<PAGE>
Registration No. 2-94479
811-4161
As filed with the Securities and Exchange Commission on November 9, 1995.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
----------------------
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-effective Amendment No.
Post-effective Amendment No. 15 /X/
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16 /X/
----------------------
Chubb America Fund, Inc.
(Exact name of Registrant as Specified in Charter)
One Granite Place
Concord, New Hampshire 03301
(Address of Principal Executive Offices)
603-226-5000
(Registrant's Telephone Number)
Ronald R. Angarella, President
One Granite Place
Concord, New Hampshire 03301
(Name and Address of Agent for Service)
Copies To:
THOMAS H. ELWOOD, Esq. JOAN E. BOROS, Esq.
Chubb America Fund, Inc. Katten Muchin & Zavis
One Granite Place 1025 Thomas Jefferson Street, N.W.
Concord, NH 03301 Washington, D.C. 20007
Approximate date of proposed public offering: It is proposed that this filing
will become effective immediately upon filing, pursuant to Rule 485(b).
The Registrant has registered an indefinite number or amount of its shares of
common stock under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. The Registrant filed a Rule 24f-2 Notice on
February 24, 1995.
<PAGE>
CHUBB AMERICA FUND, INC.
CROSS REFERENCE SHEET
Cross reference sheet showing location in the Prospectus of information
required by the Items in Part A of Form N-1A.
Item
Number Heading In Prospectus
- ------
1 Cover Page
2 *(Synopsis)
3 Financial Highlights
4 Investment Objectives and Policies, Capital Stock
5 Management of the Fund
6 Capital Stock, Taxes and Dividends
7 Offering and Redemption of Shares
8 Offering and Redemption of Shares
9 *(Legal Proceedings)
- -------------
* Indicates inapplicable or negative.
<PAGE>
- -------------------------------------------------------------------------------
CHUBB AMERICA FUND, INC.
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
(603) 226-5000
- -------------------------------------------------------------------------------
Chubb America Fund, Inc. (the "Fund") is an open-end diversified management
investment company which was incorporated in Maryland on October 19, 1984. The
Fund is composed of nine separate Portfolios which operate as distinct
investment vehicles. The names and investment objectives of the Portfolios are
as follows:
World Growth Stock Portfolio: to achieve long-term capital growth through a
policy of investing primarily in stocks of companies organized in the United
States or in any foreign nation. A portion of the Portfolio may also be
invested in debt obligations of companies and governments of any nation. Any
income realized will be incidental. Such companies will be those considered by
the Sub-Investment Manager to be undervalued or which are well-managed and
have good growth potential.
Money Market Portfolio: to achieve the highest possible current income,
consistent with preservation of capital and maintenance of liquidity, by
investing primarily in short-term money market instruments other than
commercial paper. AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
Gold Stock Portfolio: to realize long-term capital appreciation, while
retaining the option to take current income into account, by investing
primarily, and sometimes exclusively, in common stocks of gold mining
companies.
Bond Portfolio: to provide a stable level of income, consistent with
limiting risk to principal, by investing primarily in high quality corporate
debt securities and U.S. Government debt obligations.
Domestic Growth Stock Portfolio: to achieve reasonable income and growth of
capital by investing primarily in a diversified portfolio of equity securities
issued by companies organized in the U.S. and considered by the Sub-Investment
Manager to be undervalued in light of the company's earning power and growth
potential.
Growth and Income Portfolio: to seek long-term growth of capital by
investing primarily in a wide range of equity issues that may offer capital
appreciation and, secondarily, to seek a reasonable level of current income.
Capital Growth Portfolio: to seek capital growth. Realization of income is
not a significant investment consideration and any income realized will be
incidental.
Balanced Portfolio: to seek reasonable current income and long-term capital
growth, consistent with conservation of capital, by investing primarily in
common stocks and fixed income securities.
Emerging Growth Portfolio: to seek long-term growth of capital by investing
primarily in common stocks of small and medium-sized companies. THE PORTFOLIO
IS INTENDED FOR INVESTORS WHO UNDERSTAND AND ARE WILLING TO ACCEPT RISKS
ENTAILED IN SEEKING LONG-TERM GROWTH OF CAPITAL.
The World Growth Stock Portfolio, the Gold Stock Portfolio, the Growth and
Income Portfolio, the Capital Growth Portfolio, the Balanced Portfolio and the
Emerging Growth Portfolio permit investments in any nation, and investments in
these Portfolios involve special considerations and risks.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE UNITED STATES GOVERNMENT. INVESTMENTS IN THE PORTFOLIOS ARE
NOT BANK DEPOSITS AND ARE NOT INSURED BY, GUARANTEED BY, OBLIGATIONS OF, OR
OTHERWISE SUPPORTED BY THE FDIC OR ANY BANK. AN INVESTMENT IN ANY OF THE
PORTFOLIOS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE INVESTMENT TO
FLUCTUATE, AND WHEN THE INVESTMENT IS REDEEMED, THE VALUE MAY BE HIGHER OR
LOWER THAN THE AMOUNT ORIGINALLY INVESTED BY THE INVESTOR.
This Prospectus sets forth concisely the information about the Fund and its
Portfolios that a prospective investor should know before investing. This
Prospectus should be read and retained for future reference.
A Statement of Additional Information for the Fund, dated May 1, 1995, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. This Statement of Additional Information is available
upon request, and without charge, from the Fund at the address or telephone
number above. Inquiries about the Fund should be directed to the Fund at the
same address or telephone number.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS MAY 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL HIGHLIGHTS....................................................... 2
PERFORMANCE AND YIELD INFORMATION.......................................... 16
PORTFOLIOS................................................................. 16
INVESTMENT OBJECTIVES AND POLICIES......................................... 16
World Growth Stock Portfolio............................................. 17
Investment Objectives.................................................. 17
Investment Policies.................................................... 17
Risk Factors........................................................... 18
Money Market Portfolio................................................... 18
Investment Objectives.................................................. 18
Investment Policies.................................................... 18
Risk Factors........................................................... 18
Gold Stock Portfolio..................................................... 18
Investment Objectives.................................................. 18
Investment Policies.................................................... 19
Risk Factors........................................................... 19
Bond Portfolio........................................................... 19
Investment Objectives.................................................. 19
Investment Policies.................................................... 19
Risk Factors........................................................... 20
Domestic Growth Stock Portfolio.......................................... 20
Investment Objectives.................................................. 20
Investment Policies.................................................... 20
Risk Factors........................................................... 21
Growth and Income Portfolio.............................................. 21
Investment Objectives.................................................. 21
Investment Policies.................................................... 21
Risk Factors........................................................... 22
Capital Growth Portfolio................................................. 22
Investment Objectives.................................................. 22
Investment Policies.................................................... 22
Risk Factors........................................................... 23
Balanced Portfolio....................................................... 23
Investment Objectives.................................................. 23
Investment Policies.................................................... 23
Risk Factors........................................................... 23
Emerging Growth Portfolio................................................ 23
Investment Objective................................................... 23
Investment Policies.................................................... 23
Risk Factors........................................................... 24
Additional Risk Factors.................................................. 25
Foreign Securities....................................................... 26
American Depository Receipts............................................. 27
Forward Foreign Currency Exchange Contracts.............................. 27
Repurchase Agreements.................................................... 27
Zero Coupon Bonds........................................................ 28
Securities and Index Options............................................. 28
Purchasing Put and Call Options.......................................... 28
Futures Contracts........................................................ 28
Lending of Securities.................................................... 29
When Issued Securities................................................... 29
Corporate Asset-Backed Securities........................................ 29
Loan Participations and Other Direct Indebtedness........................ 29
INVESTMENT RESTRICTIONS.................................................... 30
Portfolio Turnover....................................................... 30
MANAGEMENT OF THE FUND..................................................... 30
CAPITAL STOCK.............................................................. 31
TAXES AND DIVIDENDS........................................................ 32
OFFERING AND REDEMPTION OF SHARES.......................................... 32
OTHER INFORMATION.......................................................... 33
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, IN THE STATEMENT OF ADDITIONAL INFORMATION, AND IN THE
ATTACHED PROSPECTUS FOR THE POLICY.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected unaudited data for a share of capital
stock outstanding for the Emerging Growth Portfolio throughout the period
indicated and other performance information derived from the unaudited financial
statements. The unaudited financial statements are included in the Statement of
Additional Information.
For a share outstanding for the five month period ended September 30, 1995.
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS --
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Emerging Growth Portfolio
-----------------------------
(Unaudited)
Period From
May 1,
1995 to
September
30, 1995(A)
-----------
<S> <C>
Net asset value, beginning of
period........................... $ 10.00
Income From Investment
Operations
Net investment loss............. (0.03)
Net realized and unrealized gains
(losses) on securities......... 2.85
----------
Total from investment
operations..................... 2.82
----------
Net asset value, end of period... $ 12.82
==========
Total Return(B).................. 28.21%(D)
Ratios to Average Net Assets:
Expenses........................ 1.68%(C)
Net investment loss............. (0.80%)(C)
Portfolio Turnover Rate........... 7.60%(D)
Net Assets, At End of Period...... $7,090,415
</TABLE>
(A) Per share data calculated from the initial offering date, May 1, 1995; for
sale to Chubb Separate Account A.
(B) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
(C) Per share data and ratios calculated on an annualized basis.
(D) Not annualized.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables include selected data for a share of capital stock
outstanding for each fund throughout the periods indicated and other performance
information derived from the financial statements. The related financial
statements and report of Ernst & Young LLP, independent auditors, are contained
in the Statement of Additional Information. In addition, further information
about the funds' performance is contained in the Fund's annual report to
shareholders, which may be obtained without charge.
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
World Growth Stock Portfolio
-------------------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1994 1993 1992 1991
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year..................... $ 20.89 $ 16.73 $ 16.45 $ 13.70
Income From Investment
Operations
Net investment income.. 0.25 0.24 0.35 0.34
Net realized and
unrealized gains (losses)
on securities............. (0.89) 5.40 0.65 2.75
----------- ----------- ----------- -----------
Total from investment
operations............... (0.64) 5.64 1.00 3.09
Less Distributions to
Shareholders
Dividends from net
investment income....... (0.25) (0.24) (0.35) (0.34)
Dividends in excess of net
investment income.......
Distributions from capital
gains................... (0.81) (1.24) (0.37)
Distributions in excess
of capital gains........ (0.19)
Returns of capital........
----------- ----------- ----------- -----------
Total distributions....... (1.25) (1.48) (0.72) (0.34)
Net asset value, end
of year..................... $ 19.00 $ 20.89 $ 16.73 $ 16.45
=========== =========== =========== ===========
Total Return (B).............. (3.05%) 33.73% 6.10% 22.53%
Ratios to Average Net Assets:
Expenses.................. 1.00% 1.04% 1.17% 1.14%
Net investment income..... 1.56% 1.64% 2.19% 2.40%
Portfolio Turnover Rate....... 18.74% 34.90% 32.27% 50.06%
Net Assets, At End of Year.... $52,903,768 $42,031,141 $25,416,357 $22,659,930
</TABLE>
- ----------
(A) Per share data calculated from initial offering date, August 1, 1985, for
sale to Chubb Separate Account A. Ratios to average net assets calculated on
an annualized basis.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the separate
account or related insurance policies. Investment returns and principal
values will fluctuate and shares, when redeemed, may be worth more or less
than the original cost.
(C) Not annualized.
3
<PAGE>
<TABLE>
<CAPTION>
WORLD GROWTH STOCK PORTFOLIO
----------------------------------------------------------------------------------
FOR THE
PERIOD
FROM
YEAR YEAR YEAR YEAR YEAR AUGUST 1,
ENDED ENDED ENDED ENDED ENDED 1985 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1990 1989 1988 1987 1986 1985(A)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 16.07 $ 12.77 $ 11.48 $ 13.75 $ 10.81 $ 10.27
0.36 0.32 0.18 0.06 0.31 0.05
(2.00) 3.34 1.32 (0.91) 2.69 0.49
----------- ----------- ---------- ---------- ---------- ----------
(1.64) 3.66 1.50 (0.85) 3.00 0.54
(0.37) (0.36) (0.18) (0.34) (0.06)
(0.36) (0.03) (1.08)
----------- ----------- ---------- ---------- ---------- ----------
(0.73) (0.36) (0.21) (1.42) (0.06)
$ 13.70 $ 16.07 $ 12.77 $ 11.48 $ 13.75 $ 10.81
=========== =========== ========== ========== ========== ==========
(10.38%) 28.62% 13.10% (7.74%) (27.77%) 5.26%(C)
1.22% 1.42% 1.60% 1.81% 1.62% 0.74%
2.65% 2.46% 1.80% 1.14% 3.02% 0.53%
25.79% 5.73% 14.75% 8.88% 67.53% N/A
$16,052,089 $14,467,050 $8,781,827 $5,253,616 $2,105,193 $1,084,864
</TABLE>
4
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year (A):
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
---------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year................... $ 10.26 $ 10.22 $ 10.22 $ 10.21
INCOME FROM INVESTMENT OP-
ERATIONS
Net investment income.... 0.35 0.20 0.29 0.52
Net realized and
unrealized gains (loss-
es) on
securities.............. (0.01) 0.04 0.01
---------- ---------- ---------- ----------
Total from investment op-
erations................ 0.34 0.24 0.29 0.53
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income......... (0.35) (0.20) (0.29) (0.52)
Dividends in excess of
net investment income...
Distributions from capi-
tal gains...............
Distributions in excess
of capital gains........
Returns of capital.......
---------- ---------- ---------- ----------
Total distributions...... (0.35) (0.20) (0.29) (0.52)
Net asset value, end of
year...................... $ 10.25 $ 10.26 $ 10.22 $ 10.22
========== ========== ========== ==========
Total Return (C)........... 3.28% 2.32% 2.83% 5.18%
Ratios to Average Net As-
sets:
Expenses................. 0.65% 0.74% 0.85% 0.85%
Net investment income.... 3.31% 2.32% 2.81% 4.95%
Portfolio Turnover Rate
(D)....................... N/A N/A N/A N/A
Net Assets, At End of Year. $7,680,485 $5,061,181 $3,956,152 $3,672,941
</TABLE>
- -------
(A) The per share amounts which are shown have been computed based on the
average number of shares outstanding during each year.
(B) Per share data calculated from initial offering date, August 1, 1985 for
sale to Chubb Separate Account A. Ratios to average net assets calculated
on an annual basis.
(C) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(D) There were no purchases and/or sales of securities other than short-term
obligations during the year. Therefore, the portfolio turnover rate has not
been calculated.
(E) Not annualized.
5
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
FOR THE
PERIOD
FROM
YEAR YEAR YEAR YEAR YEAR AUGUST 1,
ENDED ENDED ENDED ENDED ENDED 1985 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1990 1989 1988 1987 1986 1985(B)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 10.18 $10.16 $ 10.09 $ 10.56 $ 10.33 $ 10.06
0.73 0.78 0.63 0.49 0.56 0.27
---------- ---------- ---------- ---------- ---------- ----------
0.73 0.78 0.63 0.49 0.56 0.27
(0.70) (0.76) (0.56) (0.96) (0.33)
---------- ---------- ---------- ---------- ---------- ----------
(0.70) (0.76) (0.56) (0.96) (0.33)
$ 10.21 $ 10.18 $ 10.16 $ 10.09 $ 10.56 $ 10.33
========== ========== ========== ========== ========== ==========
7.15% 7.63% 6.33% 4.85% 5.36% 2.72%(E)
1.09% 1.37% 1.79% 1.81% 1.45% 0.65%
6.90% 7.35% 6.16% 4.75% 5.23% 2.62%
N/A N/A N/A N/A N/A N/A
$2,910,677 $2,496,140 $2,228,190 $1,539,184 $1,249,363 $1,032,539
</TABLE>
6
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
GOLD STOCK PORTFOLIO
-----------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 19.00 $ 11.57 $ 11.99 $ 12.76
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. 0.03 0.02 0.03 0.07
Net realized and
unrealized gains
(losses) on
securities........... (2.65) 7.43 (0.42) (0.77)
---------- ---------- ---------- ----------
Total from investment
operations........... (2.62) 7.45 (0.39) (0.70)
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net
investment income.... (0.03) (0.02) (0.03) (0.07)
Dividends in excess of
net investment
income...............
Distributions from
capital gains........
Distributions in
excess of capital
gains................ (0.10)
Returns of capital....
---------- ---------- ---------- ----------
Total distributions... (0.13) (0.02) (0.03) (0.07)
Net asset value, end of
year................... $ 16.25 $ 19.00 $ 11.57 $ 11.99
========== ========== ========== ==========
Total Return (B)........ (13.77%) 63.90% (3.29%) (5.48%)
Ratios to Average Net
Assets:
Expenses.............. 0.99% 1.01% 1.13% 1.16%
Net investment income. 0.18% 0.14% 0.24% 0.57%
Portfolio Turnover Rate. 17.43% 7.32% 7.78% 14.23%
Net Assets, At End of
Year................... $7,351,625 $7,863,581 $4,338,297 $4,646,951
</TABLE>
- -------
(A) Per share data calculated from initial offering date, August 1, 1985 for
sale to Chubb Separate Account A. Ratios to average net assets calculated
on an annual basis.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(C) Not annualized.
7
<PAGE>
<TABLE>
<CAPTION>
GOLD STOCK PORTFOLIO
---------------------------------------------------------------------------------
FOR THE
PERIOD
FROM
YEAR YEAR YEAR YEAR YEAR AUGUST 1,
ENDED ENDED ENDED ENDED ENDED 1985 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1990 1989 1988 1987 1986 1985(A)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 16.95 $14.37 $ 18.24 $ 13.59 $ 10.00 $ 10.04
0.07 0.06 (0.03) (0.03) (0.07) 0.05
(4.19) 2.70 (3.84) 4.69 3.74 (0.09)
---------- ---------- ---------- ---------- ---------- --------
(4.12) 2.76 (3.87) 4.66 3.67 (0.04)
(0.70) (0.05) (0.08)
(0.12) (0.01)
(0.01)
---------- ---------- ---------- ---------- ---------- --------
(0.70) (0.18) (0.01) (0.08)
$ 12.76 $ 16.95 $ 14.37 $ 18.24 $ 13.59 $ 10.00
========== ========== ========== ========== ========== ========
(24.28%) 19.24% (21.24%) 34.29% 37.00% (0.40%)(C)
1.36% 1.39% 1.62% 1.92% 1.48% 0.65%
0.59% 0.39% (0.38%) (0.24%) (0.63%) 0.43%
17.61% 3.05% 9.92% 7.02% 7.43% N/A
$5,390,279 $5,969,256 $4,258,297 $3,821,605 $1,458,593 $999,946
</TABLE>
8
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
DOMESTIC GROWTH STOCK PORTFOLIO
------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year................... $ 16.14 $ 15.16 $ 12.96 $ 10.15
INCOME FROM INVESTMENT OP-
ERATIONS
Net investment income.... 0.09 0.12 0.14 0.24
Net realized and
unrealized gains
(losses) on securities.. 1.12 2.29 3.27 3.13
----------- ----------- ----------- -----------
Total from investment op-
erations................ 1.21 2.41 3.41 3.37
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net
investment income....... (0.09) (0.12) (0.14) (0.24)
Dividends in excess of
net investment income...
Distributions from capi-
tal gains............... (1.32) (1.31) (1.07) (0.32)
Distributions in excess
of capital gains........
Returns of capital.......
----------- ----------- ----------- -----------
Total distributions...... (1.41) (1.43) (1.21) (0.56)
Net asset value, end of
year...................... $ 15.94 $ 16.14 $ 15.16 $ 12.96
=========== =========== =========== ===========
Total Return (B)........... 7.66% 15.89% 26.50% 33.18%
Ratios to Average Net As-
sets:
Expenses................. 0.89% 0.97% 1.07% 1.13%
Net investment income.... 0.63% 0.76% 1.07% 2.02%
Portfolio Turnover Rate.... 46.65% 49.47% 41.36% 40.93%
Net Assets, At End of Year. $31,458,666 $25,072,289 $19,985,838 $15,583,806
</TABLE>
- -------
(A) Per share data calculated from initial offering date, April 18, 1986 for
sale to Chubb Separate Account A. Ratios to average net assets calculated
on an annual basis.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(C)Not annualized.
9
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC GROWTH STOCK PORTFOLIO
------------------------------------------------------------------
FOR THE
PERIOD
FROM
APRIL 18,
YEAR YEAR YEAR YEAR 1986 TO
ENDED ENDED ENDED ENDED DECEMBER
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 31,
1990 1989 1988 1987 1986(A)
------------ ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
$ 13.25 $ 11.71 $ 9.54 $ 10.57 $ 10.00
0.26 0.18 0.11 0.04 0.10
(2.71) 2.06 2.40 (0.11) 0.47
----------- ----------- ---------- ---------- ----------
(2.45) 2.24 2.51 (0.07) 0.57
(0.26) (0.21) (0.10) (0.12)
(0.39) (0.49) (0.24) (0.84)
----------- ----------- ---------- ---------- ----------
(0.65) (0.70) (0.34) (0.96)
$ 10.15 $ 13.25 $ 11.71 $ 9.54 $ 10.57
=========== =========== ========== ========== ==========
(18.55%) 19.36% 26.31% (1.61%) 5.65%(C)
1.25% 1.45% 1.70% 1.75% 1.64%
2.38% 1.59% 1.26% 0.71% 1.32%
15.17% 10.32% 22.69% 13.53% 31.53%
$10,517,783 $11,320,279 $6,893,776 $3,448,383 $1,139,554
</TABLE>
10
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
BOND PORTFOLIO
-----------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year.................. $ 10.28 $ 10.21 $ 10.61 $ 9.83
INCOME FROM INVESTMENT OP-
ERATIONS
Net investment income... 0.35 0.74 0.66 0.72
Net realized and
unrealized gains
(losses) on securities. (0.58) 0.13 0.13 0.79
----------- ---------- ---------- ----------
Total from investment
operations............. (0.23) 0.87 0.79 1.51
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net
investment income...... (0.35) (0.74) (0.66) (0.73)
Dividends in excess of
net investment income..
Distributions from capi-
tal gains.............. (0.06) (0.53)
Distributions in excess
of capital gains.......
Returns of capital......
----------- ---------- ---------- ----------
Total distributions..... (0.35) (0.80) (1.19) (0.73)
Net asset value, end of
year..................... $ 9.70 $ 10.28 $ 10.21 $ 10.61
=========== ========== ========== ==========
Total Return (B).......... (2.28%) 8.68% 7.46% 15.34%
Ratios to Average Net As-
sets:
Expenses................ 0.68% 0.74% 0.88% 1.03%
Net investment income... 6.07% 7.59% 6.83% 7.12%
Portfolio Turnover Rate... 140.30% 112.66% 81.23% 23.73%
Net Assets, At End of
Year..................... $13,066,445 $5,461,879 $4,042,506 $3,516,314
</TABLE>
- -------
(A) Per share data calculated from initial offering date, April 18, 1986 for
sale to Chubb Separate Account A. Ratios to average net assets calculated
on an annual basis.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(C) Not annualized.
11
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO
---------------------------------------------------------------
FOR THE
PERIOD
FROM
APRIL 18,
YEAR YEAR YEAR YEAR 1986 TO
ENDED ENDED ENDED ENDED DECEMBER
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 31,
1990 1989 1988 1987 1986(A)
------------ ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
$ 9.76 $9.29 $ 9.38 $ 10.47 $ 10.02
0.75 0.73 0.62 0.55 0.37
0.06 0.47 (0.09) (0.65) 0.08
---------- ---------- ---------- ---------- ----------
0.81 1.20 0.53 (0.10) 0.45
(0.74) (0.73) (0.62) (0.94)
(0.05)
---------- ---------- ---------- ---------- ----------
(0.74) (0.73) (0.62) (0.99)
$ 9.83 $ 9.76 $ 9.29 $ 9.38 $ 10.47
========== ========== ========== ========== ==========
8.44% 12.92% 5.62% (1.04%) 4.47%(C)
1.21% 1.60% 1.80% 1.96% 1.18%
7.97% 7.62% 6.85% 6.43% 5.08%
29.25% 7.64% 13.80% 53.17% 97.37%
$2,905,564 $2,289,788 $1,730,229 $1,302,390 $1,069,355
</TABLE>
12
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
-----------------------------------------
YEAR YEAR PERIOD FROM
ENDED ENDED MAY 1, 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 (A)
------------ ------------ --------------
<S> <C> <C> <C>
Net asset value, beginning of year. $ 12.35 $ 11.10 $ 10.27
INCOME FROM INVESTMENT OPERATIONS
Net investment income............ 0.13 0.12 0.02
Net realized and unrealized gains
(losses) on securities.......... (0.65) 1.53 0.83
---------- ---------- ----------
Total from investment operations. (0.52) 1.65 0.85
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment in-
come............................ (0.13) (0.12) (0.02)
Dividends in excess of net in-
vestment income.................
Distributions from capital gains. (0.48) (0.28)
Distributions in excess of capi-
tal gains.......................
Returns of capital...............
---------- ---------- ----------
Total distributions.............. (0.61) (0.40) (0.02)
Net asset value, end of year....... $ 11.22 $ 12.35 $ 11.10
========== ========== ==========
Total Return (B)................... (4.24%) 14.94% 12.48%
Ratios to Average Net Assets:
Expenses......................... 1.10% 1.35% 2.09%(C)
Net investment income............ 1.52% 1.38% 0.36%(C)
Portfolio Turnover Rate............ 38.17% 77.68% 54.11%
Net Assets, At End of Year......... $5,610,472 $2,831,442 $1,489,179
</TABLE>
- -------
(A) Per share data calculated from the initial offering date, May 1, 1992, for
sale to Chubb Separate Account A. For the period from the start of business
April 1, 1992 to April 30, 1992, net investment income per share aggregated
$0 for the Growth and Income Portfolio.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost. Total return for periods of less than
one year have been annualized.
(C) Per share data and ratios calculated on an annualized basis.
13
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
CAPITAL GROWTH PORTFOLIO
--------------------------------------------
YEAR YEAR PERIOD FROM
ENDED ENDED MAY 1, 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 (A)
------------ ------------ --------------
<S> <C> <C> <C>
Net asset value, beginning of
year............................ $ 14.26 $ 12.42 $ 9.95
INCOME FROM INVESTMENT OPERATIONS
Net investment income.......... 0.03 (0.01)
Net realized and unrealized
gains (losses) on securities.. (0.49) 3.03 2.69
----------- ----------- ----------
Total from investment opera-
tions......................... (0.46) 3.03 2.68
LESS DISTRIBUTIONS TO SHAREHOLD-
ERS
Dividends from net investment
income........................ (0.03)
Dividends in excess of net in-
vestment income...............
Distributions from capital
gains......................... (0.33) (1.19) (0.21)
Distributions in excess of cap-
ital gains.................... (0.06)
Returns of capital.............
----------- ----------- ----------
Total distributions............ (0.42) (1.19) (0.21)
Net asset value, end of year..... $ 13.38 $ 14.26 $ 12.42
=========== =========== ==========
Total Return (B)................. (3.26%) 24.73% 40.40%
Ratios to Average Net Assets:
Expenses....................... 1.22% 1.33% 1.96% (C)
Net investment income.......... 0.25% (0.11%) (0.37%)(C)
Portfolio Turnover Rate.......... 202.04% 162.79% 104.76%
Net Assets, At End of Year....... $27,564,086 $15,373,489 $5,343,734
</TABLE>
- -------
(A) Per share data calculated from the initial offering date, May 1, 1992, for
sale to Chubb Separate Account A. For the period from the start of business
April 1, 1992 to April 30, 1992, net investment income per share aggregated
$0 for the Capital Growth Portfolio.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost. Total return for periods of less than
one year have been annualized.
(C) Per share data and ratios calculated on an annualized basis.
14
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
-------------------------------------------
YEAR YEAR PERIOD FROM
ENDED ENDED MAY 1, 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 (A)
------------ ------------ --------------
<S> <C> <C> <C>
Net asset value, beginning of year. $ 11.22 $ 10.77 $ 10.10
INCOME FROM INVESTMENT OPERATIONS
Net investment income............ 0.32 0.25 0.16
Net realized and unrealized gains
(losses) on securities.......... (0.47) 0.74 0.67
----------- ----------- ----------
Total from investment operations. (0.15) 0.99 0.83
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment in-
come............................ (0.32) (0.25) (0.16)
Dividends in excess of net in-
vestment income.................
Distributions from capital gains. (0.13) (0.25)
Distributions in excess of capi-
tal gains....................... (0.04)
Returns of capital...............
----------- ----------- ----------
Total distributions.............. (0.45) (0.54) (0.16)
Net asset value, end of year....... $ 10.62 $ 11.22 $ 10.77
=========== =========== ==========
Total Return (B)................... (1.33%) 9.27% 12.33%
Ratios to Average Net Assets:
Expenses......................... 1.01% 1.07% 1.43%(C)
Net investment income............ 3.34% 2.79% 2.80%(C)
Portfolio Turnover Rate............ 103.68% 65.49% 77.33%
Net Assets, At End of Year......... $14,764,853 $11,703,898 $6,944,437
</TABLE>
- -------
(A) Per share data calculated from the initial offering date, May 1, 1992, for
sale to Chubb Separate Account A. For the period from the start of business
April 1, 1992 to April 30, 1992, net investment income per share aggregated
$.03 for the Balanced Portfolio.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost. Total return for periods of less than
one year have been annualized.
(C) Per share data and ratios calculated on an annualized basis.
15
<PAGE>
PERFORMANCE AND YIELD INFORMATION
From time to time the Fund may advertise the yield and/or the average annual
total return of some or all of its nine investment portfolios. These figures
are based on historical earnings and are not intended to indicate future
performance. Shares of the portfolios are presently offered only to
corresponding divisions of separate accounts established by Chubb Life
Insurance Company of America ("Chubb Life"), or its affiliated insurance
companies, to fund flexible premium life insurance policies. None of these
performance figures reflect fees and charges imposed under such flexible
premium life insurance policies, which fees and charges will reduce the yield
and total return to policyowners; therefore, these performance figures may be
of limited use for comparative purposes.
The Money Market Portfolio's yield quotations represent the Portfolio's
investment income, less expenses, expressed as a percentage of assets on an
annualized basis for a seven-day period. The yield is expressed as both a
simple annualized yield and a compounded effective yield. The yield for the
non-money market portfolios is calculated by dividing the portfolio's net
investment income per share during a recent 30-day period by the maximum
offering price per share of that Portfolio (which is the net asset value of
that Portfolio) on the last day of the period.
The average annual total return quotations of the non-money market portfolios
are determined by computing the average annual percentage change in value of a
$1,000 investment, made at the maximum public offering price (which is net
asset value) for certain specified periods. This computation assumes
reinvestment of all dividends and distributions.
PORTFOLIOS
The Fund currently consists of nine investment portfolios, namely the World
Growth Stock Portfolio, the Money Market Portfolio, the Gold Stock Portfolio,
the Bond Portfolio, the Domestic Growth Stock Portfolio, the Growth and Income
Portfolio, the Capital Growth Portfolio, the Balanced Portfolio and the
Emerging Growth Portfolio (the "Portfolios").
The separate accounts established by Chubb Life or its affiliated insurance
companies are used for the purpose of funding Flexible Premium Variable Life
Insurance Policies (the "Policies") issued by Chubb Life, its affiliated
insurance companies and their successors or assigns. The owner of a Policy may
allocate among the Portfolios the amounts available for investment under the
Policy. Chubb Life is a wholly-owned subsidiary of The Chubb Corporation, a New
Jersey corporation.
In the future, the Fund may sell its shares to other separate accounts,
funding variable annuities and variable life insurance policies, established by
Chubb Life, its successors or assigns, or by other insurance companies with
which Chubb Life is affiliated, and may add or delete Portfolios.
Shares of each Portfolio are both offered and redeemed at their net asset
value without the addition of any sales load or redemption charge. See
"OFFERING AND REDEMPTION OF SHARES" in the Prospectus.
The investment manager to the Fund is Chubb Investment Advisory Corporation
("Chubb Investment Advisory"), a wholly-owned subsidiary of Chubb Life. Chubb
Investment Advisory and the Fund have contracted with six unaffiliated
companies, Templeton, Galbraith & Hansberger Ltd. ("Templeton"), Van Eck
Associates Corporation ("Van Eck Associates"), Pioneering Management
Corporation ("Pioneer"), Janus Capital Corporation ("Janus"), Phoenix
Investment Counsel, Inc. ("Phoenix"), and Massachusetts Financial Services
Company ("MFS") to act as sub-investment advisers or managers to the World
Growth Stock, Gold Stock, Domestic Growth Stock, Capital Growth, Balanced and
Emerging Growth Portfolios, respectively, and one affiliated company, Chubb
Asset Managers, Inc. ("Chubb Asset") to act as sub-investment adviser or
manager to the Money Market, Bond and Growth and Income Portfolios.
(Collectively the "Sub-Investment Managers"). The fees of the Sub-Investment
Managers are paid directly by Chubb Investment Advisory.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Portfolio are described below.
The investment objectives of a Portfolio, and certain investment restrictions
discussed in the Statement of Additional Information, may be changed only with
the approval of the stockholders of each Portfolio that are affected by such
change. The investment policies of a Portfolio, used to achieve the Portfolio's
objectives, may be changed by the Fund's Board of Directors without the
approval of the Portfolio's stockholders.
16
<PAGE>
Because investment involves both opportunities for gain and risks of loss, no
assurance can be given that the Portfolios will achieve their objectives. The
difference in objectives and policies among the various Portfolios can be
expected to affect each Portfolio's investment return as well as the degree of
market and financial risks to which each Portfolio is subject. Prospective
purchasers of Policies should carefully review the objectives and policies of
the Portfolios and consider their ability to assume the risks involved before
purchasing Policies and allocating amounts thereunder to particular Portfolios.
World Growth Stock Portfolio
Investment Objectives. The investment objective of the World Growth Stock
Portfolio is long-term capital growth, which it seeks to achieve through a
flexible policy of investing primarily in stocks of companies organized in the
United States or in any foreign nation. A portion of the Portfolio may also be
invested in debt obligations of companies and governments of any nation. Any
income realized will be incidental.
The Portfolio invests primarily in securities of companies of any size that
are (i) believed to be well-managed and possessing good growth potential or
(ii) are considered by the Sub-Investment Manager to be undervalued. See
"Foreign Securities," in the Prospectus.
Investment Policies. The Portfolio believes that in a world where investment
opportunities change rapidly, not only from company to company and from
industry to industry but also from one national economy to another, its
objective is more likely to be achieved through an investment policy that is
flexible and mobile. Accordingly, the Portfolio seeks investment opportunities
in all types of securities issued by companies or governments of any nation.
Investments are usually made in common stocks, but may also include preferred
stocks and certain debt securities, rated or unrated, such as convertible bonds
and bonds selling at a discount; all of these debt securities will have credit
ratings in the four highest rating categories of Standard & Poor's Rating
Service Corporation ("Standard & Poor's") or Moody's Investors Service, Inc.
("Moody's") or other nationally recognized statistical rating organizations
("NRSROs") or, if not rated, will be of comparable quality to obligations so
rated in the judgment of the Sub-Investment Manager. Securities rated BBB or
Baa by Standard & Poor's or Moody's are considered investment-grade obligations
and are regarded as having adequate capacity to pay interest and repay
principal, although adverse economic conditions or changing circumstances are
more likely to lead to a weakening of such capacity than for higher grade
bonds. Such securities may be considered to have speculative characteristics.
See "DESCRIPTION OF CERTAIN INVESTMENTS" in the Statement of Additional
Information for a more complete description of investment ratings. In the event
that the ratings of securities held by the Portfolio fall below investment
grade, the Portfolio will not be obligated to dispose of such securities and
may continue to hold such securities if, in the opinion of the Sub-Investment
Manager, such investment is considered appropriate under the circumstances.
Notwithstanding the investment objective of long-term capital growth, the
Portfolio may on occasion, for defensive purposes and without limitation as to
amount, invest in debt obligations of the U.S. Government, its agencies or
instrumentalities for the purpose of earning income; hold cash and time
deposits with banks in the U.S. or Canadian currencies or currencies of other
nations; acquire repurchase agreements with respect to U.S. or Canadian
government obligations; or invest in high-grade commercial paper. For a more
complete description of obligations of the U.S. Government, its agencies or
instrumentalities, see the description in the "Investment Policies" section of
the description of the Bond Portfolio. The Portfolio may also invest in
warrants, which are rights to buy certain securities at set prices during
specified time periods. See "DESCRIPTION OF CERTAIN INVESTMENTS" in the
Statement of Additional Information for more information concerning repurchase
agreements, warrants, and commercial paper. See also "Repurchase Agreements" in
the Prospectus.
The Portfolio may enter into agreements with banks or broker-dealers to
purchase some securities on a "forward commitment," "when issued" or on a
"delayed delivery" basis. Such agreements involve a commitment to purchase
securities at a price, which is fixed at the time of commitment, for delivery
at a future date, which may be up to three months in the future. The Portfolio
will not pay for the securities or begin earning interest on them until the
securities are paid for and received. The securities so purchased are subject
to market fluctuations so that at the time of delivery, the value of such
securities may be more or less than the purchase price.
The Portfolio will generally be composed of investments from among many
different industries. Although management may invest up to 25% of the
Portfolio's assets in a single industry, it has no present intention of doing
so. As a general matter, the Portfolio will be invested in a minimum of five
different foreign countries at all times. However,
17
<PAGE>
this minimum is reduced to four when foreign country investments comprise less
than 80% of the Portfolio's net asset value; to three when less than 60% of
such value; to two when less than 40%; and to one when less than 20%.
Risk Factors. All or a significant portion of this Portfolio may be invested
in foreign securities, including American Depository Receipts ("ADRs"), and
investors should understand the special considerations and risks related to
such an investment emphasis. See "Foreign Securities" and "American Depository
Receipts" in the Prospectus.
Money Market Portfolio
Investment Objectives. The primary objective of the Money Market Portfolio is
to seek as high a level of current income as is consistent with preservation of
capital and liquidity.
Investment Policies. The Portfolio invests exclusively in (1) obligations
whose timely payment of principal and interest is backed by the full faith and
credit of the U.S. Government or that of its agencies or instrumentalities
("U.S. Government Obligations") or which are secured or collateralized by such
obligations, (2) short-term obligations of U.S. banks which are members of the
Federal Deposit Insurance Corporation ("FDIC"), (3) U.S. dollar obligations of
foreign branches of U.S. banks, or (4) instruments fully secured or
collateralized by such bank obligations. Some of the obligations which the
Portfolio buys are insured by the FDIC up to $100,000. The Portfolio may also
invest in commercial paper, and may buy corporate or other notes if such notes
are guaranteed as to the payment of principal and interest by U.S. banks'
letters of credit or collateralized by U.S. Government Obligations. For a more
complete description of U.S. Government Obligations see the description in the
"Investment Policies" section of the description of the Bond Portfolio.
The Portfolio will invest only in securities which present minimal credit
risk and (1) which have been rated or whose issuer has received a rating at the
time of acquisition in one of the two highest rating categories for short-term
debt obligations by any two NRSROs, or by one NRSRO if it is the only NRSRO to
have issued a rating, ("Requisite NRSROs") or (2) which are unrated securities
of comparable quality. The Portfolio will invest no more than 5% of the value
of its total assets, at time of acquisition, in the securities of any one
issuer, other than U.S. Government Obligations, except that the Portfolio may
invest more than 5% of its total assets in securities of a single issuer rated
in the highest rating category by the Requisite NRSROs for up to three business
days after purchase. The Portfolio will also invest no more than 5% of its
total assets, at time of acquisition, in securities rated in the second highest
rating category by the Requisite NRSROs, with investment in any one issuer
limited to no more than the greater of 1% of the Portfolio's total assets or
$1,000,000.
The Sub-Investment Manager, under the supervision of Chubb Investment
Advisory, will use its best judgment in selecting investments, taking into
consideration rates, terms, and marketability of obligations as well as the
capitalization, earnings, liquidity, and other indicators of the financial
condition of their issuers. Because the market value of debt obligations
fluctuates as an inverse function of changing interest rates, the Portfolio
seeks to minimize the effect of such fluctuations by investing in instruments
with a remaining maturity of 397 calendar days or less at the time of
investment, except for U.S. government obligations which may have a remaining
maturity of 762 calendar days or less. The Portfolio will maintain a dollar-
weighted average portfolio maturity of 90 days or less.
The Portfolio may enter into repurchase agreements whereby it purchases
securities, subject to agreement by the other party to repurchase the
obligations at a specified price and date. Repurchase agreements may involve
certain additional risks. See "Repurchase Agreements" in the Prospectus and
"RISK CONSIDERATIONS" in the Statement of Additional Information for a
discussion of these risks. See "DESCRIPTION OF CERTAIN INVESTMENTS" in the
Statement of Additional Information for a more complete description of
repurchase agreements.
Risk Factors. The principal risk factors associated with investment in the
Money Market Portfolio are the risk of fluctuations in short-term interest
rates and the risk of default among one or more issuers of securities which
comprise the Portfolio's assets. Compared with the other available Portfolios,
the Money Market Portfolio could be considered the least risky of all the
Fund's Portfolios. See "RISK CONSIDERATIONS" in the Statement of Additional
Information for a description of the risks associated with investment in U.S.
dollar obligations of foreign branches of U.S. banks.
Gold Stock Portfolio
Investment Objectives. The primary investment objective of the Gold Stock
Portfolio is long-term capital appreciation while retaining, however, freedom
of action to take current income into consideration in selecting its
investments.
18
<PAGE>
Investment Policies. The present policy is to concentrate investments in
common stocks of gold mining companies. Up to 100% of the value of the
Portfolio's assets may be invested in this industry. The Fund does not
currently plan to concentrate investments of the Gold Stock Portfolio in any
industry other than the gold mining industry. Under unusual economic, political
or financial conditions, it may temporarily place a substantial portion (no
more than 75%) of its investments in debt or equity securities issued by
foreign companies, debt obligations of one or more foreign governments and/or
U.S. Government Obligations. All such debt securities in which the Portfolio
invests will have credit ratings in the four highest rating categories of
Standard & Poor's or Moody's or other NRSROs or, if not rated, will be of
comparable quality to obligations so rated in the judgment of the Sub-
Investment Manager. Securities rated BBB or Baa by Standard & Poor's or Moody's
are considered investment-grade obligations and are regarded as having adequate
capacity to pay interest and repay principal, although adverse economic
conditions or changing circumstances are more likely to lead to a weakening of
such capacity than for higher grade bonds. Such securities may be considered to
have speculative characteristics. See "DESCRIPTION OF CERTAIN INVESTMENTS" in
the Statement of Additional Information for a more complete description of
investment ratings. In the event that the ratings of securities held by the
Portfolio fall below investment grade, the Portfolio will not be obligated to
dispose of such securities and may continue to hold such securities if, in the
opinion of the Sub-Investment Manager, such investment is considered
appropriate under the circumstances.
The Gold Stock Portfolio may invest in securities of U.S. companies and also
in the following types of securities: securities of companies, wherever
organized, whose properties, products or services are international in scope or
substantially in countries outside of the U.S.; securities of foreign
governments; and U.S. Government Obligations. The Portfolio may also invest in
ADRs. See "American Depository Receipts" in the Prospectus and "DESCRIPTION OF
CERTAIN INVESTMENTS" in the Statement of Additional Information for a
description of ADRs.
The Portfolio may also enter into repurchase agreements and invest in
warrants, which are rights to buy certain securities at set prices during
specified time periods. See "Repurchase Agreements" in the Prospectus and
"DESCRIPTION OF CERTAIN INVESTMENTS" in the Statement of Additional Information
for a description of repurchase agreements and warrants.
Risk Factors. All or a significant portion of this Portfolio may be invested
in foreign securities, including ADRs, and investors should understand the
special considerations and risks related to such an investment emphasis. See
"Foreign Securities" below. In addition, given the Portfolio's concentration in
stocks of gold mining companies, investors should be aware that gold mining
shares are at times volatile; there may be sharp fluctuations in prices even
during periods of general inflation and political conditions in gold mining
countries may affect the Fund's investment decisions relating to gold mining
shares. The price of gold may affect the value of investments in the Gold Stock
Portfolio. Gold has been subject to substantial price fluctuations over short
periods of time and may be affected by the actions of certain governments and
changes in existing governments, by unpredictable international monetary and
political policies such as currency devaluations or revaluations, by economic
and social conditions within a country, trade imbalances or trade or currency
restrictions between countries or political unrest. See "RISK CONSIDERATIONS--
Gold Mining Shares" in the Statement of Additional Information.
Bond Portfolio
Investment Objectives. The investment objective of the Bond Portfolio is to
provide a stable level of income, consistent with limiting risk to principal,
by investing primarily in high quality corporate debt securities and U.S.
Government debt obligations.
Investment Policies. At least 85% of the assets of the Bond Portfolio are
invested in (a) U.S. Government Obligations, (b) debt securities, including
convertible securities, which are rated "AA" or higher by Standard & Poor's or
Moody's or other NRSROs or, if unrated, are considered by the Portfolio's Sub-
Investment Manager to be of comparable quality and (c) cash and cash
equivalents (such as bankers' acceptances, commercial paper and certificates of
deposit no greater than $100,000 per issuing bank, having ratings of A-1 or
Prime-1 by Standard & Poor's or Moody's or other NRSROs or, if unrated, are
considered by the Portfolio's Sub-Investment Manager to be of comparable
quality.)
U.S. Government Obligations consist of marketable securities issued or
guaranteed as to the timely payment of both principal and interest by the U.S.
Government, its agencies or instrumentalities. Federal agency securities are
debt obligations issued by agencies of the U.S. Government established under
authority granted by Congress. Such obligations include, but are not limited
to, those issued by the Federal Housing Authority, Maritime Administration,
Government
19
<PAGE>
National Mortgage Association, the Tennessee Valley Authority, and the General
Services Administration. Instrumentalities include, for example, each of the
Federal Home Loan Banks, the National Bank for Cooperatives, the Federal Home
Loan Mortgage Corporation, the Farm Credit Banks, the Federal National Mortgage
Association, and the U.S. Postal Service. These U.S. Government Obligations are
either: (i) backed by the full faith and credit of the U.S. Government (e.g.,
U.S. Treasury Bills); (ii) guaranteed by the U.S. Treasury (e.g., Government
National Mortgage Association mortgage-backed securities); (iii) supported by
the issuing agency's or instrumentality's right to borrow from the U.S.
Treasury (e.g., Federal National Mortgage Association Discount Notes); or (iv)
supported only by the issuing agency's or instrumentality's own credit (e.g.,
each of the Federal Home Loan Banks).
The Portfolio may also invest up to 15% of its total assets in corporate debt
securities which are rated A or BBB by Standard & Poor's or A and Baa by
Moody's or other NRSROs or, if not rated, are of comparable quality to
obligations so rated in the judgment of the Sub-Investment Manager. Securities
rated BBB or Baa by Standard & Poor's or Moody's are considered investment-
grade obligations and are regarded as having adequate capacity to pay interest
and repay principal, although adverse economic conditions or changing
circumstances are more likely to lead to a weakening of such capacity than for
higher grade bonds. Such securities may be considered to have speculative
characteristics. See "DESCRIPTION OF CERTAIN INVESTMENTS" in the Statement of
Additional Information for a more complete description of investment ratings.
In the event that the ratings of securities held by the Portfolio fall below
investment grade, the Portfolio will not be obligated to dispose of such
securities and may continue to hold such securities if, in the opinion of the
Sub-Investment Manager, such investment is considered appropriate under the
circumstances.
