Merger Update

F&C Capital & Income Inv Tst PLC
11 March 2005

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND OR THE UNITED STATES OF
AMERICA OR TO US PERSONS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF
AN OFFER TO SELL, PURCHASE, EXCHANGE OR SUBSCRIBE FOR ANY SECURITIES OR
SOLICITATION OF SUCH AN OFFER IN THE UNITED STATES OF AMERICA OR ANY OTHER
JURISDICTION. THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, AND WILL NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO
AN APPLICABLE EXEMPTION FROM REGISTRATION


11 March 2005


RECOMMENDED MERGER BETWEEN F&C INCOME GROWTH INVESTMENT TRUST PLC AND F&C
CAPITAL AND INCOME INVESTMENT TRUST PLC


Summary



The boards of F&C Income Growth Investment Trust PLC ("FIGIT") and F&C Capital
and Income Investment Trust PLC ("FCIIT") announce agreement on recommended
proposals for the merger of FIGIT and FCIIT on a formula asset value basis.



The merger will be effected by means of a Scheme of Arrangement of FIGIT under
section 425 of the Companies Act 1985.



The scheme will be conditional on the approval of FIGIT shareholders and the
approval of the Court, and will result in FCIIT, as the continuing company,
being substantially enlarged.





Expected summary timetable:



Shareholder meetings of FIGIT and FCIIT        11 April 2005



Formula asset value calculation date           28 April 2005



Court hearing to consider sanctioning scheme   4 May 2005



Effective date of merger                       5 May 2005



Dealings commence in new FCIIT shares          6 May 2005





Introduction

The boards of F&C Income Growth Investment Trust PLC ("FIGIT") and F&C Capital
and Income Investment Trust PLC ("FCIIT") today announce that they have agreed
the terms and conditions of a proposed merger of FIGIT and FCIIT (the "Merger"),
which is to be effected by way of a Scheme of Arrangement. The boards of both
companies will be writing to their shareholders shortly with full details of the
proposals and convening the necessary shareholder meetings. The Merger is
subject, amongst other conditions, to the approval of the shareholders of both
companies.

Both FIGIT and FCIIT are listed investment trusts, have similar investment
objectives and portfolios, and are managed by the same investment team within F&
C Management Limited (the "Manager"). The Manager has indicated its support for
the proposals.

The Merger will be effected on a formula asset value ("FAV") basis.  The number
of FCIIT shares which FIGIT shareholders will receive will be based on the
relative FAVs of the two companies on the FAV Calculation Date, which is
expected to be 28 April 2005.  FIGIT will bear all the costs of the transaction
as a deduction from its FAV.  FCIIT will act as the continuing company following
the Merger. It is expected that, if all necessary conditions are met, the Merger
will become effective on 5 May 2005.

Following the Merger, FCIIT's investment objective will be to provide
shareholders with long term capital and income growth from a portfolio
consisting mainly of FTSE All-Share companies.

The boards of both FIGIT and FCIIT are pleased to recommend the Merger to their
respective shareholders.



Benefits of the Merger

The boards of FIGIT and FCIIT believe that shareholders of both companies will
benefit from the Merger.

If the Merger is implemented:

•  The total expense ratio ("TER") of FCIIT following the Merger is
   expected to be significantly less than FIGIT's current ratio.  The board of
   FIGIT has estimated that the TER reduction will be approximately 0.45 per cent.
   per annum.  At this level, based on FIGIT's current net asset value ("NAV"), 
   the estimated transaction expenses to be borne by FIGIT represent less than 
   three years' TER savings;

•  Although the nature of FIGIT's share register is such that certain
   administrative costs will be higher for FCIIT in the future, FCIIT's TER
   following the Merger will be slightly less than it would have been in the
   absence of the Merger;

•  The increase in FCIIT's market capitalisation is expected to
   reinforce its position in the FTSE-All Share Index and thereby reinforce
   investor demand for its shares, particularly from investment funds which 
   have an index-tracking objective.  The FCIIT board believes that this demand 
   for FCIIT's shares should assist in preserving the narrow discount to NAV at 
   which its shares have traded in the market recently; and

•  FCIIT's larger market capitalisation following the Merger should
   also tend to enhance the liquidity of the market in its shares.



The Merger and its financial impact

General

The Merger is proposed to be effected by means of a Scheme of Arrangement under
section 425 of the Companies Act 1985 and an associated reduction of capital
under section 135 of that Act.  As a result of the Merger, FCIIT will be the
continuing company and will accept the transfer of FIGIT's investments and other
net assets. The existing capital structure of FCIIT will be retained.

