Portfolio Update

BLACKROCK SMALLER COMPANIES TRUST plc

All information is at 31 December 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              1.4%    -28.3%    -44.0%    -27.8%      8.6%      
Share price                 12.0%    -32.1%    -42.5%    -33.5%     12.0%     
HGSC ex Inv Trust + AIM*     1.1%    -26.2%    -49.4%    -46.4%    -31.2%  

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 three year and five year periods the
above index has been blended to reflect this.

At month end                                                                  
                                                                              
Net asset value Capital only (debt at par value):           232.67p           
Net asset value Capital only (debt at fair value):          227.30p           
Net asset value incl Income (debt at par value):            237.08p**         
Net asset value incl Income (debt at fair value):           231.71p**         
Share price:                                                181.50p           
Discount to Capital only NAV (debt at par value):           -21.99%           
Discount to Capital only NAV (debt at fair value):          -20.15%           
Net yield:                                                    3.42%             
Total assets:                                               £129.8m^          
Gearing incl. income:                                         13.4%             
Ordinary shares in issue:                                48,494,792^^      

**includes net revenue of 4.41p.
^includes current year revenue.
^^excludes 1,498,731 shares held in treasury.

Ten Largest Sector                                                             

Weightings                                                    % of Total Assets

Support Services                                                           15.5
Financial Services                                                         10.4
Software & Computer Services                                                9.0
Aerospace & Defence                                                         9.0
Industrial Engineering                                                      7.9
Oil & Gas Producers                                                         5.7
Electronic & Electrical Equipment                                           5.6
Health Care Equipment & Services                                            4.9
Pharmaceuticals & Biotechnology                                             4.2
Nonlife Insurance                                                           3.7
                                                                           ----
Total                                                                      75.9
                                                                           ====

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

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

December was a calmer month with the Company's NAV rising by 1.4%, whilst the
benchmark index rose by 1.1%. By way of comparison the FTSE 100 Index rose by
3.4%.

In relative terms, the best stock contributions came from Mouchel Group,
Rathbone Brothers and Hill & Smith. Mouchel produced a confident interim
management statement re-affirming its very high level of contract backed
revenue visibility. Rathbones shares rose, probably due to firmer markets in
December. Hill & Smith shares have been rising since a confident trading
statement in mid-November which was followed by several directors buying
shares.

The worst relative performers during the month were WSP Group and Hyder
Consulting, both engineering consultants. WSP's December trading statement
pointed to a general slowdown in commercial developments, with resources being
redeployed out of Dubai which was noticeably quieter. WSP confirmed that 2008
results had met expectations. Hyder Consulting shares have fallen on thin
volumes along with most other engineering consultants; it is strong in the
Middle East and the worries about the Dubai property market have taken their
toll on the share price. Both WSP and Hyder trade on less than 4 times current
year forecast earning; neither is highly geared.

During the month we invested 0.5% of the portfolio into Playtech. Playtech is a
software company which focuses on the online gaming market. Its platforms are
well regarded, it is a truly global business and it recently signed an
interesting tie up with William Hill Online. It is a highly profitable and cash
generative company with naturally recurring revenues.

We sold our holding in Metorex, principally a copper producer. Its key copper
mine experienced cost overruns which management were slow to fund, and
eventually raised equity but not from UK based shareholders.

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).

26 January 2009