GSM Gart.Sml.Co

    Gartmore Smaller Companies Trust p.l.c.

Proposed merger with Standard Life UK Smaller Companies Trust plc

10 November 2008

Background

The Board of Gartmore Smaller Companies Trust p.l.c. (the `Company') has been
concerned for some time about the discount at which the Company's shares trade
relative to their net asset value. The Company also has one of the smaller
market capitalisations in the Association of Investment Companies UK Smaller
Companies sub-sector at approximately �40 million. In addition, the Board is
aware that some investors may wish to realise a proportion of their investment
in the Company in the near to medium-term.

Reviewing the Company's future

Accordingly, the Board has reviewed the Company's operations and its future
direction with its advisers, Winterflood Investment Trusts. The Board invited
proposals from a limited number of investment managers, including Gartmore
Investment Limited ('Gartmore'), which could preserve and enhance value in the
Company by:

  * potentially increasing the size of the Company;
   
  * improving and protecting the Company's rating;
   
  * reducing the Company's total expense ratio;
   
  * providing an orderly exit mechanism for investors who may want to realise
    all or part of their investment; and
   
  * restoring the Company as an attractive investment proposition for existing
    and new investors.
   
Proposed merger

The Board is pleased to announce that it has reached agreement with Standard
Life UK Smaller Companies Trust plc (`SLS') in respect of a merger of the
assets of the two companies to be effected through a scheme of reconstruction
and winding-up of the Company (the `Scheme'). The Scheme will be subject to,
amongst other things, the approval of both companies' shareholders at general
meetings, which will be held in the next few months. Under the Scheme, SLS will
be the continuing company and the Company's continuing shareholders will be
issued with new shares in the capital of SLS.

The Company is making this announcement with the approval of SLS.

The investment objective of SLS is to achieve long-term capital growth by
investment in UK quoted smaller companies. SLS's assets will continue to be
managed by Standard Life Investments Limited (the current investment manager of
SLS) ('SLI'). SLI is a leading asset management company with �123.6 billion
under management as at 30 September 2008. The SLI UK Smaller Company team
manages a number of smaller company funds with aggregate assets of �1.1 billion
as at 30 September 2008. SLS has been managed by Harry Nimmo since SLI was
appointed as its manager in September 2003. Since then, SLS been one of the top
ranking UK smaller company investment trusts and has significantly outperformed
its smaller company benchmark, the Extended Hoare Govett Smaller Companies
Index (ex Investment Companies), over one, three and five years.

Structure of the Scheme

Under the Scheme, if approved by shareholders in both companies:

  * the Company will be put into members' voluntary liquidation and its
    business and assets split into two funds in respect of the interests of
    continuing shareholders (the 'continuation fund') and exiting shareholders
    (the 'realisation fund') on the basis described below;
   
  * SLS will issue new continuation shares to shareholders wishing to remain
    invested in the enlarged company in exchange for the transfer to it of the
    assets comprised in the continuation fund;
   
  * exiting shareholders will retain their shares in the Company and receive
    cash distributions out of the realisation fund;
   
  * larger shareholders holding in excess of 10 per cent. of the Company's
    shares will be offered an in specie distribution;
   
  * shareholders will be entitled to elect to receive either continuation
    shares issued by SLS and/or a cash exit in respect of their investment in
    the Company, subject to the cash exit elections not exceeding 35 per cent.
    of the Company's total issued shares, excluding any shares elected for the
    in specie option; and
   
  * qualifying shareholders electing for the in specie option will be entitled
    to receive up to 100 per cent. of their interest in the Company in specie.
   
The assets of the Company will be split pro rata to each fund in proportion to
the respective elections save that an exit charge of 3 per cent. will be
deducted from the realisation fund, and from any in specie distribution, and
credited to the continuation fund towards the costs of the Scheme.

Both funds will be managed by SLI. Assets in the realisation fund will be
realised over a period of up to 12 months and quarterly distributions will be
made to realisation fund shareholders. Assets in the continuation fund will be
realigned in accordance with the SLS investment policy over a period of up to
12 months and continuation shares will be converted into new SLS ordinary
shares quarterly as the realignment process progresses. SLI will be required to
dispose of assets in the realisation fund and the continuation fund on the same
terms and at the same time.

The continuation shares will be listed, subject to satisfying the requirements
for listing of the listing rules of the UK Listing Authority.

SLI will charge an investment management fee of 0.4 per cent. per annum on the
value of the realisation fund and 0.8 per cent. per annum on the value of the
continuation fund.

Standard Life Investments' commitment

In connection with the Scheme, SLI has agreed to reduce its annual investment
management fee over the enlarged SLS to 0.65 per cent. per annum and introduce
a performance fee after conversion of all of the continuation shares. The
performance fee will be payable if SLS out-performs its benchmark by at least 1
per cent. per annum. The amount of the performance fee will be 20 per cent. per
annum of the enlarged SLS' outperformance above 1 per cent. over its benchmark,
capped at 0.6 per cent. per annum of the gross assets of SLS. The performance
fee will be subject to protections in respect of any underperformance.

