<PAGE>
Registration No. 2-94479
811-4161
As filed with the Securities and Exchange Commission on April 7, 1997.
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. 17 /X/
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 18 /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. JANE KANTER, Esq.
Chubb America Fund, Inc. Katten Muchin & Zavis
One Granite Place 1025 Thomas Jefferson Street, N.W.
Concord, NH 03301 Washington, D.C. 20007
It is proposed that this filing will become effective 60 days after filing
pursuant to paragraph 485(a)(1).
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 27, 1997.
<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, 1997, 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, 1997
<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.................................................... 18
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........................................................... 21
Capital Growth Portfolio................................................. 21
Investment Objectives.................................................. 21
Investment Policies.................................................... 22
Risk Factors........................................................... 22
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....................................................... 25
Emerging Market 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.............................................................. 33
TAXES AND DIVIDENDS........................................................ 34
OFFERING AND REDEMPTION OF SHARES.......................................... 34
OTHER INFORMATION.......................................................... 35
</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 tables include selected data for a share of capital stock
outstanding for each fund throughout the periods indicated. The related
financial statements and report of Ernst & Young LLP, independent auditors,
are incorporated by reference into the Statement of Additional Information and
are available upon request and without charge by calling 1-800-452-4822.
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,
1996 1995 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 21.20 $ 19.00 $ 20.89 $ 16.73
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. .49 0.45 0.25 0.24
Net realized and
unrealized gains
(losses) on securi-
ties and foreign cur-
rencies.............. 3.56 2.65 (0.89) 5.40
----------- ----------- ----------- -----------
Total from investment
operations........... 4.05 3.10 (0.64) 5.64
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income...... (.48) (0.43) (0.25) (0.24)
Dividends in excess of
net investment in-
come.................
Distributions from
capital gains........ (1.46) (0.47) (0.81) (1.24)
Distributions in ex-
cess of capital
gains................ (0.19)
Returns of capital....
----------- ----------- ----------- -----------
Total distributions... (1.94) (0.90) (1.25) (1.48)
Net asset value, end of
year................... $ 23.31 $ 21.20 $ 19.00 $ 20.89
=========== =========== =========== ===========
Total Return (A)........ 19.22% 16.35% (3.05%) 33.73%
Ratios to Average Net
Assets:
Expenses.............. .88% 0.96% 1.00% 1.04%
Net investment income. 2.20% 2.31% 1.56% 1.64%
Portfolio Turnover Rate. 27.50% 18.09% 18.47% 34.90%
Average Commission Rate
Paid................... $ 0.0155
Net Assets, At End of
Year................... $91,995,634 $73,692,357 $52,903,768 $42,031,141
</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.
2
<PAGE>
<TABLE>
<CAPTION>
WORLD GROWTH STOCK PORTFOLIO
---------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1992 1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 16.45 $ 13.70 $ 16.07 $ 12.77 $ 11.48 $ 13.75
0.35 0.34 0.36 0.32 0.18 0.06
0.65 2.75 (2.00) 3.34 1.32 (0.91)
----------- ----------- ----------- ----------- ---------- ----------
1.00 3.09 (1.64) 3.66 1.50 (0.85)
(0.35) (0.34) (0.37) (0.36) (0.18) (0.34)
(0.37) (0.36) (0.03) (1.08)
----------- ----------- ----------- ----------- ---------- ----------
(0.72) (0.34) (0.73) (0.36) (0.21) (1.42)
$ 16.73 $ 16.45 $ 13.70 $ 16.07 $ 12.77 $ 11.48
=========== =========== =========== =========== ========== ==========
6.10% 22.53% (10.38%) 28.62% 13.10% (7.74%)
1.17% 1.14% 1.22% 1.42% 1.60% 1.81%
2.19% 2.40% 2.65% 2.46% 1.80% 1.14%
32.27% 50.06% 25.79% 5.73% 14.75% 8.88%
$25,416,357 $22,659,930 $16,052,089 $14,467,050 $8,781,827 $5,253,616
</TABLE>
3
<PAGE>
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 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 10.27 $ 10.25 $ 10.26 $ 10.22 $ 10.22
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. 0.50 0.50 0.35 0.20 0.29
Net realized and
unrealized gains
(losses) on
securities........... (0.02) 0.02 (0.01) 0.04
---------- ---------- ---------- ---------- ----------
Total from investment
operations........... 0.48 0.52 0.34 0.24 0.29
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income...... (0.50) (0.50) (0.35) (0.20) (0.29)
Dividends in excess of
net investment in-
come.................
Distributions from
capital gains........
Distributions in ex-
cess of capital
gains................
Returns of capital....
---------- ---------- ---------- ---------- ----------
Total distributions... (0.50) (0.50) (0.35) (0.20) (0.29)
Net asset value, end of
year................... $ 10.25 $ 10.27 $ 10.25 $ 10.26 $ 10.22
========== ========== ========== ========== ==========
Total Return (B)........ 4.65% 5.06% 3.28% 2.32% 2.83%
Ratios to Average Net
Assets:
Expenses.............. 0.62% 0.63% 0.65% 0.74% 0.85%
Net investment income. 4.54% 4.89% 3.31% 2.32% 2.81%
Portfolio Turnover Rate
(C).................... N/A N/A N/A N/A N/A
Average Commission Rate
Paid (D)............... N/A
Net Assets, At End of
Year................... $7,896,257 $8,312,676 $7,680,485 $5,061,181 $3,956,152
</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 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 purchase and/or sales of securities other than short term
obligations during the year. Therefore, the portfolio turnover rate has
not been calculated.
(D) During the period, the portfolio held less than 10% of the value of
average net assets in equity securities. Therefore, the Average Commission
Rate Paid has not been calculated.
4
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$ 10.21 $ 10.18 $ 10.16 $ 10.09 $ 10.56
0.52 0.73 0.78 0.63 0.49
0.01
---------- ---------- ---------- ---------- ----------
0.53 0.73 0.78 0.63 0.49
(0.52) (0.70) (0.76) (0.56) (0.96)
---------- ---------- ---------- ---------- ----------
(0.52) (0.70) (0.76) (0.56) (0.96)
$ 10.22 $ 10.21 $ 10.18 $ 10.16 $ 10.09
========== ========== ========== ========== ==========
5.18% 7.15% 7.63% 6.33% 4.85%
0.85% 1.09% 1.37% 1.79% 1.81%
4.95% 6.90% 7.35% 6.16% 4.75%
N/A N/A N/A N/A N/A
$3,672,941 $2,910,677 $2,496,140 $2,228,190 $1,539,184
</TABLE>
5
<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,
1996 1995 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, begin-
ning of year............ $ 16.61 $ 16.25 $ 19.00 $ 11.57
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. (0.03) 0.05 0.03 0.02
Net realized and
unrealized gains
(losses) on securities
and foreign curren-
cies.................. 0.45 0.40 (2.65) 7.43
---------- ---------- ---------- ----------
Total from investment
operations............ 0.42 0.45 (2.62) 7.45
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income....... (0.05) (0.03) (0.02)
Dividends in excess of
net investment income. (0.04)
Distributions from cap-
ital gains............ (0.43)
Distributions in excess
of capital gains...... (0.10)
Returns of capital.....
---------- ---------- ---------- ----------
Total distributions.... (0.43) (0.09) (0.13) (0.02)
Net asset value, end of
year.................... $ 16.60 $ 16.61 $ 16.25 $ 19.00
========== ========== ========== ==========
Total Return (A)......... 2.57% 2.76% (13.77%) 63.90%
Ratios to Average Net As-
sets:
Expenses............... 1.04% 1.01% 0.99% 1.01%
Net investment income.. (0.11%) 0.24% 0.18% 0.14%
Portfolio Turnover Rate.. 64.78% 23.98% 11.12% 7.32%
Average Commission Rate
Paid.................... $ 0.0151
Net Assets, At End of
Year.................... $7,554,427 $6,867,645 $7,351,625 $7,863,581
</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 current 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.
6
<PAGE>
<TABLE>
<CAPTION>
GOLD STOCK PORTFOLIO
---------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1992 1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 11.99 $ 12.76 $ 16.95 $ 14.37 $ 18.24 $ 13.59
0.03 0.07 0.07 0.06 (0.03) (0.03)
(0.42) (0.77) (4.19) 2.70 (3.84) 4.69
---------- ---------- ---------- ---------- ---------- ----------
(0.39) (0.70) (4.12) 2.76 (3.87) 4.66
(0.03) (0.07) (0.07) (0.05)
(0.12) (0.01)
(0.01)
---------- ---------- ---------- ---------- ---------- ----------
(0.03) (0.07) (0.07) (0.18) (0.01)
$ 11.57 $ 11.99 $ 12.76 $ 16.95 $ 14.37 $ 18.24
========== ========== ========== ========== ========== ==========
(3.29%) (5.48%) (24.28%) 19.24% (21.24%) 34.29%
1.13% 1.16% 1.36% 1.39% 1.62% 1.92%
0.24% 0.57% 0.59% 0.39% (0.38%) (0.24%)
7.78% 14.23% 17.61% 3.05% 9.92% 7.02%
$4,338,297 $4,646,951 $5,390,279 $5,969,256 $4,258,297 $3,821,605
</TABLE>
7
<PAGE>
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 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 17.87 $ 15.94 $ 16.14 $ 15.16 $ 12.96
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. .06 0.15 0.09 0.12 0.14
Net realized and
unrealized gains
(losses) on
securities........... 2.85 4.48 1.12 2.29 3.27
----------- ----------- ----------- ----------- -----------
Total from investment
operations........... 2.91 4.63 1.21 2.41 3.41
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net
investment income.... (.06) (0.15) (0.09) (0.12) (0.14)
Dividends in excess of
net investment
income...............
Distributions from
captal gains......... (2.53) (2.55) (1.32) (1.31) (1.07)
Distributions in
excess of capital
gains................
Returns of capital....
----------- ----------- ----------- ----------- -----------
Total distributions... (2.59) (2.70) (1.41) (1.43) (1.21)
Net asset value, end of
year................... $18.19 $ 17.87 $ 15.94 $ 16.14 $ 15.16
=========== =========== =========== =========== ===========
Total Return (A)........ 16.46% 29.72% 7.66% 15.89% 26.50%
Ratios to Average Net
Assets:
Expenses.............. .85% 0.87% 0.89% 0.97% 1.07%
Net investment income. .31% 0.95% 0.63% 0.76% 1.07%
Portfolio Turnover Rate. 49.75% 64.17% 46.65% 49.47% 41.36%
Average Commission Rate
Paid................... $0.0555
Net Assets, At End of
Year................... $62,166,366 $48,517,886 $31,458,666 $25,072,289 $19,985,838
</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.
