Interim Results

Foreign & Colonial U.S.Smllr.Co PLC
13 March 2001


Contact: Robert Siddles                         Tel: [phone]
         Foreign & Colonial

         Louise Dolan                           Tel. [phone]
         Financial Dynamics


                FOREIGN & COLONIAL U.S. SMALLER COMPANIES PLC

               Unaudited Interim Statement of Results for the
                       half year ended 31 December 2000

Highlights

-      The net asset value per share rose by 3.12% to 250.94 pence.  This
       compared to a fall in our benchmark index sterling adjusted, the Russell 
       2000 of 5.26%.

-      Since the inception of the company diluted net asset value per share
       has risen by 143.65% which compares with a rise in the Russell 2000      
       Index, sterling adjusted, of 105.26%.

-      The buy back programme has continued with a further 896,000 shares
       being purchased at an average discount of 12%.

-      The discount to NAV has narrowed to 10%.


Outlook

-      We expect smaller companies to produce better returns than larger
       companies.

-      Smaller companies remain relatively cheap on a price to earnings ratio.

-      We will have a risk averse investment strategy focusing on companies
       with recurring revenues capable of generating free cash flow in a variety
       of economic conditions.


                                    6 months ended  6 months ended  Year ended
                                       31 December     31 December     30 June

                                              2000            1999        2000
Net Assets                                 £81.49m         £84.23m     £80.95m
Net Asset value per share                  250.94p         237.29p     243.35p
Net Asset value per share diluted          235.12p         223.54p     228.44p
Share price                                206.50p         199.00p     200.00p
Warrant price                              105.00p          97.00p     103.00p


Chairman's Statement


I am pleased to report that your Company enjoyed a good period of relative
performance in the last six months against a background of generally falling
US share prices.



                                   RESULTS

At 31 December 2000, the undiluted net asset value per share was 250.94p,
which valued your Company at £81.49 million. This was an increase of 3.12 per
cent for the period under review, which compares to a decrease of 5.26 per
cent in our benchmark index, the Russell 2000 when converted to Sterling. Over
the six months to December 2000 the share price rose 3.25 per cent.

The relative out-performance of the net assets was largely a function of our
underweight position in the technology group which fell precipitously over the
period under review. Over the past six months we have seen a return to
traditional company analysis more in keeping with our focus on companies with
recurring revenues and free cash flow. Good stock selection in media, energy
and financials helped overall performance. Since the inception of the Company
diluted net asset value per share has risen by 143.65%, which compares with a
rise in the Russell 2000 Index, sterling adjusted, of 105.26%. The value of
each initial unit of five shares and one warrant has risen from 500p at the
initial public offering to 1,137.5p on 31 December 2000.

We take a risk averse approach to investing in smaller companies, focusing on
those with recurring revenues which are capable of generating free cash flow
in a variety of economic conditions. This differentiates us from our
competitors, which are mainly growth and momentum orientated. This investment
style has led to us maintaining limited exposure to the technology sector,
because we have found it hard to identify companies with the financial
characteristics that we like to see. This approach created some difficult
periods for performance last year but we believe that over the long term,
superior results will be achieved by adhering to our philosophy.



SHARE REPURCHASE

In an effort to keep the discount to net asset value, at which your Company's
shares trade, near ten per cent, your Board has continued an aggressive share
repurchase programme. Over the six months under review, the Company has bought
back for cancellation 896,000 shares at an average discount of 12 per cent.
Your Board is committed to buying back further shares at appropriate times.
The discount to NAV at which your Company's shares trade has narrowed over the
past six months and as of writing is 10 per cent.



MANAGER

After almost four years managing your Company, Graeme Glen has decided to
focus his attention on larger US companies, an area which he had concentrated
on for much of his previous career in investment management. The Board thanks
him for his efforts on the Company's behalf.

The Board is pleased to welcome Robert Siddles, who succeeds Mr Glen as
manager of the trust. Mr Siddles has joined Foreign & Colonial as head of U.S.
Smaller Companies. He joined from Gartmore Investment Management, where he had
been head of U.S. Equities and has fourteen years experience of investing in
the  US stock market. The Board expects that he and his team will provide the
Company with successful portfolio performance.



MARKET REVIEW

The US stock market has experienced a painful transition over the past six
months. The frenzied activity and speculation in technology companies which
created extreme valuations, finally ended. Many technology stocks swept higher
in the bubble market have lost much of their value. The Federal Reserve Board
has moved quickly to cut interest rates, but after such an extraordinary
period of stock market excesses, it is unlikely that the technology sector
will recover fully.

After a difficult period in the mid-1990s smaller companies have achieved
better relative returns in 2000 and have now out-performed large
capitalisation stocks for the second consecutive year. Mutual funds inflows
have been supportive to the stock market and after the recent correction some
valuations are looking more reasonable.

