Final Results - Year Ended 31 January 2000

Perpetual UK Smaller Co's IT PLC
24 March 2000

Perpetual UK Smaller Companies Investment Trust plc

Chairman's Statement

During the second half of the financial year to 31st January 2000 smaller
companies in the UK continued to outperform their larger counterparts.  Over
the full year, your Company's net assets increased by 67.7%, from just under
£50 million to £83 million, outperforming our Benchmark Index*, which rose by
47% and the FT-SE All-Share Index, which increased by 10.4%.  Since the end of
the year, net assets have continued to grow and, as at the end of February
2000, stood at £89.4 million, or 637.3p per share.

During the financial year your Company's share price rose 70.5% and the
discount to net asset value narrowed from 19% to 18%.  This discount is
exactly in line with the sector average at 31st January 2000.  Income for the
year increased by nearly 53%, to just over £3 million, partly because of the
receipt of £600,000 in special dividends.  While the investment management fee
and expenses charged to income have increased over the year, they have
decreased significantly as a proportion of net assets from 1.5% to 1%.  As a
result, a final dividend of 10.7p per share (1999: 7.0p per share) is proposed
and will be paid on 3rd May 2000 to shareholders on the register at the close
of business on the 7th April 2000.  It should be noted that the same level of
special dividends is unlikely to be matched in the coming financial year.

Your Board has approved borrowing up to a limit of 30% of net assets and your
Manager has used its discretion usefully to gear the portfolio from time to
time during the year.  At the financial year end the level of gearing stood at
3.8%.  It remains your Board's view that the Manager should use short term
gearing opportunities when considered appropriate.

There are three important matters to be considered at the forthcoming Annual
General Meeting.  First, your Board believes it is appropriate to obtain
powers to buy back shares and, if the Annual General Meeting provides us with
the necessary authority, we anticipate that the Investment Manager will be
able to take any appropriate action, within parameters determined by the
directors, to return value to shareholders through purchases in the market of
up to 14.99% of shares.  Second, in order that we can issue new shares to meet
possible demand from those investing through the Savings Scheme, the Manager's
PEP or ISA, we shall be proposing, as in previous years, a Special Resolution
that the directors should have limited powers to allot new shares.  Finally,
we shall be proposing a number of changes to the Company's Articles of
Association, details of which are more fully set out in the Directors' Report.

We have participated in the AITC's 'its' campaign and made contributions of
£36,000 in the first year.  It is too early to judge the overall success of
this generic campaign, but the AITC is positive about the impact of the
campaign to date.

During the year under review, your Board has reviewed in depth risk assessment
and the standards of corporate governance.  Details can be found in the
Corporate Governance section of the Report and Accounts.

Looking to the future, your Board concurs with the Manager's sanguine outlook
for the UK economy as a whole and smaller companies in particular.  I believe
that your Company's portfolio is well placed to benefit both from the new
trends in markets, as well as any shift in investors' attention towards value
based investment.

Jamie Berry
Chairman

24th March 2000



Manager's Review

Economy and Market Review

The first half of the year under review saw the Monetary Policy Committee
('MPC') reduce interest rates three times, from 6.0% to 5.0%.  During this
time, there was increasing evidence of an improving economic environment
within the UK.  House prices and house buying activity were increasing;
interest rate cuts were beginning to feed through into lower mortgage
repayments; and consumer confidence and expenditure were starting to recover. 
Engineers and manufacturers were coming to terms with Sterling's strength and,
as signs of recovery began to reappear in Asian and Continental European
markets, evidence of improving business confidence emerged.  Although the
period saw some firming of commodity prices (especially oil), inflation
remained constrained by a combination of factors - excess capacity, global
competition, the strength of Sterling and the reluctance of UK consumers to
accept higher prices.

