As filed with the Securities and Exchange Commission on January 22, 1999
Registration No. 33-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.___ [ ] Post-Effective Amendment No.___
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
(formerly INVESCO Flexible Funds, Inc., formerly INVESCO Multiple Asset
Funds, Inc.)
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue
Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
(303) 930-6300
(Registrant's Area Code and Telephone Number)
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
Copies to:
Susan M. Casey, Esq.
Anil D. Aggarwal, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9036
Approximate Date of Proposed Public Offering: as soon as practicable
after this Registration Statement becomes effective under the Securities Act
of 1933.
Title of securities being registered: Common stock, par value $0.01 per
share.
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No filing fee is required because of reliance on Section 24(f) of the
Investment Company Act of 1940, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheets
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
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<TABLE>
<CAPTION>
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
FORM N-14 CROSS REFERENCE SHEET
Part A Item No. Prospectus/Proxy
and Caption Statement Caption
- ----------- -----------------
<S> <C> <C>
1. Beginning of Registration Statement and Outside Front Cover Page
Cover Page of Prospectus
2. Beginning and Outside Back Cover Page of Prospectus Table of Contents
3. Synopsis Information and Risk Factors Synopsis; Comparison of Principal Risk Factors
4. Information About the Transaction Synopsis; The Proposed Transaction
5. Information About the Registrant Synopsis; Comparison of Principal Risk Factors;
Additional Information About INVESCO Balanced
Fund; Miscellaneous; See also the Prospectus for
INVESCO Balanced Fund, dated December 1, 1998,
previously filed on EDGAR, Accession Number
0000913126-98-000020
6. Information About the Company Being Acquired Synopsis; Comparison of Principal Risk Factors;
Miscellaneous; See also the Prospectus for
INVESCO Multi-Asset Allocation Fund, dated
December 1, 1998, previously filed on EDGAR,
Accession Number 0000913126-98-000020
7. Voting Information Voting Information
8. Interest of Certain Persons and Experts Not Applicable
9. Additional Information Required for Re-offering by Not Applicable
Persons Deemed to be Underwriters
<PAGE>
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
FORM N-14 CROSS REFERENCE SHEET
Part B Item No. Statement of Additional
and Caption Information Caption
- ----------- -------------------
10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information About the Registrant Statement of Additional Information of INVESCO
Balanced Fund, dated December 1, 1998, previously
filed on EDGAR, Accession Number
0000913126-98-000020
13. Additional Information About the Company Being Statement of Additional Information of INVESCO
Acquired INVESCO Multi-Asset Allocation Fund, dated
December 1, 1998, previously filed on EDGAR,
Accession Number 0000913126-98-000020
14. Financial Statements Annual Report of INVESCO Balanced Fund for Fiscal
Year Ended July 31, 1998, previously filed on
EDGAR, Accession Number 0000913126-98-000017;
Annual Report of INVESCO Multi-Asset Allocation
Fund for Fiscal Year Ended July 31, 1998,
previously filed on EDGAR, Accession Number
0000913126-98-000017
</TABLE>
<PAGE>
PART C
- ------
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
PART A
<PAGE>
INVESCO MULTI-ASSET ALLOCATION FUND (A SERIES OF INVESCO
COMBINATION STOCK & BOND FUNDS, INC.
(FORMERLY INVESCO FLEXIBLE FUNDS, INC., FORMERLY INVESCO MULTIPLE ASSET
FUNDS, INC.))
March __, 1999
Dear INVESCO Multi-Asset Allocation Fund Shareholder:
The attached proxy materials describe a proposal that INVESCO Multi-Asset
Allocation Fund ("Multi-Asset Allocation Fund") reorganize and become part of
INVESCO Balanced Fund ("Balanced Fund"). If the proposal is approved and
implemented, each shareholder of Multi-Asset Allocation Fund will automatically
become a shareholder of Balanced Fund.
The attached proxy materials also describe other proposals to approve
certain changes in the fundamental investment restrictions of Multi-Asset
Allocation Fund (if the reorganization is not approved, or cannot be completed
for some other reason), to approve certain changes in the Articles of
Incorporation, to elect directors, and to ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants of Multi-Asset Allocation
Fund.
YOUR BOARD RECOMMENDS A VOTE FOR ALL PROPOSALS. The board believes that
combining the two Funds will benefit Multi-Asset Allocation Fund's shareholders
by providing them with a portfolio that has an investment objective that is
substantially identical to that of Multi-Asset Allocation Fund, that has a
similar investment strategy and that, both before and after taking into account
voluntary fee waivers and expense reimbursements, will have lower operating
expenses as a percentage of net assets. If, however, the reorganization is not
approved or cannot be completed for some other reason, you are also being asked
to approve certain changes to the fundamental investment restrictions of
Multi-Asset Allocation Fund that will update and streamline the restrictions.
The attached proxy materials provide more information about the proposed
reorganization and the two Funds, as well as the proposed changes in fundamental
investment restrictions and the other matters you are being asked to vote upon.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your
shares early will permit Multi-Asset Allocation Fund to avoid costly follow-up
mail and telephone solicitation. After reviewing the attached materials, please
complete, date and sign your proxy card and mail it in the enclosed return
envelope today. As an alternative to using the paper proxy card to vote, you may
vote by mail, by telephone, by facsimile, through the Internet, or in person.
Very truly yours,
Mark H. Williamson
President
INVESCO Multi-Asset Allocation Fund
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[HEADLINE] WHAT YOU SHOULD KNOW ABOUT
THIS PROPOSED FUND MERGER
March 23, 1999
INVESCO AND THE FUND'S BOARD OF DIRECTORS ENCOURAGE YOU TO READ THE ENCLOSED
PROXY STATEMENT CAREFULLY. THE FOLLOWING IS A BRIEF OVERVIEW OF THE KEY ISSUE.
WHY IS MY FUND HOLDING A SPECIAL SHAREHOLDERS MEETING?
The main reason for the meeting is so that shareholders of INVESCO Multi-Asset
Allocation Fund can decide whether or not to reorganize their fund. If
shareholders decide in favor of the proposal, MULTI-ASSET ALLOCATION FUND WILL
MERGE with another, similar mutual fund managed by INVESCO, and you will become
a shareholder of INVESCO BALANCED FUND.
Whether or not shareholders decide they wish to merge the Funds, there are other
matters of business to be considered. So, no matter how you choose to vote on
the proposed merger, please do review all of the other proposals and vote on
them as well.
WHAT ARE THE ADVANTAGES OF MERGING THE FUNDS?
There are three key potential advantages:
o BALANCED FUND IS MANAGED BY SOME OF OUR MOST EXPERIENCED PORTFOLIO MANAGERS:
Charles P. Mayer and Peter M. Lovell (equities) and Donovan J. "Jerry" Paul
(fixed-income obligations). The team's highly disciplined investment strategy,
combined with their expertise in stock and bond analysis, may result in stronger
fund performance over the long-term (although of course this cannot be
guaranteed).
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o By combining the Funds, SHAREHOLDERS MAY ENJOY LOWER EXPENSE RATIOS over time.
Larger funds tend to enjoy economies of scale not available to funds with
smaller assets under management.
o These LOWER COSTS MAY LEAD TO STRONGER PERFORMANCE, since total return to a
fund's shareholders is net of fund expenses. The potential benefits and possible
disadvantages are explained in more detail in the enclosed proxy statement.
HOW ARE THESE TWO FUNDS ALIKE?
The investment goals of the Funds are basically the same: They both seek high
total return through capital appreciation and current income. Each invests in
more than one type of asset class. In general, the Funds are subject to similar
risks and offer similar opportunities for growth and income. However, there are
significant differences in investment strategy:
o MULTI-ASSET ALLOCATION FUND invests in a wider variety of securities,
following a benchmark allocation model that includes foreign securities and Real
Estate Investment Trusts. This extra level of diversification may temper market
volatility to an extent, but may somewhat limit opportunities for long-term
growth.
o BALANCED FUND allocates primarily between common stocks and debt obligations;
its managers enjoy a wide flexibility in the type of assets they may select for
the fund, and are not restricted to specific percentage allocations. Equity
managers focus on a stock's earnings growth potential; fixed-income securities
are selected from a value orientation.
WHAT HAPPENS IF SHAREHOLDERS DECIDE IN FAVOR OF A MERGER?
A Closing Date will be set for the reorganization. Shareholders will receive
full and fractional shares of Balanced Fund equal in value to the shares of
Multi-Asset Allocation Fund that they owned on the Closing Date. The net asset
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value per share of Balanced Fund will not be affected by the transaction. So the
reorganization will not result in a dilution of any shareholder's interest.
IF THE FUNDS MERGE, WILL THERE BE TAX CONSEQUENCES FOR ME?
Unlike a transaction where you direct INVESCO to sell shares of one fund in
order to buy shares of another, the reorganization WILL NOT BE CONSIDERED A
TAXABLE EVENT. The Funds themselves will recognize no gains or losses on assets
as a result of a reorganization. So you will not have reportable capital gains
or losses due to the reorganization. However, you should consult your own tax
advisor regarding any possible effect a reorganization might have on you, given
your personal circumstances -- particularly regarding state and local taxes.
WHO WILL PAY FOR THIS REORGANIZATION?
The expenses of the reorganization, including legal expenses, printing,
packaging and postage, plus the costs of any supplementary solicitation, will be
borne partly by INVESCO and partly by the two Funds.
WHAT DOES THE FUND'S BOARD OF DIRECTORS RECOMMEND?
The Board believes you should vote in favor of the reorganization. More
important, though, the directors recommend that you study the issues involved,
call us with any questions, and vote promptly to ensure that a quorum of
Multi-Asset Allocation Fund shares are represented at this Fund's special
shareholders meeting.
WHERE DO I GET MORE INFORMATION ABOUT INVESCO BALANCED FUND?
o Please visit our Web site at WWW.INVESCO.COM
o Or call Investor Services toll-free at 1-800-646-8372
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[BACK COVER] YOU SHOULD KNOW WHAT INVESCO KNOWS
At INVESCO, we've built a global reputation on professional investment
management. Some of the world's largest institutions and more than a million
individuals rely on our knowledgeable investment specialists for effective
management of their portfolios. INVESCO provides investors the perspective
gained from more than 65 years of helping clients seek their financial goals.
The heart of INVESCO's business is to provide strong core mutual fund portfolios
designed as solid foundations for our clients' investments. We draw on the
resources of affiliates worldwide, so we have seasoned experts in the investment
strategies you want to pursue -- both for your core investments as well as to
meet special needs. And we offer award-winning service to help you better take
advantage of our investment expertise. Call us to learn more about your choices
at INVESCO.
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INVESCO MULTI-ASSET ALLOCATION FUND (A SERIES OF INVESCO
COMBINATION STOCK & BOND FUNDS, INC.
(FORMERLY INVESCO FLEXIBLE FUNDS, INC., FORMERLY INVESCO MULTIPLE ASSET
FUNDS, INC.))
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
To The Shareholders:
A special meeting of shareholders of the INVESCO Multi-Asset Allocation
Fund ("Multi-Asset Allocation Fund"), a series of INVESCO Combination Stock &
Bond Funds, Inc. ("Combination Stock & Bond Funds") (formerly INVESCO Flexible
Funds, Inc., formerly INVESCO Multiple Asset Funds, Inc.), will be held on May
20, 1999, at 10:00 a.m., Mountain Time, at the office of INVESCO Funds Group,
Inc., 7800 E. Union Avenue, Denver, Colorado, for the following purposes:
(1) To approve a Plan of Reorganization and Termination under which the
INVESCO Balanced Fund ("Balanced Fund"), another series of Combination Stock &
Bond Funds, would acquire all of the assets of Multi-Asset Allocation Fund in
exchange solely for shares of Balanced Fund and the assumption by Balanced Fund
of all of Multi-Asset Allocation Fund's liabilities, followed by the
distribution of those shares to the shareholders of Multi-Asset Allocation Fund,
all as described in the accompanying Prospectus/Proxy Statement;
(2) To approve certain changes to the fundamental investment restrictions
of Multi-Asset Allocation Fund;
(3) To elect a board of directors of Combination Stock & Bond Funds;
(4) To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of Multi-Asset Allocation Fund; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
<PAGE>
You are entitled to vote at the meeting and any adjournment thereof if you
owned shares of the Multi-Asset Allocation Fund at the close of business on
March 12, 1999. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the Board,
Glen A. Payne
Secretary
March ___, 1999
Denver, Colorado
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, sign
and date the card, and return it in the envelope provided. IF YOU SIGN, DATE AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSALS DESCRIBED ABOVE. In order to avoid the additional expense of
further solicitation, we ask your cooperation in mailing your proxy card
promptly. As an alternative to using the paper proxy card to vote, you may vote
by mail, telephone, through the Internet, by facsimile machine, or in person. To
vote by telephone, please call the toll-free number listed on the enclosed proxy
card(s). Shares that are registered in your name, as well as shares held in
"street name" through a broker, may be voted via the Internet or by telephone.
To vote in this manner, you will need the 12-digit "control" number(s) that
appear on your proxy card(s). To vote via the Internet, please access
www.____.com on the World Wide Web. In addition, shares that are registered in
your name may be voted by faxing your completed proxy card(s) to 1-800-_______.
If we do not receive your completed proxy cards after several weeks, you may be
contacted by our proxy solicitor, [name of proxy solicitor company]. Our proxy
solicitor will remind you to vote your shares or will record your vote over the
phone if you choose to vote in that manner. You may also call [name of proxy
solicitor company] directly at [1-800-_______, extension ___,] and vote by
phone.
Unless proxy cards submitted by corporations and partnerships are signed by
the appropriate persons as indicated in the voting instructions on the proxy
card, they will not be voted.
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MULTI-ASSET ALLOCATION FUND (A SERIES OF INVESCO
COMBINATION STOCK & BOND FUNDS, INC.
(FORMERLY INVESCO FLEXIBLE FUNDS, INC., FORMERLY INVESCO MULTIPLE ASSET
FUNDS, INC.))
7800 EAST UNION AVENUE
DENVER, COLORADO 80237
(TOLL FREE) 1-800-646-8372
PROSPECTUS/PROXY STATEMENT
MARCH __, 1999
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of the INVESCO Multi-Asset Allocation Fund ("Multi-Asset Allocation
Fund"), a series of INVESCO Combination Stock & Bond Funds, Inc. (formerly
INVESCO Flexible Funds, Inc., formerly INVESCO Multiple Asset Funds, Inc.)
("Combination Stock & Bond Funds"), in connection with the solicitation of
proxies by its Board for use at a special meeting of its shareholders to be held
on May 20, 1999, at 10:00 a.m., Mountain Time, and at any adjournment of the
meeting, if the meeting is adjourned for any reason.
As more fully described in this Proxy Statement, one of the main purposes
of the meeting is to vote on a proposed reorganization. In the reorganization,
the INVESCO Balanced Fund ("Balanced Fund"), another series of Combination Stock
& Bond Funds, would acquire all of the assets of Multi-Asset Allocation Fund in
exchange solely for shares of Balanced Fund and the assumption by Balanced Fund
of all of the liabilities of Multi-Asset Allocation Fund. Those shares of
Balanced Fund would then be distributed to the shareholders of Multi-Asset
Allocation Fund, so that each shareholder of Multi-Asset Allocation Fund would
receive a number of full and fractional shares of Balanced Fund having an
aggregate value that, on the effective date of the reorganization, is equal to
the aggregate net asset value of the shareholder's shares of Multi-Asset
Allocation Fund. As soon as practicable following the distribution of shares,
Multi-Asset Allocation Fund will be terminated.
Balanced Fund is a diversified series of Combination Stock & Bond Funds,
which is an open-end management investment company. Balanced Fund's investment
objective is to achieve a high total return on investment through capital
appreciation and current income.
This Proxy Statement, which should be retained for future reference, sets
forth concisely the information about the reorganization and Balanced Fund that
a shareholder should know before voting on the reorganization. A Statement of
Additional Information, dated March __, 1999, relating to the reorganization and
including historical financial statements, has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated herein by reference (that
is, the Statement of Additional Information is legally a part of this Proxy
Statement). A Prospectus and a Statement of Additional Information for Balanced
Fund, each dated December 1, 1998, and Balanced Fund's Annual Report to
Shareholders for the fiscal year ended July 31, 1998, have been filed with the
SEC and are incorporated herein by reference. A Prospectus and a Statement of
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Additional Information for Multi-Asset Allocation Fund, each dated January 1,
1999, have been filed with the SEC and also are incorporated herein by this
reference. A copy of Balanced Fund's Prospectus and Annual Report accompany this
Proxy Statement. Copies of the other referenced documents, as well as
Multi-Asset Allocation Fund's Annual Report to Shareholders for the fiscal year
ended July 31, 1998, may be obtained without charge, and further inquiries may
be made, by writing to INVESCO Distributors, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706, or by calling toll-free 1-800-646-8372.
