Interim Results

Montanaro UK Smlr Cos Inv Tst PLC
13 November 2001


               MONTANARO UK SMALLER COMPANIES INVESTMENT TRUST PLC

              PRELIMINARY ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS

The Directors announce the unaudited statement of results for the period 1
April 2001 to 30 September 2001 as follows:-

STATEMENT OF TOTAL RETURN
(incorporating the revenue account* of the Company)
                                                                    Restated**
                                          1 April 2001            1 April 2000
                                  to 30 September 2001    to 30 September 2000

                            Revenue  Capital     Total Revenue Capital   Total
                             £'000    £'000     £'000   £'000   £'000   £'000

Capital (losses)/gains on
investments                      -  (19,082)  (19,082)      -   4,139   4,139
Dividends and interest       1,227        -     1,227   1,090       -   1,090
Other income                     -        -         -       2       -       2
Investment management fee     (276)    (276)     (552)   (151)   (151)   (302)
Other expenses                (261)       -      (261)   (123)      -    (123)

Return before interest
and taxation                   690  (19,358)  (18,668)    818   3,988   4,806
Interest payable and
similar
charges                       (156)    (156)     (312)   (188)   (187)   (375)

Return on ordinary
activities
before and after taxation      534  (19,514) (18,980)     630   3,801   4,431

Return per ordinary share    1.34p  (48.88)p  (47.54)p  1.57p   9.48p  11.05p


*          The revenue column of this statement is the revenue account of the
Company.



**         The financial statements have been prepared using accounting
standards and policies adopted at the previous year end, except that with
effect from 1 April  2001, finance costs and the fixed fee payable to the
Investment Manager are to be charged 50% to the capital reserve - realised and
50% to the revenue account.  The performance fee is to be charged 100% to
capital. This is in line with the Board's expectations of long-term returns
from the investment portfolio of the Company. The comparative figures have
been restated to reflect this change.

SUMMARISED BALANCE SHEET


                                                                     Restated**
                                                       As at   As at      As at
                                                          30      31         30
                                                   September   March  September
                                                        2001    2001       2000
                                                      £'000   £'000      £'000

Fixed asset investments                              68,979   89,979    99,882
Net current assets                                    4,517    6,514     6,061
Long term credit facility                            (7,500) (7,500)    (7,500)

Net assets                                           65,996   88,993    98,443
Less current period revenue                            (534)       -     (630)

Net assets for the purpose of calculating the net
asset value
per ordinary share                                   65,462   88,993    97,813

Net asset value per ordinary share                   175.56p 221.92p    243.92p


**    See note under Statement of Total Return.

On 19 September 2001, the Company repurchased 1,125,000 ordinary shares at a
price of 144.5p per share. On 20 September 2001 the Company repurchased
1,688,470 ordinary shares at a price of 141.0p per share. The cost of the
shares repurchased has been charged to the special reserve and the repurchased
shares were subsequently cancelled.

SUMMARISED STATEMENT OF CASHFLOWS

                                               1 April 2001 to 1 April 2000 to
                                                  30 September    30 September
                                                          2001            2000
                                                         £'000           £'000

Net cash inflow from operating activities                  50             110

Servicing of finance
- Interest and similar charges paid                      (308)           (434)

Net cash outflow from servicing of finance               (308)           (434)

Capital expenditure and financial investment
- Purchases of investments                            (13,572)        (15,421)
- Sales of investments                                 15,384          21,586

Net cash inflow from capital expenditure
and financial investment                                1,812           6,165

Equity dividends paid                                    (120)           (120)

Financing
- Repayment of short term credit facility                   -          (7,500)
- Ordinary shares repurchased and cancelled            (4,017)              -
- Warrants repurchased and cancelled                        -              (7)

Net cash outflow from financing                        (4,017)         (7,507)

Decrease in cash                                       (2,583)         (1,786)



These financial statements are unaudited and are not the Company's statutory
accounts.   Full financial statements for the year ended 31 March 2001 include
an unqualified audit report and have been delivered to the Registrar of
Companies.

Chairman's Statement

Performance

Over the six months ended 30 September 2001, the Company's NAV outperformed
its benchmark, the SmallCap, by more than 4%, marking six and an half years of
consecutive outperformance.   This is an unique achievement.

However, in absolute terms the NAV declined by 21% over the past six months,
the second largest fall since the launch of the Company in March 1995.  The
largest decline followed the collapse of Long Term Credit Management, which
totalled a fall of 22% over the six-months ended 30 September 1998.

The performance of each of the past two quarters was markedly different.  In
the first quarter ended 30 June 2001, the Company's NAV increased by 1%
matching the performance of the SmallCap.  Since the start of the year, the
performance of UK large and small companies was almost identical.

This changed in the second quarter ended 30 September 2001.  Although the
Company's NAV outperformed by over 4%, the SmallCap fell by 25%.  As a result,
UK quoted small companies underperformed large companies over the past six
months by 12%.

