Performance at Month End

Merrill Lynch Br. SmallerCo Tst PLC
14 October 2005


MERRILL LYNCH BRITISH SMALLER COMPANIES TRUST plc

All information is at 30 September 2005 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                       3.2%         11.7%          40.8%          106.5%         -10.1%
Share price                           5.9%         16.9%          42.1%          132.8%         -12.5%
FTSE Small Cap Index (ex IC's)        0.3%          6.7%          20.7%          70.7%           -8.8%

Sources:  Merrill Lynch Investment Managers and Datastream.

At month end
Net asset value:                                 310.09p
Share price:                                     264.25p
Discount to NAV:                                   14.8%
Net yield:                                          1.7%

Total assets:                                    £171.5m
Gearing:                                            9.4%
Ordinary shares in issue:                        50,563,523


Ten Largest Sector
Weightings                                                                                             % of Total Assets
Support Services                                                                                                    13.9
Software & Computer Services                                                                                         8.8
Media & Entertainment                                                                                                7.5
Electronic & Electrical Equipment                                                                                    7.2
Engineering & Machinery                                                                                              7.0
Construction & Building Materials                                                                                    6.9
Mining                                                                                                               6.6
Oil & Gas                                                                                                            5.4
Health                                                                                                               4.6
Information Technology Hardware                                                                                      4.0
                                                                                                                    ----
Total                                                                                                               71.9
                                                                                                                    ----




Ten Largest Equity Investments
Company
Aveva Group
Brewin Dolphin Holdings
BSS Group
Chaucer Holdings
Consolidated Minerals
Dechra Pharmaceuticals
Kier Group
Mouchel Parkman
Renishaw
WSP Group




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

During September the Company's NAV per share rose by 3.2% to 310.09p. The
benchmark index rose by 0.3%.

Good share price performances came from Brammer, Wincanton, Paypoint, CSR,
Highway Insurance, Big Yellow, First Quantum Minerals and Pure Wafer. Brammer
produced good interim results and a very confident outlook which resulted in
forecasts being upgraded. Wincanton had a positive pre-close update, and,
following the bid for Exel by Deutsche Post, is rumoured to be a potentially
attractive acquisition target for others. Paypoint also had a positive trading
statement which indicated that first half trading is ahead of forecasts; we
added to the Company's holding. CSR announced that it was seeing a significant
acceleration in Bluetooth revenues in Q3; forecasts were increased
significantly. Highway announced good interims, a positive outlook, a doubled
interim dividend and intention to pay higher dividends in future; even after a
strong run, the shares are currently trading on a prospective yield of more than
7%, which should be 1.5 times covered. Big Yellow, the self storage company,
performed well on the back of repeated directors' share purchases; we regard the
management team very highly. First Quantum, an emerging producer of copper,
benefited from higher copper prices. Pure Wafer, who clean and recover wafers
for most of the world's semiconductor manufacturers, produced good final results
and a confident outlook.

Poorer performers in the month were Dealogic, UCM Group and KBC Advanced
Technology. We met the management of each of these companies following their
results released during September. Dealogic produce software used by many of the
world's leading investment banks. Costs were higher than expected as the company
sought to push its Strategy Manager software. We came away feeling that the
company should continue to grow its high margin revenues and that the shares
look good value. UCM again disappointed as it warned of a slowdown in steel
related demand and higher energy prices. We believe the company's still fairly
new CEO is doing the right things. KBC Advanced Technology sells software and
services to help oil refineries improve their operating efficiency. This is
currently very topical and KBC has some of the biggest oil companies in the
world as its customers.

New holdings included Spirax-Sarco and Speedy Hire. Spirax-Sarco is a world
leader in the supply of equipment which is used to manage steam in industrial
processes. We met management after good results. The business has grown steadily
over many years, provides excellent customer sales and service support on a
worldwide basis, and looks destined to continue to grow earnings. 1% of the
Company's assets have been invested in the company. Speedy Hire provides mainly
tool hire across the UK. It has been consistently successful over many years. We
have followed the company closely and took part in a small placing.

Complete disposals during the month included holdings in SCS Upholstery, BTG,
Biotrace and Watermark.

The Company continues to take a cautious line towards UK consumer spending and
is underweight in the main consumer sectors. We prefer to invest in companies
which can benefit from growth opportunities on a global basis, such as
Spirax-Sarco, or those which although UK focused, can identify areas of robust
strength in spending, such as Speedy Hire.

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



14 October 2005


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            The company news service from the London Stock Exchange