Under the terms of the Scheme, FIGIT's existing shares will be cancelled (save
for one share, to be held by a FIGIT director, which will remain in issue for
technical reasons), new FCIIT shares will be issued to FIGIT shareholders and
FCIIT will become the sole shareholder of FIGIT. The number of new FCIIT shares
which FIGIT Shareholders will receive will be based on the relative FAVs of
FCIIT and FIGIT.  FIGIT will bear all the costs of the transaction as a
deduction from its FAV.  All of the assets in each company's portfolio will be
valued in accordance with the normal accounting policies applied by each
company.

The actual FAVs of FIGIT and FCIIT will be determined for the purpose of the
Scheme shortly before the date on which the Scheme becomes effective (expected
to be 5 May 2005) and it is therefore not possible until then to specify the
actual number of new FCIIT shares to which FIGIT shareholders will become
entitled.

Transaction costs

As mentioned above, a deduction will be made in calculating the FIGIT FAV to
reflect all the costs of the Merger, which are estimated to be approximately
£760,000, inclusive of VAT.

The board of FIGIT believes that, in the context of the overall terms on which
the Merger is to be effected, it is appropriate for FIGIT to bear both
companies' transaction costs because the annual cost saving benefits expected to
accrue to FIGIT shareholders following the Merger will more than compensate them
for bearing the transaction costs. It is anticipated that the cost savings
deriving from the lower annual running expenses of FCIIT will exceed the total
transaction costs within three years following completion of the Merger.

If the Merger should, for any reason, not successfully complete, each of FIGIT
and FCIIT would bear the costs it had incurred up to that point.

Save in relation to the transaction costs, the value of FIGIT shareholders' net
assets entitlements will not be diluted by the Merger.



Future Dividends

Shareholders in FIGIT have received dividends amounting to 4.30 pence per FIGIT
share in respect of the year ended 31 March 2004, paid quarterly in one interim
dividend of 0.85 pence per share, two interim dividends of 0.90 pence per share,
and a fourth interim dividend in lieu of a final dividend of 1.65 pence per
share.

In relation to the year ending 31 March 2005, shareholders in FIGIT will
receive, or will have received, three quarterly dividends (in September 2004,
December 2004 and March 2005 each of 0.90 pence per FIGIT share) and a fourth
interim dividend expected to amount to 1.70p per FIGIT share and be payable to
FIGIT shareholders before the effective date of the Merger, rather than the
usual final payment in June/July 2005.

Shareholders in FCIIT have received dividends amounting to 5.45 pence per FCIIT
share in respect of the year ended 30 September 2004, paid in October 2004 and
February 2005.

The board of FCIIT intends, following implementation of the Scheme, to declare
and pay dividends quarterly with interim dividends payable in April, July and
October and a fourth interim or final dividend in February. It is anticipated
that the first three quarterly interim dividends paid by FCIIT in future
accounting periods will be broadly similar in amount. However, the fourth
quarterly dividend (which may be paid by means of either a fourth interim
dividend or final dividend) may be of a larger amount.  Shareholders should
note, however, that under International Accounting Standards ("IAS") a dividend
has to be accounted for in the year in which it is paid. Accordingly, the board
of FCIIT may review the payment dates of its dividends following the adoption of
IAS by FCIIT.

Holders of new FCIIT shares to be issued to FIGIT shareholders pursuant to the
Scheme will not be entitled to receive the interim dividend expected to be paid
by FCIIT on 20 May 2005 in respect of the first half of FCIIT's current
accounting period.  Otherwise, the new FCIIT shares will rank pari passu in all
respects with the existing FCIIT shares in respect of both dividends and
capital.

The boards of both FIGIT and FCIIT expect that the level of dividends to be paid
on the new FCIIT shares issued to FIGIT shareholders pursuant to the Scheme
should not be less, taking into account the relative FAV basis on which the new
FCIIT shares will be issued, than the level of dividend income which the FIGIT
board estimates would otherwise have been receivable by FIGIT shareholders in
the absence of the Merger. This expectation applies in relation to each of the
periods to 30 September 2005 (the first year end of FCIIT following the Merger),
31 March 2006 (which would be the end of FIGIT's accounting period in the
absence of the Merger proposals) and 30 September 2006 (the end of the first
full accounting period of FCIIT following the Merger).

This is an estimate of dividends only and is not intended to be, nor should it
be taken as, a forecast of profits.



Changes to the boards

It is intended that the board of FCIIT following the Merger will comprise Pen
Kent CBE (Chairman), Professor James Norton, Hugh Priestley, John Emly and Neil
Dunford.

Following the Merger becoming effective, Michael Beckett, Viscount Churchill and
Peter Wilmot-Sitwell will retire as directors of FIGIT and Graham Ross Russell
and Peter Hardy will retire from the board of FCIIT.