8
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$ 10.15 $ 13.25 $ 11.71 $ 9.54 $ 10.57
0.24 0.26 0.18 0.11 0.04
3.13 (2.71) 2.06 2.40 (0.11)
----------- ----------- ----------- ---------- ----------
3.37 (2.45) 2.24 2.51 (0.07)
(0.24) (0.26) (0.21) (0.10) (0.12)
(0.32) (0.39) (0.49) (0.24) (0.84)
----------- ----------- ----------- ---------- ----------
(0.56) (0.65) (0.70) (0.34) (0.96)
$ 12.96 $ 10.15 $ 13.25 $ 11.71 $ 9.54
=========== =========== =========== ========== ==========
33.18% (18.55%) 19.36% 26.31% (1.61%)
1.13% 1.25% 1.45% 1.70% 1.75%
2.02% 2.38% 1.59% 1.26% 0.71%
40.93% 15.17% 10.32% 22.69% 13.53%
$15,583,806 $10,517,783 $11,320,279 $6,893,776 $3,448,383
</TABLE>
9
<PAGE>
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 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 10.59 $ 9.70 $ 10.28 $ 10.21 $ 10.61
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. .56 0.74 0.35 0.74 0.66
Net realized and
unrealized gains
(losses) on securi-
ties................. (.29) 0.89 (0.58) 0.13 0.13
----------- ---------- ----------- ---------- ----------
Total from investment
operations........... .27 1.63 (0.23) 0.87 0.79
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income...... (.56) (0.74) (0.35) (0.74) (0.66)
Dividends in excess of
net investment
income...............
Distributions from
capital gains........ (.03) (0.06) (0.53)
Distributions in ex-
cess of capital
gains................
Returns of capital....
----------- ---------- ----------- ---------- ----------
Total distributions... (.59) (0.74) (0.35) (0.80) (1.19)
Net asset value, end of
year................... $ 10.27 $ 10.59 $ 9.70 $ 10.28 $ 10.21
----------- ========== =========== ========== ==========
Total Return (A)........ 2.47% 16.76% (2.28%) 8.68% 7.46%
Ratios to Average Net
Assets:
Expenses.............. .60% 0.63% 0.68% 0.74% 0.88%
Net investment income. 5.93% 6.43% 6.07% 7.59% 6.83%
Portfolio Turnover Rate. 23.25% 127.74% 140.30% 112.66% 81.23%
Average Commission Rate
Paid (B)............... N/A
Net Assets, At End of
Year................... $11,717,693 $9,230,090 $13,066,445 $5,461,879 $4,042,506
</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.
(B) During the period, the portfolio held less than 10% of the value of its
average net assets in equity securities. Therefore, the Average Commission
Rate Paid has not been calculated.
10
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO
-------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$ 9.83 $ 9.76 $ 9.29 $ 9.38 $ 10.47
0.72 0.75 0.73 0.62 0.55
0.79 0.06 0.47 (0.09) (0.65)
---------- ---------- ---------- ---------- ----------
1.51 0.81 1.20 0.53 (0.10)
(0.73) (0.74) (0.73) (0.62) (0.94)
(0.05)
---------- ---------- ---------- ---------- ----------
(0.73) (0.74) (0.73) (0.62) (0.99)
$ 10.61 $ 9.83 $ 9.76 $ 9.29 $ 9.38
========== ========== ========== ========== ==========
15.34% 8.44% 12.92% 5.62% (1.04%)
1.03% 1.21% 1.60% 1.80% 1.96%
7.12% 7.97% 7.62% 6.85% 6.43%
23.73% 29.25% 7.64% 13.80% 53.17%
$3,516,314 $2,905,564 $2,289,788 $1,730,229 $1,302,390
</TABLE>
11
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
---------------------------------------------------------------------
FOR THE
YEAR YEAR YEAR YEAR PERIOD FROM
ENDED ENDED ENDED ENDED MAY 1, 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992 (A)
------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 14.41 $ 11.22 $ 12.35 $ 11.10 $ 10.27
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. 0.18 0.15 0.13 0.12 0.02
Net realized and
unrealized gains
(losses) on securi-
ties................. 3.12 3.62 (0.65) 1.53 0.83
----------- ----------- ---------- ---------- ----------
Total from investment
operations........... 3.30 3.77 (0.52) 1.65 0.85
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income...... (0.18) (0.15) (0.13) (0.12) (0.02)
Dividends in excess of
net investment
income...............
Distributions from
capital gains........ (0.62) (0.29) (0.48) (0.28)
Distributions in ex-
cess of capital
gains................ (0.14)
Returns of capital....
----------- ----------- ---------- ---------- ----------
Total distributions... (0.80) (0.58) (0.61) (0.40) (0.02)
Net asset value, end of
year................... $ 16.91 $ 14.41 $ 11.22 $ 12.35 $ 11.10
=========== =========== ========== ========== ==========
Total Return (B)........ 22.88% 33.58% (4.24%) 14.94% 12.48%
Ratios to Average Net
Assets:
Expenses.............. 0.88% 0.92% 1.10% 1.35% 2.09%(C)
Net investment income. 1.39% 1.50% 1.52% 1.38% 0.36%(C)
Portfolio Turnover Rate. 35.69% 32.30% 38.17% 77.68% 54.11%
Average Commission Rate
Paid................... $0.0700
Net Assets, At End of
Period................. $23,711,696 $13,126,023 $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.
(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 not been annualized.
(C) Per share data and ratios calculated on an annualized basis.
12
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout the year:
<TABLE>
<CAPTION>
CAPITAL GROWTH PORTFOLIO
------------------------------------------------------------------------
FOR THE
YEAR YEAR YEAR YEAR PERIOD FROM
ENDED ENDED ENDED ENDED MAY 1, 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992 (A)
------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 17.38 $ 13.38 $ 14.26 $ 12.42 $ 9.95
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. 0.05 0.03 0.03 (0.01)
Net realized and
unrealized gains
(losses) on securi-
ties and foreign cur-
rencies.............. 3.24 5.56 (0.49) 3.03 2.69
----------- ----------- ----------- ----------- ----------
Total from investment
operations........... 3.29 5.59 (0.46) 3.03 2.68
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income...... (0.05) (0.03) (0.03)
Dividends in excess of
net investment
income...............
Distributions from
capital gains........ (3.36) (1.56) (0.33) (1.19) (0.21)
Distributions in ex-
cess of capital
gains................ (0.06)
Returns of capital....
----------- ----------- ----------- ----------- ----------
Total distributions... (3.41) (1.59) (0.42) (1.19) (0.21)
Net asset value, end of
year................... $ 17.26 $ 17.38 $ 13.38 $ 14.26 $ 12.42
=========== =========== =========== =========== ==========
Total Return (B)........ 19.25% 41.74% (3.26%) 24.73% 40.40%
Ratios to Average Net
Assets:
Expenses.............. 1.13% 1.15% 1.22% 1.33% 1.96% (C)
Net investment income. 0.30% 0.21% 0.25% (0.11%) (0.37%)(C)
Portfolio Turnover Rate. 147.82% 170.32% 202.04% 162.79% 104.76%
Average Commission Rate
Paid................... $0.0502
Net Assets, At End of
Period................. $70,832,162 $49,853,029 $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.
(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 not 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>
BALANCED PORTFOLIO
----------------------------------------------------------------------
FOR THE
YEAR YEAR YEAR YEAR PERIOD FROM
ENDED ENDED ENDED ENDED MAY 1, 1992 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992 (A)
------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year........... $ 11.91 $ 10.62 $ 11.22 $ 10.77 $ 10.10
INCOME FROM INVESTMENT
OPERATIONS
Net investment income. 0.26 0.37 0.32 0.25 0.16
Net realized and
unrealized gains
(losses) on securi-
ties................. 0.99 1.99 (0.47) 0.74 0.67
----------- ----------- ----------- ----------- ----------
Total from investment
operations........... 1.25 2.36 (0.15) 0.99 0.83
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net in-
vestment income...... (0.26) (0.37) (0.32) (0.25) (0.16)
Dividends in excess of
net investment
income...............
Distributions from
capital gains........ (0.83) (0.70) (0.13) (0.25)
Distributions in ex-
cess of capital
gains................ (0.04)
Returns of capital....
----------- ----------- ----------- ----------- ----------
Total distributions... (1.09) (1.07) (0.45) (0.54) (0.16)
Net asset value, end of
year................... $ 12.07 $ 11.91 $ 10.62 $ 11.22 $ 10.77
=========== =========== =========== =========== ==========
Total Return (B)........ 10.56% 22.35% (1.33%) 9.27% 12.33%
Ratios to Average Net
Assets:
Expenses.............. 0.97% 0.99% 1.01% 1.07% 1.43%(C)
Net investment income. 2.20% 3.20% 3.34% 2.79% 2.80%(C)
Portfolio Turnover Rate. 222.35% 164.70% 103.68% 65.49% 77.33%
Average Commission Rate
Paid................... $ 0.0601
Net Assets, At End of
Period................. $18,256,430 $14,532,268 $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.
(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 not 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>
EMERGING GROWTH PORTFOLIO
-----------------------------
FOR THE
YEAR PERIOD FROM
ENDED MAY 1, 1995 TO
DECEMBER 31, DECEMBER 31,
1996 1995 (A)
------------ --------------
<S> <C> <C>
Net asset value, beginning of period........... $ 13.29 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)................. (0.05) (0.04)
Net realized and unrealized gains on securi-
ties........................................ 2.48 3.33
----------- -----------
Total from investment operations............. 2.43 3.29
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income.........
Dividends in excess of net investment income.
Distributions from capital gains............. (0.49)
Distributions in excess of capital gains.....
Returns of capital...........................
----------- -----------
Total distributions.......................... (0.49) 0.00
Net asset value, end of period................. $ 15.23 $ 13.29
=========== ===========
Total Return (B)............................... 18.30% 32.91%
Ratios to Average Net Assets:
Expenses..................................... 1.16% 1.63% (C)
Net investment income........................ (0.48%) (0.84%)(C)
Portfolio Turnover Rate........................ 94.58% 30.31%
Average Commission Rate Paid................... $ 0.0390
Net Assets, At End of Period................... $30,794,030 $11,439,524
</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 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 not 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 $10,000 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 Jefferson-Pilot
Corporation, a North Carolina 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 may or may not be 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 seven unaffiliated
companies, Templeton Global Advisors, Inc. ("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") and
Chubb Asset Managers, Inc. to act as sub-investment advisers or managers to
the World Growth Stock, Gold Stock, Domestic Growth Stock, Capital Growth,
Balanced, Emerging Growth Money Market, Bond, and Growth and Income
Portfolios, respectively. (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, 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%.
17
<PAGE>
Risk Factors. All or a significant portion of this Portfolio may be invested
in foreign securities, including Depository Receipts, and investors should
understand the special considerations and risks related to such an investment
emphasis. See "Foreign Securities" and "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 Nationally Recognized Securities Rating
Organization ("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.
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
18
<PAGE>
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
American Depositary Receipts ("ADRs") European Depositary Receipts ("EDRs")
and Global Depositary Receipts ("GDRs"). See "Foreign Securities" and
"Depository Receipts" in the Prospectus and "DESCRIPTION OF CERTAIN
INVESTMENTS" in the Statement of Additional Information for a description of
ADRs, EDRs and GDRs.
