Performance at Month End

Merrill Lynch Br. SmallerCo Tst PLC
14 June 2005


MERRILL LYNCH BRITISH SMALLER COMPANIES TRUST plc

All information is at 31 May 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                        0.2%        -6.7%           19.1%          19.5%          -8.2%
Share price                           -4.7%        -8.8%           21.7%          15.0%          -8.6%
FTSE Small Cap Index (ex IC's)         0.0%        -4.5%           10.7%           8.8%          -11.1%

Sources:  Merrill Lynch Investment Managers and Datastream.

At month end
Net asset value:                                 262.78p
Share price:                                     208.75p
Discount to NAV:                                   20.6%
Net yield:                                          2.2%

Total assets:                                    £147.6m
Gearing:                                           11.1%
Ordinary shares in issue:                        50,563,523


Ten Largest Sector
Weightings                                                                                  % of Total Assets
Support Services                                                                                   14.2
Media & Entertainment                                                                               9.4
Software & Computer Services                                                                        9.0
Construction & Building Materials                                                                   6.7
Electronic & Electrical Equipment                                                                   6.2
Mining                                                                                              5.5
Oil & Gas                                                                                           5.0
Engineering & Machinery                                                                             4.1
General Retailers                                                                                   4.1
Health                                                                                              3.8
                                                                                                   ----
Total                                                                                              68.0
                                                                                                   ----

Ten Largest Equity Investments
Company
BSS Group
Aveva Group
Consolidated Minerals
Dechra Pharmaceuticals
Brewin Dolphin Holdings
Parkdean Holidays
Chaucer Holdings
Renishaw
Blacks Leisure Group
Dicom Group

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

Smallcap stocks performed poorly during the first half of May, but recovered
well later in the month, and have performed well in the first few weeks of June.
The Company's NAV per share rose by 0.2% during May, whilst the benchmark was
unchanged.

Good share price performances amongst larger holdings came from Consolidated
Minerals, BSS and ITE. The former was stronger after a weak April and was helped
by the company buying in shares. BSS and ITE both posted good results leading to
upgraded forecasts. BSS are benefiting from robust demand for their plumbing,
heating and other products. Significant construction spending on major projects
such as new schools and hospitals, but also in the repair, maintenance and
improvement of social housing and other buildings, have driven growth and leave
BSS confident for the future. ITE organise exhibitions mainly in Russia and
other former Soviet countries. Demand has been very strong and the company has
been successful at winning new exhibitions as well as increasing the size and
profitability of existing exhibitions. All three of these companies have very
impressive management teams.

Poor share price performers included Home Entertainment, Zetex and Autologic.
The first two of these are consumer related. Home Entertainment rent and sell
DVDs and mobile phones. Weak rental income was blamed on the weather and piracy;
the company is now valued at only three times cash flow. Zetex supply analogue
semiconductors many of which are used in mobile phones and certain TV related
applications. Re-orders indicated only weeks before did not materialise giving
rise to a warning on profits. Autologic move cars mainly between manufacturers/
ports and dealerships, and provide a range of related services. Their 40% owned
joint venture in France delivered poor first quarter results. Our holding in
this company was halved several months ago when the share price was much higher.

During the month the Company has added to existing core holdings such as Mouchel
Parkman, WSP, White Young Green, SIG, Domino Printing Sciences and Northgate. A
new holding was started in Chloride, following good results and a meeting with a
confident management team. Chloride supply uninterruptible power supply
solutions on a global basis. A small holding was also taken in Alphameric, which
supplies software to bookmakers, such as William Hill, and the hospitality
sector. The company has been winning good new business and is lowly valued given
the opportunities facing it.

The Company's discretionary consumer exposure was reduced further by the sale of
the holdings in Holidaybreak and Regent Inns. The Company is underweight in the
main consumer sectors, but retains a number of holdings in the companies in the
consumer sectors which we regard as likely long term winners; these include
Parkdean, the owner operator of caravan parks, and Blacks Leisure, the outdoor
specialists.

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 June 2005


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