Portfolio Update

BLACKROCK SMALLER COMPANIES TRUST plc

All information is at 30 September 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             -16.9%   -21.0%    -27.5%      4.6%   61.6%     
Share price                 -15.2%   -20.6%    -29.2%      1.2%   65.6%     
HGSC ex Inv Trust + AIM*    -16.8%   -20.8%    -35.6%    -24.4%   -2.5%   

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 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):           324.41p           
Net asset value Capital only (debt at fair value):          318.92p           
Net asset value incl Income (debt at par value):            329.09p**         
Net asset value incl Income (debt at fair value):           323.60p**         
Share price:                                                267.50p           
Discount to Capital only NAV (debt at par value):           17.5%             
Discount to Capital only NAV (debt at fair value):          16.1%             
Net yield:                                                  2.3%              
Total assets:                                               £177.98m^         
Gearing:                                                    11.8%             
Ordinary shares in issue:                                   48,509,708^^      

**includes net revenue of 4.68p.
^includes current year revenue.
^^excludes 1,483,815 shares held in treasury.

Ten Largest Sector                                                             
Weightings                                                    % of Total Assets
                                                                               
Support Services                                                           14.2
Software & Computer Services                                               13.3
Financial Services                                                          9.7
Industrial Engineering                                                      8.5
Aerospace & Defence                                                         7.5
Industrial Metals & Mining                                                  7.1
Oil & Gas Producers                                                         6.6
Electronic & Electrical Equipment                                           5.4
Health Care Equipment and Services                                          5.2
Pharmaceuticals & Biotechnology                                             4.1
                                                                           ----
Total                                                                      81.6
                                                                           ====

 

Ten Largest Equity Investments (in alphabetical order)                         
                                                                               
Company                                                                        
                                                                               
Brewin Dolphin Holdings                                                        
Chemring Group                                                                 
Connaught                                                                      
Dechra Pharmaceuticals                                                         
Rathbone Brothers                                                              
Rotork                                                                         
Spirax-Sarco Engineering                                                       
Synergy Healthcare                                                             
Ultra Electronics Holdings                                                     
Victrex                                                                        

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

During September the Company's NAV fell by 16.9%. The benchmark index fell by
16.8% whilst the FTSE100 Index fell by 13.0%. Stockmarket conditions during the
month were very poor with continued nervousness about the state of the world
economy and, in particular, the banking system. In recent weeks we have seen
the failure, nationalisation and takeover of a variety of previously well
regarded financial companies. In the UK, the housing market is in crisis and
likely to deteriorate, consumer spending is weakening, and government tax
receipts look likely to fall short of expectations with implications for
government spending and debt. Resource prices have fallen further; this
probably reflects the closure of speculative positions but may also indicate
demand destruction. GDP growth in key countries such as China has slowed partly
due to reduced demand from the US.

Many of our holdings fell by more than 20% during the month, even though in
many of these cases newsflow was limited. The worst relative performers were
Nighthawk Energy and, again, Albidon. Albidon shares have been very weak since
May despite having brought its Munali nickel mine into production, since when
the nickel price has collapsed. Nighthawk shares were weak as the market
focused more on its Cisco Springs project, which does not look economic, and
less on its Jolly Ranch project where drilling has shown substantial quantities
of oil which is already being produced.

In relative terms, the best stock contributions came from Brewin Dolphin,
Rathbone Brothers and Dechra Pharmaceuticals. Brewins and Rathbones benefited
from the bans put in place to prevent short selling of financial companies;
they are also, we believe, good value at current levels. Dechra is very
defensive given its focus on the provision of pharmaceuticals for companion
animals.

New holdings in the month included Rensburg Sheppards, Hargreaves Services and
Hiscox. We see Rensburgs, a wealth manager with a high level of recurring fee
income, as offering good value and upside on a market recovery. Hargreaves
Services mines, imports and processes coal - we were impressed by management
and the earnings growth being achieved. Following the demise of AIG, and in
view of the impact of hurricane Ike, it now looks as though enough capacity
will come out of the insurance market to push up premiums in 2009. We decided
to reduce our underweight position and bought a holding in Hiscox, a well
regarded insurer. We sold our holding in SSP Holdings, following an agreed bid,
and reduced the size of several resources holdings.

We have maintained total borrowings at about £18-19 million. With the fall in
markets and the value of our portfolio in September and October to date,
gearing has increased to approximately 13%. This is above our usual level, but
we feel markets are close to bottoming and this level of gearing and risk is
tolerable in the circumstances. Also, our holding in Axon (2.0% of the
portfolio), has received an agreed cash bid which, assuming it does complete,
will reduce borrowing in due course.



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).

22 October 2008


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