Transfer Agreement

Under an agreement (the "Transfer Agreement") to be entered into between FIGIT
and FCIIT shortly before the Scheme becomes effective, FCIIT will agree to
acquire FIGIT's investment portfolio and other net assets for a consideration
payable in cash on completion of the transfer of the portfolio. It is intended
that FIGIT and FCIIT will agree that this consideration will be left outstanding
as an inter-company loan. The Scheme includes provisions to authorise these
arrangements.



Liquidation

FIGIT will, following the Merger, enter into liquidation or be dissolved in due
course, and the debt owed by FCIIT to FIGIT under the Transfer Agreement will
thereby be extinguished.  It is not expected that FIGIT will have any creditors
at the date upon which the Scheme will take effect, nor will it have any
liabilities prior to entering into members' voluntary liquidation.  The costs of
the liquidation are not expected to exceed £15,000 (exclusive of VAT) and they
will be discharged by FCIIT.



Investment Management Arrangements

FCIIT will, following the Merger, continue to be managed by the same investment
team of the Manager which currently manages both FIGIT and FCIIT. The investment
management agreement between FCIIT and the Manager will remain in place upon the
same terms.  FCIIT's existing investment management agreement provides for the
payment quarterly of a fee calculated at the rate of 0.10 per cent. of the value
of FCIIT's total investments.

FIGIT and the Manager have agreed that the management agreement in respect of
FIGIT will be terminated upon the Scheme becoming effective, and no compensation
will be payable to the Manager.



Shareholder meetings

Meetings of FIGIT and FCIIT shareholders will be held on 11 April 2005 in order
for shareholders to consider resolutions to approve the Merger. The Merger
requires the approval of the shareholders of both companies.



Illustrative Merger Terms

The number of new FCIIT shares to be issued to FIGIT shareholders pursuant to
the Scheme will be based on the relative FAVs of FCIIT and FIGIT.  These values
will be determined for the purposes of the Scheme on the FAV calculation date
which is expected to be 28 April 2005.  It is therefore not possible prior to
that date to specify the actual number of new FCIIT shares to which FIGIT
shareholders will become entitled.



For illustrative purposes only, based on estimated FAVs as at 10 March 2005, the
latest practicable date prior to the publication of this announcement, a FIGIT
Shareholder would receive:



     For every 1,000 FIGIT shares      752 new FCIIT shares



The formula to be applied in calculating the FAV is to be provided in the
Schedule to the Scheme of Arrangement which will be sent to FIGIT shareholders
shortly and also in the circular to be sent to FCIIT shareholders at the same
time.



Conditions and Implementation of the Scheme and the Merger

Implementation of the Scheme and the Merger is conditional upon:

(i)the approval of the Scheme by a majority in number
representing at least three-fourths in value of the holders of FIGIT shares
present and voting either in person or by proxy at the Court Meeting of holders
of FIGIT shares;

(ii)the passing at an Extraordinary General Meeting of FIGIT
shareholders of the special resolution required to implement the Scheme and the
associated reduction of capital, and to amend FIGIT's articles of association;

(iii) the passing by FCIIT shareholders at an Extraordinary
General Meeting of FCIIT of a resolution to approve the Merger and the Transfer
Agreement, to authorise the allotment of new FCIIT shares pursuant to the Scheme
and to approve the investment policy of FCIIT following the Merger;

(iv)  the UKLA and the London Stock Exchange having notified
FCIIT of their decision to admit all of the new FCIIT shares to the Official
List and to trading on the London Stock Exchange respectively (subject, in each
case, to allotment) and such decision not being changed before the date on which
the Court draws up the Order sanctioning the Scheme;

(v)   tax clearances having been received in relation to the
Merger under section 138 of the Taxation of Chargeable Gains Act 1992 and
section 707 of the Income and Corporation Taxes Act 1988;

(vi)  the following conditions being satisfied on the date
immediately preceding the date on which the Court considers sanctioning the
Scheme:

(a)   no notice having been given or action taken by the
Inland Revenue which indicates that FIGIT may not remain approved as an
investment trust company pursuant to section 842 of the Taxes Act up to the time
when the Scheme becomes effective, or that the Merger and/or the transfer of
FIGIT's assets to FCIIT under the Scheme might cause FIGIT to cease to be
approved as an investment trust company;

(b)   no governmental authority, regulatory body, court or
other person having instituted or threatened any action, proceedings or
investigation, or enacted or proposed any statute, regulation or order, which
would or might make implementation of the Scheme and the other steps involved in
the Merger void or illegal, or restrict or prohibit the implementation of the
Merger, or impose material additional conditions in relation to that
implementation, or otherwise adversely affect in any material respect the
business of FIGIT or FCIIT;

