Interim Management Statement

F&C U.S. Smaller Companies PLC
14 November 2007

F&C US Smaller Companies PLC
Interim Management Statement
For the four month period from 1 July 2007 to 31 October 2007


Performance summary

                                                 31 October 2007        30 June 2007           Movement

Net assets                                                £69.2m              £73.2m             -8.16%

Net asset value (NAV) per share                          309.27p             336.06p             -7.97%

Share price                                              272.75p             300.50p             -9.23%

Russell 2000 Index
   (sterling adjusted)                                    398.59              415.53             -4.08%

Discount to NAV per share                                  11.8%               10.6%




Year to date review

The NAV per share fell 8.0% in the four months to 31 October. The performance of
the NAV per share was below that of the benchmark, the Russell 2000 Index
(sterling adjusted), which declined by 4.1% in the same period.


The market has turned against the value investing style, the approach used by
the Company, and the performance, although very disappointing, is slightly
better than that of the Russell 2000 Value Index (sterling adjusted) which fell
by 9.0% in the same period.


The market weakness in July presented new investment opportunities and the
Company took the opportunity to make seven new purchases in August including
coal, defence investment technology, water infrastructure and regional banks.
Some holdings were sold as they became expensive, especially in the consumer
discretionary sector, e.g. LKQ (recycled car parts) and Republic Services (waste
collection). Profits were also taken in energy stocks towards the end of the
period.


There were two bids for holdings in the portfolio: Midland Company, the niche
personal lines insurer that is being acquired by Munich Re and Radiation Therapy
Services, the operator of cancer treatment centres, which announced a leveraged
buy out at a 51% premium to the pre-announcement share price.


The Company is not currently geared.


Since 30 June 2007, 59,000 shares have been bought back for cancellation at a
cost of £164,000 and an average discount of 11.45%.




Ten Largest Holdings


    31 October     30 June      Company                                               Percentage of total
       2007          2007                                                                     investments

                                
       1              (4)       Community Health Systems                                              2.7
                                Rural hospital operator

       2              (13)      Cousins Properties                                                    2.7
                                Real estate investment trust based in Atlanta
                                focusing on commercial and retail development

       3              (18)      Radiation Therapy Services                                            2.6
                                Operator of cancer treatment centres

       4              (8)       Jarden                                                                2.4
                                Niche consumer products

       5              (15)      Five Star Quality Care                                                2.3
                                Assisted living facilities

       6              (2)       Premiere Global Services                                              2.3
                                Outsourced communication services

       7              (-)       Harvest Natural Resources                                             2.3
                                Oil and gas exploration and development

       8              (3)       Conn's                                                                2.3
                                Retailer of home appliances and consumer electronic
                                goods

       9              (7)       Dollar Thrifty Automotive Group                                       2.2
                                Car rental operator to the leisure sector

       10             (5)       ACCO Brands                                                           2.2
                                Manufacturer of office supplies



Industrial Classification


                                                    31 October 2007                 30 June 2007
                                                Percentage of total          Percentage of total
                                                        investments                  investments
Financial Services                                             22.9                         18.7
Consumer Discretionary                                         18.0                         27.2
Producer Durables                                              13.5                         11.5
Healthcare                                                      9.9                         10.9
Technology                                                      9.8                          5.8
Materials & Processing                                          9.2                          9.2
Other Energy                                                    6.6                          6.6
Autos & Transportation                                          5.0                          5.7
Utilities                                                       2.3                          2.9
Consumer Staples                                                1.5                          1.5
Other                                                           1.3                            -




Outlook



Investors have been concerned about the sub prime credit crisis which was first
manifested in sub prime and un-certificated housing loans and which has spread
to doubts about the valuations of many complex financial products. Problems with
housing loans are likely to become particularly severe in 2008 when borrowers
have to start paying market interest rates. High energy and fuel prices are also
a concern although any slowing in world economies could take some pressure off
oil prices.



Whilst the short term outlook is uncertain we believe the stocks held in the
portfolio represent good value and should do well in the intermediate term.



Further information including a monthly update regarding the Company can be
found at www.fandc.com.



By order of the Board

F&C Management Limited - Secretary
14 November 2007


                      This information is provided by RNS
            The company news service from the London Stock Exchange