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Sgr & Frdlndr AIM 3 (VICT)

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Tuesday 27 April, 2004

Sgr & Frdlndr AIM 3

Final Results

Singer & Friedlander AIM 3 VCT PLC
27 April 2004



Singer & Friedlander AIM 3 VCT plc

Performance Summary

Total net assets of £31,372,256 (2003: £24,775,064)

Net asset value per share 95.38p (2003: 75.21p)

Net dividends of £82,227 for the year (2003: £263,527)

Dividend per ordinary share 0.25 pence (2003: 0.80 pence)

Qualifying investments 77% of the current investment portfolio (2003: 56.49%)

Total dividends to date: 2.75p





Chairman's Statement

I am delighted to present my first annual report to shareholders as Chairman of
your company. At the interim stage we had started to see a recovery in the stock
market. I am pleased to report that the recovery has continued and gathered
pace, particularly in the smaller companies sector including AIM.

During the second half of the year the AIM Index rose by 31.2%, giving a rise of
53.0% for the year. Over the same periods our qualifying listed investments
increased in value by 40.6% and 61.1% respectively. However, as we continue to
hold approximately 27% of our portfolio in fixed interest securities, unquoted
investments and cash the increase in our net asset value was not as good. The
net asset value increased by 21% in the second half and by 26.8 % for the year.
It is, however, encouraging to note that since the Trust's launch in February
2001 the AIM index has declined by nearly 35%, whilst the net asset value of the
Trust (including dividend payments) has increased by 3%.

It is a requirement of the inland revenue that 70% of our funds are invested in
'qualifying investments' by our third anniversary. This requirement was met with
77% invested in 'qualifying investments' on the 31st January 2004.

The Board is recommending a dividend of 0.25p per share for the year, this is
less than the previous year due to the lower exposure to fixed interest
securities. As and when substantial gains are made it is the Board's intention
to return these gains to shareholders by recommending enhanced dividend
payments. Further information on our progress is contained in the Manager's
Report.

The investment environment has improved considerably over the last year and the
outlook for the current year appears favourable. Your Board believes that your
Company's portfolio is well placed to benefit from further market recovery and
an improving economy.

C J L Moorsom

Chairman



Manager's Report

Our portfolio now comprises holdings in 46 'qualifying' companies engaged in a
wide variety of activities, 5 are currently unquoted, 3 are listed on OFEX, and
the remaining 38 are quoted on the Alternative Investment Market. There is a
brief description of each of our investments later in this report. We have seen
an excellent performance from our quoted equity portfolio during the year as
investor confidence has returned and markets have rallied. Following the strong
performance of several shares including Centurion Electronics (+189%), ID Data
(+173%), Knowledge Technology Solutions (+325%) and Ringprop (+142%) we have
taken some profits. These totalled some £460,000 for the year. We anticipate
taking further profits during the new financial year if share prices continue to
rise. Our unquoted portfolio has experienced mixed fortunes, we have benefited
from one successful IPO, however, as reported at the interim stage three other
holdings have been written down in value.

The market background is more buoyant than we have seen for several years and
new issue activity is healthy. We believe valuations remain attractive and we
anticipate markets, particularly the AIM, making further progress.

A N Banks

Singer & Friedlander Investment Management Limited

Investment Portfolio Summary


  AIM Quoted           Sector              Nature of                Cost at   Valuation at  Percentage      Percentage
  Companies                                business            acquisition                          of      of company
                                                                              31st January    portfolio     managed by
                                                                                                            Investment
                                                                                     2004                     Manager 

                                                                         £              £             %             % 

  AERO Inventory       Aerospace &         Distribution of         481,041        898,361          2.86          8.44 
                       defence             aircraft                                                                   
                                           components                                                                 

  Asfare Group         Engineering &       Manufacturer of         321,393        363,174          1.16         15.00 
                       machinery           ladders for                                                                
                                           rescue services                                                            

  Blooms of            General retailers   Garden centres          470,000        304,823          0.97          7.57 
  Bressingham                                                                                                         

  Capcon Holdings      Speciality &        Audit,                  700,000        585,813          1.87         12.97 
                       other finance       stocktaking and                                                            
                                           commercial                                                                 
                                           investigation                                                              
                                           services                                                                   

  Cardpoint            Speciality &        Independent ATM         475,844      1,546,494          4.93          4.37 
                       other finance       deployer                                                                   

  Centurion            Automobiles &       Conception,             271,950        983,553          3.14          3.92 
  Electronics          parts               design,                                                                    
                                           marketing &                                                                
                                           distribution of                                                            
                                           in-car                                                                     
                                           audio-visual                                                               
                                           products                                                                   

  CMS Webview          Media &             Real-time               401,674        532,218          1.70          6.75 
                       entertainment       market data                                                                
                                           collection,                                                                
                                           processing and                                                             
                                           distribution                                                               

  Corpora              Software &          Research,               375,000        675,000          2.15         10.72 
                       computer services   development &                                                              
                                           sale of                                                                    
                                           knowledge                                                                  
                                           discovery                                                                  
                                           technologies                                                               

  First Artist Corp    Media &             Sports                  400,000         21,000          0.07          3.62 
                       entertainment       management                                                                 
                                           company                                                                    

  Fulcrum              Pharmaceuticals &   Customised              279,532        227,879          0.73          2.52 
  Pharmaceuticals      biotechnology       global drug                                                                
                                           development                                                                
                                           solutions                                                                  

  Glisten              Food producers &    Manufacturer of         355,143        941,129          3.00          7.49 
                       processors          confectionery                                                              
                                           products                                                                   

  Huveaux              Media &             Aims to build a         857,739      1,655,399          5.28          7.52 
                       entertainment       broadly based                                                              
                                           media and                                                                  
                                           related                                                                    
                                           services group                                                             
                                           by means of                                                                
                                           acquisition                                                                

  ID Data              Information         Provider of             348,250        525,000          1.67          4.75 
                       technology          corporate smart                                                            
                       hardware            cards                                                                      

  Imprint Search &     Support services    Recruitment             480,000        570,000          1.82          7.82 
  Selection                                services                                                                   

  Intellexis*          Support services    Provider of             324,960        324,960          1.03          5.89 
                                           financial &                                                                
                                           business skills                                                            
                                           learning                                                                   
                                           solutions                                                                  

