Final Results

Ruffer Investment Company Limited
27 September 2007


RUFFER INVESTMENT COMPANY LIMITED
Chairman's Review
For the year ended 30 June 2007


Performance

The Company's investment portfolio earned a negative total return of 0.6% in the
year to 30 June 2007. This is calculated after all expenses of management and
allowing for the payment of dividends totalling 1.75p per share. The objective
rate of return - twice the time weighted Bank of England base rate - for the
year was 9.7%. Further details are given on page 9 of the Annual Report.


Earnings and Dividend

Earnings for the year were 2.54p per share on revenue account partially
offsetting a loss, including unrealized losses, of 3.32p per share on capital
account. In the course of the year dividends totalling 1.75p per share were paid
(of which 0.5p was in respect of the year to 30 June 2006). A final dividend of
1.25p per share in respect of the year to 30 June 2007 was approved on September
18th and will be paid on October 12th 2007.

Share Price

In the first seven months of the year to 30 June 2007 the shares moved from a
premium of over 6% above Net Asset Value (NAV) at the beginning of the period to
a discount of 4% towards the end. In the last five months of the year the
discount on NAV remained at around 4%.

Annual General Meeting

The AGM of the Company will be held at 10.30 a.m. on Thursday November 8th at
the Company's registered office at Trafalgar Court, Les Banques, St Peter Port,
Guernsey

Share Buyback Authority

With the shares trading at a discount of around 3% on NAV at September 18th, the
Board has resolved to seek, at the AGM on November 8th, renewal of its authority
to buy back shares in the terms stated in Special Resolution No. 2. No shares
have been bought back under the existing authorisation granted at the previous
AGM on October 30th 2006.

Share Redemption Facility

The Company has a Redemption Facility operable in November of each year. This is
described on page 22 of the Report and Accounts. The directors will advise
shareholders by separate letter if, and on what scale, they intend to make it
available in November 2007.

Continuation Vote on Company

Under the Company's Articles there is the requirement that shareholders vote on
the future of the Company after its operation for 3 years. This is therefore the
subject of Special Resolution No. 3 at the forthcoming AGM. The directors
recommend shareholders vote in favour of the Company continuing as an investment
company because the investment managers' ability to earn a positive return in
turbulent economic times is proven.

John de Havilland
Chairman
September 26th 2007.


Investment Manager's Report
For the year ended 30 June 2007


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
(5.50 per cent as at 30 June 2007) by investing in internationally listed or
quoted equities or equity related securities (including convertibles) and/or
bonds which are issued by corporate issuers, supra-nationals or government
organisations.


Investment Review

In the twelve month period from 1 July 2006 to 30 June 2007 the Total Return
fell 0.6% (net of fees and expenses and inclusive of a 1.75p dividend), compared
to the objective return of 9.7%, being twice the time weighted Bank of England
base rate over the period. This is a wretched outcome.


Since launch on July 8 2004 the Total Return, including dividends, has risen by
22%.

A manager's review of such performance is normally backward looking, covering
mainly the events which have happened over the relevant period, with an
explanation and clarification in the light of these developments. However, this
report, written in the first days of September, is forward looking, since this
is the key to understanding recent performance, the dispositions within the
investment trust, and the thinking behind them.

The events which unfolded from the end of July have given investors a real
fright. The unfolding dislocation centred around the shortfalls in the
structured product market has played out almost exactly as we feared. Only the
mono line insurers, which looked to us like an accident waiting to happen, have
not yet been identified as a major health hazard in the financial markets.

Nevertheless, we feel that we have not been vindicated. We might add sotto voce,
not yet - but the important part of the observation is that, at the time of
writing, the real trouble still lies ahead.