The SEC maintains a website (http://www.sec.gov) that contains the
Statements of Additional Information and other material incorporated by
reference, together with other information regarding INVESCO Balanced Fund and
INVESCO Multi-Asset Allocation Fund.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
SHARES OF THE INVESCO BALANCED FUND OR DETERMINED WHETHER THIS PROXY STATEMENT
IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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<PAGE>
TABLE OF CONTENTS
VOTING INFORMATION...........................................................1
PART I: THE REORGANIZATION..................................................3
PROPOSAL 1. To approve a Plan of Reorganization and Termination
under which Balanced Fund would acquire all of the assets of
Multi-Asset Allocation Fund in exchange solely for shares of
Balanced Fund and the assumption by Balanced Fund of all of
Multi-Asset Allocation Fund's liabilities followed by the
distribution of those shares to the shareholders of Multi-Asset
Allocation Fund..............................................................3
Synopsis.....................................................................3
Comparison of Principal Risk Factors........................................12
The Proposed Transaction....................................................15
PART II. PROPOSED ROUTINE ORGANIZATIONAL MATTERS AND
MODIFICATIONS TO FUNDAMENTAL INVESTMENT LIMITATIONS.........................20
PROPOSAL 2. To approve amendments to the fundamental investment restrictions
of Multi-Asset Allocation Fund..............................................20
a. Modification of fundamental restriction on issuer diversification.....21
b. Modification of fundamental restriction on borrowing..................21
c. Modification of fundamental restriction on industry concentration.....23
d. Modification of fundamental restriction on real estate investment.....23
e. Modification of fundamental restriction on investing in commodities...24
f. Modification of fundamental restriction on loans......................24
g. Modification of fundamental restriction on underwriting...............25
h. Modification of fundamental policy on investing in another investment
company and adoption of non-fundamental policy regarding investing in
securities issued by other investment companies..........................26
i. Adoption of fundamental restriction on the issuance of senior
securities...............................................................26
PROPOSAL 3. To elect the Board of Directors of Combination Stock & Bond
Funds.................................................................27
PROPOSAL 4. To ratify the selection of PricewaterhouseCoopers LLP as
Independent Accountants of Multi-Asset Allocation Fund......................33
OTHER BUSINESS..............................................................34
INFORMATION CONCERNING ADVISER, SUB-ADVISER, DISTRIBUTOR AND AFFILIATED
COMPANIES...................................................................34
<PAGE>
MISCELLANEOUS...............................................................35
Available Information.......................................................35
Legal Matters...............................................................35
Experts.....................................................................35
APPENDIX A: PLAN OF REORGANIZATION
AND TERMINATION......................................................A-1
APPENDIX B: PRINCIPAL SHAREHOLDERS.........................................B-1
<PAGE>
MULTI-ASSET ALLOCATION FUND (A SERIES OF INVESCO
COMBINATION STOCK & BOND FUNDS, INC.
(FORMERLY INVESCO FLEXIBLE FUNDS, INC., FORMERLY INVESCO MULTIPLE ASSET
FUNDS, INC.))
-----------
PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
-----------
VOTING INFORMATION
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of the INVESCO Multi-Asset Allocation Fund ("Multi-Asset Allocation
Fund"), a series of INVESCO Combination Stock & Bond Funds, Inc. (formerly
INVESCO Flexible Funds, Inc., formerly INVESCO Multiple Asset Funds, Inc.)
("Combination Stock & Bond Funds"), in connection with the solicitation of
proxies from Multi-Asset Allocation Fund shareholders by the board of directors
of Combination Stock & Bond Funds ("Board") for use at a special meeting of
shareholders to be held on May 20, 1999 ("Meeting"), and at any adjournment of
the Meeting. This Proxy Statement will first be mailed to shareholders on or
about March 23, 1999.
One-third of Multi-Asset Allocation Fund's shares outstanding on March 12,
1999, represented in person or by proxy, shall constitute a quorum and must be
present for the transaction of business at the Meeting. If a quorum is not
present at the Meeting or a quorum is present but sufficient votes to approve
one or more of the proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a majority
of those shares represented at the Meeting in person or by proxy. The persons
named as proxies will vote those proxies that they are entitled to vote FOR any
proposal in favor of such an adjournment and will vote those proxies required to
be voted AGAINST a proposal against such adjournment. A shareholder vote may be
taken on one or more of the proposals in this Proxy Statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against any proposal where the required vote is a percentage of the shares
present or outstanding. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal.
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The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions as indicated on the proxy card, if your proxy
card is received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, your shares will be voted in favor of approval of each of
the proposals and the duly appointed proxies may, in their discretion, vote upon
such other matters as may come before the Meeting. The proxy card may be revoked
by giving another proxy or by letter or telegram revoking the initial proxy. To
be effective, revocation must be received by Combination Stock & Bond Funds
prior to the Meeting and must indicate your name and account number. If you
attend the Meeting in person you may, if you wish, vote by ballot at the
Meeting, thereby canceling any proxy previously given.
In order to reduce costs, the notices to a shareholder having more than
one account in Multi-Asset Allocation Fund listed under the same Social Security
number at a single address have been combined. The proxy cards have been coded
so that a shareholder's votes will be counted for each such account.
As of March 12, 1999 ("Record Date"), Multi-Asset Allocation Fund had
_______ shares of common stock outstanding. The solicitation of proxies, the
cost of which will be borne half by INVESCO Funds Group, Inc. ("INVESCO"), the
investment adviser and transfer agent of Multi-Asset Allocation Fund, and half
by INVESCO Balanced Fund ("Balanced Fund"), another series of Combination Stock
& Bond Funds, and Multi-Asset Allocation Fund, will be made primarily by mail
but also may be made by telephone or oral communications by representatives of
INVESCO and INVESCO Distributors, Inc. ("IDI"), the distributor of the INVESCO
group of investment companies ("INVESCO Funds"), who will not receive any
compensation for these activities from either Multi-Asset Allocation Fund or
Balanced Fund, or by [name of proxy solicitor company], professional proxy
solicitors, who will be paid fees and expenses of up to approximately $_______
for soliciting services. If votes are recorded by telephone, [name of proxy
solicitor company] will use procedures designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their shares in
accordance with their instructions, and to confirm that a shareholder's
instructions have been properly recorded. You may also vote by mail, by
facsimile or through a secure Internet site. Proxies voted by telephone,
facsimile or Internet may be revoked at any time before they are voted in the
same manner that proxies voted by mail may be revoked.
Except as set forth in Appendix B, INVESCO does not know of any person who
owns beneficially 5% or more of the shares of Multi-Asset Allocation Fund or
Balanced Fund (each a "Fund"). Directors and officers of Combination Stock &
Bond Funds own in the aggregate less than 1% of the shares of Multi-Asset
Allocation Fund.
VOTE REQUIRED. Approval of Proposal 1 requires the affirmative vote of a
majority of the outstanding voting securities of Multi-Asset Allocation Fund.
Approval of Proposal 2 requires the affirmative vote of a "majority of the
outstanding voting securities" of Multi-Asset Allocation Fund, as defined in the
Investment Company Act of 1940, as amended ("1940 Act"). This means that
Proposal 2 must be approved by the lesser of (1) 67% of Multi-Asset Allocation
Fund's shares present at a meeting of shareholders if the owners of more than
50% of Multi-Asset Allocation Fund's shares then outstanding are present in
person or by proxy or (2) more than 50% of Multi-Asset Allocation Fund's
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outstanding shares. A plurality of the votes cast at the Meeting, and at the
concurrent meeting of the shareholders of Balanced Fund, taken in the aggregate,
is sufficient to approve Proposal 3. Approval of Proposal 4 requires the
affirmative vote of a majority of the votes present at the Meeting, provided a
quorum is present. Each outstanding full share of Multi-Asset Allocation Fund is
entitled to one vote, and each outstanding fractional share thereof is entitled
to a proportionate fractional share of one vote. If any Proposal is not approved
by the requisite vote of shareholders of Multi-Asset Allocation Fund, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies.
PART I: THE REORGANIZATION
PROPOSAL 1. TO APPROVE A PLAN OF REORGANIZATION AND TERMINATION
UNDER WHICH BALANCED FUND WOULD ACQUIRE ALL OF THE ASSETS OF
MULTI-ASSET ALLOCATION FUND IN EXCHANGE SOLELY FOR SHARES OF
BALANCED FUND AND THE ASSUMPTION BY BALANCED FUND OF ALL OF
MULTI-ASSET ALLOCATION FUND'S LIABILITIES FOLLOWED BY THE
DISTRIBUTION OF THOSE SHARES TO THE SHAREHOLDERS OF MULTI-ASSET
ALLOCATION FUND
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this Proxy Statement, the Prospectus and Statement of Additional Information of
Balanced Fund (which are incorporated herein by reference), the Prospectus and
Statement of Additional Information of Multi-Asset Allocation Fund (which are
incorporated herein by reference), and the Reorganization Plan (which is
attached as Appendix A to this Proxy Statement). As discussed more fully below,
the Board believes that the Reorganization will benefit Multi-Asset Allocation
Fund's shareholders. The Funds have the same investment objective and similar
investment policies. To achieve their investment objective, the Funds employ
different investment strategies. It is anticipated that, following the
Reorganization, the total operating expenses for the combined Fund, both before
and after taking into account voluntary fee waivers and expense reimbursements,
will be lower as a percentage of net assets than those of Multi-Asset Allocation
Fund.
THE PROPOSED REORGANIZATION
The Board considered and approved the Reorganization Plan at a meeting
held on [February 3], 1999. The Reorganization Plan provides for the acquisition
of all the assets of Multi-Asset Allocation Fund by Balanced Fund, in exchange
solely for shares of common stock of Balanced Fund and the assumption by
Balanced Fund of all the liabilities of Multi-Asset Allocation Fund. Multi-Asset
Allocation Fund then will distribute those shares of Balanced Fund to its
shareholders, so that each Multi-Asset Allocation Fund shareholder will receive
the number of full and fractional shares that is equal in value to the value of
the shareholder's holdings in Multi-Asset Allocation Fund as of the day the
Reorganization is completed. Multi-Asset Allocation Fund will be terminated as
soon as practicable thereafter.
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The Reorganization will occur as of the close of business on June 11,
1999, or at a later date when the conditions to the closing are satisfied
("Closing Date").
For the reasons set forth below under "The Proposed Transaction -- Reasons
for the Reorganization," the Board, including its directors who are not
"interested persons," as that term is defined in the 1940 Act, of Combination
Stock & Bond Funds ("Independent Directors"), has determined that the
Reorganization is in the best interests of Multi-Asset Allocation Fund, that the
terms of the Reorganization are fair and reasonable and that the interests of
Multi-Asset Allocation Fund's shareholders will not be diluted as a result of
the Reorganization. Accordingly, the Board recommends approval of the
transaction. In addition, the Board, including its Independent Directors, has
determined that the Reorganization is in the best interests of Balanced Fund,
that the terms of the Reorganization are fair and reasonable and that the
interests of Balanced Fund's shareholders will not be diluted as a result of the
Reorganization.
COMPARATIVE FEE TABLE
Certain fees and expenses that Multi-Asset Allocation Fund's shareholders
pay, directly or indirectly, are slightly higher than those incurred by Balanced
Fund's shareholders, although neither Fund's shares are subject to any
shareholder transaction expenses, I.E., there are no sales charges on shares
purchased or deferred sales charges for shares redeemed. The following tables
show (1) fees currently incurred by shareholders of each Fund and fees that each
shareholder will incur after giving effect to the Reorganization, and (2) the
current fees and expenses incurred for the fiscal year ended July 31, 1998 by
each Fund and PRO FORMA fees for Balanced Fund after giving effect to the
Reorganization.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Multi-asset
Balanced Fund Allocation Fund Combined Fund
------------- --------------- -------------
Sales charge (load) on None None None
purchases of shares
Sales charge (load) on None None None
reinvested dividends
Redemption fee or deferred None None None
sales charge (load)
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (as
a percentage of average daily net assets)
Multi-asset Combined Fund
Balanced Fund Allocation Fund (Pro Forma)
------------- --------------- -----------
Management Fees 0.60% 0.75% 0.60%
Distribution (12b-1) fees* 0.25% 0.25% 0.25%
Other Expenses 0.37% (1)(2) 0.92% (1)(2) 0.38%
Total Fund Operating Expenses 1.22% (1)(2) 1.92% (1)(2) 1.23%
====== ====== =====
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* Because each Fund pays distribution fees, long-term shareholders could pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
(1)Certain expenses of Multi-Asset Allocation Fund are being voluntarily
absorbed by INVESCO and INVESCO Management & Research, Inc. ("IMR").
Accordingly, the "Other Expenses" and "Total Fund Operating Expenses" paid by
Multi-Asset Allocation Fund were 0.54% and 1.54%, respectively. INVESCO and
IMR do not intend to continue absorbing the expenses of Multi-Asset
Allocation Fund. INVESCO will, however, continue to absorb the expenses of
Balanced Fund for a period of at least one year, so that Total Fund Operating
Expenses will not exceed 1.25%. Thus, if the Reorganization is not approved,
Multi-Asset Allocation Fund's Other Expenses and Total Fund Operating
Expenses will likely increase.
(2)Each Fund's actual Total Fund Operating Expenses were lower than the figures
shown, because custodian fees for Multi-Asset Allocation Fund and custodian
transfer agency and distribution fees for Balanced Fund were reduced under
expense offset arrangements. Because of an SEC requirement, the figures shown
above DO NOT reflect these reductions.
EXAMPLE OF EFFECT ON FUND EXPENSES
This Example is intended to help you compare the cost of investing in
Multi-Asset Allocation Fund with the cost of investing in Balanced Fund and the
cost of investing in Balanced Fund assuming the Reorganization has been
completed.
The Example assumes that you invest $10,000 in the specified Fund for the
time periods indicated and redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each
year, that all dividends and other distributions are reinvested and that the
Fund's operating expenses remain the same. Although your actual costs and
returns may be higher or lower, based on these assumptions your costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
Balanced Fund $125 $389 $ 674 $1,484
Multi-Asset $197 $608 $ 1,046 $2,259
Allocation Fund
Combined Fund $126 $393 $ 679 $1,495
- ---------------------
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND EACH FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The actual expenses of each Fund will depend upon, among other things, the level
of its average net assets and the extent to which it incurs variable expenses,
such as transfer agency costs.
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FORMS OF ORGANIZATION
Each Fund is a separate series of Combination Stock & Bond Funds, a
no-load, open-end, diversified management investment company that was organized
as a Maryland corporation on August 19, 1993. Combination Stock & Bond Funds'
Articles of Incorporation authorize the directors to issue up to 1,600,000,000
shares, par value $0.01 per share. Of the authorized shares of Combination Stock
& Bond Funds, 100,000,000 have been allocated to Balanced Fund and 100,000,000
have been allocated to Multi-Asset Allocation Fund. Neither Balanced Fund nor
Multi-Asset Allocation Fund is required to (nor do they) hold annual shareholder
meetings. Neither Multi-Asset Allocation Fund nor Balanced Fund issues share
certificates.
INVESTMENT ADVISER
INVESCO is the investment adviser to each Fund. In this capacity, INVESCO
supervises all aspects of each Fund's operations and makes and implements all
investment decisions for Balanced Fund. IMR is the sub-adviser of Multi-Asset
Allocation Fund and is primarily responsible for managing that Fund's
investments.
INVESCO is currently paid (1) by Multi-Asset Allocation Fund a monthly
management fee computed at the annual rate of 0.75% on the first $500 million of
the Fund's average net assets, 0.65% on the next $500 million of such assets,
and 0.50% on such assets over $1 billion and (2) by Balanced Fund a monthly
management fee computed at the annual rate of 0.60% on the first $350 million of
the Fund's average net assets, 0.55% on the next $350 million of such assets,
and 0.50% on such assets over $700 million. For the fiscal year ended July 31,
1998, Multi-Asset Allocation Fund and Balanced Fund paid an investment
management fee of 0.75% and 0.60%, respectively, of its average daily net
assets. Following the Reorganization, the initial management fee for the
combined Fund is expected to be 0.60% of average net assets, although this fee
will decrease in accordance with the fee schedule for Balanced Fund described
above if the assets of the combined Fund increase. With respect to Multi-Asset
Allocation Fund, INVESCO (not the Fund) pays IMR a monthly fee of one-third of
the advisory fee (0.25% on the first $500 million of the Fund's average net
assets, 0.2166% on the next $500 million of such assets, and 0.1667% on such
assets over $1 billion).
Following the Reorganization, INVESCO, in its capacity as investment
adviser to Balanced Fund, will have sole responsibility for managing the Funds'
combined assets.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective, strategies, and policies of each Fund are set
forth below. Balanced Fund and Multi-Asset Allocation Fund have the same
investment objective in that each Fund seeks to achieve a high total return on
investment through capital appreciation and current income. The Funds have
substantially similar investment policies. The investment strategies used by
Balanced Fund and Multi-Asset Allocation Fund, however, differ in the method of
allocation of assets among securities. There can be no assurance that either
Fund will achieve its investment objective.
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<PAGE>
BALANCED FUND. The Fund pursues its investment objective by normally
investing 50% to 70% of its total assets in common stocks and the remainder in
fixed-income securities, including cash reserves. At least 25% of the Fund's
assets will be invested in fixed-income securities issued by the U.S.
government, its agencies and instrumentalities, or in investment grade corporate
bonds. This approach is designed to cushion a shareholder's investment from the
volatility typically associated with mutual funds that invest primarily in
common stocks. With respect to the equity holdings, the Fund looks for companies
with better-than-average earnings growth potential, as well as companies within
industries that the Fund has identified as well-positioned for the current and
expected economic climate. The Fund also considers dividend payout records. The
Fund may also take positions in securities traded on regional or foreign
exchanges. In addition to common stocks, the Fund also may hold preferred stocks
and securities convertible into common stock. With respect to the fixed-income
portion of the holdings, the Fund selects only obligations of the U.S.
government, its agencies and instrumentalities, or investment grade corporate
bonds. Obligations issued by U.S. government agencies or instrumentalities may
include some supported only by the credit of the issuer rather than by the full
faith and credit of the U.S. government. The Fund may hold debt securities of
any maturity (from less than one year up to 30 years), with the average maturity
varying depending upon economic and market conditions. The Fund may also hold
cash and cash equivalent securities as cash reserves.