  Knowledge            Media &             Live UK                 127,362        541,289          1.73          7.63 
  Technology           entertainment       financial news                                                             
                                           and data                                                                   
                                           products                                                                   

  Kuju                 Software &          Developer of            399,999        108,333          0.35          4.97 
                       computer services   interactive                                                                
                                           games software                                                             

  Lloyds British       Support services    Provision of            362,400        212,136          0.68          7.70 
  Testing                                  lifting                                                                    
                                           equipment                                                                  
                                           testing                                                                    
                                           services                                                                   

  Lo-Q                 Leisure & hotels    Theme park              760,000         50,350          0.16          5.84 
                                           guest services                                                             
                                           systems                                                                    

  Medal                Media &             Creation &              417,509        536,034          1.71          9.74 
  Entertainment &      entertainment       exploitation of                                                            
  Media                                    intellectual                                                               
                                           property rights                                                            
                                           through                                                                    
                                           acquisition                                                                

  Mediwatch            Health              Design,                 696,950        594,494          1.89         11.92 
                                           manufacturing                                                              
                                           and marketing                                                              
                                           of medical                                                                 
                                           diagnostic                                                                 
                                           services                                                                   

  Monstermob Group     Media &             UK mobile phone         141,750        189,525          0.60          0.44 
                       entertainment       entertainment                                                              
                                           content                                                                    
                                           provider                                                                   

  NWD Group            Media &             Marketing               466,750        547,534          1.74         13.87 
                       entertainment       services                                                                   
                                           business                                                                   

  Oasis Healthcare     Health              Dental                  631,180        386,598          1.23          7.00 
                                           healthcare                                                                 
                                           provider                                                                   

  Pixology             Software &          Developer of            399,000        460,275          1.47          1.43 
                       computer services   digital photo                                                              
                                           printing                                                                   
                                           software                                                                   
                                           solutions                                                                  

  PM Group             Transport           Design,                 679,232      1,406,010          4.48          6.61 
                                           manufacture &                                                              
                                           service of on                                                              
                                           board vehicle                                                              
                                           weighting                                                                  
                                           systems                                                                    

  Prezzo               Leisure & hotels    Restaurant              403,610        723,454          2.31          3.69 
                                           operator                                                                   

  Proactive Sports     Media &             Football                390,000        109,200          0.34          1.36 
                       entertainment       management and                                                             
                                           marketing                                                                  
                                           services                                                                   
  Quadnetics**         Electronic &        Design,                 225,632        225,632          0.72          2.10 
                       electrical          integration &                                                              
                       equipment           control of                                                                 
                                           advanced CCTV &                                                            
                                           networked video                                                            
                                           systems                                                                    

  Real Good Food       Food producers &    Prepared foods          596,113        804,395          2.56          5.46 
  Company              processors          manufacturer                                                               

  Ringprop             Engineering &       Production &            431,999      1,242,828          3.96          5.66 
                       machinery           marketing of                                                               
                                           new marine                                                                 
                                           propeller                                                                  

  Symphony Plastic     Chemicals           Manufacturer of         349,339        460,933          1.47          4.56 
  Technology                               fully                                                                      
                                           degradable                                                                 
                                           plastic carrier                                                            
                                           bags                                                                       

  Synergy Healthcare   Health              Medical support         481,280        985,120          3.14          2.67 
                                           services                                                                   

  Tanfield Group       Support services    Graphical               737,403         15,642          0.05          1.10 
                                           imaging onto 3D                                                            
                                           products                                                                   

  The Clapham House    Leisure & hotels    Acquiring &             237,600        288,684          0.92          2.28 
                                           developing                                                                 
                                           small                                                                      
                                           restaurants                                                                

  Tikit Group          Software &          IT consultancy          400,000        405,217          1.29          2.89 
                       computer services   services and IT                                                            
                                           solutions                                                                  

  Tissue Science       Health              Medical device          744,600        510,000          1.63          2.31 
  Laboratories                             company for                                                                
                                           surgical                                                                   
                                           implants                                                                   

  UBC Media Group      Media &             Content                 409,908        524,095          1.67          1.60 
                       entertainment       supplier to                                                                
                                           radio, internet                                                            
                                           & digital tv                                                               

  Vianet Group         Information         Remote                  450,000        604,167          1.93         10.04 
                       technology          monitoring of                                                              
                       hardware            vending                                                                    
                                           machines                                                                   

  Xpertise             Support services    Provision of IT         485,179        318,482          1.01         19.40 
                                           training                                                                   
                                           exercises                                                                  
                                                                17,967,321     22,405,230         71.42               

All investments are in ordinary shares unless otherwise stated 
 

                                                                                                                      
  OFEX Quoted     Sector              Nature of business          Cost at     Valuation     Percentage     Percentage
  Companies                                                   acquisition            at   of portfolio     of company
                                                                                   31st                    managed by
                                                                                January                    Investment
                                                                                   2004                       Manager
 
                                                                        £             £              %              % 

  Aquilo          Speciality &        Accident                    589,375        94,249           0.30          11.34 
                  other finance       management                                                                      
                                      services                                                                        

  Flying          Leisure & hotels    Owner of a steam            400,800        15,012           0.05           9.69 
  Scotsman                            locomotive                                                                      

  Music           Media &             Exploitation of             375,000       573,530           1.83          19.62 
  Copyright       entertainment       music catalogues                                                                
  Solutions                           and royalty                                                                     
                                      administration                                                                  

                                                                1,365,175       682,791           2.18                

All investments are in ordinary shares unless otherwise stated 

*This holding represents placing shares not yet admitted to trading on AIM as at 
31st January 2004. Admission of these shares onto AIM occurred on 24th 
February 2004.  

**This holding represents placing shares not yet admitted to trading on AIM as 
at 31st January 2004. Admission of these shares onto AIM occurred on 19th 
February 2004. 