OUTLOOK

The restructuring and deregulation which have taken place over the past ten
years in the US corporate sector have significantly improved America's
world-wide competitive position. Despite the problems of the last year we
believe the secular bull market in US equities is still in place, although
2001 is likely to be a difficult year. The Federal Reserve has scope to reduce
interest rates further in an effort to avoid a deep recession.

We expect smaller companies to produce better returns than larger companies.
Interest rate cuts should boost the performance of this sector as it tends to
do well following periods of Federal Reserve easing, although the outlook for
corporate profit growth is currently poor. Smaller companies remain cheap on a
price to earnings ratio relative to larger companies and have been less
aggressive both on share repurchase programmes and leveraging the balance
sheet late in the economic cycle.


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

                                 31 December 2000         31 December 1999
                              Revenue   Capital Total   Revenue Capital   Total
                                        £'000's         £'000's
                              £'000's         £'000's           £'000's  £'000s
                                                              
Gains/(losses) on                  -      2,391 2,391          - (1,449) (1,449)
Investments
Exchange gains/ (losses on         -         73    73          -   (119)   (119)
currency balances)
Income                            263         -   263        388      -      388
Management fee                  (332)         - (332)      (362)      -    (362)
Loss on warrants purchased          -         -     -          - (1,158) (1,158)
for cancellation
Other expenses                   (73)       (2)  (75)       (97)   (184)   (281)
Net return before finance       (142)     2,462 2,320       (71) (2,910) (2,981)
Costs and taxation
Interest payable and similar      (3)         -   (3)          -       -     -
charges
Return on ordinary activities   (145)     2,462 2,317       (71) (2,910) (2,981)
before taxation
Taxation on ordinary             (24)         -  (24)       (53)       -    (53)
activities
Return attributable to equity   (169)     2,462 2,293      (124) (2,910) (3,034)
shareholders
Dividend on ordinary shares         -          -     -          -       -     -
Amount transferred              (169)     2,462 2,293      (124) (2,910) (3,034)
(from) / to reserves
Return per ordinary share -    (0.51)      7.49  6.98     (0.31)  (7.27)  (7.58)
pence
Return per ordinary share -         +      7.02  6.54          +       +     +
diluted pence


-       *The revenue column of this statement is the profit and loss account
         of the Company.
-       +  Not applicable.
-       All revenue and capital items in the above statement derive from
        continuing operations.

BALANCE SHEET
                                         31 December  31 December      30 June
                                                2000         1999         2000
                                              £'000s       £'000s       £'000s
                                                                      
Fixed assets
Investments                                   80,381       83,819       78,598
Current assets
Debtors                                          159          155          171
Taxation recoverable                               9           92           42
Cash at bank                                   1,436          612        2,395
                                               1,604          859        2,608
Current liabilities
Creditors: amounts falling due within          (496)        (445)        (260)
one year:
Net current assets                             1,108          414        2,348
Net assets                                    81,489       84,233       80,946

Capital and reserves
Called up equity share capital                 8,119        8,874        8,316
Capital redemption reserve                     4,507        3,725        4,283
Share premium                                    165           50           50
Special reserve                               26,088       32,264       27,945
Warrant reserve                                1,403        1,438        1,438
Capital reserve                               42,092       38,403       39,630
Revenue reserve                                (885)        (521)        (716)
Total equity shareholders' funds              81,489       84,233       80,946

Net asset value per ordinary share -         250.94p      237.29p      243.35p
pence
Net asset value per ordinary share -         235.12p      223.54p      228.44p
(diluted)- pence


*Geographical distribution of the investments at 31 December 2000 was:
United States 100%

Cash Flow Statement for the year half ended 31 December 2000

                                                                   31        31
                                                             December  December
                                                                 2000      1999
                                                               £'000s    £'000s

Net cash outflow from operating activities                      (129)      (72)
Total tax paid                                                     11      (58)
Net cash inflow/(outflow) from financial investment               836   (7,248)
Net cash inflow/(outflow) before use of liquid resources          718   (7,378)
and financing
(Increase)/decrease in short-term deposits                    (1,004)     6,175
Net cash (outflow)/inflow from financing                      (1,750)        46
Decrease in cash                                              (2,036)   (1,157)


Notes

No dividend is recommended for payment on the ordinary shares.

The Report and Accounts will be posted to all shareholders on or around
21 March 2001. Copies may be obtained during normal office hours from the
Company's Registered Office, Exchange House, Primrose Street, London EC2A 2NY,
thereafter.
                                                         By order of the Board

                                         Foreign & Colonial Management Limited

                                                                     Secretary