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, EDRs and GDRs, 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 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
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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' 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
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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 Depositary Receipts. 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 "Depository Receipts" in the Prospectus and "DESCRIPTION OF
CERTAIN INVESTMENTS--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.
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.
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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 Depository
Receipts. 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 "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.
Risk Factors. The foreign securities and ADRs, EDRs and GDRs in which the
Portfolio may invest involve special considerations and risks. See "Foreign
Securities" and "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.
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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 Depository Receipts. See
"Foreign Securities" and "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 "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, technologies, management and market
and other opportunities which are usually necessary to become more widely
recognized as growth companies. Emerging growth companies can be of any size
and the Portfolio may also invest in larger or more established companies
whose rates of 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.
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The Portfolio may also hold foreign currency (see "Risk Factors" below). The
Portfolio may invest up to 25% (and generally expects to invest between 0% and
10%) 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 also
invest in emerging market securities.
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 temporary 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. In addition, there may be less research available on many
promising small and medium sized emerging growth companies. 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 generally 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 Service
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 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
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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. 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
dependent 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.
Foreign Securities
The World Growth Stock Portfolio, the Capital Growth 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
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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 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.
Emerging Market Securities
Consistent with the Portfolios' objectives and policies the Portfolios may
invest in securities of issuers whose principal activities are located in
emerging market countries. Emerging market countries include any country
determined by the Sub-Investment Manager to have an emerging market economy,
taking into account a number of factors including whether the country has a
low to middle economy according to the International Bank for Reconstruction
and Development, the country's foreign currency debt rating, its political and
economic stability and the development of its financial and capital markets.
The Sub-Investment Manager determines whether an issuer's principal activities
are located in an emerging market country
26
<PAGE>
by considering such factors as country of organization, the principal trading
market for its securities and the source of its revenues and assets. The
issuer's principal activities generally are deemed to be located in a
particular country if: (a) the security is issued or guaranteed by the
government of the country or any of its agencies, authorities, or
instrumentalities; (b) the issuer is organized under the laws of, and
maintains a principal office in that country; (c) the issuer has its principal
securities trading market in that country; (d) the issuer derives 50% or more
of its total revenue from goods sold or services performed in that country; or
(e) the issuer has 50% or more of its assets in that country.
Depository Receipts
The World Growth Portfolio, the Gold Stock Portfolio, the Growth and Income
Portfolios, the Capital Growth Portfolio, the Balanced Portfolio and the
Energy Growth Portfolio may also invest in Depository Receipts, (ADRs, GDRs
and EDRs.) ADRs are certificates issued by a United States bank representing
the right to receive securities of a foreign issuer deposited in a foreign
branch of a United States bank and traded on a United States exchange or over-
the-counter. European Depository Receipts ("EDRs") and Global Depository
Receipts ("GDRs") are typically issued by foreign banks or trust companies,
although they may be by US banks or trust companies, and also evidence
ownership of underlying securities issued by a foreign or U.S. securities
market. Generally, Depositary Receipts in registered form are designed for use
in the U.S. securities market and Depositary Receipts in bearer form are
designed for use in securities markets outside the United States. Depositary
Receipts may not necessarily be denominated in the same currency as the
underlying securities in to which they may be converted. Depositary Receipts
may be issued pursuant to sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities traded in the
form of Depositary Receipts. In unsponsored programs the issuer may not be
directly involved in the creation of the program. In some cases it may be
easier to obtain financial information from an issuer that has participated in
the creation of the sponsored program. Accordingly, there may be less
information available regarding issuers of securities underlying unsponsored
programs and there may not be a correlation between such information and the
market value of the Securities Brokerage commissions will be incurred if ADRs
are purchased through brokers on the U.S. stock exchanges.
Depositary Receipts also involve the risks of other investment in foreign
securities, for purposes of each Fund's investment policies, a Fund's
investment in Depositary Receipts will be deemed to be investments in the
underlying securities.
Forward Foreign Currency Exchange Contracts
The Portfolios 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, or a proxy currency whose performance is
expected to correlate to the currency. 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 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
27
<PAGE>
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 securities underlying repurchase agreements must
be either U.S. Government Obligations or securities that, at the time the
repurchase agreement is made, 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.
Zero Coupon Bonds
The Portfolios 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
28
<PAGE>
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
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 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, U.S.
Government securities or an irrevocable letter of credit 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 or a letter of credit).
When-Issued Securities
In order to help ensure the availability of suitable securities, the
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.
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<PAGE>
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 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 1996 and 1995 were as follows: 27.50% and 18.09%
for the World Growth Stock Portfolio; 64.78% and 23.98% for the Gold Stock
Portfolio; 49.75% and 64.17% for the Domestic Growth Stock Portfolio; 23.25%
and 127.74% for the Bond Portfolio; 35.69% and 32.30%, for the Growth and
Income Portfolio; 147.82% and 170.32% for the Capital Growth Portfolio; and
222.35% and 164.70% for the Balanced Portfolio. In addition, the portfolio
turnover rate for the Balanced Portfolio for such periods can be broken down
into rates of 233.29% and 219.50%, respectively, for the common stock portion
of the Portfolio and 202.08% and 92.85%, respectively, for the fixed income
portion. The Portfolio turnover rate for Emerging Growth Portfolio for 1996
and for the period from May 1, 1995 (commencement of operations) to December
31, 1995 was 94.58% and 30.31%, respectively. Portfolios having higher
turnover rates may realize larger amounts of gains and losses relative to a
portfolio having a lower 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 affect 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, is a wholly-owned subsidiary of Chubb Life which, in turn,
is a wholly-owned Subsidiary of Jefferson Pilot Corporation. Its address is
One Granite Place, Concord, NH 03301. It provides supervisory investment
advice, and provides certain administrative services for all of the Fund's
Portfolios. Its investment advisory responsibilities include, among other
things, recommending, evaluating, monitoring 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
transfer agent and dividend disbursing agent for the fund and serves as
investment administrator to Chubb Investment Funds, Inc., an open-end
management investment companies organized in 1987.
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,
MONEY MARKET GROWTH AND INCOME, CAPITAL EMERGING
AVERAGE DAILY NET ASSETS 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 Global
Advisors, Inc., 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., 56
Prospect Street, 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 U.S. registered investment companies.
Mr. Sean Farrington has been primarily responsible for the day-to-day
management of the World Growth Stock Portfolio since 1995. He has been
employed by Templeton since 1991.
Chubb Asset, a registered investment adviser, is a Delaware corporation and
a wholly-owned subsidiary of The Chubb Corporation. It is in no way affiliated
with Chubb Investment Advisory or Chubb Life. 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, the Chubb Growth and
Income Fund, the Capital Appreciation Fund and the Global 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. Robert
Witkoff has been primarily responsible for the day-to-day management of the
Growth and Income Portfolio since 1992. Mr. Witkoff joined Chubb Asset in 1988
and is currently Senior 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,
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. Since October 1996, Henry J. Bingham
has been primarily responsible for the day-to-day management of the Gold Stock
Portfolio. He has been associated with Van Eck Associates since 1994 and is
currently Executive Managing Director of Van Eck.
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-two other
registered investment companies. Robert W. 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.
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<PAGE>
Janus, a registered investment adviser, is a Colorado corporation. It serves
as investment adviser or sub-adviser 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 83% 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. Mr. Thomas Marisco and Mr. Marc Pinto are primarily responsible for
the day-to-day management of the Capital Growth Fund. Mr. Marisco is Executive
Vice President of Janus. Mr. Marisco joined Janus in 1986. Mr. Pinto
previously was employed by a family firm and Goldman Sachs.
Phoenix Investment Counsel, Inc. (Phoenix), a registered investment adviser,
is a Massachusetts corporation headquartered in Hartford, Connecticut. It was
originally organized in 1932 as John P. Chase, Inc. and became an indirect
wholly-owned subsidiary of Phoenix Duff & Phelps Corporation on November 1,
1995 as a result of a merger with Duff & Phelps Corporation. Phoenix has been
engaged in the management of the Phoenix Series Fund since 1958 and also
serves as investment adviser or sub-investment adviser to Phoenix Multi-
Portfolio Fund, Phoenix Total Return Fund, Inc., Phoenix Edge Series Fund,
Phoenix Strategic Equity Series Fund and SunAmerica Series Trust. C. Edwin
Riley has been primarily responsible for the day-to-day management of the
Balanced Portfolio since November 1996. Prior to joining Phoenix in 1995, Ed
was a Senior Vice President and Director of Equity Management at NationsBank
Investment Management. He had been with that firm since 1981.
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 $52.8 billion on behalf
of approximately 2.3 million investor accounts as of February 28, 1997. As of
such date, the MFS organization manages approximately $28.9 billion of assets
invested in equity securities and approximately $19.9 billion of assets
invested in fixed income securities. Approximately $4.0 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 wholly owned 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 various combination fixed/variable annuity contracts. MFS and its
wholly owned subsidiary, MFS Asset Management, Inc., provide investment advice
to substantial private clients. John W. Ballen, a Senior Vice President of
MFS, is the Portfolio's portfolio manager. Mr. Ballen has been employed as a
portfolio manager by MFS since 1984.
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 ASSETS 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, under the Investment Management Agreement 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,
32
<PAGE>
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, 1996, all investment management fees paid to
Chubb Investment Advisory totalled: .75%, .50%, .75%, .75%, .50%, .75%, 1.00%,
.75% and .80%, respectively, of the average daily 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, Balanced Portfolio and Emerging Growth Portfolio. For the
year ended December 31, 1996 the ratio of operating expenses to average net
assets was 0.88%, 0.62%, 1.04%, 0.85%, 0.60%, 0.88%, 1.13%, 0.97% and 1.16%
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,
the Balanced Portfolio and Emerging Growth 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.
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 26, 1997,
Chubb Life owned shares of capital stock of the Capital Growth, the Growth and
Income Portfolio and the Balanced Portfolio, representing .14%, .57% and .75%,
respectively, of total shares outstanding. 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.
33
<PAGE>
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 and Jefferson Pilot Corporation. No selling
commission or redemption charge is made with respect to the purchase or sale
of Fund shares.
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 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
34
<PAGE>
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.
Short-term 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 plus assumes a constant rate of
amortization of any discount or premium, 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 mean of the bid and asked 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, affiliates of Chubb Life and Jefferson Pilot Corporation and other non-
affiliated insurance companies in order to fund additional variable life
insurance policies or variable annuity contracts.
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>
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 May 1, 1997.
The date of this Statement of Additional Information is May 1, 1997.
S-1
<PAGE>
TABLE OF CONTENTS
Page
----
Business History
Investment Restrictions
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
S-2
<PAGE>
Page
----
Performance and Yield Information
Additional Information
Reports
Name and Service Mark
S-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. Chubb Life was
acquired by Jefferson-Pilot Corporation, a North Carolina corporation, on April
30, 1997. 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
S-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.