                                                                                                                      
   Private              Sector          Nature of              Cost at    Valuation at    Percentage of     Percentage
 Companies                               business          acquisition    31st January        portfolio     of company
                                                                                  2004                      managed by
                                                                                                            Investment
                                                                                                               Manager 

                                                                     £               £               %              % 

  Checkout           Software &       Provider of              408,819         408,819            1.30           2.80 
  Holdings           computer         EPOS systems                                                                    
                     services                                                                                         

  Checkout           Software &       Provider of               45,000          45,000            0.14          20.00 
  Holdings (loan     computer         EPOS systems                                                                    
  stock) 2007        services                                                                                         

  Flexbenefits       Software &       Employee                 517,500         129,375            0.41           8.27 
                     computer         benefits &                                                                      
                     services         financial                                                                       
                                      services                                                                        

  ITS Ecco           Support          Electronic               400,000         314,655            1.00           9.39 
                     services         trading                                                                         
                                      software                                                                        

  Lilestone          General          Lingerie                 405,000         405,000            1.29          16.41 
                     retailers        design and                                                                      
                                      retail                                                                          

  U4EA               Information      Data transfer            374,989          36,201            0.12          16.86 
                     technology       management                                                                      
                     hardware                                                                                         

  U4EA (preference   Information      Data transfer            404,581         407,581            1.30          12.57 
  shares)            technology       management                                                                      
                     hardware                                                                                         
                                                             2,555,889       1,746,631            5.56                

All investments are in ordinary shares unless otherwise stated 

                                                                                                                      


Other qualifying          Sector          Nature of             Cost at   Valuation at   Percentage of   Percentage of
     investments                           business         acquisition                      portfolio         company
                                                                          31st January                      managed by
                                                                                                            Investment
                                                                                 2004                          Manager 

                                                                     £              £               %               % 

  ID Data Conv       Information       Provider of             225,000        225,000            0.72            8.99 
  Loan Stock         technology        corporate                                                                      
                     hardware          smart cards                                                                    

  Tanfield Group     Support           Graphical               250,000        250,000            0.80           16.46 
  8.5% Loan          services          imaging onto                                                                   
  Stk                                  3D products                                                                    

  Xpertise Group     Support           Provision of            200,000        200,000            0.64          100.00 
  Loan Stock         services          IT training                                                                    
                                       exercises                                                                      
                                                               675,000        675,000            2.16                 

All investments are in ordinary shares unless otherwise stated 



                                                                                                                      
  Fixed interest             Sector        Nature of                 Cost at    Valuation    Percentage    Percentage
      securities                            business             acquisition           at            of    of company
       and other                                                                     31st     portfolio    managed by
  non-qualifying                                                                  January                  Investment
     investments                                                                     2004                     Manager 

                                                                          £             £             %             % 
  Debentures and                                                                                                      
  loan stocks                                                                                                         

  BK NED                                                            510,051       510,250          1.63         0.482 
  Gemeenten****                                                                                                       

  6.375% MTN                                                                                                          
  30/3/2005                                                                                                           

  Euro Inv                                                        1,118,922     1,128,985          3.60         0.058 
  Bank****                                                                                                            

  6.125% BDS                                                                                                          
  7/12/2005                                                                                                           

  KFW INTL                                                        1,987,805     2,008,900          6.40         0.942 
  Finance****                                                                                                         
  5.5% GTD MTN                                                                                                        
  18/6/2004                                                                                                           

  Lloyds TSB Bank                                                 1,011,722     1,005,625          3.20         1.468 
  6% NTS 7/6/2004                                                                                                     
                                                                  4,628,500     4,653,760         14.83               

  Other                                                                                                               
  non-qualifying                                                                                                      
  investments                                                                                                         

  Aquilo Loan        Speciality & other    Accident                  62,500        62,500          0.20         50.00 
  Notes 2002         finance               management                                                                 
                                           services                                                                   

  Aquilo Conv Loan   Speciality & other    Accident                 120,000       120,000          0.38        100.00 
  Notes 2003         finance               management                                                                 
                                           services                                                                   

  Aquilo Loan        Speciality & other    Accident                 225,000       225,000          0.72         50.46 
  Notes 2004         finance               management                                                                 
                                           services                                                                   

  Blooms of          General retailers     Garden centres           384,993       249,690          0.80          7.57 
  Bressingham                                                                                                         

  Blooms of          General retailers     Garden centres            20,007        17,010          0.05         23.95 
  Bressingham                                                                                                         
  (warrants)                                                                                                          

  Checkout           Software & computer   Provider of              233,333       233,333          0.74         31.11 
  Holdings (loan     services              EPOS systems                                                               
  stock) 2004                                                                                                         

  Medal              Media &               Creation &                51,168        87,840          0.28          9.74 
  Entertainment &    entertainment         exploitation of                                                            
  Media                                    intellectual                                                               
                                           property rights                                                            
                                           through                                                                    
                                           acquisition                                                                
                                                                  1,097,001       995,373          3.17               

  Investments held                                                                                                    
  at nil                                                                                                              
  valuation***                                                                                                        

  Coinmaster         Leisure & hotels      Production of            350,000             -             -             - 
  Gaming                                   electronic                                                                 
                                           gaming machines                                                            

  Exertris           Software & computer   Developer of             503,445             -             -             - 
                     services              exercise bikes                                                             

  Exertris Conv      Software & computer   Developer of             100,000             -             -             - 
  Debt               services              exercise bikes                                                             
  Firmgrowth         Software & computer   Student careers          250,000             -             -             - 
                     services              directory &                                                                
                                           internet portal                                                            

  Global Money       Speciality & other    Money transfer           300,000             -             -             - 
  Transfer (loan     finance               service                                                                    
  notes)                                                                                                              

  Monotub            Household goods &     Washing machine          260,000             -             -             - 
  Industries         textiles              manufacturer                                                               

  Recycled Waste     Support services      Environmental            374,994             -             -             - 
                                           control                                                                    
  Stanhope Telecom   Telecommunication     Telecom                  500,000             -             -             - 
                     services              products                                                                   
                                                                  2,638,439             -             -             - 

***These stocks are in liquidation and , with the exception of Exertris and
Global Money Transfer, they are shown within the Investment Portfolio Summary
since they count towards the VCT investment test which states that 70% of the
Company's assets will be invested in VCT qualifying investments by January 2004.
 

****All investments listed on pages 6 to 7 are incorporated and quoted within
the UK with the exception of these holdings. BK NED Gemeenten 6.375% MTN
30/3/2005 is incorporated in the Netherlands and quoted in Luxembourg. KFW INTL
Finance 5.5% GTD MTN 18/6/2004 is incorporated in the USA and quoted in
Luxembourg. Euro Inv Bank 6.125% BDS 7/12/2005 is incorporated in the UK and
quoted in Luxembourg. 
 