The Portfolio will not purchase preferred or common stocks but may acquire
and retain up to 10% of its total assets in preferred or common stocks either
by conversion of fixed income securities or by the exercise of related
warrants.
The Portfolio may enter into agreements with banks or broker-dealers to
purchase some securities on a "forward commitment," "when issued" or on a
"delayed delivery" basis. Such agreements involve a commitment to purchase
securities at a price, which is fixed at the time of commitment, for delivery
at a future date, which may be up to three months in the future. The Portfolio
will not pay for the securities or begin earning interest on them until the
securities are paid for and received. The securities so purchased are subject
to market fluctuations so that at the time of delivery, the value of such
securities may be more or less than the purchase price.
It is the policy of the Bond Portfolio not to engage in trading for short-
term profits. The Portfolio will engage in trading if it believes a transaction
net of costs (including custodian's fees) will contribute to the achievement of
its investment objective.
It is anticipated that the Portfolio's average portfolio maturity will not
exceed 15 years, with the precise term to maturity dependent upon general
market and economic conditions.
Risk Factors. If the Bond Portfolio disposes of an obligation prior to
maturity, it may realize a loss or a gain. An increase in interest rates will
generally reduce the value of portfolio investments, and a decline in interest
rates will generally increase the value of portfolio investments. As a result,
the level of income under such circumstances may vary. In addition, portfolio
investments (other than U.S. Government Obligations) are dependent upon the
ability of the issuer to make scheduled payments of principal and income.
Domestic Growth Stock Portfolio
Investment Objectives. The investment objective of the Domestic Growth Stock
Portfolio is to achieve reasonable income and growth of capital by investing
primarily in a diversified portfolio of equity securities issued by companies
organized in the U.S. and considered by the Sub-Investment Manager to be
undervalued in light of the company's earning power and growth potential.
Investment Policies. The mix of assets of the Portfolio will vary with
prevailing economic and market conditions. Generally, at least 80% of the
Portfolio's assets are invested in common stocks and other equity related
securities such as preferred stocks and securities convertible into common
stock. The Portfolio may also invest up to 20% of its assets in both U.S.
Government Obligations and corporate debt securities, which will be rated
within the top four rating categories of Standard & Poor's or Moody's or other
NRSROs or, if unrated, are considered by the Portfolio's Sub-Investment Manager
to be of comparable quality and cash equivalent investments, such as
certificates of deposit, bankers'
20
<PAGE>
acceptances, and commercial paper, having ratings of A-1 or Prime-1 by Standard
& Poor's or Moody's or other NRSROs or, if unrated, are considered by the
Portfolio's Sub-Investment Manager to be of comparable quality. Securities
rated BBB or Baa by Standard & Poor's or Moody's are considered investment-
grade obligations and are regarded as having adequate capacity to pay interest
and repay principal, although adverse economic conditions or changing
circumstances are more likely to lead to a weakening of such capacity than for
higher grade bonds. Such securities may be considered to have speculative
characteristics. In the event that the ratings of securities held by the
Portfolio fall below investment grade, the Portfolio will not be obligated to
dispose of such securities and may continue to hold such securities if, in the
opinion of the Sub-Investment Manager, such investment is considered
appropriate under the circumstances. Generally, at least 60% of the Portfolio's
assets will be invested in securities which have paid dividends or interest
within the preceding 12 months, but non-income producing securities will be
held for anticipated increases in value. The Portfolio may also invest in
warrants, which are rights to buy certain securities at set prices during
specified time periods. See "DESCRIPTION OF CERTAIN INVESTMENTS--Warrants" in
the Statement of Additional Information.
This Portfolio invests primarily in stocks listed on the New York Stock
Exchange and on other national securities exchanges and, to a lesser extent, in
stocks that are traded over-the-counter. Securities are selected principally
for their potential appreciation and anticipated income. Assets of the
Portfolio will be substantially fully invested at all times.
Risk Factors. The prices of the types of securities usually purchased for the
Domestic Growth Stock Portfolio will tend to fluctuate more than the prices of
the securities usually purchased for the Bond Portfolio or the Money Market
Portfolio. As a result, the net asset value of the Domestic Growth Stock
Portfolio may experience greater short-term and long-term variations than
Portfolios that invest primarily in fixed income securities.
Growth and Income Portfolio
Investment Objectives. The objective of the Growth and Income Portfolio is to
seek long-term growth of capital by investing primarily in a wide range of
equity issues that may offer capital appreciation and, secondarily, to seek a
reasonable level of current income.
Investment Policies. The Growth and Income Portfolio invests at least 80% of
its assets in common stocks and other equity securities such as preferred
stocks and securities convertible into common stock that are either listed on
the New York Stock Exchange, traded over-the-counter or, to a lesser extent,
listed on other national securities exchanges. Securities are selected
principally for potential capital appreciation, based upon such criteria as
relatively low price to earnings ratio and relatively low price to book value
ratio, as compared to such ratios for the market in general and, secondarily,
for current income and increasing future dividends. While the Growth and Income
Portfolio intends to invest at least 60% of its assets in securities which have
paid dividends or interest within the preceding 12 months, the Portfolio may
invest in securities not currently paying dividends where the Sub-Investment
Manager anticipates that they will increase in value.
The Growth and Income Portfolio may also invest for temporary or defensive
purposes in high-grade debt securities and money market securities, including
U.S. Government Obligations, commercial paper and bank obligations, and
repurchase agreements.
The Growth and Income Portfolio will invest primarily in U.S. companies, but
may, when deemed appropriate by the Sub-Investment Manager, invest in and hold
up to 20% of the Portfolio's total assets in foreign securities which are
traded in the U.S. or in ADRs. The Growth and Income Portfolio may also
purchase the securities of foreign issuers directly in foreign markets. The
Portfolio's investments in foreign securities will primarily be in equity
securities of companies organized outside the U.S., but may also include debt
obligations of foreign companies and governments. See "Foreign Securities" and
"American Depository Receipts" in the Prospectus and "DESCRIPTION OF CERTAIN
INVESTMENTS--American Depository Receipts" in the Statement of Additional
Information.
The Growth and Income Portfolio may write covered call options or purchase
put and call options with respect to certain of its portfolio securities or
purchase stock index options for hedging purposes or to enhance income. The
Growth and Income Portfolio may also purchase or write futures contracts,
including stock index futures contracts. The Portfolio may also enter into
closing transactions with respect to such options and futures contracts. See
"Securities and Index Options" and "Futures Contracts" in this Prospectus.
21
<PAGE>
Risk Factors. The prices of the securities purchased for the Growth and
Income Portfolio will tend to fluctuate more than the prices of securities
purchased for the Bond Portfolio or the Money Market Portfolio. As a result,
the net asset value of the Growth and Income Portfolio may experience greater
short-term and long-term variations than Portfolios that invest primarily in
fixed income securities.
Capital Growth Portfolio
Investment Objectives. The investment objective of the Capital Growth
Portfolio is to seek capital growth. Realization of income is not a significant
investment consideration and any income realized will be incidental.
Investment Policies. The Capital Growth Portfolio will invest primarily in
common stocks when the Sub-Investment Manager believes that the market
environment favors investment in those securities. Common stock investments are
selected in industries and companies that the Sub-Investment Manager believes
are experiencing favorable demand for their products and services and that
operate in a favorable environment from a competitive and regulatory
standpoint.
It is the policy of the Capital Growth Portfolio to purchase and hold
securities for capital growth. If the Sub-Investment Manager is satisfied with
the performance of a security and anticipates continued appreciation, the
Portfolio will generally retain such security. However, changes in the
Portfolio will generally be made whenever the Sub-Investment Manager believes
they are advisable, either as a result of securities having reached a price
objective, or by reason of developments not foreseen at the time of the
investment decision. Since investment changes usually will be made without
reference to the length of time a security has been held, a significant number
of short-term transactions may result. To a limited extent, the Portfolio may
also purchase individual securities in anticipation of relatively short-term
price gains, and the rate of portfolio turnover will not be a determining
factor in the sale of such securities. However, certain tax rules may restrict
the Portfolio's ability to sell securities held for less than 90 days.
Although the Portfolio expects that under normal conditions its assets will
be primarily invested in common stocks, to the extent that it is not so
invested, the Capital Growth Portfolio may also invest in other securities,
including: U.S. Government Obligations, corporate bonds and debentures, high
grade commercial paper, preferred stocks, convertible securities, warrants or
other securities of U.S. issuers when the Sub-Investment Manager perceives an
opportunity for capital growth from such securities or so that the Portfolio
may receive a return on its idle cash. The Portfolio's cash position may
increase when the Sub-Investment Manager is unable to locate investment
opportunities that it believes have desirable risk/reward characteristics.
Investments in debt securities will be limited to securities of U.S. companies,
the U.S. Government and foreign governments and foreign governmental entities.
Foreign governmental entities include supranational organizations, such as the
European Economic Community and the World Bank, that are chartered to promote
economic development and are supported by various governments and governmental
entities. All debt securities in which the Portfolio invests, except as noted
below, will have credit ratings in the four highest rating categories of
Standard & Poor's or Moody's or other NRSROs or, if not rated, will be of
comparable quality to obligations so rated in the judgment of the Sub-
Investment Manager. The Capital Growth Portfolio may invest up to 5% of its
assets in high-yield/high-risk bonds. Such securities include debt securities
that are below investment grade (securities rated Ba or lower by Moody's or BB
or lower by Standard & Poor's) and unrated securities of comparable quality as
determined by the Sub-Investment Manager.
Investments may also be made in foreign equity securities and in ADRs. The
Portfolio will not invest more than 25% of its assets in foreign securities
denominated in foreign currencies and not publicly traded in the U.S. See
"Foreign Securities" and "American Depository Receipts" in the Prospectus.
Additionally, in order to manage exchange rate risks, the Portfolio may enter
into foreign currency exchange contracts (agreements to exchange one currency
for another at a future date). See "Forward Foreign Currency Exchange
Contracts" in the Prospectus.
The Portfolio may purchase and sell futures contracts as more fully described
under "Futures Contracts" in this Prospectus and may write covered call options
and purchase call and put options as described under "Securities and Index
Options" in this Prospectus.
The Portfolio may invest in "special situations" from time to time. A special
situation arises when, in the Sub-Investment Manager's opinion, the securities
of a particular company will be recognized and appreciate in value due to a
specific development, such as a technological breakthrough or a new product, at
that company.
The Portfolio expects that its securities will primarily be traded on U.S.
and foreign securities exchanges and established over-the-counter markets.
22
<PAGE>
Risk Factors. The foreign securities and ADRs in which the Portfolio may
invest involve special considerations and risks. See "Foreign Securities" and
"American Depository Receipts" in this Prospectus. Investing in foreign
currency exchange contracts involves certain risks since shifting the
Portfolio's currency exposure from one currency to another removes the
Portfolio's opportunity to profit from increases in the value of the original
currency and involves a risk of increased losses if the Sub-Investment
Manager's projection of future exchange rates is inaccurate. Investment in
special situations may carry an additional risk of loss in the event that the
anticipated development does not occur or does not attract the expected
attention. The price of the securities purchased by the Capital Growth
Portfolio will tend to fluctuate more than the prices of securities purchased
by the Bond Portfolio and the Money Market Portfolio.
Balanced Portfolio
Investment Objectives. The investment objective of the Balanced Portfolio is
to seek reasonable current income and long-term capital growth, consistent with
conservation of capital, by investing primarily in common stocks and fixed
income securities.
Investment Policies. The Balanced Portfolio intends to invest based on
combined considerations of risk, income, capital enhancement and protection of
capital value. The Balanced Portfolio may invest in any type or class of
security. Normally, the Balanced Portfolio will invest in common stocks and
fixed income securities; however, it may also invest in warrants and in
securities convertible into common stocks. At least 25% of the value of its
assets will be invested in high-grade fixed income senior securities which are
rated in the three highest rating categories by any NRSRO or, if unrated, are
considered by the Portfolio's Sub-Investment Manager to be of comparable
quality. The Portfolio may purchase and sell futures contracts as more fully
described under "Futures Contracts" in this Prospectus and may write covered
call options and purchase call and put options as described under "Securities
and Index Options" in this Prospectus. The Portfolio may also invest in zero
coupon debt obligations. In order to provide additional diversification the
Portfolio may invest in equity and debt securities of foreign issuers limited
to 15% of the Portfolio's total assets and in ADRs. See "Foreign Securities"
and "American Depository Receipts" in this Prospectus.
In implementing the investment objectives of the Balanced Portfolio, the Sub-
Investment Manager will select securities believed to have potential for the
production of current income, with emphasis on securities that also have
potential for capital enhancement. In an effort to protect its assets against
major market declines, or for other temporary defensive purposes, the Balanced
Portfolio may actively pursue a policy of retaining cash or investing part or
all of its assets in cash equivalents, such as U.S. Government Obligations,
high grade commercial paper and U.S. dollar obligations of foreign branches of
U.S. banks.
Risk Factors. The prices of equity securities in which the Balanced Portfolio
invests will fluctuate day to day and, as a result, the value of an investment
in the Balanced Portfolio will vary based upon such market conditions. The
value of the Balanced Portfolio's investment in fixed income securities will
vary depending on various factors including prevailing interest rates. Fixed
income securities are also subject to the ability of the issuer to make
payments of principal and interest when due. Although the Balanced Portfolio
seeks to reduce both financial and market risks associated with any one
investment medium, performance of the Balanced Portfolio will depend on such
additional factors as timing the mix of investments and the ability of the Sub-
Investment Manager to predict and react to changing market conditions.
Investment in foreign securities and ADRs involve special considerations and
risks. See "Foreign Securities" and "American Depository Receipts" in this
Prospectus.
Emerging Growth Portfolio
Investment Objective. The Emerging Growth Portfolio seeks to provide long-
term growth of capital. Dividend and interest income from portfolio securities,
if any, is incidental to the Portfolio's investment objective of long term
growth of capital.
Investment Policies. The Portfolio's policy is to invest primarily (i.e., at
least 80% of its assets under normal circumstances) in common stocks of small
and medium-sized companies that are early in their life cycle but which have
the potential to become major enterprises (emerging growth companies). Such
companies generally would be expected to show earnings growth over time that is
well above the growth rate of the overall economy and the rate of inflation,
and would have the products, management and market opportunities which are
usually necessary to become more widely recognized as growth companies.
23
<PAGE>
However, the Portfolio may also invest in more established companies of any
capitalization whose earnings growth are expected to accelerate because of
special factors, such as rejuvenated management, new products, changes in
consumer demand, or basic changes in the economic environment.
While the Portfolio will invest primarily in common stocks, the Portfolio
may, to a limited extent, seek appreciation in other types of securities such
as foreign or convertible securities and warrants when relative values make
such purchases appear attractive either as individual issues or as types of
securities in certain economic environments (see "Risk Factors" and "Foreign
Securities" below). The Portfolio may also enter into forward foreign currency
exchange contracts for the purchase or sale of foreign currency for hedging
purposes and non-hedging purposes, including transactions entered into for the
purpose of profiting from anticipated changes in foreign currency exchange
rates, as well as options on foreign currencies. The Portfolio may also hold
foreign currency (see "Risk Factors" below). The Portfolio may invest up to 25%
of its total assets in foreign securities (not including American Depository
Receipts ("ADRs") (see "American Depository Receipts" below)), which may be
traded on foreign exchanges. The Portfolio may hold cash equivalents or other
forms of debt securities as a reserve for future purchases of common stock or
to meet liquidity needs.
The Portfolio may invest in corporate asset-backed securities (see "Corporate
Asset-Backed Securities" below). The Portfolio may write covered call and put
options and purchase call and put options on securities and stock indices in an
effort to increase current income and for hedging purposes. The Portfolio may
also purchase and sell stock index futures contracts and may write and purchase
options thereon for hedging purposes and for non-hedging purposes, subject to
applicable law (see "Futures Contracts" below and the Statement of Additional
Information). In addition, the Portfolio may purchase portfolio securities on a
"when-issued" or on a "forward delivery" basis (See "When-Issued Securities"
below). The Portfolio may also invest a portion of its assets in "loan
participations" (see "Loan Participations and Other Direct Indebtedness" below
and in the Statement of Additional Information).
While it is not generally the Portfolio's policy to invest or trade for
short-term profits, the Portfolio may dispose of a portfolio security whenever
the Sub-Investment Manager is of the opinion that such security no longer has
an appropriate appreciation potential or when another security appears to offer
relatively greater appreciation potential. Subject to tax requirements,
portfolio changes are made without regard to the length of time a security has
been held, or whether a sale would result in a profit or loss.
During periods of unusual market conditions when the Sub-Investment Manager
believes that investing for defensive purposes is appropriate, or in order to
meet anticipated redemption requests, a large portion or all of the assets of
the Portfolio may be invested in cash or cash equivalents including, but not
limited to, obligations of banks (including certificates of deposit, bankers'
acceptances and repurchases agreements) with assets of $1 billion or more,
commercial paper, short-term notes, obligations issued or guaranteed by the
U.S. Government or any of its agencies, authorities or instrumentalities and
related repurchase agreements. U.S. Government securities also include
interests in trust or other entities representing interests in obligations that
are issued or guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities.
Risk Factors. The nature of investing in emerging growth companies involves
greater risk than is customarily associated with investments in more
established companies. Emerging growth companies often have limited product
lines, markets or financial resources, and they may be dependent on one-person
management. The securities of emerging growth companies may have limited
marketability and may be subject to more abrupt or erratic market movements
than securities of larger, more established growth companies or the market
averages in general. Shares of the Portfolio, therefore, are subject to greater
fluctuation in value than shares of a conservative equity Portfolio or of a
growth Portfolio which invests entirely in proven growth stocks.
The Portfolio may invest to a limited extent in lower rated fixed income
securities or comparable unrated securities. Investments in lower rated income
securities, while offering high current income and generally providing greater
income and opportunity for gain than investments in higher rated securities,
usually entail greater risk of principal and income (including the possibility
of default or bankruptcy of the issuers of such securities), and involve
greater volatility of price (especially during periods of economic uncertainty
or change) than investments in higher rated securities and because yields may
vary over time, no specified level of income can ever be assured. In
particular, securities rated lower than Baa by Moody's Investors Service, Inc.
("Moody's") or BBB by Standard & Poor's Rating Group or comparable unrated
securities (commonly known as "junk bonds") are considered speculative. These
lower rated high yielding fixed income securities generally tend to reflect
economic changes (and the outlook for economic growth), short-term corporate
and
24
<PAGE>
industry developments and the market's perception of their credit quality
(especially during times of adverse publicity) to a greater extent than higher
rated securities which react primarily to fluctuations in the general level of
interest rates (although these lower rated fixed income securities are also
affected by changes in interest rates). In the past, economic downturns or an
increase in interest rates have under certain circumstances caused a higher
incidence of default by the issuers of these securities and may do so in the
future, especially in the case of highly leveraged issuers. During certain
periods, the higher yields on the Portfolio's lower rated high yielding fixed
income securities are paid primarily because of the increased risk of loss of
principal and income, arising from such factors as the heightened possibility
of default or bankruptcy of the issuers of such securities. Due to the fixed
income payments of these securities, the Portfolio may continue to earn the
same level of interest income while its net asset value declines due to
portfolio losses, which could result in an increase in the Portfolio's yield
despite the actual loss of principal. The prices for these securities may be
affected by legislative and regulatory developments. For example, federal rules
require that savings and loan associations gradually reduce their holdings of
high-yield securities. An effect of such rules may be to depress the prices of
outstanding lower rated high yielding fixed income securities. Changes in the
value of securities subsequent to their acquisition will not affect cash income
or yield to maturity to the Portfolio but will be reflected in the net asset
value of shares of the Portfolio. The market for these lower rated fixed income
securities may be less liquid than the market for investment grade fixed income
securities. Furthermore, the liquidity of these lower rated securities may be
affected by the market's perception of their credit quality. Therefore, the
Sub-Investment Manager's judgment may at times play a greater role in valuing
these securities than in the case of investment grade fixed income securities,
and it also may be more difficult during times of certain adverse market
conditions to sell these lower rated securities at their fair value to meet
redemption requests or to respond to changes in the market. No minimum rating
standard is required by the Portfolio. To the extent the Portfolio invests in
these lower rated fixed income securities, the achievement of its investment
objective may be more dependant on the Sub-Investment Manager's own credit
analysis than in the case of a Portfolio investing in higher quality bonds.
While the Sub-Investment Manager may refer to ratings issued by established
credit rating agencies, it is not a policy of the Portfolio to rely exclusively
on ratings issued by these agencies, but rather to supplement such ratings with
the Sub-Investment Manager's own independent and ongoing review of credit
quality.
The Portfolio may also invest in fixed income securities rated Baa by Moody's
or BBB by S&P and comparable unrated securities. These securities, while
normally exhibiting adequate protection parameters, may have speculative
characteristics and changes in economic conditions and other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than in the case of higher rated securities.
Additional Risk Factors
The net asset value of the shares of an open-end investment company which may
invest to a limited extent in fixed income securities changes as the general
levels of interest rates fluctuate. When interest rates decline, the value of a
fixed income portfolio can be expected to rise. Conversely, when interest rates
rise, the value of a fixed income portfolio can be expected to decline.
Although changes in the value of securities subsequent to their acquisition
are reflected in the net asset value of shares of the Portfolio, such changes
will not affect the income received by the Portfolios from such securities.
However, the dividends paid by the Portfolios, if any, will increase or
decrease in relation to the income received by the Portfolio from its
investments, which would in any case be reduced by the Portfolio's expenses
before it is distributed to shareholders.
In addition, the use of options, futures contracts, options on futures
contracts, forward contracts and options on foreign currencies may result in
the loss of principal, particularly where such instruments are traded for other
than hedging purposes (e.g., to enhance current yield).
The Emerging Growth Portfolio is aggressively managed and, therefore, the
value of its shares is subject to greater fluctuation and investments in its
shares involve the assumption of a higher degree of risk than would be the case
with an investment in a conservative equity portfolio or a growth portfolio
investing entirely in proven growth equities.
See the Statement of Additional Information for further discussion of foreign
securities and the holding of foreign currency as well as the associated risks.
Given the above average investment risk inherent to the Emerging Growth
Portfolio, investment in shares of the Emerging Growth Portfolio should not be
considered a complete investment program and may not be appropriate for all
investors.
25
<PAGE>
Foreign Securities
The World Growth Stock Portfolio, the Gold Stock Portfolio and the Emerging
Growth Portfolio intend to purchase securities that are listed on stock
exchanges in foreign countries. They may also, to a limited extent, purchase
unlisted foreign securities. The Growth and Income Portfolio, the Capital
Growth Portfolio and the Balanced Portfolio may also invest in listed and
unlisted foreign securities. Foreign investments may involve greater risks than
are present in domestic investments. Compared to domestic companies, there is
generally less publicly available information about foreign companies, less
comprehensive accounting, reporting and disclosure requirements, and there may
be less governmental regulation and supervision of foreign stock exchanges,
brokers and listed companies. Investments in foreign securities also involve
the risk of expropriation or confiscatory taxation that could affect
investments, currency blockages which would prevent cash from being brought
back into the United States, generally higher brokerage and custodial costs
than those of domestic securities and settlement of transactions with respect
to such securities may sometimes be delayed beyond periods customary in the
United States. The Sub-Investment Managers, under the supervision of Chubb
Investment Advisory, consider possible political and financial instability
abroad, as well as the liquidity and volatility of foreign investments.
Investing in foreign securities or on foreign exchanges may present a greater
degree of risk than investing in domestic issuers. These risks include changes
in currency rates, exchange control regulations, governmental administration,
economic or monetary policy (in this country or abroad), war or expropriation.
In particular, the dollar value of portfolio securities of non-U.S. issuers
fluctuates with changes in market and economic conditions abroad and with
changes in relative currency values (when the value of the dollar increases as
compared to a foreign currency, the dollar value of a foreign-denominated
security decreases, and vice versa). Costs may be incurred in connection with
conversions between various currencies. Special considerations may also include
more limited information about foreign issuers, higher brokerage costs,
different accounting standards and thinner trading markets. Foreign securities
markets may also be less liquid, more volatile and less subject to government
supervision than in the United States. Investments in foreign countries could
be affected by other factors including confiscatory taxation and potential
difficulties in enforcing contractual obligations and could be subject to
extended settlement periods. Therefore, an investment in shares of a Portfolio
may be subject to a greater degree of risk than investments in other investment
companies which invest exclusively in domestic securities.
As a result of its investments in foreign securities, the Portfolios may
receive interest or dividend payments, or the proceeds of the sale or
redemption of such securities, in the foreign currencies in which such
securities are denominated. In that event, a Portfolio may promptly convert
such currencies into dollars at the then current exchange rate. Under certain
circumstances, however, such as where the Sub-Investment Manager believes that
the applicable exchange rate is unfavorable at the time the currencies are
received or the Sub-Investment Manager anticipates, for any other reason, that
the exchange rate will improve, a Portfolio may hold such currencies for an
indefinite period of time.
In addition, a Portfolio may be required to receive delivery of the foreign
currency underlying forward currency contracts it has entered into. This could
occur, for example, if an option written by the Portfolio is exercised or is
unable to close out a forward contract it has entered into. A Portfolio may
also hold foreign currency in anticipation of purchasing foreign securities. A
Portfolio may also elect to take delivery of the currencies underlying options
or forward contracts if, in the judgment of the Sub-Investment Manager, it is
in the best interest of the Portfolio to do so. In such instances as well, a
Portfolio may promptly convert the foreign currencies to dollars at the then
current exchange rate, or may hold such currencies for an indefinite period of
time.
While the holding of currencies will permit a Portfolio to take advantage of
favorable movements in the applicable exchange rate, it also exposes a
Portfolio to risk of loss if such rates move in a direction adverse to the
Portfolio's position. Such losses could reduce any profits or increase any
losses sustained by the Portfolio from the sale or redemption of securities,
and could reduce the dollar value of interest or dividend payments received. In
addition, the holding of currencies could adversely affect the Portfolio's
profit or loss on currency options or forward contracts, as well as its hedging
strategies.
Prior to investing in foreign securities, a Portfolio may hold funds
temporarily in foreign currencies. The value of the assets of that Portfolio
may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations. The Portfolio may also incur
costs in connection with conversions between various currencies. The Portfolios
will, therefore, consider foreign exchange rates in making investment
decisions, but, other
26
<PAGE>
than the Capital Growth Portfolio and the Emerging Growth Portfolio, will not
actively hedge foreign currency fluctuations by entering into contracts to
purchase or sell foreign currencies at a future date or options or futures
contracts on foreign currencies. See "RISK CONSIDERATIONS--Foreign Securities"
in the Statement of Additional Information.
American Depository Receipts
The World Growth Stock Portfolio, the Gold Stock Portfolio, the Growth and
Income Portfolio, the Capital Growth Portfolio, the Balanced Portfolio and the
Emerging Growth Portfolio may invest in ADRs. These are certificates issued by
a United States bank representing the right to receive securities of a foreign
issuer deposited in that bank or a correspondent bank. There are no fees
imposed on the purchase or sale of ADRs when purchased from the issuing bank in
the initial underwriting, although the issuing bank may impose charges for the
collection of dividends and the conversion of ADRs into the underlying ordinary
shares. Brokerage commissions will be incurred if ADRs are purchased through
brokers on U.S. stock exchanges. Investments in ADRs often have advantages over
direct investments in the underlying foreign securities, including the
following: they are more liquid investments, they can be sold for U.S. dollars,
they may be transferred easily, market quotations are readily available in the
U.S. and more uniform financial information is available for the issuers of
such securities.
Forward Foreign Currency Exchange Contracts
The Capital Growth Portfolio and the Emerging Growth Portfolio may utilize
forward foreign currency exchange contracts ("forward currency contracts"). A
forward currency contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the forward currency contract agreed upon by the parties, at a price set at
the time of the contract. These forward currency contracts are principally
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. The Portfolios will enter
into forward currency contracts only under two circumstances. First, when a
Portfolio has entered into a contract to purchase or sell a security
denominated in a foreign currency, the Portfolio may be able to protect itself
against a possible loss, between trade date and settlement date for such
security, resulting from an adverse change in the relationship between the U.S.
dollar and the foreign currency in which such security is denominated, by
entering into a forward currency contract in U.S. dollars for the purchase or
sale of the amount of the foreign currency involved in the underlying security
transaction. However, this tends to limit potential gains which might result
from a positive change in such currency relationships. Second, when management
of a Portfolio believes that the currency of a particular foreign country may
suffer or enjoy a substantial movement against the U.S. dollar (or another
currency), the Portfolio may enter into a forward currency contract to sell or
buy an amount of foreign currency approximating the value of some or all of the
Portfolio's securities denominated in such foreign currency, limited to no more
than 10% of the Portfolio's total assets. The forecasting of short-term
currency market movement is extremely difficult and whether such a short-term
hedging strategy will be successful is highly uncertain.
Repurchase Agreements
All of the Portfolios except the Bond Portfolio and the Domestic Growth Stock
Portfolio may enter into repurchase agreements, whereby the Portfolio purchases
securities (referred to as "underlying securities") from well-established
securities dealers or banks, subject to agreement by the seller to repurchase
the securities at a stated price on a specified date. Repurchase agreements
involve certain risks not associated with direct investment in securities,
including the risk that the original seller will default on its obligations to
repurchase, as a result of bankruptcy or otherwise. To minimize this risk, a
Portfolio will enter into repurchase agreements only if the repurchase
agreement is structured in a manner reasonably designed to collateralize fully
the value of a Portfolio's investment during the entire term of the agreement
and in accordance with guidelines regarding the creditworthiness of the seller
determined by the Board of Directors of the Fund. As a general matter, if the
seller of the repurchase agreement is a bank it must have assets of at least
$1,000,000,000; if the seller is a broker-dealer it must have a net worth of at
least $25,000,000. The underlying securities, held as collateral, will be
marked to market on a daily basis, and must be high-quality short-term
securities. In addition, the underlying securities of repurchase agreements
acquired by the Money Market Portfolio must be either U.S. Government
Obligations or securities that, at the time the repurchase agreement is entered
into, are rated in the highest rating category by the Requisite NRSROs.
Nevertheless, in the event that the other party to the agreement fails to
repurchase the securities subject to the agreement, a Portfolio could suffer a
loss to the extent proceeds from the sale of the underlying securities held as
collateral were less than the price specified in the repurchase agreement.
27
<PAGE>
Zero Coupon Bonds
The Balanced Portfolio, Capital Growth Portfolio and the Emerging Growth
Portfolio may invest in zero coupon bonds which are debt obligations that do
not make any interest payments for a specified period of time prior to maturity
or until maturity. The value of these obligations fluctuates more in response
to interest rate changes than does the value of debt obligations that make
current interest payments.
Securities and Index Options
The Growth and Income Portfolio, the Capital Growth Portfolio, the Balanced
Portfolio and the Emerging Growth Portfolio may write covered call options and
purchase call and put options on securities and stock indices. The Capital
Growth Portfolio and the Emerging Growth Portfolio may also utilize options on
foreign currencies. See the Statement of Additional Information for a more
detailed description of these options.
Writing (Selling) Call Options. In order to earn additional income or to
protect partially against declines in the value of its securities, the
Portfolios noted above may write (sell) covered call options. A Portfolio may
also purchase call options to the extent necessary to close out call option
positions previously written by the Portfolio. A call option gives the holder
(purchaser) the right to buy and obligates the writer (seller) to sell, in
return for a premium paid to the writer, the underlying security at the
exercise price at any time during the option period. A call option on a
securities index is similar to a call option on an individual security, except
that the value of the option depends on the weighted value of the group of
securities comprising the index and all settlements are made in cash rather
than by delivery of a particular security. The Portfolios will write only
covered call options which are listed on exchanges, and will not write a
covered call option if, as a result, the aggregate market value of all
portfolio securities covering all call options or subject to call options
written exceeds 25% of the value of the Portfolio's total assets.
The writing of call options on securities and securities indices involves the
following risks: (1) during the option period the writer of a call option gives
up the opportunity for capital appreciation above the exercise price should the
market price of the underlying security increase, but retains the risk of loss
should the price of the underlying security or index decline and (ii) the
inability to close out options previously written, which would require the
Portfolio to retain the option and the securities covering the option until its
exercise or expiration.
Purchasing Put and Call Options
In order to hedge against changes in the market value of their portfolio
securities, the Growth and Income Portfolio, the Capital Growth Portfolio, the
Balanced Portfolio and the Emerging Growth Portfolio may also purchase put and
call options with respect to equity securities, bonds, and stock and bond
indices which correlate with their portfolio securities, provided that the
premiums paid for such options are limited in each case to no more than 5% of
the Portfolio's total assets. A put option on a security gives the purchaser of
the option, in return for the premium paid to the writer (seller), the right to
sell the underlying security at the exercise price at any time during the
option period. Upon exercise by the purchaser, the writer of a put option has
the obligation to purchase the underlying security at the exercise price. A put
option on a securities index is similar to a put option on an individual
security, except that the value of the option depends on the weighted value of
the group of securities comprising the index and all settlements are made in
cash, rather than by delivery of a particular security.
Purchasing a put or call option on securities and securities indices involves
the risk that the Portfolio may lose the premium it paid plus transaction
costs.
Futures Contracts
The Growth and Income Portfolio, the Capital Growth Portfolio, the Balanced
Portfolio and the Emerging Growth Portfolio may purchase and sell futures
contracts on debt securities and indexes of debt securities (i.e., interest
rate futures contracts) as a hedge against or to minimize adverse principal
fluctuations resulting from anticipated interest rate changes. They may also,
where appropriate, enter into stock index futures contracts to provide a hedge
for a portion of a Portfolio's equity holdings. Stock index futures contracts
may be used as a way to implement either an increase or decrease in portfolio
exposure to the equity markets in response to changing market conditions. The
Capital Growth Portfolio and the Emerging Growth Portfolio may also enter into
currency futures contracts to hedge the currency fluctuations of its foreign
securities. A Portfolio may also write covered call options and purchase put or
call options on futures contracts of the type which that Portfolio is permitted
to purchase. The Portfolios will not enter into futures contracts for
speculation and will only enter into futures contracts that are traded on
national futures exchanges. No Portfolio will enter into futures contracts or
options thereon if immediately thereafter the sum of the amounts of initial
28
<PAGE>
margin deposits on the Portfolio's existing futures contracts and premiums paid
for options on unexpired futures contracts would exceed 5% of the value of the
Portfolio's total assets.
The use of futures contracts by the Growth and Income Portfolio, the Capital
Growth Portfolio, the Balanced Portfolio and the Emerging Growth Portfolio
entails certain risks, including but not limited to the following: no assurance
that futures contracts transactions can be offset in closing transactions at
favorable prices or at all unless a liquid secondary market exists; possible
reduction of the Portfolio's income due to the use of hedging; possible
reduction in value of both the securities hedged and the hedging instrument;
possible lack of liquidity due to daily limits on price fluctuation; imperfect
correlation between the contract and the securities being hedged; and potential
losses well in excess of the amount invested in futures contracts themselves.
If a Sub-Investment Manager's forecasts regarding movements in securities
prices or interest rates are incorrect, the Portfolio's investment results may
have been better without the hedge. Futures contracts and their associated
risks are described in more detail in the Statement of Additional Information.
Lending of Securities
The Emerging Growth Portfolio may make loans of its portfolio securities.
Such loans will usually be made only to member banks of the Federal Reserve
System and member firms (and subsidiaries thereof) of the New York Stock
Exchange and would be required to be secured continuously by collateral in
cash, cash equivalents or U.S. Government securities maintained on a current
basis at an amount at least equal to the market value of the securities loaned.
The Portfolio would continue to collect the equivalent of the interest on the
securities loaned and would receive either interest (through investment of cash
collateral) or a fee (if the collateral is U.S. Government securities).
When-Issued Securities
In order to help ensure the availability of suitable securities for its
portfolio, the Bond and the Emerging Growth Portfolios may purchase securities
on a "when-issued" or on a "forward delivery" basis, which means that the
obligations will be delivered to the Portfolios at a future date usually beyond
customary settlement time. It is expected that, under normal circumstances, the
Portfolios will take delivery of such securities. In general, the Portfolios do
not pay for the securities until received and does not start earning interest
on the obligations until the contractual settlement date. While awaiting
delivery of the obligations purchased on such bases, the Portfolios will
establish a segregated account consisting of cash, short-term money market
instruments or high quality debt securities equal to the amount of the
commitments to purchase "when-issued" securities. See the Statement of
Additional Information.
Corporate Asset-Backed Securities
The Bond and the Emerging Growth Portfolios may invest in corporate asset-
backed securities. These securities, issued by trusts and special purpose
corporations, are backed by a pool of assets, such as credit card or automobile
loan receivables, representing the obligations of a number of different
parties. Corporate asset-backed securities present certain risks. For instance,
in the case of credit card receivables, these securities may not have the
benefit of any security interest in the related collateral. See the Statement
of Additional Information for further information on these securities.
Loan Participations and Other Direct Indebtedness
The Bond and the Emerging Growth Portfolios may invest a portion of their
assets in "Loan Participations" and other direct indebtedness. By purchasing a
loan participation, the Portfolios acquire some or all of the interest of a
bank or other lending institution in a loan to a corporate borrower. Many such
loans are secured, and impose restrictive covenants which must be met by the
borrower. These loans are made generally to finance internal growth, mergers,
acquisitions, stock repurchases, leveraged buy-outs and other corporate
activities. Such loans may be in default at the time of purchase. The
Portfolios may also purchase other direct indebtedness such as trade or other
claims against companies, which generally represent money owed by the company
to a supplier of goods and services. These claims may also be purchased at a
time when the company is in default. Certain of the loan participations and
other direct indebtedness acquired by the Portfolios may involve revolving
credit facilities or other standby financing commitments which obligate the
Portfolios to pay additional cash on a certain date or on demand.
The highly leveraged nature of many such loans and other direct indebtedness
may make such loans especially vulnerable to adverse changes in economic or
market conditions. Loan participations and other direct indebtedness may not be
in the form of securities or may be subject to restrictions on transfer, and
only limited opportunities may exist to
29
<PAGE>
resell such instruments. As a result, the Portfolios may be unable to sell such
investments at an opportune time or may have to resell them at less than fair
market value. For a further discussion of loan participations, other direct
indebtedness and the risks related to transactions therein, see the Statement
of Additional Information.
INVESTMENT RESTRICTIONS
Investments of the Portfolios are further restricted by certain policies that
may not be changed without a vote of stockholders. See "INVESTMENT
RESTRICTIONS" in the Statement of Additional Information.
Portfolio Turnover
Portfolio turnover may vary and from year to year or within a year depending
upon economic, market and business conditions. The annual portfolio turnover
rates for the Portfolios in 1994 and 1993 were as follows: 19% and 35% for the
World Growth Stock Portfolio; 17% and 7% for the Gold Stock Portfolio; 47% and
49% for the Domestic Growth Stock Portfolio; and 140% and 113% for the Bond
Portfolio. The portfolio turnover rates for the years ended December 31, 1994
and the year ended December 31, 1993 were 38% and 78%, respectively, for the
Growth and Income Portfolio, 202% and 163%, respectively, for the Capital
Growth Portfolio and 104% and 65%, respectively, for the Balanced Portfolio. In
addition, the portfolio turnover rate for the Balanced Portfolio for such
periods can be broken down into rates of 152% and 72%, respectively, for the
common stock portion of the Portfolio and 36% and 57%, respectively, for the
fixed income portion. It is expected that the Emerging Growth Portfolio will
have a turnover that will approximate 100%. Portfolios having annual portfolio
turnover rates of over 100% may realize larger amounts of gains and losses than
they would with a lower portfolio turnover rate and will generally incur
correspondingly greater brokerage commissions. Excessive short-term trading may
result in excessive "short-short income under the Internal Revenue Code ("IRC")
which, in turn, could cause the Portfolio to also violate IRC Section 817(h)
affecting the status of such Portfolios as regulated investment companies and
the tax status of the contracts invested in the Portfolio. See "TAXES AND
DIVIDENDS" in this Prospectus and "PORTFOLIO TRANSACTIONS AND BROKERAGE
ALLOCATIONS" in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Board of Directors of the Fund is responsible for the administration of
the affairs of the Fund.
The Fund's investment manager is Chubb Investment Advisory, a registered
investment adviser, which is a wholly-owned subsidiary of Chubb Life. Its
address is One Granite Place, Concord, NH 03301. It provides supervisory
investment advice, acts as transfer and dividend disbursing agent for the Fund
and provides certain administrative services for all of the Fund's Portfolios.
Its investment advisory responsibilities include, among other things,
recommending and overseeing the activities of the Sub-Investment Managers and
reviewing the practices of broker-dealers selected by the Sub-Investment
Managers. Chubb Investment Advisory also provides office space and related
utilities, including telephones, necessary for the Fund's operations;
recommends auditors, counsel and custodians; maintains records not otherwise
maintained by other parties; and provides personnel, data processing services,
and supplies to the Fund. The cost of such facilities, supplies and services is
included in the investment management fee described below. Chubb Investment
Advisory also acts as investment administrator to Chubb Investment Funds, Inc.,
and UST Master Variable Series, Inc., both open-end management investment
companies organized in 1987 and 1994 respectively, and as investment manager
for Chubb Series Trust, an open-end management investment company established
in 1994.
Investment management fees are paid to Chubb Investment Advisory monthly at
an annual rate based on a percentage of the average daily net asset value of
each Portfolio as shown below:
<TABLE>
<CAPTION>
WORLD GROWTH STOCK,
GOLD STOCK,
DOMESTIC GROWTH STOCK,
AVERAGE DAILY NET ASSET MONEY MARKET GROWTH AND INCOME, CAPITAL EMERGING
VALUE AND BOND AND BALANCED GROWTH GROWTH
- ----------------------- ------------ ---------------------- ------- --------
<S> <C> <C> <C> <C>
First $200 Million....... .50% .75% 1.00% .80%
Next $1.1 Billion........ .45% .70% .95% .75%
Over $1.3 Billion........ .40% .65% .90% .70%
</TABLE>
30
<PAGE>
The Sub-Investment Managers for the Portfolios are Templeton, Galbraith &
Hansberger Ltd., Lyford Cay, Nassau, Bahamas for the World Growth Stock
Portfolio; Chubb Asset Managers, Inc., 15 Mountain View Road, Warren, New
Jersey 07061 for the Money Market, Bond, and Growth and Income Portfolios; Van
Eck Associates Corporation, 99 Park Avenue, New York, New York 10016 for the
Gold Stock Portfolio; Pioneering Management Corporation, 60 State Street,
Boston, Massachusetts 02109 for the Domestic Growth Stock Portfolio; Janus
Capital Corporation, 100 Fillmore Street, Suite 300, Denver, Colorado 80206 for
the Capital Growth Portfolio; Phoenix Investment Counsel, Inc., One American
Row, Hartford, Connecticut 06115 for the Balanced Portfolio; Massachusetts
Financial Services Company, 500 Boylston Street, Boston, Massachusetts 02116
for the Emerging Growth Portfolio.
Templeton, a registered investment adviser, is organized under the laws of
the Bahamas. Templeton is an indirect wholly owned subsidiary of Franklin
Resources, Inc. ("Franklin"), a Delaware corporation. Franklin is a publicly
traded company whose ordinary shares of common stock are listed on the New York
Stock Exchange. Templeton serves as an investment adviser or sub-adviser to
various investment companies registered under the Investment Company Act of
1940, subject to the supervision and direction of each company's Board of
Directors and, where appropriate, the company's investment adviser, as well as
to investment companies registered in foreign jurisdictions. In this capacity,
Templeton is responsible on a daily basis for managing the companies'
investments, making investment decisions on behalf of the companies and
supplying research services. Templeton may also provide investment research and
advice to certain common trust vehicles. Templeton is also an adviser or sub-
adviser to several private accounts. Templeton and its affiliates currently
serve as investment manager to twenty-five U.S. registered investment
companies. Dr. Jane Siebels-Kilnes has been primarily responsible for the day-
to-day management of the World Growth Stock Portfolio since 1991. She has been
employed by Templeton since September 1990 and was previously Vice President
for Union Bank of Switzerland, Zurich, Switzerland from March 1990 to September
1990 and Portfolio Manager for Storebrand International, Oslo, Norway from July
1985 to March 1990.
Chubb Asset, a registered investment adviser, is a Delaware corporation and a
wholly-owned subsidiary of The Chubb Corporation. Since 1987, Chubb Asset has
been the investment manager for Chubb Investment Funds, Inc., which currently
consists of the Chubb Money Market Fund, the Chubb Government Securities Fund,
the Chubb Tax-Exempt Fund, the Chubb Total Return Fund and the Chubb Growth and
Income Fund. Persons employed by Chubb Asset, who are also investment personnel
of Chubb & Son, Inc., a wholly-owned subsidiary of The Chubb Corporation,
currently provide investment advice to and supervise and monitor investment
portfolios for The Chubb Corporation and its affiliates, including general
accounts of insurance affiliates of The Chubb Corporation. In addition, certain
investment personnel employed by Chubb Asset currently provide advice to other
investment portfolios of entities not affiliated with The Chubb Corporation or
its affiliates in their capacity as officers or directors of certain registered
investment advisers not related to Chubb Asset. Ned Gerstman and Paul Geyer
have been primarily responsible for the day-to-day management of the Bond
Portfolio since 1988 and 1991, respectively. Mr. Gerstman is Senior Vice
President of Chubb Asset and Vice President and Portfolio Manager of The Chubb
Corporation. He has been employed by Chubb Asset since 1988 and has been
Portfolio Manager for The Chubb Corporation since 1987. Mr. Geyer, Assistant
Vice President and Assistant Portfolio Manager of Chubb Asset, has been
affiliated with Chubb Asset since 1991 and with The Chubb Corporation since
1990. He was previously affiliated with Merrill Lynch in New York. David
Schafer and Robert Witkoff have been primarily responsible for the day-to-day
management of the Growth and Income Portfolio since 1993 and 1992,
respectively. Mr. Schafer, Senior Vice President of Chubb Asset, has been
affiliated with Chubb Asset since 1993. Mr. Schafer is also President of Chubb
Equity Managers, Director and President of Schafer Value Fund, Inc., Director,
President and Treasurer of Schafer Capital Management, Inc., Chairman of the
Board of Schafer Cullen Capital Management, Inc. and sole proprietor of Schafer
Capital Management Co. Mr. Witkoff joined Chubb Asset in 1988 and is currently
Vice President of Chubb Asset and Portfolio Manager for The Chubb Corporation.
Van Eck Associates, a registered investment adviser, is a Delaware
corporation. It acts as an adviser to three other registered investment
companies, Van Eck Funds, Van Eck Investment Trust and International Growth
Trust and as a sub-adviser to two other registered investment companies,
Thomson Fund Group--Thomson Precious Metals and Natural Resources Fund and GCG
Trust--Natural Resources Fund, and manages or advises managers of portfolios of
pension plans and other accounts. Mr. John C. van Eck owns 25.6% of the
outstanding voting securities of Van Eck Associates and his wife and two sons,
Jan and Derek van Eck, 270 River Road, Briarcliff Manor, New York, are each the
beneficial owners of 24.8% of such securities. Mr. John C. van Eck has retained
the right to direct the voting and disposition of the shares of Van Eck
Associates held by his wife. Lucille Palermo has been primarily responsible for
the day-to-day management of the Gold Stock Portfolio since October of 1991.