Central banks have been commendably alert, pumping in over $100 billion and
facilitating bail outs where necessary. The early dislocations have been dealt
with, and the full weight of the Federal Reserve stands ready to put order back
into markets made disorderly in the case of future shocks. One must not
underestimate this good work; the possibility of a vicious circle arising from
that initial shock was a real one. The central banks will not do so well in the
next phase of the dislocation, not from a lack of care or skill, but because the
next phase will show that we are dealing with a credit crisis, not a liquidity
crisis. In the early stages the two are hard to tell apart. Banks are
carnivorous - they make their living by putting their money at risk. They have
every incentive to put aside their fears and re-engage. But depositors are not
carnivorous - they are the herbivores of the financial food chain. They seek,
above all, safety and take whatever returns the market place offers. They never
seek risk; indeed, try to shun it but every so often they are seduced into
taking a risk which they did not fully understand, or appreciate. Who are
today's depositors? No longer is it only the classical banks who make the loans
- the banking industry has mutated into investment banking and learned to thrive
by acting as investment principal and by fees, much more than by lending. And
the role of lender has passed to the originators' securitised debt - the loans
are now owned by investors, not bankers. Who are those investors? Conservative,
yield hungry investors - pension funds, insurance companies, government agencies
for 'senior' securitised paper, and risk-averse investors in fund of hedge funds
for the 'junior' stuff.

The events of mid-August have shattered the illusions; the early indicator was
the Bear Stearns fund ($3.2 billion), which after 41 unbroken 'up' months,
promptly announced it was worth only a few cents on the dollar. Two terrible
days in the market - 10 August and 16 August have been enough to persuade these
'new' depositors that it's a mug's game to chase a small extra income at the
hazard of the capital value. And, as herbivores do, they have stampeded in the
opposite direction - with the inevitable consequences that vast swathes of
perfectly safe commercial paper find no buyers today.

This is the battleground. The optimists see dislocation increasingly contained,
and against a backcloth of a sound economy, bargain hunters are returning to the
fray. 12 August was, by coincidence, the 25th anniversary of the start of Wall
Street's run (the Dow Jones was 776 then!). Buying the dips has been right every
single time for the last quarter century, so one doesn't need to be especially
brave to do it again. But they forget the nature of the herbivore. Why should he
return to securitised debt? He has now discovered that the AAA he owned wasn't
the 'Simon says' variety, and is risky. He doesn't want risk. The optimists are
looking at the wrong thing in the strength of the economy, which is an
essentially backward looking exercise: admiring the firm physique of the
followers of the Mahdi as they mass to greet the clickety clack of the Maxim
gun. The photographs of queues of depositors at Northern Rock clamouring for
their money back is a part of the pattern: a widespread loss of confidence which
may or may not have been justified. Who cares? Why take the risk?

It is what happens from now on which will determine whether our analysis is
sound.


Ruffer LLP
5th September 2007



Company Performance

                                   Price                             Change in
                                at 30.06.07                         Buying Price
                          Buying            Selling          From               From
                           Price             Price          Launch            30.06.06
                             £                 £               %                  %

Shares                     1.128             1.115          + 12.80            -11.18

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             In Issue
                                                             Share
                                               £               £

                             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 1.167 using mid market values. Bid prices
are presented as fair value in the Financial Statements.

Share Price Range

                                            Highest         Shares             Lowest
                           Accounting    Buying Price                       Selling Price
                           Period to:          £                                  £

                             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         Shares             Lowest
                           Accounting         NAV                                NAV
                           Period to:          £                                  £

                             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 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

                                                                     Market          % of
                                                  Holding at          Value     Total Net
Stock name                          Currency        30.06.07              £        Assets

Treasury 4% 07/03/2009                      GBP   11,300,000     10,984,617          8.88
Austria 3% 21/08/2009                       CHF   24,750,000     10,039,975          8.12
Switzerland 3 1/2% 08/04/2033               CHF   16,800,000      6,849,174          5.54
Treasury 4 3/4% 07/06/2010                  GBP    7,000,000      6,802,530          5.50
Norway 5 1/2% 15/05/2009                    NOK   80,000,000      6,767,140          5.47
Norway 6% 16/05/2011                        NOK   70,000,000      6,054,747          4.90
Switzerland 4% 08/04/2028                   CHF   12,240,000      5,424,523          4.39
Switzerland 1 3/4% 05/11/2009               CHF   13,100,000      5,192,623          4.20
Treasury 5 3/4% 07/12/2009                  GBP    4,250,000      4,245,283          3.43
Unilever                                    GBP      200,000      3,226,000          2.61




Balance Sheet

                                                                30.06.07        30.06.06

                                                                       £               £
ASSETS
Cash and cash equivalents                                        346,711       6,190,457
Receivables                                                      824,796       1,483,682
Financial assets at fair value through profit                123,074,306     119,449,349
or loss

Total Assets                                                 124,245,813     127,123,488