                                                                                                                  
      Summary                                     Cost at acquisition     Valuation at    Percentage of portfolio 
                                                                          31st January                             
                                                                                  2004  
                          
                                                                    £                £                          % 

      Total qualifying portfolio                           22,563,385       25,509,652                      81.32 

      Fixed interest/non-qualifying portfolio               5,725,501        5,649,133                      18.00 

      Investments held at nil valuation                     2,638,439                -                          - 

      Sub total                                            30,927,325       31,158,785                      99.32 

      Net current assets                                            -          213,471                       0.68 

      Total                                                30,927,325       31,372,256                     100.00 
 
 
Table of largest ten investments by value. 

                                                                                                                      
       Name of          Percentage of      Percentage      Profit/(loss)          Retained    Net asset    Accountiing 
  undertaking               portfolio         held by        before tax            profit/        value      Reference 
                                              company                         (accumulated                        Date 
                                                                                     loss)                 
            
                                  %                %             £000's            £000's       £000's         £000's 

  KFW INTL Finance              6.40                -                  -                 -            -              -
  5.5% GTD MTN                                                                                                        
  18/6/2004                                                                                                           

  Huveaux                       5.28             4.03              1,205               473       21,585       31/12/03

  Cardpoint                     4.93             3.84              (608)           (2,869)        6,942       30/09/03

  PM Group                      4.48             5.23              1,178             1,097        5,928       30/06/03

  Ringprop                      3.96             5.59              (964)             (868)        6,471       30/09/03

  Euro Inv Bank                 3.60                -                  -                 -            -              -
  6.125% BDS                                                                                                          
  7/12/2005                                                                                                           

  Lloyds TSB Bank               3.21                -                  -                 -            -              -
  6% NTS 7/6/2004                                                                                                     

  Synergy                       3.14             1.70              2,344             2,264       23,893       31/03/03
  Healthcare                                                                                                          

  Centurion                     3.14             3.92              1,180               620        4,318       30/09/03
  Electronics                                                                                                         

  Glisten                       3.00             4.88              1,055               638        6,030       30/06/03

The aggregate value of these top ten holdings is £12,904,043.

All figures are taken from the most recently available audited accounts of the 
underlying entity.  

*All the above fixed interest investments are AAA rated except for Lloyds TSB 
Bank which has a split rating. 

                                                                                                                
        Sector analysis                         Cost at acquisition     Valuation at     Percentage of portfolio 
                                                                        31st January                             
                                                                                2004                            

                                                                  £                £                          % 

        Aerospace & defence                                  481,041          898,361                       2.86

        Automobiles & parts                                  271,950          983,553                       3.14

        Chemicals                                            349,339          460,933                       1.47

        Electronic & electrical equipment                    225,632          225,632                       0.72

        Engineering & machinery                              753,392        1,606,002                       5.12

        Food producers & processors                          951,256        1,745,524                       5.56

        General retailers                                  1,280,000          976,523                       3.11

        Health                                             2,554,010        2,476,211                       7.89

        Information technology hardware                    1,802,820        1,797,949                       5.73

        Leisure & hotels                                   1,802,010        1,077,500                       3.44

        Media & entertainment                              4,038,860        5,317,664                      16.95

        Pharmaceuticals & biotechnology                      279,532          227,879                       0.73

        Software & computer services                       2,778,651        2,465,353                       7.86

        Speciality & other finance                         2,172,719        2,634,055                       8.40

        Support services                                   3,239,942        2,205,876                       7.03

        Transport                                            679,232        1,406,010                       4.48

        Fixed interest investments                         4,628,500        4,653,760                      14.83

        Suspended/delisted/liquidated stocks               2,638,439                -                          -

        Sub total                                                                                               

        Net current assets                                        -           213,471                       0.68

        Total                                            30,927,325        31,372,256                     100.00 



                                                                                                                      
  AERO Inventory                        Aero Inventory is primarily engaged in procurement and inventory management   
                                        for the aerospace industry. The company has consistently won new business     
                                        since its admission to AIM, and has recently signed a new contract with SR    
                                        Technic, one of Europe's largest aircraft repair and maintenance              
                                        organisations. Profits in the year to June 2003 were up 74% and the dividend  
                                        was increased by 23%.                                                         

  Aquilo (formerly Accidentcare)        Aquilo has been formed from the merger of Ecom Group and Accidentcare.        
                                        Accidentcare provides a wide range of motor accident management related       
                                        services to individuals via brokers, affinity groups and insurers. It also    
                                        provides outsource claims management services to insurers and corporates.     
                                        Ecom specialises in providing smart IT solutions to the financial services    
                                        sector. Its services include academic research and development, consultancy,  
                                        project management and systems design/ build.                                 

  Asfare Group                          Asfare is the UK's leading manufacturer of ladders for the rescue services.   
                                        It is also involved in the manufacture of gantries and ancillary equipment to 
                                        both UK and overseas customers. The company has identified several potential  
                                        additional products which it could supply to its customers and intends to     
                                        pursue these opportunities.                                                   

  Blooms of Bressingham                 Following the disposal of its smaller sites Blooms now operates seven retail  
                                        garden centres. It also has one greenfield site awaiting development. Blooms  
                                        is active in the development of new plant varieties, having won a total of 24 
                                        gold medals at Chelsea. The company received a takeover approach last year    
                                        although acceptable terms could not be agreed.                                

  Capcon Holdings                       Capcon provide audit, stocktaking and investigation services. The company     
                                        came to AIM two years ago with an experienced management team keen to grow    
                                        both organically and via acquisition. This is evidenced by the purchases of   
                                        VSA and Argen so far.                                                         

  Cardpoint                             Cardpoint is an independent owner and operator of over 1700 ATMs in the UK.   
                                        The company makes a modest charge for cash withdrawals with the customer's    
                                        permission. The group is a member of LINK and its machines are typically      
                                        located in areas not served by the banks.                                     

  Centurion Electronics                 Centurion is a UK market leader in the field of in-car audio-visual           
                                        entertainment. It focuses on the design, marketing and distribution of DVD,   
                                        video and the latest LCD monitors. The systems can be fully integrated or may 
                                        be portable 'plug and play' products.                                         

  Checkout Holdings (unquoted)          The company offers electronic point of sale terminals primarily for the       
                                        licensed trade and fast food restaurant operators. The company has a 'blue    
                                        chip' client base and has recently signed a large contract with Mitchells and 
                                        Butlers. Currently unlisted, the company intends either coming to the market  
                                        when conditions allow or seeking a trade buyer. The shares are valued at the  
                                        price of the last equity issue in December 2002.                              