S-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.
S-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
S-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 Nationally Recognized Securities Rating Organization
(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
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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
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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 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
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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 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
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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 or otherwise cover the forward currency contract
in accordance with the current SEC's regulations.
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"),
Global Depository Receipts ("GDR's"), and European Depository Receipts
("EDR's"). ADR's 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. GDRs and EDRs are
similar to ADRs except that they are not necessarily issued by a US Bank in that
they represent evidence of ownership of underlying securities issued in the US
or foreign securities market. Generally, Depository Receipts in bearer form are
designed for care in securities market outside the United States. Depository
Receipts may not necesarily be denominated in the same currency as the
underlying securities into which they may be converted. Depository Receipts may
be in sponsored or unsponsored programs. The issuer may not be involved and less
issuer information may be available. The Fund believes that the risk associated
with ownership of depository receipts 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
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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
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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 used for non hedging purposes.
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
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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
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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.
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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
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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.
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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.
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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
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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
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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.
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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.
S-23
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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.
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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
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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 Global Advisors, Inc.
("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. 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
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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, 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 and the Domestic Growth Stock Portfolio,
respectively. For the year ended December 31, 1995, the Fund paid $511,260,
$40,941, $59,640, $50,107, $317,840, $65,332, $387,176 and $106,430 and $33,463
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, the Balanced Portfolio, and the Emerging Growth Portfolio,
respectively. For the year ended December 31, 1996 the Fund paid and $656,115,
$42,306, $62,705, $54,902, $480,015, $135,383, $703,702, $134,590, and $169,822
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 Stock Portfolio, the Capital Growth
Portfolio, the Balanced Portfolio and the Emerging Growth Portfolio. All such
fees were paid pursuant to the terms of the Investment Management Agreements and
the Sub-Investment Management Agreements. The Emerging Growth Portfolio was
added to the Fund on May 1, 1995 and therefore no investment advisory fees were
paid by it during 1994.
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 were approved by the Fund's Board of Directors on January
30, 1997. As a result of the sale by the Chubb Corporation of Chubb Life to
Jefferson-Pilot on April 30, 1997 (the "Transaction") and the resulting change
in control of Chubb Investment Advisory, the Investment Management Agreements
and each of the Sub-Investment Management Agreements terminated by operation of
law on that date. On April 30, 1997 the Fund and Chubb Investment Advisory
received an exemptive order from the Securities and Exchange Commission that
permits Chubb Investment Advisory to continue to provide investment management
services to the Fund and each of its series during an interim period of not more
than 120 days from the date of the Transaction and continuing through the date a
new investment management agreement and new sub-investment management agreements
are approved or disapproved by shareholders (but in no event later than August
28, 1997). It is currently expected that shareholders of record on April 4, 1997
will be asked to consider these agreements at Special Meeting of Shareholders to
be held on May 30, 1997. See "CAPITAL STOCK" in this Statement of Additional
Information.
Independent Auditors
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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 incorporated by reference 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 incorporated by
reference herein, 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
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mark-up.
The amount of brokerage commissions paid by the Fund for all Portfolios, for the
year 1996 were $532,729, and for all portfolios for 1995 were $402,052.
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
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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 1996, $37,663 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.
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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.
Charles C. Cornelio Vice Executive Vice President, Chief
One Granite Place President Administrative Officer, Counsel and
Concord, N.H. 03301 and Assistant Secretary, Chubb Life
General Counsel 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.
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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 of
One Granite Place ChubbLife; Treasurer of Chubb
Concord, N.H. 03301 Securities Corporation, Chubb
Investment Advisory and Hampshire
Funding, Inc.; formerly, Mutual Fund
Accounting Officer 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 Mutual Fund Accounting and
One Granite Place Treasurer Operations Officer for ChubbLife
Concord, N.H. 03301 Concord, N.H. 03301 and Chubb
Investment Advisory; Assistant
Treasurer of Chubb Investment Funds,
Inc.; formerly Mutual Fund Accounting
and Operations Manager for the Fund,
Chubb Investment Funds, Inc. and
Chubb Investment Advisory.
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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
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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,$5,000,000 worth of shares of the Balanced
Portfolio and $3,000,000 worth of shares of Emerging Growth Portfolio for its
general account. Chubb Life intends to withdraw such investment from time to
time.
As of February 28, 1997, Chubb Life owned of record and beneficially the
following percentages of shares of the Fund's Portfolios in its general account:
1.35% of the Growth and Income Portfolio, .36% of the Capital Growth, Portfolio,
1.23% of the Balanced Portfolio. Chubb Separate Account A, a separate account
established by Chubb Life, owned of record as of February 28, 1997, 100.00% of
the World Growth Stock Portfolio, the Money Market Portfolio, the Gold Stock
Portfolio, the Bond Portfolio, the Domestic Growth Stock Portfolio and the
Emerging Growth Portfolio, 98.65% of the Growth and Income Portfolio, 99.64% of
the Capital Growth Portfolio, 98.77% 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
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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.
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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.
Long-Term U.S. Treasury securities and other obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities 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 valued
at cost on the date of purchase plus a constant rate of amortization of any
discount or premium until maturity, regardless of any intervening change in
general interest rates or the market value of the instrument. 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, 1996, the yield of the Money Market
Portfolio expressed as a simple annualized yield was 4.28%; the yield of the
Money Market Portfolio expressed as a compounded effective yield was 4.37%.
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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, 1996 for the Bond Portfolio
was 6.25%.
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, the Balanced Portfolio and Emerging Growth Portfolio for the
year ended December 31, 1996 are 19.22%, 4.65%, 2.57%, 2.47%, 16.46%, 22.88%,
19.25%, 10.56% and 18.30%, respectively. The average annual total return
quotations for these Portfolios, other than the Growth and Income Portfolio, the
Capital Growth Portfolio, the Balanced Portfolio and the Emerging Growth
Portfolio, for the 5 years ended December 31, 1996 are 13.79%, 3.63%, 7.64%,
6.42% and 18.98%, respectively. The average annual total return quotations for
these Portfolios since each Portfolio's inception are 12.34%, 5.01%, 5.17%,
7.20%, 13.96%, 15.43%, 22.65%, 10.32% and 31.10%, 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
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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
$10,000 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
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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, have been sent to
Policyowners.
Name and Service Mark
The Chubb Corporation in conjunction with its sale of Chubb Life to Jefferson-
Pilot Corporation has granted the Fund the right to use the "Chubb" name and
service mark.
FINANCIAL STATEMENTS
The financial statements contained in the Fund's December 31, 1996 Annual Report
to Shareholders are incorporated herein by reference.
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PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements contained in the Fund's December 31, 1996
Annual Report to Shareholders filed on March 3, 1997 are
incorporated by reference in the Fund's Statement of Additional
Information.
(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-1
<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-2
<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-3
<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-4
<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-5
<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. Not applicable.
12. Not applicable.
C-6
<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.
27.1 Financial Data Schedules
99.1 Consent of Ernst & Young LLP
99.2 Schedule of Computation of Performance Quotations
99.3 Diagram of Subsidiaries of the Jefferson-Pilot Corporation
99.4 Price Make-up Sheet
C-7
<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. On April 30, 1997, The Chubb Corporation sold all
of its ownership interest in Chubb Life to Jefferson-Pilot Corporation, a North
Carolina corporation. 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 Jefferson-Pilot
Corporation, or subsidiaries of such subsidiaries. A diagram of the subsidiaries
of Jefferson-Pilot Corporation has been filed herein as Exhibit 99.3.
C-8
<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....... Two
</TABLE>
Chubb Life has purchased 300,000 shares of capital stock of the the Emerging
Growth Portfolio. 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-9
<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-10
<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 Executive 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-11
<PAGE>
<TABLE>
<CAPTION>
Name of Director Positions with Chubb Other Business,
or Officer of Chubb Investment Profession, Vocation or
Investment Advisory Advisory Employment During
- ------------------- -------- Past Two Years
--------------
<S> <C> <C>
John A. Weston Treasurer Assistant Vice President,
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 Vice President of the
Chubb Corporation and
Chubb Asset; Senior Vice
President of Federal
Insurance Company and
Chubb & Son, Inc.,
</TABLE>
C-12
<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,
One Granite Place Counsel and Secretary General Counsel and
Concord, Assistant Secretary
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-13
<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,
Global Advisors, Inc., Lyford Cay, Nassau, Bahamas; Janus Capital Corporation,
100 Fillmore Street, Suite 300, Denver, Colorado 80206; Phoenix Investment
Counsel, Inc., 56 Prospect Street 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-14
<PAGE>
SIGNATURES
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-15
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/RONALD ANGARELLA President, April 7, 1997
------------------- Principal
RONALD ANGARELLA Executive
Officer, and
Director
/s/JOHN A. WESTON Treasurer, Principal April 7, 1997
----------------- Financial Officer,
JOHN A. WESTON, and Principal
Accounting Officer
MICHAEL D. COUGHLIN* Director April 7, 1997