She has been affiliated with Van Eck
31
<PAGE>
Associates and related companies since 1989 and is currently Executive Vice
President of Van Eck Funds and President and Portfolio Manager for the
Gold/Resources Fund.
Pioneer, a registered investment adviser, is a Delaware corporation. It is a
wholly-owned subsidiary of The Pioneer Group, Inc., a Delaware corporation.
Pioneer currently acts as a manager and investment adviser of twenty-five other
registered investment companies. Robert Benson, Senior Vice President of
Pioneer, has been primarily responsible for the day-to-day management of the
Domestic Growth Stock Portfolio since 1986. Mr. Benson has been employed by
Pioneer since 1974.
Janus, a registered investment adviser, is a Colorado corporation. It serves
as investment adviser or subadviser to Janus Growth and Income Fund, Janus
Worldwide Fund, Janus Fund, Janus Twenty Fund, Janus Venture Fund, Janus
Flexible Income Fund and Janus Intermediate Government Securities Fund, as well
as several other mutual funds and individual, corporate and pension and profit-
sharing accounts. Kansas City Southern Industries, Inc. ("KCSI") owns
approximately 81% of the outstanding voting stock of Janus, most of which it
acquired in 1984. KCSI is a publicly-traded holding company whose primary
subsidiaries are engaged in transportation, financial services and real estate.
Helen Young Hayes has been primarily responsible for the day-to-day management
of the Capital Growth Portfolio since its inception in 1992. Ms. Hayes, who is
currently Executive Vice President of Janus Investment Fund and Janus Aspen
Series, as well as Portfolio Manager of the Janus Worldwide Fund and separate
equity accounts, has been affiliated with Janus since 1987.
Phoenix, a registered investment adviser, is a Massachusetts corporation. It
was originally organized in 1932 as John P. Chase, Inc. and has been engaged in
the management of the Phoenix Series Fund since 1958. It also serves as
investment adviser or sub-investment adviser to Phoenix Multi-Portfolio Fund,
Phoenix Total Return Fund, Inc., The Phoenix Edge Series Fund, Cambridge Series
Trust, SunAmerica Series Trust, JNL Series Trust and American Skandia Trust.
All of the outstanding stock of Phoenix is owned by Phoenix Equity Planning
Corporation, an indirect subsidiary of Phoenix Home Life Mutual Insurance
Company. Phoenix Home Life Mutual Insurance Company is in the business of
writing ordinary and group life and health insurance and annuities, including
variable life insurance and variable annuities. Melanie Reichl has been
primarily responsible for the day-to-day management of the Balanced Portfolio
since May 1995. Previously she was an Assistant Vice President Personal Trust
Portfolio manager at the Bank of Boston.
Massachusetts Financial Services Company ("MFS") is America's oldest mutual
fund organization. MFS and its predecessor organizations have a history of
money management dating from 1924 and the founding of the first mutual fund in
the United States, Massachusetts Investors Trust. Net assets under the
management of the MFS organization were approximately $34.5 billion on behalf
of approximately 1.6 million investor accounts as of February 28, 1995. As of
such date, the MFS organization manages approximately $11.5 billion of assets
invested in equity securities and approximately $19.5 billion of assets
invested in fixed income securities. Approximately $3.1 billion of the assets
managed by MFS are invested in securities of foreign issuers and non-U.S.
dollar denominated securities of U.S. issuers. MFS is a subsidiary of Sun Life
Assurance Company of Canada (U.S.), which in turn is a subsidiary of Sun Life
Assurance Company of Canada.
MFS also serves as investment adviser to each of the other funds in the MFS
Family of Funds (the "MFS Funds") and to MFS (R) Municipal Income Trust, MFS
Multimarket Income Trust, MFS Government Markets Income Trust, MFS Intermediate
Income Trust, MFS Charter Income Trust, MFS Special Value Trust, MFS Variable
Insurance Trust, MFS Institutional Trust, MFS Union Standard Trust, MFS/Sun
Life Series Trust, Sun Growth Variable Annuity Fund, Inc. and seven variable
accounts, each of which is a registered investment company established by Sun
Life Assurance Company of Canada (U.S.) in connection with the sale of Compass-
2 and Compass-3 combination fixed/variable annuity contracts. MFS and its
wholly-owned subsidiary, MFS Asset Management, Inc., provides investment advice
to substantial private clients. John W. Ballen, a Senior Vice President of MFS,
will be the Portfolio's portfolio manager. Mr. Ballen has been employed by MFS
since 1984.
32
<PAGE>
The compensation of the Sub-Investment Managers is paid directly from the
investment management fees of Chubb Investment Advisory and is set forth in the
table below as an annual percentage of the average daily net asset value of the
Portfolio managed:
<TABLE>
<CAPTION>
SUB-INVESTMENT MANAGER
-----------------------------------------------------------------------------
CHUBB ASSET
CHUBB ASSET FOR THE
FOR THE BOND AND
GROWTH AND MONEY MARKET VAN ECK
AVERAGE DAILY NET ASSET VALUE INCOME PORTFOLIO JANUS PHOENIX TEMPLETON PORTFOLIOS ASSOCIATES PIONEER MFS
- ----------------------------- ---------------- ----- ------- --------- ------------ ---------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First $200 Million...... .50% .75% .50% .50% .35% .50% .50% .50%
Next $1.1 Billion....... .45% .70% .45% .45% .30% .45% .45% .45%
Over $1.3 Billion....... .40% .65% .40% .40% .25% .40% .40% .40%
</TABLE>
As noted above, Chubb Investment Advisory acts as transfer agent and dividend
paying agent for the Fund and assumes a number of administrative functions in
addition to its investment management services. For example, Chubb Investment
Advisory prepares and distributes proxy statements, prospectuses, Statements of
Additional Information, reports and other communications with stockholders;
schedules, plans the agenda for, and conducts the meetings of the Fund's
directors and stockholders; and prepares and files tax returns and reports
which federal, state, local or foreign laws may require. The cost of preparing,
printing and distributing all materials and holding such meetings is borne by
the Fund. The Fund also pays certain other expenses which are described under
the heading "INVESTMENT ADVISORY AND OTHER SERVICES--Payment of Expenses" in
the Statement of Additional Information.
For the year ended December 31, 1994, all investment management fees paid to
Chubb Investment Advisory totalled .75%, .50%, .75%, .75%, .50%, .75%, 1.00%,
and .75%, respectively, of the average net assets of the World Growth Stock
Portfolio, Money Market Portfolio, Gold Stock Portfolio, Domestic Growth Stock
Portfolio, Bond Portfolio, Growth and Income Portfolio, Capital Growth
Portfolio and Balanced Portfolio. For the year ended December 31, 1994 the
ratio of operating expenses to average net assets was 1.00%, .65%, .99%, .89%,
.68%, 1.10%, 1.22% and 1.01% respectively, for the World Growth Stock
Portfolio, the Money Market Portfolio, the Gold Stock Portfolio, the Domestic
Growth Stock Portfolio, the Bond Portfolio, the Growth and Income Portfolio,
the Capital Growth Portfolio and the Balanced Portfolio.
CAPITAL STOCK
The Fund issues a separate series of capital stock for each Portfolio. Each
share of capital stock issued with respect to a Portfolio has a pro rata
interest in the assets of that Portfolio. Each share of capital stock is
entitled to one vote on all matters submitted to a vote of all stockholders of
the Fund, and fractional shares are entitled to a corresponding fractional
vote. Shares of a Portfolio will be voted separately from shares of other
Portfolios on matters affecting only that Portfolio, including approval of the
investment management agreement, a sub-investment management agreement, and
changes in fundamental investment policies of that Portfolio. The assets of
each Portfolio are charged with the liabilities of that Portfolio and a
proportionate share of the general liabilities of the Fund. All shares may be
redeemed at any time.
As a Maryland corporate entity, the Fund is not required to hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Fund is, however, required to hold shareholder meetings for
such purposes as, for example: (i) approving certain agreements as required by
the 1940 Act; (ii) changing fundamental investment objectives and restrictions
of the Portfolios; and (iii) filling vacancies on the Board of Directors in the
event that less than a majority of the directors were elected by shareholders.
The Fund expects that there will be no meetings of shareholders for the purpose
of electing directors unless and until such time as less than a majority of the
directors holding office have been elected by shareholders. At such time, the
directors then in office will call a shareholder meeting for the election of
directors. In addition, holders of record of not less than two-thirds of the
outstanding shares of the Fund may remove a director from office by a vote cast
in person or by proxy at a shareholder meeting called for that purpose at the
request of holders of 10% or more of the outstanding shares of the Fund. The
Fund has the obligation to assist in such shareholder communications. Except as
set forth above, directors will continue in office and may appoint successor
directors.
33
<PAGE>
Chubb Life initially purchased 100,000 shares of the capital stock of each
Portfolio, other than the Balanced Portfolio and the Emerging Growth Portfolio,
for its general account. Chubb Life initially purchased 500,000 shares of the
capital stock of the Balanced Portfolio and will purchase 300,000 shares of
capital stock of the Emerging Growth Portfolio for its general account. The
purchase price of each share was $10.00. All other shares are offered only to
corresponding divisions of separate accounts established by Chubb Life or its
affiliated insurance companies. As of March 31, 1995, Chubb Life owned greater
than 25% of the shares of capital stock of the Bond Portfolio, the Growth and
Income Portfolio and the Balanced Portfolio. Chubb Life's ownership of greater
than 25% of these Portfolios may result in Chubb Life being deemed to be a
controlling entity of them. The shares held in a separate account which are
attributable to Policies will be voted by Chubb Life or its affiliated
insurance companies in accordance with instructions received from the owners of
Policies. The shares held by Chubb Life or its affiliated insurance companies,
including shares for which no voting instructions have been received, shares
held in the separate account representing charges imposed by Chubb Life or its
affiliated insurance companies against the separate account and shares held by
Chubb Life or its affiliated insurance companies that are not otherwise
attributable to Policies, will also be voted by Chubb Life or its affiliated
insurance companies in proportion to instructions received from the owners of
Policies. Chubb Life and its affiliated insurance companies reserve the right
to vote any or all such shares at their discretion to the extent consistent
with then current interpretations of the Investment Company Act of 1940 and
rules thereunder.
TAXES AND DIVIDENDS
Each Portfolio intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code ("Code"). It is the Fund's policy to
comply with the provisions of the Code regarding distribution of investment
income. Under those provisions, a Portfolio will not be subject to federal
income tax on that portion of its ordinary income and net capital gains
distributed to shareholders.
The Fund expects that each Portfolio will declare and distribute by the end
of each calendar year all or substantially all ordinary income and net capital
gains. Failure to distribute substantially all ordinary and net capital gains,
as described, may subject the Fund to an excise tax.
Dividends from ordinary income will be declared and distributed with respect
to each Portfolio at least once each year. Ordinary income of each Portfolio is
the investment company taxable income as defined in Section 852(b) of the Code.
All dividends and distributions will be automatically reinvested in additional
shares of the Portfolio with respect to which dividends have been declared, at
net asset value, as of the ex-dividend date of such dividends.
Section 817(h) of the Code and regulations thereunder set standards for
diversification of the investments underlying variable life insurance policies
in order for such policies to be treated as life insurance. These requirements,
which are in addition to diversification requirements applicable to the
Portfolios under Subchapter M and the Investment Company Act of 1940, may
affect the composition of a Portfolio's investments. Since the shares of the
Fund are currently sold to segregated asset accounts underlying such variable
life insurance policies, the Fund intends to comply with the diversification
requirements as set forth in the regulations.
The Secretary of the Treasury may in the future issue additional regulations
or revenue rulings that will prescribe the circumstances in which a
policyowner's control of the investments of a separate account may cause the
policyowner, rather than the insurance company, to be treated as the owner of
the assets of the separate account. Failure to comply with Section 817(h) of
the Code or any regulations thereunder, or with any regulations or revenue
rulings on policyowner control, if promulgated, would cause earnings on a
policyowner's interest in the separate account to be includible in the
policyowner's gross income in the year earned.
OFFERING AND REDEMPTION OF SHARES
Shares of capital stock of each Portfolio of the Fund are offered only to the
corresponding division of a separate account to which premiums have been
allocated by the owner of a Policy. Shares are sold and redeemed at their net
asset value as next determined following receipt by the separate account of
premium payments, surrender requests under Policies, loan payments, transfer
requests, and similar or related transactions through the separate account. The
Fund's principal underwriter and distributor is Chubb Securities Corporation,
One Granite Place, Concord, New Hampshire 03301. Chubb Securities Corporation
is an affiliate of Chubb Investment Advisory and a wholly-owned subsidiary of
Chubb Life. No selling commission or redemption charge is made with respect to
the purchase or sale of Fund shares.
34
<PAGE>
Net asset value is normally determined as of the close of regular trading on
the New York Stock Exchange (presently 4:00 p.m. New York Time) on each day
during which the New York Stock Exchange is open for trading.
An equity security listed on a stock exchange is valued at the closing sale
price on the exchange on which such security is principally traded. If no sale
took place, the mean of the bid and asked prices at the close of trading is
used. A security not listed on a stock exchange is valued at the closing sale
price as reported on a readily available market quotation system, or, if no
sales took place, the mean of the bid and asked prices at the close of trading
in the over-the-counter market. Quotations of foreign securities in foreign
currencies are converted to United States dollar equivalents using
appropriately translated foreign market closing prices.
Trading in securities on exchanges in European and Far Eastern countries, and
in over-the-counter markets in such other nations, is normally completed well
before the close of trading on the New York Stock Exchange. Trading of European
and Far Eastern securities, either generally or in a particular country or
countries, may not take place on every day on which the New York Stock Exchange
is open. Furthermore, trading takes place in Japanese markets on certain
Saturdays, and in various foreign markets on days which are not business days
in New York and on which the Fund's net asset value is not normally calculated.
The calculation of the net asset value of those Portfolios which do such
trading, therefore, may not take place contemporaneously with the determination
of the prices of many of the securities of each such Portfolio which are used
in making the calculation of net asset value. Occasionally, events affecting
the values of such securities may occur between the times at which they are
determined and the close of the New York Stock Exchange, which events may not
be reflected in the computation of a Portfolio's net asset value. If, during
such periods, events occur which materially affect the value of the securities
of a Portfolio, and during such periods either shares are tendered for
redemption or a purchase or sale order is received by the Fund, such securities
will be valued at fair value as determined in good faith by the Board of
Directors of the Fund.
Debt securities having remaining maturities of 60 days or less are valued on
an amortized cost basis unless the Board determines that such method does not
represent fair value. This procedure values a purchased instrument at cost on
the date of purchase. It thereafter assumes a constant rate of amortization of
any discount or premium and of accrual of interest income, regardless of any
intervening change in general interest rates or the market value of the
instrument.
Options and convertible preferred stocks listed on a national securities
exchange are valued as of their last sale price or, if there is no sale, at the
current bid price. Futures Contracts are valued as of their last sale price or,
if there is no sale, at the latest available bid price.
All other securities and assets are valued at their fair value as determined
in good faith by the Board of Directors of the Fund.
With the approval of the Board, the Fund may utilize a pricing service, a
bank, or a broker-dealer experienced in such matters to perform any of the
above-described valuation functions.
Further discussion of asset valuation methods is included in the Statement of
Additional Information under the heading "DETERMINATION OF NET ASSET VALUE."
OTHER INFORMATION
Shares of the Portfolios are presently offered only to corresponding
divisions of separate accounts established by Chubb Life or its affiliated
insurance companies in order to fund the Policies. In the future, however, the
shares of the Portfolios may also be offered to separate accounts of Chubb Life
or affiliates of Chubb Life in order to fund additional variable life insurance
policies or variable annuity contracts offered by Chubb Life or its affiliates.
A potential for certain conflicts of interest exists between the interests of
variable life insurance policyowners and variable annuity contract owners. In
the event that shares of the Portfolios are offered to separate accounts
funding variable annuity contracts, the Board of Directors of the Fund intends
to monitor events for the existence of any material conflict between the
interests of variable life insurance policyowners and variable annuity contract
owners and to determine what action, if any, should be taken in response
thereto.
35
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ ----------
<S> <C> <C>
COMMON STOCK 90.30%
Advertising, Broadcasting, & Publishing 0.13%
Citation Corporation (S).......................... 500 $9,000
----------
Automotive Manufacturing 0.01%
Boyds Wheels, Inc. (S)............................ 100 700
----------
Brewery 0.04%
Redhook Ale Brewery, Inc. (S)..................... 100 2,952
----------
Broadcasting - Radio & TV 0.07%
American Radio Systems Corp. (S).................. 100 2,475
Sinclair Broadcasting Group, Inc. (S)............. 100 2,875
----------
5,350
----------
Chemicals 0.05%
Arcadian Corporation (S).......................... 100 2,038
The Carbide/Graphite Group, Inc. (S).............. 100 1,412
----------
3,450
----------
Commercial Services 4.98%
AccuStaff, Inc. (S)............................... 100 3,675
Business Resource Group (S)....................... 100 487
CUC International, Inc. (S)....................... 3,600 125,550
Franklin Quest Company (S)........................ 3,500 85,750
Healthplan Services Corp ......................... 1,000 20,375
Interim Services, Inc. (S)........................ 1,000 27,000
Personnel Group Of America, Inc. (S).............. 4,900 68,600
Romac International, Inc. (S)..................... 100 1,700
SOS Staffing Services (S)......................... 200 1,650
Service Corporation International................. 400 15,650
Sitel Corporation (S)............................. 100 2,450
----------
352,887
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ ----------
<S> <C> <C>
Computer & Office Equipment 4.07%
Bay Networks, Inc................................. 1,200 $64,050
Cabletron Systems, Inc. (S)....................... 2,900 191,037
Chipcom Corporation (S)........................... 500 24,250
Cybex Corporation (S)............................. 100 2,500
Imnet Systems, Inc (S)............................ 100 2,575
Storemedia, Inc. (S).............................. 100 4,525
----------
288,937
----------
Computer Software - Mainframe 21.04%
Arcsys, Inc. (S).................................. 100 4,125
BDM International, Inc. (S)....................... 100 2,750
BMC Software, Incorporated........................ 3,200 147,200
Baan Company N.V. (S)............................. 100 4,500
Black Box Corporation (S)......................... 700 12,950
Cadence Design Systems, Inc....................... 3,000 117,750
Checkfree Corporation (S)......................... 100 2,000
Computer Associates International, Inc. (S)....... 1,400 59,150
Computron Software, Inc. (S)...................... 100 1,725
Compuware Corp. (S)............................... 4,000 88,000
Datalogix International, Inc. (S)................. 100 1,425
Eagle Point Software Corp. (S).................... 100 1,875
HNC Software, Inc. (S)............................ 100 2,625
HPR, Inc. (S)..................................... 100 2,325
Harbinger Corporation (S)......................... 100 1,375
Informix Corporation.............................. 5,000 162,500
Interactive Group, Inc. (S)....................... 100 662
Legato Systems, Inc. (S).......................... 100 2,650
Marcam Corp. (S).................................. 1,000 14,875
Maxis, Inc. (S)................................... 100 4,400
Mysoftware Company (S)............................ 100 1,275
National Data Corp................................ 100 2,687
Number Nine Visual Technology Corp. (S)........... 100 1,650
Oak Technology, Inc. (S).......................... 300 12,600
Oracle Systems Corp............................... 8,600 330,025
SPS Transaction Services Corp..................... 2,700 78,300
Spyglass, Inc. (S)................................ 100 4,575
Summit Medical Systems (S)........................ 100 1,500
Sybase, Inc. (S).................................. 3,900 125,288
Symantec Corporation (S).......................... 700 21,000
System Software Associates, Inc................... 5,600 224,700
The Bisys Group, Inc. (S)......................... 1,500 38,250
Transaction Systems Architects, Inc. (S).......... 200 5,350
UUNET Technologies, Inc. (S)...................... 100 4,625
Vantive Corporation (S)........................... 100 1,600
Videoserver, Inc. (S)............................. 100 3,525
----------
1,491,812
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ ---------
<S> <C> <C>
Computer Software - P.C. 7.45%
Adobe Systems, Inc................................ 700 $36,225
Astea International, Inc (S)...................... 100 2,000
Autodesk, Inc..................................... 6,300 275,625
CBT Group PLC-ADR (S)............................. 200 9,550
Dendrite International, Inc.(S)................... 100 1,525
Discreet Logic, Inc............................... 100 5,500
Hummingbird Communications, Ltd.(S)............... 800 29,800
Inference Corp., Class A (S)...................... 100 1,500
Integrated Measurement Systems, Inc.(S)........... 100 1,325
Netscape Communications Corporation (S)........... 100 6,250
Novadigm, Inc. (S)................................ 100 1,687
On Technology, Inc. (S)........................... 100 1,750
Premenos Technology Corporation (S)............... 100 3,250
Pure Software, Inc. (S)........................... 100 3,575
Seer Technologies, Inc. (S)....................... 100 1,512
Smith Micro Software, Inc. (S).................... 100 988
Softkey International, Inc. (S)................... 2,800 123,900
Spectrum Holobyte, Inc. (S)....................... 600 7,575
Technology Solutions Company (S).................. 600 10,800
Touchstone Software Corporation (S)............... 200 2,150
Unison Software, Inc. (S)......................... 100 1,500
----------
527,987
----------
Electrical Equipment 0.02%
Plasma & Materials Technologies, Inc. (S)......... 100 1,763
----------
Electronics 3.46%
AVX Corporation................................... 200 6,700
Accom, Inc. (S)................................... 100 875
Cyberoptics Corporation (S)....................... 100 3,400
Euphonix, Inc. (S)................................ 300 3,000
Information Storage Devices, Inc. (S)............. 300 6,787
Lsi Logic Corporation............................. 1,300 75,075
Linear Technology Corp............................ 1,400 58,100
Mackie Designs, Inc. (S).......................... 100 1,450
Macromedia, Inc................................... 200 11,425
Maxim Integrated Products, Inc.................... 300 22,200
Paradigm Technology, Inc. (S)..................... 100 3,075
Smartflex Systems, Inc. (S)....................... 100 1,700
Telecom Seciconductors, Inc. (S).................. 100 1,150
Thermospectra Corporation (S)..................... 100 1,675
Tower Semiconductor, Ltd. (S)..................... 1,000 32,500
UCAR International, Inc. (S)...................... 300 8,175
Ultratech Stepper, Inc............................ 200 8,450
----------
245,737
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ ----------
<S> <C> <C>
Electronics-Semiconductor 0.12%
National Semiconductor Corporation (S)............ 300 $8,288
----------
Emerging Technology 0.01%
General Scanning, Inc. (S)........................ 100 1,125
----------
Entertainment & Leisure 3.91%
Ambassadors International, Inc. (S)............... 200 2,250
Aztar Corporation (S)............................. 300 2,512
Casino America, Inc. (S).......................... 900 8,437
Grand Casinos, Inc................................ 2,500 101,563
Harrah's Entertainment, Inc....................... 5,100 149,175
National Gaming Corp. (S)......................... 1,000 10,250
Station Casinos, Inc. (S)......................... 200 3,075
----------
277,262
----------
Environmental Control 0.78%
Sanifill, Inc. (S)................................ 1,700 55,675
----------
Financial Services 0.26%
Credit Acceptance Corporation..................... 400 10,800
Jayhawk Acceptance Corp. (S)...................... 100 1,462
Union Acceptance Corp., Class A (S)............... 200 3,750
WFS Financial, Inc. (S)........................... 100 2,275
----------
18,287
----------
Food-Processing 0.05%
Rocky Mountain Chocolate Factory, Inc. (S)........ 200 3,450
----------
Industrial Machines - Engines 0.04%
Hardinge, Inc..................................... 100 2,625
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ ------------
<S> <C> <C>
Insurance 11.39%
Compdent Corporation (S).......................... 400 $11,700
Foundation Health Corp. (S)....................... 2,800 106,750
Healthsource, Inc. (S)............................ 1,500 72,187
Mid Atlantic Medical Services, Inc. (S)........... 8,100 158,962
Oxford Health Plans, Inc.......................... 800 58,200
Pacificare Health Systems, Class A (S)............ 1,000 65,500
Physician Corporation Of America (S).............. 400 6,300
Renaissancere Holdings, Ltd. (S).................. 100 2,438
United Dental Care, Inc. (S)...................... 100 3,000
United Healthcare Corp............................ 6,600 322,575
----------
807,612
----------
Lodging 7.05%
Amerihost Properties, Inc. (S).................... 5,000 34,375
Doubletree Corp. (S).............................. 200 4,450
HFS, Inc.......................................... 6,450 337,819
John Q Hammons Hotels, Inc. (S)................... 4,100 52,787
La Quinta Inns, Inc............................... 100 2,800
Promus Hotel Corporation (S)...................... 2,400 54,600
Renaissance Hotel Group N.V. (S).................. 600 10,650
Studio Plus Hotels, Inc. (S)...................... 100 2,300
----------
499,781
----------
Machine-Diversified 0.35%
AG Associates, Inc. (S)........................... 100 2,550
American Standard Companies, Inc. (S)............. 300 8,850
Computational Systems, Inc. (S)................... 100 1,625
Opal, Inc. (S).................................... 100 1,825
Veeco Instruments, Inc. (S)....................... 100 2,625
Westinghouse Air Brake Co. (S).................... 500 7,187
----------
24,662
----------
Manufacturing 0.15%
Chicago Miniature Lamp, Inc. (S).................. 100 1,775
Oakley, Inc. (S).................................. 100 2,963
Safety Components International, Inc. (S)......... 300 5,700
----------
10,438
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ -----------
<S> <C> <C>
Medical - Biotech 0.03%
Ostech Inc. (S)................................... 100 $1,825
------------
Medical - Hospitals 7.09%
American Oncology Resources, Inc. (S)............. 100 4,300
Community Care of America, Inc. (S)............... 200 2,775
Horizon Healthcare Corp. (S)...................... 1,900 43,225
Integrated Health Services........................ 4,100 115,825
Lincare Holdings, Inc. (S)........................ 2,000 51,500
Living Centers Of America, Inc. (S)............... 500 16,625
Mariner Health Group, Inc. (S).................... 1,000 14,125
Occusystems, Inc. (S)............................. 100 2,075
Owen Healthcare Inc............................... 400 6,525
Pacificare Health Systems-B, Inc. (S)............. 2,100 142,800
Pediatric Services of America, Inc. (S)........... 400 7,700
Pediatrix Medical Group, Inc. (S)................. 100 2,050
Physicians Resource Group, Inc. (S)............... 200 4,425
Renal Treatment Centers, Inc. (S)................. 1,200 44,400
Surgical Care Affiliates.......................... 1,900 44,175
----------
502,525
-----------
Medical Supplies 0.24%
ICU Medical, Inc. (S)............................. 100 1,350
Orthofix International N.V. (S)................... 1,000 15,500
----------
16,850
----------
Office & Business Equipment 0.17%
BT Office Products International, Inc. (S)........ 900 11,813
----------
Publishing-Newspaper 0.05%
Desktop Data, Inc. (S)............................ 100 3,475
----------
Publishing/Printing 0.17%
Mail-Well, Inc. (S)............................... 900 12,150
----------
Real Estate 0.39%
NHP, Inc. (S)..................................... 2,000 27,750
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ ----------
<S> <C> <C>
Restaurants & Food Service 4.68%
Apple South, Inc.................................. 100 $2,275
Applebee's International, Inc..................... 2,000 54,500
Brinker International, Inc. (S)................... 4,400 65,450
Buffets, Inc. (S)................................. 3,000 37,500
Hometown Buffet, Inc. (S)......................... 1,700 23,800
IHOP Corporation. (S)............................. 3,000 78,750
Logan's Roadhouse, Inc. (S)....................... 100 1,750
Lone Star Steakhouse & Saloon (S)................. 900 36,900
Papa John's International, Inc. (S)............... 100 4,500
Quantum Restaurant Group, Inc. (S)................ 2,000 26,750
----------
332,175
----------
Retail 6.23%
Boise Cascade Office Products Corp. (S)........... 800 22,200
Borders Group, Inc. (S)........................... 300 5,137
Consolidated Stores Corp. (S)..................... 2,200 50,875
Dollar Tree Stores, Inc. (S)...................... 900 30,600
Duty Free International, Inc...................... 100 1,275
Global Directmail Corp. (S)....................... 1,200 29,550
Gymboree Corp. (S)................................ 700 21,088
Hollywood Entertainment Corp...................... 600 12,863
Micro Warehouse, Inc. (S)......................... 2,700 123,525
Office Depot, Inc. (S)............................ 4,800 144,600
----------
441,713
----------
Retail - Specialty 0.58%
Corporate Express, Inc............................ 700 17,062
Creative Computers, Inc. (S)...................... 100 2,950
Moovies, Inc. (S)................................. 100 1,963
Officemax, Inc.................................... 800 19,400
----------
41,375
----------
Semiconductors 0.65%
Burr-Brown Corporation............................ 800 29,800
C.P. Clare Corp. (S).............................. 100 2,550
Lattice Semiconductor Corporation. (S)............ 100 4,062
MEMC Electronic Materials, Inc. (S)............... 200 5,425
Ontrak Systems, Inc. (S).......................... 100 2,763
Transwitch Corp. (S).............................. 100 1,263
----------
45,863
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (Note B)
------------ -----------
<S> <C> <C>
Telecommunication 2.78%
Equalnet Holding Corp. (S)........................ 3,000 $46,500
Midcom Communications, Inc. (S)................... 200 3,050
Mobile Media, Inc. (S)............................ 100 2,700
Tel-Save Holdings, Inc. (S)....................... 2,100 32,288
Worldcom, Inc. (S)................................ 3,500 112,437
----------
196,975
----------
Telecommunication Equipment 0.33%
Colonial Data Technologies Corporation (S)........ 1,000 18,500
Harmonic Lightwaves, Inc. (S)..................... 100 1,800
Teletrend, Inc. (S)............................... 100 3,300
----------
23,600
----------
Transportation 0.66%
American Medical Response, Inc. (S)............... 1,500 42,563
Atlas Air, Inc. (S)............................... 200 4,450
----------
47,013
----------
Transportation-Air 0.03%
Midwest Express Holdings, Inc. (S)................ 100 2,250
----------
Utilities-Telecommunications 0.75%
Frontier Corporation.............................. 2,000 53,250
----------
Wholesale 0.04%
Programmer's Paradise, Inc. (S)................... 100 1,050
U.S. Office Products Company (S).................. 100 1,513
----------
2,563
----------
TOTAL COMMON STOCK (cost $5,321,729)........... 6,402,945
----------
</TABLE>
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS--Unaudited (Continued)
CHUBB AMERICA FUND, INC.
EMERGING GROWTH PORTFOLIO
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Market
Principal Value
Value (Note B)
------------ -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS 9.73%
FHLMC, 6.300%, due 10/02/95.................................... $690,000 $689,759
----------
TOTAL SHORT-TERM OBLIGATIONS (cost $689,759)................ 689,759
----------
TOTAL INVESTMENTS
(Cost $6,011,488*)....................... 100.03% 7,092,704
Other assets, less liabilities.............. -0.03 (2,289)
------- ----------
TOTAL NET ASSETS......................... 100.00% $7,090,415
======= ==========
</TABLE>
*Aggregate cost for Federal income tax purposes.
(S) Non-income producing security.
See notes to financial statements.
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- (Unaudited)
September 30, 1995
<TABLE>
<CAPTION>
Emerging
Growth
Portfolio
---------
<S> <C>
ASSETS
Investments, at market value (Note B and C).................
Common Stock:
Emerging Growth Portfolio (cost--$5,321,729)............ $6,402,945
Short-Term Obligations--at amortized cost which
approximates market value................................ 689,759
----------
Total Investments..................................... 7,092,704
Cash...................................................... 174,240
Accrued Investment income................................. 326
Receivable for portfolio securities sold.................. 713,048
Receivable from Chubb Life Insurance Company of America... 35,737
----------
Total Assets.......................................... 8,016,055
LIABILITIES
Payable for portfolio securities purchased................ 914,153
Accrued investment advisory fees (Note D)................. 4,037
Accrued custody fees...................................... 5,995
Payable to Chubb America Service Corp..................... 1,455
----------
Total Liabilities..................................... 925,640
----------
NET ASSETS.................................................. $7,090,415
==========
NET ASSETS CONSIST OF:
Capital paid in........................................... $6,022,903
Accumulated net investment loss........................... (15,227)
Accumulated net realized gain from investments............ 1,523
Net unrealized gain on investments........................ 1,081,216
----------
NET ASSETS.................................................. $7,090,415
==========
Shares of common stock outstanding (no par value,
100,000,000 shares authorized)............................ 553,018
----------
Net asset value, offering and redemption price per share.... $ 12.82
==========
</TABLE>
See notes to financial statements.
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENT OF OPERATIONS--(Unaudited)
For the Period from May 1, 1995 to September 30, 1995
<TABLE>
<CAPTION>
Emerging
Growth
Portfolio
---------
<S> <C>
INVESTMENT INCOME
Income
Interest................................. $ 16,404
Dividends................................ 377
----------
Total investment
Income................................ 16,781
Expenses:
Advisory fees (Note D)..................... 14,962
Custodian fees............................. 10,007
Shareholder reports........................ 671
Professional fees.......................... 607
Insurance expenses......................... 148
Security valuation......................... 4,443
Miscellaneous expenses..................... 1,170
----------
Total expenses........................... 32,008
----------
Net investment loss...................... (15,227)
----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments........... 1,523
Net unrealized gain on investments......... 1,081,216
----------
Net realized and unrealized gain
on investments.......................... 1,082,739
----------
Net increase in net assets
resulting from operations................. $1,067,512
==========
</TABLE>
See notes to financial statements.
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the Period from May 1, 1995 to September 30, 1995
<TABLE>
<CAPTION>
Emerging Growth
Portfolio
---------------
<S> <C>
Increase (decrease) in net assets:
From operations:
Net investment loss..................................... $ (15,227)
Net realized gain on investments........................ 1,523
Net unrealized gain on investments...................... 1,081,216
----------
Net increase in net assets resulting from operations.... 1,067,512
Increase in net assets derived
from shareholder transactions (Note E)................... 6,022,903
----------
Net increase in net assets.............................. 7,090,415
Net Assets:
Beginning of period..................................... 0
End of period (1)....................................... $7,090,415
----------
(1) Including accumulated
net investment loss..................................... $ (15,227)
==========
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
CHUBB AMERICA FUND, INC.
September 30, 1995
NOTE A--ORGANIZATION
Chubb America Fund, Inc. (the "Company") is a diversified open-end series
management investment company registered under the Investment Company Act of
1940, as amended. The Company was incorporated under the laws of the State of
Maryland on October 19, 1984 for the purpose of funding Flexible Premium
Variable Life Insurance Policies issued by Chubb Life Insurance Company of
America ("Chubb Life"). The Company is composed of nine separate portfolios
(the "Portfolios"): the World Growth Stock Portfolio, the Money Market
Portfolio, the Gold Stock Portfolio, the Domestic Growth Stock Portfolio, the
Bond Portfolio, the Growth and Income Portfolio, the Capital Growth Portfolio,
the Balanced Portfolio and the Emerging Growth Portfolio. Chubb Life's ownership
in the Emerging Growth Portfolio as of September 30, 1995 is as follows:
<TABLE>
<CAPTION>
Percentage of
Portfolio Shares Owned Shares Outstanding
<S> <C> <C>
Emerging Growth................ 300,001 54.25%
</TABLE>
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments: Investment securities are valued at the closing sales
price on the exchange on which such securities are principally traded;
securities traded in the over-the-counter market and securities traded on a
national exchange for which no sales took place on the day of valuation are
valued at the mean of the bid and ask prices at the close of trading. Quotations
for foreign securities are in United States dollars and accordingly, unrealized
gains and losses on these securities reflect all foreign exchange fluctuations.
Restricted securities are valued at fair value as determined in good faith by
the Board of Directors. Short-term debt instruments with a remaining maturity of
60 days or less are valued at amortized cost, which approximates market value.
Investment Security Transactions: Investment security transactions are recorded
as of the trade date, the date the order to buy or sell is executed. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
Distributions to Shareholders: Distributions to shareholders from ordinary
income and net realized capital gains are declared and distributed at least once
annually. Distributions to shareholders are recorded on the ex-dividend date.
The Company distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as dividends
in excess of net investment income or accumulated net realized gains.
Federal Income Taxes: It is the policy of the Company for the Portfolio to
continue to qualify as a regulated investment company by complying with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, and by distributing all of its ordinary income and net realized
capital gains. Therefore, no Federal tax provision is required.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
CHUBB AMERICA FUND, INC.
September 30, 1995
NOTE C--INVESTMENTS
Net realized gains and losses on investment securities sold are determined by
using the first-in, first-out method. The aggregate cost of investments owned
for Federal income tax purposes is the same as for financial reporting purposes.
As of September 30, 1995, gross unrealized gains and losses were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Gains Losses Gain
---------- ---------- ----------
<S> <C> <C> <C>
Emerging Growth Portfolio......... $1,132,207 $50,991 $1,081,216
</TABLE>
Purchases and sales of investment securities for the period ended September 30,
1995, other than short-term obligations, were as follows:
<TABLE>
<CAPTION>
Proceeds
Cost of from
Investment Investment
Securities Securities
Purchased Sold
---------- ----------
<S> <C> <C>
Emerging Growth Portfolio.......... $5,660,187 $339,981
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
CHUBB AMERICA FUND, INC.
September 30, 1995
Note D--INVESTMENT ADVISORY FEES AND MANAGEMENT AGREEMENT
The Company has entered into an investment management agreement with Chubb
Investment Advisory Corporation, a wholly-owned subsidiary of Chubb Life. Under
the agreement, Chubb Investment Advisory Corporation provides investment
management and certain administrative services for the Company. Chubb Investment
Advisory Corporation has, in turn, retained MFS Asset Management Group to
provide investment advisory services for the Emerging Growth Portfolio. For its
investment management and administrative services, Chubb Investment Advisory
Corporation is paid an annual fee through a daily charge based on a percentage
of the average daily net asset value of the Portfolio as shown below:
<TABLE>
<CAPTION>
First Next Over
$200 $1.1 $1.3
Million Billion Billion
------- ------- -------
<S> <C> <C> <C>
Emerging Growth Portfolio .80% .75% .70%
</TABLE>
NOTE E--SHAREHOLDERS' TRANSACTIONS
Following is a summary of transactions with shareholders for each Portfolio.
<TABLE>
<CAPTION>
Emerging Growth Portfolio*
------------------------------------
For Period from May 1, 1995
to September 30, 1995
----------------------------
Shares Dollars
-------- ----------
<S> <C> <C>
Shares issued........................... 553,367 $ 6,027,398
Shares issued as reinvestment of
dividends.............................
Shares redeemed......................... (349) (4,495)
------- -----------
Net increase........................ 553,018 $ 6,022,903
======= ===========
</TABLE>
*Inception Date--May 1, 1995
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS--Unaudited
For a share outstanding throughout the period:
<TABLE>
<CAPTION>
Emerging Growth Portfolio
-------------------------
(Unaudited)
Period From
May 1,
1995 to
September
30, 1995(A)
-------------
<S> <C>
Net asset value, beginning of
period............................ $ 10.00
Income From Investment
Operations
Net investment loss............. (0.03)
Net realized and unrealized
gains (losses) on
securities..................... 2.85
-----------
Total from investment
operations.................... 2.82
-----------
Net asset value, end of period.. $ 12.82
============
Total Return (B)................ 28.21%(D)
Ratios to Average Net Assets:
Expenses...................... 1.68%(C)
Net investment loss........... (0.80%)(C)
Portfolio Turnover Rate......... 7.60%(D)
Net Assets, At End of Period.... $7,090,415
</TABLE>
(A) Per share data calculated from the initial offering date, May 1, 1995, for
sale to Chubb Separate Account A.
(B) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of account fees and charges that apply to the
separate account of related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth more
or less than the original cost.
(C) Per share data and ratios calculated on an annualized basis.
(D) Not Annualized.
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
WORLD GROWTH STOCK PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------
<S> <C> <C>
COMMON STOCK-83.68%
Advertising, Broadcast & Publishing-0.87%
Nedlloyd Groep, NLG10, ORD 14,000 $ 459,052
----------
Aerospace Equipment-1.12%
British Aerospace, ORD 88,889 594,507
----------
Banking-4.62%
Banco Popular Espanol, ORD 5,000 594,469
Banco Portugues De Investimento, ORD 17,000 253,718
Barclays PLC, ADR 7,000 267,750
Credit Foncier De France, ORD 3,000 432,845
National Australia Bank Ltd., ADR. 11,307 457,923
National Bank of Canada, ORD 65,000 440,226
----------
2,446,931
----------
Beverages-1.13%
Embotelladora Andina S.A., ADR 23,000 600,875
----------
Building & Construction-3.06%
Corcemar Corp., ORD, B Shares+ 65,000 428,968
Perini Corporation+ 30,000 281,250
Sociedade Construcos Soares De Costa, ORD, NEW 11,100 211,949
Sociedade Construcos Soares De Costa, ORD 37,000 697,235
----------
1,619,402
----------
Building & Real Estate-0.56%
Wereldhave, NV, ORD 5,200 294,863
----------
Building Materials-4.84%
Enso-Gutzeit Oy, ORD 65,000 558,175
Masco Corporation 16,400 371,050
Owens-Corning Fiberglass Corp.+ 10,000 320,000
Pioneer International Ltd., ADR 200,000 496,400
Pioneer International Ltd., ORD 195,000 484,010
Skane-Gripen, AB., ORD 33,000 332,924
----------
2,562,559
----------
Business & Public Services-3.07%
Oce Van Der Grinten, NV, ORD 20,500 917,902
Rhoen Klinikum, ORD 840 704,509
----------
1,622,411
----------
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------
<S> <C> <C>
Chemicals-3.88%
BASF AG, ORD 2,400 $ 488,201
Bayer, ADR 20,000 463,218
Desc Fomento, ORD, Series C 27,027 153,105
Solvay S.A., ORD 1,100 523,562
Vitro S.A., ORD 90,000 423,954
----------
2,052,040
----------
Communication Systems-4.64%
Cable & Wireless, Pub. Ltd. Co., ADR 22,000 385,000
Compania de Telefon De Chile, S.A., ADR. 9,000 708,750
MCI Communications Corp 36,000 661,500
Telefonica de Espana, ADR 20,000 702,500
----------
2,457,750
----------
Electronics-3.05%
Great Wall Electronics Ltd., ORD 720,000 56,736
Hitachi Ltd., ORD 100,000 991,270
Sony Corporation, ORD 10,000 566,302
----------
1,614,308
----------
Energy Sources-2.07%
Royal Dutch Petroleum Co., Ltd., ADR. 5,000 537,500
Total Petroles, ORD 9,600 557,998
----------
1,095,498
----------
Engineering-2.98%
Danieli & C Officine Meccaniche, ORD 180,000 643,536
Empresa ICA Sociedad Controladora S.A., ADR 21,000 325,500
IHC Caland, ORD 24,000 607,152
----------
1,576,188
----------
Entertainment & Leisure-0.90%
Kuoni, ORD 17 474,149
----------
Financial Services-4.17%
Brierley Investments Ltd., ORD 525,000 379,732
Chile Fund, Inc. 11,570 533,666
Invesco Mim, ORD 200,000 513,140
Rhone-Poulenc, ORD 7,800 181,086
Thailand International Fund+ 12 360,000
The Turkey Trust, PLC, ORD 73,000 237,549
----------
2,205,173
----------
</TABLE>
See notes to financial statements.
1
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
WORLD GROWTH STOCK PORTFOLIO-(Continued)
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK-Continued
Food & Household Products-0.91%
Ares-Serono S.A., ORD 875 $ 480,739
----------
Forest Products & Paper-9.10%
Boise Cascade Corp. 19,000 508,250
Bowater, Inc. 21,000 559,125
Burlington Northern, Inc. 8,500 409,062
Carter Holt Harvey, Ltd., ORD 279,251 572,018
Fletcher Challenge Ltd. Forestry Division, ORD 360,000 430,920
International Paper Company 12,500 942,188
James River Corp., of Virginia 22,000 445,500
Tampella AB, 144A, ORD 120,000 354,456
Valmet Oy, FIM20, ORD 20,000 380,206
Vital Forsikring AS, ORD 20,000 212,890
----------
4,814,615
----------
Health & Personal Care-2.64%
Glaxo Holdings Corp., ADR 20,000 407,500
Nationwide Health Properties 12,000 429,000
Roche Holdings Genusscheine, ORD 2 9,682
Smithkline Beecham, PLC, ADR 16,000 548,000
----------
1,394,182
----------
Industrial Machines, Engines-3.29%
Celsius Industrier, AB, ORD 19,000 421,707
Internatio-Mueller, NV, ORD 10,000 530,163
SKF, ORD 48,000 790,949
----------
1,742,819
----------
Insurance-3.07%
National Mutual Asia Ltd., ORD 750,000 494,325
Swiss Reinsurance, Zurich, BR, SZF100, ORD 1,650 996,056
Swiss Reinsurance, Reg., SWF20, ORD 220 132,639
----------
1,623,020
----------
International, Oil-0.57%
YPF Sociedad Anonima S.A., ADR 14,000 299,250
----------
Manufacturing-0.96%
Pechiney International, S.A., FRF100, ORD 17,000 509,669
----------
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
Merchandising-0.79%
Limited, Inc. 23,000 $ 416,875
----------
Mining & Metals-6.57%
DeBeers/Centenary Linked Units, ADR 22,000 514,250
Industrius Penoles S.A., New Star CP, ORD+ 313,300 828,240
Metall Mining Corp., ORD+ 51,000 436,305
Oregon Steel Mills, Incorporated 14,000 218,750
Sociedad Quimica Y Minera De Chile, ADR 16,000 466,000
Tesco, PLC, ORD 140,000 545,384
Union Miniere, NPV, ORD 6,000 465,597
----------
3,474,526
----------
Multi-Industries-2.46%
Desc Sociedad De Fomento Industrial, ORD 100,000 507,610
Jardine Matheson Holdings, ADR. 111,600 796,913
----------
1,304,523
----------
Office & Business Equipment-1.94%
Buderus AG Lahn-Wetzlar, ORD 2,400 1,028,892
----------
Oil Drilling-0.45%
Parker Drilling Company+ 50,000 237,500
----------
Pharmaceuticals-2.57%
Astra AB, B Free, ORD 34,500 879,429
Pharmacia AB, B Free, SEK25, ORD 30,000 478,203
----------
1,357,632
----------
Pollution Control-0.52%
WMX Technologies Incorporated 10,500 275,625
----------
Retail-0.90%
Karstadt AG, DEM50, ORD 1,300 473,866
----------
Shipping-2.08%
Bergesen "B", ORD 20,000 484,918
Transportation Maritima, S.A., ORD. 45,000 278,676
Unitor Ships Service, ORD 20,000 337,076
----------
1,100,670
----------
</TABLE>
See notes to financial statements.