  CMS Webview                           CMS has developed extensive expertise in the area of real-time financial      
                                        market data collection, processing and distribution. Customers include the    
                                        London Metal Exchange and the Chicago Board of Trade. CMS also has the        
                                        European rights to distribute ProphetX, a PC based price reporting service.   

  Corpora                               Corpora's principal activity is the research, development and sale of the     
                                        document navigation system Jump! The core of Jump! is an in-document          
                                        navigation tool enabling users to search within and between multiple          
                                        documents to find information pertinent to them. Particular applications are  
                                        envisaged in defence and security.                                            

  Exertris (unquoted)                   The company developed and marketed an exercise bike which incorporates a PC   
                                        and monitor to allow the user to play computer games whilst exercising. The   
                                        amount of effort put in on the machine controls what happens on the computer  
                                        screen. Due to the harsh industry conditions the company decided to try to    
                                        sell the business to a larger company, unfortunately these negotiations were  
                                        unsuccessful and due to lack of funds liquidators have been appointed. We     
                                        have written off the value of our investment.                                 

  First Artist                          First Artist is a leading European management and representation company      
                                        looking after the commercial interests of footballers and other high profile  
                                        personalities in the football and television market.                          

  Flexbenefits                          Flexbenefits has developed a system for the management, delivery and          
  (formerly Eurobenefits) (unquoted)    communication of employee benefit and financial services information in the   
                                        UK. These services enable employers to reduce costs and improve employee      
                                        communication and understanding. Following the sale of the UK rights to the   
                                        product to Aegon the company has carried out a share buyback, which should    
                                        enhance shareholder value. The shares are valued on the basis of a discount   
                                        to guaranteed future revenues                                                 

  Flying Scotsman                       The group owns the famous steam locomotive built in 1923 and recently         
                                        restored it to original condition. The asset is used for rail excursions      
                                        whilst the brand name is also exploited for merchandise and other licensing   
                                        opportunities. Following the failure to negotiate a suitable site to exhibit  
                                        the Scotsman the company has recently announced the sale of the locomotive    
                                        for a sum in excess of bank debt. We are unsure as to the future of the       
                                        company and have therefore written down the value of the shares (traded on    
                                        OFEX) to our estimate of net asset value.                                     

  Fulcrum Pharma                        Fulcrum Pharma offers global virtual drug development and strategic           
                                        outsourcing services to the pharmaceutical and biotechnology industries. The  
                                        company has offices in the UK, USA and Japan offering global solutions across 
                                        the full length of the drug development value chain.                          

  Glisten                               The company was admitted to AIM in June 2002 with the objective of building a 
                                        food group focusing on niche sectors. The acquisition of Glisten              
                                        Confectionery based in Blackburn was made at this time. It is a manufacturer  
                                        of chocolate and sugar based confectionery, edible decorations and            
                                        ingredients. It serves a wide range of customers including many high street   
                                        retailers and the foodservice and export sectors. The acquisition in January  
                                        of Fravigar is highly complimentary in terms of product range and introducing 
                                        new customers and should enhance earnings.                                    

  Huveaux                               Huveaux listed on AIM in December 2001 with the intention of making           
                                        acquisitions in the media sector. The experienced management team acquired    
                                        Vacher Dodd, the leading publisher of parliamentary directories in July 2002  
                                        and educational publisher Lonsdale last March. In September Huveaux purchased 
                                        Fenman, a publisher of educational materials. Trading performance has been    
                                        encouraging.                                                                  

  ID Data                               ID Data is a supplier of secure transaction systems and services to the       
                                        international telephone, banking and retail industries. Exporting to more     
                                        than 30 countries, ID Data is a leading UK based manufacturer of smart cards. 

  Imprint Search & Selection            Imprint is establishing a business in the high value permanent recruitment    
                                        market. The founders of the business have impressive track records in this    
                                        market, having previously built up and sold a similar business. The company   
                                        is aiming to establish itself in several industries including financial       
                                        services, marketing and accounting. Maiden profitability was achieved in 2003.

  Intellexis                            Intellexis is a financial training company involved in financial awareness    
                                        training for non-financial managers. The company has a blue chip client base  
                                        from the UK, USA and Europe and has an extensive library of e-learning        
                                        courseware. They have recently acquired Key Skills Ltd which adds vital       
                                        marketing and distribution capabilities.                                      

  ITS Ecco (unquoted)                   The Company is a leading supplier of electronic trading software to           
                                        electronic exchanges and trading companies in the derivatives market.         
                                        Eccoware is a flexible set of products designed to fulfil the specific        
                                        requirements of traders and brokers, connecting transparently via a generic   
                                        interface to major electronic exchanges. The shares are valued on the basis   
                                        of a fundraising in July 2003.                                                

  Knowledge Technology Solutions        KTS is a software company using proprietary technology to develop and provide 
                                        real-time interactive market data in a reliable, cost effective manner        
                                        primarily over the internet. In contrast to other providers, the system does  
                                        not require any dedicated hardware, software or infrastructure but will work  
                                        on a standard PC. The service is aimed mainly at the professional user but is 
                                        also affordable for private investors wanting a more sophisticated service.   

