Portfolio Update

Merrill Lynch Br. SmallerCo Tst PLC
09 March 2006

MERRILL LYNCH BRITISH SMALLER COMPANIES TRUST plc

All information is at 28 February 2006 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                            3.3%          15.6%            27.5%          154.6%           27.2%
Share price                                4.4%          20.0%            36.2%          184.3%           30.3%
FTSE Small Cap Index (ex IC's)             2.2%          11.1%            18.1%          102.2%            9.2%

Sources:  Merrill Lynch Investment Managers and Datastream.

From 30 December 2005 underlying investments are valued on a bid price basis, in
accordance with AITC guidelines.

At month end
Net asset value:                                 359.16p
Share price:                                     312.00p
Discount to NAV:                                   13.1%
Net yield:                                          1.5%
Total assets:                                    £196.3m
Gearing:                                            8.1%
Ordinary shares in issue:                        50,563,523


Ten Largest Sector
Weightings                                                                                             % of Total Assets
Support Services                                                                                                    15.5
Engineering & Machinery                                                                                              8.7
Construction & Building Materials                                                                                    8.3
Electronic & Electrical Equipment                                                                                    7.0
Media & Entertainment                                                                                                6.9
Real Estate                                                                                                          6.8
Oil & Gas                                                                                                            6.6
Software & Computer Services                                                                                         6.3
Mining                                                                                                               5.6
Speciality and other finance                                                                                         4.9
                                                                                                                    ----
Total                                                                                                               76.6
                                                                                                                    ----




Ten Largest Equity Investments
Company
Aveva Group
Brewin Dolphin Holdings
BSS Group
Charter Consolidated
Kier Group
Mouchel Parkman
Rathbone Brothers
Renishaw
SIG
WSP Group




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



February was a good month for the Company. The Company's NAV rose by 3.3%.  The
benchmark index rose by 2.2%.



February is a fairly quiet time for many smaller companies although results for
companies with December year ends start to come through before the end of
February, and then continue well into March. Good performances were seen from
Royalblue which produces its year end accounts very promptly and remains
confident about investment banking demand for its software. MTL Instruments
shares continued their strong run in anticipation of good results, recognising
that the company is exposed both to oil & gas markets, which use its explosion
prevention instrumentation, and to Far Eastern markets such as China. Dechra
Pharmaceuticals recovered from its January sell off as the market appreciated;
trading remains strong and medium term prospects for Vetoryl in the US remain
good. Bloomsbury Publishing, publishers of the Harry Potter books, saw renewed
interest in its shares following an unjustifiably weak January. RDF Media,
independent TV producers and makers of programmes such as Scrap Heap Challenge,
acquired a Scottish production company (makers of programmes such as Location,
Location, Location) and hired some senior executives from ITV and elsewhere -
its shares responded positively. Chorion, a small holding, rights owners to the
Mister Men characters, Noddy, and a variety of grown-up entertainment such as
Miss Marple and Poirot, received a takeover proposal from 3i which pushed the
shares up over 30%. Rugby Estates, an entrepreneurially run owner and developer
of real estate saw a strong price rise as the market began to identify its
undervaluation relative to the sector.



There were no major upsets during the month.



New holdings in the month included W S Atkins and Emerald Energy. W S Atkins is
the leading UK listed engineering consultant with operations widely spread
globally. We have been impressed by its management and the shares are good value
and look set to move upwards. Emerald Energy has recovered well under new
management and has seen strong growth in oil production and cash generation, as
well as some interesting exploration territory, justifying a 0.5% of NAV
purchase.



The holding in Blacks Leisure was sold after a strong run by the shares. We rate
the management of this company highly, but remember the damage caused to Blacks
by foot and mouth disease as people avoided the countryside and stopped buying
walking gear. With bird flu becoming a possible concern, we decided to be
cautious. A number of small holdings were also sold or significantly reduced.





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).



9 March 2006


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