Management Arrangements

3i Smaller Quoted Co's Trust PLC
08 October 2004

PRESS RELEASE



3i Smaller Quoted Companies Trust plc - changes to management arrangements



Following the recent announcement by 3i Group plc of its intention to dispose of
its quoted fund management activities, the Board of Directors of 3i Smaller
Quoted Companies Trust plc (the "Company") is pleased to announce that agreement
has been reached, on a conditional basis, for the appointment of DWS Investment
Trust Managers Limited ("DWS") as investment manager to the Company. This
appointment is subject to completion of the requisite due diligence,
finalisation of the terms of transfer and internal Deutsche Bank approvals, but
has been agreed in principle by the Company, DWS and 3i Group plc.



DWS is the investment trust management arm of Deutsche Asset Management ("DeAM
Group"), which operates in over 60 countries around the world and manages
Eur572bn (as at 31 August 2004). Almost half of these assets are invested for
clients in Europe, the home market of Deutsche Bank, its parent company.
Deutsche Asset Management has a presence in 15 locations throughout Europe with
major fund management and client servicing hubs in London and Frankfurt. It has
expertise in all major areas of investment and offers products in four main
areas: active equities, active fixed income, balanced and alternative
investments.



DWS is a specialist investment trust management business. The DeAM Group, in its
previous incarnation as Morgan Grenfell Asset Management, has been responsible
for managing investment trusts for over twenty years. Consequently, the support
infrastructure for the investment trust business is well-established. Currently,
there are three investment trusts under management.



The Board has secured materially improved terms for the Company's management
arrangements, as described in further detail below, and believes that the
appointment of DWS as investment manager will prove beneficial to the Company,
providing it with access to a wider retail shareholder base both through
improved marketing and promotion through DWS's new enhanced marketing campaigns.



Management arrangements



Details of the terms upon which it is proposed that the management arrangements
be transferred from 3i Investments plc ("3i") to DWS are as follows:



(a)               Portfolio manager



The Company's portfolio will continue to be managed by Mike Prentis, who will
move from 3i to DWS as part of the agreed transfer of management arrangements.
Mike Prentis has been integral to the Company's success in recent times. The
Board is delighted that the Company will continue to benefit from Mike Prentis's
knowledge and experience, and pleased that his presence will ensure continuity
and stability for the portfolio.



(b)               Management fee



The Company currently pays an annual management fee to 3i equal to 0.65% of the
Company's total assets less current liabilities. Under the terms agreed with
DWS, this fee will be maintained at 0.65% in respect of the first £50 million of
the Company's total assets less current liabilities, and reduced to 0.5%
thereafter. As at 6 October 2004, the Company had net assets of approximately
£115.7m.  The performance fee, equal to 10% of the average of the outperformance
by the Company of its benchmark on a total return basis in its two immediately
preceding financial years, and capped at 0.25% of the average of total assets
less current liabilities over those two financial years, will remain unchanged.
The reduction in the basic management fee will help to ensure that the Company's
management arrangements remain competitive in the context of the UK Small Cap
investment trust sector.



(c)               Notice period



The present management contract with 3i is terminable upon twelve months'
notice. Under the terms of the proposed new management agreement with DWS, the
agreement will have an initial fixed period of twelve months, after which time
it may be terminated at any time by either the Company or DWS giving six months'
notice.



(d)               IPO opportunities



3i has agreed to give an undertaking that, in the case of the proposed flotation
of any UK company in which 3i Group plc has, or may in the future have, an
investment, it will send a formal written request to the relevant company's
sponsor that the Company be given the opportunity to acquire shares in the
relevant IPO at the flotation price. This arrangement will be subject to review
after two years, after which time it will continue until either party gives
twelve months' notice. Shareholders should note that while this arrangement will
not guarantee the Company's participation in any particular IPO, it will
constitute a tangible benefit to the Company in terms of future opportunities.



Board of Directors



William Govett will be retiring as Chairman at the Company's next Annual General
Meeting, which is due to be held in June 2005. Richard Brewster, who is
currently Deputy Chairman and who has been a director of the Company since 1998,
will be appointed as Chairman at that time. It is proposed that up to two new
non-executive directors will be appointed in the near future with the intention
that, following William Govett's retirement, the Board will once again be
comprised of five non-executive directors.



The Board believes that the appointment of DWS as manager will prove a positive
step for shareholders, and that the changes described above provide the Company
with a solid foundation for the future. The Board will continue to monitor the
discount at which the Company's shares trade, using share buybacks where
appropriate, and is optimistic that wider marketing efforts undertaken in the
future in conjunction with DWS will also be of assistance in this regard.



A further announcement will be made by the Company upon formal completion of the
appointment of DWS as investment manager.



8 October 2004



William Govett                                  020 7835 0516
Chairman



Andrew Zychowski/David Yovichic                 020 7623 8000
Dresdner Kleinwort Wasserstein










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