-------------------
ELIZABETH S. HAGER* Director April 7, 1997
------------------
JAMES J. WEISBART* Director April 7, 1997
-----------------
By /s/ Ronald Angerella
-----------------------
Ronald Angerella, attorney in fact
</TABLE>
C-16
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
27.1 Financial Data Schedules, All Portfolios
99.1 Consent of Ernst & Young LLP
99.2 Schedule of Computation of Performance Quotations
99.3 Diagram of Subsidiaries of the Jefferson-Pilot Corporation
99.4 Price Make-up Sheet.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> WORLD GROWTH STOCK PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,765,094
<INVESTMENTS-AT-VALUE> 9,713,036
<RECEIVABLES> 2,459,549
<ASSETS-OTHER> 1,237,333
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,835,918
<PAYABLE-FOR-SECURITIES> 1,653,028
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,187,256
<TOTAL-LIABILITIES> 8,840,284
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71,067,714
<SHARES-COMMON-STOCK> 3,947,054
<SHARES-COMMON-PRIOR> 3,475,276
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 490,907
<ACCUMULATED-NET-GAINS> 2,046,667
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19,372,160
<NET-ASSETS> 91,995,634
<DIVIDEND-INCOME> 2,149,311
<INTEREST-INCOME> 551,779
<OTHER-INCOME> 0
<EXPENSES-NET> 772,846
<NET-INVESTMENT-INCOME> 1,928,244
<REALIZED-GAINS-CURRENT> 7,188,290
<APPREC-INCREASE-CURRENT> 6,444,435
<NET-CHANGE-FROM-OPS> 15,560,969
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,896,674
<DISTRIBUTIONS-OF-GAINS> 5,766,822
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 480,289
<NUMBER-OF-SHARES-REDEEMED> 182,468
<SHARES-REINVESTED> 173,957
<NET-CHANGE-IN-ASSETS> 18,303,277
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 556,740
<OVERDISTRIB-NII-PRIOR> 454,018
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 65,061
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 772,846
<AVERAGE-NET-ASSETS> 86,733,775
<PER-SHARE-NAV-BEGIN> 21.20
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> 3.56
<PER-SHARE-DIVIDEND> .48
<PER-SHARE-DISTRIBUTIONS> 1.46
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.31
<EXPENSE-RATIO> .88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,740,635
<INVESTMENTS-AT-VALUE> 7,739,400
<RECEIVABLES> 634
<ASSETS-OTHER> 549,360
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,289,394
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 393,137
<TOTAL-LIABILITIES> 393,137
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,898,600
<SHARES-COMMON-STOCK> 770,648
<SHARES-COMMON-PRIOR> 809,271
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,108)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,235)
<NET-ASSETS> 7,896,257
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 440,661
<OTHER-INCOME> 0
<EXPENSES-NET> 52,737
<NET-INVESTMENT-INCOME> 387,924
<REALIZED-GAINS-CURRENT> (163)
<APPREC-INCREASE-CURRENT> (2,551)
<NET-CHANGE-FROM-OPS> 385,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 387,924
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,371,889
<NUMBER-OF-SHARES-REDEEMED> 1,449,618
<SHARES-REINVESTED> 39,106
<NET-CHANGE-IN-ASSETS> (416,419)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (945)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 42,558
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 52,737
<AVERAGE-NET-ASSETS> 8,470,557
<PER-SHARE-NAV-BEGIN> 10.27
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> (.02)
<PER-SHARE-DIVIDEND> .50
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.25
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> GOLD STOCK PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,594,071
<INVESTMENTS-AT-VALUE> 7,803,139
<RECEIVABLES> 424,418
<ASSETS-OTHER> 10,597
<OTHER-ITEMS-ASSETS> 5,400
<TOTAL-ASSETS> 8,243,554
<PAYABLE-FOR-SECURITIES> 485,692
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 203,435
<TOTAL-LIABILITIES> 689,127
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,377,161
<SHARES-COMMON-STOCK> 454,995
<SHARES-COMMON-PRIOR> 413,432
<ACCUMULATED-NII-CURRENT> 105,318
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (135,784)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 207,732
<NET-ASSETS> 7,554,427
<DIVIDEND-INCOME> 61,079
<INTEREST-INCOME> 16,930
<OTHER-INCOME> 0
<EXPENSES-NET> 87,402
<NET-INVESTMENT-INCOME> (9,393)
<REALIZED-GAINS-CURRENT> 579,813
<APPREC-INCREASE-CURRENT> (474,478)
<NET-CHANGE-FROM-OPS> 95,942
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 196,148
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 119,333
<NUMBER-OF-SHARES-REDEEMED> 80,029
<SHARES-REINVESTED> 2,259
<NET-CHANGE-IN-ASSETS> 686,782
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 71,804
<OVERDIST-NET-GAINS-PRIOR> 332,934
<GROSS-ADVISORY-FEES> 62,705
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 87,402
<AVERAGE-NET-ASSETS> 8,314,989
<PER-SHARE-NAV-BEGIN> 16.61
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> .45
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .43
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.60
<EXPENSE-RATIO> 1.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> DOMESTIC GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 57,127,636
<INVESTMENTS-AT-VALUE> 66,193,249
<RECEIVABLES> 352,945
<ASSETS-OTHER> 3,305,136
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 69,851,330
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,684,964
<TOTAL-LIABILITIES> 7,684,964
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,741,370
<SHARES-COMMON-STOCK> 3,418,546
<SHARES-COMMON-PRIOR> 2,715,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 359,383
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,065,613
<NET-ASSETS> 62,166,366
<DIVIDEND-INCOME> 665,000
<INTEREST-INCOME> 83,777
<OTHER-INCOME> 0
<EXPENSES-NET> 546,784
<NET-INVESTMENT-INCOME> 201,993
<REALIZED-GAINS-CURRENT> 7,787,402
<APPREC-INCREASE-CURRENT> 1,251,740
<NET-CHANGE-FROM-OPS> 9,241,135
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 201,993
<DISTRIBUTIONS-OF-GAINS> 8,608,136
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 674,482
<NUMBER-OF-SHARES-REDEEMED> 372,862
<SHARES-REINVESTED> 401,256
<NET-CHANGE-IN-ASSETS> 13,648,480
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 480,015
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 546,784
<AVERAGE-NET-ASSETS> 63,632,545
<PER-SHARE-NAV-BEGIN> 17.87
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 2.85
<PER-SHARE-DIVIDEND> .06
<PER-SHARE-DISTRIBUTIONS> 2.53
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.19
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 12,152,607
<INVESTMENTS-AT-VALUE> 12,196,539
<RECEIVABLES> 168,563
<ASSETS-OTHER> 73,016
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,438,118
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 720,425
<TOTAL-LIABILITIES> 720,425
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,672,624
<SHARES-COMMON-STOCK> 1,141,490
<SHARES-COMMON-PRIOR> 871,579
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,137
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 43,932
<NET-ASSETS> 11,717,693
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 699,701
<OTHER-INCOME> 0
<EXPENSES-NET> 64,383
<NET-INVESTMENT-INCOME> 635,318
<REALIZED-GAINS-CURRENT> 70,071
<APPREC-INCREASE-CURRENT> (363,167)
<NET-CHANGE-FROM-OPS> 342,222
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 635,318
<DISTRIBUTIONS-OF-GAINS> 34,269
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 526,422
<NUMBER-OF-SHARES-REDEEMED> 317,408
<SHARES-REINVESTED> 60,897
<NET-CHANGE-IN-ASSETS> 2,487,603
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (34,665)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 53,464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 64,383
<AVERAGE-NET-ASSETS> 10,634,614
<PER-SHARE-NAV-BEGIN> 10.59
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> (.29)
<PER-SHARE-DIVIDEND> .56
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.27
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> GROWTH AND INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 19,449,541
<INVESTMENTS-AT-VALUE> 23,632,810
<RECEIVABLES> 46,077
<ASSETS-OTHER> 1,189,653
<OTHER-ITEMS-ASSETS> 175
<TOTAL-ASSETS> 24,868,715
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,157,019
<TOTAL-LIABILITIES> 1,157,019
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,104,196
<SHARES-COMMON-STOCK> 1,402,464
<SHARES-COMMON-PRIOR> 910,807
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 424,234
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,183,269
<NET-ASSETS> 23,711,696
<DIVIDEND-INCOME> 373,172
<INTEREST-INCOME> 35,826
<OTHER-INCOME> 0
<EXPENSES-NET> 158,754
<NET-INVESTMENT-INCOME> 250,244
<REALIZED-GAINS-CURRENT> 1,429,599
<APPREC-INCREASE-CURRENT> 2,322,094
<NET-CHANGE-FROM-OPS> 4,001,937
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 250,227
<DISTRIBUTIONS-OF-GAINS> 873,208
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 638,373
<NUMBER-OF-SHARES-REDEEMED> 183,357
<SHARES-REINVESTED> 36,642
<NET-CHANGE-IN-ASSETS> 10,585,673
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 132,174
<GROSS-ADVISORY-FEES> 135,739
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 158,754
<AVERAGE-NET-ASSETS> 17,885,364
<PER-SHARE-NAV-BEGIN> 14.41
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> 3.12
<PER-SHARE-DIVIDEND> .18
<PER-SHARE-DISTRIBUTIONS> .62
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.91
<EXPENSE-RATIO> .88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> CAPITAL GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 73,631,704
<INVESTMENTS-AT-VALUE> 80,082,904
<RECEIVABLES> 1,095,969
<ASSETS-OTHER> 1,771,723
<OTHER-ITEMS-ASSETS> 180
<TOTAL-ASSETS> 82,950,776
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,118,614
<TOTAL-LIABILITIES> 12,118,614
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 62,852,475
<SHARES-COMMON-STOCK> 4,103,167
<SHARES-COMMON-PRIOR> 2,869,198
<ACCUMULATED-NII-CURRENT> 1,873
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,526,661
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,451,153
<NET-ASSETS> 70,832,162
<DIVIDEND-INCOME> 464,170
<INTEREST-INCOME> 542,852
<OTHER-INCOME> 0
<EXPENSES-NET> 797,903
<NET-INVESTMENT-INCOME> 209,119
<REALIZED-GAINS-CURRENT> 13,355,059
<APPREC-INCREASE-CURRENT> (2,436,125)
<NET-CHANGE-FROM-OPS> 11,128,053
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 206,677
<DISTRIBUTIONS-OF-GAINS> 13,430,158
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,090,550
<NUMBER-OF-SHARES-REDEEMED> 205,098
<SHARES-REINVESTED> 348,517
<NET-CHANGE-IN-ASSETS> 20,979,133
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,602,334
<OVERDISTRIB-NII-PRIOR> 1,143
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 703,701
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 797,903
<AVERAGE-NET-ASSETS> 69,766,608
<PER-SHARE-NAV-BEGIN> 17.38
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 3.24
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 3.36
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.26
<EXPENSE-RATIO> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> BALANCED PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 18,701,560
<INVESTMENTS-AT-VALUE> 19,627,605
<RECEIVABLES> 1,088,377
<ASSETS-OTHER> 41,357
<OTHER-ITEMS-ASSETS> 176
<TOTAL-ASSETS> 20,757,515
<PAYABLE-FOR-SECURITIES> 1,007,150
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,493,935
<TOTAL-LIABILITIES> 2,501,085
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,700,368
<SHARES-COMMON-STOCK> 1,513,162
<SHARES-COMMON-PRIOR> 1,220,439
<ACCUMULATED-NII-CURRENT> 169
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 629,848
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 926,045
<NET-ASSETS> 18,256,430
<DIVIDEND-INCOME> 101,457
<INTEREST-INCOME> 469,158
<OTHER-INCOME> 0
<EXPENSES-NET> 174,909
<NET-INVESTMENT-INCOME> 395,706
<REALIZED-GAINS-CURRENT> 1,710,585
<APPREC-INCREASE-CURRENT> (325,936)
<NET-CHANGE-FROM-OPS> 1,780,355
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 395,535
<DISTRIBUTIONS-OF-GAINS> 1,248,566
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 444,592
<NUMBER-OF-SHARES-REDEEMED> 270,460
<SHARES-REINVESTED> 118,592
<NET-CHANGE-IN-ASSETS> 3,724,162
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 134,709
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 174,909
<AVERAGE-NET-ASSETS> 17,812,036
<PER-SHARE-NAV-BEGIN> 11.91
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> .99
<PER-SHARE-DIVIDEND> .26
<PER-SHARE-DISTRIBUTIONS> .83
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.07
<EXPENSE-RATIO> .97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> EMERGING GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 27,681,152
<INVESTMENTS-AT-VALUE> 31,343,640
<RECEIVABLES> 19,552
<ASSETS-OTHER> 391,571
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,754,763
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 960,733
<TOTAL-LIABILITIES> 960,733
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,298,182
<SHARES-COMMON-STOCK> 2,021,917
<SHARES-COMMON-PRIOR> 860,878
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,495,848
<NET-ASSETS> 30,794,030
<DIVIDEND-INCOME> 26,867
<INTEREST-INCOME> 119,739
<OTHER-INCOME> 0
<EXPENSES-NET> 250,544
<NET-INVESTMENT-INCOME> (103,938)
<REALIZED-GAINS-CURRENT> 867,902
<APPREC-INCREASE-CURRENT> 2,223,109
<NET-CHANGE-FROM-OPS> 2,987,073
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 964,086
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,255,676
<NUMBER-OF-SHARES-REDEEMED> 96,996
<SHARES-REINVESTED> 2,359
<NET-CHANGE-IN-ASSETS> 19,354,506
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 173,563
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 250,544
<AVERAGE-NET-ASSETS> 21,508,669
<PER-SHARE-NAV-BEGIN> 13.29
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 2.48
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .49
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.23
<EXPENSE-RATIO> 1.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 99.1
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 14, 1997,
incorporated by reference in Post-Effective Amendment Number 18 to the
Registration Statement (Form N-1A No. 2-94479) of Chubb America Fund, Inc.
