Portfolio Update

Merrill Lynch Br. SmallerCo Tst PLC
16 February 2007

MERRILL LYNCH BRITISH SMALLER COMPANIES TRUST plc

All information is at 31 January 2006 and unaudited.

Performance at month end is calculated on a capital only basis
                                            One          Three              One           Three            Five
                                         Month         Months              Year           Years           Years
Net asset value                            2.5%          13.9%            27.6%           96.0%          103.6%
Share price                                2.2%          12.4%            27.1%          118.6%          113.9%
FTSE SmallCap Index (ex IC's)              0.9%           9.6%            14.6%           45.7%           53.8%

Sources:  BlackRock and Datastream.
At month end
Net asset value:                                 443.67p
Share price:                                     379.75p
Discount to NAV:                                   14.4%
Net yield:                                          1.2%
Total assets:                                    £240.6m
Gearing:                                            8.5%
Ordinary shares in issue:                        49,993,523


Ten Largest Sector
Weightings                                                                                             % of Total Assets
Support Services                                                                                                    16.5
Real Estate                                                                                                         10.6
Software & Computer Services                                                                                         9.0
General Financial                                                                                                    7.3
Industrial Engineering                                                                                               6.8
Electronic & Electrical Equipment                                                                                    5.6
Oil & Gas Producers                                                                                                  5.3
Media                                                                                                                5.3
Non-Life Insurance                                                                                                   4.9
Mining                                                                                                               3.6
                                                                                                                    ----
Total                                                                                                               74.9
                                                                                                                    ----




Ten Largest Equity Investments (in alphabetical order)
Company
Aveva Group
Brewin Dolphin
BSS Group
Chaucer Holdings
Dechra Pharmaceuticals
Domino Printing
ITE Group
Mouchel Parkman
Rathbone Brothers
WSP Group




Commenting on the markets, Mike Prentis, representing the Investment Manager
noted:



The Company's NAV rose by 2.5% in January on a capital only basis. The benchmark
index rose by 0.9%.



The main positive contributors to relative performance in January were the
Company's holdings in Dechra Pharmaceuticals, Plant Health Care and Aveva.
Dechra, who develop and distribute a wide range of pharmaceutical products used
by vets, released a positive post half year end trading update which received
good broker coverage. Plant Health Care signed a license with Bayer CropScience
allowing Bayer to sell its Myconate product in connection with certain crop
types. In the medium term this agreement should generate substantial profits for
Plant Health Care. Aveva shares continued to rise, reflecting the sustained
strength in its end markets. Good absolute share price performances came from a
few smaller holdings notably KBC Advanced Technology (up 51%), and City of
London Investment Group (up 21%).



The largest negative impact on relative performance in January came from
holdings in SMC and Speedy Hire. SMC announced a change in accounting policy to
adopt a more cautious line - this was in effect a profit warning, although
management assure us that trading is resilient. In early February we visited
Speedy Hire at its head office and several depots in the North West. This was
very comforting and confirmed trading remains in line with expectations.



The main new holding in the month was software company Micro Focus.  This
holding was acquired in advance of a trading update which was expected to be
good and lived up to expectations. Holdings in Findel and Unite were sold after
good runs.



Newsflow from the portfolio continues to be generally positive. In addition to
earnings upgrades, we are seeing continued M & A activity. We are expecting a
good round of results from portfolio companies later this month and in the first
half of March.





Latest information is available by typing www.blackrock.co.uk/its on the
internet, 'BLRKINDEX' on Reuters, 'BLRK' on Bloomberg or '8800' on Topic 3 (ICV
terminal).



16 February 2007


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