Reconstruction Proposals

GERMAN SMALLER COMPANIES INVESTMENT TRUST PLC
29 September 1999


GERMAN SMALLER COMPANIES INVESTMENT TRUST PLC (THE
'COMPANY')

RECOMMENDED PROPOSALS FOR THE RECONSTRUCTION OF THE
COMPANY

Further to the announcements made on 25 May, 1 June and 7
July  1999, the Directors of the Company announce that  a
circular  is  being  posted  today  to  shareholders  and
warrantholders  setting  out  the  detailed   recommended
proposals for the reconstruction of the Company.

Since those initial announcements, the Directors and the
Company's   investment   manager,   Hill   Samuel   Asset
Management   Limited  ('HSAM  or  the  'Manager'),   have
obtained  authorisation for Hill Samuel Investment  Funds
ICVC  ('HSF') and various taxation clearances which  were
necessary to implement its proposals.  HSF is an umbrella
Open-Ended Investment Company initially having  a  single
sub-fund,  the Pan-European Smaller Companies  Fund  (the
'HSF Fund').

The  recommended proposals provide eligible  shareholders
with a choice of any combination of:

1.    holding shares in HSF with entitlement to  the  HSF
      Fund;
2.    holding units in Abbey Gilt and Fixed Interest Fund
      ('the  Gilt Fund'), a gilt fund investing primarily in
      gilts; or
3.    receiving cash by means of an immediate redemption
      of Gilt Fund units.

The  proposals will be implemented by way  of  a  scheme,
pursuant  to  Section  110 of the  Insolvency  Act  1986,
whereby  the  Company  is  put  into  members'  voluntary
liquidation  and  its investments are transferred  (after
providing for all costs and expenses) to HSF and the Gilt
Fund.   Shareholders may elect to exchange their holdings
of ordinary shares for one of shares in HSF, units in the
Gilt Fund or a combination of both.

The  proposals  are subject to approval  by  shareholders
and,  subject  to these approvals being received,  it  is
expected that the proposals will become effective  on  11
November 1999.

Eligible  warrantholders are being  given  an  additional
subscription  opportunity to enable them  participate  in
HSF.    This  opportunity  is  subject  to  approval   by
warrantholders  of  the necessary  modifications  to  the
rights  of  warrantholders.  Warrantholders  who  do  not
exercise this right will receive a cash payment for their
warrants  in accordance with the terms and conditions  of
the warrants on a winding-up of the Company.

HSF  will  be managed by Hill Samuel Unit Trust  Managers
Limited,  part  of the Lloyds TSB Group, with  investment
management   being  delegated  to  HSAM.   As  previously
announced,   the   Board  proposed  that   the   existing
geographic  constraints  of  the  investment  policy   be
widened  to  a  Pan-European  basis.   Accordingly,   the
investment  objective  of the  HSF  Fund  is  to  provide
investors   with   long  term  capital   growth   through
investment   in  Pan-European  small  and  medium   sized
companies.   The HSF Fund will aim to hold  shares  in  a
diversity  of  sectors and countries  focusing  on  those
companies   which   are  perceived  to  have   particular
expertise  in  their  markets and  above  average  growth
potential.

The  Gilt  Fund  invests  in  gilts  and  fixed  interest
securities  and  is  currently  managed  by  Abbey   Life
Investment  Services  Limited, part  of  the  Lloyds  TSB
Group, but as from October 1999 investment management  is
to  be  delegated to HSAM.  Its policy is  to  invest  in
medium  and long-dated British Government securities  and
high  quality  corporate loan stock.  As at 17  September
1999  the estimated gross income yield was 5.88 per  cent
per annum.

Commenting  on the proposals, Peter Minchin, Chairman  of
the  Company, said: 'These proposals provide shareholders
with  an  opportunity to continue their investment  in  a
vehicle whose realisable value is close to its underlying
net  asset  value, with an investment policy which  takes
into account the wider Pan-European market following  the
introduction of the Euro currency but which is similar in
terms  of  its  objective  to achieve  long-term  capital
growth.   In  addition, they give those shareholders  who
wish  to  realise their investment for cash in  the  near
future an opportunity to do so.  The Board believes  that
these   proposals   are   in   the   interests   of   all
shareholders.'

Enquiries:

Michael Oliver        German Smaller Companies    0171 203 3000
                      Investment Trust
                                          
Arthur Copple         Merrill Lynch               0171 772 1000
Jeremy Garrett-Cox    International