MULTI-ASSET ALLOCATION FUND. The Fund pursues its investment objective by
allocating its assets among six asset classes: stocks of large-capitalization
companies; stocks of small-capitalization companies; equity real estate
securities, primarily real estate investment trusts; international equity
securities; fixed-income securities; and cash securities. The Fund may allocate
its assets among these six classes within specified ranges. Current allocations
are based on the Fund's projections of investment returns for each class. The
Fund's "benchmark mix" of assets represents the expected allocation when the
projected returns for all six classes are normal relative to the others based on
historical investment returns. If the Fund believes the return for a particular
class will be higher than normal relative to the others, the Fund invests in
that class more heavily than the benchmark suggests. Conversely, if the Fund
estimates a lower-than-normal return for a particular class relative to the
others, it is underweighted relative to the benchmark mix. The historical
performance of each class is measured by using a comparative index of securities
for the class.
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<PAGE>
The Fund's six asset classes, investment ranges, benchmark mix and comparative
indices are set forth below:
Percentage of
Asset Class Fund's Benchmark Mix Comparative Index
Total Assets
- --------------------------------------------------------------------------------
Large-cap stocks 0-70% 35% S&P 500
Small-cap stocks 0-30% 10% Russell 2000
Real estate equity 0-30% 10% NAREIT Equity
securities REIT Index
International stocks 0-25% 10% MSCI-EAFE
Fixed-income 0-50% 25% Lehman Brothers
Aggregate Bond
Cash securities 0-30% 10% 90-day T-bills
INVESCO and IMR regularly review the Fund's investment allocations and
will vary the amount invested in each class within the ranges set forth above
depending upon their assessment of business, economic and market conditions.
However, the Fund does not attempt to "time" the various markets or make sudden,
major shifts in weightings. Any allocation adjustments are made gradually and in
accordance with the Fund's objective of seeking a high total return. While the
percentage of the Fund's assets invested in each class will vary from time to
time, the Fund does not anticipate altering the benchmark mix. The Fund does,
however, upon notice to shareholders, reserve the right to add or delete asset
classes and to adjust the percentage of each class in the benchmark mix
accordingly.
In managing the equity portions of Multi-Asset Allocation Fund's portfolio
(large-cap stocks, small-cap stocks, equity real estate securities and
international stocks), INVESCO and IMR apply a combination of quantitative
strategies and traditional stock selection methods to a broad universe of stocks
in order to uncover attractive values. Typically, common stocks and, to a lesser
degree, preferred stocks and securities convertible into common stocks, will be
examined quantitatively for their exposure to certain factors that INVESCO and
IMR believe are helpful in selecting equities that can be expected to show
superior future performance. These factors include earnings-to-price ratio, book
value-to-price ratio, earnings estimate revision momentum, relative market
strength compared to competitors, inventory/sales trend and financial leverage.
A stock's expected return is estimated based on these factors and estimated
trading costs. Next a computer optimization process suggests a portfolio that
seeks to maximize expected return at a controlled level of risk. Traditional
fundamental analysis is then employed to make the final selection of holdings.
Large-cap stock holdings are selected from the 1,000 largest
publicly traded U.S. companies. Size is determined by measuring a firm's market
capitalization - the market value of all of a company's equity securities. These
securities are traded principally on U.S. national stock exchanges but also may
be traded on regional stock exchanges or in the over-the-counter market.
Large-cap stocks may offer higher dividends than the stocks of smaller-cap
firms. Multi-Asset Allocation Fund seeks its small-cap holdings from companies
8
<PAGE>
having market capitalizations smaller than the 1,000 largest publicly traded
U.S. companies. These small-cap stocks typically pay no or only minimal
dividends and may involve greater risks than securities of larger, more
established companies. However, because of their long-term prospects, they may
offer the potential for greater price appreciation. Multi-Asset Allocation Fund
focuses its real estate investments on equity real estate investment trusts
(REITs) but may also invest in real estate development and real estate operating
companies, as well as other real estate-related businesses. Equity REITs are
trusts that sell shares to investors and invest the proceeds in real estate.
For the fixed-income portion of the holdings, Multi-Asset Allocation Fund
selects only obligations of the U.S. government, its agencies and
instrumentalities, or investment grade corporate bonds. These securities tend to
offer lower income than bonds of lower quality but are more shielded from credit
risk. Obligations issued by government agencies or instrumentalities may include
some supported only by the credit of the issuer rather than backed by the full
faith and credit of the U.S. government.
OTHER POLICIES OF BOTH FUNDS. The Funds have similar investment policies.
Each Fund may invest up to 25% of its total assets directly in foreign equity or
corporate debt securities. Up to 15% of each Fund's net assets may be invested
in illiquid securities, including securities with restrictions on resale or
securities that are not readily marketable. Each Fund may also commit up to 10%
of its total assets to the purchase and sale of securities on a when-issued or
delayed delivery basis - that is, with settlement taking place in the future.
Each Fund may invest money, for as short a time as overnight, using repurchase
agreements entered into with member banks of the Federal Reserve System,
registered broker-dealers and registered U.S. government securities dealers that
are deemed creditworthy under standards established by the Board. Multi-Asset
Allocation Fund may invest in stripped mortgage or asset-backed securities, in
which the principal and interest payments on the underlying pool of loans are
separated or "stripped" to create two classes of securities.
Each Fund may seek to earn additional income by lending securities to
qualified brokers, dealers, banks or other financial institutions, on a fully
collateralized basis. In order to hedge its portfolio, each Fund may purchase
and write options on securities (including index options and options on foreign
securities) and may invest in futures contracts for the purchase or sale of
foreign currencies, fixed-income securities and instruments based on financial
indices, options on such futures contracts and forward contracts.
When business, market, or economic conditions warrant, each Fund may
assume a defensive position by temporarily investing up to 100% of its assets in
U.S. government and agency securities, investment grade corporate bonds or cash
securities, such as domestic certificates of deposit and bankers' acceptances,
commercial paper and repurchase agreements, in an attempt to protect principal
value until conditions stabilize.
9
<PAGE>
OPERATIONS OF BALANCED FUND FOLLOWING THE REORGANIZATION
As indicated above, the Funds have the same investment objective and,
although they have different investment strategies, the investment policies of
the two Funds are similar. Although Multi-Asset Allocation Fund intends to
invest within asset classes at certain benchmark levels, Balanced Fund does not
have any such prescribed guidelines for investment within its allocation of
total assets between common stocks and fixed-income securities. Multi-Asset
Allocation Fund also invests a greater proportion of its assets in fixed income
and cash securities based upon its current benchmarks. Based on its review of
the investment portfolios of each Fund, INVESCO believes that most of the assets
held by Multi-Asset Allocation Fund will be consistent with the investment
policies of Balanced Fund and thus can be transferred to and held by Balanced
Fund if the Reorganization is approved. If the Reorganization Plan is approved,
however, and Multi-Asset Allocation Fund has assets that are not consistent with
Balanced Fund's investment policies, Multi-Asset Allocation Fund will sell any
such assets prior to the Reorganization. The proceeds of such sales will be held
in temporary investments or reinvested in assets that qualify to be held by
Balanced Fund. The possible need for Multi-Asset Allocation Fund to dispose of
assets prior to the Reorganization could result in selling securities at a
disadvantageous time and could result in Multi-Asset Allocation Fund's realizing
losses that would not otherwise have been realized. Alternatively, these sales
could result in Multi-Asset Allocation Fund's realizing gains that would not
otherwise have been realized, the net proceeds of which would be included in a
distribution to its shareholders prior to the Reorganization.
Currently, INVESCO serves as investment adviser to both Funds and IMR
serves as sub-adviser to Multi-Asset Allocation Fund. After the Reorganization,
INVESCO, in its capacity as investment adviser to Balanced Fund, will have sole
responsibility for managing the Funds' combined assets. In addition, the
directors and officers of Balanced Fund, its distributor and other outside
agents will continue to serve Balanced Fund in their current capacities.
PURCHASES AND REDEMPTIONS
PURCHASES. Shares of each Fund may be purchased by wire, telephone, mail
or direct payroll purchase. The shares of each Fund are sold on a continuous
basis at the net asset value ("NAV") per share next calculated after receipt of
a purchase order in good form. The NAV per share for each Fund is computed
separately and is determined once each day that the New York Stock Exchange is
open, as of the close of regular trading ("Business Day"), but may also be
computed at other times. For a more complete discussion of share purchases, see
"How to Buy Shares" in either the Balanced Fund Prospectus or the Multi-Asset
Allocation Fund Prospectus.
REDEMPTIONS. Shares of each Fund may be redeemed by telephone, by mail, by
exchange, by periodic withdrawal plan, or by payment to a third party. Such
redemptions are made at the NAV per share next determined after a request in
proper form is received at the Fund's office. Normally, payment of redemption
proceeds will be mailed within seven days following receipt of the required
documents. For a more complete discussion of share redemption procedures, see
"How to Sell Shares" in either the Balanced Fund Prospectus or the Multi-Asset
Allocation Fund Prospectus.
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<PAGE>
[Multi-Asset Allocation Fund shares will no longer be available for
purchase beginning on the Business Day following the date on which the
Reorganization is approved and all contingencies have been met. Redemptions of
Multi-Asset Allocation Fund's shares may be effected through the Closing Date.]
EXCHANGES
Shares of the Funds are exchangeable for shares of another INVESCO Fund on
the basis of their respective NAVs per share at the time of the exchange. After
the Reorganization, shares of Balanced Fund will continue to be exchangeable for
shares of any other INVESCO Fund. For a more complete discussion of the Funds'
exchange policies, see "How to Sell Shares" in either Balanced Fund's Prospectus
or Multi-Asset Allocation Fund's Prospectus.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund earns investment income in the form of dividends and interest on
its investments. Dividends paid by each Fund are based solely on its investment
income. Each Fund's policy is to distribute substantially all of this investment
income, less expenses, to shareholders on a quarterly basis, at the discretion
of the Board of Directors of that Fund. Dividends are automatically reinvested
in additional shares of a Fund at the NAV on the ex-dividend date unless
otherwise requested.
Each Fund also realizes capital gains and losses when it sells securities
or derivatives for more or less than it paid. If total gains on these sales
exceed total losses (including losses carried forward from previous years), a
Fund has capital gain net income. Net realized capital gains, if any, together
with gains realized on foreign currency transactions, if any, are distributed to
shareholders at least annually, usually in December. Capital gains distributions
are automatically reinvested in shares of the respective Fund at the NAV on the
ex-dividend date unless otherwise requested. Dividends and other distributions
are paid to holders of shares on the record date of distribution regardless of
how long a Fund's shares have been held by the shareholder.
On or before the Closing Date, Multi-Asset Allocation Fund will declare as
a distribution substantially all of its net investment income and realized net
capital gain, if any, and distribute that amount plus any previously declared
but unpaid dividends, in order to continue to maintain its tax status as a
regulated investment company.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
Combination Stock & Bond Funds will receive an opinion of its counsel,
Kirkpatrick & Lockhart LLP, to the effect that the Reorganization will
constitute a tax-free reorganization within the meaning of section 368(a)(1)(C)
of the Internal Revenue Code of 1986, as amended ("Code"). Accordingly, neither
Fund nor any of their shareholders will recognize any gain or loss as a result
of the Reorganization. See "The Proposed Transaction - Federal Income Tax
Considerations," page 18.
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COMPARISON OF PRINCIPAL RISK FACTORS
An investment in Balanced Fund is subject to specific risks arising from
the types of securities in which the Fund invests and general risks arising from
investing in any mutual fund. The principal specific risks associated with
investing in Balanced Fund include:
DEBT SECURITIES. Balanced Fund's investments in debt securities generally
are subject to both credit risk and market risk. Credit risk relates to the
ability of the issuer to meet interest or principal payments, or both, as they
come due. Market risk relates to the fact that the market values of the debt
securities generally will be affected by changes in the level of interest rates.
An increase in interest rates will tend to reduce the market values of
outstanding debt securities, whereas a decline in interest rates will tend to
increase their values. The lower a bond's quality, the more it is subject to
credit risk and market risk. Balanced Fund seeks to reduce these risks by
investing only in investment grade debt securities. While the management of
Balanced Fund monitors all of the debt securities in its portfolio for the
issuer's ability to make required payments and other quality factors, it may
retain a bond whose rating is changed to one below the minimum rating required
for purchase of the security. The Fund's investment in debt securities may
include investments in zero-coupon bonds and step-up bonds. Due to the timing of
the payment of interest on these bonds, they are extremely responsive to changes
in interest rates and are, therefore, more volatile than other bonds. The Fund
may invest in mortgage- or asset-backed securities. The loans underlying these
securities are subject to prepayments that may shorten the securities' weighted
average lives and may lower their returns.
FOREIGN SECURITIES. Balanced Fund may invest up to 25% of its assets in
foreign securities. Investments in foreign securities are influenced not only by
the returns on the foreign investments themselves, but also by currency
fluctuations. In addition, there is generally less publicly available
information, reports and ratings about foreign companies and other foreign
issuers than that which is available about companies and issuers in the United
States. Foreign issuers are also generally subject to fewer uniform accounting,
auditing and financial reporting standards, practices and requirements as
compared to those applicable to U.S. issuers. The Fund's adviser normally
purchases foreign securities in over-the-counter markets or on foreign
exchanges, which are generally not as developed or efficient as those in the
United States and are subject to less government supervision and regulation.
Moreover, with respect to certain foreign countries, there is the possibility of
adverse changes in investment or exchange control regulations, expropriation or
confiscatory taxation, limitations on the removal of funds or other assets of a
fund, political or social instability, or diplomatic developments that could
affect U.S. investments in those countries. The fund may also invest in American
Depository Receipts ("ADRs"). ADRs are subject to some of the same risks as
direct investments in foreign securities, including the risk that material
information about the issuer may not be disclosed in the United States and the
risk that currency fluctuations may adversely affect the value of the ADR.
ILLIQUID AND RULE 144A SECURITIES. Balanced Fund may invest in illiquid
securities, including restricted securities and other investments that are not
readily marketable. Restricted securities are securities that are subject to
restrictions on their resale because they have not been registered under the
Securities Act of 1933, as amended ("1933 Act"), or because, based upon their
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<PAGE>
nature or the market for such securities, they are not readily marketable. These
limitations on resale and marketability may have the effect of preventing the
Fund from disposing of such a security at the time desired or at a reasonable
price. In addition, in order to resell a restricted security, the Fund might
have to bear the expense and incur the delays associated with registering the
security. The Fund may also invest in restricted securities that can be resold
to institutional investors in accordance with Rule 144A under the 1933 Act
("Rule 144A securities"). However, an insufficient number of qualified
institutional buyers interested in purchasing a Rule 144A security held by the
Fund could adversely affect the marketability of such security, and the Fund
might be unable to dispose of the security promptly or at a reasonable price.
DELAYED DELIVERY OR WHEN-ISSUED SECURITIES. Balanced Fund may invest in
when-issued or delayed delivery securities, that is, with settlement taking
place in the future. The payment obligation and the interest rate received on
the securities generally are fixed at the time the Fund enters into the
commitment. Between the date of purchase and the settlement date, the market
value of the securities may vary, and no interest is payable to the Fund prior
to settlement. Thus, the purchase of securities on a when-issued basis involves
the risk that the value of the securities purchased will decline prior to
settlement.
REPURCHASE AGREEMENTS. Balanced Fund may invest money, for as short a time
as overnight, using repurchase agreements. With a repurchase agreement, the Fund
buys a debt instrument, agreeing simultaneously to sell it back to the prior
owner at an agreed-upon price. The Fund could incur costs or delays in seeking
to sell the instrument if the prior owner defaults on its repurchase obligation.
To reduce such risk, the securities that are the subject of the repurchase
agreement will be maintained with the Fund's custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest).
SECURITIES LENDING. Balanced Fund may lend its securities to qualified
brokers, dealers, banks or other financial institutions. Lending securities
involves certain risks, the most significant of which is the risk that a
borrower may fail to return a portfolio security. Fund management monitors the
creditworthiness of borrowers in order to minimize such risks.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. Balanced Fund may enter
into futures contracts, and purchase and sell options to buy or sell futures
contracts and other securities which are included in the types of instruments
sometimes referred to as "derivatives," because their value depends upon or
derives from the value of an underlying asset. Where futures are purchased to
hedge against a possible increase in the price of a security before the Fund is
able in an orderly fashion to invest in the security, it is possible that the
market may decline instead. If the Fund, as a result, concluded not to make the
planned investment at that time because of concern as to possible further market
decline or for other reasons, the Fund would realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contract and the
portion of the portfolio being hedged, the price of futures may not correlate
perfectly with movements in the prices due to certain market distortions. All
participants in the futures market are subject to margin deposit and maintenance
13
<PAGE>
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the underlying securities and the
value of the futures contract. Moreover, the deposit requirements in the futures
market are less onerous than margin requirements in the securities market and
may therefore cause increased participation by speculators in the futures
market. Such increased participation may also cause temporary price distortions.
Due to the possibility of price distortion in the futures market and because of
the imperfect correlation between movements in the value of the underlying
securities and movements in the prices of futures contracts, the value of
futures contracts as a hedging device may be reduced.
In addition, if the Fund has insufficient available cash, it may at times
have to sell securities to meet variation margin requirements. Such sales may
have to be effected at a time when it may be disadvantageous to do so.
TURNOVER RATE. The Fund's investment portfolio is actively traded. There
are no limitations regarding portfolio turnover for either the equity or
fixed-income portions of the Fund's portfolio; securities may be sold without
regard to the time they have been held when investment considerations warrant
such action. The Fund's portfolio turnover rate may be higher than that of many
other mutual funds, sometimes exceeding 100%. This turnover may result in
greater brokerage commissions and acceleration of capital gains, which are
taxable when distributed to shareholders.
