Final Results

Montanaro UK Smlr Cos Inv Tst PLC
4 June 2001



              MONTANARO UK SMALLER COMPANIES INVESTMENT TRUST PLC

              PRELIMINARY ANNOUNCEMENT OF AUDITED ANNUAL RESULTS

The Directors announce the audited statement of results for the year ended 31
March 2001 as follows:-

SUMMARISED STATEMENT OF TOTAL RETURN
(incorporating the revenue account* of the Company)

                            1 April 2000 to 31 March   1 April 1999 to 31 March
                                                2001                       2000

                           Revenue  Capital    Total  Revenue  Capital    Total
                            £'000    £'000    £'000    £'000    £'000    £'000

Capital (losses)/gains on
investments                      -  (4,932)  (4,932)        -   32,849   32,849
Dividends and interest       2,113        -    2,113    2,231        -    2,231
receivable
Other income                     2        -        2       22        -       22
Administration expenses    (1,406)        -  (1,406)  (1,444)        -  (1,444)

Net return before
financing costs
and taxation                   709  (4,932)  (4,223)      809   32,849   33,658

Interest payable and
similar
charges                      (684)        -    (684)    (808)        -    (808)

Return on ordinary
activities
before and after taxation       25  (4,932)  (4,907)        1   32,849   32,850

Dividends proposed           (120)        -    (120)    (120)        -    (120)

Transfer (from)/to
reserves
after dividends proposed      (95)  (4,932)  (5,027)    (119)   32,849   32,730

                             Pence    Pence    Pence    Pence    Pence    Pence
Return per ordinary share     0.06  (12.30)  (12.24)     0.00    73.89    73.89


*   The revenue column of this statement is the revenue account of the
    Company.

     The accounts have been prepared using accounting standards and policies
     adopted at the previous year end.

All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.

SUMMARISED BALANCE SHEET



                                                          As at           As at
                                                       31 March        31 March
                                                           2001            2000
                                                         £'000           £'000

Investments                                              89,979         100,253
Net current assets                                        6,514           1,254

Total assets less current liabilities                    96,493         101,507

Creditors - amounts falling due after
more than one year                                      (7,500)         (7,500)

Net assets                                               88,993          94,007

Net asset value per ordinary share                      221.92p         234.43p


STATEMENT OF CASHFLOWS

                                                As at 31 March  As at 31 March
                                                          2001            2000
                                                          £000            £000
Operating activities
- Investment income received                             1,859           2,052
- Deposit interest received                                281             181
- Underwriting commission received                           2              22
- Investment Management fee                            (1,068)           (877)
- Company Secretarial fees paid                           (49)            (44)
- Other expenses                                         (397)           (289)

Net cash inflow from operating
activities                                                 628           1,045

Servicing of finance
- Interest and similar charges paid                      (748)           (743)

Net cash outflow from servicing of finance               (748)           (743)

Capital expenditure and financial investment
- Purchases of investments                            (31,397)        (29,785)
- Sales of investments                                  38,571          41,824

Net cash inflow from capital expenditure
and financial investment                                 7,174          12,039

Equity dividends paid                                    (120)           (283)
Financing
- Proceeds of credit facility                                -          10,000
- Repayment of credit facility                         (7,500)         (2,500)
- Ordinary shares repurchased
   and cancelled                                             -        (10,901)
- Warrants repurchased and cancelled                       (7)         (1,407)

Net cash outflow from financing                        (7,507)         (4,808)

(Decrease)/increase in cash                              (573)           7,250


The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2001 or 2000. Statutory
accounts for 2000 have been delivered to the Registrar of Companies, whereas
those for 2001 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts; their reports were
unqualified and did not contain a statement under section 237 (2) or (3) of
the Companies Act 1985.


Chairman's Statement

Background

I am pleased to present the sixth annual report of the Montanaro UK Smaller
Companies Investment Trust PLC.

