Portfolio Update

BLACKROCK SMALLER COMPANIES TRUST plc

All information is at 31 July 2008 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             -6.5%     -7.6%     -19.6%     32.4%   101.7%    
                                                                                
Share price                 -7.3%     -7.0%     -21.3%     31.2%   104.9%    
                                                                                
HGSC ex Inv Trust + AIM*    -7.6%    -14.3%     -28.8%     -8.9%    18.4%   

Sources: BlackRock and Datastream

*With effect from 1 September 2007 the Hoare Govett Smaller Companies plus AIM
(ex Investment companies) Index replaced the FTSE SmallCap Index (ex Investment
Companies) as the Company's benchmark. For the one year, three year and five
year periods above the index has been blended to reflect this.

At month end                                                                  
                                                                              
Net asset value Capital only (debt at par value):           384.02p           
                                                                              
Net asset value Capital only (debt at fair value):          380.16p           
                                                                              
Net asset value incl Income (debt at par value):            387.77p*          
                                                                              
Net asset value incl Income (debt at fair value):           383.91p*          
                                                                              
Share price:                                                312.50p           
                                                                              
Discount to Capital only NAV (debt at par value):           18.6%             
                                                                              
Discount to Capital only NAV (debt at fair value):          17.8%             
                                                                              
Net yield:                                                  1.6%              
                                                                              
Total assets:                                               £204.2m^          
                                                                              
Gearing:                                                    7.9%              
                                                                              
Ordinary shares in issue^:                                  48,509,708**      

*includes net revenue of 3.75p
**excludes 1,483,815 shares held in treasury
^includes current year revenue
 

Ten Largest Sector                                                             
Weightings                                                    % of Total Assets
                                                                               
Support Services                                                           14.1
                                                                               
Software & Computer Services                                               12.4
                                                                               
Industrial Engineering                                                      8.9
                                                                               
Oil & Gas Producers                                                         8.2
                                                                               
Financial Services                                                          7.8
                                                                               
Industrial Metals & Mining                                                  7.8
                                                                               
Aerospace & Defence                                                         7.6
                                                                               
Electronic & Electrical Equipment                                           4.9
                                                                               
Health Care Equipment and Services                                          4.6
                                                                               
Media                                                                       3.6
                                                                               
                                                                           ----
                                                                               
Total                                                                      79.9
                                                                           ====

 

Ten Largest Equity Investments (in alphabetical order)                         
                                                                               
Company                                                                        
                                                                               
Aveva Group                                                                    
                                                                               
Chemring                                                                       
                                                                               
Dechra Pharmaceuticals                                                         
                                                                               
Hampson Industries                                                             
                                                                               
ITE Group                                                                      
                                                                               
Rathbone Brothers                                                              
                                                                               
Spirax-Sarco Engineering                                                       
                                                                               
Synergy Healthcare                                                             
                                                                               
Ultra Electronic Holdings                                                      
                                                                               
Victrex                                                                        
                                                                               
   
Commenting on the markets, Mike Prentis, representing the Investment Manager
noted:

Overall performance in July was poor. The Company's NAV fell by 6.5 % and the
benchmark index fell by 7.6 %, both on a capital only basis. Stockmarket
conditions in July were very poor with continued nervousness about the state of
the world economy, and in particular the UK and US economies. July saw further
provisioning in the banking sector, and continued attempts by the banks to
improve their balance sheets by raising new equity and curtailing lending to
higher risk customers and situations. In the UK the housing market is in
crisis, consumer spending is weakening and Government tax receipts look likely
to fall short of expectations with implications for Government spending and
debt. Resource prices fell during July, but it is too early to tell whether
this is a temporary pullback or a genuine indication of demand destruction.
Inflation remains high in most countries but, providing resource prices do not
increase further, the effects of past resource prices increases will gradually
fall out of statistics helping to bring inflation down in due course. GDP
growth in key countries such as China has reduced slightly, partly due to
reduced demand from the US. However, a combination of continued infrastructure
build and structurally growing domestic consumption should see China and other
major emerging economies continue to grow strongly.

The most significant relative outperformers were Detica, Victrex, Synergy
Healthcare and Ultra Electronics. Detica agreed to be acquired by BAE Systems,
at a 57% premium to the pre-bid price. Once again we have seen one of our core
holdings acquired; this is in some ways unsurprising given the quality of the
business and its management, and also the relatively attractive valuation
afforded to a business of this quality pre-bid. It follows on from the takeover
of Expro International and the rebuffed bid for Chloride in recent months.
Victrex, Synergy Healthcare and Ultra Electronics are all core holdings with
contractual or fairly predictable revenues; all continue to trade well.

The most significant relative underperformers were mining companies Albidon and
Avocet Mining. Mining stocks generally had a poor month as sentiment turned
against the sector. Cost inflation remains high, production can be very
variable especially for smaller producers dependent on one mine, and some
metals prices have been weak, notably nickel. Albidon is an emerging nickel
producer, and Avocet announced that last quarter's gold production was below
expectations. Xaar warned that sales of its more mature print heads had slowed.

New holdings in the month included Wellstream, a manufacturer of flexible
tubing used in deep offshore oilfields, and Fenner, a leading supplier of
conveyor belting, much of which is used in the mining industry. Disposals
included our holdings in Big Yellow and Helical Bar, a reflection of our
growing nervousness about the UK economy and UK real estate.

Our aim is to benefit from sources of growth around the world, and to avoid
areas of weakness. We are continuing our emphasis on holdings which are well
managed, cash generative, differentiated price setters, with strong earnings
growth records and sound balance sheets; companies in which we have a high
degree of confidence. We are not inclined to seek out potential recovery
situations among retailers, pub companies, housebuilders and the like because
we expect UK macro-economic newsflow to deteriorate further, and these types of
companies to suffer further material earnings downgrades. It seems unlikely
that the share prices of these companies will outperform in such a scenario.
Equally, we are conscious that share prices in general have fallen a long way
and markets have anticipated a lot of bad news. We therefore intend to retain
our gearing which has been in the 9-10% of net assets range in recent months.

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).

21 August 2008