  Kuju                                  Kuju is a leading interactive entertainment developer, producing games on a   
                                        range of platforms including PC, console (Playstation2, Xbox and GameCube),   
                                        mobile 'phones and interactive TV. Current titles include Fireblade and Fire  
                                        Warrior.                                                                      

  Lilestone (unquoted)                  Lilestone has established the Myla brand of lingerie. The company is          
                                        designing its own brand products as well as sourcing product from other       
                                        designers throughout the world. The products are being sold via mail order,   
                                        the internet, through conventional retail channels such as Selfridges and the 
                                        company's own stores. Maiden profitability is expected during the current     
                                        year. The shares are valued on the basis of the last funding round in July    
                                        2003.                                                                         

  Lloyds British Testing                Lloyds British is one of the leading companies within the field of lifting    
                                        equipment engineering. It is active in inspection and testing, short-term     
                                        supply repair and renovation, crane and lift maintenance, and training. It    
                                        has 19 locations in the UK.                                                   

  Lo-Q                                  Lo-Q has developed a queue management system that places visitors to theme    
                                        parks in 'virtual queues', reducing the time that customers spend physically  
                                        waiting in line for key rides to a few minutes, enabling them to enjoy, and   
                                        spend money on the other attractions in the park. A lower cost version of the 
                                        product has recently been introduced and is expected to increase Lo-Q's       
                                        available market.                                                             

  Medal Entertainment & Media           Medal was established by an experienced management team to build a group      
                                        actively participating in the creation, exploitation and ownership of         
                                        audio-visual copyrights. The company currently has two subsidiaries,          
                                        Leisureview, a specialist video/DVD publisher and Fountain Television, the    
                                        largest fully-equipped independent TV studio in the UK.                       

  Mediwatch                             Mediwatch is a medical diagnostic equipment company that is developing high   
                                        speed urological screening equipment. The company's products are designed to  
                                        enable early detection of prostate and bladder cancers for the fast growing   
                                        primary care market. The company has chosen Bard as its marketing partner for 
                                        the Portascan product.                                                        

  Monstermob                            Monstermob provides mobile phone content such as ringtones, competitions,     
                                        wallpapers, voicemails, logos, alerts and games. Income is derived from the   
                                        sale of this content which is ordered by customers sending a text message or  
                                        ringing a premium rate number. The company has a database of over 3 million   
                                        customers aged mainly between 14 and 30, further strong growth is expected as 
                                        mobile 'phones become more sophisticated.                                     

  Music Copyright Solutions             MCS is a music publisher principally focusing on the management of music      
                                        library assets, music copyright licensing and royalty administration,         
                                        collection and payment. The company has been building its portfolio via the   
                                        acquisition of libraries of rights and sees numerous further opportunities in 
                                        this area. The shares are currently traded on OFEX but a move to AIM is       
                                        scheduled for early this year.                                                

  NWD Group                             NWD was a shell company established for the purpose of building a marketing   
                                        services business. The company recently announced the purchase of three       
                                        companies in this area. These companies are involved in corporate             
                                        communications, brand consultancy and brand promotion. Further acquisitions   
                                        are anticipated.                                                              

  Oasis Healthcare                      Oasis has built up an estate of dental practices in the UK and following the  
                                        acquisition of Dencare now has 127 sites and 500 clinicians serving over      
                                        800,000 patients. The company is now experiencing the benefits of scale and   
                                        has annualised turnover of over £70m.                                         

  Pixology                              Pixology is a provider of innovative imaging software in the rapidly          
                                        expanding market of digital photography. The company has developed technology 
                                        to enable consumers to easily print (at home, on-line or in-store), organise  
                                        and share their digital pictures. The company has also developed a solution   
                                        to 'red-eye' which is being sold to camera manufacturers.                     

  PM Group                              The group is a leader in the design, manufacture and service of onboard       
                                        weighing systems and associated software for the bulk haulage and waste       
                                        management industries. The company has a significant market position in the   
                                        bulk haulage market. However due to the introduction of new legislation in    
                                        waste management strong growth is being seen in this area.                    

  Prezzo                                Prezzo owns and operates a chain of restaurants based in and around London    
                                        and trading in two different formats, Jonathans and Prezzo. The food offering 
                                        consists of pizza and pasta with Prezzo also selling rotisserie chicken. At   
                                        the end of March the company had 34 restaurants and was profitable for the    
                                        year to last December.                                                        

  Proactive Sports                      Proactive is a leading sports management and marketing agency with a          
                                        particular emphasis on football. The company has an international network of  
                                        offices and football agents and represents nearly 300 players.                

  Quadnetics Group                      Quadnetics is a leader in the design, integration and control of advanced     
                                        CCTV and networked video systems. The company recently raised funds in order  
                                        to finance acquisitions including that of Look Closed Circuit TV. Look supply 
                                        systems for bus manufacturers and operators.                                  

  Real Good Food Group                  RGF was established to build through acquisition and organic growth, a food   
                                        business focused on the supply of chilled, frozen and ambient products. It    
                                        supplies to both retailers and the food services market. The company          
                                        currently has three subsidiaries producing chilled cakes and desserts,        
                                        sandwiches and celebration cakes.                                             

  Ringprop                              Ringprop owns the rights to a marine propeller technology. As the name        
                                        suggests the propeller is enclosed by a ring which delivers certain           
                                        performance and safety advantages over conventional products. The inherent    
                                        strength of the design enables the propeller to be made of lighter, composite 
                                        materials giving cost advantages as well as being safer for marine and human  
                                        life. The company has recently signed a manufacturing agreement with JL       
                                        French who are one of the world's largest aluminium die-casting manufacturers.

  Symphony Plastic Technologies         Symphony is a specialist technology company concerned with degradable plastic 
                                        packaging products. Symphony's 'd2wTM' technology has been licensed to        
                                        several overseas partners and production for UK customers is sub-contracted   
                                        to manufacturing partners.                                                    

  Synergy Healthcare                    Synergy is a specialist provider of out-sourced medical support services to   
                                        the NHS. It is the largest private sector provider of sterile instrumentation 
                                        services and linen products. The company has several long term contracts with 
                                        NHS Trusts and hospitals around the UK.                                       

  Tanfield Group (formerly Comeleon)    Following the merger of Comeleon and Tanfield the company is involved with    
                                        product personalisation via digital imaging (Comeleon) and specialist         
                                        manufacturing, providing technical and assembly solutions to a wide range of  
                                        sectors (Tanfield).                                                           

  The Clapham House                     Clapham House was admitted to AIM to exploit acquisition opportunities within 
                                        the UK restaurant sector. The experienced management team made its first      
                                        acquisition in December with the purchase of a profitable Greek restaurant    
                                        and bar chain which management believes has significant rollout potential.    
                                        This acquisition was followed recently by the purchase of the Bombay Bicycle  
                                        Indian restaurant business.                                                   

  Tikit Group                           The company is a provider of consultancy services and software solutions      
                                        primarily to the legal profession. The company concentrates on the top 200    
                                        law firms in the UK and has a very good reputation for quality of service and 
                                        'best of breed' solutions. Applications cover time recording, document        
                                        management, customer relationship management and knowledge management.        