UK smaller companies started the financial year in a positive manner,
encouraged by a more positive outlook for corporate profits, combined with an
environment of low inflation and falling interest rates.  As the year
progressed, strengthening economic activity in the UK, continued robust
economic growth in the US, and signs of recovery in Asia, Japan and
Continental Europe, raised the possibility of interest rates increasing again.
In September, the MPC responded by raising interest rates to 5.25% - citing
strength in global demand, stronger than expected domestic demand, a buoyant
housing market, and some evidence of a tight labour market.  

In the final quarter of 1999, the telecommunications and technology sectors
saw substantial rises, with valuation and fundamental analysis appearing to
take a back seat. This scenario continued throughout the final quarter of the
review period.

Investment Strategy 

During the period under review, our investment strategy remained broadly
unchanged, reflecting the increasingly positive global and domestic economic
environment, with modest interest rates, restrained inflation, and increased
consumer spending power.  We invested in economically sensitive sectors such
as housebuilders, construction, building materials, retail, leisure and media.
 The Company maintained an overweight position (relative to the benchmark) in
the information technology sector.  However, in view of the not insignificant
risks attached to the IT sector, we were less aggressively exposed than some
of our peer group.

A second significant factor driving performance was take-over activity,
encouraged by the continued significant discount to the main market of smaller
company valuations.  As we have observed in earlier reports, if the UK equity
market is not prepared to recognise fundamental value, then other companies
and venture capitalists will.  In this context, an ongoing factor has been US
and Continental European companies seeking manufacturing and distribution
bases in the UK, and the establishment of bridgeheads into Continental Europe.
Companies at the receiving end of bids, and in which the Company was invested,
included Rugby Cement, Apollo Metals, Ruberoid, Waddington, Medeva, Norcros
and Bridport.  
 
Company Risk Profile

The Company's objective is to achieve long term capital growth by investing
predominantly in the shares of quoted and listed UK smaller companies.  Given
that the Company invested effectively entirely within the UK, currency hedging
programmes were not considered appropriate.

Smaller companies, by their nature, tend to have relatively modest traded
share capital, and the market in such shares can at times prove illiquid. 
Shifts in investor sentiment, or the announcement of new price-sensitive
information, can provoke significant movement in share prices, and make
dealing in size difficult.  By investing in a broad range of companies, the
Company seeks to minimise so-called 'stock-specific' risk.  By investing
almost entirely in the UK, the Company's portfolio is effectively exposed to
the risk associated with the UK equity market.


Current Outlook

The recovery that we forecast a year ago has occurred both domestically and
internationally; at the same time, the level of inflation has remained below
earlier market expectations.

Economic recovery in the UK and elsewhere in the world is proving more rapid
than many expected, leading the MPC in January 2000 to raise interest rates. 
However, we believe that the traditional inflationary pressures such as higher
commodity prices and a tighter labour market will be more than offset by the
disinflationary effects of excess capacity within the retail industry, the
downward regulatory pressure on utility prices, and the increasingly pervasive
influence of the internet in driving price competition.  We expect continued
economic growth in an environment that is broadly non-inflationary and
conducive to reasonably low interest rates.

The spectacular recent gains seen in the telecommunication and technology
sectors has continued, albeit with considerable volatility, into 2000.  While
some of the so-called 'dot.com' companies will survive and prosper, many have
seen their share prices driven to unrealistic heights by a combination of
opportunism, greed and naivety. Over-optimistic valuations may be sustained by
momentum for a while, but, in the long run, it is tangible measures of value -
a company's assets, the strength of its balance sheet and cash flow, and its
ability to pay a rising dividend backed by growing earnings - that determine
its true worth. The sharp and ultimately insupportable spike in the valuations
of certain 'growth' stocks has served, in our view, to underline the
importance of seeking out fundamental value in our share portfolios.

Portfolio Strategy

Value and cyclical stocks have underperformed recently, as investors feared
that the MPC's recent pre-emptive rise in interest rates signalled a policy
response which would slow economic growth. However, we believe that growth
both within the UK and globally should continue at a healthy level, and any
further rate rises will dampen demand rather than tip the economy into
recession. Given this assessment, current ratings on some of the value and
cyclical stocks seem very low, both in the services and manufacturing sectors,
and particularly so within the smaller companies area. 