The Trust was launched on 16 March 1995 as an asset allocation vehicle for
institutional shareholders to invest in quoted UK 'smaller' companies.  At the
time of the launch, 'smaller' companies were defined as those with a market
capitalisation of £100 million or less.  Currently, the Trust invests in
companies falling within the FTSE SmallCap (excluding investment companies)
Index ('SmallCap'), although the investment strategy remains to research and
invest in the 'smaller' end of the quoted UK small company market to maximise
returns for both institutional and individual shareholders.  At 31 March 2001,
almost two thirds of the portfolio was held in companies with a market
capitalisation of below £150 million.

Due to the investment focus on illiquid companies, and the preference of
investors for a listed structure, the fund was launched as a closed-end
investment trust.  Investment trusts have the benefit of providing a market in
which shareholders can sell their shares.  By contrast, open-end, unlisted
vehicles such as unit trusts may face redemption restrictions by the Trustees,
which are required to act in the best interests of all unit holders.  Unit
holders redeeming units may force the investment manager to sell the most
easily realisable investments at an inappropriate time, thereby potentially
impacting on future performance for remaining unit holders.

In 1996, the initial £25 million Trust was increased in size through a £30
million 'C' share issue.  Net assets now stand at almost £90 million.

Recent Performance

The year from 1 April 1999 to 31 March 2000 was particularly strong for both
quoted UK small companies and the Trust.  The net asset value ('NAV') of the
Trust increased by 53%, outperforming the SmallCap, the Trust's benchmark, by
14%.

In contrast, in the year from 1 April 2000 to 31 March 2001, quoted UK small
companies fell by 13%.  Once again, the Trust performed better than the quoted
UK small company market.  At 31 March 2001, the NAV of the Trust was 221.92p,
outperforming the SmallCap by more than 8%.  It was one of only seven UK small
company investment trusts to outperform the SmallCap last year.

This outperformance was due to the investment approach and sound stock
selection of the Investment Manager, Montanaro Investment Managers Limited,
which is one of the few independent fund managers in the UK to specialise in
quoted UK 'smaller' companies.  In the past year, it has recruited several
analysts to create one of the largest quoted UK small company teams in the
City.

Investment Management Agreement

The Board is responsible for monitoring the management of the Company's assets
by the Investment Manager.  It has decided to propose a Resolution at the
forthcoming Annual General Meeting to amend the investment management fee by
increasing the annual fixed fee from 0.5% to 1% of the gross assets of the
Company.  In addition, there would be a performance fee of 0.1% based on each
1% outperformance of the Company's NAV against the SmallCap which would be
capped at 0.5%.  No performance fee would become due unless the Trust
outperforms the SmallCap by 2%.  A high water mark would also apply.  Subject
to shareholder approval, this increase will take effect from 1 April 2001.

Dividend

In line with the Company's primary focus on capital appreciation rather than
income, the Board proposes a final dividend of 0.3p per ordinary share payable
on 31 July 2001 to shareholders on the register at the close of business on 8
June 2001.

Returns

The share price of the Trust on 31 March 2001 was 180.0p compared with 173.5p
a year earlier, which is an increase of 4%.  This increase compares favourably
with the 13% fall in the quoted UK small company market.  Since the launch in
March 1995, the share price has increased by 80%.

The Trust focuses on quoted UK 'smaller' companies, which are less widely
researched and more illiquid than quoted UK small companies, thereby creating
an inefficient market that offers the potential for higher returns.

The closed-end structure enhances the Investment Manager's ability to achieve
high returns through strong NAV performance.  Over the past six years, the
SmallCap has risen by 69%.  By contrast, the NAV of the Trust has more than
doubled, increasing by over 125%.  However, the illiquidity of the underlying
investments tends to be reflected in the level of discount of the Trust.

Discount

The discount of the Trust's share price to NAV on 31 March 2001 was 19%,
having narrowed by 7% from a year earlier.   The average discount of the Trust
over the past six years has been 15.5% (Source: Bloomberg).  On 31 March 2001,
the size weighted average discount for UK small company investment trusts was
15% (Source: Datastream).