YEAR 2000. Many computer systems in use today may not be able to recognize
any date after December 31, 1999. If these systems are not fixed by that date,
it is possible that they could generate erroneous information or fail
altogether. INVESCO has committed substantial resources in an effort to make
sure that its own major computer systems will continue to function on and after
January 1, 2000. In addition, the markets for, or value of, securities in which
the Funds invest may possibly be hurt by computer failures affecting portfolio
investments or trading of securities beginning January 1, 2000. For example,
improperly functioning systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and
overall economic uncertainties. Individual issuers may incur increased costs in
making their own systems Year 2000 compliant. The combination of market
uncertainty and increased costs means that there is a possibility that Year 2000
computer issues may adversely affect the Fund's investments.
COMPARISON TO MULTI-ASSET ALLOCATION FUND
Because Multi-Asset Allocation Fund's investment objective and policies
are similar to those of Balanced Fund, an investment in Multi-Asset Allocation
Fund is subject to many of the same specific risks as an investment in Balanced
Fund.
Multi-Asset Allocation Fund invests up to 30% of its total assets, with a
benchmark investment of 10% of its total assets, and Balanced Fund may invest,
in small-capitalization companies. These companies (particularly those trading
"over the counter") may be in the early stages of development; have limited
product lines, markets or financial resources; and/or lack management depth.
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These factors may expose these companies to more intense competitive pressures,
greater volatility in earnings, and relative illiquidity or erratic price
movements for the companies' securities, compared to larger, more established
companies or the market averages in general.
Multi-Asset Allocation Fund also invests up to 30% of its total assets,
with a benchmark investment of 10% of its total assets, and Balanced Fund may
invest, in real estate securities. These securities have many of the same risks
as the direct ownership of real estate, including the risk that the property
will decline in value, and risks related to general and local economic
conditions, overbuilding, property tax and operating expense increases and
fluctuating rental income. Real estate investment trusts are subject to the
additional risks associated with management skill, potentially inadequate
diversification, and favorable financing.
Multi-Asset Allocation Fund may invest in stripped mortgage- or
asset-backed securities. The market prices of these securities generally are
more sensitive to changes in interest and prepayment rates than traditional
mortgage- and asset-backed securities and may be extremely volatile.
THE PROPOSED TRANSACTION
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction will be
consummated are set forth in the Reorganization Plan. Significant provisions of
the Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, which is attached as
Appendix A to this Proxy Statement.
The Reorganization Plan provides for (a) the acquisition by Balanced Fund
on the Closing Date of all the assets of Multi-Asset Allocation Fund in exchange
solely for Balanced Fund shares and the assumption by Balanced Fund of all of
Multi-Asset Allocation Fund's liabilities, and (b) the distribution of those
Balanced Fund shares to the shareholders of Multi-Asset Allocation Fund.
The assets of Multi-Asset Allocation Fund to be acquired by Balanced Fund
include all cash, cash equivalents, securities, receivables, claims and rights
of action, rights to register shares under applicable securities laws, books and
records, deferred and prepaid expenses shown as assets on Multi-Asset Allocation
Fund's books and all other property owned by Multi-Asset Allocation Fund.
Balanced Fund will assume from Multi-Asset Allocation Fund all liabilities,
debts, obligations and duties of Multi-Asset Allocation Fund of whatever kind or
nature; provided, however, that Multi-Asset Allocation Fund will use its best
efforts to discharge all of its known debts, liabilities, obligations and duties
before the Closing Date. Balanced Fund will deliver its shares to Multi-Asset
Allocation Fund, which will distribute the shares to Multi-Asset Allocation
Fund's shareholders.
The value of Multi-Asset Allocation Fund's net assets to be acquired by
Balanced Fund and the NAV per share of the Balanced Fund shares to be exchanged
for those assets will be determined as of the close of regular trading on the
New York Stock Exchange on the Closing Date ("Valuation Time"), using the
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valuation procedures described in each Fund's then-current Prospectus and
Statement of Additional Information. Multi-Asset Allocation Fund's net value
shall be the value of its assets to be acquired by Balanced Fund, less the
amount of Multi-Asset Allocation Fund's liabilities, as of the Valuation Time.
On, or as soon as practicable after, the Closing Date, Multi-Asset
Allocation Fund will distribute the Balanced Fund shares it receives PRO RATA to
its shareholders of record as of the effective time of the Reorganization, so
that each Multi-Asset Allocation Fund shareholder will receive a number of full
and fractional Balanced Fund shares equal in aggregate value to the
shareholder's holdings in Multi-Asset Allocation Fund. Multi-Asset Allocation
Fund will be terminated as soon as practicable after the share distribution. The
shares will be distributed by opening accounts on the books of Balanced Fund in
the names of Multi-Asset Allocation Fund shareholders and by transferring to
those accounts the shares previously credited to the account of Multi-Asset
Allocation Fund on those books. Fractional shares in Balanced Fund will be
rounded to the third decimal place.
Accordingly, immediately after the Reorganization, each former shareholder
of Multi-Asset Allocation Fund will own Balanced Fund shares that will be equal
in aggregate value to that shareholder's Multi-Asset Allocation Fund shares
immediately prior to the Reorganization. Moreover, because Balanced Fund shares
will be issued at NAV in exchange for the net assets of Multi-Asset Allocation
Fund, the aggregate value of Balanced Fund shares issued to Multi-Asset
Allocation Fund shareholders will equal the aggregate value of Multi-Asset
Allocation Fund shares. The NAV per share of Balanced Fund will be unchanged by
the transaction. Thus, the Reorganization will not result in a dilution of any
shareholder's interest.
Any transfer taxes payable upon issuance of Balanced Fund shares in a name
other than that of the registered holder of the shares on the books of
Multi-Asset Allocation Fund shareholders shall be paid by the person to whom
those shares are to be issued as a condition of such transfer. Any reporting
responsibility of Multi-Asset Allocation Fund to a public authority will
continue to be its responsibility until it is dissolved.
Half of the cost of the Reorganization, including professional fees and
the cost of soliciting proxies for the Meeting, consisting principally of
printing and mailing expenses, together with the cost of any supplementary
solicitation, will be borne by INVESCO, the investment adviser to each Fund, and
half by Balanced Fund and Multi-Asset Allocation Fund. The Board considered the
fact that INVESCO will pay half of these expenses in approving the
Reorganization and finding that the Reorganization is in the best interests of
the Funds.
The consummation of the Reorganization is subject to a number of
conditions set forth in the Reorganization Plan, some of which may be waived by
either Fund. In addition, the Reorganization Plan may be amended in any mutually
agreeable manner, except that no amendment may be made subsequent to the Meeting
that has a material adverse effect on Multi-Asset Allocation Fund shareholders'
interests.
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REASONS FOR THE REORGANIZATION
The Board, including a majority of its Independent Directors, has
determined that the Reorganization is in the best interests of Multi-Asset
Allocation Fund, that the terms of the Reorganization are fair and reasonable
and that the interests of Multi-Asset Allocation Fund's shareholders will not be
diluted as a result of the Reorganization. They have also determined that the
Reorganization is in the best interests of Balanced Fund, that the terms of the
Reorganization are fair and reasonable and that the interests of Balanced Fund's
shareholders will not be diluted as a result of the Reorganization.
In approving the Reorganization, the Board, including a majority of its
Independent Directors, on behalf of each Fund, considered a number of factors,
including the following:
(1) the compatibility of the Funds' investment objectives, policies and
restrictions;
(2) the effect of the Reorganization on the Funds' expected investment
performance;
(3) the effect of the Reorganization on the expense ratio of each Fund relative
to its current expense ratio;
(4) the costs to be incurred by each Fund as a result of the Reorganization;
(5) the tax consequences of the Reorganization;
(6) possible alternatives to the Reorganization, including whether Multi-Asset
Allocation Fund could continue to operate on a stand-alone basis or should be
liquidated; and
(7) the potential benefits of the Reorganization to INVESCO and to other
persons.
The Reorganization was recommended to the Board on behalf of each Fund by
INVESCO at meetings of the Board held on [February 3], 1999. In recommending the
Reorganization, INVESCO advised the Board that the investment advisory and
administration fee schedule applicable to Balanced Fund would be equal to or
lower than that currently in effect for Multi-Asset Allocation Fund and, because
Multi-Asset Allocation Fund has been unsuccessful in attracting assets, it is
unlikely INVESCO would continue to absorb expenses of Multi-Asset Allocation
Fund. The Board considered the fact that Balanced Fund has a better performance
record and that Multi-Asset Allocation Fund has had more difficulty in
attracting assets than Balanced Fund. The Board also considered the similarity
in investment objective and portfolio composition between the two Funds.
Further, the Board was advised by INVESCO that, because Balanced Fund has
greater net assets than Multi-Asset Allocation Fund, combining the two Funds
would reduce the expenses borne by the shareholders of Multi-Asset Allocation
Fund as a percentage of net assets. The Board was also advised that following
the Reorganization, the expense ratio for Balanced Fund may decrease because the
investment advisory and administration fee paid by that Fund decreases as its
size increases.
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DESCRIPTION OF SECURITIES TO BE ISSUED
Combination Stock & Bond Funds is registered with the SEC as an open-end
management investment company. It has an authorized capitalization of $1.6
billion shares of common stock (par value $0.01 per share). Shares of Balanced
Fund entitle their holders to one vote per full share and fractional votes for
fractional shares held.
Balanced Fund does not hold annual meetings of shareholders. There
normally will be no meetings of shareholders for the purpose of electing
directors unless fewer than a majority of the directors holding office have been
elected by shareholders, at which time the directors then in office will call a
shareholders' meeting for the election of directors. The directors will call
annual or special meetings of shareholders for action by shareholder vote as may
be required by the 1940 Act or Combination Stock & Bond Funds' Articles of
Incorporation, or at their discretion.
Both Funds are series of Combination Stock & Bond Funds. Thus, the rights
of shareholders of Balanced Fund and Multi-Asset Allocation Fund with respect to
shareholder meetings, inspection of shareholder lists, and distributions on
liquidation of a Fund are identical.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of Multi-Asset Allocation
Fund, which prohibit it from acquiring more than a stated percentage of
ownership of another company, might be construed as restricting its ability to
carry out the Reorganization. By approving the Reorganization Plan, Multi-Asset
Allocation Fund's shareholders will be agreeing to waive, only for the purpose
of the Reorganization, those fundamental investment restrictions that could
prohibit or otherwise impede the transaction.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Multi-Asset Allocation Fund's assets for Balanced Fund
shares and Balanced Fund's assumption of Multi-Asset Allocation Fund's
liabilities is intended to qualify for federal income tax purposes as a tax-free
reorganization under Section 368(a)(1)(C) of the Code. Combination Stock & Bond
Funds will receive an opinion of its counsel, Kirkpatrick & Lockhart LLP,
substantially to the effect that:
(1) Balanced Fund's acquisition of Multi-Asset Allocation
Fund's assets in exchange solely for Balanced Fund shares and
Balanced Fund's assumption of Multi-Asset Allocation Fund's
liabilities, followed by Multi-Asset Allocation Fund's distribution
of those shares PRO RATA to its shareholders constructively in
exchange for their Multi-Asset Allocation Fund shares, will
constitute a "reorganization" within the meaning of section
368(a)(1)(C) of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
(2) Multi-Asset Allocation Fund will recognize no gain or loss
on the transfer to Balanced Fund of its assets in exchange solely
for Balanced Fund shares and Balanced Fund's assumption of
Multi-Asset Allocation Fund's liabilities or on the subsequent
distribution of those shares to Multi-Asset Allocation Fund's
shareholders in constructive exchange for their Multi-Asset
Allocation Fund shares;
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(3) Balanced Fund will recognize no gain or loss on its receipt
of the transferred assets in exchange solely for Balanced Fund
shares and its assumption of Multi-Asset Allocation Fund's
liabilities;
(4) Balanced Fund's basis for the transferred assets will be
the same as the basis thereof in Multi-Asset Allocation Fund's hands
immediately before the Reorganization, and Balanced Fund's holding
period for those assets will include Multi-Asset Allocation Fund's
holding period therefor;
(5) A Multi-Asset Allocation Fund shareholder will recognize no
gain or loss on the constructive exchange of all its Multi-Asset
Allocation Fund shares solely for Balanced Fund shares pursuant to
the Reorganization; and
(6) A Multi-Asset Allocation Fund shareholder's aggregate basis
for the Balanced Fund shares to be received by it in the
Reorganization will be the same as the aggregate basis for its
Multi-Asset Allocation Fund shares to be constructively surrendered
in exchange for those Balanced Fund shares, and its holding period
for those Balanced Fund shares will include its holding period for
those Multi-Asset Allocation Fund shares, provided they are held as
capital assets by the shareholder on the Closing Date.
The tax opinion may state that no opinion is expressed as to the effect of the
Reorganization on the Funds or any shareholder with respect to any asset as to
which any unrealized gain or loss is required to be recognized for federal
income tax purposes at the end of a taxable year (or on the termination or
transfer thereof) under a mark-to-market system of accounting.
Shareholders of Multi-Asset Allocation Fund should consult their tax
advisers regarding the effect, if any, of the Reorganization in light of their
individual circumstances. Because the foregoing discussion only relates to
federal income tax consequences of the Reorganization, those shareholders also
should consult their tax advisers about state and local tax consequences, if
any, of the Reorganization.
CAPITALIZATION
The following table shows the capitalization of each Fund as of July 31,
1998, and on a pro forma combined basis (unaudited) as of July 31, 1998 giving
effect to the Reorganization:
Balanced Fund Multi-Asset Combined Fund
------------- ----------- -------------
Allocation Fund (Pro Forma)
--------------- -----------
Net Assets 216,623,518 20,945,196 237,568,714
Net Asset Value Per Share 15.71 12.97 15.71
Shares Outstanding 13,786,868 1,615,367 15,120,108
REQUIRED VOTE. Approval of the Reorganization requires the affirmative
vote of a majority of the outstanding voting securities of Multi-Asset
Allocation Fund.
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THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL 1
PART II. PROPOSED ROUTINE ORGANIZATIONAL MATTERS AND MODIFICATIONS TO
FUNDAMENTAL INVESTMENT LIMITATIONS
PROPOSAL 2. TO APPROVE AMENDMENTS TO THE FUNDAMENTAL INVESTMENT
RESTRICTIONS OF MULTI-ASSET ALLOCATION FUND
As required by the 1940 Act, Multi-Asset Allocation Fund has adopted
certain fundamental investment restrictions ("fundamental restrictions"), which
are set forth in the Fund's Statement of Additional Information. These
fundamental restrictions may be changed only with shareholder approval.
Restrictions and policies that the Fund has not specifically designated as
fundamental are considered to be "non-fundamental" and may be changed by the
Board without shareholder approval.
Some of Multi-Asset Allocation Fund's fundamental restrictions reflect
past regulatory, business or industry conditions, practices or requirements that
are no longer in effect. Also, as other INVESCO Funds have been created over the
years, they have adopted substantially similar fundamental restrictions that
often have been phrased in slightly different ways, resulting in minor but
unintended differences in effect or potentially giving rise to unintended
differences in interpretation. Accordingly, the Board has approved revisions to
Multi-Asset Allocation Fund's fundamental restrictions in order to simplify,
modernize and make the Fund's fundamental restrictions more uniform with those
of the other INVESCO Funds.
The Board believes that eliminating the disparities among the INVESCO
Funds' fundamental restrictions will enhance management's ability to manage the
Fund's assets efficiently and effectively in changing regulatory and investment
environments and permit directors to review and monitor investment policies more
easily. In addition, standardizing the fundamental restrictions of the INVESCO
Funds will assist the INVESCO Funds in making required regulatory filings in a
more efficient and cost-effective way. Although the proposed changes in
fundamental restrictions will allow the Multi-Asset Allocation Fund greater
investment flexibility to respond to future investment opportunities, the Board
does not anticipate that the changes, individually or in the aggregate, will
result at this time in a material change in the level of investment risk
associated with an investment in the Fund.
The text and a summary description of each proposed change to Multi-Asset
Allocation Fund's fundamental restrictions are set forth below, together with
the text of each current corresponding fundamental restriction. The text below
also describes any non-fundamental restrictions that would be adopted by the
Board in conjunction with the revision of certain of fundamental restrictions.
Any non-fundamental restriction may be modified or eliminated by the Board at
any future date without further shareholder approval.
If approved by Multi-Asset Allocation Fund's shareholders at the Meeting,
the proposed changes in Multi-Asset Allocation Fund's fundamental restrictions
will be adopted by the Fund only if the Reorganization is NOT approved by
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Multi-Asset Allocation Fund's shareholders. In that event, Multi-Asset
Allocation Fund's Statement of Additional Information will be revised to reflect
those changes as soon as practicable following the Meeting. If the
Reorganization is approved, the proposed changes in the Fund's fundamental
restrictions will not be implemented. Instead, as described in Proposal 1,
Multi-Asset Allocation Fund shareholders will become shareholders of Balanced
Fund, whose shareholders are being asked to approve substantially similar
changes in Balanced Fund's fundamental restrictions, and Multi-Asset Allocation
Fund will be terminated.
a. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION
Multi-Asset Allocation Fund's current fundamental restriction on issuer
diversification is as follows:
The Fund may not, with respect to seventy-five percent (75%) of its total
assets, purchase the securities of any one issuer (except cash items and
"Government securities" as defined under the 1940 Act), if the purchase
would cause the Fund to have more than 5% of the value of its total assets
invested in the securities of such issuer or to own more than 10% of the
outstanding voting securities of such issuer.
