Portfolio Update

Merrill Lynch Br. SmallerCo Tst PLC
13 December 2005


MERRILL LYNCH BRITISH SMALLER COMPANIES TRUST plc

All information is at 30 November 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                            6.0%           3.4%            29.3%          100.7%            8.2%
Share price                                6.2%           4.2%            30.2%          119.4%            6.1%
FTSE Small Cap Index (ex IC's)             4.8%           1.5%            16.4%           62.4%           -1.5%

Sources:  Merrill Lynch Investment Managers and Datastream.

At month end
Net asset value:                                 310.65p
Share price:                                     260.00p
Discount to NAV:                                   16.3%
Net yield:                                          1.8%
Total assets:                                    £171.8m
Gearing:                                            9.4%
Ordinary shares in issue:                        50,563,523


Ten Largest Sector
Weightings                                                                                             % of Total Assets
Support Services                                                                                                    13.6
Media & Entertainment                                                                                                8.0
Engineering & Machinery                                                                                              8.0
Construction & Building Materials                                                                                    7.3
Electronic & Electrical Equipment                                                                                    7.2
Software & Computer Services                                                                                         6.0
Mining                                                                                                               5.9
Oil & Gas                                                                                                            5.8
Real Estate                                                                                                          5.7
Health                                                                                                               4.5
                                                                                                                    ----
Total                                                                                                               72.0
                                                                                                                    ----




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




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



November was a good month for equity markets and the Company. The Company's NAV
rose by 6.0%, fully reversing the fall in October.  The benchmark index rose by
4.8%.



Various portfolio companies produced good results or trading updates which were
mirrored by share price strength. Charter, a recent purchase, was particularly
strong on the back of another earnings upgrade. Both its air and gas handling
business, and also its welding and cutting business, are seeing good demand and
growing order books in many geographies. Paypoint, which has a national network
to facilitate payments and mobile phone top ups, produced excellent results and
a confident outlook. Big Yellow, the provider of self storage facilities, also
produced strong results, as did Chloride and Aveva. Shares in CSR continued to
perform well as the market recognised the dominance of CSR's position in the
Bluetooth market, and the strength of that market.



Disappointments came from Zetex, a manufacturer of analogue semiconductors, Home
Entertainment, which sell and rent DVDs, computer games and various types of
hardware, and Trifast which supply fasteners to global manufacturers. The
Company's investment in these holdings has been reduced.



New holdings in the month were Hamworthy, Umeco, Unite, and Hansteen. Hamworthy
supplies capital equipment installed on ships. It is winning substantial orders
for systems which are required on new liquid natural gas carriers to prevent gas
loss en route to consumer markets. The Company bought stock in a placing. Umeco
supply aerospace companies with components and composite materials, and continue
to benefit from the strength of the aerospace cycle. Unite design, construct and
own buildings that are used to house university students. A leading provider in
this sector, Unite is seeing good demand for its buildings and also attractive
rental growth. Hansteen is a new real estate company formed by the former
management of Ashtenne, a highly successful owner/developer of industrial
property, in which the Company had owned a significant holding. We hope that
they can repeat their previous success, mainly in the UK, with Hansteen which
will invest in Western Continental European industrial property.



Holdings in First Quantum, Torex Retail and RPC were sold. The first two had
performed very well for the Company, but we now prefer other stocks in their
sectors. RPC has traded satisfactorily but we wanted to reduce further portfolio
exposure to companies which are large consumers of energy given the much higher
prices now feeding through to manufacturers which are not always easy to pass
on.







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).



13 December 2005


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