ERNST & YOUNG LLP
Boston, Massachusetts
April 4, 1997
<PAGE>
CHUBB AMERICA FUND
MONEY MARKET PORTFOLIO
7 DAY YIELD
<TABLE>
<CAPTION>
NET MARKET DAILY
DATE INCOME EXPENSES INCOME VALUE YIELD
<S> <C> <C> <C> <C> <C>
12/25/96 1,091.60 153.79 937.82 7,934,829,360 0.000118
12/26/06 1,091.60 153.79 937.82 7,934,829,360 0.000118
12/27/96 1,090.08 154.40 935.68 7,972,718,900 0.000117
12/28/96 1,097.47 154.92 942.56 7,972,718,900 0.000118
12/29/96 1,097.47 154.92 942.56 7,972,718,900 0.000118
12/30/96 1,097.47 154.92 942.56 8,248,169,050 0.000114
12/31/96 1,121.97 158.68 963.29 8,284,181,600 0.000116
7 DAY YIELD 4.28%
7 DAY EFFECTIVE YIELD: 4.37%
FORMULA:
7 DAY YIELD @SUM(L11.I..L17)/7*365
7 DAY EFFECTIVE YIELD ((1+@SUM(L11..L17))[CARAT APPEARS HERE]
(365/7)-1)
</TABLE>
<PAGE>
CHUBB AMERICA FUND
BOND PORTFOLIO
30 DAY YIELD INCOME CALCULATION
FOR PERIOD 12/02/96 - 12/31/96
GOVERNMENT SECURITIES AND CORPORATE BONDS
<TABLE>
<CAPTION>
SETTLE YTM MARKET
SYMBOL DATE PAR COUPON DUE DATE QUOTE (Monroe) YTM VALUE
- -------- ------- ------- ------------- -------------- ---------- ---------- ---------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CORN 12/02/96 50 8.250% 03/15/02 108.3309 6.366% 6.366% 54,165.45
N1199 12/05/96 730 7.750% 11/30/99 105.5312 5.709% 5.709% 770,377.76
N1112 12/02/96 1375 10.375% 11/15/12 132.1250 6.999% 6.999% 1,816,718.75
N0900 12/02/96 2050 6.125% 09/30/00 101.2187 5.763% 5.763% 2,074,983.35
N0203 12/02/96 2740 6.250% 02/15/03 101.8125 5.895% 5.895% 2,789,662.50
N0203 12/05/96 150 6.250% 02/15/03 101.0938 6.034% 6.034% 151,640.63
N0203 12/05/96 150 6.250% 02/15/03 101.0938 6.034% 6.034% 151,640.63
N0701 12/02/96 500 6.625% 07/31/01 103.2187 5.824% 5.824% 516,093.50
N0400 12/02/96 380 6.750% 04/30/00 103.0312 5.756% 5.756% 391,518.56
N0501 12/02/96 200 8.000% 05/15/01 108.5312 5.797% 5.797% 217,062.40
--------------------
8,933,863.52
===================
<CAPTION>
INTEREST
SYMBOL RECEIVABLE DAYS HELD INCOME
- -------- ------------ ----------- -----------
<S> <C> <C> <C>
CORN 859.50 30 $291.91
N1189 28,318.29 30 $3,799.80
N1112 5,911.20 30 10,630.49
N0900 21,041.95 30 10,066.16
NO203 49,792.91 30 13,948.82
NO203 2,853.26 11 284.84
NO203 2,853.26 27 699.16
NO701 10,981.32 30 2,558.07
NO400 2,054.94 30 1,887.84
NO501 663.00 30 1,051.80
------------ -----------
125,329.63 $45,218.89
============ ===========
</TABLE>
MORTGAGE-BACKED SECURITIES
<TABLE>
<CAPTION>
FACE GAIN/LOSS
INTEREST INCOME (adj. for $ paydown) RATE DAYS INCOME ON PAYDOWN
- --------------- -------------------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FHLMC, #C80090, 6.00% FC800 528,611 6.00% 30 2,643.06 185.22
MAT: 01/01/24
FNMA, 9.55% F0997 55,000 9.550% 30 437.71 0.00
MAT: 09/10/97
FNMA, CMO #88296, 9.500 F8298 68,139 9.500% 30 539.43 20.67
MAT: 12/25/18
FNMA POOL #248672, 6.0 F248 170,942 6.000% 30 854.71 24.94
MAT: 12/01/23
FNMA POOL #261605M 6.0 F261 706,979 6.000% 30 3,534.90 88.38
MAT: 01/01/2024
FNMA POOL #267376, 6.0 F267 179,066 6.000% 30 895.33 20.74
MAT: 01/01/24
GNMA POOL #190666, 9.0 G0666 91,609 9.000% 30 687.07 1.68
MAT: 12/15/16
GNMA POOL #402670, 8.0 G0825 914,878 8.000% 30 6,099.19 (295.06)
MAT: 08/15/25
GNMA POOL #780339, 8.0 G1223 905,439 8.000% 30 6,036.26 (331.47)
MAT: 12/15/23
$21,727.65 ($284.90)
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DISCOUNT EARNED (Adjusted for 1 Paydown)
---------------------------------------
<S> <C> <C> <C> <C>
F248 12/2/96-12/31/96 1.63 30 48.90
F261 12/2/96-12/31/96 6.74 30 202.20
F267 12/2/96-12/31/96 1.71 30 51.30
FB298 12/2/96-12/31/96 0.18 30 5.40
FC800 12/2/96-12/31/96 5.13 30 153.90
G066 12/2/96-12/31/96 0.16 30 4.80
G0825 12/2/96-12/31/96 (2.75) 30 (82.50)
G1223 12/2/96-12/31/96 (3.68) 30 (110.40)
-----------
$273.60
-----------
-----------
Total Mortgage Backed Securities $21,716.35
===========
</TABLE>
See Calculations Above ----------------- Bond Income $66,935.24
Sweep Income 278.10
------------
Total Income $67,213.34
============
<TABLE>
<CAPTION>
30 DAY YIELD CALCULATION Current
-------
<S> <C>
INCOME $67,213.34
EXPENSES $6,593.63
AVG DAILY SHARES ELIGIBLE FOR DIST. 1,148,083.548
OFFERING PRICE AT END OF PERIOD $10.27
30 DAY YIELD = 6.25%
</TABLE>
Formula:
=2*((((67213.34-6593.63)/(1148083.548*10.27)+1)TO THE POWER 6)-1)
PREPARED BY:______________________________
REVIEWED BY:______________________________
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: WORLD GROWTH FUND
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
SHARES TO DATE X (NAV + NOT REINVESTED)= GROSS VALUE
511.492226 23.31 11921.5626
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 21.20 11921.5626 10,000.00 (1921.5626)
SHARES PURCHASED: 471.5924943
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(1921.5626) 10,000.00 0.1922
ONE YEAR NET RATE OF RETURN: 19.22%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 21.204748 12/31/95 12/31/95 0.433027 0.473926 21.204748 3,151,911.72
01/31/96 21.668855 01/31/96 01/31/96 21.668855
02/28/96 21.892306 02/28/96 02/28/96 21.892306
03/31/96 21.992176 03/31/96 03/31/96 0.150160 21.992176 556,740.56
04/30/96 22.483211 04/30/96 04/30/96 22.483211
05/31/96 22.711642 05/31/96 05/31/96 22.711642
06/30/96 22.834833 06/30/96 06/30/96 22.834833
07/31/96 22.074809 07/31/96 07/31/96 22.074809
08/31/96 22.800739 08/31/96 08/31/96 22.800739
09/30/96 23.076727 09/30/96 09/30/96 23.076727
10/31/96 23.373643 10/31/96 10/31/96 23.373643
11/30/96 24.573486 11/30/96 11/30/96 24.573486
12/31/96 23.307417 12/31/96 12/31/96 0.480529 1.319993 23.307417
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/95 471.592494
01/31/96 471.592494
02/28/96 471.592494
03/31/96 70.814329 3.219978 474.812473
04/30/96 474.812473
05/31/96 474.812473
06/30/96 474.812473
07/31/96 474.812473
08/31/96 474.812473
09/30/96 474.812473
10/31/96 474.812473
11/30/96 474.812473
12/31/96 854.910303 36.679753 511.492226
</TABLE>
<PAGE>
GROSS CAF: WORLD GROWTH FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
PURCHASE DATE: 12/31/91
INITIAL INVESTMENT: $10,000.00
INITIAL VALUE: 16.45
SHARES PURCHASED: 607.9027356
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INCOME
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION
12/31/91 16.450000 12/31/91 12/31/91 0.336800
01/31/92 16.418704 01/31/92 01/31/92
02/28/92 16.766066 02/28/92 02/28/92
03/31/92 16.419780 03/31/92 03/31/92 0.001510
04/30/92 16.991563 04/30/92 04/30/92
05/31/92 17.746603 05/31/92 05/31/92
06/30/92 17.360832 06/30/92 06/30/92
07/31/92 17.470219 07/31/92 07/31/92
08/31/92 17.133530 08/31/92 08/31/92
09/30/92 16.837943 09/30/92 09/30/92
10/31/92 16.863608 10/31/92 10/31/92
11/30/92 17.043888 11/30/92 11/30/92
12/31/92 16.725976 12/31/92 12/31/92 0.352180
01/31/93 17.112758 01/31/93 01/31/93
02/28/93 17.325399 02/28/93 02/28/93
03/31/93 17.860448 03/31/93 03/31/93
04/30/93 18.484501 04/30/93 04/30/93
05/31/93 18.848873 05/31/93 05/31/93
06/30/93 18.555732 06/30/93 06/30/93
07/31/93 18.758134 07/31/93 07/31/93
08/31/93 20.063211 08/31/93 08/31/93
09/30/93 20.007417 09/30/93 09/30/93
10/31/93 21.040060 10/31/93 10/31/93
11/30/93 20.733282 11/30/93 11/30/93
12/31/93 20.889335 12/31/93 12/31/93 0.236602
01/31/94 21.893065 01/31/94 01/31/94
02/28/94 21.505751 02/28/94 02/28/94
03/31/94 19.956783 03/31/94 03/31/94 0.005400
04/30/94 20.160521 04/30/94 04/30/94
05/31/94 20.202263 05/31/94 05/31/94
06/30/94 19.642215 06/30/94 06/30/94
07/31/94 20.376412 07/31/94 07/31/94
08/31/94 21.310992 08/31/94 08/31/94
09/30/94 20.981873 09/30/94 09/30/94
<CAPTION>
SHARES TO DATE X (NAV + NOT REINVESTED)= GROSS VALUE
818.505603 23.31 19077.2514
GROSS VALUE - INITIAL INVESTMENT NET VALUE
19077.2514 10,000.00 (9077.2514)