  Tissue Science Laboratories           Tissue Science is a medical devices company specialising in human tissue      
                                        replacement and repair products derived from porcine dermis. The company has  
                                        proprietary core technology, which has many applications in a rapidly growing 
                                        market. It has marketing agreements with C R Bard to sell various products.   

  U4EA (unquoted)                       U4EA is a specialist provider of solutions for data transfer management by    
                                        large corporates. This has particular implications in improving the           
                                        performance of transfers of large amounts of data across networks. The shares 
                                        are currently unquoted and are valued on the basis of a funding round carried 
                                        out in January 2004.                                                          

  UBC Media                             UBC is a content and programme producer for the radio industry. It is the     
                                        largest independent supplier of programming to the BBC. In addition, the      
                                        company is at the forefront in the development of digital radio with a stake  
                                        in the 'Oneworld Radio' consortium, which has had considerable success        
                                        bidding for new digital licenses.                                             

  Vianet                                Vianet is a provider of telemetry-based solutions for maintaining and         
                                        supplying automatic vending machines. The company offers the machine          
                                        operators and brand owners a data management service to improve machine usage 
                                        and profitability. The product has been trialed by several customers and      
                                        rollouts are ongoing, the company has recently entered an agreement with      
                                        Alcatel who will market the system.                                           

  Xpertise Group                        Xpertise is a leader in providing accredited technical IT training to         
                                        business customers from centres in the North West, the North East, the        
                                        Midlands and London. The company has suffered along with its competitors from 
                                        poor market conditions but following last year's acquisition of Power         
                                        Education further consolidation is likely which should enable a return to     
                                        profitability.                                                                
 
 
Financial Statements 

Statement of Total Return 

(incorporating the revenue account*) for the year ended 31st January 2004 

                                                                                                                      
                                                               Year ended                                   Year ended 
                                                        31st January 2004                            31st January 2003 
                        Notes        Revenue         Capital        Total     Revenue            Capital         Total
 
                                           £               £            £           £                  £             £ 

  Gains/(losses) on         9              -        6,908,453   6,908,453           -        (6,530,296)   (6,530,296)
  investments                                                                                                         

  Income                    2        645,846                -     645,846     999,885                  -       999,885
  Administrative                                                                                                      
  expenses                                                                                                            

  Investment                3      (135,209)        (405,628)   (540,837)   (136,557)          (409,669)     (546,226)
  management fees                                                                                                     

  Other expenses            4      (294,584)                -   (294,584)   (257,295)                  -     (257,295)

  Return on ordinary                 216,053        6,502,825   6,718,878     606,033        (6,939,965)   (6,333,932)
  activities before                                                                                                   
  taxation                                                                                                            

  Tax on ordinary           6       (49,029)           49,029           -   (210,185)            128,731      (81,454)
  activities                                                                                                          

  Return on ordinary                 167,024        6,551,854   6,718,878     395,848        (6,811,234)   (6,415,386)
  activities after                                                                                                    
  taxation for the                                                                                                    
  financial period                                                                                                    

  Dividends in respect      7       (82,227)                -    (82,227)   (263,527)                  -     (263,527)
  of equity shares                                                                                                    

  Transfer to/(from)       14         84,797        6,551,854   6,636,651     132,321        (6,811,234)   (6,678,913)
  reserves                                                                                                            

  Basic and diluted         8          0.51p           19.89p      20.40p       1.20p           (20.66)p      (19.46)p
  Return per ordinary                                                                                                 
  share                                                                                                               

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

All revenue and capital items in the above statement derive from continuing 
operations.

No operations were acquired or discontinued in the period.
 
 
Balance Sheet 

                                                                                                           
                                                                   Notes             As at           As at 
                                                                              31st January    31st January 
                                                                                      2004            2003 

                                                                                         £               £ 
              Fixed assets                                                                                 

              Investments                                                                                  

              Qualifying investments                                             25,509,652      12,038,167

              Fixed interest securities and other non-qualifying                  5,649,133      12,519,698
              Investments                                                                                  

                                                                       9         31,158,785      24,557,865

              Current assets                                                                               

              Debtors                                                 10            189,574         295,271

              Cash at bank                                                          982,144         765,950

                                                                                  1,171,718       1,061,221

              Creditors: amounts falling due within one year          11          (958,247)       (844,022)

              Net current assets                                                    213,471         217,199

              Net assets                                                        31,372,256      24,775,064 

              Capital and reserves                                                                         

              Called-up share capital                                 13          1,644,543       1,647,043

              Share premium account                                   14          2,721,969       2,721,969

              Special reserve                                         14         26,896,733      26,936,192

              Capital redemption reserve                              14              5,000           2,500

              Capital reserve - realised                              14          (463,440)       (605,604)

              Capital reserve - unrealised                            14            231,460     (6,178,230)

              Revenue reserve                                         14            335,991         251,194

              Equity shareholders' funds                              15        31,372,256      24,775,064 

              Net asset value per ordinary share                      16            95.38p          75.21p 
 


Cash Flow Statement 
                                                                                                                   
                                                                         Notes         Year ended       Year ended 
                                                                                     31st January     31st January  
                                                                                             2004             2003 

                                                                                                £                £ 
     Operating activities                                                                                          

     Investment income received                                                            730,354        1,102,620

     Deposit interest received                                                              22,864           27,732

     Underwriting commission received                                                            -              237

     Investment management fees paid                                                     (530,361)        (708,323)

     Other expenses paid                                                                 (283,598)        (280,806)

     Net cash (outflow)/inflow from operating activities                    17            (60,741)          141,460

     Taxation                                                                                                      

     Corporation tax paid                                                                 (48,204)        (176,501)

     Net cash outflow from taxation                                                       (48,204)        (176,501)


     Capital expenditure and financial investment                                                                  

     Purchase of investments                                                           (7,392,552)      (9,127,627)

     Disposals of investments                                                            8,020,677        9,959,727

     Net cash inflow from capital expenditure and financial investment                     628,125          832,100

     Equity dividends paid                                                               (263,527)        (560,845)

     Net cash inflow before financing                                                      255,653          236,214


     Financing                                                                                                     

     Cost of ordinary shares purchased for cancellation                                   (39,459)         (39,042)

     Net cash outflow from financing                                                      (39,459)         (39,042)

