Interim Management Statement

Montanaro UK Smaller Companies Investment Trust

Interim Management Statement - 4 months to 31 January 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

                    4 months      1 year     3 years   5 years       Launch
                                                                           
MUSCIT               (15.0%)     (16.5%)       36.0%    143.2%       213.0%
                                                                           
Benchmark            (20.2%)     (26.0%)        4.5%     83.0%       140.7%


Performance Summary (capital only)

                 As at 31 January         As at 30         Movement
                             2008    September 2007                
                                                                   
Gross assets *        114,200,480       139,324,697         (18.0%)
                                                                   
Net asset value             289.7             344.2         (15.8%)
per share                                                          
                                                                   
Share price                 230.5             296.0         (22.1%)
                                                                   
Discount                  (20.4%)           (14.0%)                
                                                                   
Net gearing                 15.2%             12.2%                

* please see material events

Period Review

The four months to the end of January 2008 have proved very challenging for UK
Smaller Companies. The flight to the perceived security and liquidity of larger
companies accelerated during the period as the `credit crunch' impacted stock
market sentiment. The UK Smaller Companies Index capital return was down 20.8%,
in contrast to a decline of 9.6% in capital terms in the FTSE-AllShare. The
bulk of this relative underperformance came in November when the
underperformance was 8.3%. This is only the third month since the Company's
inception, almost 14 years, that the FTSE SmallCap has lagged the AllShare by
more than 8%.

MUSCIT fell 15.8% in capital terms during the period, delivering relative
outperformance of 5%. In a period where absolute returns were hard to achieve,
Merger & Acquisition has continued to prove a valuable source of performance.
The Company benefited from 4 takeovers in the period. We have believed for some
time that the portfolio of quality, well managed businesses operating in niche
markets would prove attractive and this has remained the case despite the down
turn in the market place. Takeover approaches were seen at Foseco (industrial
foundry products), Abbot Group (oil services), MTL Instruments (industrial
safety devices) and Coda (financial software).

The period has been characterised by considerable market volatility, which has
led to some extreme share price movements. Many companies have seen significant
de-ratings as nervousness surrounding a possible recession on both sides of the
Atlantic has mounted. We have remained focused on ensuring that the portfolio
is comprised of strong businesses operating with robust earning's streams.
However, it has not been possible to escape the malaise and DTZ (property
services) and Superglass (insulation manufacturer) have proved particular drags
on performance in the last 4 months.

Material Events

On 10 December 2007 the Company bought 1,828,000 shares into Treasury at a
price of £2.445 per share. This stock can be reissued at a narrower discount
and a higher price up until the next AGM in July 2008. In addition, since this
date the Company has bought a total of 135,000 shares for cancellation at an
average price of £2.36 per share. The above accounted for a reduction of £
4,822,058 in gross assets.

Top Ten Holdings as at 31January 2008

Company                  Sector                          % of total portfolio  
                                                                               
Fisher (J) & Sons        Industrial Transportation                          3.0
                                                                               
BPP Holdings             Support Services                                   2.8
                                                                               
Dignity                  General Retailers                                  2.8
                                                                               
Genus                    Pharmaceuticals & Biotechnology                    2.7
                                                                               
Dechra Pharmaceuticals   Pharmaceuticals & Biotechnology                    2.6
                                                                               
Chloride Group           Electronic & Electrical                            2.6
                         Equipment                                             
                                                                               
Fenner                   Industrial Engineering                             2.4
                                                                               
MTL Instruments Group    Electronic & Electrical                            2.3
                         Equipment                                             
                                                                               
Wilmington Group         Media                                              2.3
                                                                               
Coda                     Software & Computer Services                       2.3
                                                                               
Total                                                                      25.8

Sector Breakdown

Sector                                           % of total         % of market
                                                  portfolio                    
                                                                               
Aerospace & Defence                                     3.2                 1.1
                                                                               
Beverages                                               1.1                 0.6
                                                                               
Chemicals                                               3.9                 1.8
                                                                               
Constructions & Materials                               1.6                 2.7
                                                                               
Electronic & Electrical Equipment                       8.4                 2.6
                                                                               
Food Producers                                          2.7                 4.2
                                                                               
General Financial                                       3.8                11.5
                                                                               
General Retailers                                       5.3                 7.5
                                                                               
Health Care Equipment & Services                        4.8                 3.7
                                                                               
Industrial Engineering                                  9.5                 4.3
                                                                               
Industrial Transportation                               3.1                 3.5
                                                                               
Leisure Goods                                           1.6                 0.5
                                                                               
Media                                                   3.6                 4.6
                                                                               
Oil & Gas Producers                                     2.5                 2.4
                                                                               
Pharmaceuticals & Biotechnology                         5.3                 6.5
                                                                               
Real Estate                                             3.1                11.9
                                                                               
Software & Computer Services                            9.3                 8.2
                                                                               
Support Services                                       24.1                10.5
                                                                               
Travel & Leisure                                        3.1                 5.3
                                                                               
Technology Hardware and Telecoms                        0.0                 4.3
                                                                               
Other                                                   0.0                 2.3
                                                                               
Total                                                100.00              100.00

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