The Board recommends that this restriction be replaced with the following
fundamental restriction:
The Fund may not, with respect to 75% of the Fund's total assets, purchase
the securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (i) more than
5% of the Fund's total assets would be invested in the securities of that
issuer, or (ii) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
The primary purpose of the revision is to revise the Fund's fundamental
restriction on issuer diversification to conform to a restriction that is
expected to become standard for all INVESCO Funds. If the proposed revision is
approved, Multi-Asset Allocation Fund could invest without limit in other
investment companies to the extent permitted by the 1940 Act. The proposed
change would standardize the language of the Fund's fundamental restriction on
issuer diversification and provide the Fund's managers with greater investment
flexibility.
b. MODIFICATION OF FUNDAMENTAL RESTRICTION ON BORROWING
Multi-Asset Allocation Fund's current fundamental restriction on borrowing
is as follows:
The Fund may not borrow money, except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) and may
enter into reverse repurchase agreements in an aggregate amount not
exceeding 331/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
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come to exceed 33 1/3% of the value of the Fund's total assets by reason
of a decline in net assets will be reduced within three business days to
the extent necessary to comply with the 331/3% limitation. This
restriction shall not prohibit deposits of assets to margin or guarantee
positions in futures, options, swaps or forward contracts, or the
segregation of assets in connection with such contracts.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not borrow money, except that the Fund may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings).
The primary purpose of the proposal is to eliminate minor differences in
the wording of the INVESCO Funds' current restrictions on borrowing for greater
uniformity and to conform to the 1940 Act requirements for borrowing. Currently,
the Fund's fundamental restriction is significantly more limiting than the
restrictions imposed by the 1940 Act in that it limits the purposes for which
the Fund may borrow money. The proposed revision would eliminate the
restrictions on the purposes for which the Fund may borrow money and the
explicit requirement that any borrowings that come to exceed 331/3% of the
Fund's net assets by reason of a decline in net assets be reduced within three
business days.
If the proposal is approved, the Board will adopt a non-fundamental policy
with respect to borrowing as follows:
The Fund may borrow money only from a bank or from an open-end management
investment company managed by INVESCO Funds Group, Inc. or an affiliate or
a successor thereof for temporary or emergency purposes (not for
leveraging or investing) or by engaging in reverse repurchase agreements
with any party (reverse repurchase agreements will be treated as
borrowings for purposes of fundamental limitation (2) (above).
The non-fundamental limitation reflects the Fund's current policy that
borrowing by the Fund may only be done for temporary or emergency purposes. In
addition to borrowing from banks, as permitted in the Fund's current policy, the
non-fundamental policy would permit the Fund to borrow from open-end funds
managed by INVESCO or an affiliate or successor thereof. The Fund would not be
able to do so, however, unless it obtains permission for such borrowings from
the SEC. The non-fundamental policy also clarifies that reverse repurchase
agreements will be treated as borrowings.
The Board believes that this approach, making the Fund's fundamental
restriction on borrowing no more limiting than is required under the 1940 Act,
while incorporating more strict limits on borrowing in a non-fundamental
restriction, will maximize the Fund's flexibility for future contingencies.
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c. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION
Multi-Asset Allocation Fund's current fundamental restriction on industry
concentration is as follows:
The Fund may not invest more than 25% of the value of its total assets in
any particular industry (other than Government securities).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities or municipal securities) if, as a result,
more than 25% of the Fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry.
If the proposed revision is approved, the Board would also adopt the
following non-fundamental policy:
With respect to fundamental limitation (1), domestic and foreign banking
will be considered to be different industries.
The purpose of the modification is to eliminate minor differences in the
wording of the INVESCO Funds' current restrictions on concentration for greater
uniformity and to avoid unintended limitations. The proposed changes to
Multi-Asset Allocation Fund's fundamental concentration policy clarify that the
concentration limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, or to municipal
securities. The exclusion from the current concentration limitation refers
simply to "Government Securities." A failure to except all such securities from
the concentration policy could hinder the Fund's ability to purchase such
securities in conjunction with taking temporary defensive positions.
d. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENT
Multi-Asset Allocation Fund's current fundamental restriction on real
estate investment is as follows:
The Fund may not invest directly in real estate or interests in real
estate; however, the Fund may own debt or equity securities issued by
companies engaged in those businesses.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund will not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments backed
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by real estate or securities of companies engaged in the real estate
business).
In addition to conforming Multi-Asset Allocation Fund's fundamental
restriction to that of the other INVESCO Funds, the proposed amendment of the
Fund's fundamental restriction on investment in real estate would more
completely describe the types of real estate-related securities investments that
are permissible for the Fund. The Board believes that this clarification will
make it easier for decisions to be made concerning the Fund's investments in
real estate-related securities.
e. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES
Multi-Asset Allocation Fund's current fundamental restriction on the
purchase of commodities is as follows:
The Fund may not purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of securities (but
this shall not prevent the Fund from purchasing or selling options,
futures, swaps and forward contracts or from investing in securities or
other instruments backed by physical commodities).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase or sell physical commodities; however, this
policy shall not prevent the Fund from purchasing and selling foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments.
The proposed changes to this investment restriction are intended to
conform the restriction to those of the other INVESCO Funds and ensure that
Multi-Asset Allocation Fund will have the maximum flexibility to enter into
hedging or other transactions utilizing financial instruments and derivative
products when doing so is permitted by operating policies established for the
Fund by the Board. Due to the rapid and continuing development of derivative
products and the possibility of changes in the definition of "commodities,"
particularly in the context of the jurisdiction of the Commodities Futures
Trading Commission, it is important for the Fund's policy to be flexible enough
to allow it to enter into hedging and other transactions using these products
when doing so is deemed appropriate by INVESCO and is within the investment
parameters established by the Board. To maximize that flexibility, the Board
recommends that the Fund's fundamental restriction on commodities investments be
clear in permitting the use of derivative products, even if the current
non-fundamental investment policies of the Fund would not permit investment in
one or more of the permitted transactions.
f. MODIFICATION OF FUNDAMENTAL RESTRICTION ON LOANS
Multi-Asset Allocation Fund's current fundamental restriction concerning
lending is as follows:
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The Fund may not lend any security or make any other loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of commercial paper, debt
securities or to repurchase agreements.)
The Board recommends that the shareholders of the Fund vote to replace
this restriction with the following fundamental restriction:
The Fund may not lend any security or make any loan if, as a result, more
than 33 1/3 % of its total assets would be lent to other parties, but this
limitation does not apply to the purchase of debt securities or to
repurchase agreements.
The primary purpose of the proposal is to eliminate minor differences in
the wording of the INVESCO Funds' current restrictions on loans for greater
uniformity. The proposed changes to this fundamental restriction are relatively
minor and would have no substantive effect on Multi-Asset Allocation Fund's
lending activities or other investments.
g. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING
Multi-Asset Allocation Fund's current fundamental restriction on
underwriting is as follows:
The Fund may not act as an underwriter of securities issued by others,
except to the extent that it may be deemed an underwriter in connection
with the disposition of portfolio securities of the Fund.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not underwrite securities of other issuers, except insofar as
it may be deemed to be an underwriter under the Securities Act of 1933, as
amended, in connection with the disposition of the Fund's portfolio
securities.
The primary purpose of the proposal is to eliminate minor differences in
the wording of the Fund's current fundamental restriction on underwriting for
greater uniformity with the fundamental restrictions of the other INVESCO Funds
and to avoid unintended limitations.
h. MODIFICATION OF FUNDAMENTAL POLICY ON INVESTING IN ANOTHER INVESTMENT
COMPANY AND ADOPTION OF NON-FUNDAMENTAL POLICY REGARDING INVESTING IN
SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES
Multi-Asset Allocation Fund's current fundamental policy regarding
investment in another investment company is as follows:
The Fund may, notwithstanding any other investment policy or limitation
(whether or not fundamental), invest all of its assets in the securities
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of a single open-end management investment company with substantially the
same fundamental investment objectives, policies and limitations as the
Fund.
The Board recommends that shareholders vote to replace this policy with
the following fundamental policy:
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO Funds Group,
Inc. or an affiliate or a successor thereof, with substantially the same
fundamental investment objective, policies and limitations as the Fund.
The proposed revision to Multi-Asset Allocation Fund's current fundamental
policy would ensure that the INVESCO Funds have uniform policies permitting each
Fund to adopt a "master/feeder" structure whereby one or more Funds invest all
of their assets in another Fund. The master/feeder structure has the potential,
under certain circumstances, to minimize administration costs and maximize the
possibility of gaining a broader investor base. Currently, none of the INVESCO
Funds intend to establish a master/feeder structure; however, the Board
recommends that Multi-Asset Allocation Fund shareholders adopt a policy that
would permit this structure in the event that the Board determines to recommend
the adoption of a master/feeder structure by the Fund. The proposed revision,
unlike the current policy, would require that any fund in which the Fund may
invest under a master/feeder structure be advised by INVESCO or an affiliate.
If the proposed revision is approved, the Board will adopt a
non-fundamental policy as follows:
The Fund may invest in securities issued by other investment companies to
the extent that such investments are consistent with the Fund's investment
objective and policies and permissible under the 1940 Act.
The primary purpose of this non-fundamental policy is to conform to the
other INVESCO Funds and to the 1940 Act requirements for investing in other
investment companies. Currently, the Fund's fundamental restriction is much more
limiting than the restriction imposed by the 1940 Act. Adoption of this
non-fundamental policy will enable the Fund to purchase the securities of other
investment companies to the extent permitted under the 1940 Act or pursuant to
an exemption granted by the SEC.
i. ADOPTION OF FUNDAMENTAL RESTRICTION ON THE ISSUANCE OF SENIOR SECURITIES
Currently, Multi-Asset Allocation Fund has no fundamental restriction on
the issuance of senior securities. The Board recommends that shareholders vote
to adopt the following fundamental restriction:
The Fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940.
26
<PAGE>
The primary purpose of the proposal is to adopt a fundamental restriction
indicating the extent to which the Fund may issue "senior securities," a term
that is generally defined to refer to fund obligations that have a priority over
the fund's shares with respect to the distribution of fund assets or the payment
of dividends. The Board believes that the adoption of the proposed fundamental
restriction, which does not specify the manner in which senior securities may be
issued and is no more limiting than is required under the 1940 Act, would
maximize the Fund's borrowing flexibility for future contingencies and would
conform to the fundamental restrictions of the other INVESCO Funds on the
issuance of senior securities.
REQUIRED VOTE. Approval of Proposal 2 requires the affirmative vote of a
"majority of the outstanding voting securities" of Multi-Asset Allocation Fund,
which for this purpose means the affirmative vote of the lesser of (1) 67% or
more of the shares of the Fund present at the Meeting or represented by proxy if
more than 50% of the outstanding shares of the Fund are so present or
represented, or (2) more than 50% of the outstanding shares of the Fund.
SHAREHOLDERS WHO VOTE "FOR" PROPOSAL 2 WILL VOTE "FOR" EACH PROPOSED CHANGE
DESCRIBED ABOVE. THOSE SHAREHOLDERS WHO WISH TO VOTE AGAINST ANY OF THE SPECIFIC
PROPOSED CHANGES DESCRIBED ABOVE MAY DO SO ON THE PROXY PROVIDED.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
PROPOSAL 3. TO ELECT THE BOARD OF DIRECTORS OF COMBINATION
STOCK & BOND FUNDS
The Board of Combination Stock & Bond Funds has nominated the individuals
identified below for election to the Board at the Meeting. Combination Stock &
Bond Funds currently has ten directors. Vacancies on the Board are generally
filled by appointment by the remaining directors. However, the 1940 Act provides
that vacancies may not be filled by directors unless thereafter at least
two-thirds of the directors shall have been elected by shareholders. To ensure
continued compliance with this rule without incurring the expense of calling
additional shareholder meetings, shareholders are being asked at this meeting to
elect the current ten directors. Consistent with the provisions of Combination
Stock & Bond Funds' by-laws, and as permitted by Maryland law, Combination Stock
& Bond Funds does not anticipate holding annual shareholder meetings. Thus, the
directors will be elected for indefinite terms, subject to termination or
resignation. Each nominee has indicated a willingness to serve if elected. If
any of the nominees should not be available for election, the persons named as
proxies (or their substitutes) may vote for other persons in their discretion.
Management has no reason to believe that any nominee will be unavailable for
election.
All of the Independent Directors now being proposed for election were
nominated, and selected by Independent Directors. Eight of the ten current
directors are Independent Directors.
The persons named as attorneys-in-fact in the enclosed proxy have advised
Combination Stock & Bond Funds that unless a proxy instructs them to withhold
authority to vote for all listed nominees or for any individual nominee, they
will vote all validly executed proxies for the election of the nominees named
below.
27
<PAGE>
The nominees for director, their ages, a description of their principal
occupations, the number of Multi-Asset Allocation Fund shares owned by each, and
their respective memberships on Board committees are listed in the table below.
<TABLE>
<CAPTION>
Name, Position with Principal Occupation and Business Director or Number of Member of
- ------------------- --------------------------------- ----------- --------- ---------
Combination Stock & Experience (during the past five Executive Multi-Asset Committee
- ------------------- -------------------------------- --------- ----------- ---------
Bond Funds, and Age years) Officer of Allocation Fund
- ------------------- ------ ---------- ---------------
Combination Shares
----------- ------
Stock & Bond Beneficially Owned
------------ ------------------
Funds Since Directly or
----------- -----------
Indirectly on Dec.
------------------
31, 1998 (1)
------------
<S> <C> <C> <C> <C>
CHARLES W. BRADY, Chief Executive Officer and Director 1993 0 (3), (4),
Chairman of the Board, of AMVESCAP, PLC, London, England, (5), (6)
Age 63* and of various subsidiaries
thereof. Chairman of the Board of
INVESCO Global Health Sciences Fund.
FRED A. DEERING, Vice Trustee of INVESCO Global Health 1993 8.642 (2), (3), (5)
Chairman of the Board, Sciences Fund. Formerly, Chairman
Age 70 of the Executive Committee and
Chairman of the Board of Security
Life of Denver Insurance Company,
Denver, Colorado; Director of ING
America Life Insurance Company.
MARK H. WILLIAMSON, President, Chief Executive Officer, 1998 0 (3), (4), (5)
President, Chief and Director, INVESCO Distributors
Executive Officer, and Inc.; President, Chief Executive
Director, Age 47* Officer, and Director, INVESCO;
President, INVESCO Global Health
Sciences Fund. Formerly, Chairman
of the Board and Chief Executive
Officer, NationsBanc Advisors, Inc.
(1995-1997); Chairman of the Board,
NationsBanc Investments, Inc.
(1997-1998).
DR. VICTOR L. ANDREWS, Professor Emeritus, Chairman 1993 8.642 (4), (6), (8)
Director, Age 68 Emeritus and Chairman of the CFO
Roundtable of the Department of
Finance at Georgia State University,
Atlanta, Georgia; President, Andrews
Financial Associates, Inc.
(consulting firm); since October
1984; formerly, member of the
faculties of the Harvard Business
School and the Sloan School of
Management of MIT. Dr. Andrews is
also a director of the Southeastern
Thrift and Bank Fund, Inc. and the
Sheffield Funds, Inc.
BOB R. BAKER, Director, President and Chief Executive 1993 8.642 (3), (4), (5)
Age 62 Officer of AMC Cancer Research
Center, Denver, Colorado, since
January 1989; until December 1988,
Vice Chairman of the Board, First
Columbia Financial Corporation,
Englewood, Colorado. Formerly,
Chairman of the Board and Chief
Executive Officer of First Columbia
Financial Corporation.
LAWRENCE H. BUDNER, Trust Consultant; Prior to June 1993 8.642 (2), (6), (7)
Director, Age 68 1987, Senior Vice President and
Senior Trust Officer, InterFirst
Bank, Dallas, Texas.
DR. WENDY LEE GRAMM, Self-employed (since 1993). 1997 8.642 (4), (8)
Director, Age 53 Professor of Economics and Public
Administration, University of Texas
at Arlington. Formerly, Chairman,
Commodities Futures Trading
Commission (1988-1993);
Administrator for Information and
28
<PAGE>
Regulatory Affairs, Office of
Management and Budget (1985-1988);
Executive Director, Presidential
Task Force on Regulatory Relief;
Director, Federal Trade Commission
Bureau of Economics; Director of the
Chicago Mercantile Exchange; Enron
Corporation; IBP, Inc.; State Farm
Insurance Company; Independent
Women's Forum; International
Republic Institute; and the
Republican Women's Federal Forum.
KENNETH T. KING, Presently retired. Formerly, 1993 8.642 (2), (3),
Director, Age 73 Chairman of the Board of the Capitol (5), (6), (7)
Life Insurance Company, Providence
Washington Insurance Company, and
Director of numerous subsidiaries
thereof in the United States.
Formerly, Chairman of the Board of
the Providence Capitol Companies in
the United Kingdom and Guernsey.
Until 1987, Chairman of the Board,
Symbion Corporation.
JOHN W. MCINTYRE, Presently retired. Formerly, Vice 1995 8.642 (2), (3),
Director, Age 68 Chairman of the Board of The (5), (7)
Citizens and Southern Corporation;
Chairman of the Board and Chief
Executive Officer of The Citizens
and Southern Georgia Corporation;
Chairman of the Board and Chief
Executive Officer of Citizens and
Southern National Bank. Trustee of
INVESCO Global Health Sciences Fund
and Gables Residential Trust.
DR. LARRY SOLL, Presently retired. Chairman of the 1997 8.642 (4), (8)
Director, Age 56 Board (1987-1994), Chief Executive
Officer (1982-1989 and 1993-1994)
and President (1982-1989) of
Synergen Corporation. Director of
Synergen Corporation since
incorporation in 1982. Director of
ISI Pharmaceuticals, Inc. Trustee
of INVESCO Global Health Sciences
Fund.
