Interim Management Statement

Montanaro UK Smaller Companies Investment Trust PLC

Interim Management Statement - 3 months to 30 June 2008

Investment Objective

The Montanaro UK Smaller Companies Investment Trust PLC ("MUSCIT") was launched
in March 1995 and is listed on the London Stock Exchange. Initial investments
may be made in UK companies with a market capitalisation lower than the largest
constituent of the Hoare Govett Smaller Companies Index ("the HGSC") which
represents the smallest 10% by value of the UK stock market. Investments may be
held if they rise above the HGSC.

The investment policy remains to focus on the "smaller" end of the quoted UK
small companies market. The benchmark is the FTSE SmallCap (excluding
Investment Companies) Index ("SmallCap"). The investment objective is capital
growth.

Benchmark

FTSE SmallCap (excluding Investment Companies)

Net Asset Value Total Return Performance

                    3 months      1 year     3 years   5 years       Launch
                                                                           
MUSCIT                (2.0%)     (17.6%)       32.4%    105.0%       221.1%
                                                                           
Benchmark             (7.0%)     (33.6%)      (6.5%)     33.1%       118.4%


Performance Summary (capital only)

                    As at 30 June    As at 31 March        Movement
                             2008              2008                
                                                                   
Gross assets         £116,948,745      £117,857,395          (0.8%)
                                                                   
Net asset value            295.3p            304.5p          (3.0%)
per share                                                          
                                                                   
Share price                238.0p            245.0p          (2.9%)
                                                                   
Discount                  (19.4%)          (19.55%)                
                                                                   
Potential                  14.92%            14.65%                
Gearing                                                            
                                                                   
Net Gearing                 1.94%             3.80%                

Period Review

The macro-economic news has continued to deteriorate over the course of the
past three months. The British economy is simultaneously facing the twin forces
of rising commodity prices and slowing growth. Set against a backdrop of
continued uncertainty in the British housing market and an ongoing credit
crisis, there has been a discernible squeeze on the consumer's pocket. It is
easy to see why the FTSE UK Smaller Companies Index has now seen five
consecutive quarters of negative returns.

Over the past three months the FTSE UK Smaller Companies Index excluding
Investment Companies was down 17%. Since the 4th June 2007 the Index is down
over 45%, highlighting the fact we have entered a bear market.

MUSCIT's continued focus on profitable, quality businesses that enjoy good
visibility of earnings and healthy cash generation has continued to serve
investors well. Over the last three months the Company's NAV is down 2%, which
represents outperformance of 5%.

The Company has been helped by retaining underweight positions in Real Estate
and General Financials, which have been two of the hardest hit sectors. It has
also run a low level of net gearing over the period. We have done little
trading over the past three months as we have heightened our focus on our
existing holdings.

It has not been possible to avoid all the banana skins that have been out
there. There were disappointing trading updates from Eaga and Superglass, who
have both suffered from weakness in construction related markets. Additionally,
in the wake of a banking crisis the market has reappraised the state of
corporate balance sheets. What eighteen months ago was perceived to be an
efficient balance sheet, is now considered stretched. UTV (Media) and
Holidaybreak (Leisure) have both come under pressure as a result.

Strong absolute returns have been possible. Two common themes connecting our
best performing holdings have been the oil price and M&A activity. Dana
Petroleum and Venture Productions have been particular beneficiaries of the oil
price moving over $140 per barrel. The Company also saw two takeovers during
the period. IBS OpenSystems, a public sector software business, was acquired by
Capita, while Gibbs and Dandy, a regional builder's merchants, was acquired by
St. Gobain.

Material Events

At the Company's AGM on 18 July 2008 all Resolutions put to the meeting were
passed. The announcement of the results, including proxy votes, can be found on
the Company's website.

Following approval by shareholders at the Annual General Meeting on 18 July
2008, a final dividend of 3.65p (2007: 2.65p) will be paid on 18 August 2008 to
shareholders on the register on 13 June 2008.

Since the 31st March 2008 the Company has bought a total of 145,000 shares for
cancellation.

This interim management statement and up to date NAV is available at
www.montanarouksmaller.co.uk

Top Ten Holdings as at 30 June 2008

Company                  Sector                          % of total portfolio  
                                                                               
Dechra Pharmaceuticals   Pharmaceuticals & Biotechnology                    3.2
                                                                               
Chloride Group           Electronic & Electrical                            3.0
                         Equipment                                             
                                                                               
Fisher (J) & Sons        Industrial Transportation                          3.0
                                                                               
Dignity                  General Retailers                                  3.0
                                                                               
Wilmington Group         Media                                              2.5
                                                                               
BPP Holdings             Support Services                                   2.5
                                                                               
Hargreaves Services      Support Services                                   2.4
                                                                               
Fenner                   Industrial Engineering                             2.3
                                                                               
Scott Wilson Group       Support Services                                   2.3
                                                                               
Latchways                Support Services                                   2.3
                                                                               
Total                                                                      26.5

Sector Breakdown

Sector                               % of total     % of market
                                      portfolio                
                                                               
Aerospace & Defense                        4.5%            1.7%
                                                               
Beverages                                  1.3%            0.8%
                                                               
Chemicals                                  4.6%            2.3%
                                                               
Construction & Materials                   1.9%            3.7%
                                                               
Electronic & Electrical                    8.6%            2.3%
Equipment                                                      
                                                               
Food Producers                             1.8%            4.4%
                                                               
General Financial                          4.7%            8.6%
                                                               
General Retailers                          5.5%            7.0%
                                                               
Health Care Equipment &                    4.6%            2.6%
Services                                                       
                                                               
Industrial Engineering                     5.3%            3.9%
                                                               
Industrial Transportation                  3.0%            4.8%
                                                               
Leisure Goods                              1.2%            0.4%
                                                               
Life & Nonlife Insurance                   0.0%            3.4%
                                                               
Media                                      3.2%            4.0%
                                                               
Oil & Gas Producers                        3.4%            1.5%
                                                               
Other                                      0.0%            3.6%
                                                               
Pharmaceuticals &                          5.5%            6.3%
Biotechnology                                                  
                                                               
Real Estate                                4.5%           10.3%
                                                               
Software & Computer Services               9.0%            7.4%
                                                               
Support Services                          24.9%           11.4%
                                                               
Technology Hardware & Telecoms             0.0%            5.3%
                                                               
Travel & Leisure                           2.5%            4.5%
                                                               
                                         100.0%          100.0%

This Interim Management Statement and up to date NAV and Share Price are
available at the Company's website www.montanarouksmaller.co.uk.