP
20 January 2006
Company Performance

           Price at 31.12.2005               Change in Buying Price
                Buying             Selling          From                  From
                 Price               Price         Launch               30.06.05
                    £                    £               %                   %
Shares          1.210                1.190          +21.00               +6.14

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 in Issue
                     Value        Value per Share
                       £                    £
31.12.2005   127,717,620                1.204                      106,117,074
30.06.2005    55,935,077                1.119                       50,000,000

Share Price Range

Accounting Period to:               Highest           Shares            Lowest
                                 Buying Price                      Selling Price
                                         £                                   £
31.12.2005                            1.240                               1.120
30.06.2005                            1.140                               1.000

Net Asset Value Range

Accounting Period to:              Highest       Shares            Lowest
                                   NAV                             NAV
                                   £                               £
31.12.2005                         1.204                           1.122
30.06.2005                         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 you may not get back the
amount originally invested. Because of this, you are not certain to make a
profit on your investment and you may lose money.




Top Ten Holdings

As at 31 December 2005

Stock name                        Currency   Holding at   Market       % of
                                               31.12.05   Value        Total
                                                                       Net
                                                             £         Assets
Austria 3% 21/08/2009             CHF        24,750,000   11,362,072      8.89
Treasury 4% 07/03/2009            GBP        11,300,000   11,233,194      8.79
Switzerland (Govt.) 3 1/2% 08/04/ CHF        16,800,000    9,225,670      7.22
2033
Treasury 5% 07/03/2008            GBP         8,300,000    8,438,527      6.61
Treasury 5 3/4% 07/12/2009        GBP         7,250,000    7,653,752      5.99
Treasury 4 3/4% 07/06/2010        GBP         7,000,000    7,160,230      5.61
Switzerland (Govt.) 4% 08/04/2028 CHF        12,240,000    7,024,503      5.50
Norway 5 1/2% 15/05/2009          NOK        60,000,000    5,513,527      4.32
Treasury 2 1/2% Index Linked 23/  GBP         1,500,000    4,043,985      3.17
08/2011
Switzerland (Govt.) 4% 06/01/2049 CHF         6,400,000    3,773,358      2.96

Balance Sheet

As at 31 December 2005

                                                        31.12.05      30.06.05
                                           Notes               £             £
ASSETS
Cash and cash equivalents                              6,479,022       138,396
Receivables                                 8          1,521,101       699,050
Financial assets at fair value through
profit or loss                             1&7       120,241,000    55,562,965
                                                         ---------     ---------
Total Assets                                         128,241,123    56,400,411
                                                         ---------     ---------

EQUITY
Capital and reserves attributable to the
Company's shareholders
Management share capital                     10              2             2
Net assets attributable to holders of
redeemable participating preference shares 11&12     127,717,620    55,935,077
                                                         ---------     ---------
Total Equity                                         127,717,622    55,935,079
                                                         ---------     ---------

LIABILITIES
Payables                                      9          523,501       465,332
                                                         ---------     ---------
Total Liabilities                                        523,501       465,332
                                                         ---------     ---------
                                                         ---------     ---------
Total Equity and Liabilities                         128,241,123    56,400,411
                                                         ---------     ---------

Net assets attributable to holders of
redeemable participating preference shares
(per share)                                    12          1.204         1.119
                                                         ---------     ---------

The financial statements on pages 6 to 20 were approved at a Board Meeting on 16
March 2006 and signed on behalf of the Board of Directors by:-



John de Havilland                                           Wayne Bulpitt
Chairman                                                    Director



Statement of Operations

For the period from 1 July 2005 to 31 December 2005

                                Revenue     Capital     01.07.05     01.06.04
                                                           to           to
                                                          31.12.05    31.12.04
                                                             Total       Total
                         Notes         £           £            £           £
Bank interest income        1     289,094           -      289,094     180,879
Fixed interest income       1     880,228           -      880,228     494,870
Dividend income             1     271,069           -      271,069     216,378
Net gains on financial
assets                  1&3             -   5,143,834    5,143,834   3,679,257
at fair value through
profit or loss
Other (losses)/gains    1&4       (29,070)    138,855      109,785      12,344
                                    -------    --------   ----------  ----------
Total investment income         1,411,321   5,282,689    6,694,010   4,583,728
                                    -------    --------   ----------   ---------