     Increase in cash for the period                                        18            216,194          197,172 
 



Notes to the Financial Statements 
 
1.   Accounting policies

     A summary of the principal accounting policies, all of which have been 
     applied consistently throughout the year, is set out below.
 
a.   Basis of accounting

The financial statements have been prepared under the historical cost 
convention, modified to include the revaluation of fixed asset investments. The 
financial statements have been prepared in accordance with applicable accounting
standards and are in compliance with the 2003 Statement of Recommended Practice 
'Financial Statements of Investment Trust Companies' ('SORP').
 
b.   Investments

     Listed investments and investments traded on AIM and OFEX are stated at mid 
     market prices at the year end. Unquoted investments are stated at the 
     Directors' valuation with reference to the new British Venture Capital 
     Association ('BVCA') guidelines where appropriate. The Directors' policy in 
     valuing unquoted investments is to carry them at cost except in the 
     following circumstances:
 

•    Where a company's under performance against plan indicates a diminution in 
     the value of the investment 

•    Where a company is well established and profitable, the shares may be 
     valued by applying a suitable price-earnings ratio to the company's 
     historic post-tax earnings. The ratio used is based on a comparable listed 
     company or sector but discounted to reflect lack of marketability; 

•    Where a value is indicated by a material arms-length transaction by a third 
     party in the shares of a company.Unquoted investments will not normally be 
     revalued upwards for a period of at least six months from the date of 
     acquisition. Where trading in the securities of an investee company is 
     suspended, the investment is valued at the Board's estimate of its net 
     realisable value.

     Capital gains and losses on investments, whether realised or unrealised, 
     are dealt with in the capital reserve.
 
a.   Income

     Dividends receivable on listed and quoted equity shares are brought into 
     account on the ex-dividend date. Dividends receivable on unquoted equity 
     shares are brought into account when the Company's right to receive payment 
     is established and there is no reasonable doubt that payment will be 
     received. Fixed returns on non-equity shares and debt securities are 
     recognised on a time apportionment basis so as to reflect the effective 
     yield, provided there is no reasonable doubt that payment will be received 
     in due course. Underwriting commission and interest receivable are included 
     in the accounts on an accruals basis.
 
b.   Expenses

     All expenses are accounted on an accruals basis. Expenses are charged 
     through the revenue account except as follows:
 
•    expenses which are incidental to the acquisition of an investment are 
     included within the cost of the investment; 

•    expenses which are incidental to the disposal of an investment are deducted 
     from the disposal proceeds on an investment. 

•    Expenses are charged to capital reserve - realised where a connection with 
     the maintenance or enhancement of the value of the investments can be 
     demonstrated. In this respect the investment management fee has been 
     allocated 75% to capital reserve and 25% to revenue account, in line with 
     the Board's expected long-term split of returns, in the form of capital 
     gains and income respectively, from the investment portfolio of the 
     Company.
 
a.   Taxation

     Deferred tax is recognised in respect of all timing differences that have 
     originated but not reversed at the balance sheet date where transactions or 
     events that result in an obligation to pay more tax in the future have 
     occurred at the balance sheet date. This is subject to deferred tax assets 
     only being recognised if it is considered more likely than not that there 
     will be suitable profits from which the future reversals of the underlying 
     timing differences can be deducted. Timing differences are differences 
     between the Company's taxable profits and its results as stated in the 
     financial statements.

     Deferred tax is measured at the average tax rates that are expected to 
     apply in the periods in which the timing differences are expected to 
     reverse, based on tax rates and laws that have been enacted or #
     substantially enacted by the balance sheet date. Deferred tax is measured 
     on a non-discounted basis.

     Any tax relief obtained in respect of management fees allocated to capital 
     is reflected in the capital reserve - realised and a corresponding amount 
     is charged against revenue. The tax relief is the amount by which 
     corporation tax payable is reduced as a result of these capital expenses.
 
b.    Capital Reserve


Realised 

The following are accounted for as realised returns:
 
•    Gains and losses on realisation of investments; 

•    Realised exchange differences of a capital nature; 

•    Expenses and finance costs, together with the related tax effect to this   
     reserve in accordance with the policies; and 

•    Realised gains and losses on transactions undertaken to hedge an exposure 
     of a capital nature.


     Unrealised 


The following are accounted for as unrealised returns:

 
•    Increases and decreases in the valuation of investments held at the year end; 

•    Unrealised exchange differences of a capital nature, and  

•    Unrealised gains and losses on transactions undertaken to hedge an exposure 
     of a capital nature.


                                                                                                                      
2    Dividend   
                                                                                                    
     The Directors are recommending a final dividend of 0.25p (2003: 0.80 pence) 
     per share for the year ended 31st January 2004. Subject to shareholders' 
     approval at the Annual General Meeting on 9th June 2004, the dividend   
     will be paid on 16th June 2004 to shareholders whose names appear on the 
     register of members at the close of business on 21st May 2004.                                                     
                               


3    Earnings per share                                                                                             

     Basic and diluted revenue return per ordinary share is based on the net 
     revenue on ordinary activities after taxation of £167,024 (2003: £395,848) 
     and on 32,931,545 (2003: 32,967,572) ordinary shares, being the weighted 
     average number of ordinary shares in issue during the year.  
                                                  
     Basic and diluted capital return per ordinary share is based on net capital 
     gains for the financial year of £6,551,854 (2003: net capital losses: 
     £6,811,234) and on 32,931,545 (2003: 32,967,572) ordinary shares, being            
     the weighted average number of ordinary shares in issue during the year.                                       



4    Annual General Meeting                                                                                         

     The Annual General Meeting of the Company will be held at 21 New Street, 
     Bishopsgate, London EC2M 4HR on Wednesday 9th June 2004 at 11.30 a.m.                                              
                           


5    Statutory Report and Accounts                                                                                  

     The financial information set out above does not constitute the Company's 
     statutory accounts for the year ended 31st January 2004. Statutory accounts 
     for 2004 will be finalised on the basis of the financial information 
     presented by the Directors in this announcement and will be delivered to 
     the Registrar of Companies following the Company's Annual General Meeting.    
                                                  
     The Company will be circulating the full Report and Accounts to 
     shareholders shortly and copies will be available from the Registered 
     Office of the Company, 21 New Street, Bishopsgate, London EC2M 4HR.              
 
END  



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