MONTANARO UK SMALLER COMPANIES INVESTMENT TRUST PLC: Interim Management Statement Montanaro UK Smaller Companies Investment Trust PLC ("MUSCIT") Interim Management Statement - 3 months to 31 December 2012 Investment Objective MUSCIT's investment objective is capital appreciation through investing in small quoted companies listed on the London Stock Exchange or traded on the Alternative Investment Market ("AIM") and to achieve relative outperformance of its benchmark, the FTSE SmallCap (excluding Investment Companies) Index ("SmallCap"). No unquoted investments are permitted. Benchmark FTSE SmallCap (excluding Investment Companies) Index Net Asset Value Performance 3 months 1 year 3 years 5 years Launch MUSCIT 2.7% 23.2% 65.2% 45.7% 375.3% (excluding current period revenue) Benchmark 7.5% 32.3% 23.0% (6.9)% 68.9% Outperformance (4.8)% (9.1)% 42.2% 52.6% 306.4% Performance Summary As at 31 As at 30 Movement December 2012 September 2012 Gross assets £174,292,129 £170,397,487 2.3% Net asset value per share 473.65p 460.65p 2.8% (including current period revenue) Share price 396.00p 369.00p 7.3% Discount 16.4% 19.9% Net gearing 8.3% 6.3% Period Review For the 3 months ended 31 December 2012: The NAV increased by 2.7% over the 3 months to the end of December 2012, compared with a 7.5% increase of its benchmark, the FTSE SmallCap. Outlook UK equity markets made good progress during the quarter, driven by the positive political momentum during the summer which culminated with the ECB's policy decision to buy peripheral bonds and a softening of Germany's pro-austerity rhetoric. Recently released fund flow data in the UK confirmed that, after four years of selling Europe, investors have started buying once again. UK SmallCap may benefit from institutions increasing their weightings in UK and Europe this year. Improving macro-economic data in the US and Developing Countries supports our view that global activity is recovering. Together with a more stable inflation environment, the improving economic outlook should support a continued re-rating of the stock market. Furthermore, after a year of earnings contraction, profits may improve as the year unfolds. We would expect this year that investors will see "normal" positive returns for UK SmallCap after a very strong 2012. The by-product of restored confidence since last summer has been an undisputed leadership of Value over Growth and of Low Quality over High Quality. Investors who are familiar with Montanaro will know that this is not a particularly favourable environment for our investment style which has performed well over many years. However, we remain firmly committed to investing only in the highest quality UK smaller companies and will happily leave more speculative names to others. While the clouds may be dispersing, credit remains largely unavailable to the weak. As always, quality will (should) eventually return to favour. We look forward to 2013 with cautious optimism. Montanaro Asset Management Limited 14 February 2013 Top Ten Holdings as at 31 December 2012 Company Sector % of total portfolio Victrex Chemicals 3.8 Dignity General Retailers 3.6 Brammer Support Services 3.5 James Fisher Industrial Transportation 3.3 Domino Printing Sciences Electronic and Electrical Equipment 3.3 Genus Pharmaceuticals and Biotechnology 3.2 Dechra Pharmaceuticals Pharmaceuticals and Biotechnology 3.1 Devro Food Producers 3.1 Renishaw Electronic and Electrical Equipment 3.0 Fenner Industrial Engineering 3.0 32.9 Industry Breakdown Sector % of total % of market portfolio Oil & Gas 4.4 4.4 Basic Materials 8.7 5.7 Industrials 39.9 35.8 Consumer Goods 6.5 7.9 Health Care 9.4 3.4 Consumer Services 7.6 21.3 Financials 11.5 15.5 Technology 12.0 6.0 100.0 100.0 Other than as stated above, the Directors are not aware of any significant events or transactions which have occurred between 31 December 2012 and the date of publication of this statement which have had a material impact on the financial position of the Company. For latest performance information, please refer to the Company's website. This Interim Management Statement and up to date NAV and share price are available at the Company's website www.montanarouksmaller.co.uk Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement. END -0- Feb/14/2013 16:17 GMT
MONTANARO UK SMALLER COMPANIES INVESTMENT TRUST PLC: Interim Management Statement
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