2
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
WORLD GROWTH STOCK PORTFOLIO-(Continued)
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------- -----------
<S> <C> <C>
COMMON STOCK-Continued
Textiles & Apparel-0.78%
Liz Clairborne, Inc 24,500 $ 413,438
-----------
Transportation-1.00%
Frans Maas Groep, CVA, NLG10, ORD 17,000 529,009
-----------
Utilities, Electric & Gas-2.12%
Alcatel Alsthom CG, ORD 4,079 348,529
Empresa Nacional De Electricidad, ADR 10,000 405,000
Shandong Huaneng Power, ADR+ 38,000 365,750
-----------
1,119,279
-----------
TOTAL COMMON STOCK (Cost $38,208,159) 44,271,835
-----------
PREFERRED STOCK-2.47%
Banking-0.83%
ANZ Banking Co., PFD., ORD 2,000 175,298
Wells Fargo & Co., PFD., Series B. 6,270 261,773
-----------
437,071
-----------
Beverages-0.33%
Dairy Farm International Holding Ltd., 6.500%,
Cumulative Convertible+ 210,000 175,875
-----------
Building Materials-0.66%
Kaufman & Broad Home Corp., PFD. 26,000 347,750
-----------
Financial Services-0.65%
Bangkok Investments Co., Ltd., PFD. 2,500 344,975
-----------
TOTAL PREFERRED STOCK (Cost $1,335,875) 1,305,671
-----------
<CAPTION>
Market
Principal Value
Company Value (Note B)
- ------- --------- -----------
<S> <C> <C>
CORPORATE BONDS-2.49%
News Corp Zero Convertibles, due 03/31/02 $ 459,000 $ 328,185
P T Inti Indorayon Utama, Conv., 5.500%,
due 10/01/02 70,000 79,100
Softe, S.A., CNV, 4.250%, due 07/30/98 ITL805,000,000 516,810
TNT Pacific Finance Conv., 9.000%,
due 07/27/98 AUD550,000 391,149
-----------
TOTAL CORPORATE BONDS (Cost $1,298,454) 1,315,244
-----------
SHORT-TERM OBLIGATIONS-15.29%
U.S. Treasury Bill, 4.965%, due 01/19/95 1,000,000 997,380
U.S. Treasury Bill, 5.080%, due 01/19/95 770,000 767,935
U.S. Treasury Bill, 5.340%, due 02/16/95 500,000 496,514
U.S. Treasury Bill, 5.540%, due 03/09/95 3,900,000 3,861,480
U.S. Treasury Bill, 5.295%, due 04/13/95 2,000,000 1,967,832
-----------
TOTAL SHORT-TERM OBLIGATIONS (Cost $8,090,719) 8,091,141
-----------
TOTAL INVESTMENTS (Cost $48,933,207*) 103.93% 54,983,891
Other assets, less liabilities (3.93) (2,080,123)
--------- -----------
TOTAL NET ASSETS 100.00% $52,903,768
========= ===========
</TABLE>
- --------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.
See notes to financial statements.
3
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
MONEY MARKET PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Market
Principal Value
Value (Note B)
----------- ----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS-100.43%
U.S. Treasury Bill, 5.050%, due 01/19/94 $2,825,000 $2,817,471
U.S. Treasury Bill, 5.320%, due 02/02/95 3,125,000 3,109,760
U.S. Treasury Bill, 4.830%, due 02/09/95 1,800,000 1,790,340
----------
TOTAL SHORT-TERM OBLIGATIONS (Cost $7,717,571) 7,717,571
----------
TOTAL INVESTMENTS (Cost $7,717,571*) 100.48% 7,717,571
Other assets, less liabilities (0.48) (37,086)
------- ----------
TOTAL NET ASSETS 100.00% $7,680,485
======= ==========
</TABLE>
- --------------
*Aggregate cost for Federal income tax purposes.
See notes to financial statements.
4
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
GOLD STOCK PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK-97.09%
Australia-14.23%
Acacia Resources Ltd+ 45,000 $ 82,021
Australian Resources Ltd., ORD 70,000 89,586
Herald Resources Ltd. 20,500 16,377
Mount Burgess Gold Mining Co., N.L., ORD+ 100,000 14,730
Newcrest Mining Ltd., ORD. 100,000 446,000
Placer Pacific Ltd., ORD 33,300 92,984
Plutonic Resources Ltd., ORD 20,000 88,424
Samantha Gold N.L., ORD 39,286 89,890
Sons of Gwalia N.L., ADR 5,000 90,170
Wiluna Mines, ORD 40,000 35,680
----------
1,045,862
----------
Canada-43.57%
American Barrick Resources Corp. 36,125 803,781
Audrey Resources Ltd., Inc.+ 51,000 43,630
Bolivar Goldfields Ltd.+ 18,000 30,283
Bolivar Goldfields Ltd., Warrants (exp. 4/20/95)+(A) 9,000 0
Dayton Mining Corporation+ 75,000 216,548
Dayton Mining Corporation, Warrants (exp. 5/3/95)+(A) 12,500 0
Echo Bay Mines, Ltd. 17,000 180,625
El Callao Mining Corp., ORD. 41,000 39,458
Glamis Gold, Ltd. 15,000 131,250
Hemlo Gold Mines, Inc. 33,874 342,974
Miramar Mining Corp.+ 30,000 128,325
Miramar Mining Corp., Warrants (exp. 10/12/95)+(A) 12,500 0
Placer Dome, Inc. 20,000 435,000
Prime Resources Group, Inc.+ 15,000 108,275
Rayrock Yellowknife+ 5,000 59,261
Solitario Resources Corp.+ 30,000 22,029
Teck Corp., Class B. 6,000 108,542
Texas Star Resources Corp.+ 45,000 15,075
Treminco Resources Ltd.+ 100,000 19,240
TVX Gold, Inc.+ 60,000 405,000
Viceroy Resources Corp.+ 20,000 114,066
----------
3,203,362
----------
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
United States-39.29%
Ashanti Goldfields Company Ltd., 144A+ 15,000 $ 327,188
Battle Mountain Gold Co., Inc. 40,000 440,000
Coeur D'Alene Mines Corp. 6,000 98,250
Crown Resources Corporation+ 20,000 82,500
FMC Gold Company 20,000 67,500
Freeport McMoran Copper & Gold, Inc. 27,000 573,750
Hecla Mining Co.+ 10,000 101,250
Homestake Mining Company 17,800 304,825
Newmont Gold Company 6,000 213,750
Newmont Mining Corporation 6,999 251,964
Santa Fe Pacific Gold Corp.+ 10,000 128,750
Stillwater Mining Company+ 10,000 136,250
USMX, Inc.+ 65,000 162,500
----------
2,888,477
----------
TOTAL COMMON STOCK (Cost $5,692,063) 7,137,701
----------
<CAPTION>
Principal
Value
---------
SHORT-TERM OBLIGATIONS-3.38%
U.S. Treasury Bill, 4.300%, due 02/09/95 $150,000 149,283
U.S. Treasury Bill, 5.350%, due 03/09/95 100,000 99,013
----------
TOTAL SHORT-TERM OBLIGATIONS (Cost $248,273) 248,296
----------
TOTAL INVESTMENTS (Cost $5,940,336*) 100.47% 7,385,997
Other assets, less liabilities (0.47) (34,372)
--------- ----------
TOTAL NET ASSETS 100.00% $7,351,625
========= ==========
</TABLE>
- --------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.
(A) Restricted security, valued at fair value (Notes B and F).
See notes to financial statements.
5
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DOMESTIC GROWTH STOCK PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK-96.04%
Aerospace Equipment-1.39%
Sunstrand Corporation 9,600 $ 436,800
----------
Apparel-0.92%
Cato Corp 40,000 290,000
----------
Auto Parts and Accessories-1.24%
HI-LO Automotive, Inc.+ 40,000 390,000
----------
Banking-5.57%
Bay View Capital Corporation 24,900 473,100
Meridian Bancorp, Inc. 14,300 380,738
TIG Holdings 32,000 600,000
Transamerica Corporation 6,000 298,500
----------
1,752,338
----------
Chemicals-6.64%
Cambrex Corporation 27,700 720,200
Ferro Corp. 12,750 304,406
Furon Corp. 30,000 660,000
Loctite Corp. 5,000 232,500
Specialty Chemical Resources,Inc.+ 57,200 171,600
----------
2,088,706
----------
Communications -- Systems-1.75%
Intervoice, Inc.+ 40,000 550,000
----------
Computer & Office Equipment-2.69%
Data General Corporation+ 60,000 600,000
Smith Corona Corp 98,100 245,250
----------
845,250
----------
Computer Software/Services-3.46%
Banctec, Inc.+ 28,000 609,000
Phamis Inc.+ 26,700 480,600
----------
1,089,600
----------
Consumer Products-2.15%
American Greetings Corporation 25,000 675,000
----------
Drug and Hospital Supplies-3.48%
National Medical Enterprises+ 50,000 706,250
PCI Services, Inc.+ 60,000 390,000
----------
1,096,250
----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
Electronics-3.34%
Instrument Systems Corp.+ 65,000 $ 544,375
Whittaker Corporation+ 25,000 506,250
----------
1,050,625
----------
Financial Services-2.07%
Student Loan Marketing Association 20,000 650,000
----------
Furnishings & Appliances-1.81%
Kimball International Inc., Class B 11,200 291,200
Shelby Williams Industries, Inc. 33,400 279,725
----------
570,925
----------
Health & Personal Care-9.24%
Allied Healthcare Products, Inc. 32,000 528,000
Bergen Brunswig Corp., Class A 29,950 625,206
Healthdyne Tech, Inc.+ 66,666 674,993
IBP Incorporated 7,900 238,975
Integrated Health Services, Inc.+ 21,200 837,400
----------
2,904,574
----------
Insurance-4.84%
American Bankers, Inc. 30,000 720,000
Citizens Corporation 25,000 425,000
Unum Corporation 10,000 377,500
----------
1,522,500
----------
Leisure & Entertainment-2.03%
Club Car, Inc.+ 38,700 638,550
----------
Machinery-5.70%
Duriron, Inc. 17,500 310,625
Lamson & Sessions, Inc.+ 88,200 529,200
N.N. Ball & Roller, Inc. 32,000 608,000
Simpson Industries, Inc. 37,500 346,875
----------
1,794,700
----------
Manufacturing-1.59%
Paragon Trade Brands, Inc.+ 37,800 500,850
----------
Merchandising-1.03%
Pier 1 Imports, Inc. 34,482 323,269
----------
Mining & Metals-3.23%
A.M. Castle & Co. 38,550 534,881
Roanoke Electric Steel Corp. 29,700 482,625
----------
1,017,506
----------
</TABLE>
See notes to financial statements.
6
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DOMESTIC GROWTH STOCK PORTFOLIO--(Continued)
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK-Continued
Miscellaneous Industries-5.46%
ABM Industries, Inc. 22,000 $ 511,500
Alco Standard Corp.+ 7,200 451,800
Farrel Corporation 22,000 121,000
Sun Healthcare Group, Inc.+ 25,000 634,375
-----------
1,718,675
-----------
Paper-0.95%
Potlatch Corporation 8,000 298,000
-----------
Real Estate-0.15%
Factory Stores of America 2,200 47,575
-----------
Retail Stores-5.32%
Caldor, Inc.+ 20,000 445,000
Catherines Stores Company+ 34,000 297,500
Consolidated Stores Corp.+ 35,000 651,875
Designs, Inc.+ 40,000 280,000
-----------
1,674,375
-----------
Shipping-5.84%
Airborne Freight Corp. 30,000 615,000
American President Companies 20,000 505,000
Yellow Corp. 30,000 716,250
-----------
1,836,250
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
Software Development-4.89%
Banyan Systems, Inc.+ 30,000 $ 536,250
Dataflex Corporation+ 56,000 497,000
Marcam Corp.+ 50,000 506,250
-----------
1,539,500
-----------
Textiles & Shoes-5.81%
Lacrosse Footwear, Inc. 30,000 330,000
Nine West Group, Inc.+ 25,000 709,375
Vans, Inc.+ 100,000 787,500
-----------
1,826,875
-----------
Utilities, Electric & Gas-3.45%
Acme Electric Corp.+ 50,900 648,975
Enterra Corporation+ 23,000 437,000
-----------
1,085,975
-----------
TOTAL COMMON STOCK (Cost $26,381,402) 30,214,668
-----------
TOTAL INVESTMENTS (Cost $26,381,402*) 96.04% 30,214,668
Other assets, less liabilities 3.96 1,243,998
------- -----------
TOTAL NET ASSETS 100.00% $31,458,666
======= ===========
</TABLE>
- --------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.
See notes to financial statements.
7
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
BOND PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Market
Principal Value
Company Value (Note B)
- ------- ---------- -----------
<S> <C> <C>
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS-101.50%
FHLMC, #C80090, 6.000%, due 01/01/24 $ 600,471 $ 511,643
FNMA, 9.550%, due 09/10/97 55,000 57,200
FNMA, CMO, #8829B, 9.500%, due 12/25/18 107,106 108,541
FNMA, Pool #248672, 6.000%, due 12/01/23 191,214 162,352
FNMA, Pool #261605, 6.000%, due 01/01/24 821,603 697,592
FNMA, Pool #267376, 6.000%, due 01/01/24 193,905 164,637
GNMA, Pool #190666, 9.000%, due 12/15/16 107,578 108,520
U.S. Treasury Note, 5.375%, due 05/31/98 4,995,000 4,631,294
U.S. Treasury Note, 7.500%, due 10/31/99 750,000 739,452
U.S. Treasury Note, 7.750%, due 11/30/99 5,650,000 5,628,813
U.S. Treasury Note, 6.250%, due 02/15/03 500,000 452,031
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $13,631,808) 13,262,075
-----------
<CAPTION>
Market
Principal Value
Company Value (Note B)
- ------- ---------- -----------
<S> <C> <C>
CORPORATE BONDS-0.38%
Corning Glass, 8.250%, due 03/15/02 $ 50,000 $ 49,372
-----------
TOTAL CORPORATE BONDS (Cost $48,272) 49,372
-----------
TOTAL INVESTMENTS (Cost $13,680,080*) 101.88% 13,311,447
Other assets, less liabilities (1.88) (245,002)
---------- -----------
TOTAL NET ASSETS 100.00% $13,066,445
========== ===========
</TABLE>
- --------------
* Aggregate cost for Federal income tax purposes.
See notes to financial statements.
8
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
GROWTH AND INCOME PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK-97.46%
Aerospace, Defense-1.75%
Boeing Company 2,100 $ 98,175
----------
Appliances-3.05%
Whirlpool Corp. 3,400 170,850
----------
Automobiles-5.87%
Chrysler Corporation 3,300 161,700
General Motors Corporation, Class H 4,800 167,400
----------
329,100
----------
Banks-15.04%
First Chicago Corp. 3,500 167,125
First Federal Michigan Corp. 8,100 166,050
Fleet Mortgage Group, Inc. 9,700 192,788
KeyCorp. 6,533 163,325
Mellon Bank Corp. 5,050 154,656
----------
843,944
----------
Beverages-2.27%
Anheuser Busch Companies, Inc. 2,500 127,187
----------
Building, Homes-2.76%
Toll Brothers+ 15,700 155,037
----------
Building Materials-3.25%
Owens-Corning Fiberglass Corp.+ 5,700 182,400
----------
Capital Goods, Truck-3.23%
Cummins Engine, Inc. 4,000 181,000
----------
Computers-2.89%
Compaq Computer Corp. 4,100 161,950
----------
Consumer Health-8.65%
American Home Products, Inc. 2,500 156,875
Baxter International, Inc. 5,300 149,725
National Health Labs Holdings, Inc. 13,500 178,875
----------
485,475
----------
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
Consumer Photography-2.49%
Polaroid Corp. 4,300 $ 139,750
----------
Electronics, Defense-2.75%
E-Systems, Inc. 3,700 154,013
----------
Financial Services-4.84%
Merrill Lynch 4,200 150,150
Paine Webber Group, Inc. 8,100 121,500
----------
271,650
----------
Food, Processing-2.56%
Philip Morris Companies, Inc. 2,500 143,750
----------
Insurance-8.75%
Old Republic International Corp. 8,500 180,625
Progressive Corp. 4,900 171,500
Berkley Corp. 3,700 138,750
----------
490,875
----------
Mining and Metals-2.70%
Inco, Ltd. 5,300 151,713
----------
Oil, Domestic-0.59%
Tenneco, Inc. 776 32,980
----------
Oil, International-2.60%
Exxon Corporation 2,400 145,800
----------
Oil, Refining-2.50%
Ultramar Corp. 5,500 140,250
----------
Retail, Speciality-2.77%
Sotheby's Holdings, Inc. 13,500 155,250
----------
Retail Stores-2.69%
K Mart Corporation 11,600 150,800
----------
Technology, Semiconductors-3.03%
Avnet, Inc. 4,600 170,200
----------
</TABLE>
See notes to financial statements.
9
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
GROWTH AND INCOME PORTFOLIO-(Continued)
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK--Continued
Telephone-2.18%
Telefonos de Mexico, S.A., ADR 3,000 $ 123,000
----------
Textiles-2.83%
Burlington Industries, Inc.+ 16,100 158,987
----------
Transportation, Rail & Truck-2.66%
Burlington Northern, Inc. 3,100 149,188
----------
Transportation, Shipping-2.76%
Offshore Logistics+ 11,900 154,700
----------
TOTAL COMMON STOCK (Cost $5,595,367) 5,468,024
----------
<CAPTION>
Market
Value
Company (Note B)
- ------- ----------
<S> <C> <C>
TOTAL INVESTMENTS (Cost $5,595,367*) 97.46% $5,468,024
Other assets, less liabilities 2.54 142,448
------- ----------
TOTAL NET ASSETS 100.00% $5,610,472
======= ==========
</TABLE>
- --------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.
See notes to financial statements.
10
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
CAPITAL GROWTH PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK--45.99%
Advertising, Broadcast & Publ.-2.59%
British Sky Broadcasting, ADR+ 24,100 $ 578,400
Central European Media Center+ 9,750 136,500
----------
714,900
----------
Appliances-0.56%
The Singer Company, N.V., ADR 5,150 153,856
----------
Automotive Parts-0.83%
Finishmaster, Inc.+ 24,950 227,669
----------
Banking-0.58%
First Empire State Corporation 1,175 159,800
----------
Beverages-1.69%
Dr. Pepper/Seven Up Companies, Inc.+ 6,480 166,050
Panamerican Beverage Inc., Class A 9,515 300,912
----------
466,962
----------
Communication Systems-6.12%
Millicom International Cellular, S.A., ADR+ 26,050 784,756
Motorola Inc. 4,925 285,034
Paging Network, Inc.+ 18,125 616,250
----------
1,686,040
----------
Consumer Products-1.06%
Dial Corporation 1,350 28,688
Industrie Natuzzi SPA, ADR 7,750 263,500
----------
292,188
----------
Financial Services-13.28%
APS Holdings, Inc.+ 12,975 366,544
Citicorp 15,875 656,828
Espirito Santo Financial, ADR 17,675 236,403
Grupo Financiero Inbursa "C", ORD+ 75,140 195,281
Grupo Financiero Serfin, ADR+ 775 5,813
Household International, Inc. 13,025 483,553
Kinnevik AB, ORD, Class B Free 43,300 1,432,832
World Acceptance Corp.+ 12,000 282,000
----------
3,659,254
----------
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
Hardware Stores-0.44%
Orchard Supply Hardware Stores+ 16,125 $ 120,937
----------
Health & Personal Care-0.14%
Dentsply International, Inc. 1,200 37,800
----------
Lodging & Restaurant-0.55%
Davco Restaurants, Inc.+ 12,300 150,675
----------
Media-2.11%
Heritage Media Corp. Class A+ 16,525 444,109
Scandinavian Broadcasting System+ 6,725 137,863
----------
581,972
----------
Multi-Industries-0.84%
Newell Company 11,100 233,100
----------
Pharmaceuticals-3.58%
Pfizer, Inc. 3,525 272,306
R.P. Scherer Corp.+ 15,750 714,656
----------
986,962
----------
Publishing-2.26%
Wolters Klower, CVA, ORD 3,118 230,708
Wolters Kluwer, NV, ADR 5,300 392,159
----------
622,867
----------
Retail Stores-4.36%
Carrefour Supermarche, ORD 603 249,932
Cato Corporation, Class A 26,200 189,950
Federated Department Stores+ 14,450 278,163
Filene's Basement Corp.+ 2,200 10,175
Lowe's Companies, Inc. 7,875 273,656
Wal Mart Stores, Inc. 9,375 199,219
----------
1,201,095
----------
Software Products & Services-2.37%
First Data Corp. 10,075 477,303
General Motors Corp. Class E 4,600 177,100
----------
654,403
----------
</TABLE>
See notes to financial statements.
11
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
CAPITAL GROWTH PORTFOLIO-(Continued)
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- -----------
<S> <C> <C>
COMMON STOCK--Continued
Steel-1.82%
AK Steel Holding Corp.+ 16,350 $ 502,763
-----------
Textiles & Apparel-0.81%
Gap Incorporated 7,375 224,937
-----------
TOTAL COMMON STOCK (Cost $11,709,962) 12,678,180
-----------
<CAPTION>
Market
Principal Value
Company Value (Note B)
- ------- ---------- -----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS-5.20%
U.S. Treasury Bill, 5.620%, due 03/02/95 $1,300,000 $ 1,288,626
U.S. Treasury Bill, 5.630%, due 03/02/95 145,000 143,732
-----------
TOTAL SHORT-TERM OBLIGATIONS (Cost $1,431,238) 1,432,358
-----------
TOTAL INVESTMENTS (Cost $13,141,200*) 51.19% 14,110,538
Other assets, less liabilities 48.81 13,453,548
----- ----------
TOTAL NET ASSETS 100.00% $27,564,086
========== ===========
</TABLE>
- --------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.
See notes to financial statements.
12
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
BALANCED PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
COMMON STOCK-33.10%
Beverages-1.23%
PepsiCo, Inc. 5,000 $ 181,250
----------
Chemicals-0.89%
Lilly, Eli & Co. 2,000 131,250
----------
Communication Systems-2.69%
American Telephone & Telegraph Company 3,200 160,800
Bell Atlantic Corporation 2,000 99,500
GTE Corp. 4,500 136,687
----------
396,987
----------
Computers-1.04%
Computer Sciences Corp. 3,000 153,000
----------
Food & Household Products-1.08%
CPC International, Inc. 3,000 159,750
----------
Health & Personal Care-4.85%
American Home Products Corp. 3,000 188,250
Bristol Myers Squibb Co. 3,000 173,625
Health Care REIT, Inc. 4,000 80,500
Nationwide Health Properties 3,500 125,125
Schering Plough Corporation 2,000 148,000
----------
715,500
----------
Insurance-1.87%
American International Group, Inc. 1,500 147,000
Interpublic Group Companies, Inc. 4,000 128,500
----------
275,500
----------
Lodging & Restaurant-1.73%
Bertucci's, Inc.+ 8,000 88,000
McDonalds Corp. 5,700 166,725
----------
254,725
----------
Machines-0.53%
Thermo Electron Corp.+ 1,739 78,038
----------
Manufacturing-1.08%
Minnesota Mining & Manufacturing Co. 3,000 160,125
----------
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------
<S> <C> <C>
Merchandising-2.18%
Home Depot, Inc. 4,000 $ 184,000
Toys R Us+ 4,500 137,250
----------
321,250
----------
Misc-Industries-0.97%
Elan, PLC, ADR+ 4,000 142,500
----------
Office & Business Equipment-1.00%
Xerox Corporation 1,500 148,500
----------
Oil, International-5.35%
Amoco Corporation 3,000 177,375
Chevron Corporation 5,000 223,125
Mobil Corporation 2,500 210,625
Texaco, Inc. 3,000 179,625
----------
790,750
----------
Oil Service Equipment-1.83%
Baker Hughes, Inc. 6,500 118,625
Schlumberger Limited 3,000 151,125
----------
269,750
----------
Retail Stores-3.49%
Dillard Department Stores, Class A 5,000 133,750
May Department Stores Co. 3,000 101,250
Wal Mart Stores, Inc. 7,000 148,750
Walgreen Co. 3,000 131,250
----------
515,000
----------
Telephone-0.72%
U.S. West, Inc. 3,000 106,875
----------
Textiles & Apparel-0.57%
Nine West Group, Inc.+ 3,000 85,125
----------
TOTAL COMMON STOCK (cost $4,871,604) 4,885,875
----------
</TABLE>
See notes to financial statements.
13
<PAGE>
CHUBB AMERICA FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
BALANCED PORTFOLIO-(Continued)
December 31, 1994
<TABLE>
<CAPTION>
Market
Principal Value
Company Value (Note B)
- ------- ----------- -----------
<S> <C> <C>
U.S. GOVERNMENT and AGENCY
OBLIGATIONS-27.89%
U.S. Treasury Note, 5.500%, due 02/15/95 $ 300,000 $ 299,906
U.S. Treasury Note, 5.125%, due 11/15/95 250,000 245,703
U.S. Treasury Note, 4.750%, due 02/15/97 750,000 706,171
U.S. Treasury Note, 7.375%, due 11/15/97 150,000 148,406
U.S. Treasury Note, 6.000%, due 10/15/99 1,500,000 1,391,718
U.S. Treasury Note, 5.500%, due 04/15/00 400,000 360,624
U.S. Treasury Note, 7.250%, due 05/15/04 900,000 864,280
U.S. Treasury Bond, 6.250%, due 08/15/23 125,000 101,523
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $4,326,851) 4,118,331
===========
<CAPTION>
Market
Principal Value
Company Value (Note B)
- ------- ----------- -----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS-42.50%
Student Loan Marketing Assoc., 5.750%, due 01/03/95 $ 715,000 $ 714,657
Merrill Lynch, 6.000%, due 01/04/95 564,000 563,624
Du Pont E I De Nemours, 5.700%, due 01/05/95 440,000 439,652
Federal National Mtg. Assoc., 5.900%, due 01/09/95 370,000 369,454
Johnson & Johnson, 5.950%, due 01/09/95 570,000 569,152
Goldman Sachs, 5.950%, due 01/10/95 645,000 643,934
General Re, 5.950%, due 01/11/95 450,000 449,182
General Electric Capital, 5.950%, due 01/12/95 250,000 249,504
First Deposit Funding Trust, 6.000%, due 01/13/95 405,000 404,123
Ameritech Capital Funding, 5.980%, due 01/24/95 745,000 742,030
AT&T, 5.820%, due 01/30/95 110,000 109,466
Federal Farm Credit Bank, 5.830%, due 02/13/95 330,000 327,649
Abbott Labs, 6.050%, due 02/27/95 700,000 693,177
-----------
TOTAL SHORT-TERM OBLIGATIONS (Cost $6,275,604) 6,275,604
-----------
TOTAL INVESTMENTS (Cost $15,474,059*) 103.49% 15,279,810
Other assets, less liabilities (3.49) (514,957)
----------- -----------
TOTAL NET ASSETS 100.00% $14,764,853
=========== ===========
</TABLE>
- --------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.
See notes to financial statements.
14
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<CAPTION>
World
Growth Money Gold
Stock Market Stock
Portfolio Portfolio Portfolio
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments-at market value (Notes B and C):
Common Stock
World Growth Stock Portfolio (cost-$38,208,159) $44,271,835
Gold Stock Portfolio (cost-$5,692,063) $7,137,701
Domestic Growth Stock Portfolio (cost-$26,381,402)
Growth and Income Portfolio (cost-$5,595,367)
Capital Growth Portfolio (cost-$11,709,962)
Balanced Portfolio (cost-$4,871,604)
Preferred Stock
World Growth Stock Portfolio (cost-$1,335,875) 1,305,671
Corporate Bonds
World Growth Stock Portfolio (cost-$1,298,454) 1,315,244
Bond Portfolio (cost-$48,272)
U.S. Government and Agency Obligations
Bond Portfolio (cost-$13,631,808)
Balanced Portfolio (cost-$4,326,851)
Short-Term Obligations-at amortized cost which
approximates market value 8,091,141 $7,717,571 248,296
----------- ---------- ----------
TOTAL INVESTMENTS 54,983,891 7,717,571 7,385,997
Cash and cash equivalents 343,301 225,017 61,978
Accrued investment income 160,236 341 2,738
Receivable for portfolio securities sold 179,966 110,972
Receivable from Chubb Life Insurance Company of America 111,183 423
Deferred organization costs (Note B)
----------- ---------- ----------
TOTAL ASSETS 55,778,577 7,943,352 7,561,685
LIABILITIES
Due to Chubb Life Insurance Company of America 4,618
Dividends payable 2,838,549 259,435 50,893
Payable for portfolio securities purchased 149,265
Accrued investment advisory fees (Note D) 26,141 3,302 3,655
Accrued custody fees 9,953 130 1,304
Payable to Chubb America Service Corp. 166 325
----------- ---------- ----------
TOTAL LIABILITIES 2,874,809 262,867 210,060
----------- ---------- ----------
NET ASSETS $52,903,768 $7,680,485 $7,351,625
=========== ========== ==========
NET ASSETS CONSIST OF:
Capital paid in $47,308,621 $7,681,371 $7,415,889
Undistributed net investment income (loss)
Accumulated net realized gain (loss) from investments (886) (1,461,584)
Undistributed (dividends in excess) net realized gains from
foreign currency transactions (265) 34
Net unrealized gain (loss) on investments and translation of
assets and liabilities in foreign currencies (Note C) 6,047,699 1,445,661
Capital gain distributions required for
Federal tax purposes over amounts
recognized for financial reporting (Note C) (452,287) (48,375)
----------- ---------- ----------
NET ASSETS $52,903,768 $7,680,485 $7,351,625
=========== ========== ==========
Shares of common stock outstanding (no par value,
1,000,000,000 shares authorized) 2,783,776 749,331 452,308
=========== ========== ==========
Net asset value, offering and redemption price per share $ 19.00 $ 10.25 $ 16.25
=========== ========== ==========
</TABLE>
See notes to financial statements.
15
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<CAPTION>
Domestic Growth
Growth and Capital
Stock Bond Income Growth Balanced
Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments-at market value (Notes B and C):
Common Stock
World Growth Stock Portfolio (cost-$38,208,159)
Gold Stock Portfolio (cost-$5,692,063)
Domestic Growth Stock Portfolio (cost-$26,381,402) $30,214,668
Growth and Income Portfolio (cost-$5,595,367) $ 5,468,024
Capital Growth Portfolio (cost-$11,709,962) $12,678,180
Balanced Portfolio (cost-$4,871,604) $ 4,885,875
Preferred Stock
World Growth Stock Portfolio (cost-$1,335,875)
Corporate Bonds
World Growth Stock Portfolio (cost-$1,298,454) $ 49,372
Bond Portfolio (cost-$48,272)
U.S. Government and Agency Obligations
Bond Portfolio (cost-$13,631,808) 13,262,075
Balanced Portfolio (cost-$4,326,851) 4,118,331
Short-Term Obligations-at amortized cost which
approximates market value 1,432,358 6,275,604
----------- ----------- ----------- ----------- -----------
TOTAL INVESTMENTS 30,214,668 13,311,447 5,468,024 14,110,538 15,279,810
Cash and cash equivalents 2,067,801 118,553 317,268 14,096,682 2,062
Accrued investment income 25,034 98,969 14,403 49,354 67,513
Receivable for portfolio securities sold 1,221,169 107,797 355,357
Receivable from Chubb Life Insurance
Company of America 36,069 16,361 6,746 66,993 10,741
Deferred organization costs (Note B) 1,612 1,615 1,610
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS 33,564,741 13,545,330 5,808,053 28,432,979 15,717,093
LIABILITIES
Due to Chubb Life Insurance Company of America
Dividends payable 1,896,979 472,011 193,562 469,711 527,979
Payable for portfolio securities purchased 187,307 372,648 412,176
Accrued investment advisory fees (Note D) 19,517 5,385 3,494 22,202 9,193
Accrued custody fees 804 122 482 4,332 2,102
Payable to Chubb America Service Corp. 1,468 1,367 43 790
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES 2,106,075 478,885 197,581 868,893 952,240
----------- ----------- ----------- ----------- -----------
NET ASSETS $31,458,666 $13,066,445 $ 5,610,472 $27,564,086 $14,764,853
----------- ----------- ----------- ----------- -----------
NET ASSETS CONSIST OF:
Capital paid in $26,597,918 $13,664,679 $ 5,737,815 $26,708,913 $14,879,474
Undistributed net investment income (loss)
Accumulated net realized gain (loss) from
investments 1,027,482 (229,601) 79,628
Undistributed (dividends in excess) net
realized gains from foreign currency
transactions
Net unrealized gain (loss) on investments
and translation of assets and liabilities
in foreign currencies (Note C) 3,833,266 (368,633) (127,343) 969,345 (194,249)
Capital gain distributions required for
Federal tax purposes over amounts
recognized for financial reporting (Note C) (114,172)
----------- ----------- ----------- ----------- -----------
NET ASSETS $31,458,666 $13,066,445 $ 5,610,472 $27,564,086 $14,764,853
=========== =========== =========== =========== ===========
Shares of common stock outstanding (no par value,
1,000,000,000 shares authorized) 1,973,880 1,346,582 499,912 2,060,200 1,390,721
=========== =========== =========== =========== ===========
Net asset value, offering and redemption price
per share $ 15.94 $ 9.70 $ 11.22 $ 13.38 $ 10.62
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
16
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
World
Growth Money Gold
Stock Market Stock
Portfolio Portfolio Portfolio
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 310,616 $ 310,681 $ 25,445
Dividends 1,087,183 75,653
Foreign taxes withheld (110,531) (5,797)
----------- ----------- -----------
Total investment income 1,287,268 310,681 95,301
----------- ----------- -----------
Expenses:
Advisory fees (Note D) 377,344 39,051 60,959
Custodian fees 50,113 879 4,480
Shareholder reports 20,957 3,285 3,510
Professional fees 19,310 2,996 3,187
Insurance expense 5,399 840 879
Directors fees 2,443 380 397
Security valuation 16,806 618 4,321
Registration fees 4,389 870 274
Miscellaneous expenses 4,617 2,327 2,403
Amortization of deferred organization costs (Note B)
----------- ----------- -----------
Total expenses 501,378 51,246 80,410
----------- ----------- -----------
Net investment income 785,890 259,435 14,891
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 2,028,789 (886) 109,276
Net realized foreign exchange gain (loss) (102,259) (2,987)
Net unrealized loss on investments (4,696,572) (507) (1,382,511)
Net unrealized gain (loss) on translation
of assets and liabilities in foreign currencies 4,667 2
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments and foreign currency (2,765,375) (1,393) (1,276,220)
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $(1,979,485) $ 258,042 $(1,261,329)
=========== =========== ===========
</TABLE>
See notes to financial statements.
17
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
Domestic Growth
Growth and
Stock Bond Income
Portfolio Portfolio Portfolio
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 40,806 $ 525,174 $ 7,608
Dividends 411,107 105,965
Foreign taxes withheld (663)
----------- ----------- -----------
Total investment income 451,913 525,174 112,910
----------- ----------- -----------
Expenses:
Advisory fees (Note D) 221,681 38,648 32,319
Custodian fees 5,628 1,511 4,014
Shareholder reports 12,374 3,042 1,750
Professional fees 10,916 2,745 1,682
Insurance expense 3,186 828 458
Directors fees 1,441 375 207
Security valuation 5,326 1,008 3,060
Registration fees 1,347 2,694 1,067
Miscellaneous expenses 3,054 2,312 2,214
Amortization of deferred organization costs (Note B) 715
----------- ----------- -----------
Total expenses 264,854 53,163 47,486
----------- ----------- -----------
Net investment income 187,059 472,011 65,424
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 2,737,402 (227,339) 128,139
Net realized foreign exchange gain (loss)
Net unrealized loss on investments (729,515) (402,014) (406,681)
Net unrealized gain (loss) on translation
of assets and liabilities in foreign currencies
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments and foreign currency 2,007,887 (629,353) (278,542)
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 2,194,946 $ (157,342) $ (213,118)
=========== =========== ===========
<CAPTION>
Capital
Growth Balanced
Portfolio Portfolio
----------- -----------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 207,283 $ 411,749
Dividends 110,738 172,150
Foreign taxes withheld (1,446)
----------- -----------
Total investment income 316,575 583,899
----------- -----------
Expenses:
Advisory fees (Note D) 214,041 100,956
Custodian fees 15,549 11,990
Shareholder reports 8,693 5,577
Professional fees 8,374 5,093
Insurance expense 2,285 1,442
Directors fees 1,035 652
Security valuation 4,983 5,227
Registration fees 4,186 1,167
Miscellaneous expenses 3,241 2,725
Amortization of deferred organization costs (Note B) 713 717
----------- -----------
Total expenses 263,100 135,546
----------- -----------
Net investment income 53,475 448,353
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 302,046 159,254
Net realized foreign exchange gain (loss) 17
Net unrealized loss on investments (893,606) (783,353)
Net unrealized gain (loss) on translation
of assets and liabilities in foreign currencies 28
----------- -----------
Net realized and unrealized gain (loss) on
investments and foreign currency (591,515) (624,099)
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ (538,040) $ (175,746)
=========== ===========
</TABLE>
See notes to financial statements.
18
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
World Growth Money Market Gold Stock
Stock Portfolio Portfolio Portfolio
--------------------------- -------------------------- -----------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
December December December December December December
31, 1994 31, 1993 31, 1994 31, 1993 31, 1994 31, 1993
----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations:
Net investment income (loss)....... $ 785,890 $ 550,400 $ 259,435 $ 100,165 $ 14,891 $ 8,353
Net realized gain (loss) on
investments....................... 2,028,789 2,971,311 (886) 100 109,276 (115,099)
Net realized foreign exchange
gain (loss)....................... (102,259) (74,336) (2,987) (1,480)
Net unrealized gain (loss)
on investments.................... (4,696,572) 6,690,215 (507) (744) (1,382,511) 3,019,073
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies 4,667 407 2 (3)
----------- ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from operations.. (1,979,485) 10,137,997 258,042 99,521 (1,261,329) 2,910,844
Dividends to shareholders from
net investment income............... (683,631) (476,064) (259,435) (100,165) (11,870) (6,844)
Dividends to shareholders in excess
of net investment income............ (265)
Distributions to shareholders from
capital gains....................... (2,213,897) (2,499,319) (29)
Distributions to shareholders in
excess of capital gains............. (452,287) (48,375)
Dividends to shareholders from
capital paid in.....................
Increase in net assets derived from
shareholder transactions (Note E)... 16,202,192 9,452,170 2,620,697 1,105,702 809,618 621,284
----------- ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in
net assets......................... 10,872,627 16,614,784 2,619,304 1,105,029 (511,956) 3,525,284
Net Assets:
Beginning of year................... 42,031,141 25,416,357 5,061,181 3,956,152 7,863,581 4,338,297
=========== =========== =========== ========== ========== ==========
End of year......................... $52,903,768 $42,031,141 $ 7,680,485 $5,061,181 $7,351,625 $7,863,581
=========== =========== =========== ========== ========== ==========
Undistributed net investment income.. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ========== ========== ==========
</TABLE>
See notes to financial statements.
19
<PAGE>
CHUBB AMERICA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Domestic Growth Stock Bond Growth and Income
Portfolio Portfolio Portfolio
--------------------------- --------------------------- --------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
December December December December December December
31, 1994 31, 1993 31, 1994 31, 1993 31, 1994 31, 1993
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations:
Net investment income (loss)....... $ 187,059 $ 180,995 $ 472,011 $ 392,220 $ 65,424 $ 28,248
Net realized gain (loss) on
investments....................... 2,737,402 2,796,109 (227,339) 31,891 128,139 131,315
Net realized foreign exchange
gain (loss).......................
Net unrealized gain (loss)
on investments.................... (729,515) 573,730 (402,014) (15,384) (406,681) 143,711
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies
----------- ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from operations.. 2,194,946 3,550,834 (157,342) 408,727 (213,118) 303,274
Dividends to shareholders from
net investment income............... (187,059) (180,995) (472,011) (392,220) (65,424) (28,248)
Dividends to shareholders in excess
of net investment income............
Distributions to shareholders from
capital gains....................... (2,502,153) (2,030,104) (31,891) (192,338) (64,088)
Distributions to shareholders in
excess of capital gains............. (1,925)
Dividends to shareholders from
capital paid in.....................
Increase in net assets derived from
shareholder transactions (Note E)... 6,880,643 3,746,716 8,233,919 1,436,682 3,249,910 1,131,325
----------- ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in
net assets......................... 6,386,377 5,086,451 7,604,566 1,419,373 2,779,030 1,342,263
Net Assets:
Beginning of year................... 25,072,289 19,985,838 5,461,879 4,042,506 2,831,442 1,489,179
=========== =========== =========== ========== ========== ==========
End of year......................... $31,458,666 $25,072,289 $13,066,445 $5,461,879 $5,610,472 $2,831,442
=========== =========== =========== ========== ========== ==========
Undistributed net investment income.. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Capital Growth Balanced
Portfolio Portfolio
-------------------------- --------------------------
Year Year Year Year
Ended Ended Ended Ended
December December December December
31, 1994 31, 1993 31, 1994 31, 1993
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
From operations:
Net investment income (loss)....... $ 53,475 $ (11,508) $ 448,353 $ 265,691
Net realized gain (loss) on
investments....................... 302,046 1,321,816 159,254 200,346
Net realized foreign exchange
gain (loss)....................... 17 (172)
Net unrealized gain (loss)
on investments.................... (893,606) 1,294,012 (783,353) 309,826
Net unrealized gain (loss) on
translation of assets and
liabilities in foreign currencies 28 190
----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations.. (538,040) 2,604,338 (175,746) 775,863
Dividends to shareholders from
net investment income............... (53,492) (448,353) (265,691)
Dividends to shareholders in excess
of net investment income............
Distributions to shareholders from
capital gains....................... (546,146) (1,194,908) (163,739) (200,346)
Distributions to shareholders in
excess of capital gains............. (114,172) (45,971)
Dividends to shareholders from
capital paid in.....................
Increase in net assets derived from
shareholder transactions (Note E)... 13,442,447 8,620,325 3,848,793 4,495,606
----------- ----------- ----------- -----------
Net increase (decrease) in
net assets......................... 12,190,597 10,029,755 3,060,955 4,759,461
Net Assets:
Beginning of year................... 15,373,489 5,343,734 11,703,898 6,944,437
=========== =========== =========== ===========
End of year......................... $27,564,086 $15,373,489 $14,764,853 $11,703,898
=========== =========== =========== ===========
Undistributed net investment income.. $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB AMERICA FUND, INC.
December 31, 1994
NOTE A-ORGANIZATION
Chubb America Fund, Inc. (the "Company") is a diversified open-end series
management investment company registered under the Investment Company Act of
1940, as amended. The Company was incorporated under the laws of the State of
Maryland on October 19, 1984 for the purpose of funding Flexible Premium
Variable Life Insurance Policies issued by Chubb Life Insurance Company of
America ("Chubb Life"). The Company is composed of eight separate portfolios:
the World Growth Stock Portfolio, the Money Market Portfolio, the Gold Stock
Portfolio, the Domestic Growth Stock Portfolio, the Bond Portfolio, the Growth
and Income Portfolio, the Capital Growth Portfolio, and the Balanced Portfolio.
Chubb Life's ownership at December 31, 1994 is as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
PORTFOLIO SHARES OWNED SHARES OUTSTANDING
<S> <C> <C>
World Growth Stock 23,275 0.84%
Money Market 93,202 12.44%
Gold Stock 79,948 17.68%
Domestic Growth Stock 66,735 3.38%
Bond 145,657 10.82%
Growth and Income 105,451 21.09%
Capital Growth 112,037 5.44%
Balanced 537,037 38.62%
</TABLE>
NOTE B-SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments: Investment securities are valued at the closing
- ------------------------
sales price on the exchange on which such securities are principally traded;
securities traded in the over-the-counter market and securities traded on a
national exchange for which no sales took place on the day of valuation are
valued at the mean of the bid and asked prices at the close of trading.
Quotations for foreign securities are in United States dollars and,
accordingly, unrealized gains and losses on these securities reflect all
foreign exchange fluctuations. Restricted securities are valued at fair value
as determined in good faith by the Board of Directors. Short-term debt
instruments with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates market value. At December 31, 1994 the World
Growth, Gold and Capital Growth Portfolios owned short-term obligations with
remaining maturities of greater than 60 days that, in aggregate, exceeded
amortized cost by $422, $23 and $1,120, respectively.
Investment Security Transactions: Investment security transactions are
- --------------------------------
recorded as of the trade date, the date the order to buy or sell is executed.
Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
Deferred Organizational Costs: Costs incurred by the Company in connection
- -----------------------------
with the organization and initial public offering of the Growth and Income,
Capital Growth and Balanced Portfolios have been deferred and are being
amortized over a five year period using the straight line method from the date
the shares were first offered to the public. In the event that any of the
initial shares are redeemed, by any holder thereof, during the amortization
period, the proceeds will be reduced for any unamortized organizational costs
in the same proportion as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption.
Distributions to Shareholders: Distributions to shareholders from ordinary
- -----------------------------
income and net realized capital gains are declared and distributed at least
once annually. Distributions to shareholders are recorded on the ex-dividend
date.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB AMERICA FUND, INC.
December 31, 1994
NOTE B-SIGNIFICANT ACCOUNTING POLICIES-(Continued)
The Company distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as dividends
in excess of net investment income or accumulated net realized gains.
Foreign Currency Transactions: The World Growth Stock, Gold Stock and Capital
- -----------------------------
Growth Portfolios engage in portfolio transactions that are denominated in
foreign currency. All related receivables and payables are marked to market
daily based on the most recent exchange rates listed at the close of the New
York Stock Exchange.
The portfolios do not isolate the portion of the operating results due to
changes in foreign exchange rates on investments from the fluctuations arising
from changes in the market value of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign currency gains and losses arise from the
fluctuation of exchange rates between trade date and settlement date on
security transactions and from the difference between accrual date and payment
date on accrued investment income. Net unrealized foreign exchange gains and
losses are related to the fluctuation of exchange rates on the payables and
receivables of securities and accrued investment income at fiscal year end.
Federal Income Taxes: It is the policy of the Company for each Portfolio to
- --------------------
continue to qualify as a regulated investment company by complying with the
requirements of the Internal Revenue Code applicable to regulated investment
companies, and by distributing all of its ordinary income and net realized
capital gains. Therefore, no Federal tax provision is required.
Foreign taxes withheld represents amounts withheld by foreign tax
authorities, net of refunds recoverable.
NOTE C-INVESTMENTS
Net realized gains and losses on investment securities sold are determined
by using the first-in, first-out method. The aggregate cost of investments
owned for Federal income tax purposes is the same as for financial reporting
purposes.
At December 31, 1994, gross unrealized gains and losses were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Gains Losses Gain/(Loss)
---------- ---------- -----------
<S> <C> <C> <C>
World Growth Stock Portfolio $9,038,962 $2,988,278 $6,050,684
Gold Stock Portfolio 2,151,126 705,465 1,445,661
Domestic Growth Stock Portfolio 6,002,776 2,169,510 3,833,266
Bond Portfolio 10,807 379,440 (368,633)
Growth and Income Portfolio 219,831 347,174 (127,343)
Capital Growth Portfolio 1,642,079 672,741 969,338
Balanced Portfolio 219,580 413,829 (194,249)
</TABLE>
At December 31, 1994, the World Growth Stock Portfolio had an unrealized foreign
currency loss of $2,985 and the Capital Growth Portfolio had a foreign currency
gain of $7.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB AMERICA FUND, INC.
December 31, 1994
NOTE C-INVESTMENTS-(Continued)
At December 31, 1994, realized capital losses, for Federal income tax purposes,
available to be used to offset future realized capital gains are as follows: the
Money Market Portfolio has $886 which expires in 2002; the Gold Stock Portfolio
has $1,461,584, of which $376,773 expires in 1998, $430,365 expires in 1999,
$370,619 expires in 2000, and $283,827 expires in 2001; the Bond Portfolio has
$229,601 which expires in 2002.