Management of the Discount

The Board continues to seek ways to manage the discount of the Trust.  A
number of positive steps have been taken already

1.            Share Buy Backs

The Board was among the first to arrange a facility to buy back shares of the
Trust.  During 1999, the Board authorised the buy back for cancellation of
seven million shares from several institutional shareholders.

The Board is responsible for the implementation of the share buy back
programme, which is undertaken at arm's length from the Investment Manager.
During the last financial year, the Board instructed the Company's stockbroker
to approach the major shareholders of the Trust to determine potential selling
interest.  This was at a time when the discount was wider than the sector
average. However, no shares were offered to the Company to buy back.

The Board will continue to consider share buy backs as and when appropriate.
Approval to renew this authority is included as a Resolution at the
forthcoming Annual General Meeting.

2.            Warrants

In 1999, the Board authorised innovative tender offers to purchase the
Company's warrants for cancellation.  There are currently no warrants
outstanding.

3.            Gearing

The Board regularly reviews the level of gearing of the Company with the
Investment Manager.  Prudent use of gearing can be a useful tool to enhance
NAV returns.  There is a reduced ability to gear in open-end structures such
as unit trusts and open-end investment companies ('OEICS').

4.            Share Save Scheme

The Board is introducing a Share Save Scheme to attract investment in the
Company by individual shareholders, who wish to invest in quoted UK 'smaller'
companies for the long-term.  Details of the Scheme will accompany the Annual
Report.

5.            Continuation Vote

At the Annual General Meeting held in July 1999, shareholders were unanimously
in favour of the Company continuing as a closed-end investment trust.

Myners' Review

On 6 March 2001, Paul Myners submitted the results of his Review of '
Institutional Investment in the UK'.  His recommendations, if adopted in full,
could have far-reaching consequences for the quoted UK small company market in
which the Trust operates.

Myners expressed the view, shared by your Board, that a closed-end structure
such as an investment trust is the optimum structure for investment in
illiquid assets in which the Board would include quoted UK 'smaller' companies
as a class '...Investment in illiquid assets is extremely difficult for
vehicles that need to be priced regularly to admit new investors and allow
existing investors to redeem in a manner equitable to both groups and
continuing investors.  By contrast, investment trusts do not face the same
pricing or liquidity issues affecting authorised unit trusts and oeics'.

Myners is also sensitive to possible conflicts of interest and has recommended
that dealing costs should be borne 'as a cost of the business of fund
management'.  One possible consequence of this recommendation could be to
disincentivise fund managers from actively dealing in quoted UK small company
shares, thereby causing an already illiquid market to become even more so.  As
a result, brokers would be less likely to produce research, which would lead
to a spiralling loss of interest in this market.

There are currently 1,556 listed companies outside the FTSE-350 Index (listed
on the SmallCap, FTSE Fledgling Index and Alternative Investment Market)
representing 6% of the total quoted UK small company market with an average
market capitalisation of £65 million.  The market for these companies must be
nurtured and interest in them stimulated, rather than the reverse.

Conclusions

Although there are advantages and disadvantages to both open-end and
closed-end structures, it is the Board's view that the optimum structure for
investment in quoted UK 'smaller' companies is a closed-end structure such as
an investment trust.   The Company continues to provide an effective vehicle
for long-term institutional shareholders to gain exposure to quoted UK '
smaller' companies, which are inherently illiquid.

The benefits of the closed-end structure have enabled the Investment Manager
to achieve strong performance and the Company to meet its investment
objectives, more than compensating for the discount.  Since the launch, the
level of discount of the Company has been in line with the sector average,
whilst the NAV returns have been consistently far better.

The Trust has now reached its sixth anniversary.  Since the launch, the NAV
has increased by 125%.  The Trust has outperformed its benchmark every year
and cumulatively by a total of 56%; it has also outperformed the FTSE-100
Index by 46%.  It is the only UK small company investment trust to have
outperformed consistently every year since launch.  This consistent
outperformance has been in years of both positive and negative returns for the
market as a whole.  With such strong performance by the Investment Manager,
shareholders looking for added value over the longer term can face the future
with confidence.


C Brandon Gough

Chairman

4 June 2001