(c)   there being no material pending or threatened
litigation, arbitration proceedings, prosecution or other legal proceedings
against FCIIT or FIGIT;

(d)   FIGIT not having incurred any liability for or in the
nature of borrowings, or any material contingent liability not reflected in its
latest annual report and accounts or disclosed to FCIIT in writing before the
announcement of the Merger;

(e)   FCIIT not having incurred any liability for or in the
nature of borrowings, or any material contingent liability not reflected in its
latest annual report and accounts or disclosed to FIGIT in writing before the
announcement of the Merger;

(f)   except as publicly disclosed before the announcement
of the Merger or contemplated by the Scheme, FIGIT not having issued any
ordinary shares or other securities or securities convertible into, or warrants
or options to subscribe for, its ordinary shares or other securities, or entered
into any commitment to do so, or made any material change in its investment
policy other than as agreed between FIGIT and FCIIT, or entered into any
material agreement or commitment which is of a long term or unusual (by
reference to FIGIT's prior practice) nature or magnitude, other than agreements
the existence of which has been disclosed in writing to FCIIT before the
announcement of the Merger; and

(g)   except as publicly disclosed before the announcement
of the Merger or contemplated by the Scheme or as described in the Listing
Particulars, FCIIT not having issued any shares or other securities or
securities convertible into, or warrants or options to subscribe for, its shares
or other securities, or entered into any commitment to do so, or made any
material change in its investment policy other than as agreed between FIGIT and
FCIIT, or entered into any material agreement or commitment which is of a long
term or unusual (by reference to FCIIT's prior practice) nature or magnitude,
other than agreements the existence of which has been disclosed in writing to
FIGIT before the announcement of the Merger; and

(vii) sanction by the Court to the Scheme, confirmation by the
Court of the reduction of FIGIT's capital provided for by the Scheme and
registration of the Court Order sanctioning the Scheme and confirming such
reduction of capital by the Registrar of Companies.

Any of the conditions in the paragraphs above may be waived by FIGIT and FCIIT
jointly (or, where appropriate, by the party for whose benefit the relevant
condition exists), in whole or in part.  References to each of FIGIT and FCIIT
in paragraph (vi) are deemed to refer to such company and any subsidiary of such
company in existence at the time of announcement of the Merger or subsequently
acquired and references to materiality in paragraph (vi) shall mean material in
the context of FIGIT or FCIIT (as the case may be) and each such subsidiary,
taken as a whole.  The Scheme will only become effective if all conditions are
satisfied (and/or waived (as the case may be)).



Miscellaneous

FCIIT neither owns nor controls any shares in FIGIT.

Neither FCIIT nor any person acting in concert with FCIIT holds any option to
purchase any FIGIT shares.

The Manager, in its capacity as the manager of FCIIT, would be deemed to be
acting in concert with FCIIT in respects of investments managed on a
discretionary basis. However, there are no FCIIT shares which are managed on
such basis by the Manager. In addition, there are no FIGIT shares which are
managed on such basis by the Manager.

No irrevocable commitments have been made to vote in favour of the Scheme.



Enquiries



Michael Wrobel                              020 7628 8000

Jason Hollands                              020 7268 8000

F&C Management Limited



Howard Myles                                020 7951 5324

Ernst & Young LLP, advisers to FCIIT



Paul Fincham                                020 7426 7736

Jonathan Becher                             020 6426 3269

Teather & Greenwood Limited, advisers to FIGIT





The directors of FIGIT accept responsibility for the information relating to
FIGIT and its directors contained in this document.  To the best of the
knowledge and belief of such directors (who have taken all reasonable care to
ensure that such is the case), the information relating to FIGIT and its
directors contained in this document, for which they are solely responsible, is
in accordance with the facts and does not omit anything likely to affect the
import of such information.

The directors of FCIIT accept responsibility for the information relating to
FCIIT and its directors contained in this document.  To the best of the
knowledge and belief of such directors (who have taken all reasonable care to
ensure that such is the case), the information relating to FCIIT and its
directors contained in this document, for which they are solely responsible, is
in accordance with the facts and does not omit anything likely to affect the
import of such information.

Ernst & Young LLP and Teather & Greenwood Limited are acting exclusively for
FCIIT and FIGIT respectively and for no one else in connection with the matters
described herein and will not be responsible to anyone other than FCIIT and
FIGIT respectively for providing the protections afforded to clients of Ernst &
Young LLP and Teather & Greenwood Limited, nor for providing advice in relation
to the matters described herein.




                      This information is provided by RNS
            The company news service from the London Stock Exchange