Final Results

Foreign & Colonial U.S.Smllr.Co PLC
02 October 2002



EMBARGOED UNTIL 7AM ON WEDNESDAY 2 OCTOBER 2002

Contact: Robert Siddles, F&C, Tel: [phone]/Emma Chilvers, Lansons Communications, Tel. [phone]



                 FOREIGN & COLONIAL U.S. SMALLER COMPANIES PLC

                       Unaudited Preliminary Statement
                       for the year ended 30 June 2002

Highlights

•        For the year to 30 June 2002, the diluted net asset value per share
fell by 12.4% compared with a fall of 16.8% for the sterling-adjusted Russell
2000 Index, the main benchmark.

•        Since inception of the Company in 1993, the net asset value has risen
by 135.3% whereas the Russell 2000 Index gained 92.5% in sterling terms.

•        The discount to NAV of the shares stood at 5% at 30 June 2002 and the
Board is committed to buying back shares at appropriate times.

•        The manager has maintained a cautious stance, especially towards the
technology sector.

•        In addition to proposing a continuation vote to continue the Company as
an investment trust the Board will put forward recommended proposals which will
allow shareholders to vote on a tender offer for ordinary shares of the Company
at a price which fairly reflects the then NAV.

•        The final notice reminding warrant holders of their rights will be sent
out in October.

•        This is the third year that US small companies have performed better
than large, and over the long run, they should offer good returns.


Summary of Results                                 30 June 2002              30 June 2001           % Change

Net assets attributable to equity                        £74.59m                  £86.74m            -14.0%
shareholders
Net asset value per share                                227.10p                  267.11p            -15.0%
Net asset value per share diluted                        218.38p                  249.22p            -12.4%
Share price                                              207.00p                  222.50p             -7.0%
Warrant price                                            107.00p                  120.00p            -10.8%


Extracts from Chairman's Statement



I am pleased to present the annual report for Foreign & Colonial U.S. Smaller
Companies PLC for the year ended 30 June 2002. Whilst it is disappointing to
report a fall in net asset value, your Company again outperformed the benchmark
Index against which it is measured. In all but one of the nine years since its
formation this has been the case, the exception being the year to 30 June 2000.



For the year to 30 June 2002, diluted net asset value per share fell by 12.4%,
compared with a drop of 16.8% in our benchmark, the sterling-adjusted Russell
2000 Index and a fall of 25.4% in the sterling adjusted Standard & Poor's
Composite Index.



Since the formation of the Company in March 1993, the net asset value has risen
by 135.3% whereas the Russell 2000 Index gained 92.5% in sterling terms.



As in previous years, no dividend is declared for the year to 30 June 2002. This
is in line with stated policy.



Market Review

The year to 30 June 2002 was a very difficult one for stock markets but against
this background, US small companies performed quite well. The market was hit by
several blows: the terrorist attacks on 11 September 2001; the continued decline
of technology stocks following the bursting of the technology bubble in 2000;
and a loss of investor confidence following a series of scandals, including
Enron and WorldCom. These two particularly affected large companies.



Over the year under review however, the Russell 2000 Index of Smaller Companies
fell, in US dollar terms, by 9.8%. This fall was considerably less than that of
the large company indices such as the Standard & Poor's Composite Index, which
fell by 19.2%, or the Nasdaq Composite Index, which fell by 32.3%.



With this as a background, the manager maintained a cautious stance, especially
towards the technology sector. The manager also used strong share price
performance in economically sensitive stocks to reduce positions, especially in
media. Additions were made to healthcare stocks where the sector performed
poorly during the last two years.



Discount and Buy backs

I am pleased to report that the price of the shares fell by only 7.0% over the
year. The discount to diluted NAV narrowed during the year to 5.0% and at 27
September 2002 was 11.7%. There was no repurchase of your Company's own shares
during the year, but a repurchase of 50,000 shares has been made since the year
end. A total of 18,028,885 shares or 35% of the ordinary shares in issue, have
been bought back since 1999. There were no further repurchases of warrants since
the buy back in the first half of the year of 1,327,213 warrants that was
covered in my interim report. The average discount at which the Company's shares
have traded over the twelve months to 27 September 2002 was 6.2%. The Board will
continue its proactive use of its share buyback facility which has been so
successful to date.



Proposals to allow shareholders to vote on realising their investment

In June 1999 the Board announced its commitment to enable all shareholders to
realise their investment in the Company following the AGM in 2002 at a price
which fairly reflected the then net asset value.



In addition to proposing a continuation vote to continue the Company as an
investment trust the Board will be writing to shareholders in due course to set
out details of proposals for a tender offer, under which shareholders (other
than certain overseas shareholders) may tender shares to the Company at 93% of
net asset value as at the Calculation Date. Your Board has been advised that,
for the purposes of these realisation proposals, the net asset value should be
discounted by an amount equal to a reasonable estimate of the costs of
realisation of the Company's asset portfolio and furthermore that these costs
are likely to account for approximately 7% of the net asset value of the Company
on the Calculation Date. Accordingly the tender offer price incorporates this
level of discount.