</TABLE>
*Because of his affiliation with INVESCO, with Multi-Asset Allocation Fund's
investment adviser, or with companies affiliated with INVESCO, this individual
is deemed to be an "interested person" of Combination Stock & Bond Funds as that
term is defined in the 1940 Act.
(1) = As interpreted by the SEC, a security is beneficially owned by a person if
that person has or shares voting power or investment power with respect to that
security. The persons listed have partial or complete voting and investment
power with respect to their respective Fund shares.
(2) = Member of the Audit Committee
(3) = Member of the Executive Committee
(4) = Member of the Management Liaison Committee
(5) = Member of the Valuation Committee
(6) = Member of the Compensation Committee
(7) = Member of the Soft Dollar Brokerage Committee
(8) = Member of the Derivatives Committee
The Board has audit, management liaison, soft dollar brokerage, and
derivatives committees, consisting of Independent Directors, and compensation,
executive, and valuation committees consisting of both Independent Directors and
non-independent directors. The Board does not have a nominating committee. The
audit committee, consisting of four Independent Directors, meets quarterly with
Combination Stock & Bond Funds' independent accountants and executive officers
of Combination Stock & Bond Funds. This committee reviews the accounting
principles being applied by Combination Stock & Bond Funds in financial
reporting, the scope and adequacy of internal controls, the responsibilities and
29
<PAGE>
fees of the independent accountants, and other matters. All of the
recommendations of the audit committee are reported to the full Board. During
the intervals between the meetings of the Board, the executive committee may
exercise all powers and authority of the Board in the management of Combination
Stock & Bond Funds' business, except for certain powers which, under applicable
law and/or Combination Stock & Bond Funds' by-laws, may only be exercised by the
full Board. All decisions are subsequently submitted for ratification by the
Board. The management liaison committee meets quarterly with various management
personnel of INVESCO in order to facilitate better understanding of management
and operations of Combination Stock & Bond Funds, and to review legal and
operational matters that have been assigned to the committee by the Board, in
furtherance of the Board's overall duty of supervision. The soft dollar
brokerage committee meets periodically to review soft dollar transactions by
Multi-Asset Allocation Fund, and to review policies and procedures of
Multi-Asset Allocation Fund's adviser with respect to soft dollar brokerage
transactions. The committee then reports on these matters to the Board. The
derivatives committee meets periodically to review derivatives investments made
by Multi-Asset Allocation Fund. The committee monitors derivatives usage by
Multi-Asset Allocation Fund and the procedures utilized by Multi-Asset
Allocation Fund's adviser to ensure that the use of such instruments follows the
policies on such instruments adopted by the Board. The committee then reports on
these matters to the Board.
During the past fiscal year, the Board met four times, the audit committee
met three times, the compensation committee met once, the management liaison
committee met three times, the soft dollar brokerage committee met once, and the
derivatives committee met twice. The executive committee did not meet. During
Combination Stock & Bond Funds' last fiscal year, each director attended 75% or
more of the Board meetings and meeting of the committees of the Board on which
he or she served.
The Independent Directors nominate individuals to serve as Independent
Directors, without any specific nominating committee. The Board ordinarily will
not consider unsolicited director nominations recommended by Multi-Asset
Allocation Fund shareholders. The Board, including its Independent Directors,
unanimously approved the nomination of the foregoing persons to serve as
directors and directed that the election of these nominees be submitted to
Multi-Asset Allocation Fund's shareholders.
The following table sets forth information relating to the compensation
paid to directors during the last fiscal year:
30
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY COMBINATION STOCK & BOND FUNDS TO DIRECTORS
NAME OF PERSON, POSITION AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION
- ------------------------ --------- --------------------- ---------------- ------------------
COMPENSATION FROM BENEFITS ACCRUED AS BENEFITS UPON FROM COMBINATION
----------------- ------------------- ------------- ----------------
COMBINATION STOCK PART OF COMBINATION RETIREMENT3 STOCK & BOND FUNDS
----------------- ------------------- ----------- ------------------
& BOND FUNDS1 STOCK & BOND FUNDS AND INVESCO FUNDS
------------- ------------------ -----------------
EXPENSES2 PAID TO DIRECTORS1
--------- ------------------
<S> <C> <C> <C> <C>
FRED A. DEERING, Vice $2,458 $439 $281 $103,700
Chairman of the Board
and Director
DR. VICTOR L. ANDREWS, $2,434 $414 $326 $80,350
Director
BOB R. BAKER, Director $2,475 $370 $437 $84,000
LAWRENCE H. BUDNER, $2,409 $414 $326 $79,350
Director
DANIEL D. CHABRIS4, $2,437 $448 $243 $70,000
Director
KENNETH T. KING, Director $2,374 $455 $255 $77,050
JOHN W. MCINTYRE, $2,384 $0 $0 $98,500
Director
DR. WENDY L. GRAMM, $2,363 $0 $0 $79,000
Director
DR. LARRY SOLL, Director $2,384 $0 $0 $96,000
----------- ------------- ------------------- ---------------------
Total $21,718 $2,540 $1,868 $767,950
As a Percentage of Net
- ----------------------
Assets 0.0091%5 0.0011%5 0.0046%6
- ------
</TABLE>
(1)The Vice Chairman of the Board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage and compensation committees, and
Independent Director members of the committees of each Fund receive compensation
for serving in such capacities in addition to the compensation paid to all
Independent Directors.
(2)Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the directors.
(3)These figures represent the Fund's share of the estimated annual benefits
payable by the INVESCO Complex (excluding INVESCO Global Health Sciences Fund
which does not participate in this retirement plan) upon the directors'
retirement, calculated using the current method of allocating director
compensation among the INVESCO Funds. These estimated benefits assume retirement
at age 72 and that the basic retainer payable to the directors will be adjusted
periodically for inflation, for increases in the number of funds in the INVESCO
Complex, and for other reasons during the period in which retirement benefits
are accrued on behalf of the respective directors. This results in lower
estimated benefits for directors who are closer to retirement and higher
estimated benefits for directors who are farther from retirement. With the
exception of Drs. Soll and Gramm, each of these directors has served as director
of one or more of the INVESCO Funds for the minimum five-year period required to
be eligible to participate in the Defined Benefit Deferred Compensation Plan.
(4)Mr. Chabris retired as a director effective September 30, 1998.
(5)Total as a percentage of the Fund's net assets as of July 31, 1998
(6)Total as a percentage of INVESCO complex's net assets as of December 31,
1998.
<PAGE>
Combination Stock & Bond Funds pays its Independent Directors, Board vice
chairman, and committee chairmen and members the fees described above.
Combination Stock & Bond Funds also reimburses its Independent Directors for
travel expenses incurred in attending meetings. Charles W. Brady, Chairman of
the Board, and Mark H. Williamson, President, Chief Executive Officer, and
Director, as "interested persons" of Combination Stock & Bond Funds and of other
31
<PAGE>
INVESCO Funds, receive compensation and are reimbursed for travel expenses
incurred in attending meetings as officers or employees of INVESCO or its
affiliated companies, but do not receive any director's fees or other
compensation from Combination Stock & Bond Funds or other INVESCO Funds for
their services as directors.
The overall direction and supervision of Multi-Asset Allocation Fund is
the responsibility of the Board, which has the primary duty of ensuring that
Multi-Asset Allocation Fund's general investment policies and programs are
adhered to and that Multi-Asset Allocation Fund is properly administered. The
officers of Multi-Asset Allocation Fund, all of whom are officers and employees
of and paid by INVESCO, are responsible for the day-to-day administration of
Multi-Asset Allocation Fund. The investment adviser for Multi-Asset Allocation
Fund has the primary responsibility for making investment decisions on behalf of
Multi-Asset Allocation Fund. These investment decisions are reviewed by the
investment committee of INVESCO.
All of the officers and directors of Combination Stock & Bond Funds hold
comparable positions with the following INVESCO Funds: INVESCO Bonds Funds, Inc.
(formerly, INVESCO Income Funds, Inc.), INVESCO Growth Funds, Inc. (formerly
INVESCO Growth Fund, Inc.), INVESCO Industrial Income Fund, Inc., INVESCO
Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO
International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Sector
Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.), INVESCO Specialty
Funds, Inc., INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc. and
INVESCO Capital Appreciation Funds, Inc.), INVESCO Tax-Free Income Funds, Inc.,
and INVESCO Variable Investment Funds, Inc. All of the directors and officers of
Combination Stock & Bond Funds also serve as trustees of INVESCO Value Trust and
INVESCO Treasurer's Series Trust.
The Boards of the funds managed by INVESCO, INVESCO Treasurer's Series
Trust, and INVESCO Value Trust have adopted a Defined Benefit Deferred
Compensation Plan (the "Plan") for the non-interested directors and trustees of
the Funds. Under the Plan, each director or trustee who is not an interested
person of the Funds (as defined in Section 2(a)(47) of the 1940 Act) and who has
served for at least five years (a "Qualified Director") is entitled to receive,
upon termination of service as director (normally at retirement age 72 or the
retirement age of 73 or 74, if the retirement date is extended by the Boards for
one or two years, but less than three years) continuation of payment for one
year (the "First Year Retirement Benefit") of the annual basic retainer and
annualized board meeting fees payable by the funds to the Qualified Director at
the time of his or her retirement. Commencing with any such director's second
year of retirement, and commencing with the first year of retirement of any
director whose retirement has been extended by the Board for three years, a
Qualified Director shall receive quarterly payments at an annual rate equal to
50% of the basic retainer and annualized board meeting fees. These payments will
continue for the remainder of the Qualified Director's life or ten years,
whichever is longer. If a Qualified Director dies or becomes disabled after age
72 and before age 74 while still a director of the funds, the First Year
Retirement Benefit and Reduced Retainer Payments will be made to him or her or
to his or her beneficiary or estate. If a Qualified Director becomes disabled or
dies either prior to age 72 or during his or her 74th year while still a
director of the funds, the director will not be entitled to receive the First
Year Retirement Benefit; however, the retirement payments will be made to his or
her beneficiary or estate. The Plan is administered by a committee of three
32
<PAGE>
directors who are also participants in the Plan and one director who is not a
Plan participant. The cost of the Plan will be allocated among the INVESCO,
Treasurer's Series Trust, and Value Trust Funds (the "INVESCO Funds") in a
manner determined to be fair and equitable by the committee. The Fund began
making payments to Mr. Chabris as of October 1, 1998 under the Plan. The Fund
has no stock options or other pension or retirement plans for management or
other personnel and pays no salary or compensation to any of its officers.
The Independent Directors have contributed to a deferred compensation
plan, pursuant to which they have deferred receipt of a portion of the
compensation which they would otherwise have been paid as directors of certain
of the INVESCO Funds. The deferred amounts, once the amount that has been
deferred totals at least $100, are invested in shares of all of the INVESCO
Funds. Each Independent Director is, therefore, an indirect owner of shares of
each INVESCO Fund, in addition to any Fund shares that may be owned directly.
REQUIRED VOTE. Election of each nominee as a director of Combination Stock &
Bond Funds requires the vote of a plurality of all the outstanding shares of
Multi-Asset Allocation Fund present at the Meeting, and of the outstanding
shares of Balanced Fund present at a concurrent meeting of the shareholders of
Balanced Fund, in person or by proxy, taken in the aggregate.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES IN PROPOSAL 3
PROPOSAL 4. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS
LLP AS INDEPENDENT ACCOUNTANTS OF MULTI-ASSET ALLOCATION FUND
The Board, including all of its Independent Directors, has selected
PricewaterhouseCoopers LLP to continue to serve as independent accountants of
Multi-Asset Allocation Fund, subject to ratification by Multi-Asset Allocation
Fund's shareholders. PricewaterhouseCoopers LLP has no direct financial interest
or material indirect financial interest in Multi-Asset Allocation Fund.
Representatives of PricewaterhouseCoopers LLP are not expected to attend the
Meeting, but have been given the opportunity to make a statement if they so
desire, and will be available should any matter arise requiring their presence.
The independent accountants examine annual financial statements for
Multi-Asset Allocation Fund and provide other audit and tax-related services. In
recommending the selection of PricewaterhouseCoopers LLP, the directors reviewed
the nature and scope of the services to be provided (including non-audit
services) and whether the performance of such services would affect the
accountants' independence.
REQUIRED VOTE. Approval of Proposal 4 requires the affirmative vote of a
majority of the votes present at the Meeting, provided a quorum is present.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL 4
33
<PAGE>
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting. If,
however, any other matters properly come before the Meeting, it is the intention
that proxies that do not contain specific instructions to the contrary will be
voted on such matters in accordance with the judgment of the persons designated
in the proxies.
INFORMATION CONCERNING ADVISER, SUB-ADVISER, DISTRIBUTOR AND AFFILIATED
COMPANIES
INVESCO, a Delaware corporation, serves as Multi-Asset Allocation Fund's
investment adviser, and provides other services to Multi-Asset Allocation Fund
and Combination Stock & Bond Funds. IDI, a Delaware corporation that serves as
Multi-Asset Allocation Fund's distributor, is a wholly owned subsidiary of
INVESCO. IMR, a Massachusetts corporation, serves as Multi-Asset Allocation
Fund's sub-adviser. INVESCO is a wholly owned subsidiary of INVESCO North
American Holdings, Inc. ("INAH"), 1315 Peachtree Street, N.E., Atlanta, Georgia
30309. INAH is an indirect wholly owned subsidiary of AMVESCAP PLC.1 The
corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square,
London, EC2M 4YR, England. INVESCO's and IDI's offices are located at 7800 East
Union Avenue, Denver, Colorado 80237. IMR's offices are located at 101 Federal
Street, Boston, Massachusetts 02110. INVESCO currently serves as investment
adviser of 14 open-end investment companies having approximate aggregate net
assets in excess of $21.1 billion as of December 31, 1998.
The principal executive officers and directors of INVESCO and their
principal occupations are:
Mark H. Williamson, Chairman of the Board, President, Chief Executive
Officer and Director, also, President and Chief Executive Officer of IDI;
Charles P. Mayer, Director and Senior Vice President, also, Senior Vice
President and Director of IDI; Ronald L. Grooms, Senior Vice President and
Treasurer of IDI; and Glen A. Payne, Senior Vice President, Secretary and
General Counsel, also, Senior Vice President, Secretary and General Counsel of
IDI.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver, Colorado 80237.
IMR serves as the sub-adviser to Multi-Asset Allocation Fund. IMR is a
wholly owned subsidiary of INAH. INVESCO, as investment adviser, has contracted
with IMR for providing portfolio investment advisory services to Multi-Asset
Allocation Fund. IMR also acts as sub-adviser to the INVESCO Small Company Value
Fund of INVESCO Diversified Funds, Inc.
The principal executive officers and directors of IMR and their principal
occupations are:
- --------
1 The intermediary companies between INAH and AMVESCAP PLC are as follows:
INVESCO, Inc., INVESCO Group Services, Inc. and INVESCO North American Group,
Ltd., each of which is wholly owned by its immediate parent.
34
<PAGE>
Frank J. Keeler, President and Chief Executive Officer; also, Corporate
Secretary of INAH; Frank A. Bisogano, Vice President, Treasurer, and Director
and Director of IT Group; Kathleen A. Greenberg, Secretary; A. D. Frazier,
Director; also, President and Chief Executive Officer of INVESCO, Inc. and
Director of INVESCO Capital Management, INVESCO Realty Advisors, Inc. and
PRIMCO Capital Management; William M. McCarthy, Senior Vice President,
Director of Fixed Income and Director; and Robert S. Slotpole, Senior Vice
President, Director of Equities and Director.
The address of each of the foregoing officers and directors is 101 Federal
Street, Boston, Massachusetts 02110.
Pursuant to an Administrative Services Agreement between Combination Stock
& Bond Funds and INVESCO, INVESCO provides administrative services to
Combination Stock & Bond Funds, including sub-accounting and recordkeeping
services and functions. During the fiscal year ended July 31, 1998, Combination
Stock & Bond Funds paid INVESCO, which also serves as Combination Stock & Bond
Funds' registrar, transfer agent and dividend disbursing agent, total
compensation of $536,681 for such services.
MISCELLANEOUS
AVAILABLE INFORMATION
Each Fund is subject to the information requirements of the Securities
Exchange Act of 1934 and the 1940 Act and in accordance with those requirements
files reports, proxy material and other information with the SEC. These reports,
proxy material and other information can be inspected and copied at the Public
Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, the Midwest Regional office of the SEC, Northwest Atrium Center, 500 West
Madison Street, Suite 400, Chicago, Illinois 60611, and the Northeast Regional
Office of the SEC, Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, Washington, D.C. 20459 at prescribed rates.
LEGAL MATTERS
Certain legal matters in connection with the issuance of Balanced Fund
shares as part of the Reorganization will be passed upon by Balanced Fund's
counsel, Kirkpatrick & Lockhart LLP.
EXPERTS
The audited financial statements of Balanced Fund and Multi-Asset
Allocation Fund, incorporated herein by reference and incorporated by reference
or included in their Statement of Additional Information, have been audited by
PricewaterhouseCoopers LLP, independent accountants for the Funds, whose reports
thereon are included in the Funds' Annual Reports to Shareholders for the fiscal
year ended July 31, 1998. The financial statements audited by
PricewaterhouseCoopers LLP have been incorporated herein by reference in
reliance on their reports given on their authority as experts in auditing and
accounting matters.