In addition, during the period from November 1, 1994 through December 31, 1994,
the World Growth Stock Portfolio incurred foreign currency losses of $265 and
capital losses of $13,017, and the Capital Growth Portfolio incurred capital
losses of $114,172 that are treated for Federal income tax purposes as if they
had occurred on January 1, 1995. Accordingly, these Portfolios made capital gain
distributions, as required by Internal Revenue Code Regulations, in excess of
net capital gains recognized for financial reporting purposes.
The World Growth Stock Portfolio and the Gold Stock Portfolio had investments in
passive foreign investment companies at December 31, 1994 which were marked to
market for Federal tax purposes. Distributions of $439,270 on the World Growth
Stock Portfolio and $48,375 on the Gold Stock Portfolio were declared based upon
this mark to market adjustment, resulting in distributions in excess of net
realized capital gains for financial statement purposes.
Purchases and sales of investment securities for the period ended December
31, 1994, other than short-term obligations, were as follows:
<TABLE>
<CAPTION>
Proceeds
Cost of from
Investment Investment
Securities Securities
Purchased Sold
------------ ------------
<S> <C> <C>
World Growth Stock Portfolio $17,730,240 $ 8,324,329
Gold Stock Portfolio 2,659,395 1,312,982
Domestic Growth Stock Portfolio 15,566,988 13,227,025
Bond Portfolio 18,644,530 10,327,113
Growth and Income Portfolio 4,827,813 1,545,484
Capital Growth Portfolio 28,786,107 29,485,147
Balanced Portfolio 11,624,156 9,296,193
</TABLE>
NOTE D-INVESTMENT ADVISORY FEES AND MANAGEMENT AGREEMENT
The Company has entered into an investment management agreement with Chubb
Investment Advisory Corporation, a wholly-owned subsidiary of Chubb Life. Under
the agreement, Chubb Investment Advisory Corporation provides investment
management and certain administrative services for the Company. Chubb Investment
Advisory Corporation has in turn retained Templeton, Galbraith & Hansberger,
Ltd. to provide investment advisory services for the World Growth Stock
Portfolio, Chubb Asset Managers, Inc. to provide investment advisory services
for the Money Market, Bond, and Growth and Income Portfolios, Van Eck Associates
Corporation to provide investment advisory services for the Gold Stock
Portfolio, Pioneering Management Corporation to provide investment advisory
services for the Domestic Growth Stock Portfolio, Janus Capital Corporation to
provide investment advisory services for the Capital Growth Portfolio, and
Phoenix Investment Counsel to provide investment advisory services for the
Balanced Portfolio. For its investment management and administrative services,
Chubb Investment Advisory Corporation is paid an annual fee through a daily
charge based on a percentage of the average daily net asset value of each
Portfolio as shown below:
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB AMERICA FUND, INC.
December 31, 1994
NOTE D-INVESTMENT ADVISORY FEES AND MANAGEMENT AGREEMENT-(Continued)
<TABLE>
<CAPTION>
World Domestic Growth
Growth Money Gold Growth and Capital
Average Daily Stock Market Stock Stock Bond Income Growth Balanced
Net Asset Value Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- --------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First $200 Million .75% .50% .75% .75% .50% .75% 1.00% .75%
Next $1.1 Billion .70% .45% .70% .70% .45% .70% .95% .70%
Over $1.3 Billion .65% .40% .65% .65% .40% .65% .90% .65%
</TABLE>
NOTE E-SHAREHOLDERS' TRANSACTIONS
Following is a summary of transactions with shareholders for each portfolio.
<TABLE>
<CAPTION>
World Growth Stock Portfolio
---------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
----------------------- --------------------
Shares Dollars Shares Dollars
---------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 1,035,573 $21,466,773 480,387 $9,334,689
Shares issued as reinvestment of
dividends 168,068 3,486,913 65,566 1,096,656
Shares redeemed (431,951) (8,751,494) (53,440) (979,175)
---------- ----------- -------- ----------
Net increase 771,690 $16,202,192 492,513 $9,452,170
========== =========== ======== ==========
<CAPTION>
Money Market Portfolio
---------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
----------------------- --------------------
Shares Dollars Shares Dollars
---------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 1,254,266 $13,015,646 356,002 $3,689,352
Shares issued as reinvestment of
dividends 9,766 100,195 10,955 112,013
Shares redeemed (1,008,034) (10,495,144) (260,545) (2,695,663)
---------- ----------- -------- ----------
Net increase 255,998 $ 2,620,697 106,412 $1,105,702
========== =========== ======== ==========
</TABLE>
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB AMERICA FUND, INC.
December 31, 1994
NOTE E-SHAREHOLDERS' TRANSACTIONS-(Continued)
<TABLE>
<CAPTION>
Gold Stock Portfolio
--------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
---------------------- --------------------
Shares Dollars Shares Dollars
--------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 157,979 $ 2,772,324 77,427 $1,234,157
Shares issued as reinvestment of
dividends 881 16,196 846 9,790
Shares redeemed (120,493) (1,978,902) (39,141) (622,663)
--------- ----------- -------- ----------
Net increase 38,367 $ 809,618 39,132 $ 621,284
========= =========== ======== ==========
<CAPTION>
Domestic Growth Stock Portfolio
--------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
---------------------- --------------------
Shares Dollars Shares Dollars
--------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 504,196 $ 8,172,260 254,117 $4,145,200
Shares issued as reinvestment of
dividends 185,687 2,977,104 94,573 1,435,235
Shares redeemed (268,980) (4,268,721) (113,878) (1,833,719)
--------- ----------- -------- ----------
Net increase 420,903 $ 6,880,643 234,812 $3,746,716
========= =========== ======== ==========
<CAPTION>
Bond Portfolio
--------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
---------------------- --------------------
Shares Dollars Shares Dollars
--------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 1,223,216 $12,359,424 141,602 $1,532,243
Shares issued as reinvestment of
dividends 41,407 426,036 46,229 471,792
Shares redeemed (449,159) (4,551,541) (52,819) (567,353)
--------- ----------- -------- ----------
Net increase 815,464 $ 8,233,919 135,012 $1,436,682
========= =========== ======== ==========
</TABLE>
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB AMERICA FUND, INC.
December 31, 1994
NOTE E-SHAREHOLDERS' TRANSACTIONS-(Continued)
<TABLE>
<CAPTION>
Growth and Income Portfolio
--------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
---------------------- --------------------
Shares Dollars Shares Dollars
--------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 293,263 $ 3,529,692 112,302 $1,333,183
Shares issued as reinvestment of
dividends 12,930 156,535 294 3,261
Shares redeemed (35,479) (436,317) (17,577) (205,119)
--------- ----------- -------- ----------
Net increase 270,714 $ 3,249,910 95,019 $1,131,325
========= =========== ======== ==========
<CAPTION>
Capital Growth Portfolio
--------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
---------------------- --------------------
Shares Dollars Shares Dollars
--------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 1,017,067 $13,892,818 684,193 $9,124,119
Shares issued as reinvestment of
dividends 92,665 1,310,134 17,399 222,490
Shares redeemed (127,748) (1,760,505) (53,735) (726,284)
--------- ----------- -------- ----------
Net increase 981,984 $13,442,447 647,857 $8,620,325
========= =========== ======== ==========
<CAPTION>
Balanced Portfolio
--------------------------------------------
Year Ended Year Ended
December 31, 1994 December 31, 1993
---------------------- --------------------
Shares Dollars Shares Dollars
--------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares issued 420,855 $ 4,654,199 394,727 $4,463,806
Shares issued as reinvestment of
dividends 41,717 466,037 22,682 248,427
Shares redeemed (115,035) (1,271,443) (18,923) (216,627)
--------- ----------- -------- ----------
Net increase 347,537 $ 3,848,793 398,486 $4,495,606
========= =========== ======== ==========
</TABLE>
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB AMERICA FUND, INC.
December 31, 1994
NOTE F-RESTRICTED SECURITIES
The Gold Stock Portfolio invests in securities which are restricted from resale.
The Portfolio does not have the right to demand that such securities be
registered. The portfolio's policy is to invest no more than 5% of the value of
the portfolio's assets in equity securities which are not readily marketable.
The securities are valued at fair value in accordance with the procedures
described in Note B.
The following securities are not registered in the U.S. or their country of
origin, and are considered restricted:
<TABLE>
<CAPTION>
Restricted Date of Market
Security Acquisition Cost Value
- ---------- -------------- ------ ------
<S> <C> <C> <C>
Bolivar Goldfields Ltd., Warrants April 20, 1994 $0 $0
Dayton Mining Corporation, Warrants May 3, 1994 0 0
Miramar Mining Corp., Warrants April 12, 1994 0 0
</TABLE>
The value of these restricted securities at December 31, 1994 was $0,
representing 0.0% of net assets.
In addition, the portfolio held unrestricted securities of the same issuer
as follows:
<TABLE>
<CAPTION>
Unrestricted Date of Market Date of Market
Security of Same Issuer Offering Value Acquisition Value
- ----------------------- ----------------- -------- -------------- --------
<S> <C> <C> <C> <C>
Dayton Mining Corporation April 13, 1994 $165,390 May 3, 1994 $153,535
Mirimar Mining Corp. February 24, 1994 21,368 April 12, 1994 24,418
</TABLE>
27
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
World Growth Stock Portfolio
-------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1994 31, 1993 31, 1992 31, 1991 31, 1990
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 20.89 $ 16.73 $ 16.45 $ 13.70 $ 16.07
Income From Investment
Operations
Net investment income 0.25 0.24 0.35 0.34 0.36
Net gains and losses
on securities (both
realized and unrealized) (0.89) 5.40 0.65 2.75 (2.00)
----------- ----------- ----------- ----------- -----------
Total from investment
operations (0.64) 5.64 1.00 3.09 (1.64)
Less Distributions to
Shareholders
Dividends from net
investment income (0.25) (0.24) (0.35) (0.34) (0.37)
Dividends in excess of net
investment income
Distributions from capital
gains (0.81) (1.24) (0.37) (0.36)
Distributions in excess of
capital gains (0.19)
----------- ----------- ----------- ----------- -----------
Returns of capital
Total distributions (1.25) (1.48) (0.72) (0.34) (0.73)
Net asset value, end of year $ 19.00 $ 20.89 $ 16.73 $ 16.45 $ 13.70
=========== =========== =========== =========== ===========
Total Return (A) (3.05%) 33.73% 6.10% 22.53% (10.38%)
Ratios to Average Net Assets:
Expenses 1.00% 1.04% 1.17% 1.14% 1.22%
Net investment income 1.56% 1.64% 2.19% 2.40% 2.65%
Portfolio Turnover Rate 18.74% 34.90% 32.27% 50.06% 25.79%
Net Assets, At End of Year $52,903,768 $42,031,141 $25,416,357 $22,659,930 $16,052,089
</TABLE>
(A) Total return assumes reinvestment of all dividends during the year and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
28
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year (A):
<TABLE>
<CAPTION>
Money Market Portfolio
-------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1994 31, 1993 31, 1992 31, 1991 31, 1990
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 10.26 $ 10.22 $ 10.22 $ 10.21 $ 10.18
Income From Investment
Operations
Net investment income 0.35 0.20 0.29 0.52 0.73
Net gains and losses
on securities (both
realized and unrealized) (0.01) 0.04 0.01
------------ ------------ ------------ ------------ ------------
Total from investment
operations 0.34 0.24 0.29 0.53 0.73
Less Distributions to
Shareholders
Dividends from net
investment income (0.35) (0.20) (0.29) (0.52) (0.70)
Dividends in excess of net
investment income
Distributions from capital
gains
Distributions in excess of
capital gains
Returns of capital
------------ ------------ ------------ ------------ ------------
Total distributions (0.35) (0.20) (0.29) (0.52) (0.70)
Net asset value, end of year $ 10.25 $ 10.26 $ 10.22 $ 10.22 $ 10.21
============ ============ ============ ============ ============
Total Return (B) 3.28% 2.32% 2.83% 5.18% 7.15%
Ratios to Average Net Assets:
Expenses 0.65% 0.74% 0.85% 0.85% 1.09%
Net investment income 3.31% 2.32% 2.81% 4.95% 6.90%
Portfolio Turnover Rate (C) N/A N/A N/A N/A N/A
Net Assets, At End of Year $ 7,680,485 $ 5,061,181 $ 3,956,152 $ 3,672,941 $ 2,910,677
</TABLE>
(A) The per share amounts which are shown have been computed based on the
average number of shares outstanding during each year.
(B) Total return assumes reinvestment of all dividends during the year and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(C) There were no purchases and/or sales of securities other than short-term
obligations during the year. Therefore, the portfolio turnover rate has
not been calculated.
29
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
Gold Stock Portfolio
----------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1994 31, 1993 31, 1992 31, 1991 31, 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 19.00 $ 11.57 $ 11.99 $ 12.76 $ 16.95
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.03 0.02 0.03 0.07 0.07
Net gains and losses on
securities (both
realized and unrealized) (2.65) 7.43 (0.42) (0.77) (4.19)
---------- ---------- ---------- ---------- ----------
Total from investment
operations (2.62) 7.45 (0.39) (0.70) (4.12)
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net
investment income (0.03) (0.02) (0.03) (0.07) (0.07)
Dividends in excess of net
investment income
Distributions from capital
gains
Distributions in excess of
capital gains (0.10)
Returns of capital
---------- ---------- ---------- ---------- ----------
Total distributions (0.13) (0.02) (0.03) (0.07) (0.07)
Net asset value, end of year $ 16.25 $ 19.00 $ 11.57 $ 11.99 $ 12.76
========== ========== ========== ========== ==========
Total Return (A) (13.77%) 63.90% (3.29%) (5.48%) (24.28%)
Ratios to Average Net Assets:
Expenses 0.99% 1.01% 1.13% 1.16% 1.36%
Net investment income 0.18% 0.14% 0.24% 0.57% 0.59%
Portfolio Turnover Rate 17.43% 7.32% 7.78% 14.23% 17.61%
Net Assets, At End of Year $7,351,625 $7,863,581 $4,338,297 $4,646,951 $5,390,279
</TABLE>
- ------------
(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
30
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
Domestic Growth Stock Portfolio
--------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1994 31, 1993 31, 1992 31, 1991 31, 1990
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year................................ $ 16.14 $ 15.16 $ 12.96 $ 10.15 $ 13.25
Income From Investment
Operations
Net investment income............... 0.09 0.12 0.14 0.24 0.26
Net gains and losses
on securities (both
realized and unrealized).......... 1.12 2.29 3.27 3.13 (2.71)
----------- ----------- ----------- ----------- ----------
Total from investment
operations........................ 1.21 2.41 3.41 3.37 (2.45)
Less Distributions to
Shareholders
Dividends from net
investment income................. (0.09) (0.12) (0.14) (0.24) (0.26)
Dividends in excess of net
investment income.................
Distributions from capital
gains............................. (1.32) (1.31) (1.07) (0.32) (0.39)
Distributions in excess of
capital gains.....................
Returns of capital..................
----------- ----------- ----------- ----------- ----------
Total distributions................. (1.41) (1.43) (1.21) (0.56) (0.65)
Net asset value, end of year.......... $ 15.94 $ 16.14 $ 15.16 $ 12.96 $ 10.15
=========== =========== =========== =========== ==========
Total Return (A)...................... 7.66% 15.89% 26.50% 33.18% (18.55%)
Ratios to Average Net Assets:
Expenses............................ 0.89% 0.97% 1.07% 1.13% 1.25%
Net investment income............... 0.63% 0.76% 1.07% 2.02% 2.38%
Portfolio Turnover Rate............... 46.65% 49.47% 41.36% 40.93% 15.17%
Net Assets, At End of Year............ $31,458,666 $25,072,289 $19,985,838 $15,583,806 $10,517,783
</TABLE>
- ----------
(A) Total return assumes reinvestment of all dividends during the year and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth more or
less than the original cost.
31
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
Bond Portfolio
----------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1994 31, 1993 31, 1992 31, 1991 31, 1990
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year.............................. $ 10.28 $ 10.21 $ 10.61 $ 9.83 $ 9.76
Income From Investment
Operations
Net investment income............. 0.35 0.74 0.66 0.72 0.75
Net gains and losses
on securities (both
realized and unrealized)........ (0.58) 0.13 0.13 0.79 0.06
----------- ----------- ----------- ----------- -----------
Total from investment
operations...................... (0.23) 0.87 0.79 1.51 0.81
Less Distributions to
Shareholders
Dividends from net
investment income............... (0.35) (0.74) (0.66) (0.73) (0.74)
Dividends in excess of net
investment income...............
Distributions from capital
gains........................... (0.06) (0.53)
Distributions in excess of
capital gains...................
Returns of capital................
----------- ----------- ----------- ----------- -----------
Total distributions............... (0.35) (0.80) (1.19) (0.73) (0.74)
Net asset value, end of year........ $ 9.70 $ 10.28 $ 10.21 $ 10.61 $ 9.83
=========== =========== =========== =========== ===========
Total Return (A).................... (2.28%) 8.68% 7.46% 15.34% 8.44%
Ratios to Average Net Assets:
Expenses.......................... 0.68% 0.74% 0.88% 1.03% 1.21%
Net investment income............. 6.07% 7.59% 6.83% 7.12% 7.97%
Portfolio Turnover Rate............. 140.30% 112.66% 81.23% 23.73% 29.25%
Net Assets, At End of Year.......... $13,066,445 $ 5,461,879 $ 4,042,506 $ 3,516,314 $ 2,905,564
</TABLE>
- ----------
(A) Total return assumes reinvestment of all dividends during the year and
does not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth more or
less than the original cost.
32
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
Growth and Income Portfolio
-----------------------------------------
Period From
Year Year May 1,
Ended Ended 1992 to
December December December
31, 1994 31, 1993 31, 1992(A)
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
year $ 12.35 $ 11.10 $ 10.27
Income From Investment
Operations
Net investment income 0.13 0.12 0.02
Net gains and losses
on securities (both
realized and unrealized) (0.65) 1.53 0.83
---------- ---------- ----------
Total from investment
operations (0.52) 1.65 0.85
Less Distributions to
Shareholders
Dividends from net
investment income (0.13) (0.12) (0.02)
Dividends in excess of net
investment income
Distributions from capital
gains (0.48) (0.28)
Distributions in excess of
capital gains
Returns of capital
---------- ---------- ----------
Total distributions (0.61) (0.40) (0.02)
Net asset value, end of year $ 11.22 $ 12.35 $ 11.10
========== ========== ==========
Total Return (B) (4.24%) 14.94% 12.48%
Ratios to Average Net Assets:
Expenses 1.10% 1.35% 2.09% (C)
Net investment income 1.52% 1.38% 0.36% (C)
Portfolio Turnover Rate 38.17% 77.68% 54.11%
Net Assets, At End of Year $5,610,472 $2,831,442 $1,489,179
</TABLE>
- -----------
(A) Per share data calculated from the initial offering date, May 1, 1992, for
sale to Chubb Separate Account A. For the period from the start of business
April 1, 1992 to April 30, 1992, net investment income per share aggregated
$0 for the Growth and Income portfolio.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost. Total return for periods of less than
one year have been annualized.
(C) Per share data and ratios calculated on an annualized basis.
33
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
Capital Growth Portfolio
-------------------------------------------
Period From
Year Year May 1,
Ended Ended 1992 to
December December December
31, 1994 31, 1993 31, 1992(A)
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of
year $ 14.26 $ 12.42 $ 9.95
Income From Investment
Operations
Net investment income 0.03 (0.01)
Net gains and losses
on securities (both
realized and unrealized) (0.49) 3.03 2.69
----------- ----------- -----------
Total from investment
operations (0.46) 3.03 2.68
Less Distributions to
Shareholders
Dividends from net
investment income (0.03)
Dividends in excess of net
investment income
Distributions from capital
gains (0.33) (1.19) (0.21)
Distributions in excess of
capital gains (0.06)
Returns of capital
----------- ----------- -----------
Total distributions (0.42) (1.19) (0.21)
Net asset value, end of year $ 13.38 $ 14.26 $ 12.42
=========== =========== ===========
Total Return (B) (3.26%) 24.73% 40.40%
Ratios to Average Net Assets:
Expenses 1.22% 1.33% 1.96% (C)
Net investment income 0.25% (0.11%) (0.37%)(C)
Portfolio Turnover Rate 202.04% 162.79% 104.76%
Net Assets, At End of Year $27,564,086 $15,373,489 $ 5,343,734
</TABLE>
- ------------
(A) Per share data calculated from the initial offering date, May 1, 1992, for
sale to Chubb Separate Account A. For the period from the start of business
April 1, 1992 to April 30, 1992, net investment income per share aggregated
$0 for the Capital Growth portfolio.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost. Total return for periods of less than
one year have been annualized.
(C) Per share data and ratios calculated on an annualized basis.
34
<PAGE>
CHUBB AMERICA FUND, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
Balanced Portfolio
---------------------------------------------
Period From
Year Year May 1,
Ended Ended 1992 to
December December December
31, 1994 31, 1993 31, 1992(A)
----------- ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
year $ 11.22 $ 10.77 $ 10.10
Income From Investment
Operations
Net investment income 0.32 0.25 0.16
Net gains and losses
on securities (both
realized and unrealized) (0.47) 0.74 0.67
----------- ----------- ----------
Total from investment
operations (0.15) 0.99 0.83
Less Distributions to
Shareholders
Dividends from net
investment income (0.32) (0.25) (0.16)
Dividends in excess of net
investment income
Distributions from capital
gains (0.13) (0.25)
Distributions in excess of
capital gains (0.04)
Returns of capital
----------- ----------- ----------
Total distributions (0.45) (0.54) (0.16)
Net asset value, end of year $ 10.62 $ 11.22 $ 10.77
=========== =========== ==========
Total Return (B) (1.33%) 9.27% 12.33%
Ratios to Average Net Assets:
Expenses 1.01% 1.07% 1.43%(C)
Net investment income 3.34% 2.79% 2.80%(C)
Portfolio Turnover Rate 103.68% 65.49% 77.33%
Net Assets, At End of Year $14,764,853 $11,703,898 $6,944,437
</TABLE>
- ----------
(A) Per share data calculated from the initial offering date, May 1, 1992, for
sale to Chubb Separate Account A. For the period from the start of business
April 1, 1992 to April 30, 1992, net investment income per share aggregated
$.03 for the Balanced portfolio.
(B) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of account fees and charges that apply to the
separate account or related insurance policies. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost. Total return for periods of less than
one year have been annualized.
(C) Per share data and ratios calculated on an annualized basis.
35
<PAGE>
Ernst & Young LLP 200 Clarendon Street
Boston, Massachusetts 02116
617/266-2000
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Chubb America Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Chubb
America Fund, Inc. (the "Fund", comprising, respectively, the World Growth
Stock, Money Market, Gold Stock, Domestic Growth Stock, Bond, Growth and Income,
Capital Growth, and Balanced Portfolios), including the schedules of portfolio
investments, as of December 31, 1994, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
periods indicated on pages 28, 29, 30, 31, 32, 33, 34 and 35 of these financial
statements. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian and brokers, or other
appropriate auditing procedures where replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Chubb America Fund, Inc. at
December 31, 1994, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated on pages 28, 29,
30, 31, 32, 33, 34 and 35 of these financial statements, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
February 17, 1995
36
<PAGE>
CHUBB AMERICA FUND, INC
One Granite Place
Concord, New Hampshire 03301
(603) 226-5000
A Series Fund
with a
World Growth Stock Portfolio Investing Primarily in Stocks
Money Market Portfolio Investing Primarily
in Money Market Instruments
Gold Stock Portfolio Investing Primarily in Gold Mining Shares
Bond Portfolio Investing Primarily in Debt Securities
Domestic Growth Stock Portfolio Investing Primarily in Stocks
Growth and Income Portfolio Investing Primarily in Stocks
Capital Growth Portfolio Investing Primarily in Stocks
Balanced Portfolio Investing Primarily in
Stocks and Fixed Income Securities
Emerging Growth Portfolio Investing Primarily in Common Stocks
of Small and Medium-Sized Companies
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus but supplements and
should be read in conjunction with the Prospectus for the Fund. It is
incorporated by reference into the Prospectus. A copy of the Prospectus may be
obtained by writing or calling the Fund at the address or telephone number
above.
- --------------------------------------------------------------------------------
The date of the Prospectus to which this Statement of Additional Information
relates is November 1, 1995.
The date of this Statement of Additional Information is November 1, 1995.
C-1
<PAGE>
TABLE OF CONTENTS
Page
----
Business History 1
Investment Restrictions 1
Description of Certain Investments
Bank Obligations
Repurchase Agreements
Commercial Paper
Loan Participation and other Direct Indebtedness
Corporate Asset Backed Securities
Lending of Securities
Foreward Commitments
Warrants
Forward Foreign Currency Exchange Contracts
American Depository Receipts
Securities and Index Options
Futures Contracts and Related Options
High Yield Bonds
Description of Investment Ratings
Risk Considerations
U.S. Dollar Obligations of Foreign
Branches of U.S. Banks
Repurchase Obligations
Foreign Securities
Forward Foreign Currency Exchange Contracts
Gold Mining Shares
Options
Futures Contracts and Related Options
Federal Tax Matters
Investment Advisory and Other Services
Investment Management Agreements
and Sub-Investment Management Agreements
Independent Auditors
Custodians
Payment of Expenses
Portfolio Transactions and Brokerage Allocations
Management of the Fund
Capital Stock
Offering and Redemption of Shares
Determination of Net Asset Value
Taxes
C-2
<PAGE>
Page
----
Performance and Yield Information
Additional Information
Reports
Name and Service Mark
Financial Statements
C-3
<PAGE>
BUSINESS HISTORY
Chubb America Fund, Inc. (the "Fund") is an open-end diversified management
investment company established by Chubb Life Insurance Company of America
("Chubb Life") to provide for the investment of assets of separate accounts
established by Chubb Life or its affiliated insurance companies. Such assets are
acquired by the separate accounts pursuant to the sale of flexible premium
variable life insurance policies (the "Policies"). The Fund has no business
history prior to being incorporated in Maryland on October 19, 1984. In the
future, the Fund may sell its shares to other separate accounts funding variable
annuities and variable life insurance policies established by Chubb Life, its
successors or assigns, or by other insurance companies with which Chubb Life is
affiliated, and may add or delete Portfolios.
INVESTMENT RESTRICTIONS
Each of the following investment restrictions are fundamental policies of the
World Growth Stock, Money Market, Gold Stock, Bond and Domestic Growth Stock
Portfolios and may not be changed for any such Portfolio without approval of a
majority of the outstanding shares of each affected Portfolio. Investment
restrictions 2, 3, 5, 6, 8-12 and 17 are fundamental policies for the Growth and
Income, Capital Growth, Emerging Growth and Balanced Portfolios and may not be
changed for any such Portfolio without approval of a majority of the outstanding
shares of the affected Portfolio. Each restriction, whether or not fundamental,
applies to each Portfolio of the Fund, unless otherwise indicated. A change in
policy affecting only one Portfolio may be effected with the approval of a
majority of the outstanding shares of that Portfolio only. (As used in the
Prospectus and this Statement of Additional Information, the term "majority of
the outstanding voting shares" means the lesser of (1) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented or (2) more than 50% of the outstanding shares.) A Portfolio will
not:
1. Invest more than 10%, or in the case of Emerging Growth Portfolio 15%, of
the value of the total assets of the Portfolio in securities, or 5%, except
with respect to Emerging Growth Portfolio, of the value of the total assets
of the Portfolio in equity securities, which are not readily marketable,
such as repurchase agreements having a maturity of more than seven days,
restricted securities, and securities that are secured by interests in real
estate.
2. Invest in real estate, although it may buy securities of companies which
deal in real estate and securities which are secured by interests in real
estate, including interests in real estate investment trusts.
3. Invest in commodities or commodity contracts, except that the Growth and
Income Portfolio, the Capital Growth Portfolio, the Balanced Portfolio and
the Emerging Growth Portfolio may each enter into financial futures
contracts and options thereon that are listed on a national securities or
commodities exchange if, immediately thereafter for that Portfolio: (a) the
total of the initial margin deposits required with respect to all open
futures positions at the time such positions were established plus the sum
of the premiums paid for all unexpired options on futures contracts would
not exceed 5% of the value of a Portfolio's total assets and (b) a
segregated account consisting of cash or liquid high-grade debt securities
in an amount equal to the total market value of any futures contracts
purchased by a Portfolio, less the amount of any initial margin, is
established by that Portfolio. In the case of an option that is "in-the-
money" at the time of purchase, the "in-the-money" amount, as defined under
Commodity Futures Trading Commission
C-4
<PAGE>
regulations, may be excluded in computing the 5% limit.
4. Invest in securities of other investment companies, except by purchases in
the open market involving only customary broker's commissions or as part of
a merger, consolidation, or acquisition, subject to limitations in the
Investment Company Act of 1940 (the "1940 Act") and rules thereunder.
5. Make loans, except by the purchase of bonds or other debt obligations
customarily distributed privately to institutional investors and except
that the Fund may buy repurchase agreements and provided that the Emerging
Growth Fund may lend its portfolio securities representing not in excess of
30% of its total assets (taken at market value).
6. Make an investment unless, when considering all its other investments, 75%
of the value of the Portfolio's assets would consist of cash, cash items,
U.S. Government securities, securities of other investment companies, and
other securities. For this restriction, "other securities" are limited, for
each issuer, to not more than 5% of the value of the Portfolio's assets and
to not more than 10% of the issuer's outstanding voting securities.
As a matter of operating policy, the Fund considers bank obligations as "other
securities" and will invest no more than 5% of a Portfolio's total assets in the
obligations of any one issuer and will own no more than 10% of the outstanding
voting securities of such issuer. Pursuant to this operating policy, the Fund
will not consider repurchase agreements to be subject to this 5% limitation if
the collateral underlying the repurchase agreements are exclusively U.S.
Government Obligations.
7. Invest more than 5% of the value of the total assets of the Portfolio in
securities of companies having a record of less than three years'
continuous operations, including predecessors and unconditional guarantors.
8. Act as an underwriter of securities of other issuers, except to the extent
that it may be deemed to be an underwriter in reselling securities, such as
restricted securities, acquired in private transactions and subsequently
registered under the Securities Act of 1933.
9. Except with respect to the Emerging Growth Portfolio, borrow money, except
that, as a temporary measure for extraordinary or emergency purposes and
not for investment purposes, any Portfolio may borrow from banks up to 5%
of its assets taken at cost, provided in each case that the total
borrowings have an asset coverage, based on value, of at least 300%. The
Emerging Growth Portfolio may not borrow money in an amount in excess of
33 1/3% of its total assets, and then only as a temporary measure for
extraordinary or emergence purposes. This restriction will not prevent the
Growth and Income Portfolio, the Capital Growth Portfolio, the Balanced
Portfolio or Emerging Growth Portfolio from entering into futures contracts
as set forth above in restriction 3.
10. Issue securities senior to its common stock except to the extent set out in
paragraph 9 above. For purposes hereof, writing covered call options, and
as regards Emerging Growth Portfolio, put options, and entering into
futures contracts, to the extent permitted by restrictions 3 and 13, shall
not involve the issuance of senior securities.
11. Sell securities short, except the Growth and Income Portfolio, the Capital
Growth Portfolio, the Balanced Portfolio and the Emerging Growth Portfolio
may make short sales against the box.
C-5
<PAGE>
12. Buy securities on margin, except that (1) it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities, and (2) the Growth and Income Portfolio, the Capital Growth
Portfolio, the Balanced Portfolio and the Emerging Growth Portfolio may
make margin deposits in connection with futures contracts and options
transactions to the extent permitted by restrictions 3 and 13.
13. Invest in or write puts, calls, straddles, or spreads. However, this
restriction shall not prohibit the Portfolios (other than the Money Market
Portfolio) from writing or selling covered call options or purchasing call
options in order to close transactions. Nor shall this restriction prohibit
the Emerging Growth or Capital Growth Portfolio from writing or selling
covered call and put options or purchasing call or put options. This
restriction shall not prohibit the Growth and Income Portfolio, the Capital
Growth Portfolio, the Balanced Portfolio and the Emerging Growth Portfolio
from investing more than 5% of the value of the total assets of the
Portfolio in securities of companies having a record of less than three
years' continuous operations, including predecessors and unconditional
guarantors. (In addition, as a matter of operating policy, no Portfolio may
write covered call options if, as a result, a Portfolio's securities
covering all call options written or subject to put or call options would
exceed 25% of the value of the Portfolio's total assets.)
14. Enter into a repurchase agreement with Chubb Life Insurance Company of
America ("Chubb Life"); The Chubb Corporation; or a subsidiary of either of
such corporations.
15. Except for the Emerging Growth Portfolio, participate on a joint or joint
and several basis in any trading account in securities. Transactions for
the Portfolios and any other accounts under common management may be
combined or allocated between the Portfolios and such other accounts.
16. Invest in companies for the purpose of exercising control of management.
17. Invest more than 25% of the value of the total assets of the Portfolio
(other than the Gold Stock Portfolio) in securities of any one industry.
Banks are not considered a single industry for purposes of this
restriction. (As a matter of operating policy, only the Money Market
Portfolio may utilize this exception.) Nor shall this restriction apply to
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
C-6
<PAGE>
18. Invest in interests, other than debentures or equity stock interests, in
oil and gas or other mineral exploration or development programs.
19. Invest more than 5% of the total value of the assets of the Portfolio in
warrants, whether or not the warrants are listed on the New York or
American Stock Exchanges, or more than 2% of the value of the assets of the
Portfolio in warrants which are not listed on those exchanges. Warrants
acquired in units or attached to securities are not included in this
restriction.
20. Invest more than 15% of the value of the assets of the Portfolios (except
the Emerging Growth Portfolio) in securities of foreign issuers that are
not listed on a recognized U.S. or foreign securities exchange, or quoted
on an inter-dealer quotation system.
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which may be made
by the Portfolios and which may involve certain specific risks, discussed under
"RISK CONSIDERATIONS" below:
Bank Obligations
All of the Portfolios may acquire obligations of banks. These include
certificates of deposit, which are normally limited to $100,000 per issuing
bank, bankers' acceptances and time deposits. Certificates of deposit are
generally short-term, interest-bearing negotiable certificates issued by
commercial banks or savings and loan associations against funds deposited in the
issuing institution. Bankers' acceptances are time drafts drawn on a commercial
bank by a borrower, usually in connection with an international commercial
transaction (to finance the import, export, transfer or storage of goods). With
a bankers' acceptance, the borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most bankers' acceptances have maturities of six months or less and are
traded in secondary markets prior to maturity. Time deposits are generally
short-term, interest-bearing negotiable obligations issued by commercial banks
against funds deposited in the issuing institution. None of the Portfolios will
invest in time deposits maturing in more than seven days.
The Money Market Portfolio will not invest in any security issued by a
commercial bank unless the bank is organized and operating in the U.S. and is a
member of the Federal Deposit Insurance Corporation. However, this limitation
shall not prohibit investments in foreign branches of U.S. banks which otherwise
meet the foregoing requirements.
Repurchase Agreements
All of the Portfolios, except the Bond Portfolio and the Domestic Growth Stock
Portfolio, may invest in repurchase agreements.
A repurchase agreement customarily obligates the seller, at the time it sells
securities to the Portfolio, to repurchase the securities at a mutually agreed
upon time and price. The total amount received on repurchase would be calculated
to exceed the price paid by the Portfolio, reflecting an agreed upon market rate
of interest for the period from the time of the repurchase agreement to the
settlement date, and would not necessarily be related to the interest rate on
the underlying securities. The differences between the total amount to be
received upon repurchase
C-7
<PAGE>
of the securities and the price which was paid by the Portfolio upon their
acquisition is accrued as interest and is included in the Portfolio's net income
declared as dividends. The underlying securities will consist of high-quality
securities. With respect to the Money Market Portfolio, the underlying security
must be either a U.S. Government Obligation or a security rated in the highest
rating category by the Requisite NRSROs (as defined in the Prospectus) and must
be determined to present minimal credit risk. The Fund has the right to sell
securities subject to repurchase agreements but would be required to deliver
identical securities upon maturity of the repurchase agreements unless the
seller fails to pay the repurchase price. It is each Portfolio's intention not
to sell securities subject to repurchase agreements prior to the agreement's
maturity.
Commercial Paper
All of the Portfolios may invest in commercial paper. Commercial paper involves
an unsecured promissory note issued by a corporation. It is usually sold on a
discount basis and has a maturity at the time of issuance of nine months or
less. In connection with the World Growth Stock Portfolio, the Gold Stock
Portfolio, the Bond Portfolio and the Domestic Growth Stock Portfolio, on the
date of investment, such paper must be rated A-1 by Standard & Poor's
Corporation ("Standard & Poor's") or Prime-1 by Moody's Investor's Service, Inc.
("Moody's"), the highest commercial paper ratings, or the highest commercial
paper ratings by other NRSROs, or, if not rated, must have been issued by a
corporation with an outstanding debt issue rated AAA or AA by Standard & Poor's
or AAA or Aa by Moody's as described below, and be of equivalent investment
quality in the judgment of the Portfolio's Investment Manager or Sub-Investment
Manager, as appropriate. On the date of investment, with respect to the Money
Market Portfolio, such paper or its issuer must be rated in one of the two
highest commercial paper rating categories by at least two NRSROs which have
issued a rating with respect to such commercial paper or its issuer or by one
NRSRO if that paper or its issuer has been rated by only one NRSRO or, if not
rated, must be of comparable quality. In connection with the Growth and Income
Portfolio, the Capital Growth Portfolio and the Balanced Portfolio, on the date
of investment, such paper must be rated within the three highest categories by
Moody's, Standard & Poor's or other NRSROs or, if not rated, must be of
equivalent investment quality in the judgment of the Portfolio's Investment
Manager or Sub-Investment Manager, as appropriate.
Loan Participations and Other Direct Indebtedness
As described in the Prospectus, the Portfolios may purchase loan participations
and other direct indebtedness. In purchasing a loan participation, a Portfolio
acquires some or all of the of the interest of a bank or other lending
institution in a loan to a corporate borrower. Many such loans are secured,
although some may be unsecured. Such loans may be in default at the time of
purchase. Loans and other direct indebtedness that are fully secured offer a
Portfolio more protection than an unsecured loan in the event of non-payment of
scheduled interest or principal. However, there is no assurance that the
liquidation collateral from a secured loan or other direct indebtedness would
satisfy the corporate borrower's obligation, or that the collateral can be
liquidated.
These loans and other direct indebtedness are made generally to finance internal
growth, mergers, acquisitions, stock repurchases, leveraged buy-outs and other
corporate activities. Such loans and other direct indebtedness loans are
typically made by a syndicate of lending institutions represented by an agent
lending institution which has negotiated and structured the loan and is
C-8
<PAGE>
responsible for collecting interest, principal and other amounts due on its own
behalf and on behalf of the others in the syndicate, and for enforcing its and
their other rights against the borrower. Alternatively, such loans and other
direct indebtedness may be structured as a novation, pursuant to which the
Portfolio would assume all of the rights of the lending institution in a loan,
or as an assignment, pursuant to which the Portfolio would purchase an
assignment of a portion of a lender's interest in a loan or other direct
indebtedness either directly from the lender or through an intermediary. A
Portfolio may also purchase trade or other claims against companies, which
generally represent money owed by the company to a supplier of goods or
services. These claims may also be purchased at a time when the company is in
default.
Certain of the loan participations and other direct indebtedness acquired by a
Portfolio may involve revolving credit facilities or other standby financing
commitments which obligates a Portfolio to pay additional cash on a certain date
or on demand. These commitments may have the effect of requiring a Portfolio to
increase its investment in a company at a time when the Emerging Growth
Portfolio might not otherwise decide to do so (including at a time when the
company's financial condition makes it unlikely that such amounts will be
repaid). To the extent that a Portfolio is committed to advance additional
funds, it will at all times hold and maintain in a segregated account cash or
other high grade debt obligations in an amount sufficient to meet such
commitments.
The Emerging Growth Portfolio's ability to receive payment of principal,
interest and other amounts due in connection with these investments will depend
primarily on the financial condition of the borrower. In selecting the loan
participations and other direct indebtedness which the Portfolio will purchase,
The Sub-Investment Manager will rely upon its own (and not the original lending
institution's) credit analysis of the borrower. As the Portfolio may be required
to rely upon another lending institution to collect and pass on to the Portfolio
amounts payable with respect to the loan and to enforce the Portfolio's rights
under the loan and other direct indebtedness, an insolvency, bankruptcy or
reorganization of the lending institution may delay or prevent the Portfolio
from receiving such amounts. In such cases, the Portfolio will evaluate as well
the creditworthiness of the lending institution and will treat both the borrower
and the lending institution as an "issuer" of the loan participation for the
purposes of certain investment restrictions pertaining to the diversification of
the Portfolio's investments. The highly leveraged nature of many such loans and
other direct indebtedness may make such loans and other direct indebtedness
especially vulnerable to adverse changes in economic or market conditions.
Investments in such loans and other direct indebtedness may involve additional
risk to the Portfolio. For example, if a loan or other direct indebtedness is
foreclosed, the Portfolio could become part owner of any collateral, and would
bear the costs and liabilities associated with owning and disposing of
collateral. In addition, it is conceivable that under emerging legal theories of
lender liability, the Portfolio could be held liable as co-lender. It is unclear
whether loans and other forms of direct indebtedness offer securities law
protections against fraud and misrepresentation. In the absence of definitive
regulatory guidance, the Portfolio relies on the Sub-Investment Manager's
research in an attempt to avoid situations where fraud and misrepresentation
could adversely affect the Portfolio. In addition, loan participations and other
direct investments may not be in the form of securities or may be subject to
restrictions on transfer, and only limited opportunities may exist to resell
such instruments. As a result, the Portfolio may be unable to sell such
investments at an opportune time or may have to resell them at less than fair
market value. To the extent that the Sub-Investment Manager determines that any
such
C-9
<PAGE>
investments are illiquid, the Portfolio will include them in the investment
limitations described below.
Corporate Asset-Backed Securities
As described in the Prospectus, the Fund may invest in corporate asset-backed
securities. These securities, issued by trusts and special purposes
corporations, are backed by a pool of assets, such as credit card and automobile
loan receivables, representing the obligations of a number of different parties.
Corporate asset-backed securities present certain risks. For instance, in the
case of credit card receivables, these securities may not have the benefit of
any security interest in the related collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. Most issuers of automobile receivables permit the servicers to
retain possession of the underlying obligations. If the servicer were to sell
these obligations to another party, there is a risk that the purchaser would
acquire an interest superior to that of the holders of the related automobile
receivables. In addition, because of the large number of vehicles involved in
a typical issuance and technical requirements under state laws, the trustee for
the holders of the automobile receivables may not have a proper security
interest in all of the obligations backing such receivables. Therefore, there
is the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities. The underlying
assets (e.g., loans) are also subject to prepayments which shorten the
securities' weighted average life and may lower their return.
Corporate asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors and underlying assets to make payments, the
securities may contain elements of credit support which fall into two
categories: (i) liquidity protection and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
resulting from ultimate default ensures payment through insurance policies or
letter of credit obtained by the issuer or sponsor from third parties. The Fund
will not pay any additional or separate fees for credit support. The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquency or loss in excess of that anticipated or failure of the
credit support could adversely affect the return on an investment in such a
security.
Lending of Securities
The Emerging Growth Portfolio may seek to increase its income by lending
portfolio securities. Such loans will usually be made only to member banks of
the Federal Reserve System and to its member firms (and subsidiaries thereof) of
the New York Stock Exchange and would be required to be secured continuously by
collateral in cash, cash equivalents, or U.S. Government securities maintained
on a current basis at an amount at least equal to the market value of the
securities loaned. The Emerging Growth Portfolio would have the right to call a
loan and obtain the securities loaned at any time on customary industry
settlement notice (which will usually not exceed five days). During the
existence of a loan, the Emerging Growth Portfolio would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
C-10
<PAGE>
loaned and would also receive compensation based on investment of the
collateral. The Emerging Growth Portfolio would not, however, have the right to
vote any securities having voting rights during the existence of the loan, but
would call the loan in anticipation of an important vote to be taken among
holders of the securities or of the giving or withholding of their consent on a
material matter affecting the investment. As with other extensions of credit,
there are risks of delay in recovery or even loss of rights in the collateral
should the borrower fail financially. However, the loans would be made only to
firms deemed by The Sub-Investment Manager to be of good standing, and when, in
the judgment of The Sub-Investment Manager, the consideration which could be
earned currently from securities loans of this type justifies the attendant
risk. If The Sub-Investment Manager determines to make securities loans, it is
not intended that the value of the securities loaned would exceed 30% of the
value of the Emerging Growth Portfolio's total assets.
Forward Commitments
The Money Market, Capital Growth, Bond and Emerging Growth Portfolios may, from
time to time, purchase securities on a forward commitment, when issued, or
delayed delivery basis. The price of such forward commitment securities, which
may be expressed in yield terms, is fixed at the time the commitment to purchase
is made. Delivery and payment will take place at a later date. Normally, the
settlement date may take up to three months. During the period between purchase
and settlement, no payments are made by the Portfolio to the issuer and no
interest accrues to the Portfolio. Forward commitments involve a risk of loss if
the value of the security to be purchased declines prior to the settlement date.
While forward commitment securities may be sold prior to the settlement date,
each Portfolio intends to purchase such securities with the purpose of actually
acquiring them, unless a sale appears desirable for investment reasons. At the
time a Portfolio makes the commitment to purchase a security on a forward
commitment basis, the Portfolio will record the transaction and reflect the
value of the security in determining its net asset value. The Fund does not
believe that the net asset value or income of either Portfolio will be adversely
affected by the purchase of securities on a forward commitment basis. Each
Portfolio using forward commitments will maintain with the Fund's custodian, in
a segregated account, cash or high-grade money market securities equal in value
to its total commitments for forward commitment securities.
Warrants
All of the Portfolios, except the Money Market Portfolio, may invest in
warrants, which are rights to buy certain securities at set prices during
specified time periods. If, prior to the expiration date, the Portfolio is not
able to exercise a warrant at a cost lower than the underlying securities, the
Portfolio will suffer a loss of its entire investment in the warrant.
Forward Foreign Currency Exchange Contracts
The Capital Growth Portfolio and the Emerging Growth Portfolio may use forward
foreign currency exchange contracts ("forward currency contracts") to hedge
against the decline of a currency in which the Portfolio's securities are
denominated. A forward currency contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract as agreed by the parties, at a price set at the
time of the contracts.
The Capital Growth Portfolio and the Emerging Growth Portfolio may enter into
forward currency contracts or maintain a net exposure on such contracts only if
(i) the consummation of
C-11
<PAGE>
the contracts would not obligate the Portfolio to deliver an amount of foreign
currency in excess of the value of the Portfolio's securities or other assets
denominated in the currency and (ii) the Capital Growth Portfolio and the
Emerging Growth Portfolio maintain with their custodian cash, U.S. government
securities, or liquid, high-grade debt securities in a segregated account in an
amount not less than the value of the Portfolio's total assets committed to the
consummation of the contracts.
American Depository Receipts
The World Growth Stock Portfolio, the Growth and Income Portfolio, the Capital
Growth Portfolio, the Balanced Portfolio, the Gold Stock Portfolio and the
Emerging Growth Portfolio may invest in American Depository Receipts ("ADR's").
These are certificates issued by a U.S. bank representing the right to receive
securities of a foreign issuer deposited in that bank or a correspondent bank.