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(9077.2514) 10,000.00 0.9077
GROSS 5 YEAR RETURN: 90.77%
ANNUALIZED GROSS 5 YEAR RETURN: 13.79%
CAPITAL SHARES TOTALS
DATE DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST. REINV. SHARES
<S> <C> <C> <C> <C> <C> <C>
12/31/91 16.450000 454,602.01 607.902736
01/31/92 16.418704 607.902736
02/28/92 16.766066 607.902736
03/31/92 16.419780 2,100.00 0.917933 0.055904 607.958640
04/30/92 16.991563 607.958640
05/31/92 17.746603 607.958640
06/30/92 17.360832 607.958640
07/31/92 17.470219 607.958640
08/31/92 17.133530 607.958640
09/30/92 16.837943 607.958640
10/31/92 16.863608 607.958640
11/30/92 17.043888 607.958640
12/31/92 0.369510 16.725976 1,096,656.10 438.757671 26.232112 634.190751
01/31/93 17.112758 634.190751
02/28/93 17.325399 634.190751
03/31/93 17.860448 634.190751
04/30/93 18.484501 634.190751
05/31/93 18.848873 634.190751
06/30/93 18.555732 634.190751
07/31/93 18.758134 634.190751
08/31/93 20.063211 634.190751
09/30/93 20.007417 634.190751
10/31/93 21.040060 634.190751
11/30/93 20.733282 634.190751
12/31/93 1.242153 20.889335 937.812978 44.894343 679.085095
01/31/94 21.893065 679.085095
02/28/94 19.956783 679.085095
03/31/94 0.222800 19.956783 511,530.10 154.967219 7.765140 686.850235
04/30/94 686.850235
05/31/94 686.850235
06/30/94 19.642215 686.850235
07/31/94 686.850235
08/31/94 686.850235
09/30/94 20.981873 686.850235
</TABLE>
<PAGE>
GROSS CAF: WORLD GROWTH FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
10/31/94 21.310312 10/31/94 10/31/94
11/30/94 20.376215 11/30/94 11/30/94
12/31/94 19.004320 12/31/94 01/03/95 0.265230 0.754446
01/31/95 18.594037 01/31/95 01/31/95
02/28/95 18.888884 02/28/95 02/28/95
03/31/95 19.252199 03/31/95 03/31/95
04/28/95 19.925984 04/28/95 04/28/95
05/31/95 20.365173 05/31/95 05/31/95
06/30/95 20.830000 06/30/95 06/30/95
07/31/95 21.711728 07/31/95 07/31/95
08/31/95 21.325985 08/31/95 08/31/95
09/30/95 21.870337 09/30/95 09/30/95
10/31/95 21.488719 10/31/95 10/31/95
11/30/95 21.654547 11/30/95 11/30/95
12/31/95 21.204748 12/31/95 12/31/95 0.433027 0.473926
01/31/96 21.668855 01/31/96 01/31/96
02/28/96 21.892306 02/28/96 02/28/96
03/31/96 21.992176 03/31/96 03/31/96 0.150160
04/30/96 22.483211 04/30/96 04/30/96
05/31/96 22.711642 05/31/96 05/31/96
06/30/96 22.834833 06/30/96 06/30/96
07/31/96 22.074809 07/31/96 07/31/96
08/31/96 22.800739 08/31/96 08/31/96
09/30/96 23.076727 09/30/96 09/30/96
10/31/96 23.373643 10/31/96 10/31/96
11/30/96 24.573486 11/30/96 11/30/96
12/31/96 23.307417 12/31/96 12/31/96 0.480529 1.319993
<CAPTION>
<S> <C> <C> <C> <C> <C>
10/31/94 686.850235
11/30/94 686.850235
12/31/94 19.004320 2,838,549.43 700.364700 36.852921 723.703156
01/31/95 723.703156
02/28/95 723.703156
03/31/95 19.252199 723.703156
04/28/95 723.703156
05/31/95 723.703156
06/30/95 20.830000 723.703156
07/31/95 723.703156
08/31/95 723.703156
09/30/95 21.870337 723.703156
10/31/95 21.488719 723.703156
11/30/95 21.654547 723.703156
12/31/95 21.204748 3,151,911.72 656.364748 30.953669 754.656825
01/31/96 21.668855 754.656825
02/28/96 21.892306 754.656825
03/31/96 21.992176 556,740.56 113.319269 5.152708 759.809533
04/30/96 22.483211 759.809533
05/31/96 22.711642 759.809533
06/30/96 22.834833 759.809533
07/31/96 22.074809 759.809533
08/31/96 22.800739 759.809533
09/30/96 23.076727 759.809533
10/31/96 23.373643 759.809533
11/30/96 24.573486 759.809533
12/31/96 23.307417 1368.053780 58.696070 818.505603
</TABLE>
<PAGE>
GROSS CAF: WORLD GROWTH FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES TO DATE (NAV +NOT REINVESTED GROSS VALUE
1621.585757 23.31 37794.9754
PURCHASE DATE: 08/01/85
INITIAL INVESTME $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.27 37794.9754 10,000.00 (27794.9754)
SHARES PURCHASED 973.710
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(27794.9754) 10,000.00 2.7795
GROSS RATE OF RETURN SINCE INCEPTION: 277.95%
ANNUALIZED GROSS RATE OF RETURN SINCE INCEP 12.34%
</TABLE>
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<C> <C> <C> <C> <C> <C> <C>
08/01/85 10.270000 08/01/85 08/01/85 10.270000
08/31/85 9.862001 08/31/85 08/31/85 9.862001
09/30/85 9.357841 09/30/85 09/30/85 9.357841
10/31/85 9.772022 10/31/85 10/31/85 9.772022
11/30/85 10.370973 11/30/85 11/30/85 10.370973
12/31/85 10.810000 12/31/85 12/31/85 10.810000
01/31/86 10.883980 01/31/86 01/31/86 10.883980
02/28/86 12.195507 02/28/86 02/28/86 12.195507
03/31/86 13.280718 03/31/86 03/31/86 13.280718
04/30/86 13.385027 04/30/86 04/30/86 0.060000 13.385027 5,842.00
05/31/86 13.252997 05/31/86 05/31/86 13.252997
06/30/86 13.000000 06/30/86 06/30/86 13.000000
07/31/86 12.643114 07/31/86 07/31/86 12.643114
08/31/86 13.228849 08/31/86 08/31/86 13.228849
09/30/86 13.051185 09/30/86 09/30/86 13.051185
10/31/86 13.824138 10/31/86 10/31/86 13.824138
11/30/86 13.711601 11/30/86 11/30/86 13.711601
12/31/86 13.750000 12/31/86 12/31/86 13.750000
01/31/87 14.487582 01/31/87 01/31/87 14.487582
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
08/01/85 973.709834
08/31/85 973.709834
09/30/85 973.709834
10/31/85 973.709834
11/30/85 973.709834
12/31/85 973.709834
01/31/86 973.709834
02/28/86 973.709834
03/31/86 973.709834
04/30/86 58.422590 4.364772 978.074606
05/31/86 978.074606
06/30/86 978.074606
07/31/86 978.074606
08/31/86 978.074606
09/30/86 978.074606
10/31/86 978.074606
11/30/86 978.074606
12/31/86 978.074606
01/31/87 978.074606
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<C> <C> <C> <C> <C> <C> <C> <C>
02/28/87 13.873665 02/28/87 02/28/87 13.873665
03/31/87 13.930530 03/31/87 03/31/87 0.273800 1.048500 13.930530 229,747.00
04/30/87 13.668272 04/30/87 04/30/87 13.668272
05/31/87 13.581600 05/31/87 05/31/87 13.581600
06/30/87 14.006038 06/30/87 06/30/87 14.006038
07/31/87 14.834140 07/31/87 07/31/87 14.834140
08/31/87 15.253643 08/31/87 08/31/87 15.253643
09/30/87 15.095986 09/30/87 09/30/87 15.095986
10/31/87 11.413366 10/31/87 10/31/87 11.413366
11/30/87 10.892080 11/30/87 11/30/87 10.892080
12/31/87 11.483548 12/31/87 12/31/87 0.071100 0.031700 11.483548 46,639.00
01/31/88 11.863134 01/31/88 01/31/88 11.863134
02/28/88 12.524002 02/28/88 02/28/88 12.524002
03/31/88 12.790585 03/31/88 03/31/88 0.031900 12.790585 16,625.00
04/30/88 12.996789 04/30/88 04/30/88 12.996789
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
02/28/87 978.074606
03/31/87 1293.308052 92.839831 1070.914437
04/30/87 1070.914437
05/31/87 1070.914437
06/30/87 1070.914437
07/31/87 1070.914437
08/31/87 1070.914437
09/30/87 1070.914437
10/31/87 1070.914437
11/30/87 1070.914437
12/31/87 110.090004 9.586759 1080.501196
01/31/88 1080.501196
02/28/88 1080.501196
03/31/88 34.467988 2.694794 1083.195990
04/30/88 1083.195990
</TABLE>
<PAGE>
GROSS CAF: WORLD GROWTH FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
05/31/88 12.760931 05/31/88 05/31/88 12.760931
06/30/88 13.250035 06/30/88 06/30/88 13.250035
07/31/88 13.162747 07/31/88 07/31/88 13.162747
08/31/88 12.759928 08/31/88 08/31/88 12.759928
09/30/88 13.054684 09/30/88 09/30/88 13.054684
10/31/88 13.457890 10/31/88 10/31/88 13.457890
11/30/88 13.011370 11/30/88 11/30/88 13.011370
12/31/88 12.775918 12/31/88 12/31/88 0.180000 12.775918 122,768.00 194.975278
01/31/89 13.882000 01/31/89 01/31/89 13.882000
02/28/89 13.753000 02/28/89 02/28/89 13.753000
03/31/89 13.995000 03/31/89 03/31/89 13.995000
04/30/89 14.612647 04/30/89 04/30/89 14.612647
05/31/89 14.559000 05/31/89 05/31/89 14.559000
06/30/89 14.440000 06/30/89 06/30/89 14.440000
07/31/89 15.653000 07/31/89 07/31/89 15.653000
08/31/89 16.287000 08/31/89 08/31/89 16.287000
09/14/89 16.280000 09/14/89 09/14/89 0.001300 16.280000 1,045.00 1.427994
09/30/89 16.610000 09/30/89 09/30/89 16.610000