SLI has agreed to make a contribution to the costs of Scheme equal to its
management fee on the continuation fund for a period of up to 9 months,
calculated on the value of the continuation fund immediately following the
implementation of the Scheme, which is expected to be paid by means of a
management fee waiver.

SLI intends to maintain a significant interest on behalf of its clients in the
enlarged SLS of up to 15 per cent. of the issued share capital following
implementation of the Scheme. In principle, SLI has indicated that it would be
prepared to acquire shares in the Company through the market prior to the
Scheme becoming effective. Any such purchases would be made at prevailing
market prices and would be expected to be made at a 15 per cent. or wider
discount to the published net asset value per share.

Discount policy for the enlarged SLS

The Board of SLS intends to seek authority from shareholders at each annual
general meeting to introduce a share redemption facility, to commence
approximately 18 months following the Scheme becoming effective, to allow SLS
to purchase up to 10 per cent. of its issued shares per annum at a discount of
2 per cent. to realisation value. The share redemption facility will be
available on a 6 monthly basis with any excess from the first 6 monthly share
redemption in any year available to be applied towards the share redemption in
the second half of that year. Unused share redemptions of up to 5 per cent. of
SLS's issued shares in any year will be carried forward to the next year and
therefore a maximum of 15 per cent. could be available in any year, subject to
the carry forward being available.

The Board of SLS will also aim to use its annual 14.99 per cent. share buy-back
authority to maintain a discount level of less than 10 per cent. on the
enlarged SLS ordinary shares under normal market conditions.

Direct Costs and Expenses

The direct costs of the Scheme are estimated to be approximately �1 million
(excluding portfolio realignment costs and stamp duty).

The contribution to the costs of the Scheme through the waiver of management
fees on the continuation fund by SLI, together with the realisation fund exit
charge, will be used to contribute towards the costs of the Scheme. Depending
on the size of the realisation fund, the Scheme is expected to have minimal
financial impact on continuing shareholders. The Scheme will not cause asset
dilution for SLS shareholders.

Board

Following the completion of the Scheme, two directors of the Company will join
the board of the enlarged SLS. Donald MacDonald, chairman of SLS, will remain
chairman of the enlarged SLS. Neil Dunn, one of the SLS directors, has
indicated his intention to resign as a director with effect from completion of
the Scheme. The board of the enlarged SLS will therefore comprise five
directors.

Support

The Board has consulted with the Company's major shareholders, holding in
aggregate approximately 60 per cent. of the Company's issued share capital, who
have all indicated their intention to vote in support of the Scheme and the
majority of whom will continue with a significant investment in the enlarged
SLS.

Benefits of the Scheme

The Board believes that the Scheme will have the following benefits for
shareholders in the Company:

  * it will allow shareholders wishing to re-invest in SLS to roll-over all or
    part of their investment in the Company into SLS in a tax-efficient and
    cost effective manner;
   
  * it will offer shareholders the opportunity to receive cash in respect of
    their investment in the Company over a period of up to 12 months and avoid
    forced selling of investments in current market conditions;
   
  * the return of cash and the conversion will be managed to maximise portfolio
    value, to minimise the costs for continuing shareholders and to be fair to
    those who choose to exit; and
   
  * continuation shareholders will have an investment in the enlarged SLS:
   
  * 
      + with a larger asset base than the Company;
       
      + with reduced basic management fee arrangements and total expense ratio;
       
      + managed by Harry Nimmo, one of the best performing managers in the UK
        smaller company sector; and
       
      + with a discount control mechanism to protect a level of 10 per cent.
        and a periodic exit route over 10 per cent. of the issued share capital
        in any 12 month period.
       
Expected Timetable

The Company expects to publish documents in connection with the implementation
of the Scheme during December 2008 to enable shareholders' approval to be
obtained in January 2009 for the Company to be placed into members' voluntary
liquidation. Shortly after this the in specie distribution would be made to
qualifying shareholders. It is expected that final realisations and conversions
would be made by late January 2010.

Completion of the Scheme will also be subject to the receipt of all necessary
regulatory approvals and tax clearances.

The record date for participation in the realisation fund or in specie
distributions has been set for 13 November 2008.

Enquiries:

Liam Kane

Chairman, Gartmore Smaller Companies Trust p.l.c.

020 7068 6960

Robin Archibald

Winterflood Investment Trusts

020 3100 0290

Winterflood Investment Trusts, which is authorised and regulated by the
Financial Services Authority, is acting for the Company and for no-one else in
connection with the contents of this announcement and will not be responsible
to anyone other than the Company for providing the protections afforded to
customers of Winterflood Investment Trusts, or for affording advice in relation
to the contents of this announcement or any matters referred to herein.

Dickson Minto W.S., which is authorised and regulated by the Financial Services
Authority, is acting for SLS and for no-one else in connection with the
contents of this announcement and will not be responsible to anyone other than
SLS for providing the protections afforded to clients of Dickson Minto W.S., or
for affording advice in relation to the contents of this announcement or any
matters referred to herein.

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