There are no fees imposed on the purchase or sale of ADR's when purchased from
the issuing bank in the initial underwriting, although the issuing bank may
impose charges for the collection of dividends and the conversion of ADR's into
the underlying ordinary shares. Brokerage commissions will be incurred if ADR's
are purchased through brokers on U.S. stock exchanges. Investments in ADR's
often have advantages over direct investments in the underlying foreign
securities, including the following: they are more liquid investments, they can
be sold for U.S. dollars, they may be transferred easily, market quotations are
readily available in the U.S. and more uniform financial information is
available for the issuers of such securities. The Fund believes that the risk
associated with ownership of ADR's are no greater than the risks associated with
the direct ownership of foreign shares.
Securities and Index Options
All of the Portfolios, except the Money Market Portfolio, may write (sell)
covered call options and purchase call options in order to close transactions.
In addition, the Growth and Income Portfolio, the Capital Growth Portfolio, the
Balanced Portfolio and the Emerging Growth Portfolio may purchase put and call
options to enhance investment performance or for hedging purposes. The options
activities of a Portfolio may increase its portfolio turnover rate and the
amount of brokerage commissions paid. These commissions may be higher than those
which would apply to purchases and sales of securities directly.
Writing Covered Call Options. A call option is a contract that gives the holder
(buyer) of the option the right to buy (in return for a premium paid), and the
writer of the option (in return for a premium received) the obligation to sell,
the underlying security at a specified price (the exercise price) at any time
before the option expires. A covered call option is a call in which the writer
of the option, for example, owns the underlying security throughout the option
period. In such cases, the security covering the call will be maintained in a
segregated account with the Fund's custodian. The exercise price of a call
option written by a Portfolio may be below, equal to or above the current market
value of the underlying security at the time the option is written. A Portfolio
will write covered call options to reduce the risks associated with certain of
its investments or to increase total investment return through the receipt of
premiums.
A Portfolio may attempt to protect itself from loss due to a decline in value of
the underlying security or from the loss of appreciation due to its rise in
value by buying an identical option, in which case the purchase cost of such
option may offset the premium received for the option previously written. In
order to do this, the Portfolio makes a "closing purchase transaction" by the
purchase of a call option on the same security with the same exercise price and
expiration date as the covered call option which it has previously written. The
Portfolio will realize a gain or loss from a closing purchase transaction if the
amount paid to purchase a call option is less
C-12
<PAGE>
or more than the amount received from the sale of the corresponding call option.
Also, because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the exercise or closing out of a call option is likely to be
offset in whole or in part by unrealized appreciation of the underlying security
owned by the Portfolio.
Purchasing Put and Call Options. A Portfolio may purchase put options on
securities to protect its holdings in an underlying or related security against
an anticipated decline in market value. Such hedge protection is provided only
during the life of the option. Securities are considered related if their price
movements generally correlate with one another. The purchase of put options on
securities held by a Portfolio or related to such securities will enable a
Portfolio to preserve, at least partially, unrealized gains in an appreciated
security in its portfolio without actually selling the security. In addition, a
Portfolio will continue to receive interest or dividend income on the security.
A Portfolio may purchase call options on individual securities or stock indices
in order to take advantage of anticipated increases in the price of those
securities by purchasing the right to acquire the securities underlying the
option or, with respect to options on indices, to receive income equal to the
value of such index over the strike price. As the holder of a call option with
respect to individual securities, a Portfolio obtains the right to purchase the
underlying securities at the exercise price at any time during the option
period. As the holder of a call option on a stock index, a Portfolio obtains the
right to receive, upon exercise of the option, a cash payment equal to the
multiple of any excess of the value of the index on the exercise date over the
strike price specified in the option.
Options on Indexes. A Portfolio may write covered call options and purchase put
and call options on appropriate securities indexes for the purpose of hedging
against the risk of unfavorable price movements adversely affecting the value of
a Portfolio's securities or to enhance income. Unlike a stock option which gives
the holder the right to purchase or sell a specified stock at a specified price,
an option on a securities index gives the holder the right to receive a cash
settlement amount based upon price movements in the stock market generally (or
in a particular industry or segment of the market represented by the index)
rather than the price movements in individual stocks.
A securities index fluctuates with changes in the market values of the
securities so included. For example, some securities index options are based on
a broad market index such as the S&P 500 or the NYSE Composite Index, or a
narrower market index such as the S&P 100. Indexes may also be based on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index. Options on stock indexes are currently traded on
the following exchanges, among others: The Chicago Board Options Exchange, New
York Stock Exchange and American Stock Exchange. Options on other types of
securities indexes, which do not currently exist, including indexes on certain
debt securities, may be introduced and traded on exchanges in the future.
Futures Contracts and Related Options
The Growth and Income Portfolio, the Capital Growth Portfolio, the Balanced
Portfolio and the Emerging Growth Portfolio may purchase or sell futures
contracts and related options.
Futures Transactions. A futures contract is an agreement to buy or sell a
security (or deliver a final cash settlement price in the case of a contract
relating to an index or otherwise not calling
C-13
<PAGE>
for physical delivery at the end of trading in the contracts) for a set price in
the future. Futures exchanges and trading in futures is regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC").
Futures contracts trade on certain regulated contracts markets.
Positions taken in the futures markets are not normally held until delivery or
cash settlement is required, but are instead liquidated through offsetting
transactions which may result in a gain or a loss. While futures positions taken
by a Portfolio will usually be liquidated in this manner, the Portfolio may
instead make or take delivery of underlying securities whenever it appears
economically advantageous to the Portfolio to do so. A clearing organization
associated with the exchange on which futures are traded assumes responsibility
for closing-out transactions and guarantees that, as between the clearing
members of an exchange, the sale and purchase obligations will be performed with
regard to all positions that remain open at the termination of the contract.
Upon entering into a futures contract, a Portfolio will be required to deposit
with a futures commission merchant a certain percentage (usually 1% to 5%) of
the futures contracts market value as initial margin. A Portfolio may not commit
in the aggregate more than 5% of the market value of its total assets to initial
margin deposits on the Portfolio's existing futures contracts and premium paid
for options on unexpired futures contracts. Initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned upon
termination of the futures contract if all contractual obligations have been
satisfied. The initial margin in most cases will consist of cash or U.S.
Government securities. Subsequent payments, called variation margin, may be made
with the futures commission merchant as a result of marking the contracts to
market on a daily basis as the contract value fluctuates.
Futures on Debt Securities. A futures contract on a debt security is a binding
contractual commitment which, if held to maturity, will result in an obligation
to make or accept delivery, during a particular future month, of securities
having a standardized face value and rate of return. By purchasing futures on
debt securities [assuming a "long" position] a Portfolio will legally obligate
itself to accept the future delivery of the underlying security and pay the
agreed price. By selling futures on debt securities [assuming a "short"
position] it will legally obligate itself to make the future delivery of the
security against payment of the agreed price. Open future positions on debt
securities will be valued at the most recent settlement price, unless such price
does not appear to the Sub-Investment Manager to reflect the fair value of the
contract, in which case the positions will be valued by, or under the direction
of, the Board of Directors.
The Portfolios by hedging through the use of futures on debt securities seek to
establish more certainty with respect to the effective rate of return on their
portfolio securities. A Portfolio may, for example, take a "short" position in
the futures market by selling contracts for the future delivery of debt
securities held by the Portfolio (or securities having characteristics similar
to those held by the Portfolio) in order to hedge against an anticipated rise in
interest rates that would adversely affect the value of the Portfolio's
portfolio securities. When hedging of this character is successful, any
depreciation in the value of portfolio securities will be substantially offset
by appreciation in the value of the futures position.
On other occasions, a Portfolio may take a "long" position by purchasing futures
on debt securities. This would be done, for example, when the Portfolio intends
to purchase particular debt securities, but expects the rate of return available
in the bond market at that time to be less favorable than rates currently
available in the futures markets. If the anticipated rise in the price of the
debt securities should occur (with its concomitant reduction in yield), the
increased cost to the Portfolio of purchasing the debt securities will be
offset, at least to some extent, by the
C-14
<PAGE>
rise in the value of the futures position in debt securities taken in
anticipation of the subsequent purchase of such debt securities.
The Portfolio could accomplish similar results by selling debt securities with
long maturities and investing in debt securities with short maturities when
interest rates are expected to increase or by buying debt securities with long
maturities and selling debt securities with short maturities when interest rates
are expected to decline. However, by using futures contracts as a risk
management technique (to reduce a Portfolio's exposure to interest rate
fluctuations), given the greater liquidity in the futures market than in the
bond market, it might be possible to accomplish the same result more effectively
and perhaps at a lower cost. See Limitations on Purchase and Sale of Futures
Contracts and Options on Futures Contracts below.
Stock Index Futures. A stock index futures contract does not require the
physical delivery of securities, but merely provides for profits and losses
resulting from changes in the market value of the contract to be credited or
debited at the close of each trading day to the respective accounts of the
parties to the contract. On the contract's expiration date, a final cash
settlement occurs and the futures positions are simply closed out. Changes in
the market value of a particular stock index futures contract reflect changes in
the specified index of equity securities on which the future is based.
Stock index futures may be used to hedge the equity portion of a Portfolio's
securities portfolio with regard to market risk (involving the market's
assessment of over-all economic prospects), as distinguished from stock-specific
risk (involving the market's evaluation of the merits of the issuer of a
particular security). By establishing an appropriate "short" position in stock
index futures, a Portfolio may seek to protect the value of its portfolio
against an overall decline in the market for equity securities. Alternatively,
in anticipation of a generally rising market, a Portfolio can seek to avoid
losing the benefit of apparently low current prices by establishing a "long"
position in stock index futures and later liquidating that position as
particular equity securities are in fact acquired. To the extent that these
hedging strategies are successful, a Portfolio will be affected to a lesser
degree by adverse overall market price movements, unrelated to the merits of
specific portfolio equity securities, than would otherwise be the case. See
Limitations on Purchase and Sale of Futures Contracts and Options on Futures
Contracts below.
Options on Futures. For bona fide hedging purposes, the Growth and Income
Portfolio, the Capital Growth Portfolio, the Emerging Growth Portfolio and the
Balanced Portfolio may purchase put and call options and write call options on
futures contracts. These options are traded on exchanges that are licensed and
regulated by the CFTC for the purpose of options trading. A call option on a
futures contract gives the purchaser the right, in return for the premium paid,
to purchase a futures contract (assume a "long" position) at a specified
exercise price at any time before the option expires. A put option gives the
purchaser the right, in return for the premium paid, to sell a futures contract
(assume a "short" position) at a specified exercise price at any time before the
option expires. Upon the exercise of a call, the writer of the option is
obligated to sell the futures contract (to deliver a "long" position to the
option holder) at the option exercise price, which presumably will be lower than
the current market price of the contract in the futures market. Upon exercise of
a put, the writer of the option is obligated to purchase the futures contract
(to deliver a "short" position to the option holder) at the option exercise
price which presumably will be higher than the current market price of the
contract in the futures market.
When a Portfolio, as a purchaser of an option on a futures contract, exercises
such option and assumes a long futures position, in the case of a call, or a
short futures position, in the case of
C-15
<PAGE>
a put, its gain will be credited to its futures variation margin account. Any
loss suffered by the writer of the option of a futures contract will be debited
to its futures variation margin account. However, as with the trading of
futures, most participants in the options markets do not seek to realize their
gains or losses by exercise of their option rights. Instead, the holder of an
option usually will realize a gain or loss by buying or selling an offsetting
option at a market price that will reflect an increase or a decrease from the
premium originally paid as purchaser or required as a writer.
Options on futures contracts can be used by a Portfolio to hedge the same risks
as might be addressed by the direct purchase or sale of the underlying futures
contracts themselves. Depending on the pricing of the option, compared to either
the futures contract upon which it is based or upon the price of the underlying
securities themselves, it may or may not be less risky than direct ownership of
the futures contract or the underlying securities.
In contrast to a futures transaction, in which only transaction costs are
involved, benefits received by a Portfolio as a purchaser in an option
transaction will be reduced by the amount of the premium paid as well as by
transaction costs. In the event of an adverse market movement, however, a
Portfolio which purchased an option will not be subject to a risk of loss on the
option transaction beyond the price of the premium it paid plus its transaction
costs, and may consequently benefit from a favorable movement in the value of
its portfolio securities that would have been more completely offset if the
hedge had been effected through the use of futures.
If a Portfolio writes call options on futures contracts, the Portfolio will
receive a premium but will assume a risk of adverse movement in the price of the
underlying futures contract comparable to that involved in holding a futures
position. If the option is not exercised, the Portfolio will realize a gain in
the amount of the premium, which may partially offset unfavorable changes in the
value of securities held by, or to be acquired for, the Portfolio. If the option
is exercised, the Portfolio will incur a loss in the option transaction, which
will be reduced by the amount of the premium it has received, but which may be
partially offset by favorable changes in the value of its portfolio securities.
While the purchaser or writer of an option on a futures contract may normally
terminate its position by selling or purchasing an offsetting option of the same
series, a Portfolio's ability to establish and close out options positions at
fairly established prices will be subject to the existence of a liquid market.
The Portfolios will not purchase or write options on futures contracts unless,
in the Sub-Investment Manager's opinion, the market for such options has
sufficient liquidity that the risks associated with such options transactions
are not at unacceptable levels.
C-16
<PAGE>
Options on Foreign Currencies
As noted in the Prospectus, the Capital Growth and Emerging Growth Portfolios
may purchase and write options on foreign currencies for hedging purposes in a
manner similar to that in which Forward Contracts will be utilized. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant.
In order to protect against such diminutions in the value of portfolio
securities, the Capital Growth and Emerging Growth Portfolios may purchase put
options on the foreign currency. If the value of the currency does decline, the
Capital Growth and Emerging Growth Portfolios will have the right to sell such
currency for a fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its investments which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which securities
to be acquired are denominated is projected, thereby increasing the cost of such
securities, the Capital Growth and the Emerging Growth Portfolios may purchase
call options thereon. The purchase of such options could offset, at least
partially, the effects of the adverse movements in exchange rates. As in the
case of other types of options, however, the benefit to the Capital Growth and
the Emerging Growth Portfolios deriving from purchases of foreign options will
be reduced by the amount of the premium and related transactions costs. In
addition, where currency exchange rates do not move in the direction or to the
extent anticipated, the Capital Growth and the Emerging Growth Portfolios could
sustain losses on transactions in foreign currency options which would require
it to forgo a portion or all of the benefits of advantageous changes in such
rates.
The Capital Growth and Emerging Growth Portfolios may write options on foreign
currencies for the same types of hedging purposes. For example, where the
Capital Growth or Emerging Growth Portfolios anticipate a decline in the dollar
value of foreign-dominated securities due to adverse fluctuations in exchange
rates it could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the options will most likely
not be exercised, and the diminution in value of portfolio securities will be
offset by the amount of premium received.
Similarly, instead of purchasing a call option to hedge against anticipated
increase in the dollar cost of securities to be acquired, the Capital Growth or
Emerging Growth Portfolio could write a put option on the relevant currency
which, if rates move in the manner projected, will expire unexercised and allow
the Capital Growth or Emerging Growth Portfolio to hedge such increased costs up
to the amount of the premium. Foreign currency options written by the Emerging
Growth Portfolio will generally be covered in a manner similar to the covering
of other types of options. As in the case of other types of options, however,
the writing of a foreign currency option will constitute only a partial hedge up
to the amount of the premium, and only if rates move in the expected direction.
If this does not occur, the option may be exercised and the Emerging Growth
Portfolio would be required to purchase or sell the underlying currency at a
loss which may not be offset by the amount of the premium. Through the writing
of options on foreign currencies, the Emerging Growth Portfolio also may be
required to forgo all or a portion of the benefits which might otherwise have
been obtained from favorable movements in exchange rates.
Limitations on Purchase and Sale of Futures Contracts
and Options on Futures Contracts.
The Portfolios will engage in transactions in futures contracts and related
options only for bona fide hedging purposes and not for speculation. The
Portfolios may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amounts of initial margin
C-17
<PAGE>
deposits on a Portfolio's existing futures contracts and premiums paid for
unexpired options on futures contracts would exceed 5% of the value of the
Portfolio's total assets; provided, however, that in the case of an option that
is "in-the-money" at the time of purchase, the "in-the-money" amount may be
excluded in calculating the 5% limitation. In instances involving the purchase
or sale of futures contracts or the writing of covered call options thereon by a
Portfolio, such positions will always be "covered", as appropriate, by either
(i) an amount of cash and cash equivalents, equal to the market value of the
futures contracts purchased or sold and options written thereon (less any
related margin deposits), deposited in a segregated account with its custodian
or (ii) by owning the instruments underlying the futures contract sold (i.e.,
short futures positions) or option written thereon or by holding a separate
option permitting the Portfolio to purchase or sell the same futures contract or
option at the same strike price or better.
High Yield Bonds
The medium and lower quality debt securities in which the Capital Growth and
Emerging Growth Portfolios may invest are regarded as predominantly speculative
with respect to the issuer's continuing ability to meet principal and interest
payments. Medium and lower quality bonds may be more susceptible to real or
perceived adverse economic and individual corporate developments than would
investment grade bonds. For example, a projected economic downturn or the
possibility of an increase in interest rates could cause a decline in high yield
bond prices because such an event might lessen the ability of highly leveraged
high yield issuers to meet their principal and interest payment obligations,
meet projected business goals or obtain additional financing. In addition, the
secondary trading market for medium and lower quality bonds may be less liquid
than the market for investment grade bonds. This potential lack of liquidity may
make it more difficult for the Sub-Investment Manager to accurately value
certain portfolio securities. Further, there is the risk that certain high yield
bonds containing redemption or call provisions may be called by the issuers of
such bonds in a declining interest rate market and the Portfolio might then have
to replace such called bonds with lower yielding bonds, thereby decreasing the
net investment income to the Portfolio.
C-18
<PAGE>
Description of Investment Ratings
Moody's - Bond Ratings
Aaa-Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt-
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A-Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa-Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba-Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca-Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C-Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
C-19
<PAGE>
Moody's Commercial Paper Ratings
Moody's Commercial Paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative capacity of rated issuers:
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations.
Issuers rated Prime-3 (or related supporting institutions) have an acceptable
capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
Standard & Poor's - Bond Ratings
AAA-This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA-Bonds rated AA also qualify as quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A-Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB-Bonds rated BBB are regarded as having an adequate capacity to pay principal
and interest. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB, B, CCC, CC-Bonds rated BB, B, CCC, and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree. While such bonds
will likely have some equality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
C-Bonds rated C are typically subordinated to senior debt which is assigned an
actual or implied CCC rating.
D-Bonds rated D are in payment default or may be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
Standard & Poor's Commercial Paper Ratings
A Standard & Poor's Commercial Paper Rating is a current assessment of the
likelihood of
C-20
<PAGE>
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into four categories, ranging from "A" for the highest
quality obligations to "D" for the lowest. Ratings are applicable to both
taxable and tax-exempt commercial paper. The four categories are as follows:
A-Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation 1, 2 and 3 to indicate the relative degree of safety.
A-1-This designation indicates that the degree of safety regarding timely
payment is very strong.
A-2-Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated "A-1".
A-3-Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
The Commercial Paper Rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to Standard &
Poor's by the issuer and obtained by Standard & Poor's from other sources it
considers reliable. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information.
Commencing on July 27, 1984, Standard & Poor's instituted a new rating category
with respect to certain municipal note issues with a maturity of less than three
years. The new note ratings and symbols are:
SP-1-A very strong, or strong, capacity to pay principal and interest. Issues
that possess overwhelming safety characteristics will be given a "+"
designation.
SP-2-A satisfactory capacity to pay principal and interest.
SP-3-A speculative capacity to pay principal and interest.
Standard & Poor's may continue to rate note issues with a maturity greater than
three years in accordance with the same rating scale currently employed for
municipal bond ratings.
RISK CONSIDERATIONS
U.S. Dollar Obligations of Foreign Branches of U.S. Banks
The Money Market Portfolio and the Balanced Portfolio may regularly invest in
U.S. dollar denominated obligations of foreign branches of FDIC-member U.S.
banks. These instruments represent the loan of funds actually on deposit in the
U.S. The Fund believes that the U.S. bank would be liable in the event that the
foreign branch failed to pay on its U.S. dollar obligations. Nevertheless, the
assets supporting the liability could be expropriated or otherwise restricted if
located outside the U.S. Exchange controls, taxes, or political and economic
developments could affect liquidity or repayment. Because of possibly
conflicting laws or regulations, the issuing bank could maintain and prevail
that the liability is solely that of the branch, thus exposing the Portfolio to
a possible loss. Such U.S. dollar obligations of foreign branches of FDIC-member
C-21
<PAGE>
U.S. banks are not covered by the usual $100,000 of FDIC insurance if they are
payable only at an office of such a bank located outside the U.S., the District
of Columbia, Puerto Rico, Guam, American Samoa, and the Virgin Islands.
Repurchase Agreements
During the holding period of a repurchase agreement, the seller marks to market
the collateral on a daily basis and must provide additional collateral if the
market value of the obligation falls below the repurchase price. If a Portfolio
acquires a repurchase agreement and then the seller defaults at a time when the
value of the underlying securities is less than the obligation of the seller,
the Fund could incur a loss. If the seller defaults or becomes insolvent, a
Portfolio could realize delays, costs or a loss in asserting its rights to the
collateral in satisfaction of the seller's repurchase agreement. The Portfolios
will enter into repurchase agreements only with sellers who are believed to
present minimal credit risks and whose creditworthiness has been evaluated by
the Board of Directors of the Fund. As a general matter, if the seller of the
repurchase agreement is a bank it must have assets of at least $1,000,000,000;
if the seller is a broker-dealer it must have a net worth of at least
$25,000,000.
Foreign Securities
The investment in securities of foreign issuers by the World Growth Stock
Portfolio, the Gold Stock Portfolio, the Growth and Income Portfolio, the
Capital Growth Portfolio, the Balanced Portfolio, and the Emerging Growth
Portfolio may involve special considerations associated with fluctuating
exchange rates, the fact that foreign securities and the markets therefore are
not as liquid as their domestic counterparts, the imposition of exchange control
restrictions, and economic or political instability. In addition, issuers of
foreign securities are subject to different, and in some cases less
comprehensive, accounting, reporting and disclosure requirements than domestic
issuers. As a result, the selection of investments in foreign issuers may be
more difficult and subject to greater risks than investments in domestic
issuers.
These Portfolios make investments in businesses located in foreign nations.
Thus, there is the possibility of expropriation or confiscatory taxation,
political or social instability or diplomatic developments which could affect
investments in those nations. Further, foreign brokerage commissions and
custodian fees are generally higher than in the U.S. In addition, government
restrictions in certain countries and other limitations or investment may affect
the maximum percentage of equity ownership in any one company by the Portfolios.
Moreover, in some countries, only special classes of securities may be purchased
by external investors and the price, liquidity, and rights with respect to such
securities may differ from those relating to shares owned by nationals. In
addition, there may also be the absence of developed legal structures governing
private or foreign investment or allowing for judicial redress for injury to
private property. As a result, the selection of securities of non-U.S. issuers
may be more difficult and subject to greater risks than investment in domestic
issuers.
A Portfolio may be affected, either unfavorably or favorably, by fluctuations in
the relative rates of exchange between the currencies of different nations and
the exchange control regulations and by their indigenous economic and political
developments. The Sub-Investment Managers for these Portfolios will consider
these and other factors before investing in particular foreign securities, and
will not make such investments unless, in its opinion, such investments will
meet the policies and objectives of its respective Portfolio. In addition, the
Board of Directors will monitor all foreign custody arrangements to ensure
compliance with the 1940 Act and the rules thereunder, and will review and
approve, at least annually, the continuance of such arrangements as consistent
with the best interests of the Fund and the stockholders.
C-22
<PAGE>
Forward Foreign Currency Exchange Contracts
The Capital Growth and Emerging Growth Portfolios' use of forward foreign
currency exchange contracts involves the special risks described below. The
precise matching of the amounts of foreign currency contracts and the value of
the portfolio securities being hedged will not generally be possible, because
the future value of such securities in foreign currencies will change as a
consequence of movements in the market value of those securities between the
dates the forward currency contracts are entered into and the dates they mature.
In addition, since it is impossible to forecast with precision the market value
of portfolio securities at the expiration or maturity of a forward currency
contract, it may be necessary for the Portfolio to purchase additional foreign
currency on the spot (i.e., cash) market (and bear the expense of such purchase)
if the market value of the securities being hedged is less than the amount of
foreign currency the Portfolio would be obligated to deliver upon the sale of
such securities. Conversely, it may be necessary for the Portfolio to sell some
of the foreign currency received upon the sale of portfolio securities on the
spot market if the market value of such securities exceeds the amount of foreign
currency the Portfolio is obligated to deliver.
Further, the Capital Growth and Emerging Growth Portfolios may not always be
able to enter into a forward currency contract when the Sub-Investment Manager
deems it advantageous to do so, for instance, if the Portfolio is unable to find
a counterparty to the transaction at an attractive price. Moreover, the
Portfolio may not be able to purchase forward currency contracts with respect to
all of the foreign currencies in which its portfolio securities may be
denominated. In those circumstances, and in other circumstances in which the
Portfolio enters into a cross-hedging forward currency contract, the correlation
between the movements in the exchange rates of the subject currency and the
currency in which the portfolio security is denominated may not be precise.
Finally, the cost of purchasing forward currency contracts in a particular
currency will reflect, in part, the rate of return available on instruments
denominated in that currency. The cost of purchasing forward contracts to hedge
portfolio securities that are denominated in currencies that, in general, yield
high rates of return may, therefore, tend to reduce the rate of return.
Gold Mining Shares
The four largest producers of gold currently are the Republic of South Africa,
the U.S., Australia and Canada. Economic and political conditions and objectives
prevailing in these countries may have direct effects on the production and
marketing of newly produced gold and sales of central bank gold holdings.
Political and social conditions in South Africa, due to the history of apartheid
and the volatility of the political conditions in the new South African
government and unsettled political conditions which could recur in South Africa
as well as in neighboring countries, may pose certain risks to investments in
South Africa if aggravated by local or international developments, such risks
could have an adverse effect on investments in South Africa including the Fund's
investments and, under certain conditions, on the liquidity of the Funds
portfolio and its ability to meet shareholder redemption requests. The ability
of the Fund to invest or hold investments in South African companies may be
further affected by changes in the United States or South African laws or
regulations. In the past legislation has been proposed in Congress which would
require U.S. investors, including the Fund, to sell their investment in South
Africa. If such legislation were to be enacted it could have a materially
adverse effect on the value of the Fund's investments in South Africa.
Notwithstanding these considerations, the recent liberalization of South
Africa's political system could reduce the risks described above in the future.
C-23
<PAGE>
Options
During the option period, the writer of a call option has, in return for the
premium received on the option, given up the opportunity for capital
appreciation above the exercise price should the market price of the underlying
security increase, but has retained the risk of loss should the price of the
underlying security decline. The writer has no control over the time when it may
be required to fulfill its obligation as a writer of the option. The premium is
intended to offset that loss in whole or in part. Unlike the situation in which
the Portfolio owns securities not subject to a call option, the Portfolio in
writing call options must assume that the call may be exercised at any time
prior to the expiration of its obligation as a seller, and that in such
circumstances the net proceeds realized from the sale of the underlying
securities pursuant to the call may be substantially below the prevailing market
price, although it must be at the previously agreed to exercise price.
The risk of purchasing a call option or a put option is that the Portfolio may
lose the premium it paid plus transaction costs. If a Portfolio does not
exercise the option and is unable to close out the position prior to expiration
of the option, it will lose its entire investment. An option position may be
closed out only on an exchange that provides a secondary market for an option of
the same series. Although a Portfolio will write and purchase options only when
the Sub-Investment Manager believes that a liquid secondary market will exist
for options of the same series, there can be no assurance that a liquid
secondary market will exist for a particular option at a particular time and
that a Portfolio, if it so desires, can close out its position by effecting a
closing transaction. If the writer of a covered call option is unable to effect
a closing purchase transaction, it cannot sell the underlying security until the
option expires or the option is exercised. Accordingly, a covered call writer
may not be able to sell the underlying security at a time when it might
otherwise be advantageous to do so.
The effectiveness of hedging through the purchase of securities index options
will depend upon the extent to which price movements in the portion of the
securities portfolio being hedged correlate with price movements in the selected
securities index. Perfect correlation is not possible because the securities
held or to be acquired by a Portfolio will not exactly match the composition of
the securities indexes on which options are written. The principal risk in
purchasing securities index options is that the premium and transaction costs
paid by a Portfolio will be lost as a result of unanticipated movements in the
price of the securities comprising the securities index for which the option has
been purchased. In writing securities index options, the principal risks are the
inability to effect closing transactions at favorable prices and the inability
to participate in the appreciation of the underlying securities.
Futures Contracts and Related Options
Positions in futures contracts and related options may be closed out only on an
exchange that provides a secondary market for such contracts or options. A
Portfolio will enter into an option or futures contract only if there appears to
be a liquid secondary market. However, there can be no assurance that a liquid
secondary market will exist for any particular option or futures contract at any
specific time. Thus, it may not be possible to close out a futures contract or
related option position. In the case of a futures contract, in the event of
adverse price movements a Portfolio would continue to be required to make daily
margin payments. In this situation, if a Portfolio has insufficient cash to meet
daily margin requirements it may have to sell portfolio securities at a time
when it may be disadvantageous to do so. In addition, a Portfolio may be
required to take or make delivery of the securities underlying the futures
contracts it holds. The inability to close out futures contracts also could have
an adverse impact on a Portfolio's ability to hedge its portfolio effectively.
C-24
<PAGE>
There are several risks in connection with the use of futures contracts as a
hedging device. While hedging can provide protection against an adverse movement
in market prices, it can also preclude a hedger's opportunity to benefit from a
favorable market movement. In addition, investing in futures contracts and
options on futures contracts will cause a Portfolio to incur additional
brokerage commissions and may cause an increase in a Portfolio's turnover rate.
The successful use of futures contracts and related options also depends on the
ability of the Sub-Investment Manager to forecast correctly the direction and
extent of market movements within a given time frame. To the extent market
prices remain stable during the period a futures contract or option is held by a
Portfolio or such prices move in a direction opposite to that anticipated, a
Portfolio may realize a loss on the hedging transaction that will not be offset
by an increase in the value of its portfolio securities. As a result, a
Portfolio's return for the period may be less than if it had not engaged in the
hedging transaction.
Utilization of futures contracts by a Portfolio involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities which are being hedged. If the price of the futures
contract moves more or less than the price of the securities being hedged, a
Portfolio will experience a gain or loss which will not be completely offset by
movements in the price of the securities.
Compared to the purchase or sale of futures contracts, the purchase of put or
call options on futures contracts involves less potential risk for a Portfolio
because the maximum amount at risk is the premium paid for the options plus
transaction costs. However, there may be circumstances when the purchase of an
option on a futures contract would result in a loss to a Portfolio while the
purchase or sale of the futures contract would not have resulted in a loss, such
as when there is no movement in the price of the underlying securities.
Federal Tax Matters
A policyowner's interest in earnings on assets held in a separate account and
invested in the Fund are not includible in the policyowner's gross income
because the Policies presently qualify as life insurance contracts for Federal
income tax purposes.
The Fund intends that each Portfolio will comply with Section 817(h) of the Code
and the regulations thereunder. Pursuant to that Section, the only shareholders
of the Fund and its Portfolios will be separate accounts funding variable
annuities and variable life insurance policies established by Chubb Life, its
successors and assigns or by other insurance companies with which Chubb Life is
affiliated and Chubb Life's general account which provided the initial capital
for the Portfolios.
In addition, Section 817(h) of the Code and the regulations thereunder impose
diversification requirements on the separate accounts and on the Portfolios.
These diversification requirements are in addition to the diversification
requirements imposed by the Code for the Portfolios to be treated as regulated
investment companies. Failure to meet the requirements of Section 817(h) could
result in taxation to Chubb Life or its affiliated insurance companies and
immediate taxation of the owners of the policies funded by the Fund.
The Secretary of the Treasury may in the future issue regulations or one or more
revenue rulings which would prescribe the circumstances in which a policyowner's
control of the investments of a segregated asset account may cause the
policyowner, rather than an insurance company, to be treated as the owner of the
assets of the account. The regulations could impose requirements that are not
reflected in the Policy, relating, for example, to such elements of policyowner
C-25
<PAGE>
control as premium allocation, transfer privileges and investment in a division
focusing on a particular investment sector such as the Gold Stock Portfolio.
Failure to comply with any such regulations presumably would cause earnings on a
policyowner's interest in the separate account to be includible in the
policyowner's gross income in the year earned.
The Fund may, therefore, find it necessary to take action to assure that the
Policy continues to qualify as a life insurance policy under Federal tax laws.
The Fund, for example, may be required to alter the investment objectives of any
Portfolios or substitute the shares of one Portfolio for those of another. No
such change of investment objectives or substitution of securities will take
place without notice to affected policyholders and the approval of a majority of
such policyholders or without prior approval of the Securities and Exchange
Commission, to the extent legally required. See "TAXES" below.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Management Agreements and Sub-Investment Management Agreements.
The Fund has entered into Investment Management Agreements with Chubb Investment
Advisory Corporation ("Chubb Investment Advisory") with respect to all
Portfolios. The Fund and Chubb Investment Advisory have also executed Sub-
Investment Management Agreements with Templeton, Galbraith & Hansberger Ltd.
("Templeton"), Chubb Asset Managers, Inc. ("Chubb Asset"), Van Eck Associates
Corporation ("Van Eck Associates"), Pioneering Management Corporation
("Pioneer"), Janus Capital Corporation ("Janus"), Phoenix Investment Counsel,
Inc. ("Phoenix") and Massachusetts Financial Services Company ("MFS")
(collectively the "Sub-Investment Managers") with regard to the World Growth
Stock; Money Market, Bond and Growth and Income; Gold Stock; Domestic Growth
Stock; Capital Growth; Balanced and Emerging Growth Portfolios, respectively.
The Investment Management Agreements provide that Chubb Investment Advisory,
subject to control and review by the Fund's Board of Directors, is responsible
for the overall management and supervision of each Portfolio and for providing
certain administrative services to the Fund. See "MANAGEMENT OF THE FUND" in the
Prospectus. The Sub-Investment Management Agreements provide that the Sub-
Investment Managers, subject to review by the Fund's Board of Directors and by
Chubb Investment Advisory, have the day-to-day responsibility for making
decisions to buy, sell or hold any particular security for the Portfolio which
they advise.
Chubb Investment Advisory, each Sub-Investment Manager and their affiliates may
provide investment advice to other clients, including, but not limited to,
mutual funds, individuals, pension funds and institutional investors. In
addition, persons employed by Chubb Asset, who are also investment personnel of
Chubb & Son, Inc., currently provide investment advice to, supervise and monitor
investment portfolios for The Chubb Corporation and its affiliates, including
general accounts of the insurance affiliates of The Chubb Corporation. Some of
the advisory accounts of Chubb Investment Advisory, each Sub-Investment Manager,
and their affiliates may have investment objectives and investment programs
similar to those of the Portfolios. Accordingly, occasions may arise when
securities that are held by other advisory accounts, or that are currently being
purchased or sold for other advisory accounts, are also being selected for
purchase or sale for a Portfolio. It is the practice of Chubb Investment
Advisory, each Sub-Investment Manager and their affiliates to allocate such
purchases or sales insofar as feasible among their several clients in a manner
they deem equitable, to all accounts involved. Under normal circumstances such
transactions will be (1) done on a pro-rata basis substantially in proportion to
the amounts ordered by each account, (2) entered into only if the
C-26
<PAGE>
trade is likely to produce a benefit for the Portfolios, and (3) at the same
average price for each client. While it is conceivable that in certain instances
this procedure could adversely affect the price or number of shares involved in
the Fund's transaction, it is believed that the procedure generally contributes
to better overall execution of the Fund's portfolio transactions. It is also the
policy of Chubb Investment Advisory, each Sub-Investment Manager, and each of
their affiliates not to favor any one account over the other.
For providing investment advisory and management services to the Fund, Chubb
Investment Advisory receives monthly compensation from the Fund and has sole
responsibility to provide each Sub-Investment Manager, other than Janus, with
quarterly compensation and Janus with monthly compensation, at annual rates
computed as described under "MANAGEMENT OF THE FUND" in the Prospectus. For the
year ended December 31, 1991, the Fund paid $145,842, $17,724, $36,147, $15,669
and $100,941 to Chubb Investment Advisory for the World Growth Stock Portfolio,
the Money Market Portfolio, the Gold Stock Portfolio, the Bond Portfolio and the
Domestic Growth Stock Portfolio, respectively. For the year or, as appropriate,
period ended December 31, 1992, the Fund paid $181,840, $19,900, $34,123,
$19,085, $132,309, $6,408, $18,974 and $31,657 to Chubb Investment Advisory for
the World Growth Stock Portfolio, the Money Market Portfolio, the Gold Stock
Portfolio, the Bond Portfolio, the Domestic Growth Stock Portfolio, the Growth
and Income Portfolio, the Capital Growth Portfolio and the Balanced Portfolio,
respectively. For the year ended December 31, 1993, the Fund paid $251,741,
$21,623, $45,147, $25,819, $177,616, $15,277, $104,700, and $73,318 to Chubb
Investment Advisory for the World Growth Stock Portfolio, the Money Market
Portfolio, the Gold Stock Portfolio, the Bond Portfolio and the Domestic Growth
Stock Portfolio, respectively. For the year ended December 31, 1994, the Fund
paid $377,344, $39,051, $60,959, $38,648, $221,681, $32,319, $214,041 and
$100,956 to Chubb Investment Advisory for the World Growth Stock Portfolio, the
Money Market Portfolio, the Gold Stock Portfolio, the Bond Portfolio, the
Domestic Growth Stock Portfolio, the Growth and Income Portfolio, the Capital
Growth Portfolio and the Balanced Portfolio, respectively. All such fees were
paid pursuant to the terms of the Investment Management Agreements and the Sub-
Investment Management Agreements. The Emerging Growth Portfolio will be added to
the Fund on May 1, 1995 and therefore no investment advisory fees were paid by
it during 1994. The Growth and Income Portfolio, the Capital Growth Portfolio
and the Balanced Portfolio were not added as investment alternatives until May
1, 1992 and, therefore, no investment advisory fees were paid by these
Portfolios during 1991.
The Investment Management Agreements also obligate Chubb Investment Advisory to
perform certain administrative services which are described more completely in
the Prospectus. Certain of these functions have been delegated to the Sub-
Investment Managers.
The continuance of the Investment Management Agreements and the Sub-Investment
Management Agreements was approved by the Fund's Board of Directors on February
2, 1995. Unless earlier terminated, each Agreement will remain in effect as to
the applicable Portfolio from year to year with respect to each such Portfolio,
if approved annually (1) by the Board of Directors of the Fund or by a majority
of the outstanding shares of the Portfolio, and (2) by a majority of the Board
of Directors who are not interested persons, within the meaning of the 1940 Act,
of any party to such Agreement. The Agreements are not assignable and may be
terminated without penalty on 60 days' written notice at the option of any party
or, with respect to any Portfolio, by the requisite vote of the stockholders of
that Portfolio. See "CAPITAL STOCK" in this Statement of Additional Information.
Independent Auditors
C-27
<PAGE>
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116, has been
selected as the independent auditors of the Fund.
The financial statements of the Fund included in this Statement of Additional
Information and the related financial highlights included in the Prospectus for
the periods indicated therein have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
in this Statement of Additional Information, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
Custodians
Citibank, N.A., 111 Wall Street, New York, New York 10043, acts as custodian of
the Fund's assets. The Fund has also appointed, with the approval of the Fund's
Board of Directors, from time to time, sub-custodians, qualified under Rule 17f-
5 of the 1940 Act, with respect to certain foreign securities. The Fund may
authorize Citibank to enter into an agreement with any U.S. banking institution
or trust company to act as a sub-custodian pursuant to a resolution of the
Fund's Board of Directors. Securities owned by the Fund subject to repurchase
agreements may be held in the custody of other U.S. banks.
Payment of Expenses
Chubb Investment Advisory is obligated to assume the cost of certain
administrative expenses for the Fund, as described in the Prospectus under the
heading "MANAGEMENT OF THE FUND." The Fund pays the following expenses:
brokerage commissions and transfer taxes; other state, federal and local taxes
and filing fees; fees and expenses of qualification of the Fund and its shares
under federal and state securities laws subsequent to the effective date of this
Prospectus; compensation of directors who are not interested persons of the Fund
("disinterested directors"); travel expenses of disinterested directors;
interest and other borrowing costs; extraordinary or nonrecurring expenses such
as litigation; costs of printing and distributing communications to current
policyowners; insurance premiums; charges and expenses of the custodian,
independent auditors, and counsel; industry association dues; and other expenses
not expressly assumed by Chubb Investment Advisory. Certain other expenses are
assumed by Chubb Securities Corporation ("Chubb Securities") pursuant to a
distribution agreement with the Fund. See "OFFERING AND REDEMPTION OF SHARES"
below.
PORTFOLIO TRANSACTIONS AND BROKERAGE
ALLOCATIONS
Under the Investment Management Agreements, Chubb Investment Advisory has
ultimate authority to select broker-dealers through which securities are to be
purchased and sold, subject to the general control of the Board of Directors.
Under the Sub-Investment Management Agreements, the Sub-Investment Managers have
day-to-day responsibility for selecting broker-dealers through which securities
are to be purchased and sold, subject to Chubb Investment Advisory's overall
monitoring and supervision. The Sub-Investment Managers each provide the trading
desk for their respective Portfolio transactions. Chubb Investment Advisory will
perform daily valuation of the assets of each Portfolio.
The Money Market Portfolio's investments usually will be purchased on a
principal basis directly from issuers, underwriters or dealers. Accordingly,
minimal brokerage charges are expected to be paid on such transactions.
Purchases from an underwriter generally include a commission or concession paid
by the issuer, and transactions with a dealer usually include the dealer's
C-28
<PAGE>
mark-up.
The amount of brokerage commissions paid by the Fund for all Portfolios
(excluding the Growth and Income Portfolio, the Capital Growth Portfolio and the
Balanced Portfolio for the year 1991) for 1992, 1993 and 1994 were $92,575,
$92,952, $151,477 and $201,435, respectively.
Insofar as known to management, no director or officer of the Fund, Chubb
Investment Advisory, any Sub-Investment Manager or any person affiliated with
any of them has any material direct or indirect interest in any broker-dealer
employed by or on behalf of the Fund.
In selecting broker-dealers to execute transactions for the Fund, the Sub-
Investment Managers are obligated to use their best efforts to obtain for each
Portfolio the most favorable overall price and execution available, considering
all the circumstances. Such circumstances include the price of the security, the
size of the broker-dealer's "spread" or commission, the willingness of the
broker-dealer to position the trade, the reliability, financial strength and
stability and operational capabilities of the broker-dealer, the ability to
effect the transaction at all where a large block is involved, the availability
of the broker-dealer to stand ready to execute possibly difficult transactions
in the future, and past experience as to qualified broker-dealers, including
broker-dealers who specialize in any Canadian or foreign securities held by the
Portfolios. Such considerations are judgmental and are weighed by the Sub-
Investment Managers in seeking the most favorable overall economic result for
the Fund.
Notwithstanding the foregoing, however, and subject to appropriate policies and
procedures as then approved by the Board of Directors of the Fund, Chubb
Investment Advisory and the Sub-Investment Managers are authorized to allocate
portfolio transactions to broker-dealers who have provided brokerage and
research services, as such services are defined in Section 28(e) of the
Securities and Exchange Act of 1934, for the Portfolios or other advisory
accounts as to which Chubb Investment Advisory or any Sub-Investment Manager has
investment discretion. In addition, Chubb Investment Advisory and the Sub-
Investment Managers may cause the Portfolios to pay a broker-dealer a commission
for effecting a securities transaction in excess of the amount another broker-
dealer would have charged for effecting the same transaction, if Chubb
Investment Advisory or the Sub-Investment Manager determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services, as defined above, provided by such broker-
dealer viewed in terms of either that particular transaction or the overall
responsibilities of Chubb Investment Advisory or the Sub-Investment Managers
with respect to the Portfolios or their other advisory accounts. Such brokerage
and research services may include, among other things, analyses and reports
concerning issuers, industries, securities, economic factors and trends, and,
portfolio strategy. Such brokerage and research services may be used by Chubb
Investment Advisory or a Sub-Investment Manager in connection with any other
advisory accounts managed by it. Conversely, research services for any other
advisory accounts may be used by the Sub-Investment Manager or Chubb Investment
Advisory in managing the investments of a Portfolio. Chubb Investment Advisory
or a Sub-Investment Manager may also receive from such broker-dealers quotations
for Portfolio valuation purposes, provided that this results in no additional
cost to the Fund.
Research services may be provided to Templeton, at no additional cost to the
Fund, by various wholly owned subsidiaries, including Templeton Investment
Counsel, Inc., a corporation registered under the Investment Advisers Act of
1940, Templeton Investment Management (Hong Kong) Ltd., and Templeton Management
Limited, a Canadian company. The research services include information,
analytical reports, computer screening studies, statistical data, and factual
resumes pertaining to securities in the U.S. and in various foreign nations
which
C-29
<PAGE>
Templeton considers as having relatively stable and friendly governments.
Such supplemental research, when utilized, is subjected to analysis by Templeton
before being incorporated into the investment advisory process. Templeton pays
these subsidiaries compensation and reimbursement of expenses as mutually agreed
on, without cost to the Fund. These subsidiaries and Templeton are independent
contractors and in no sense is any of them an agent for the other. Any of them
is free to discontinue such research services at any time on 30 days' notice
without cost or penalty.
In 1994, $7,038 of commissions were paid to brokers because of research services
provided to either Chubb Investment Advisory or the Sub-Investment Managers.
The Sub-Investment Managers will use their best efforts to recapture all
available tender offer solicitation fees and similar payments in connection with
tenders of the securities of the Fund and to advise the Fund of any fees or
payments of whatever type which it may be possible to obtain for the Fund's
benefit in connection with the purchase or sale of Fund securities.
Any of the Sub-Investment Managers and Chubb Investment Advisory may combine
transactions for the Fund with transactions for other accounts managed by them
or their affiliates, including other investment companies registered under the
1940 Act, as previously described above. Transactions will be combined only when
the transaction meets the Fund's requirements as to selection of brokers or
dealers and negotiation of prices and commissions which the Sub-Investment
Managers would otherwise apply.
C-30
<PAGE>
MANAGEMENT OF THE FUND
The directors and officers of the Fund, their addresses, their positions with
the Fund, and their principal occupations for the past five years are set forth
below:
Positions
with Principal Occupations for
Name and Address the Fund the Past Five Years
- ---------------- --------- -------------------
Ronald Angarella* President Senior Vice President, Chubb Life,
One Granite Place and Director President and Director, Chubb
Concord, N.H. 03301 Investment Advisory, Chubb
Securities and Hampshire Funding,
Inc.; Senior Vice President and
Director, Chubb Investment Funds,
Inc.
Richard V. Werner* Senior Vice Senior Vice President, Chief
One Granite Place President and Financial Officer, Chubb Life
Concord, N.H. 03301 Director Insurance Company of America,
Colonial Life Insurance Company, and
Chubb Sovereign Life Insurance
Company; Director, Chubb Investment
Advisory; Vice President, The Chubb
Corporation; President, ChubbHealth
Holdings, Inc., Chairman of the
Board, ChubbHealth, Inc.