35
<PAGE>
APPENDIX A
PLAN OF REORGANIZATION AND TERMINATION
--------------------------------------
THIS PLAN OF REORGANIZATION AND TERMINATION ("Plan") is made by INVESCO
Combination Stock & Bond Funds, Inc., a Maryland corporation ("Corporation"), on
behalf of INVESCO Multi-Asset Allocation Fund ("Target") and INVESCO Balanced
Fund ("Acquiring Fund"), and is effective as of the date of its adoption by
Corporation's board of directors. (Acquiring Fund and Target are sometimes
referred to herein individually as a "Fund" and collectively as the "Funds.")
Corporation is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Maryland; and a copy of its Articles of
Incorporation is on file with the Secretary of State of Maryland. Each Fund is a
duly established and designated segregated portfolio of assets ("series") of
Corporation.
This Plan is intended to be, and is adopted as, a plan of a reorganization
described in section 368(a)(1)(C) of the Internal Revenue Code of 1986, as
amended ("Code"). The reorganization will involve the transfer to Acquiring Fund
of Target's assets in exchange solely for voting shares of common stock in
Acquiring Fund, par value $0.01 per share ("Acquiring Fund Shares"), and the
assumption by Acquiring Fund of Target's liabilities, followed by the
constructive distribution of the Acquiring Fund Shares PRO RATA to the holders
of shares of common stock in Target ("Target Shares") in exchange therefor, all
on the terms and conditions set forth herein. The foregoing transactions are
referred to herein collectively as the "Reorganization."
Each Fund issues a single class of shares, which are substantially similar
to each other. Each Fund's shares (1) are offered at net asset value ("NAV") and
(2) are subject to a service fee at the annual rate of 0.25% of its net assets
imposed pursuant to a plan of distribution adopted in accordance with Rule 12b-1
promulgated under the Investment Company Act of 1940, as amended ("1940 Act").
1. THE REORGANIZATION
------------------
1.1. Target shall assign, sell, convey, transfer, and deliver all of its
assets described in paragraph 1.2 ("Assets") to Acquiring Fund. In exchange
therefor, Acquiring Fund shall --
(a) issue and deliver to Target the number of full and fractional
(rounded to the third decimal place) Acquiring Fund Shares,
determined by dividing the net value of Target (computed as set
forth in paragraph 2.1) by the NAV of an Acquiring Fund Share
(computed as set forth in paragraph 2.2), and
(b) assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 3.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Target's books, and other property owned by Target at the
Effective Time (as defined in paragraph 3.1).
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<PAGE>
1.3. The Liabilities shall include (except as otherwise provided herein)
all of Target's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this Plan.
Notwithstanding the foregoing, Target shall use its best efforts to discharge
all its known Liabilities before the Effective Time.
1.4. At or immediately before the Effective Time, Target shall declare and
pay to its shareholders a dividend and/or other distribution in an amount large
enough so that it will have distributed substantially all (and in any event not
less than 90%) of its investment company taxable income (computed without regard
to any deduction for dividends paid) and substantially all of its realized net
capital gain, if any, for the current taxable year through the Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares received by it
pursuant to paragraph 1.1 to Target's shareholders of record, determined as of
the Effective Time (each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Target Shares. Such distribution shall be
accomplished by Acquiring Fund's transfer agent's opening accounts on Acquiring
Fund's share transfer books in the Shareholders' names and transferring such
Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with
the respective PRO RATA number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares due that Shareholder. All outstanding
Target Shares, including any represented by certificates, shall simultaneously
be canceled on Target's share transfer books. Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares issued in connection with
the Reorganization.
1.6. As soon as reasonably practicable after distribution of the Acquiring
Fund Shares pursuant to paragraph 1.5, but in all events within twelve months
after the Effective Time, Target shall be terminated and any further actions
shall be taken in connection therewith as required by applicable law.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.8. Any transfer taxes payable upon issuance of Acquiring Fund Shares in
a name other than that of the registered holder on Target's books of the Target
Shares constructively exchanged therefor shall be paid by the person to whom
such Acquiring Fund Shares are to be issued, as a condition of such transfer.
2. VALUATION
---------
2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a) the
value of the Assets computed as of the close of regular trading on the New York
Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"), using the
valuation procedures set forth in Target's then-current prospectus and statement
of additional information less (b) the amount of the Liabilities as of the
Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund Share
shall be computed as of the Valuation Time, using the valuation procedures set
forth in Acquiring Fund's then-current prospectus and statement of additional
information.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by
or under the direction of INVESCO Funds Group, Inc. ("INVESCO").
A-2
<PAGE>
3. CLOSING AND EFFECTIVE TIME
--------------------------
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at Corporation's principal office
on June 11, 1999, or at such other place and/or on such other date as to which
the parties may agree. All acts taking place at the Closing shall be deemed to
take place simultaneously as of the close of business on the date thereof or at
such other time as to which the parties may agree ("Effective Time"). If,
immediately before the Valuation Time, (a) the NYSE is closed to trading or
trading thereon is restricted or (b) trading or the reporting of trading on the
NYSE or elsewhere is disrupted, so that accurate appraisal of the net value of
Target and the NAV of an Acquiring Fund Share is impracticable, the Effective
Time shall be postponed until the first business day after the day when such
trading shall have been fully resumed and such reporting shall have been
restored.
3.2. Corporation's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by Target to Acquiring Fund, as
reflected on Acquiring Fund's books immediately following the Closing, does or
will conform to such information on Target's books immediately before the
Closing. Corporation's custodian shall deliver at the Closing a certificate of
an authorized officer stating that (a) the Assets held by the custodian will be
transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes
in conjunction with the delivery of the Assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision for payment
has been made.
3.3. Corporation's transfer agent shall deliver at the Closing a
certificate as to the opening on Acquiring Fund's share transfer books of
accounts in the Shareholders' names.
4. CONDITIONS
----------
Each Fund's obligations hereunder are subject to satisfaction of each
condition indicated in this section 4 as being applicable to it either at the
time stated therein or, if no time is so stated, at or before (and continuing
through) the Effective Time:
4.1. CONDITIONS TO EACH FUND'S OBLIGATIONS:
4.1.1. This Plan and the transactions contemplated hereby shall have
been approved by Target's shareholders in accordance with applicable law;
4.1.2. The aggregate fair market value of the Acquiring Fund Shares,
when received by the Shareholders, will be approximately equal to the
aggregate fair market value of their Target Shares constructively
surrendered in exchange therefor;
4.1.3. Corporation's management (a) is unaware of any plan or
intention of Shareholders to redeem or otherwise dispose of any portion of
the Acquiring Fund Shares to be received by them in the Reorganization and
(b) does not anticipate dispositions of those Acquiring Fund Shares at the
time of or soon after the Reorganization to exceed the usual rate and
frequency of dispositions of shares of Target as a series of an open-end
investment company. Consequently, Corporation's management expects that
the percentage of Shareholder interests, if any, that will be disposed of
as a result of or at the time of the Reorganization will be DE MINIMIS.
Nor does Corporation's management anticipate that there will be
extraordinary redemptions of Acquiring Fund Shares immediately following
the Reorganization;
A-3
<PAGE>
4.1.4. The Shareholders will pay their own expenses, if any, incurred
in connection with the Reorganization;
4.1.5. Immediately following consummation of the Reorganization,
Acquiring Fund will hold substantially the same assets and be subject to
substantially the same liabilities that Target held or was subject to
immediately prior thereto (in addition to the assets and liabilities
Acquiring Fund then held or was subject to), plus any liabilities and
expenses of the parties incurred in connection with the Reorganization;
4.1.6. The fair market value of the Assets on a going concern basis
will equal or exceed the Liabilities to be assumed by Acquiring Fund and
those to which the Assets are subject;
4.1.7. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount;
4.1.8. Pursuant to the Reorganization, Target will transfer to
Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the fair
market value of the net assets, and at least 70% of the fair market value
of the gross assets, held by Target immediately before the Reorganization.
For the purposes of this representation, any amounts used by Target to pay
its Reorganization expenses and to make redemptions and distributions
immediately before the Reorganization (except (a) redemptions not made as
part of the Reorganization and (b) distributions made to conform to its
policy of distributing all or substantially all of its income and gains to
avoid the obligation to pay federal income tax and/or the excise tax under
section 4982 of the Code) will be included as assets thereof held
immediately before the Reorganization;
4.1.9. None of the compensation received by any Shareholder who is an
employee of or service provider to Target will be separate consideration
for, or allocable to, any of the Target Shares held by such Shareholder;
none of the Acquiring Fund Shares received by any such Shareholder will
be separate consideration for, or allocable to, any employment agreement,
investment advisory agreement, or other service agreement; and the
consideration paid to any such Shareholder will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services;
4.1.10. Immediately after the Reorganization, the Shareholders will
not own shares constituting "control" of Acquiring Fund within the
meaning of section 304(c) of the Code;
4.1.11. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization
(determined in accordance with the guidelines set forth in Rev. Rul.
73-54, 1973-1 C.B. 187) ("Reorganization Expenses"); and
4.1.12. Corporation shall have received an opinion of Kirkpatrick &
Lockhart LLP ("Counsel"), addressed to and in form and substance
satisfactory to it, as to the federal income tax consequences mentioned
below ("Tax Opinion"). In rendering the Tax Opinion, Counsel may assume
satisfaction of all the conditions set forth in this section 4 (and treat
them as representations by Corporation to Counsel) and may rely as to any
factual matters, exclusively and without independent verification, on
such representations and any other representations made to Counsel by
responsible officers of Corporation. The Tax Opinion shall be
A-4
<PAGE>
substantially to the effect that, based on the facts and assumptions
stated therein, for federal income tax purposes:
4.1.12.1. Acquiring Fund's acquisition of the Assets in exchange
solely for Acquiring Fund Shares and Acquiring Fund's assumption of
the Liabilities, followed by Target's distribution of those shares PRO
RATA to the Shareholders constructively in exchange for the
Shareholders' Target Shares, will constitute a reorganization within
the meaning of section 368(a)(1)(C) of the Code, and each Fund will be
"a party to a reorganization" within the meaning of section 368(b) of
the Code;
4.1.12.2. Target will recognize no gain or loss on the transfer to
Acquiring Fund of the Assets in exchange solely for Acquiring Fund
Shares and Acquiring Fund's assumption of the Liabilities or on the
subsequent distribution of those shares to the Shareholders in
constructive exchange for their Target Shares;
4.1.12.3. Acquiring Fund will recognize no gain or loss on its
receipt of the Assets in exchange solely for Acquiring Fund Shares and
its assumption of the Liabilities;
4.1.12.4. Acquiring Fund's basis for the Assets will be the same
as the basis thereof in Target's hands immediately before the
Reorganization, and Acquiring Fund's holding period for the Assets
will include Target's holding period therefor;
4.1.12.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring
Fund Shares pursuant to the Reorganization; and
4.1.12.6. A Shareholder's aggregate basis for the Acquiring Fund
Shares to be received by it in the Reorganization will be the same as
the aggregate basis for its Target Shares to be constructively
surrendered in exchange for those Acquiring Fund Shares, and its
holding period for those Acquiring Fund Shares will include its
holding period for those Target Shares, provided they are held as
capital assets by the Shareholder at the Effective Time.
Notwithstanding subparagraphs 4.1.12.2 and 4.1.12.4, the Tax Opinion may
state that no opinion is expressed as to the effect of the Reorganization
on the Funds or any Shareholder with respect to any asset as to which any
unrealized gain or loss is required to be recognized for federal income
tax purposes at the end of a taxable year (or on the termination or
transfer thereof) under a mark-to-market system of accounting.
4.2. CONDITIONS TO ACQUIRING FUND'S OBLIGATIONS:
------------------------------------------
4.2.1. At the Closing, Target will have good and marketable title to
the Assets and full right, power, and authority to sell, assign, transfer,
and deliver the Assets free of any liens or other encumbrances; and upon
delivery and payment for the Assets, Acquiring Fund will acquire good and
marketable title thereto;
4.2.2. The Liabilities were incurred by Target in the ordinary course
of its business;
4.2.3. Target is a "fund" as defined in section 851(g)(2) of the Code;
it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("RIC") for each past taxable year since it
A-5
<PAGE>
commenced operations and will continue to meet all the requirements for
such qualification for its current taxable year; and it has no earnings
and profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it. The Assets shall be invested at all
times through the Effective Time in a manner that ensures compliance with
the foregoing;
4.2.4. Target is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the
meaning of section 368(a)(3)(A) of the Code;
4.2.5. Not more than 25% of the value of Target's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers; and
4.2.6. Target will be terminated as soon as reasonably practicable
after the Effective Time, but in all events within twelve months
thereafter.
4.3. CONDITIONS TO TARGET'S OBLIGATIONS:
----------------------------------
4.3.1. No consideration other than Acquiring Fund Shares (and
Acquiring Fund's assumption of the Liabilities) will be issued in exchange
for the Assets in the Reorganization;
4.3.2. The Acquiring Fund Shares to be issued and delivered to Target
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of Acquiring Fund, fully paid and non-assessable;
4.3.3. Acquiring Fund is a "fund" as defined in section 851(g)(2) of
the Code; it qualified for treatment as a RIC for each past taxable year
since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year;
Acquiring Fund intends to continue to meet all such requirements for the
next taxable year; and it has no earnings and profits accumulated in any
taxable year in which the provisions of Subchapter M of the Code did not
apply to it;
4.3.4. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares
issued in the ordinary course of its business as a series of an open-end
investment company; nor does Acquiring Fund have any plan or intention to
redeem or otherwise reacquire any Acquiring Fund Shares issued to the
Shareholders pursuant to the Reorganization, except to the extent it is
required by the 1940 Act to redeem any of its shares presented for
redemption at net asset value in the ordinary course of that business;
4.3.5. Following the Reorganization, Acquiring Fund (a) will continue
Target's "historic business" (within the meaning of section 1.368-1(d)(2)
of the Income Tax Regulations under the Code), (b) use a significant
portion of Target's historic business assets (within the meaning of
section 1.368-1(d)(3) of the Income Tax Regulations under the Code) in a
business, (c) has no plan or intention to sell or otherwise dispose of any
of the Assets, except for dispositions made in the ordinary course of that
business and dispositions necessary to maintain its status as a RIC, and
(d) expects to retain substantially all the Assets in the same form as it
receives them in the Reorganization, unless and until subsequent
A-6
<PAGE>
investment circumstances suggest the desirability of change or it becomes
necessary to make dispositions thereof to maintain such status;
4.3.6. There is no plan or intention for Acquiring Fund to be
dissolved or merged into another corporation or a business trust or any
"fund" thereof (within the meaning of section 851(g)(2) of the Code)
following the Reorganization;
4.3.7. Immediately after the Reorganization, (a) not more than 25% of
the value of Acquiring Fund's total assets (excluding cash, cash items,
and U.S. government securities) will be invested in the stock and
securities of any one issuer and (b) not more than 50% of the value of
such assets will be invested in the stock and securities of five or fewer
issuers; and
4.3.8. Acquiring Fund does not directly or indirectly own, nor at the
Effective Time will it directly or indirectly own, nor has it at any time
during the past five years directly or indirectly owned, any shares of
Target.
5. EXPENSES
--------
Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO and the remaining 50% will be borne partly by
each Fund.
6. TERMINATION
-----------
Corporation's board of directors may terminate this Plan and abandon
the Reorganization at any time prior to the Closing if circumstances develop
that, in its judgment, make proceeding with the Reorganization inadvisable for
either Fund.
7. GOVERNING LAW
-------------
This Plan shall be governed by and construed in accordance with the
internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
A-7
<PAGE>
APPENDIX B
----------
PRINCIPAL SHAREHOLDERS
----------------------
As of October 31, 1998, the following entities held more than 5% of each
Fund's outstanding equity securities:
NATURE OF COMBINED
OWNERSHIP $ OWNED FUND%
--------- ------- -----
BALANCED FUND
- -------------
Charles Schwab & Co. Inc.
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122
Saxon & Co. Trust
P.O. Box 7780-1888
Philadelphia, PA 19182-0001
MULTI-ASSET ALLOCATION FUND
- ---------------------------
Charles Schwab & Co., Inc.
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122
Jefferson-Pilot Financial
Separate Account B
One Granite Place
Concord, NH 03301-3258
INVESCO Trust Co.
981 Powell Ave., SW
Renton, WA 98055-2908
B-1
<PAGE>
INVESCO MULTI-ASSET ALLOCATION FUND
INVESCO BALANCED FUND
(EACH A SERIES OF INVESCO COMBINATION STOCK & BOND FUNDS, INC.
(FORMERLY INVESCO FLEXIBLE FUNDS, INC., FORMERLY INVESCO MULTIPLE ASSET
FUNDS, INC.))
7800 E. UNION AVENUE
DENVER, COLORADO 80237
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information relates specifically to the
proposed Reorganization whereby INVESCO Balanced Fund ("Balanced Fund") would
acquire the assets of INVESCO Multi-Asset Allocation Fund ("Multi-Asset
Allocation Fund") in exchange solely for shares of Balanced Fund and the
assumption by Balanced Fund of Multi-Asset Allocation Fund's liabilities. This
Statement of Additional Information consists of this cover page and the
following described documents, each of which is incorporated by reference
herein:
(1) The Statement of Additional Information of Balanced Fund, dated
December 1, 1998.
(2) The Statement of Additional Information of Multi-Asset Allocation
Fund, dated December 1, 1998.
(3) The Annual Report to Shareholders of Balanced Fund for the fiscal year
ended July 31, 1998.
(4) The Annual Report to Shareholders of Multi-Asset Allocation Fund for
the fiscal year ended July 31, 1998.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the Prospectus/Proxy Statement dated March __,
1999 relating to the above-referenced matter. A copy of the Prospectus/Proxy
Statement may be obtained by calling toll-free 1-800-646-8372. This Statement of
Additional Information is dated March __, 1999.