Concurrent with the tender offer, the Company is arranging with Cazenove to
operate a share purchase matching facility, which will enable shareholders
wishing to increase their investment in the Company to buy shares tendered on
the same basis as the tender offer. This will fulfil the Company's obligation to
put forward exit proposals that it undertook in 1999.



An Extraordinary General Meeting will be held immediately prior to the Annual
General Meeting to consider the Special Business. These will be held on
Wednesday, 4 December 2002.



Warrants

The final notice reminding warrantholders of their rights will be sent out in
October shortly before the last occasion that warrants in the Company can be
exercised.



Prospects

This is the third year that small companies have performed better than large
companies. The outlook for many small companies is positive, notwithstanding the
weakness in stock markets since the year end. Historically, they perform well
following interest rate cuts and they are priced inexpensively relative to large
companies bearing in mind their superior profits growth prospects.



Over the long run, US small companies should offer good returns and our
conservative approach to investment is aimed at giving protection at times of
market uncertainty.



Gordon Grender
October 2002


Balance sheet
At  30 June


                                                                       2002                       2001
                                                                     £'000s                     £'000s
Fixed assets
Listed Investments                                                   73,336                     86,028
Current assets
Debtors                                                                 262                         37
Taxation recoverable                                                      1                          5
Cash at bank                                                          1,384                        932
                                                                      1,647                        974
Current liabilities
Creditors: amounts falling due within one year:                       (393)                      (259)
Net current assets                                                    1,254                        715
Net assets                                                           74,590                     86,743

Capital and reserves
Called up equity share capital                                        8,211                      8,119
Capital redemption reserve                                            4,507                      4,507
Share premium                                                           565                        165
Warrant reserve                                                         841                      1,403
Special reserve                                                      26,088                     26,088
Capital reserves                                                     35,773                     47,534
Revenue reserve                                                     (1,395)                    (1,073)
Total equity shareholders' funds                                     74,590                     86,743

Net asset value per ordinary share - Basic pence                    227.10p                    267.11p
Net asset value per ordinary share -Diluted- pence                  218.38p                    249.22p


Geographical distribution of the investments at 30 June 2002 was:
United States 100%


Statement of Total Return (incorporating the Revenue Account*)
for the year ended  30 June


                                                        2002                                  2001

                                          Revenue     Capital       Total       Revenue     Capital       Total
                                           £'000s      £'000s       £'000s      £'000s      £'000s        £'000s

(Losses)/gains on                               -    (10,837)    (10,837)             -       7,740       7,740
Investments
Exchange (losses)/gains on currency             -        (83)        (83)             -         171         171
balances
Income                                        537           -         537           498           -         498
Management fee                              (630)           -       (630)         (660)           -       (660)
Loss on warrants purchased for                  -       (837)       (837)             -           -           -
cancellation
Other expenses                              (153)         (4)       (157)         (141)         (7)       (148)
Net return before finance                   (246)    (11,761)    (12,007)         (303)       7,904       7,601
costs and taxation
Interest payable and similar                    -           -           -             -           -           -
charges
Return on ordinary activities               (246)    (11,761)    (12,007)         (303)       7,904       7,601
before taxation
Taxation on ordinary activities              (76)           -        (76)          (54)           -        (54)
Return attributable to equity               (322)    (11,761)    (12,083)         (357)       7,904       7,547
shareholders
Dividends on ordinary shares                    -           -           -             -           -           -
(equity)
Amount transferred
(from) / to reserves                        (322)    (11,761)    (12,083)         (357)       7,904       7,547
Return per ordinary share - pence          (0.99)     (35.98)     (36.97)        (1.09)       24.19       23.10
Return per ordinary share (diluted)
- pence                                         +           +      +                  +       22.64       21.62
                                                

•          *The revenue column of this statement is the profit and loss account
of the Company.

•          +  There is no dilution.

•          All revenue and capital items in the above statement derive from
continuing operations.


Cash Flow Statement
for the year ended 30 June




                                                                                 2002                   2001
                                                                               £'000s                 £'000s

Net cash outflow from operating activities                                      (278)                  (307)
Total tax paid                                                                   (73)                   (15)
Net cash inflow from financial investment                                         516                    435
Net cash inflow before use of liquid resources and                                165                    113
financing
Management of liquid resources                                                      -                      -
Net cash inflow/(outflow )from financing                                          370                (1,747)
Increase / (decrease) in cash                                                     535                (1,634)



Notes

No dividend is recommended for payment on the ordinary shares.


The above financial information comprises non-statutory accounts within the
meaning of section 240 of the Companies Act 1985. The financial information for
the year ended 30 June 2001 has been extracted from published accounts for the
year ended 30 June 2001 that have been delivered to the Registrar of Companies
and on which the report of the independent auditors has been unqualified.



The Audited Report and Accounts will be posted to all shareholders early in
November 2002. Copies may be obtained during normal office hours from the
Company's Registered Office, Exchange House, Primrose Street, London EC2A 2NY.



The Extraordinary General Meeting and Annual General Meeting will be held at the
Company's Registered Office, Exchange House, Primrose Street, London EC2A 2NY,
on 4 December 2002 commencing at 3.30 pm.



By order of the Board
F&C Management Limited
Secretary


1 October 2002



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