Charles C. Cornelio Vice Senior Vice President, Chief
One Granite Place President Administrative Officer, Counsel and
Concord, N.H. 03301 Assistant Secretary, Chubb Life
Insurance Company of America and
Chubb Investment Funds, Inc.; Vice
President, General Counsel and
Secretary, Chubb Securities
Corporation and Hampshire Funding,
Inc.; Secretary, Chubb Investment
Advisory.
C-31
<PAGE>
Positions
with Principal Occupations
Name and Address the Fund for the Past Five Years
- ---------------- -------- -----------------------
Shari J. Lease Secretary Assistant Vice President and
One Granite Place Associate Counsel, Chubb Life;
Concord, N.H. 03301 Secretary, Chubb Investment Funds,
Inc.; Assistant Secretary, Chubb
Investment Advisory, previously
Assistant Counsel and Assistant Vice
President, State Bond and Mortgage
Company and affiliated companies.
John A. Weston Treasurer Assistant Vice President and Mutual
One Granite Place Fund Accounting Officer of
Concord, N.H. 03301 ChubbLife; Treasurer of Chubb
Securities Corporation, Chubb
Investment Advisory and Hampshire
Funding, Inc.; formerly, Mutual Fund
Accounting Manager for the Fund,
Chubb Investment Funds, Inc. and
Chubb Investment Advisory
Corporation and Assistant Treasurer
for Chubb Securities Corporation and
Hampshire Funding, Inc.
Thomas H. Elwood Assistant Assistant Counsel, Chubb Life
One Granite Place Secretary Assistant Secretary, Chubb
Concord, N.H. 03301 Investment Funds, Inc., Chubb Series
Trust; formerly, Associate Counsel,
New York Life Insurance Company;
Secretary New York Life
Institutional Funds, Inc., Assistant
Secretary, Mainstay Funds, and MFA
Funds.
Mark D. Landry Assistant Senior Fund Accountant for ChubbLife
One Granite Place Treasurer and Chubb Investment Advisory;
Concord, N.H. 03301 Assistant Treasurer of Chubb
Investment Funds, Inc.; formerly
Fund Accountant for the Fund, Chubb
Investment Funds, Inc. and Chubb
Investment Advisory.
C-32
<PAGE>
Position
with Principal Occupations
Name and Address the Fund for the Past Five Years
- ---------------- ------------ -----------------------
James J. Weisbart Director Retired, previously President of
301 Smithfield Road Bird Bath Laundromats and President
Contoocook, N.H. 03329 of Solomon's Inc. (retail clothing
company)
Michael D. Coughlin Director President of Concord Litho
106 School Street Company, Inc. (printing company)
Concord, N.H. 03301
Elizabeth S. Hager Director Formerly State Representative, New
5 Auburn Street Hampshire; Consultant, Fund
Concord, N.H. 03301 Development; previously, City
Councilor, City of Concord, N.H. and
Mayor, City of Concord, N.H.
Asterisks indicate those directors who are "interested persons" within the
meaning of Section 2(a)(19) of the 1940 Act. Messrs. Angarella and Werner are
members of the executive committee, and Messrs. Weisbart and Coughlin and Ms.
Hager are members of the audit committee.
CAPITAL STOCK
The authorized capital stock of the Fund consists of 1,000,000,000 shares of
common stock which are divided into nine series: World Growth Stock Portfolio
common stock, Money Market Portfolio common stock, Gold Stock Portfolio common
stock, Bond Portfolio common stock, Domestic Growth Stock Portfolio common
stock, Growth and Income Portfolio common stock, Capital Growth Portfolio common
stock, Balanced Portfolio common stock and Emerging Growth Portfolio common
stock. Each series currently consists of 100,000,000 shares. The Fund has the
right to issue additional shares without the consent of stockholders, and may
allocate its reissued shares to new series or to one or more of the nine
existing series.
The assets received by the Fund for the issuance or sale of shares of each
Portfolio and all income, earnings, profits and proceeds thereof are
specifically allocated to each Portfolio. They constitute the underlying assets
of each Portfolio, are required to be segregated on the books of account and are
to be charged with the expenses of such Portfolio. Any assets which are not
clearly allocable to a particular Portfolio or Portfolios are allocated in a
manner determined by the Board of Directors. Accrued liabilities which are not
clearly allocable to one or more Portfolios would generally be allocated among
the Portfolios in proportion to their relative net assets before adjustment for
such unallocated liabilities. Each issued and outstanding share in a Portfolio
is entitled to participate equally in dividends and distributions declared with
respect to such Portfolio and in the net assets of such Portfolio upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities.
The shares of each Portfolio, when issued, will be fully paid and non-
assessable, will have no preference, preemptive, conversion, exchange or similar
rights, and will be freely transferable. Shares do not have cumulative voting
rights.
Chubb Life provided the initial capital for the Fund by purchasing $1,000,000
worth of shares of the World Growth Stock Portfolio, the Money Market Portfolio
and the Gold Stock Portfolio
C-33
<PAGE>
for its general account. Subsequently, upon formation of the Bond Portfolio and
Domestic Growth Stock Portfolio, Chubb Life purchased $1,000,000 worth of shares
of the two additional Portfolios for its general account. Most recently, Chubb
Life purchased $1,000,000 worth of shares of the Growth and Income Portfolio and
the Capital Growth Portfolio and $5,000,000 worth of shares of the Balanced
Portfolio and $10.00 worth of shares of Emerging Growth Portfolio for its
general account. Chubb Life intends to withdraw such investment from time to
time, but has agreed not to make any redemption request, except with respect to
the Emerging Growth Portfolio, if it would reduce the Fund's net worth below
$100,000.
As of March 31, 1995, Chubb Life owned of record and beneficially the following
percentages of shares of the Fund's Portfolios in its general account: 0.01% of
the World Growth Stock Portfolio; 10.76% of the Money Market Portfolio; 14.07%
of the Gold Stock Portfolio; 17.28% of the Bond Portfolio; 0.02% of the Domestic
Growth Stock Portfolio; 18.02% of the Growth and Income Portfolio; 0.59% of the
Capital Growth Portfolio; and 31.92% of the Balanced Portfolio. Chubb Life's
ownership of more than 25% of the shares of the Balanced Portfolio may result in
Chubb Life being deemed to be a controlling entity of this Portfolio. Chubb
Separate Account A, a separate account established by Chubb Life, owned of
record as of March 31, 1995: 99.99% of the World Growth Stock Portfolio; 89.24%
of the Money Market Portfolio; 85.93% of the Gold Stock Portfolio; 82.72% of the
Bond Portfolio; 99.98% of the Domestic Growth Stock Portfolio; 81.98% of the
Growth and Income Portfolio; 99.41% of the Capital Growth Portfolio; and 68.08%
of the Balanced Portfolio. The shares held by Chubb Life or its affiliated
insurance companies, including shares for which no voting instructions have been
received, shares held in a separate account representing charges imposed by
Chubb Life or its affiliates and shares held by Chubb Life that are not
otherwise attributable to Policies, will be voted by Chubb Life or its
affiliated insurance companies in proportion to instructions received from the
owners of Policies. Chubb Life and its affiliated insurance companies reserve
the right to vote any or all such shares at their discretion to the extent
consistent with then current interpretations of the 1940 Act and rules
thereunder.
The officers and directors of the Fund cannot directly own shares of the Fund
without purchasing a Policy. As a result, the amount of shares owned by the
directors and officers of the Fund as a group is less than 1% of each Portfolio.
OFFERING AND REDEMPTION OF SHARES
The Fund offers shares of each Portfolio only for purchase by the corresponding
division of separate accounts established by Chubb Life or its affiliated
insurance companies. It thus will serve as an investment medium for the Policies
offered by Chubb Life and its affiliated insurance companies. The offering is
without a sales charge and is made at each Portfolio's net asset value per
share, which is determined in the manner set forth below under "DETERMINATION OF
NET ASSET VALUE." In the future, the shares of the Fund may be offered to
additional separate accounts of Chubb Life, its successor or assigns, or of its
affiliated insurance companies.
Chubb Securities is the principal underwriter and distributor of the Fund's
shares. It is also the principal underwriter and distributor of the Policies.
Under the terms of the Fund Distribution Agreement entered into by Chubb
Securities and the Fund, Chubb Securities is not obligated to sell any specific
number of shares of the Fund. Chubb Securities also pays any distribution
expenses and costs (that is, those arising from any activity
C-34
<PAGE>
which is primarily intended to result in the sale of shares issued by the Fund)
including expenses and costs attributable to the Fund which are related to the
printing and distributing of prospectuses and periodic reports to new or
prospective owners of Policies. Such expenses are reimbursed by Chubb Life or
its affiliated insurance companies, their successors or assigns, pursuant to the
terms of separate agreements with Chubb Securities relating to the sale of
Policies.
The Fund redeems all full and fractional shares of the Fund at the net asset
value per share applicable to each Portfolio. See "DETERMINATION OF NET ASSET
VALUE" below.
Redemptions are normally made in cash, but the Fund has authority, at its
discretion, to make full or partial payment by assignment to the separate
account of portfolio securities at their value used in determining the
redemption price. The Fund, nevertheless, pursuant to Rule 18f-1 under the 1940
Act, has filed a notification of election on Form N-18f-1, by which the Fund has
committed itself to pay to the separate account in cash, all such separate
account's requests for redemption made during any 90-day period, up to the
lesser of $250,000 or 1% of the applicable Portfolio's net asset value at the
beginning of such period. The securities, if any, to be paid in-kind to the
separate account will be selected in such manner as the Board of Directors deems
fair and equitable. In such cases, the separate account would incur brokerage
costs should it wish to liquidate these portfolio securities.
The right to redeem shares or to receive payment with respect to any redemption
of shares of any Portfolio may only be suspended (1) for any period during which
trading on the New York Stock Exchange is restricted or such Exchange is closed,
other than customary weekend and holiday closings, (2) for any period during
which an emergency exists as a result of which disposal of securities or
determination of the net asset value of that Portfolio is not reasonably
practicable, or (3) for such other periods as the Securities and Exchange
Commission may by order permit for the protection of stockholders of the
Portfolio.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of each Portfolio of the Fund is determined
immediately after the declaration by the Fund of dividends, if any, as of the
close of regular trading on the New York Stock Exchange (presently 4:00 P.M. New
York Time), on each day during which the New York Stock Exchange is open for
trading except on days where both (i) the degree of trading in the Portfolio's
securities would not materially affect the net asset value of the Portfolio's
shares and (ii) no shares of the Portfolio were tendered for redemption or no
purchase order was received. The New York Stock Exchange is open from Monday
through Friday except on the following national holidays: New Years Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. In the event that any of the above holidays
falls on a Sunday, it is regularly observed on the following Monday. The net
asset value per share of each Portfolio is computed by dividing the sum of the
value of the securities held by that Portfolio, plus any cash or other assets
and minus all liabilities, by the total number of outstanding shares of that
Portfolio at such time. Any expenses borne by the Fund, including the investment
management fee payable to Chubb Investment Advisory, are accrued daily except
for extraordinary or non-recurring expenses. See "INVESTMENT ADVISORY AND OTHER
SERVICES-Payment of Expenses" above.
Portfolio securities which are traded on national stock exchanges are valued at
the last sale price as of the close of business of the New York Stock Exchange
on the day the securities are being valued, or, lacking any sales, at the mean
between the closing bid and asked prices.
C-35
<PAGE>
Securities traded in the over-the-counter market are valued at the closing sales
price as reported on a readily available market quotation system, or, if no sale
took place, the mean between the bid and asked prices. Securities and assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Directors of the Fund.
Quotations of foreign securities in foreign currencies are converted to U.S.
dollar equivalents using appropriately translated foreign market closing prices.
U.S. Treasury securities and other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities with remaining maturities of 60
days or more, are valued at representative quoted prices from bond pricing
services.
Long-term publicly traded corporate bonds are valued at prices obtained from a
bond pricing service when such prices are available or, when appropriate, from
broker-dealers who make a market in that security.
Debt instruments with a remaining maturity of 60 days or less are valued on an
amortized cost basis. Under this method of valuation, the security is initially
valued at cost on the date of purchase or, in the case of securities purchased
with more than 60 days remaining to maturity, the market value on the 61st day
prior to maturity. Thereafter, a constant proportionate amortization in value is
assumed until maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the security. The amortized
cost value of the security may be either more or less than the market value at
any given time. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security will be
valued by market quotations, if available, otherwise as determined in good faith
by the Board of Directors.
TAXES
In order for each Portfolio of the Fund to qualify for Federal income tax
treatment as a regulated investment company, two of the tests they must meet are
(i) that at least 90% of its gross income for a taxable year must be derived
from qualifying income, i.e., dividends, interest, income derived from loans of
securities, and gains from the sale of securities and (ii) gains realized on the
sale or other disposition of securities held for less than three months must be
limited to less than 30% of each Portfolio's annual gross income. It is the
Fund's policy to comply with the provisions of the Internal Revenue Code of 1986
regarding distribution of investment income and capital gains so that each
Portfolio will not be subject to Federal income tax on amounts distributed and
undistributed or an excise tax on certain undistributed income or capital gains.
For these purposes, if a regulated investment company declares a dividend in
December to stockholders of record in December and pays such dividends before
the end of January they will be treated as paid in the preceding calendar year
and to have been received by such stockholder in December.
PERFORMANCE AND YIELD INFORMATION
Money Market Portfolio
For the seven days ended December 31, 1994, the yield of the Money Market
Portfolio expressed as a simple annualized yield was 4.50%; the yield of the
Money Market Portfolio expressed as a compounded effective yield was 4.60%.
C-36
<PAGE>
The Money Market Portfolio's yield is its investment income, less expenses,
expressed as a percentage of assets on an annualized basis for a seven-day
period. The yield is expressed as a simple annualized yield and as a compounded
effective yield. The yield does not reflect the fees and charges imposed on the
assets of Separate Account A.
The simple annualized yield is computed by determining the net change (exclusive
of realized gains and losses from the sale of securities and unrealized
appreciation and depreciation) in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the seven-day period,
dividing the net change in account value by the value of the account at the
beginning of the period, and annualizing the resulting quotient (base period
return) on a 365-day basis. The net change in account value reflects the value
of additional shares purchased with dividends from the original shares in the
account during the seven-day period, dividends declared on such additional
shares during the period, and expenses accrued during the period.
The compounded effective yield is computed by determining the unannualized base
period return, adding one to the base period return, raising the sum to a power
equal to 365 divided by seven, and subtracting one from the result.
Non-Money Market Portfolios
The yield for the 30-day period ended December 31, 1994 for the Bond Portfolio
was 6.66%.
This yield figure represents the net annualized yield based on a specified 30-
day (or one month) period assuming a reinvestment semiannual compounding of
income. Yield is calculated by dividing the average daily net investment income
per share earned during the specified period by the maximum offering price,
which is net asset value per share on the last day of the period, and
annualizing the result according to the following formula:
Yield = 2((A-B+1)/6/ -1)
---
CD
Where A equals dividends and interest earned during the period, B equals
expenses accrued for the period (net of reimbursements), C equals the average
daily number of shares outstanding during the period that were entitled to
receive dividends, and D equals the maximum offering price per share on the last
day of the period.
The average annual total return quotations for the World Growth Stock Portfolio,
the Money Market Portfolio, the Gold Stock Portfolio, the Bond Portfolio, the
Domestic Growth Stock Portfolio, the Growth and Income Portfolio, the Capital
Growth Portfolio and the Balanced Portfolio for the year ended December 31, 1994
are (3.05%), 3.28%, (13.77%), (2.28%), 7.66%, (4.24%), (3.26%) and (1.33%),
respectively. The average annual total return quotations for these Portfolios,
other than the Growth and Income Portfolio, the Capital Growth Portfolio and the
Balanced Portfolio, for the 5 years ended December 31, 1994 are 8.60%, 4.14%,
(.38%), 7.38% and 11.36%, respectively. The average annual total return
quotations for these Portfolios since each Portfolio's inception are 11.23%,
5.05%, 5.72%, 6.70%, 11.25%, 6.77%, 17.43% and 6.04%, respectively.
The average annual total return figures represent the average annual compounded
rate of return of the stated period. Average annual total return quotations
reflect the percentage change between the beginning value of a static account in
the Portfolio and the ending value of that account measured by the then current
net asset value of that Portfolio assuming that all dividends
C-37
<PAGE>
and capital gains distributions during the stated period were reinvested in
shares of the Portfolio when paid. Total return is calculated by finding the
average annual compounded rates of return of a hypothetical investment that
would compare the initial amount to the ending redeemable value of such
investment according to the following formula:
T = (ERV/P)/1/n/ -1
where T equals average annual total return, where ERV, the ending redeemable
value, is the value, at the end of the applicable period, of a hypothetical
$1,000 payment made at the beginning of the applicable period, where P equals a
hypothetical initial payment of $1,000, and where N equals the number of years.
From time to time, in reports and sales literature: (1) each Portfolio's
performance or P/E ratio may be compared to: (i) the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index") and Dow Jones Industrial Average
so that you may compare that Portfolio's results with those of a group of
unmanaged securities widely regarded by investors as representative of the U.S.
stock market in general; (ii) other groups of mutual funds traced by: (A) Lipper
Analytical Services, a widely-used independent research firm which ranks mutual
funds by overall performance, investment objectives, and asset size; (B) Forbes
Magazine's Annual Mutual Funds Survey and Mutual Fund Honor Roll; or (C) other
financial or business publications, such as the Wall Street Journal, Business
Week, Money Magazine, and Barron's, which provide similar information; (iii)
indices of stocks comparable to those in which the particular Portfolio invests;
(2) the Consumer Price Index (measure of inflation) may be used to assess the
real rate of return from an investment in each Portfolio; (3) other U.S.
government statistics such as GNP, and net import and export figures derived
from governmental publications, e.g., The Survey of Current Business, may be
used to illustrate investment attributes of each Portfolio or the general
economic, business, investment, or financial environment in which each Portfolio
operates; and (4) the effect of tax-deferred compounding on the particular
Portfolio's investment returns, or on returns in general, may be illustrated by
graphs, charts, etc. where such graphs or charts would compare, at various
points in time, the return from an investment in the particular Portfolio (or
returns in general) on a tax-deferred basis (assuming reinvestment of capital
gains and dividends and assuming one or more tax rates) with the return on a
taxable basis. Each Portfolio's performance may also be compared to the
performance of other mutual funds by Morningstar, Inc. which ranks mutual funds
on the basis of historical risk and total return. Morningstar rankings are
calculated using the mutual fund's performance relative to three-month Treasury
bill monthly returns. Morningstar's rankings range from five stars (highest) to
one star (lowest) and represent Morningstar's assessment of the historical risk
level and total return of a mutual fund as a weighted average for 3, 5, and 10-
year periods. In each category, Morningstar limits its five star rankings to 10%
of the funds it follows and its four star rankings to 22.5% of the funds it
follows. Rankings are not absolute or necessarily predictive of future
performance.
The performance of the Portfolios may be compared, for example, to the record of
the S&P 500 Index, NASDAQ Composite Index, and the Europe, Australia, Far
Eastern ("EAFE") Index. The S&P 500 Index is a well known measure of the price
performance of 500 leading larger domestic stocks which represent approximately
80% of the market capitalization of the U.S. equity market. The NASDAQ Composite
Index is comprised of all stocks on NASDAQ's National Market Systems, as well as
other NASDAQ domestic equity securities. The NASDAQ Composite Index has
typically included smaller, less mature companies representing 10% to 15% of the
capitalization of the entire domestic equity market. The EAFE Index is comprised
of more than 900 companies in Europe, Australia and the Far East. All of these
indices are unmanaged and capitalization weighted. In general, the securities
comprising the NASDAQ Composite Index are more growth oriented and have a
somewhat higher beta and P/E ratio than those in the S&P
C-38
<PAGE>
500 Index.
The total returns of all of these indices will show the changes in prices for
the stocks in each index. However, only the performance data for the S&P 500
Index assumes reinvestment of all capital gains distributions and dividends paid
by the stocks in each data base. Tax consequences will not be included in such
illustration, nor will brokerage or other fees or expenses of investing be
reflected in the NASDAQ Composite, S&P 500, EAFE Index.
ADDITIONAL INFORMATION
Reports
Annual and semi-annual reports containing financial statements of the Fund, as
well as voting instruction soliciting material for the Fund, will be sent to
Policyowners.
Name and Service Mark
The Chubb Corporation has granted the Fund the right to use the "Chubb" name and
service mark and has reserved the right to withdraw its consent to the use of
such name and mark by the Fund at any time and to grant the use of such name and
mark to any other users.
C-39
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Filed as part of the Prospectus:
Financial Highlights
Filed as part of the Statement of Additional Information:
Audited Financial Statements
Report of Independent Auditors.
Schedule of Portfolio Investements at December 31, 1994.
Statement of Assets and Liabilities at December 31, 1994.
Statement of Operations for the year ended December 31,
1994.
Statements of Changes in Net Assets for the years ended
December 31, 1994 and December 31, 1993.
Notes to Financial Statements.
Financial Highlights for each of the periods indicated
therein.
Unaudited Financial Statements for Emerging Growth
Portfolio at September 30, 1995.
(b) Exhibits
1. a. Amended and Restated Articles of Incorporation,
incorporated by reference to earlier filing on April 11,
1990, SEC File No. 2-94479, Exhibit 1 of Form N-1A
Registration Statement.
b. Articles Supplementary to the Articles of
Incorporation, incorporated by reference to earlier filing
on February 28, 1992, SEC File No. 2-94479, Exhibit 1(b)
of N-1A Registration Statement.
c. Articles Supplementary to the Articles of
Incorporation, incorporated by reference to earlier filing
on February 28, 1992, SEC File No. 2-94479, Exhibit 1(c)
of N-1A Registration Statement.
d. Articles Supplementary to the Articles of
Incorporation incorporated by reference to earlier filing
on April 17, 1995, SEC File No. 2-94479, Exhibit 1(d) of
N-1A Registration Statement.
2. By-Laws, incorporated by reference to earlier
filing on February 21, 1991, SEC File No. 2-94479, Exhibit
2 of Form N-1A Registration Statement.
3. Not applicable.
4. a. Specimen of Certificate of Stock of the World
Growth Stock Portfolio, incorporated by reference to earlier filing on
April 11, 1990, SEC File No. 2-94479, Exhibit 4(a) of N1-A Registration
Statement.
b. Specimen of Certificate of Stock of the Money Market Portfolio,
incorporated
C-40
<PAGE>
by reference to earlier filing on April 11, 1990, SEC File No. 2-
94479, Exhibit 4(b) of N-1A Registration Statement.
c. Specimen of Certificate of Stock of the Gold Stock Portfolio,
incorporated by reference to earlier filing on April 11, 1990, SEC
File No. 2-94479, Exhibit 4(c) of N-1A Registration Statement.
d. Specimen of Certificate of Stock of the Bond Portfolio,
incorporated by reference to earlier filing on April 11, 1990, SEC
File No. 2-94479, Exhibit 4(d) of N-1A Registration Statement.
e. Specimen of Certificate of Stock of the Domestic Growth Stock
Portfolio, incorporated by reference to earlier filing on April 11,
1990, SEC File No. 2-94479, Exhibit 4(e) of N-1A Registration
Statement.
f. Specimen of Certificate of Stock of the Growth and Income
Portfolio, incorporated by reference to earlier filing on February 28,
1992, SEC File No. 2-94479, Exhibit 4(f) of N-1A Registration
Statement.
g. Specimen of Certificate of Stock of the Capital Growth Portfolio,
incorporated by reference to earlier filing on February 28, 1992, SEC
File No. 2-94479, Exhibit 4(g) of N-1A Registration Statement.
C-41
<PAGE>
h. Specimen of Certificate of Stock of the Balanced Portfolio,
incorporated by reference to earlier filing on February 28, 1992, SEC
File No. 2-94479, Exhibit 4(h) of N-1A Registration Statement.
i. Specimen of Certificate of Stock of the Emerging Growth Portfolio,
incorporated by reference to earlier filing on April 17, 1995, SEC
File No.2-94479, Exhibit 4(i) of N-1A Registration Statement.
5. a. Amended and Restated Investment Management Agreement between Chubb
America Fund, Inc. and Chubb Investment Advisory Corporation,
incorporated by reference to earlier filing on April 11, 1990, SEC
File No. 2-94479, Exhibit 5(a) of N-1A Registration Statement.
b. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Templeton Investment
Advisers Limited, incorporated by reference to earlier filing on April
11, 1990, SEC File No. 2-94479, Exhibit 5(b) of N-1A Registration
Statement.
c. Amendment to Sub-Investment Management Agreement among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and
Templeton Investment Advisers Limited, incorporated by reference to
earlier filing on April 11, 1990, SEC File No. 2-94479, Exhibit 5(c)
of N-1A Registration Statement.
d. Second Amendment to Sub-Investment Management Agreement among
Chubb America Fund, Inc., Chubb Investment Advisory Corporation and
Templeton Investment Advisors Limited, incorporated by reference to
earlier filing on April 11, 1990, SEC File No. 2-94479, Exhibit 5(d)
of N-1A Registration Statement.
e. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Templeton, Galbraith &
Hansberger Ltd., incorporated by reference to earlier filing on April
14, 1993, SEC File No. 2-94479, Exhibit 5(e) of N-1A Registration
Statement.
f. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc., incorporated by reference to earlier filing on April 11, 1990,
SEC File No. 2-94479, Exhibit 5(e) of N-1A Registration Statement.
g. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Van Eck Associates
Corporation, incorporated by reference to earlier filing on April 11,
1990, SEC File No. 2-94479, Exhibit 5(f) of N-1A Registration
Statement.
h. Sub-Investment Management Agreement among Chubb America Fund, Inc.,
Chubb Investment Advisory Corporation and Pioneering Management
Corporation, incorporated by reference to earlier filing on April 11,
1990, SEC File No. 2-94479, Exhibit 5(g) of N-1A Registration
Statement.
i. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc., incorporated by reference to earlier filing on February 28,
1992, SEC File No. 2-94479, Exhibit 5(h) of N-1A Registration
Statement.
C-42
<PAGE>
j. Investment Management Agreement between Chubb America Fund, Inc.,
and Chubb Investment Advisory Corporation for the Growth and Income
Portfolio, incorporated by reference to earlier filing on February 28,
1992, SEC File No. 2-94479, Exhibit 5(i) of N-1A Registration
Statement.
k. Investment Management Agreement between Chubb America Fund, Inc.,
and Chubb Investment Advisory Corporation for the Capital Growth
Portfolio, incorporated by reference to earlier filing on February 28,
1992, SEC File No. 2-94479, Exhibit 5(j) of N-1A Registration
Statement.
l. Investment Management Agreement between Chubb America Fund, Inc.,
and Chubb Investment Advisory Corporation for the Balanced Portfolio,
incorporated by reference to earlier filing on February 28, 1992, SEC
File No. 2-94479, Exhibit 5(k) of N-1A Registration Statement.
m. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc., incorporated by reference to earlier filing on April 14, 1993,
SEC File No. 2-94479, Exhibit 5(m) of N-1A Registration Statement.
C-43
<PAGE>
n. Sub-Investment Management Agreement among ChubbAmerica Fund, Inc.,
Chubb Investment Advisory Corporation and Janus Capital Corporation,
incorporated by reference to earlier filing on April 14, 1993, SEC
File No. 2-94479, Exhibit 5(n) of N-1A Registration Statement.
o. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Phoenix Investment
Counsel, Inc., incorporated by reference to earlier filing on April
14, 1993, SEC File No. 2-94479, Exhibit 5(o) N-1A Registration
Statement.
p. Investment Management Agreement between Chubb America Fund, Inc.,
and Chubb Investment Advisory Corporation with respect to the Emerging
Growth Portfolio.
q. Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation, and Massachusetts
Financial Services Company with respect to the Emerging Growth
Portfolio.
6. a. Amendment to Fund Distribution Agreement Between Chubb America
Fund, Inc. and Chubb Securities Corporation, incorporated by reference
to earlier filing on April 11, 1990, SEC File No. 2-94479, Exhibit
6(a) of N-1A Registration Statement.
b. Fund Distribution Agreement between Chubb America Fund, Inc. and
Chubb Securities Corporation, incorporated by reference to earlier
filing on April 11, 1990, SEC File No. 2-94479, Exhibit 6(b) of N-1A
Registration Statement.
C-44
<PAGE>
7. Not applicable.
8. a. Custodian Agreement between Chubb America Fund, Inc. and Citibank,
N.A., incorporated by reference to earlier filing on February 21,
1991, SEC File No. 2-94479, Exhibit 8 of N-1A Registration Statement.
b. Amendment to the Custodial Services Agreement between Chubb
America Fund, Inc. and Citibank, N.A., incorporated by reference to
earlier filing on April 14, 1993, SEC File No. 2-94479, Exhibit 8(b)
of N-1A Registration Statement.
c. Amendment No.2 to Custodial Services Agreement between Chubb
America Fund, Inc. and Citibank, N.A., incorporated by reference to
earlier filing on April 14, 1993, SEC File No. 2-94479, Exhibit 8(c)
of N-1A Registration Statement.
9. Not applicable.
10. a. Opinion and Consent of Counsel as to the legality the securities
being registered, incorporated by reference to earlier filing on April
11, 1990, SEC File No. 2-94479, Exhibit 10(a) of N-1A Registration
Statement.
b. Opinion and Consent of Counsel as to legality of the securities
being registered, incorporated by reference to earlier filing April
11, 1990, SEC File No. 2-94479, Exhibit 10(b) of N-1A Registration
Statement.
c. Opinion and Consent of Counsel as to legality of the securities
being registered, incorporated by reference to earlier filing on
February 28, 1992, SEC File No. 2-94479, Exhibit 10(c) of N-1A
Registration Statement.
d. Opinion and Consent of Counsel as to the legality of securities
being registered, incorporated by reference to earlier filing on April
17, 1995, SEC File No. 2-94479, Exhibit 10(d) of N-1A Registration
Statement.
11. Consent of Ernst & Young LLP.
12. Not applicable.
C-45
<PAGE>
13. a. Stock Subscription Agreement between Chubb America Fund, Inc. and
The Volunteer State Life Insurance Company, incorporated by reference
to earlier filing on April 11, 1990, SEC File No. 2-94479, Exhibit
13(a) of N-1A Registration Statement.
b. Stock Subscription Agreement between Chubb America Fund, Inc. and
The Volunteer State Life Insurance Company, incorporated by reference
to earlier filing on April 11, 1990, SEC File No. 2-94479, Exhibit
13(b) of N-1A Registration Statement.
c. Stock Subscription Agreement between Chubb America Fund, Inc. and
Chubb Life Insurance Company of America, incorporated by reference to
earlier filing on February 28, 1992, SEC File No. 2-94479, Exhibit
13(c) of N-1A Registration Statement.
d. Stock Subscription Agreement between Chubb America Fund, Inc., and
Chubb Life Insurance Company of America.
14. Not applicable.
15. Not applicable.
16. Schedule of Computation of Performance Quotations, incorporated by
reference to earlier filing on April 17, 1995, SEC File No. 2-94479,
Exhibit 16 of N-1A Registration Statement.
17. Diagram of Subsidiaries of The Chubb Corporation incorporated by
reference to earlier filing on April 17, 1995, SEC File No. 2-94479,
Exhibit 16 of N-1A Registration Statement.
18. Price Make-up Sheet incorporated by reference to earlier filing on
April 17, 1995, SEC File No. 2-94479, Exhibit 18 of N-1A Registration
Statement.
19. Agreement Regarding Use of Name and Service Mark between The Chubb
Corporation and Chubb America Fund, Inc., incorporated by reference to
earlier filing on April 11, 1990, SEC File No. 2-94479, Exhibit 19 of N-1A
Registration Statement.
C-46
<PAGE>
20. Consent of Freedman, Levy, Kroll & Simonds, incorporated by reference
to earlier filing on April 11, 1990, SEC File No. 2-94479, Exhibit 20 of
N-1A Registration Statement.
Item 25. Persons Controlled by or under Common Control with Registrant
Initially, shares of the Registrant were offered and sold only to The Volunteer
State Life Insurance Company ("Volunteer"), a stock life insurance company
organized under the laws of Tennessee. Effective July 1, 1991, Volunteer
changed its name to Chubb Life Insurance Company of America ("Chubb Life") and
re-domesticated to New Hampshire. The purchasers of variable life insurance
contracts issued in connection with separate accounts established by Chubb Life
or its affiliated insurance companies will have the right to instruct Chubb Life
or its affiliated insurance companies with respect to the voting of the
Registrant's shares held by such separate accounts on behalf of policyowners.
The shares held by Chubb Life or its affiliated insurance companies, including
shares for which no voting instructions have been received, shares held in the
separate accounts representing charges imposed by Chubb Life or its affiliated
insurance companies against the separate account and shares held by Chubb life
or its affiliated insurance companies that are not otherwise attributable to
Policies, will also be voted by Chubb Life or its affiliated insurance companies
in proportion to instructions received from owners of Policies. Chubb Life or
its affiliated insurance companies reserve the right to vote any or all such
shares at their discretion to the extent consistent with then current
interpretations of the Investment Company Act of 1940 and rules thereunder.
Subject to such voting instruction rights, Chubb Life or its affiliated
insurance companies will directly control the Registrant.
Subsequently, shares of the Registrant may be offered and sold to other separate
accounts formed by Chubb Life, its successors or assigns, and by other insurance
companies which, along with Chubb Life, are subsidiaries of The Chubb
Corporation, a New Jersey corporation, or subsidiaries of such subsidiaries. A
diagram of the subsidiaries of The Chubb Corporation has been filed herein as
Exhibit 17.
C-47
<PAGE>
Item 26. Number of Holders of Securities
As of the effective date of this Registration Statement:
<TABLE>
<CAPTION>
(2)
(1) Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
World Growth Stock Portfolio Capital Stock; $.01 par value.... Two
Money Market Portfolio Capital Stock; $.01 par value.......... Two
Gold Stock Portfolio Capital Stock; $.01 par value............ Two
Bond Portfolio Capital Stock; $.01 par value.................. Two
Domestic Growth Stock Portfolio Capital Stock; $.01 par value. Two
Growth and Income Portfolio Capital Stock; $.01 par value..... Two
Capital Growth Portfolio Capital Stock; $.01 par value........ Two
Balanced Portfolio Capital Stock; $.01 par value.............. Two
Emerging Growth Portfolio Capital Stock; $.01 par value....... One
</TABLE>
Chubb Life has purchased 100,000 shares of each class of capital stock of the
Registrant, except for the Balanced Portfolio of which it has purchased 500,000
shares and the Emerging Growth Portfolio in which it will purchase 300,000
shares. Chubb Separate Account A has purchased shares of each Portfolio in the
amounts allocated to each Portfolio by purchasers of Policies.
Item 27. Indemnification
Reference is made to Article VIII, Section 10 of the Registrant's Amended and
Restated Articles of Incorporation filed on April 11, 1990 as Exhibit 1 to the
Form N-1A Registration Statement and to Article V of the Registrant's By-Laws
filed herein as Exhibit 2 to this Registration Statement. The Amended and
Restated Articles of Incorporation provide that neither an officer nor director
of the Registrant will be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as an officer or director, except
to the extent such limitation of liability is not otherwise permitted by law.
The By-Laws provide that the Registrant will indemnify its directors and
officers to the extent permitted or required by Maryland law. A resolution of
the Board of Directors specifically approving payment or advancement of expenses
to an officer is required by the By-Laws. Indemnification may not be made if
the director or officer has incurred liability by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of duties in the conduct of
his/her office ("Disabling Conduct"). The means of determining whether
indemnification shall be made are (1) a final decision by a court or other body
before whom the proceeding is brought that the director or officer was not
liable by reason of Disabling Conduct, or (2) in the absence of such a decision,
a reasonable determination, based on a review of the facts, that the director or
officer was not
C-48
<PAGE>
liable by reason of Disabling Conduct. Such latter determination may be made
either by (a) vote of a majority of directors who are neither interested persons
(as defined in the Investment Company Act of 1940) nor parties to the proceeding
or (b) independent legal counsel in a written opinion. The advancement of legal
expenses may not occur unless the director or officer agrees to repay the
advance (if it is determined that the director or officer is not entitled to the
indemnification) and one of three other conditions is satisfied: (1) the
director or officer provides security for his/her agreement to repay, (2) the
Registrant is insured against loss by reason of lawful advances, or (3) the
directors who are not interested persons and are not parties to the proceedings,
or independent counsel in a written opinion, determine that there is reason to
believe that the director or officer will be found entitled to indemnification.
The directors and officers are currently covered for liabilities incurred in
their capacities as such directors and officers under the terms of a joint
liability insurance policy. This policy also covers the directors and officers
of Chubb Investment Advisory, Chubb Asset, and Chubb Investment Funds, Inc. The
policy also insures the Registrant, Chubb Investment Advisory, Chubb Asset and
Chubb Investment Funds, Inc. for errors and omissions liabilities.
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Chubb Investment Advisory was formed in 1984 and had not been previously
engaged in any other business. The other businesses, professions, vocations and
employment of a substantial nature of its directors and officers during the past
two years are as follows:
C-49
<PAGE>
Other Business,
Name of Director Positions with Chubb Profession, Vocation or
or Officer of Chubb Investment Employment During
Investment Advisory Advisory Past Two Years
- -------------------- -------- --------------
Ronald Angarella President and Director Senior Vice President,
Chubb Life; President and
Director, Chubb
Securities, Hampshire
Funding, Inc. and Chubb
America Fund, Inc.;
Senior Vice President and
Director, Chubb
Investment Funds, Inc.
Michael O'Reilly Senior Vice President Senior Vice President and
and Director Chief Investment Officer,
The Chubb Corporation;
Director, President and
Chief Operating Officer,
Chubb Asset Managers,
Inc.; President and
Director, Chubb
Investment Funds, Inc.;
Senior Vice President,
Chubb & Son Inc., Federal
Insurance Company
Ronald H. Emery Senior Vice President Senior Vice President and
and Director Controller, Chubb Life
Charles C. Cornelio Secretary Senior Vice President and
Chief Administrative
Officer, Chubb Life Vice
President, Counsel and
Assistant Secretary,
Chubb Investment Funds,
Inc. and Chubb America
Fund, Inc.; Vice
President, General
Counsel and Secretary,
Chubb Securities and
Hampshire Funding, Inc.
C-50
<PAGE>
Name of Director Positions with Chubb Other Business,
or Officer of Chubb Investment Profession, Vocation or
Investment Advisory Advisory Employment During
- ------------------- -------- Past Two Years
--------------
John A. Weston Treasurer Assistant Vice President,
Mutual Fund Accounting
Officer, Chubb Life;
Treasurer, Chubb
Securities Corporation,
Chubb Investment Funds
Inc. and Chubb Series
Trust and Hampshire
Funding, Inc.; previously
Financial Reporting
Officer, Chubb Life
Richard V. Werner Director Senior Vice President,
Treasurer and Chief
Financial Officer, Chubb
Life Insurance Company of
America, Colonial Life
Insurance Company, and
Chubb Sovereign Life
Insurance Company; Vice
President, The Chubb
Corporation; Senior Vice
President and Director,
Chubb America Fund, Inc.;
President, ChubbHealth
Holdings, Inc.; Chairman
of the Board,
ChubbHealth, Inc.
Vice President, The Chubb
Corporation, Federal
Insurance Company and
Chubb & Son Inc.; Senior
Vice President, Chubb
Asset Managers, Inc.
Marjorie Raines Director Assistant Vice President
and Assistant Secretary,
Chubb Securities and
Hampshire Funding, Inc,;
Assistant Vice President,
Chubb Life
Vice President of Chubb
Securities and Hampshire
Funding, Inc.
Mary Toumpas Assistant Vice Assistant Vice President
President and and Associate Counsel,
Compliance Officer Chubb Life; Secretary,
Chubb America Fund, Inc.
and Chubb Investment
Funds, Inc.
C-51
<PAGE>
Name of Director Positions with Chubb Other Business,
or Officer of Chubb Investment Profession, Vocation or
Investment Advisory Advisory Employment During
- ------------------- -------- Past Two Years
--------------
Carol R. Hardiman Assistant Vice Vice President of Chubb
President Securities and Hampshire
Funding Inc.
Shari J. Lease Assistant Secretary Assistant Vice President
and Counsel, Chubb Life;
Secretary Chubb
Investment Funds, Inc.
and Chubb Series Trust
The directors, officers, employees and partners of the Sub-Investment Managers
have rendered investment advice and management during the past two years and
have not engaged in any other business of a substantial nature.
Item 29. Principal Underwriters
The names, principal business addresses, positions and offices with Chubb
Securities Corporation, and positions and offices with the Fund, of each
director or officer of Chubb Securities Corporation who is a director or officer
of the Fund are:
Positions and
Officers
with Chubb Positions and
Name and Principal ---------- Officers
Business Address Securities with the Fund
---------------- ---------- -------------
Ronald Angarella President and Director President and Director
One Granite Place
Concord,
New Hampshire 03301
Charles C. Cornelio Vice President, General Vice President, Counsel
One Granite Place Counsel and Secretary and Assistant Secretary
Concord,
New Hampshire 03301
John A. Weston Treasurer Treasurer
One Granite Place
Concord,
New Hampshire 03301
Item 30. Location of Accounts and Records
The following entities prepare, maintain and preserve the records required by
Section 31(a) of the 1940 Act for the Registrant. These services are provided
to the Registrant through written agreements between the parties to the effect
that such services will be provided to the Registrant
C-52
<PAGE>
for such periods prescribed by the Rules and Regulations of the Securities and
Exchange Commission under the 1940 Act and such records will be surrendered
promptly on request:
Citibank, N.A., 111 Wall Street, New York, New York 10043; Chubb Asset
Managers, Inc., 15 Mountain View Road, Warren, New Jersey 07061; Van Eck
Associates Corporation, 99 Park Avenue, New York, New York 10016; Chubb
Investment Advisory, One Granite Place, Concord, New Hampshire 03301; Pioneering
Management Corporation, 60 State Street, Boston, Massachusetts; Templeton,
Galbraith & Hansberger Ltd, Lyford Cay, Nassau, Bahamas; Janus Capital
Corporation, 100 Fillmore Street, Suite 300, Denver, Colorado 80206; Phoenix
Investment Counsel, Inc., One American Row, Hartford Connecticut 06115;
Massachusetts Financial Services Company, 500 Boylston Street, Boston,
Massachusetts 02116; and Chubb Securities Corporation, One Granite Place,
Concord, New Hampshire 03301.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
C-53
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amended Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Concord, and State of New Hampshire, on the 9th
day of November 1995.
CHUBB AMERICA FUND, INC.
By: /s/ RONALD ANGARELLA
---------------------
Ronald Angarella
President
Each of the undersigned Officers and Directors of Chubb America Fund, Inc. (the
"Fund") whose signatures appear below hereby makes, constitutes and appoints
Ronald Angarella and Charles C. Cornelio, and each of them acting individually,
his/her true and lawful attorneys with power to act without any other and with
full power of substitution, to execute, deliver and file in each of the
undersigned Officers and Directors' capacity or capacities as shown below, this
Registration Statement and any and all documents in support of this Registration
Statement or supplement thereto, and any and all amendments, including any and
all post-effective amendments to the foregoing; and said Officers and Directors
hereby grant to said attorneys, and to any one or more of them, full power and
authority to do and perform each and every act and thing whatsoever as said
attorney or attorneys may deem necessary or advisable to carry out fully the
intent of this Power of Attorney to the same extent and with the same effect as
each of said Officers and Directors might or could do personally in his/her
capacity or capacities as aforesaid, and each of said Officers and Directors
ratifies, confirms and approves all acts and things which said attorney or
attorneys might do or cause to be done by virtue of this Power of Attorney and
his/her signature as the same as may be signed by said attorney or attorneys, or
any one or more of them to this Registration Statement and any and all
amendments thereto, including any and all post-effective amendments to the
foregoing.
C-54
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amended Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Concord, and State of New Hampshire, on the 9th
day of November, 1995.
CHUBB AMERICA FUND, INC.
By: Ronald Angarella
--------------------------
President
Each of the undersigned Officers and Directors of Chubb America Fund, Inc. (the
"Fund") whose signatures appear below hereby makes, constitutes and appoints
Ronald Angarella, Shari Lease and Charles C. Cornelio, and each of them acting
individually, his/her true and lawful attorneys with power to act without any
other and with full power of substitution, to execute, deliver and file in each
of the undersigned Officers and Directors' capacity or capacities as shown
below, this Registration Statement and any and all documents in support of this
Registration Statement or supplement thereto, and any and all amendments,
including any and all post-effective amendments to the foregoing; and said
Officers and Directors hereby grant to said attorneys, and to any one or more of
them, full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of this Power of Attorney to the same extent and with
the same effect as each of said Officers and Directors might or could do
personally in his/her capacity or capacities as aforesaid, and each of said
Officers and Directors ratifies, confirms and approves all acts and things which
said attorney or attorneys might do or cause to be done by virtue of this Power
of Attorney and his/her signature as the same as may be signed by said attorney
or attorneys, or any one or more of them to this Registration Statement and any
and all amendments thereto, including any and all post-effective amendments to
the foregoing.
C-55
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amended
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President,
Principal
Executive
Officer, and
RONALD ANGARELLA Director November 9, 1995
RICHARD V. WERNER Director November 9, 1995
Treasurer, Principal
Financial Officer, and
Principal Accounting
JOHN A. WESTON Officer November 9, 1995
MICHAEL D. COUGHLIN Director November 9, 1995
ELIZABETH S. HAGER Director November 9, 1995
JAMES J. WEISBART Director November 9, 1995
C-56
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
- ------ ----------- -------------
<C> <S> <C>
5. p. Investment Management Agreement between Chubb America Fund,
Inc., and Chubb Investment Advisory Corporation with
respect to the Emerging Growth Portfolio.
q. Sub-Investment Management Agreement among Chubb America
Fund, Inc., Chubb Investment Advisory Corporation and
Massachusetts Financial Services Company with respect to
the Emerging Growth Portfolio.
11. Consent of Ernst & Young LLP.
13 d. Stock Subscription Agreement between Chubb America Fund,
Inc., and Chubb Life Insurance Company of America.
27 Financial Data Schedule, Emerging Growth Portfolio
</TABLE>
<PAGE>
EXHIBIT 5.P.
INVESTMENT MANAGEMENT AGREEMENT
BETWEEN
CHUBB AMERICA FUND, INC.