By any standards, the sell-off in UK quoted small companies has been extreme.
As measured by the smallest 10% of the UK stock-market ('HGSC Index'), UK
quoted small companies fell by 18% in September 2001 alone, the second worst
month on record since index data started in January 1955 (the worst being a
fall of 23% in October 1987).  Remarkably, not a single sector posted a
positive return on the month (Source: ABN Amro).

Much of the decline reflected a flight to perceived liquidity due to global
economic concerns and in response to the tragic events in the US on 11
September 2001. It also confirmed a bear market (defined as a decline of 20%
or more) for the HGSC Index, which peaked eighteen months ago in March 2000.

Historical Perspective

Since the Second World War, there have been six quoted UK small company bear
markets and five recessions (defined as two consecutive quarters of declining
GDP). Pre-war bear markets typically lasted 35 months and saw declines of 49%
compared with declines of 37% over 20 months since.  'Investment led
recessions, which were common before the second world war, tend to be deeper
and to last longer because it takes longer to purge the financial excesses and
over-capacity than it does to tame inflation' (Source: Economist - 25 August
2001).

We are witnessing an investment (rather than consumer) led economic slowdown
resulting from over expansion in technology, media and telecommunication ('TMT
') companies, which has been financed by heavy borrowings.  Lowering interest
rates does little to remove excess capacity, a role typically fulfilled by
recessions and insolvencies.  Painful though it may be at the time, it is a
necessary and healthy means of removing excess from the system.  Since the
process takes time, it would not be surprising to see difficult market
conditions continue into the New Year.

Historical perspective provides some comfort in these uncertain times. 'What
in the past has really dented consumers' confidence, and turned mild bear
markets into severe recessions, is a failure in the banking system.  So far
there has been no sign of that outside Japan' (Source: Financial Times - 24/25
March 2001).

Interest Rates

In the UK, the base rate has been reduced seven times this calendar year and
currently stands at 4.0%, the lowest since January 1964.  The bond-equity
earnings yield (using 20-year gilt yields and non-financial equities) was just
0.9 on 5 October 2001 - its lowest level since 1980 and traditionally an
indication that equities are cheap.  If loss-making companies are excluded,
the ratio falls to the lowest level since 1975 (Source: Investors Chronicle).

In the US, the Federal Funds Rate has fallen from 6.5% at the end of the last
calendar year to 2.0%, the lowest since 1961.  US real interest rates are now
negative, an event that heralded the end of the great bear markets of 1930s,
1940s and 1970s.

Economic Outlook

Much of the present concern about the global economic outlook relates to the
US, where a weakening economy appeared vulnerable even before the terrorist
acts.  GDP fell at an annual rate of 0.4% in the third quarter of 2001, the
largest decline in a decade and the first in eight years.  The risk remains of
a full-blown US recession leading to further global economic slowdown.

However, in marked contrast to the US, the outlook for the UK economy remains
positive.  Currently, the UK economy is widely regarded as being amongst the
strongest in the world.  Unemployment is close to a 26 year low; the consensus
forecasts for UK GDP growth in 2001 and 2002 are 1.9% and 2.1% respectively
(Source: ING Barings Global Economics 4Q01); mortgage and consumer demand
remains buoyant (new car sales in September increased by 25%), fiscal policy
and infrastructure budgets are expansionary.  UK small companies should reap
the benefits of exposure to a healthy domestic economy.

Nonetheless, quoted UK companies have been impacted by the slowdown in the US
and by the necessary adjustment to unrealistic expectations in TMT sectors.
Over the three months ended 30 September 2001, there were 182 profit warnings
compared to 78 a year earlier (Source: Hemscott) and 58% of UK earnings
forecasts were downgraded (Source: Merrill Lynch).  Further profit warnings
are likely, reinforcing the need (as always) for careful stock selection.

Outlook

This present bear market in quoted UK small companies is already over eighteen
months old and is getting long in the tooth.  The HGSC Index has fallen by 38%
over this time, the third largest post-war decline.  The TMT bubble has been
well and truly burst with the majority of TMT companies trading at valuations
lower than before the boom began.  From the peak in early March 2000, the
media sector has fallen by 65%, telecommunications by over 70%, software by
88% and hardware by 93%.  Much of the earlier overvaluation has been reversed.

For quoted UK small companies to significantly extend their recent falls,
investors will need to believe in either a real world shock such as a 400%
increase in the oil price as seen in 1973/4 or a recession/property collapse
comparable to 1987-91.  Neither event currently appears likely.

The collapse of Long Term Credit Management three years ago triggered a fall
in the quoted UK small company market almost identical in scale to the recent
decline.  In 1998, market sentiment was negative due to prevailing concern
about the risks of a recession - which never materialised.  From the third
calendar quarter of 1998, quoted UK small companies recorded no less than
eight consecutive quarters of positive returns.

Following marked declines last month, valuations of quoted UK small companies
have become more compelling.  As measured by the HGSC Index (excluding
investment companies), quoted UK small companies are trading at a price/
earnings ratio of 11.6x and yield 3.3%.  There are many attractive investment
opportunities as a result of a flight to perceived liquidity that has left
many UK quoted small companies abandoned and lowly rated.

C Brandon Gough

Chairman

13 November 2001