EQUITY
Capital and reserves attributable
to the Company's shareholders
Management share capital                                               2               2
Net assets attributable to holders of
redeemable participating preference shares                   123,690,774     126,375,613

Total Equity                                                 123,690,776     126,375,615

LIABILITIES

Payables                                                         555,037         747,873

Total Liabilities                                                555,037         747,873

Total Equity and Liabilities                                 124,245,813     127,123,488

Net assets attributable to holders of
redeemable participating preference shares                         1.166           1.191
(per share)



Statement of Operations

                                                               01.07.06 to     01.07.05 to
                                                                  30.06.07        30.06.06
                                       Revenue       Capital         Total           Total
                                             £             £             £               £
Bank interest income                    41,146             -        41,146         381,418
Fixed interest income                2,936,037             -     2,936,037       2,054,836
Dividend income                        667,676             -       667,676         631,541
Net (losses)/gains on financial
assets at fair value through profit 
or loss                                      -   (2,293,821)   (2,293,821)       3,479,996
Other (losses)/gains                         -     (118,526)     (118,526)         263,577
Total investment income/             3,644,859   (2,412,347)     1,232,512       6,811,368
(loss)

Management fees                      (315,551)     (946,650)   (1,262,201)     (1,096,691)
Expenses                             (392,903)     (161,039)     (553,942)       (901,905)
Total operating expenses             (708,454)   (1,107,689)   (1,816,143)     (1,998,596)

Operating profit/(loss) before       2,936,405   (3,520,036)     (583,631)       4,812,772
taxation

Withholding tax                      (244,159)             -     (244,159)        (28,113)

Operating profit/(loss) after 
taxation and increase/(decrease) 
in net assets attributable to 
holders of redeemable
participating preference shares      2,692,246   (3,520,036)     (827,790)       4,784,659

Basic and diluted earnings per           2.54p        -3.32p        -0.78p           5.18p
share *

* Basic and diluted earnings per share are calculated by dividing the operating profit/
(loss) after taxation and increase/(decrease) 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
106,117,074.

Statement of Changes in Equity
                                                              01.07.06 to      01.07.05 to
                                                                 30.06.07         30.06.06

                                                                        £                £

Net assets attributable to holders of
redeemable participating preference shares at 
the start of the year                                         126,375,613       55,935,077


Movement due to issues and redemptions of shares:

Proceeds from redeemable participating
preference shares issued                                                -       66,436,462

Net increase from share transactions                                    -       66,436,462

(Decrease)/increase in net assets attributable to
holders of  redeemable participating preference                 (827,790)        4,784,659
shares from operations

Distributions to holders of redeemable
participating preference shares                               (1,857,049)        (780,585)

(Decrease)/increase in net assets attributable to
holders of redeemable participating preference
shares from operations (after distributions)                  (2,684,839)        4,004,074

Net assets attributable to holders of
redeemable participating preference shares at the             123,690,774      126,375,613
end of the year



Cash Flow Statement

                                                         01.07.06 to        01.07.05 to
                                                            30.06.07           30.06.06

                                                                   £                  £
Cash flows from operating activities
Purchase of financial assets and settlement of          (37,198,127)      (104,059,163)
financial liabilities
Proceeds from sale of investments (including              31,853,203         43,077,487
realised gains)
Transaction costs                                          (161,039)          (180,098)
Bank interest received                                        62,092            355,866
Fixed interest income received                             3,016,663          1,633,111
Dividends received                                           652,367            612,075
Withholding tax                                            (244,159)           (28,113)
Operating expenses paid                                  (1,849,171)        (1,388,886)
Foreign exchange loss                                      (118,526)                  -

Net cash utilised in operating activities                (3,986,697)       (59,977,721)

Cash flows from financing activities
Dividends paid                                           (1,857,049)          (780,585)
Proceeds from issue of 'C' shares                                  -         67,500,000
Issue expenses relating to issue of 'C'                            -        (1,044,548)
shares

Net cash flow from financing activities                  (1,857,049)         65,674,867

Net (decrease)/increase in cash and cash                 (5,843,746)          5,697,146
equivalents

Cash and cash equivalents at beginning of                  6,190,457            138,396
the year
Exchange gains on cash and cash equivalents                        -            354,915
Cash and cash equivalents at end of the year                 346,711          6,190,457






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