AND
CHUBB INVESTMENT ADVISORY CORPORATION
WITH RESPECT TO THE
EMERGING GROWTH PORTFOLIO
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT made this 15th day of April 1995, between CHUBB AMERICA
FUND, INC., a Maryland corporation with offices at One Granite Place, Concord,
New Hampshire (the "Fund), and CHUBB INVESTMENT ADVISORY CORPORATION, a
Tennessee corporation with offices at One Granite Place, Concord, New Hampshire
("Chubb Investment");
WITNESSETH
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company of 1940 (the "Investment Company Act");
WHEREAS, the Fund is authorized to issue shares of common stock, $.01 par
value, ("Stock") in separate classes or series with each such class or series
representing an interest in a separate portfolio of securities and other assets;
WHEREAS, the Fund is currently comprised of nine portfolios and offers or
intends to offer shares in those nine portfolios (known individually as the
Domestic Growth Stock Portfolio, the Gold Stock Portfolio, the Money Market
Portfolio, the Bond Portfolio, the World Growth Stock Portfolio, the Growth and
Income Portfolio, the Aggressive Growth Portfolio, the Balanced Portfolio and
the Emerging Growth Portfolio), and each of which pursues or will pursue its
investment objectives through separate investment policies and separate
investment management;
WHEREAS, the Board of Directors of the Fund may add or delete portfolios
from time to time, but such addition or deletion will not affect this Agreement
which relates only to the Emerging Growth Portfolio (the "Portfolio");
WHEREAS, the shares of the Fund are and will be owned by Chubb Life
Insurance Company of America ("Chubb Life"), its successors and assigns, through
its general account and/or through Separate Account A established by Chubb Life,
and may in the future be offered to additional separate accounts established by
Chubb Life, its successors or assigns, and other insurance companies with which
it is affiliated;
WHEREAS, Chubb Investment is engaged in the business of rendering
investment advisory services and its registered as an investment adviser under
the Investment Advisers Act of 1940;
WHEREAS, the Board of Directors of the Fund desires to retain Chubb
Investment to render investment management and corporate administrative services
to the Portfolio in the
<PAGE>
manner and on the terms set forth herein; and
WHEREAS, the Board of Directors of the Fund believes that Chubb
Investment's expertise and business contacts are and will be of material benefit
to the Fund in employing and supervising any sub-investment manager ("Sub-
Investment Manager"), as further described below;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and Chubb Investment hereby agree as follows:
1. Duties of Chubb Investment. Chubb Investment hereby agrees, subject to
the supervision of the Board of Directors of the Fund (a) to act as the
investment adviser to and investment manager of the Portfolio, (b) to manage the
investment and reinvestment of the assets of the Portfolio for the period and on
the terms and conditions set forth in this Investment Management Agreement, and
(c) during the term hereof, to assume the obligations and to render the
administrative, transfer agency and dividend disbursing services herein set
forth in return for the compensation provided for herein. In taking any action
hereunder, Chubb Investment shall always be subject to, and shall follow at all
times (i) any restrictions of the Fund's Articles of Incorporation and By-Laws,
as amended from time to time, (ii) the applicable provisions of the Investment
Company Act, and any rules and regulations adopted thereunder, (iii) the
statements relating to the Portfolio's investment objectives, policies and
restrictions as the same are set forth in the prospectus of the Fund and
Statement of Additional Information then currently effective under the
Securities Act of 1933 (the "Prospectus"), and (iv) any other provisions of
state and federal law applicable to it in connection with its duties hereunder,
including any applicable provisions imposed by state insurance regulations and
under the Internal Revenue Code of 1986, as amended, and regulations thereunder
(the "Code").
(a) Investment Management Services. In performing the duties stated in
Paragraph 1 above, Chubb Investment will regularly provide the Portfolio with
such investment research, advice and management as the Board of Directors or
officers of the Fund may from time to time consider necessary for the proper
management of the Portfolio. Chubb Investment will furnish continuously an
investment program and will conduct a continuous program of evaluation of assets
in the Portfolio. In this connection, Chubb Investment will provide the Board of
Directors and officers of the Fund, and any owner of Portfolio Stock with such
asset valuations daily at the close of business and with all statistical
information with respect to investments of the Portfolio and such periodic and
special reports and information as the Board of
<PAGE>
Directors or officers of the Fund may reasonably request. I n addition, Chubb
Investment will determine which securities or other investments shall be
purchased, sold or exchanged and what portion of the assets of the Portfolio
shall be held in securities or other assets in which the Portfolio may invest.
Should the Board of Directors of the Fund at any time, however, make any
definite determination as to investment policy for the Portfolio and notify, in
writing, Chubb Investment thereof, Chubb Investment shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. Chubb Investment
shall take, on behalf of the Portfolio, all actions which it deems necessary to
implement the investment objectives, policies and restrictions of the Portfolio,
determined as provided above, and in particular shall place orders for the
purchase or sale of securities and other investments for the Portfolio with
brokers or dealers selected by Chubb Investment.
(b) Administrative Services. Subject to the direction and control of the
Board of Directors of the Fund, Chubb Investment shall perform administrative
services in connection with the management of the Portfolio and will supervise
all aspects of the Portfolio's operations. In this connection, Chubb Investment
agrees to perform the following administrative functions:
(1) Determine the value of the Portfolio's assets and liabilities,
compute the daily income and net asset value of the Portfolio and compute the
yield and/or total return of the Portfolio as may be required, in accordance
with applicable law;
(2) Schedule, plan agendas for and conduct directors and shareholders
meetings;
(3) Recommend auditors, counsel, Custodian and others;
(4) Coordinate, supervise and direct any Sub-Investment Manager, the
Fund's Custodian and the Fund's Distributor, auditors and counsel on a day-to-
day basis;
(5) Prepare and distribute all required proxy statements, reports,
and other communications with shareholders;
(6) Prepare and file tax returns, reports due and other required
filings with the Securities and Exchange Commission ("SEC"), the National
Association of Securities Dealers, Inc., state blue sky authorities, and
generally monitor compliance with all federal and state securities laws and the
Code;
<PAGE>
(7) Supply clerical, secretarial, accounting and bookkeeping
services, data processing services, office supplies and stationery;
(8) Provide persons to perform such professional, administrative and
clerical functions as are necessary in connection with shareholder relations,
reports, redemption requests and account adjustments, including the receipt,
handling and coordination of shareholder complaints;
(9) Provide adequate office space and related services (including
telephone and other utility service) necessary for the Portfolio's operations;
(10) Maintain corporate records not otherwise maintained by the Fund's
Custodian, Distributor, or Sub-Investment Manager; and
(11) Assist, generally, in all aspects of the Fund's operations with
respect to the Portfolio.
Nothing herein will be construed to restrict the Fund's right, at its own
expense, to hire its own employees or to contract for services to be performed
by third parties.
(c) Sub-Contracting. Notwithstanding any other provision hereof, Chubb
Investment, with the approval of the shareholders and the Board of Directors of
the Fund, may contract with one or more Sub-Investment Managers to perform any
of the investment management services required of Chubb Investment, and may
contract with one or more Sub-Investment Managers or other parties to perform
any of the administrative services required of Chubb Investment hereunder;
provided, however, that the compensation of such other parties will be the sole
responsibility of Chubb Investment and the duties and responsibilities of such
other Sub-Investment Managers or other parties shall be as set forth in an
agreement or agreements between the Fund, Chubb Investment and such other
parties.
Chubb Investment shall exercise reasonable care in recommending,
monitoring, and supervising the performance of Sub-Investment Managers and
others serving pursuant to the foregoing paragraph, but Chubb Investment shall
not otherwise be liable or legally responsible for the conduct of any Sub-
Investment Manager. In this connection, it shall be a particular responsibility
of Chubb Investment to evaluate the investment performance of Sub-Investment
Managers and that of potential Sub-Investment Managers, and Chubb Investment
shall supply the Board of Directors of the Fund with such statistical and
research data bearing on the Portfolio's performance and that of Sub-Investment
Managers and potential Sub-Investment Managers as they and Chubb Investment deem
necessary. It shall also be a particular responsibility of
<PAGE>
Chubb Investment to supervise and monitor the practices of Sub-Investment
Managers in placing orders and selecting brokers and dealers to effect Portfolio
transactions and in negotiating commission rates with them, and the services
provided by such brokers and dealers.
It also is understood that Chubb Investment, at its expense, will enter
into an agreement with Chubb America Service Corporation, a New Hampshire
corporation, pursuant to which Chubb Investment will obtain from said
corporation most staff, facilities and services necessary to meet its
obligations hereunder. Entering into said agreement shall in no way diminish any
obligation or liability of Chubb Investment hereunder.
(d) Chubb Investment to Issue and Register Shares. Chubb Investment, in its
capacity as transfer agent and divided paying agent for the Fund, shall issue
and record the issuance of shares of Portfolio Stock upon receipt, directly or
indirectly, of orders therefor from Chubb Life through its general account or
Separate Account A or any additional separate accounts established by Chubb
Life, its successors or assigns, or any of its affiliated insurance companies.
Chubb Investment shall notify the Custodian of every such issuance, which notice
shall include the date, class of Stock, number of shares, and dollar amount of
the transaction. If Chubb Investment receives any check or funds for the
purchase of shares of Portfolio Stock, such check or funds shall promptly be
forwarded to the Custodian for the Fund's account. Chubb Investment shall
compute the number of shares issuable in the case of an order for a dollar
amount of shares (or the purchase price in the case of an order for a specific
number of shares) at the net asset value per share for the Portfolio Stock, as
described in the Fund's Prospectus, unless the Fund's Board of Directors should
otherwise direct. Chubb Investment will take reasonable steps to ensure that the
Custodian receives all payments due the Fund in consideration of the issuance of
Portfolio Stock.
(e) Issue of Share Certificates. If a shareholder requests a share
certificate, Chubb Investment, in its capacity as transfer agent and dividend
paying agent for the Fund, shall countersign and deliver a certificate to the
shareholder at its address as set forth on the transfer books of the Fund,
subject to any instructions for delivery of certificates which the Fund may give
to Chubb Investment.
(f) Distributions. Chubb Investment shall, in accordance with the
provisions of the Fund's Articles of Incorporation and Prospectus, credit income
and capital gain payments to shareholders. The Fund's management shall cause the
Custodian to make available the amount of any such payment to be paid out in
cash, and Chubb Investment shall distribute such amounts. Chubb Investment shall
process the
<PAGE>
reinvestment of distributions at the net asset value per share next computed for
the Portfolio Stock after the payment, in accordance with the Prospectus of the
Fund and any written instructions of the shareholder.
(g) Redemptions and Repurchases. Chubb Investment, in its capacity as
transfer agent and dividend paying agent for the Fund, shall process each order
for the redemption or repurchase of shares given directly or indirectly by Chubb
Life through its general account or Separate Account A or any additional
separate accounts established by Chubb Life, its successors or assigns, or any
of its affiliated insurance companies at the net asset value per share of the
Portfolio Stock, as described in the Fund's Prospectus, unless the Fund's Board
of Directors should otherwise direct. Where redemption or repurchase of a dollar
amount is requested, Chubb Investment shall calculate the number of shares to be
redeemed so as to provide the shareholder with the dollar value identified in
the redemption order, and where a stated number of shares is to be redeemed or
repurchased, Chubb Investment shall compute the dollar amount of the redemption
proceeds. And, Chubb Investment shall make the required amount of funds
available to the shareholder. The Fund's management shall cause Chubb Investment
to make such funds available not more than seven days after receipt of the
redemption or repurchase request. However, under normal circumstances, the
Fund's management will cause Chubb Investment to make such funds available not
more than one day after receipt of the redemption or repurchase request.
2. (a) Purchase and Sale of Assets. Nothing in this Investment Management
Agreement shall preclude the combining of orders for the sale or purchase of
securities or other investments with other accounts managed by Chubb Investment,
provided that Chubb Investment does not favor any account over any other account
and provided further that any purchase or sale orders executed contemporaneously
shall be allocated in a manner that Chubb Investment deems to be equitable to
all accounts involved and, under normal circumstances, such transactions will be
(1) done on a pro rata basis substantially in proportion to the amounts ordered
by each account, (2) entered into only if, in Chubb Investment's opinion, the
trade is likely to produce a benefit for the Portfolio, and (3) is at a price
which is approximately the same for all parties involved. Neither Chubb
Investment, nor any of its directors, officers, or employees, nor any person,
firm, or corporation controlling, controlled by or under common control with it
shall act as a principal or receive any commission as agent in connection with
the purchase or sale of assets for the Portfolio.
(b) Brokerage Fees. In placing orders for the purchase or sale of
investments for the Portfolio, in the name of the Portfolio or its nominees,
Chubb Investment shall
<PAGE>
use its best efforts to obtain for the Portfolio the most favorable price and
best execution available, considering all of the circumstances, and shall
maintain records adequate to demonstrate compliance with this requirement.
Notwithstanding the foregoing, however, and subject to appropriate policies and
procedures as then approved by the Board of Directors of the Fund, Chubb
Investment may, to the extent authorized by Section 28(e) of the Securities
Exchange Act of 1934, cause the Fund to pay a broker or dealer that provides
research or other brokerage services to Chubb Investment and the Fund with
respect to the Portfolio an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if Chubb Investment determines in
good faith that such amount of commission is reasonable in relationship to the
value of such services, viewed in terms of that particular transaction or Chubb
Investment's overall responsibilities to the Portfolio or its other advisory
clients. To the extent authorized by said Section 28(e) and the Fund's Board of
Directors, Chubb Investment shall not be deemed to have acted unlawfully or to
have breached any duty created by this Investment Management Agreement or
otherwise solely by reason of such action.
3. Compensation of Chubb Investment. Except as hereinafter provided, for
the services rendered and expenses assumed by Chubb Investment, while this
Investment Management Agreement is in effect, the Fund shall pay to Chubb
Investment monthly, on the first business day of the next succeeding calendar
month, a fee which shall accrue daily at the annual rate of .80 percent of the
average of the aggregate net asset value of the Portfolio determined as of the
close of business on each day and, in the case of any day which is not a
business day, determined as of the close of business on the last preceding
business day, with respect to all of the issued and outstanding shares of the
Portfolio ("average asset value") during the month preceding such payment. These
fees are reduced to .75% if the average asset value of the Portfolio exceeds
$200,000,000, and are further reduced to .70% if such average asset value of the
Portfolio exceeds $1,300,000,000. The average asset value of the Portfolio shall
be determined and computed in accordance with the description of the method of
determining net asset value contained in the Prospectus.
The fees payable to Chubb Investment by the Fund hereunder shall be reduced
by any tender solicitation fees or similar payments received by Chubb
Investment, or any affiliated person of Chubb Investment, in connection with the
tender of investments of the Portfolio (less any direct expenses incurred by
Chubb Investment, or any affiliated person of Chubb Investment, in connection
with obtaining such fees or payments). Chubb Investment shall use its best
efforts to recapture all available tender offer solicitation
<PAGE>
fees and similar payments in connection with tenders of the securities of the
Portfolio, provided, however, that Chubb Investment shall not be required to
register as a broker-dealer for this purpose. Chubb Investment shall advise the
Board of Directors of any fees or payments of whatever type which it may be
possible for Chubb Investment to receive in connection with the purchase or sale
of investment securities for the Portfolio.
4. Non-Exclusivity. The Fund agrees that the services of Chubb Investment
are not to be deemed exclusive and Chubb Investment is free to act as investment
manager to various investment companies and as fiduciary for other managed
accounts. Chubb Investment shall, for all purposes herein, be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Fund with respect to the Portfolio in
any way or otherwise be deemed an agent of the Fund with respect to the
Portfolio other than in furtherance of its duties and responsibilities as set
forth in this Investment Management Agreement.
5. Books and Records. Chubb Investment will maintain all books and records
required for the Fund with respect to the Portfolio, to the extent not
maintained by the Custodian or any Sub-Investment Manager. Chubb Investment
agrees that all books and records which it maintains for the Fund are the Fund's
property, and, in the event of termination of this Investment Management
Agreement for any reason, Chubb Investment agrees promptly to return to the
Fund, free from any claim or retention of rights by Chubb Investment, all
records relating to the Fund. Chubb Investment also agrees, upon request of the
Fund, promptly to surrender such books and records to the Fund or, at the Fund's
expense, to make copies thereof available to the Fund or to make such books and
records available for inspection by representatives of regulatory authorities or
other persons reasonably designated by the Fund. Chubb Investment further agrees
to maintain, prepare and preserve such books and records in accordance with the
Investment Company Act and rules thereunder, including but not limited to, Rules
31a-1 and 31a-2.
Chubb Investment will use records or information obtained under this
Investment Management Agreement only for the purposes contemplated hereby, and
will not disclose such records or information in any manner other than as
expressly authorized by the Board of Directors or officers of the Fund, or
unless disclosure is expressly required by applicable federal or state
regulatory authorities or by this Investment Management Agreement. Chubb
Investment shall supply all information requested by any insurance regulatory
authorities to determine whether all insurance laws and regulations are being
complied with.
<PAGE>
The records maintained for the Fund hereunder by Chubb Investment shall
include records showing, for each shareholder's account, the following: (a)
name, address and tax identifying number; (b) number and class of shares held;
(c) historical information regarding the account of each shareholder, including
dividends paid and the date, class of Stock and price for all transactions; (d)
any stop or restraining order placed against the account; (e) any dividend
reinvestment order, dividend address and correspondence relating to the current
maintenance of the account; (f) certificate numbers and denominations for any
Stock certificates; (g) any other information required in order for Chubb
Investment to perform the calculations contemplated or required by this
Investment Management Agreement; and (h) such other records as the Fund may from
time to time reasonably request.
6. Liability. Chubb Investment will not be liable for any loss suffered
by the Portfolio in connection with any investment policy established by the
Fund for the purchase, sale or redemption of any securities at the direction of
the Board of Directors of the Fund. Nothing herein contained shall be construed
to protect Chubb Investment against any liability resulting from the willful
misfeasance, bad faith or negligence of Chubb Investment in the performance of
its duties or from reckless disregard of its obligations and duties under this
Investment Management Agreement or by virtue of violation of any applicable law.
7. (a) Initial Documents. The Fund's management shall file with Chubb
Investment the following documents: (i) certified copies of the Articles of
Incorporation of the Fund and all amendments thereto, made from time to time;
(ii) a certified copy of the By-Laws of the Fund as amended, from time to time;
(iii) a copy of the resolution of the Board of Directors of the Fund authorizing
this Investment Management Agreement; (iv) specimens of all forms of outstanding
and new stock certificates, if any, with respect to Portfolio Stock in the form
approved by the Board of Directors of the Fund accompanied by Board of
Directors' resolutions approving such forms, and with a certificate of the
Secretary of the Fund as to such approval; (v) an opinion of counsel for the
Fund with respect to the validity of the Portfolio Stock, the number of shares
authorized, the number of Shares allocated to the Portfolio's class of Shares,
the status of redeemed or repurchased Shares and the number of Shares with
respect to which a registration statement under the Securities Act of 1933 has
been filed and is in effect; and (vi) a listing of the insurance companies with
which Chubb Life through its general account or Separate Account A or any
additional separate accounts established by Chubb Life, its successors or
assigns, is affiliated.
(b) Further Documentation. The Fund's management
<PAGE>
will also furnish from time to time the following documents: (i) each resolution
of the Board of Directors of the Fund authorizing the original issue of the
Portfolio's Shares; (ii) each registration statement filed with the SEC under
the Securities Act of 1933 or under the Investment Company Act and amendments
thereof, orders relating thereto and the Prospectus in effect with respect to
the sale of shares of the Fund; (iii) certified copies of each resolution of the
Board of Directors authorizing officers to give instructions to Chubb
Investment.
(c) Information. The Fund, its officers or agent will provide timely
information to Chubb Investment regarding such matters as purchases and
redemptions of shares in the Portfolio, cash requirements, and cash available
for investment in the Portfolio, and all other information as may be reasonably
necessary, or appropriate, in order for Chubb Investment to perform its
responsibilities hereunder.
(d) Reliance on Documents and Information. Chubb Investment will be
entitled to rely on all documentation and information furnished to it by the
Fund's management.
8. Authorized Shares. The Fund certifies to Chubb Investment, that as of
the close of business on the date of this Investment Management Agreement, it
has authorized one billion shares of its Stock, and further certifies that, by
virtue of its Articles of Incorporation and the provisions of the law of the
state of its incorporation, shares of its Stock which are redeemed or
repurchased by the Fund from its shareholder are restored to the status of
authorized and unissued shares.
9. Stock Certificates. The Fund shall supply Chubb Investment with a
sufficient supply of blank stock certificates for Portfolio Stock and from time
to time shall renew such supply upon request of Chubb Investment. Such blank
stock certificates shall be properly signed, manually or by facsimile, as
authorized by the Board of Directors of the Fund, and shall bear the corporate
seal or facsimile thereof of the Fund. Notwithstanding the death, resignation or
removal of any officer of the Fund authorized to sign certificates of Stock,
Chubb Investment may continue to countersign certificates which bear the manual
or facsimile signature of such officer until otherwise directed by the Board of
Directors of the Fund.
10. Notice of Distribution. The Board of Directors of the Fund shall
promptly inform Chubb Investment of the declaration of any dividend or
distribution on account of Portfolio Stock, including the amount per share,
record date and date payable. Chubb Investment may rely on a certified copy of a
resolution of the Fund's Board of Directors that distributions of net income
shall be declared and paid annually.
<PAGE>
11. Processing Transactions. In issuing shares pursuant to Section 2(d) of
this Investment Management Agreement and processing redemptions and repurchases
pursuant to Section 2(g) in its capacity as transfer agent and dividend paying
agent for the Fund, Chubb Investment shall, if requested by the Distributor, at
its expense, maintain, on behalf of the Fund's Distributor, a record of the time
when a proper and complete order or request for each such sale, redemption or
repurchasing transaction was received by it, and the Fund's Distributor may rely
on Chubb Investment's so doing. At its expense, Chubb Investment shall, on
behalf of the Fund's Distributor, if requested by the Distributor, keep records
of confirmations and all other records in connection with the sale, redemption
or repurchase of Portfolio Shares required by, and subject to, all the terms and
conditions of Rule 17a-3 and 17a-4 under that Act, and the Fund's Distributor
may rely on Chubb Investment's so doing. All records required by this paragraph
to be maintained by Chubb Investment will (i) be and remain the property of the
Fund's Distributor and (ii) be at all times subject to inspection by the SEC in
accordance with Section 17(a) of said Act.
It is understood that, unless the Fund directs otherwise, the issuance,
redemption or repurchase of Portfolio Shares arising out of an automatic
transaction under an insurance contract (such as investment of net premiums,
death of insureds, deduction of fees and charges, transfers, surrenders, loans,
loan repayments, deductions of interest on loans, lapses, reinstatements and
similar automatic transactions) shall be effected at the net asset value per
share computed as of the close of business on the date as of which said
automatic transaction is effected, even though the "order" for purchase, sale or
redemption of Portfolio Shares is not received until after said close of
business; and all other issuances, redemptions or repurchases of Portfolio
Shares shall be effected at net asset values per share next computed after
receipt of the orders therefor, and said orders shall become irrevocable at the
time as of which said value is next computed.
The authority of Chubb Investment to process purchases, reinvestments,
repurchases and redemptions with respect to any shares of Portfolio Stock shall
be suspended upon receipt by it of an oral or written notification from the
Board of Directors of the Fund of the suspension by the Fund of said activities
or as a result of an order or determination by the SEC.
12. Tax Returns. Chubb Investment shall prepare, file with the Internal
Revenue Service and with the appropriate state agencies, and, if required, mail
to shareholders such returns for reporting dividends and distributions paid as
are required to be so filed and mailed, and shall withhold such sums, if any, as
are required to be withheld under applicable
<PAGE>
federal and state income tax laws, rules and regulations.
13. (a) Expenses of the Fund. As between the Fund and Chubb Investment,
the following expenses shall be borne exclusively by the Fund;
(i) Brokerage commissions and transfer taxes in connection
with portfolio transactions and similar fees and charges for the acquisition,
disposition, lending or borrowing of portfolio investments;
(ii) All other state, federal, local or foreign governmental
fees and taxes (including any insurance, transfer, franchise or income taxes)
payable by the Fund and all corporate or filing fees payable by the Fund to any
governmental entity or agency;
(iii) All expenses, incidental and otherwise, associated with
preparing and filing with appropriate state, federal, local or foreign
governments or agencies all tax returns, including the expenses associated with
any mailings to the policyowners with respect to such returns.
(iv) Fees and expenses incurred in the registration or
qualification (and maintaining said registration or qualification) of the Fund
and its shares under federal or state securities laws, if deemed applicable,
subsequent to the effective date of the registration statement including all
fees and expenses incurred in connection with the preparation, setting in type,
printing and mailing of the registration statement and any amendments or
supplements that may be made from time to time;
(v) Compensation paid to directors who are not "interested
persons" of the Fund within the meaning of the Investment Company Act and travel
expenses paid to all directors;
(vi) Interest and any other cost related to borrowings by the
Fund;
(vii) Any extraordinary or non-recurring expenses (such as legal
claims and liabilities, and litigation costs and any indemnification related
thereto);
(viii) Costs of printing and distributing to current
policyowners, shareholder reports, proxy statements, Prospectuses and any
stickers and supplements thereto, and otherwise communicating with the
shareholders;
(ix) Costs and all incidental expenses associated with
conducting shareholder meetings;
(x) The cost of the fidelity bond required by Investment
Company Act Rule 17g-1 and any errors and
<PAGE>
omissions insurance or other liability insurance covering the Fund and/or its
officers, directors and employees;
(xi) The cost of obtaining quotes necessary for valuing the
assets and related liabilities for the Portfolio;
(xii) The charges and expenses of the Custodian, independent
accountants and independent legal counsel retained by the Fund, the charges and
expenses of any independent proxy solicitation firm retained by the Fund to
solicit voting instructions from policyowners with respect to Portfolio Shares,
and the charges and expenses of any trade association fees; and
(xiv) All other expenses not specifically assumed hereunder by
Chubb Investment.
(b) Expenses of Chubb Investment. As between the Fund and Chubb
Investment, the costs and expenses of providing the necessary facilities,
personnel, office equipment and supplies, office space, telephone service, and
other utility service necessary to carry out its obligations hereunder shall be
borne exclusively by Chubb Investment, except as otherwise herein expressly
provided. In addition, Chubb Investment shall pay and assume all expenses
specifically assumed by Chubb Investment as set forth in Paragraphs 1(b)(1),
(3), (4), (7), (8), (9), (10) and (11); and 1(c), (d), (e), (f) and (g) of this
Investment Management Agreement.
14. Duration and Termination of the Agreement. This Investment Management
Agreement shall become effective as of the date first written above and shall
remain in force until the first meeting of shareholders of the Portfolio, at
which meeting it must be approved by a vote of the majority of the outstanding
shares of the Portfolio to remain effective. Thereafter, it shall continue in
effect with respect to the Portfolio from year to year, but only so long as such
continuance is specifically approved at least annually by (a) the Board of
Directors of the Fund, or by the vote of a majority of the outstanding shares of
the Portfolio, and (b) a vote of a majority of those directors of the Fund who
are not parties to this Investment Management Agreement nor interested persons
of any party to this Investment Management Agreement, cast in person at a
meeting called for the purpose of voting on such approval. This Investment
Management Agreement may be terminated, without the payment of any penalty, by
the Board of Directors of the Fund or by vote of a majority of the outstanding
shares of the Portfolio on sixty days' written notice to Chubb Investment, or by
Chubb Investment on sixty days' written notice to the Fund. This Investment
Management Agreement shall automatically terminate in the event of its
assignment.
<PAGE>
15. Amendment of the Agreement. This Investment Management Agreement may be
amended with respect to the Portfolio only if, to the extent required by law,
such amendment is specifically approved by (a) the vote of a majority of the
outstanding shares of the Portfolio, and (b) by the vote of the Board of
Directors of the Fund, including a majority of those directors of the Fund who
are not parties to nor interested persons of any party to this Investment
Management Agreement cast in person at a meeting called for the purpose of
voting on such approval.
16. Definitions. The terms "assignment," "interested person," and
"majority of the outstanding shares," when used in this Investment Management
Agreement, shall have the respective meanings specified under the Investment
Company Act and rules thereunder.
17. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
18. Name. This Investment Management Agreement is entered into in
conjunction with an agreement, dated February 15, 1985, between the Fund and The
Chubb Corporation granting the Fund a license to use the word "Chubb" in its
corporate name and to use such words in connection with its business.
19. Governing Law. The provisions of this Investment Management Agreement
shall be construed and interpreted in accordance with the laws of the State of
New Hampshire, as at the time in effect, and the applicable provisions of the
Investment Company Act and rules thereunder or other federal laws and
regulations which may be applicable. To the extent that the applicable law of
the State of New Hampshire, or any of the provisions herein, conflict with the
applicable provisions of the Investment Company Act and rules thereunder or
other federal laws and regulations which may be applicable the latter shall
control.
CHUBB AMERICA FUND, INC.
Attest: By:Bruce Stefany
Title: President
CHUBB INVESTMENT ADVISORY
CORPORATION
<PAGE>
Attest: By:Bruce Stefany
Title:President
<PAGE>
EXHIBIT 5.Q.
SUB-INVESTMENT MANAGEMENT AGREEMENT BY,
BETWEEN AND AMONG CHUBB AMERICA FUND, INC.,
CHUBB INVESTMENT ADVISORY CORPORATION AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
FOR THE EMERGING GROWTH PORTFOLIO
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
1. Duties of the Sub-Investment Manager 2
2. Sub-Investment Management Services 2
3. Purchase and Sale of Assets 3
4. Compensation of the Sub-Investment Manager 4
5. Non-Exclusivity 5
6. Books and Records 5
7. Liability 5
8. Reliance on Documents 6
9. Duration and Termination of the Agreement 6
10. Amendment of Agreement 7
11. Definition 7
12. Notices 7
13. Governing Law 8
</TABLE>
<PAGE>
SUB-INVESTMENT MANAGEMENT AGREEMENT FOR
THE EMERGING GROWTH PORTFOLIO
THIS AGREEMENT, made this 14th day of April 1995, by, between and among
CHUBB AMERICA FUND, INC., a Maryland corporation with offices at One Granite
Place, Concord, New Hampshire 03301 (the "Fund"), CHUBB INVESTMENT ADVISORY
CORPORATION, a Tennessee corporation with offices at One Granite Place, Concord,
New Hampshire 03301 (the "Investment Manager") and MASSACHUSETTS FINANCIAL
SERVICES COMPANY, a Delaware corporation with offices at 500 Boylston Street in
Boston, Massachusetts 02116 (the "Sub-Investment Manager");
WITNESSETH:
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate portfolio of investments;
WHEREAS, the Fund is currently comprised of nine portfolios, which,
together with any portfolio subsequently added, are designed herein as the
"Portfolios", and each of which pursues or will pursue its investment objectives
through separate investment policies and separate investment management;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Emerging Growth Portfolio, as set forth in an Investment
Management Agreement between the Fund and the Investment Manager dated ,
1995, (the "Investment Management Agreement") pursuant to which it was agreed
that the Investment Manager, with the approval of the Emerging Growth
Portfolio's shareholders may contract with the Sub-Investment Manager, or other
parties for certain investment management services;
WHEREAS, the Sub-Investment Manager is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940;
WHEREAS, the Board of Directors of the Fund and the Investment Manager
desire to retain the Sub-Investment Manager to render investment management
services to the Fund's Emerging Growth Portfolio in the manner and on the terms
hereinafter set forth;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund, the Investment Manager and the Sub-Investment
Manager hereby agree as follows:
1. Duties of Sub-Investment Manager. The Sub-Investment Manager hereby agrees,
subject to the supervision of the Investment Manager and the Board of Directors
of the Fund (1) to act as the sub-investment adviser to, and Sub-Investment
Manager of, the Emerging Growth Portfolio of the Fund (the "Emerging Growth
Portfolio"), (2) to manage the investment and reinvestment of the assets of the
Emerging Growth Portfolio for the period and on the terms and conditions set
forth in this Agreement, and (3) during the term hereof, to render the services
and to assume the obligations herein set forth in return for the compensation
provided for herein and to bear all expenses of its performance of such services
and obligations.
2. Sub-Investment Services. In performing the duties stated in Paragraph 1
above, the Sub-Investment Manager will regularly provide the Investment Manager
and the Fund with such investment research, advice and management as the
Investment Manager and the Board of Directors or officers of the Fund may from
time to time consider necessary for the proper management of the Emerging Growth
Portfolio. The Sub-Investment Manager will furnish continuously an investment
program and will conduct a continuous program of evaluation of assets in the
Emerging Growth Portfolio. In this connection the Sub-Investment Manager will
provide the Board of Directors and officers of the Fund with such asset
valuations daily at the close of business and, subject to the consent of the
Sub-Investment Manager with all statistical information with respect to
investments of the Fund and such periodic and special reports and information as
the Investment Manager or the Board of Directors or officers of the Fund may
reasonably request. In addition, the Sub-Investment Manager will determine
which securities or other investments shall be purchased, sold or exchanged and
what portion of the assets of the Emerging Growth Portfolio shall be held in
securities or other assets in which the Emerging Growth Portfolio may invest. In
so acting, the Sub-Investment Manager shall always be subject to, and shall
follow at all times (i) any restrictions of the Fund's Articles of Incorporation
and By-Laws, as amended from time to time, (ii) the applicable provisions of the
Investment Company Act, and any rules and regulations adopted thereunder, (iii)
the statements relating to the Fund's investment objectives, investment policies
and investment restrictions as the same are set forth in the prospectus of the
Fund and Statement of Additional Information then currently effective under the
Securities Act of 1933 (the "Prospectus"), and (iv) any other provisions of
state and federal securities law applicable to it in connection with its duties
hereunder. Should the Board of Directors of the Fund or the Investment Manager
at any time, however, make any definite determination as to the investment
<PAGE>
policy of the Emerging Growth Portfolio and notify the Sub- Investment Manager
thereof, the Sub-Investment Manager shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination has been revoked. The Sub-Investment Manager shall take, on behalf
of the Fund, all actions which it deems necessary to implement the investment
objectives, policies and restrictions of the Emerging Growth Portfolio,
determined as provided above, and in particular shall place orders for the
purchase or sale of securities or other investments for the Emerging Growth
Portfolio with brokers or dealers selected by the Sub-Investment Manager.
3. Purchase and Sale of Assets. Nothing in this Sub-Investment Management
Agreement shall preclude the combining of orders for the sale or purchase of
securities or other investments with other accounts managed by the Sub-
Investment Manager, provided that the Sub-Investment Manager does not favor any
account over any other account and provided further that any such purchase or
sale orders executed contemporaneously shall be allocated in a manner that the
Sub-Investment Manager deems to be equitable to all accounts involved and, under
normal circumstances, such transactions will be (1) done on a pro-rata basis,
substantially in proportion to the amounts ordered by each account, (2) entered
into only if, in the Sub-Investment Manager's opinion, the trade is likely to
produce a benefit for the Emerging Growth Portfolio, and (3) is at a price which
is approximately the same for all parties involved. Neither the Sub-Investment
Manager, nor any of its directors, officers or employees, nor any person, firm
or corporation controlling, controlled by or under common control with it shall
act as a principal or receive any commissions as agent in connection with the
purchase or sale of assets for the Emerging Growth Portfolio.
In placing orders for the purchase or sale of investments for the Fund, in the
name of the Fund or its nominees, the Sub-Investment Manager shall use its best
efforts to obtain for the Fund the most favorable price and best execution
available, considering all of the circumstances.
Subject to appropriate policies and procedures approved by the Board of
Directors of the Fund, the Sub-Investment Manager may, to the extent authorized
by Section 28(e) of the Securities and Exchange Act of 1934, cause the Fund to
pay a broker or dealer that provides research or other brokerage services to the
Sub-Investment Manager, the Investment Manager and the Fund an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Investment Manager determines, in good faith, that such
amount of commission is reasonable in relationship to the value of such
services, viewed in terms of that particular transaction or the Sub-Investment
<PAGE>
Manager's overall responsibilities to the Fund or its other advisory clients. To
the extent authorized by said Section 28(e) and the Fund's Board of Directors,
the Sub-Investment Manager shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of such action.
4. Compensation of the Sub-Investment Manager. For the services rendered and
expenses assumed by the Sub-Investment Manager, while this Agreement is in
effect, the Investment Manager shall pay to the Sub-Investment Manager at the
end of each calendar quarter a fee which shall accrue daily at the annual rate
of 0.50% of the first $200,000,000 of the average of the aggregate net asset
value of the Emerging Growth Portfolio determined as of the close of business on
each day and, in the case of any day which is not a business day, determined as
of the close of business on the last preceding business day, of all of the
issued and outstanding shares of the Emerging Growth Portfolio ("net asset
value") during the quarter preceding such payment, reduced to 0.45% of such net
asset value in excess of $200,000,000 up to $1,300,000,000 and further reduced
to 0.40% of such net asset value in excess of $1,300,000,000. The net asset
value of the Growth and Income Portfolio shall be determined and computed in
accordance with the description of the method of determining the net asset value
contained in the Prospectus.
The fees payable to the Sub-Investment Manager by the Investment Manager
hereunder shall be reduced by any tender solicitation fees or similar payments
received by the Sub-Investment Manager, or any affiliated person of the Sub-
Investment Manager, in connection with the tender of investments of the Emerging
Growth Portfolio (less any direct expenses incurred by the Sub-Investment
Manager, or any affiliated person of the Sub-Investment Manager, in connection
with obtaining such fees or payments). The Sub-Investment Manager shall use its
best efforts to recapture all available tender offer solicitation fees and
similar payments in connection with tenders of the securities of the Emerging
Growth Portfolio, provided, however, that neither the Sub-Investment Manager,
nor any affiliate of the Sub-Investment Manager shall be required to register as
a broker/dealer for this purpose. The Sub-Investment Manager shall advise the
Board of Directors of any fees or payments of whatever type which it may be
possible for the Sub-Investment Manager or an affiliate of the Sub-Investment
Manager to receive in connection with the purchase or sale of investment
securities for the Emerging Growth Portfolio.
The payment of the advisory fees and the allocation of charges and expenses
between the Fund and the Investment Manager are set forth in the Investment
Management Agreement. Nothing in this Sub-Investment Management Agreement shall
change or affect that arrangement. The payment of advisory
<PAGE>
fees and the apportionment of any expenses related to the services of the Sub-
Investment Manager shall be the sole concern of the Investment Manager and the
Sub-Investment Manager and shall not be the responsibility of the Fund.
5. Non-Exclusivity. The Fund and the Investment Manager agree that the
services of the Sub-Investment Manager are not to be deemed exclusive and the
Sub-Investment Manager is free to act as investment manager to various
investment companies and as fiduciary for ot her managed accounts. The Sub-
Investment Manager, shall for all purposes herein, be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Fund or the Investment Manager in any
way or otherwise be deemed an agent of the Fund or Investment Manager other than
in furtherance of its duties and responsibilities as set forth in this Sub-
Investment Management Agreement.
6. Books and Records. The Sub-Investment Manager agrees that all books and
records which it maintains for the Fund are the Fund's property, and, in the
event of termination of this Agreement for any reason, the Sub-Investment
Manager agrees promptly to return to the Fund, free from any claim or retention
of rights by the Sub-Investment Manager, all records relating to the Emerging
Growth Portfolio. The Sub-Investment Manger also agrees upon request of the
Investment Manager or the Fund, promptly to surrender the books and records to
either party or make the book and records available for inspection by
representatives of regulatory authorities. In connection with its duties
hereunder, the Sub-Investment Manager further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Sub-Investment Manager will use records or information obtained under this
Agreement only for the purpose contemplated hereby, and will not disclose such
records or information in any manner other than expressly authorized by the
Fund, or if disclosure is expressly required by applicable federal or state
regulatory authorities or by this Agreement. The Sub-Investment Manager will
furnish any informational reports requested by any state insurance commissioner.
7. Liability. The Sub-Investment Manager will not be liable for any loss
suffered by the Fund in connection with any investment policy established by the
Fund for the purchase, sale or redemption of any securities at the direction of
the Board of Directors of the Fund or the Investment Manager. Nothing herein
contained shall be construed to protect the Sub-Investment Manager against any
<PAGE>
liability resulting from the willful misfeasance, bad faith or gross negligence
of the Sub-Investment Manager in the performance of its duties or from reckless
disregard of its obligations and duties under this Sub-Investment Management
Agreement.
8. Reliance on Documents. The Board of Directors of the Fund or its officers
or agent will provide timely information to the Sub-Investment Manager regarding
such matters as purchases and redemptions of shares in the Emerging Growth
Portfolio, the cash requirements, and cash available for investment in the
Emerging Growth Portfolio, and all other information as may be reasonably
necessary or appropriate in order for the Sub-Investment Manager to perform its
responsibilities hereunder.
Neither the Fund not the Investment Manager, nor their respective designees
or agents shall use any material describing or identifying the Sub-Investment
Manager or its affiliates without the prior consent of the Sub-Investment
Manager. Any material utilized by the Fund, the Investment Manager or their
respective designees or agents which contain information as to the Sub-
Investment Manager and/or its affiliates shall be submitted to the Sub-
Investment Manager for approval prior to use, not less than five (5) business
days before such approval is requested.
The Investment Manager has herewith furnished the Sub-Investment Manager copies
of the Fund's Prospectus, Articles of Incorporation and By-Laws as currently in
effect and agrees during the continuance of the Agreement to furnish the Sub-
Investment Manager copies of any amendments or supplements thereto before or at
the time the amendments or supplements become effective. The Sub-Investment
Manager will be entitled to rely on all such documents furnished to it by the
Investment Manager of the Fund.
9. Duration and Termination of the Agreement. This Sub-Investment Management
Agreement shall become effective as of the date first above written and shall
remain in force until the first meeting of shareholders of the Emerging Growth
Portfolio. Thereafter, it shall continue in effect from year to year, but only
so long as such continuance is specifically approved at least annually by (a)
the Board of Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Emerging Growth Portfolio, and (b) a
majority of those directors who are not parties to this Sub-Investment
Management Agreement, nor interested persons of any party to this Sub-Investment
Management Agreement, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated, without the payment
of any penalty, by the Board of Directors of the Fund, by a vote of a majority
of the outstanding shares of the Emerging Growth Portfolio, or by the Investment
Manager on sixty days' written notice to the Sub-Investment Manager, or by the
Sub-Investment Manager on sixty
<PAGE>
days' written notice to the Fund or the Investment Manager. Termination by the
Board of Directors or by the Investment Manager shall be subject to shareholder
approval to the extent legally required. This Agreement shall automatically
terminate in the event of its assignment or in the event of termination of the
Investment Management Agreement.
10. Amendment of the Agreement. This Agreement may be amended only if such
amendment is specifically approval by (a) the vote of a majority of the
outstanding voting securities of the Emerging Growth Portfolio, and (b) the vote
of a majority of those directors of the Fund who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
11. Definitions. The terms "assignment", "interested person", and "majority of
the outstanding voting securities", when used in this Agreement, shall have the
respective meaning specified under the Investment Company Act and the rules
thereunder.
12. Notices. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be given in writing, delivered, or
mailed postpaid to the other party, or transmitted by facsimile with
acknowledgement of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Sub-Investment Manager:
Massachusetts Financial Services Company
500 Boylston Street
Boston, MA 02116
Attn: Stephen Cavan
Facsimile: (617) 954-6624
(b) If to the Investment Manager:
Chubb Investment Advisory Corporation
One Granite Place
Concord, NH 03301
Attn: Bruce Stefany
Facsimile (603)-224-1691
(c) If to the Fund:
Chubb America Fund, Inc.
One Granite Place
Concord, NH 03301
Attn: Bruce Stefany
Facsimile (603)-224-1691
<PAGE>
13. Governing Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts as
at the time in effect and the applicable provisions of the Investment Company
Act or other federal laws and regulations which may be applicable. To the extent
that the applicable law of the Commonwealth of Massachusetts or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act or other federal laws and regulations which may be applicable, the
latter shall control.
CHUBB AMERICA FUND, INC.
By: Bruce Stefany
Title: President
CHUBB INVESTMENT ADVISORY
CORPORATION
By: Bruce Stefany
Title: President
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: Steven E. Cavan
Title: Senior Vice President
General Counsel
and Assistant Secretary
Attest:
Title:
<PAGE>
EXHIBIT 11
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Independent Auditors" in the Statement of
Additional Information" and to the use of our report dated February 17, 1995
included in Post-Effective Amendment Number 15 to the Registration Statement
(Form N-1A No 2-94479) of Chubb America Fund, Inc.
ERNST & YOUNG LLP
Boston, Massachusetts
November 10, 1995
<PAGE>
EXHIBIT 13 D.
STOCK SUBSCRIPTION AGREEMENT
BETWEEN
CHUBB AMERICA FUND, INC.
AND
CHUBB LIFE INSURANCE COMPANY OF AMERICA
WITH RESPECT TO THE
EMERGING GROWTH PORTFOLIO
<PAGE>
STOCK SUBSCRIPTION AGREEMENT
THIS AGREEMENT is entered into by and between Chubb Life Insurance Company
of America (hereinafter "Chubb Life"), a stock life insurance company existing
under and by virtue of the laws of the State of New Hampshire, and the Chubb
America Fund, Inc. (hereinafter "the Company"), a corporation organized and
existing under and by virtue of the laws of the State of Maryland.
In consideration of the mutual promises set forth herein, the parties agree
as follows:
1. The Company agrees to sell to Chubb Life, and Chubb Life hereby
subscribes to purchase up to 300,000 Shares of Stock of the Emerging Growth
Portfolio; at $.01 Par Value.
2. Chubb Life agrees to pay for at least one share at some time on or
before the effective date of the update amendment required by Item 32 to the
registration statement filed by the Company on Form N-1A and to purchase and pay
for such additional Shares it desires when Chubb Life in its sole discretion
deems desireable.
3. Chubb Life acknowledges that the Shares have not been, and will not be,
registered under any state or federal securities laws and that, therefore, the
Company is relying on certain exemptions therein from such registration
requirements, including exemptions dependent on the intent of the undersigned in
acquiring the Shares. Chubb Life also understands that any resale of the Shares,
or any part thereof, may be subject to restrictions under state and federal
securities laws, and that Chubb Life may be required to bear the economic risk
of an investment in the Shares for an indefinite period of time.
4. Chubb Life represents and warrants that it is acquiring the Shares
solely for its own account and solely for investment purposes and not with a
view to the resale or disposition of all or any part thereof, and that it has no
present plan or intention to sell or otherwise dispose of the Shares or any part
thereof; and
5. Chubb Life agrees that it will not sell or dispose of the Shares or any
part thereof unless registration statements with respect to such Shares are then
in effect under the Securities Act of 1933 and under any applicable state
securities laws or unless the undersigned shall have delivered to the Company an
opinion of counsel acceptable to the Company, in form and substance acceptable
to the Company, that no such registration is necessary.
<PAGE>
6. Chubb Life further agrees to withdraw any request to redeem any of the
Shares to the extent the Company informs the undersigned that the effect of such
redemption could be to reduce the Company's net worth below $100,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives this day of , 1995.
CHUBB LIFE INSURANCE COMPANY
OF AMERICA
By: Russell Simpson
Title: Treasurer
CHUBB AMERICA FUND, INC.
By: John Weston
Title: Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> EMERGING GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> MAY-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 6,011,488
<INVESTMENTS-AT-VALUE> 7,092,704
<RECEIVABLES> 748,785<F1>
<ASSETS-OTHER> 174,566<F2>
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,016,055
<PAYABLE-FOR-SECURITIES> 914,153
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,487<F3>
<TOTAL-LIABILITIES> 925,640
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,022,903
<SHARES-COMMON-STOCK> 553,018
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (15,227)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,523
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,081,216
<NET-ASSETS> 7,090,415
<DIVIDEND-INCOME> 377
<INTEREST-INCOME> 16,404
<OTHER-INCOME> 0
<EXPENSES-NET> 32,008
<NET-INVESTMENT-INCOME> (15,227)
<REALIZED-GAINS-CURRENT> 1,523
<APPREC-INCREASE-CURRENT> 1,081,216
<NET-CHANGE-FROM-OPS> 1,067,512
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,027,398
<NUMBER-OF-SHARES-REDEEMED> 4,495
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,090,415
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,962
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 4,537,829
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 2.85
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.82
<EXPENSE-RATIO> 1.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1> Receivable from Chubb Life 35,737
Receivable for Investments Sold 713,048
-------
748,785
<F2> Cash 174,240
Accrued Income 326
-------
174,566
<F3> Accrued Inv. Advisory fees 4,037
Accrued Custody fees 5,995
Payable to CASC 1,455
------
11,487
</FN>
</TABLE>