<PAGE>
PART C
OTHER INFORMATION
Item 15. Indemnification.
Indemnification provisions for officers and directors of Registrant are
set forth in Article VII, Section 2 of the Articles of Incorporation, and are
hereby incorporated by reference. See Item 16 (1) below. Under these Articles,
officers and directors will be indemnified to the fullest extent permitted to
directors by the Maryland General Corporation Law, subject only to such
limitations as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Under the Investment Company Act of 1940,
Fund directors and officers cannot be protected against liability to the Company
or its shareholders to which they would be subject because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties of
their office. The Company also maintains liability insurance policies covering
its directors and officers.
Item 16. Exhibits
Exhibit
Number Description
------ -----------
(1) (a) Articles of Incorporation (Charter).(1)
(b) Articles of Amendment of Articles of Incorporation dated
September 8, 1998.(3)
(c) Articles of Amendment of Articles of Incorporation dated
October 28, 1998 (filed herewith).
(2) Bylaws dated August 19, 1993.(1)
(3) Not applicable.
(4) A copy of the form of the Plan of Reorganization and Termination
is included in the Prospectus/Proxy Statement as Appendix A
thereto, and is incorporated by reference herein.
(5) Provisions of instruments defining the rights of holders of
Registrant's securities are contained in Articles III, IV, VI
and VIII of the Articles of Incorporation and Articles I, II, V,
VI, VII, VIII, IX and X of the By-laws.
(6) (a) Investment Advisory Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(b) Sub-Advisory Agreement between INVESCO Funds Group, Inc.
and INVESCO Management & Research, Inc. dated
February 28, 1997.(2)
<PAGE>
Exhibit
Number Description
------ -----------
(7) (a) General Distribution Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(b) General Distribution Agreement between Registrant and
INVESCO Distributors, Inc. dated September 30, 1997.(2)
(8) (a) Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.(3)
(b) Form of Amended Defined Compensation Plan for
Non-Interested Directors and Trustees.(3)
(9) (a) Custody Agreement between Registrant and State Street Bank
and Trust Company dated October 20, 1993.(1)
(b) Amendment to Custody Agreement dated October 25, 1995.(1)
(c) Data Access ervices Addendum dated May 19, 1997.(2)
(10) (a) Plan and Agreement of Distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940 dated October 20,
1993.(1)
(b) Amendment of Plan and Agreement of Distribution pursuant to
12b-1 under the Investment Company Act of 1940 dated July
19, 1995.(2)
(c) Amended Plan and Agreement of Distribution adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
January 1, 1997.(2)
(d) Amended Plan and Agreement of Distribution adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
September 30, 1997.(2)
(11) Opinion and Consent of Kirkpatrick & Lockhart LLP as to the
legality of the securities being registered (filed herewith).
(12) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with INVESCO Multi-Asset
Allocation Fund (to be filed).
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with INVESCO Balanced Fund
(to be filed).
(13) (a) Administrative Services Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(b) Transfer Agency Agreement between Registrant and INVESCO
Funds Group, Inc. dated February 28, 1997.2
<PAGE>
Exhibit
Number Description
------ -----------
(14) Consent of PricewaterhouseCoopers LLP (filed herewith).
(15) Financial Statements omitted from Part B - None.
(16) Powers of Attorney - incorporated by reference to Powers of
Attorney filed with the Securities and Exchange Commission on
October 4, 1993, November 24, 1993, September 20, 1995, November
27,1996 and November 24, 1997.
(17) Additional Exhibits. Form of Proxy (filed herewith).
1 Incorporated herein by reference to Post-Effective Amendment No. 4 filed on
November 27, 1996.
2 Incorporated herein by reference to Post-Effective Amendment No. 5 filed on
November 24, 1997.
3 Incorporated herein by reference to Post-Effective Amendment No. 6 filed on
September 29, 1998.
Item 17. Undertakings.
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new registration statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of Registrant, in the City of Denver and the
State of Colorado, on this 22nd day of January 1999.
Attest: INVESCO Combination Stock & Bond Funds, Inc.
(formerly INVESCO Flexible Funds, Inc.,
formerly INVESCO Multiple Asset Funds, Inc.)
/s/ Glen A. Payne By: /s/ Mark H. Williamson
- ---------------------- ----------------------------
Glen A. Payne Mark H. Williamson
Secretary President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Mark H. Williamson President, Director January 22, 1999
- ------------------------------ and Chief Executive
Mark H. Williamson Officer
/s/ Ronald L. Grooms Treasurer and Chief January 22, 1999
- ------------------------------ Financial and Accounting
Ronald L. Grooms Officer
- ------------------------------ Director January 22, 1999
Victor L. Andrews*
- ------------------------------ Director January 22, 1999
Bob R. Baker*
- ------------------------------ Director January 22, 1999
Charles W. Brady*
- ------------------------------ Director January 22, 1999
Wendy L. Gramm*
- ------------------------------ Director January 22, 1999
Lawrence H. Budner*
<PAGE>
Signature Title Date
- --------- ----- ----
- ------------------------------ Director January 22, 1999
Fred A. Deering*
- ------------------------------ Director January 22, 1999
Larry Soll*
- ------------------------------ Director January 22, 1999
Kenneth T. King*
- ------------------------------ Director January 22, 1999
John W. McIntyre*
By * ------------------------
Edward F. O'Keefe
Attorney in Fact
By */s/ Glen A. Payne January 22, 1999
-------------------------
Glen A. Payne
Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this Registration Statement on Form N-14 of the
Registrant on behalf of the above-named directors and officers of the Registrant
(with the exception of Drs Soll and Gramm) have been filed with the Securities
and Exchange Commission on October 4, 1993, November 24, 1993, September 20,
1995, November 27, 1996 and November 24, 1997, respectively.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
(1) (a) Articles of Incorporation (Charter).(1)
(b) Articles of Amendment of Articles of Incorporation dated
September 8, 1998.(3)
(c) Articles of Amendment of Articles of Incorporation dated
October 28, 1998 (filed herewith).
(2) Bylaws dated August 19, 1993.(1)
(3) Not applicable.
(4) A copy of the form of the Plan of Reorganization and Termination
is included in the Prospectus/Proxy Statement as Appendix A
thereto, and is incorporated by reference herein.
(5) Provisions of instruments defining the rights of holders of
Registrant's securities are contained in Articles III, IV, VI
and VIII of the Articles of Incorporation and Articles I, II, V,
VI, VII, VIII, IX and X of the By-laws.
(6) (a) Investment Advisory Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(b) Sub-Advisory Agreement between INVESCO Funds Group, Inc.
and INVESCO Management & Research, Inc. dated
February 28, 1997.(2)
(7) (a) General Distribution Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(b) General Distribution Agreement between Registrant and
INVESCO Distributors, Inc. dated September 30, 1997.(2)
(8) (a) Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.(3)
(b) Form of Amended Defined Compensation Plan for
Non-Interested Directors and Trustees.(3)
(9) (a) Custody Agreement between Registrant and State Street Bank
and Trust Company dated October 20, 1993.(1)
(b) Amendment to Custody Agreement dated October 25, 1995.(1)
<PAGE>
Exhibit
Number Description
------ -----------
(c) Data Access Services Addendum dated May 19, 1997.(2)
(10) (a) Plan and Agreement of Distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940 dated October 20,
1993.(1)
(b) Amendment of Plan and Agreement of Distribution pursuant to
12b-1 under the Investment Company Act of 1940 dated July
19, 1995.(2)
(c) Amended Plan and Agreement of Distribution adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
January 1, 1997.(2)
(d) Amended Plan and Agreement of Distribution adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
September 30, 1997.(2)
(11) Opinion and Consent of Kirkpatrick & Lockhart LLP as to the
legality of the securities being registered (filed herewith).
(12) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with INVESCO Multi-Asset
Allocation Fund (to be filed).
(b) Opinion and consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with INVESCO Balanced Fund
(to be filed).
(13) (a) Administrative Services Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(b) Transfer Agency Agreement between Registrant and INVESCO
Funds Group, Inc. dated February 28, 1997.(2)
(14) Consent of PricewaterhouseCoopers LLP (filed herewith).
(15) Financial Statements omitted from Part B - None.
(16) Powers of Attorney - incorporated by reference to Powers of
Attorney filed with the Securities and Exchange Commission on
October 4, 1993, November 24, 1993, September 20, 1995, November
27,1996 and November 24, 1997.
(17) Additional Exhibits. Form of Proxy (filed herewith).
1 Incorporated herein by reference to Post-Effective Amendment No. 4 filed on
November 27, 1996.
2 Incorporated herein by reference to Post-Effective Amendment No. 5 filed on
November 24, 1997.
3 Incorporated herein by reference to Post-Effective Amendment No. 6 filed on
September 29, 1998.
<PAGE>
Exhibit 1(c)
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INVESCO FLEXIBLE FUNDS, INC.
INVESCO Flexible Funds, Inc., a corporation organized and existing under
the General Corporation Law of the State of Maryland (the "Company"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Article I of the Articles of Incorporation of the Company is hereby
amended to read as follows:
ARTICLE I
---------
NAME AND TERM
-------------
The name of the corporation is "INVESCO COMBINATION STOCK & BOND FUNDS,
INC." and it shall have perpetual existence.
SECOND: The foregoing amendment, in accordance with the requirements of
Section 2-605 of the General Corporation Law of the State of Maryland, was
approved by a majority of the Board of Directors of the Company on October
11, 1993.
THIRD: The foregoing amendment was duly adopted in accordance with the
requirements of Section 2-408 of the General Corporation Law of the State
of Maryland.
The undersigned, Secretary of the Company, who is executing on behalf of
the Company the foregoing Articles of Amendment, of which this paragraph is made
a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles of Amendment to be the corporate act of the Company and
further verifies under oath that, to the best of his knowledge, information and
belief, the matters and facts set forth herein are true in all material
respects, under the penalties of perjury.
IN WITNESS WHEREOF, INVESCO Flexible Funds, Inc. has caused these Articles
of Amendment to be signed in its name and on its behalf by its President and
witnessed by its Secretary on the 28th day of October, 1998.
<PAGE>
These Articles of Amendment shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.
INVESCO FLEXIBLE FUNDS, INC.
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
[SEAL]
WITNESSED:
By: /s/ Ronald L. Grooms
- -------------------------------
Ronald L. Grooms, Treasurer
CERTIFICATION
-------------
I, Michael T. Branstiter, a notary public in and for the City and County of
Denver, and State of Colorado, do hereby certify that Glen A. Payne, personally
known to me to be the person whose name is subscribed to the foregoing Articles
of Amendment, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his full and voluntary act and
deed for the uses and purposes therein set forth.
Given my hand and official seal this 28th day of October, 1998.
/s/ Michael T. Branstiter
-------------------------
Notary Public
My Commission Expires: 03/14/2002
----------
Exhibit 11
----------
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
www.kl.com
January 22, 1999
Combination Stock & Bond Funds, Inc.
7800 E. Union Avenue
Denver, Colorado 80237
Ladies and Gentlemen:
You have requested our opinion as to certain matters regarding the issuance
by INVESCO Combination Stock & Bond Funds, Inc. (formerly INVESCO Flexible
Funds, Inc., formerly INVESCO Multiple Asset Funds, Inc.) ("Company"), a
corporation organized under the laws of the State of Maryland, of shares of
common stock (the "Shares") of INVESCO Balanced Fund ("Balanced Fund"), a series
of the Company, pursuant to a Plan of Reorganization and Termination ("Plan") by
the Company on behalf of its series Balanced Fund and INVESCO Multi-Asset
Allocation Fund ("Multi-Asset Allocation Fund"). Under the Plan, Balanced Fund
would acquire the assets of Multi-Asset Allocation Fund in exchange for the
Shares and the assumption by Balanced Fund of Multi-Asset Allocation Fund's
liabilities. In connection with the Plan, the Company is about to file a
Registration Statement on Form N-14 (the "N-14") for the purpose of registering
the Shares under the Securities Act of 1933, as amended ("1933 Act"), to be
issued pursuant to the Plan.
We have examined originals or copies believed by us to be genuine of the
Company's Articles of Incorporation and By-Laws, minutes of meetings of the
Company's board of directors, the form of Plan, and such other documents
relating to the authorization and issuance of the Shares as we have deemed
relevant. Based upon that examination, we are of the opinion that the Shares
being registered by the N-14 may be issued in accordance with the Plan and the
Company's Articles of Incorporation and By-Laws, subject to compliance with the
1933 Act, the Investment Company Act of 1940, as amended, and applicable state
laws regulating the distribution of securities, and when so issued, those Shares
will be legally issued, fully paid and non-assessable.
We hereby consent to this opinion accompanying the Form N-14 that the
Company plans to file with the Securities and Exchange Commission and to the
reference to our firm under the caption "Miscellaneous -- Legal Matters" in the
Prospectus/Proxy Statement filed as part of the Form N-14.
Sincerely yours,
/s/ Kirkpatrick & Lockhart LLP
KIRKPATRICK & LOCKHART LLP
Exhibit 14
----------
PRICEWATERHOUSECOOPERS PWC
PRICEWATERHOUSECOOPERS LLP
950 Seventeenth Street
Suite 2500
Denver CO 80202
Telephone (303) 893 8100
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this registration statement on Form
N-14 (the "Registration Statement") of our report dated September 4, 1998
relating to the financial statements and financial highlights appearing in the
July 31, 1998 Annual Report to Shareholders of INVESCO Balanced Fund (one of the
portfolios constituting INVESCO Multiple Asset Funds, Inc.) and our report dated
September 4, 1998 relating to the financial statements and financial highlights
appearing in the July 31, 1998 Annual Report to Shareholders of INVESCO
Multi-Asset Allocation Fund (one of the portfolios constituting INVESCO Multiple
Asset Funds, Inc.), which are also incorporated by reference into the Statement
of Additional Information.
We also consent to the incorporation by reference of our report into the
Prospectus of INVESCO Balanced Fund dated December 1, 1998, and the
incorporation by reference of our report in the Prospectus of INVESCO
Multi-Asset Allocation Fund dated December 1, 1998, which constitute parts of
this Registration Statement. We also consent to the references to us under the
headings "Independent Accountants" and "Financial Statements" in the Statement
of Additional Information of INVESCO Balanced Fund and to the reference to us
under the heading "Financial Highlights" in the Prospectus of INVESCO Balanced
Fund both dated December 1, 1998. We also consent to the references to us under
the headings "Independent Accountants" and "Financial Statements" in the
Statement of Additional Information of INVESCO Multi-Asset Allocation Fund and
to the reference to us under heading "Financial Highlights" in the Prospectus of
INVESCO Multi-Asset Allocation Fund both dated December 1, 1998.
We also consent to the reference to us under the heading "Experts" in the
combined Prospectus/Proxy Statement, constituting part of this Registration
Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
January 21, 1999
Exhibit 17
----------
[Name and Address]
INVESCO MULTI-ASSET ALLOCATION FUND
INVESCO COMBINATION STOCK & BOND FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Combination Stock & Bond Funds, Inc. ("Company") and relates to the
proposals with respect to the Company and to INVESCO Multi-Asset Allocation
Fund, a series of the Company ("Fund"). The undersigned hereby appoints as
proxies [ ] and [ ], and each of them (with power of substitution), to vote all
shares of common stock of the undersigned in the Fund at the Special Meeting of
Shareholders to be held at 10:00 a.m., Mountain Standard Time, on May 20, 1999,
at the offices of the Company, 7800 E. Union Avenue, Denver, Colorado 80237, and
any adjournment thereof ("Meeting"), with all the power the undersigned would
have if personally present.
The shares represented by this proxy will be voted as instructed. Unless
indicated to the contrary, this proxy shall be deemed to grant authority to vote
"FOR" all proposals relating to the Company and the Fund with discretionary
power to vote upon such other business as may properly come before the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR
INTERNET, PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ] TOLL FREE OR
VISIT WWW.[ ].COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR COMPLETED
PROXY CARD TO 1-800-[ ].
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[INVXXX] KEEP THIS PORTION FOR YOUR RECORDS
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO MULTI-ASSET ALLOCATION FUND
INVESCO COMBINATION STOCK AND BOND FUNDS, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR
ALL ALL ALL
3. Election of the Company's Board EXCEPT To withhold
of Directors; (1) Charles W. / / / / / / authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll below.
-----------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. Approval of a plan of reorganization / / / / / /
and termination under which INVESCO
Balanced Fund ("Balanced Fund"), another
series of INVESCO Combination Stock &
Bond Funds, Inc., would acquire all of
the assets of Multi-Asset Allocation
Fund in exchange solely for shares of
Balanced Fund and the assumption by
Balanced Fund of all of Multi-Asset
Allocation Fund's liabilities, followed
by the distribution of those shares to
the shareholders of Multi-Asset
Allocation Fund, all as described in the
accompanying Prospectus/Proxy Statement;
2. Approval of changes to the fundamental / / / / / /
investment policies;
/ /To vote against the proposed changes to
one or more of the specific fundamental
investment policies, but to approve
others, PLACE AN "X" IN THE BOX AT left
and indicate the number(s) (as set forth
in the proxy statement) of the
investment policy or policies you do not
want to change on the line below.
- -------------------------------------------
4. Ratification of the selection of / / / / / /
PricewaterhouseCoopers LLP as the
Company's Independent Public
Accountants;
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ] TOLL FREE OR
VISIT WWW.[ ].COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR COMPLETED
PROXY CARD TO 1-800-[ ].
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person
<PAGE>
- ------------------------------ ------------------------------
Signature Date
- ------------------------------ ------------------------------
Signature (Joint Owners) Date