Cyclical services represent the single largest sector within the Company's
portfolio - holidays and leisure (First Choice, Esporta, Kingfisher Leisure);
hotels, pubs and food (Pizza Express, Slug and Lettuce Group); retail stores
(T.J. Hughes); television and media (Trinity Mirror, Television Corp.).  We
are able to identify exceptional medium-term investment opportunities at the
value/cyclical end of the market (for example, building and construction
stocks, where we are invested in house-builders, developers and construction
groups such as Crest Nicholson, Galliford, McCarthy & Stone, Prowting, SIG and
Tilbury Douglas; and building materials groups such as Baggeridge Brick and
Ruberoid).

We are willing to pay for growth, but only where there is visibility of
earnings and where the asking price bears some relation to reality. 
Investments in this area of the market include companies such as Oneview.net
(internet services to smaller businesses), Alphameric (data broadcast
systems), and Kewill Systems (software and e-commerce services).

Barring any unforeseen shock to global financial markets, we anticipate
positive investment opportunities amongst UK smaller companies over the course
of the next year.


Summary of Results
as at 31st January 2000
                                     2000         1999         % change

Total net assets (£'000)             83,187       49,597       67.7%

Net asset value per share - basic    593.0p      353.6p        67.7%

Share price                          488.5p      286.5p        70.5%

Benchmark Index*                     2772.8      1886.6        47.0%

FT-SE Actuaries All-Share Index      2975.9      2695.9        10.4%

Dividends per share                    10.7p        7.0p       52.9%

Earnings per share                     12.5p        7.9p       58.2%

*Extended Hoare Govett Smaller Companies Index (capital gains excluding
investment trusts)

Statement of Total Return
(incorporating the revenue account) 
Year ended 31st January 2000

                      2000                           1999 restated
               Revenue   Capital   Total    Revenue     Capital     Total
              £'000      £'000     £'000    £'000       £'000       £'000

Gains/(losses)
on investments                                          
realised                 10,446    10,446               3,745       3,745
unrealised               23,635    23,635              (6,470)     (6,470)

Income         3,066                3,066      2,010                2,010
Investment 
management fee (715)      (740)    (1,455)      (611)    (110)      (721)
Other expenses (137)        (8)      (145)      (114)      (6)      (120)

Net return 
before finance
costs and
taxation      2,214      33,333   35,547    1,285    (2,841)       (1,556)

Interest payable
and similar
charges       (456)                (456)     (137)                   (137)

Return on
ordinary
activities
before tax    1,758      33,333   35,091    1,148    (2,841)       (1,693)

Tax on
ordinary
activities                                    (45)                    (45)

Return on
ordinary
activities
after tax
for the
financial
year         1,758       33,333   35,091    1,103    (2,841)       (1,738)

Dividends in
respect of
equity
shares      (1,501)               (1,501)    (982)                   (982)

Transfer to/
(from)
reserves       257       33,333   33,590      121    (2,841)       (2,720)

Return per
ordinary
share:
Basic         12.5p      237.6p   250.1p      7.9p   (20.3p)       (12.4p)

The revenue column of this statement is the Profit and Loss account of the
Company and the 1999 revenue column has been restated for the early adoption
of FRS16 'Current Taxation' in that UK dividends are disclosed net of tax
credits.

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

No operations were acquired or discontinued in the year.

This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 24th March 2000.  It is not the Company's statutory
accounts.  The statutory accounts for the year ended 31st January 1999 have
been delivered to the Registrar of Companies and received an unqualified audit
report, which did not contain statements under Sections 237(2) and (3) of the
Companies Act 1985. The staturory accounts for the year ended 31st January
2000 have been approved and audited but not yet filed.

Copies of this statement will be available from the Company's registered
office at Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxon, RG9
1HH.