Management fees             5    (116,360)   (349,078)    (465,438)   (259,046)
Expenses                    6    (600,394)        (23)    (600,417)   (482,214)
                                   --------    --------   ----------   ---------
Total operating                  (716,754)   (349,101)  (1,065,855)   (741,260)
expenses                           --------    --------   ----------   ---------
                                   --------    --------   ----------   ---------
Operating profit before
taxation                          694,567   4,933,588    5,628,155   3,842,468
                                   --------    --------   ----------   ---------

Withholding tax                   (32,074)          -      (32,074)    (18,201)

Operating profit after
taxation and increase              --------    --------   ----------   ---------
in net assets
attributable to
holders of redeemable
participating
preference                        662,493   4,933,588    5,596,081   3,824,267
shares                             --------    --------   ----------   ---------

Earnings per share*                  0.84p       6.27p        7.11p       7.65p

*Earnings per share is based on the weighted average number of redeemable
participating preference shares. The weighted average number of shares for the
period is 78,668,505.





Statement of Changes in Equity

For the period from 1 July 2005 to 31 December 2005

                                                       01.07.05 to   01.06.04
                                                                         to
                                                         31.12.05     30.06.05
                                              Notes             £            £
Net assets attributable to holders of
redeemable
participating preference shares at the start           55,935,077            -
of the period

Movement due to issues and redemptions of
shares:
Proceeds from redeemable participating
preference shares issued                               66,436,462   49,350,000
Redemption of redeemable participating                          -            -
preference shares                                          --------    ---------
Net increase from share transactions                   66,436,462   49,350,000
                                                           --------    ---------

Increase in net assets attributable to
holders
of redeemable participating preference shares           5,596,081    6,835,077
from operations
Distributions to holders of redeemable
participating preference shares                   2      (250,000)    (250,000)
                                                           --------    ---------
Increase in net assets attributable to
holders
of redeemable participating preference shares           5,346,081    6,585,077
from operations (after distributions)                      --------    ---------
                                                           --------    ---------
Net assets attributable to holders of
redeemable
participating preference shares at the end of         127,717,620   55,935,077
the period                                                 --------    ---------

Cash Flow Statement

For the period from 1 July 2005 to 31 December 2005

                                                     01.07.05 to   01.06.04 to
                                                        31.12.05      31.12.04
                                                               £             £
Cash flows from operating activities
Purchase of financial assets and settlement of
financial liabilities                                (64,319,257)  (56,514,371)
Proceeds from sale of investments (including
realised gains)                                        4,783,621     8,245,668
Amount paid to brokers                                   (91,323)      (78,969)
Bank interest received                                   225,362       180,879
Fixed interest income received                           184,246         8,508
Dividends received                                       184,193       161,965
Withholding tax                                          (32,074)      (18,201)
Operating expenses paid                                 (562,402)     (456,966)
                                                          --------     ---------
Net cash utilised in operating activities            (59,627,634)  (48,471,487)
                                                          --------     ---------

Cash flows from financing activities
Dividends paid                                          (250,000)            -
Proceeds from issue of 'C' shares/redeemable
participating preference shares                       67,500,000    50,000,000
Issue expenses relating to issue of                   (1,252,670)     (650,000)
'C' shares/redeemable participating preference
shares
                                                          --------     ---------
Net cash flow from financing activities               65,997,330    49,350,000
                                                          --------     ---------

Net increase in cash and cash equivalents              6,369,696       878,513

Cash and cash equivalents at the beginning of
the period                                               138,396             -
Exchange gains on cash and cash equivalents              (29,070)      (18,557)
                                                          --------     ---------
Cash and cash equivalents at the end of the
period                                                 6,479,022       859,956
                                                          --------     ---------




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