10/31/89 15.832000 10/31/89 10/31/89 15.832000
11/30/89 16.026000 11/30/89 11/30/89 16.026000
12/31/89 16.070000 12/31/89 12/31/89 0.352420 16.070000 310,442.00 387.149180
01/31/90 15.219327 01/31/90 01/31/90 15.219327
02/28/90 15.307648 02/28/90 02/28/90 15.307648
03/31/90 15.005069 03/31/90 03/31/90 0.355600 15.005069 336,584.00 399.209463
04/30/90 14.694539 04/30/90 04/30/90 14.694539
05/31/90 15.977056 05/31/90 05/31/90 15.977056
06/30/90 16.245950 06/30/90 06/30/90 16.245950
07/31/90 16.306960 07/31/90 07/31/90 16.306960
08/31/90 14.886446 08/31/90 08/31/90 14.886446
09/30/90 13.534062 09/30/90 09/30/90 13.534062
10/31/90 13.422003 10/31/90 10/31/90 13.422003
11/30/90 13.860478 11/30/90 11/30/90 13.860478
12/31/90 13.706467 12/31/90 12/31/90 0.369060 13.706467 420,996.00 424.138979
01/31/91 14.180000 01/31/91 01/31/91 14.180000
02/28/91 15.240000 02/28/91 02/28/91 15.240000
03/31/91 15.080000 03/31/91 03/31/91 15.080000
04/30/91 15.150000 04/30/91 04/30/91 15.150000
05/31/91 15.470000 05/31/91 05/31/91 15.470000
06/30/91 14.680000 06/30/91 06/30/91 14.680000
07/31/91 15.590000 07/31/91 07/31/91 15.590000
08/31/91 15.840000 08/31/91 08/31/91 15.840000
09/30/91 15.970000 09/30/91 09/30/91 15.970000
10/31/91 16.160000 10/31/91 10/31/91 16.160000
11/30/91 15.760000 11/30/91 11/30/91 15.760000
12/31/91 16.450000 12/31/91 12/31/91 0.336800 16.450000 454,602.01 397.486544
01/31/92 16.418704 01/31/92 01/31/92 16.418704
02/28/92 16.766066 02/28/92 02/28/92 16.766066
03/31/92 16.419780 03/31/92 03/31/92 0.001510 16.419780 2,100.00 1.818567
04/30/92 16.991563 04/30/92 04/30/92 16.991563
05/31/92 17.746603 05/31/92 05/31/92 17.746603
<CAPTION>
<S> <C> <C>
05/31/88 1083.195990
06/30/88 1083.195990
07/31/88 1083.195990
08/31/88 1083.195990
09/30/88 1083.195990
10/31/88 1083.195990
11/30/88 1083.195990
12/31/88 15.261156 1098.457146
01/31/89 1098.457146
02/28/89 1098.457146
03/31/89 1098.457146
04/30/89 1098.457146
05/31/89 1098.457146
06/30/89 1098.457146
07/31/89 1098.457146
08/31/89 1098.457146
09/14/89 0.087715 1098.544861
09/30/89 1098.544861
10/31/89 1098.544861
11/30/89 1098.544861
12/31/89 24.091424 1122.636284
01/31/90 1122.636284
02/28/90 1122.636284
03/31/90 26.604973 1149.241258
04/30/90 1149.241258
05/31/90 1149.241258
06/30/90 1149.241258
07/31/90 1149.241258
08/31/90 1149.241258
09/30/90 1149.241258
10/31/90 1149.241258
11/30/90 1149.241258
12/31/90 30.944442 1180.185700
01/31/91 1180.185700
02/28/91 1180.185700
03/31/91 1180.185700
04/30/91 1180.185700
05/31/91 1180.185700
06/30/91 1180.185700
07/31/91 1180.185700
08/31/91 1180.185700
09/30/91 1180.185700
10/31/91 1180.185700
11/30/91 1180.185700
12/31/91 24.163316 1204.349016
01/31/92 1204.349016
02/28/92 1204.349016
03/31/92 0.110755 1204.459771
04/30/92 1204.459771
05/31/92 1204.459771
</TABLE>
<PAGE>
GROSS CAF: WORLD GROWTH FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/30/92 17.360832 06/30/92 06/30/92 17.360832
07/31/92 17.470239 07/31/92 07/31/92 17.470219
08/31/92 17.133530 08/31/92 08/31/92 17.133530
09/30/92 16.837943 09/30/92 09/30/92 16.837943
10/31/92 16.863608 10/31/92 10/31/92 16.863608
11/30/92 17.043888 11/30/92 11/30/92 17.043888
12/31/92 16.725976 12/31/92 12/31/92 0.352180 0.369510 16.725876 1.096.656.10 869.246572
01/31/93 17.122758 01/31/93 01/31/93 17.112758
02/28/93 17.325399 02/28/93 02/28/93 17.325399
03/31/93 17.860448 03/31/93 03/31/93 17.860448
04/30/93 18.484501 04/30/93 04/30/93 18.484501
05/31/93 18.848873 05/31/93 05/31/93 18.848873
06/30/93 18.555732 06/30/93 06/30/93 18.555732
07/31/93 18.758134 07/31/93 07/31/93 18.758134
08/31/93 20.063211 08/31/93 08/31/93 20.063211
09/30/93 20.007417 09/30/93 09/30/93 20.007417
10/31/93 21.040060 10/31/93 10/31/93 21.040060
11/30/93 20.733282 11/30/93 11/30/93 20.733282
12/31/93 20.889335 12/31/93 12/31/93 0.236602 1.242153 20.889335 1857.952056
01/31/94 21.893065 01/31/94 01/31/94 21.893065
02/28/94 21.505751 02/28/94 02/28/94 19.956783
03/31/94 19.956783 03/31/94 03/31/94 0.005400 0.222800 19.956783 511,530.10 307.013945
04/30/94 20.160521 04/30/94 04/30/94
05/31/94 20.202263 05/31/94 05/31/94
06/30/94 19.642215 06/30/94 06/30/94 19.642215
07/31/94 20.376412 07/31/94 07/31/94
08/31/94 21.310992 08/31/94 08/31/94
09/30/94 20.981873 09/30/94 09/30/94 20.981873
10/31/94 21.310312 10/31/94 10/31/94
11/30/94 20.376215 11/30/94 11/30/94
12/31/94 19.004320 12/31/94 01/03/95 0.265230 0.754446 19.004320 2,838,549.43 1387.530419
01/31/95 18.594037 01/31/95 01/31/95
02/28/95 18.888884 02/28/95 02/28/95
03/31/95 19.252199 03/31/95 03/31/95 19.252199
04/28/95 19.925984 04/28/95 04/28/95
05/31/95 20.365173 05/31/95 05/31/95
06/30/95 20.830000 06/30/95 06/30/95 20.830000
07/31/95 21.711728 07/31/95 07/31/95
08/31/95 21.325985 08/31/95 08/31/95
09/30/95 21.870337 09/30/95 09/30/95 21.870337
10/31/95 21.488719 10/31/95 10/31/95 21.488719
11/30/95 21.654547 11/30/95 11/30/95 21.654547
12/31/95 21.204748 12/31/95 12/31/95 0.433027 0.473926 21.204748 3,151,911.72 1300.359733
01/31/96 21.668855 01/31/96 01/31/96 21.668855
02/28/96 21.892306 02/28/96 02/28/96 21.892306
03/31/96 21.992176 03/31/96 03/31/96 0.150160 21.992176 556,740.56 224.502938
04/30/96 22.483211 04/30/96 04/30/96 22.483211
05/31/96 22.711642 05/31/96 05/31/96 22.711642
06/30/96 22.834833 06/30/96 06/30/96 22.834833
07/31/96 22.074809 07/31/96 07/31/96 22.074809
<CAPTION>
<S> <C> <C>
06/30/92 1204.459771
07/31/92 1204.459771
08/31/92 1204.459771
09/30/92 1204.459771
10/31/92 1204.459771
11/30/92 1204.459771
12/31/92 51.969856 1256.429627
01/31/93 1256.429627
02/28/93 1256.429627
03/31/93 1256.429627
04/30/93 1256.429627
05/31/93 1256.429627
06/30/93 1256.429627
07/31/93 1256.429627
08/31/93 1256.429627
09/30/93 1256.429627
10/31/93 1256.429627
11/30/93 1256.429627
12/31/93 88.942614 1345.372241
01/31/94 1345.372241
02/28/94 1345.372241
03/31/94 15.383940 1360.756181
04/30/94 1360.756181
05/31/94 1360.756181
06/30/94 1360.756181
07/31/94 1360.756181
08/31/94 1360.756181
09/30/94 1360.756181
10/31/94 1360.756181
11/30/94 1360.756181
12/31/94 73.011316 1433.767497
01/31/95 73.011316 1433.767497
02/28/95 1433.767497
03/31/95 1433.767497
04/28/95 1433.767497
05/31/95 1433.767497
06/30/95 1433.767497
07/31/95 1433.767497
08/31/95 1433.767497
09/30/95 1433.767497
10/31/95 1433.767497
11/30/95 1433.767497
12/31/95 61.323989 1495.091486
01/31/96 1495.091486
02/28/96 1495.091486
03/31/96 10.208309 1505.299795
04/30/96 1505.299795
05/31/96 1505.299795
06/30/96 1505.299795
07/31/96 1505.299795
</TABLE>
<PAGE>
GROSS CAF: WORLD GROWTH FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
08/31/96 22.800739 08/31/96 08/31/96 22.800739
09/30/96 23.076727 09/30/96 09/30/96 23.076727
10/31/96 23.373643 10/31/96 10/31/96 23.373643
11/30/96 24.573486 11/30/96 11/30/96 24.573486
12/31/96 23.307417 12/31/96 12/31/96 0.480529 1.319993 23.307417
<CAPTION>
<S> <C> <C> <C>
08/31/96 1505.299795
09/30/96 1505.299795
10/31/96 1505.299795
11/30/96 1505.299795
12/31/96 2710.325398 116.285962 1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
1621.585757
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: MONEY MARKET FUND
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
1021.366387 10.25 10465.1784
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.27 10465.1784 10,000.00 (465.1784)
SHARES PURCHASED: 973.5391096
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(465.1784) 10,000.00 0.0465
ONE YEAR NET RATE OF RETURN: 4.65%
INCOME CAPITAL SHARES
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST. REINV.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 10.271801 12/31/95 12/31/95 0.4964 10.271801 401,686.14
01/31/96 10.311946 01/31/96 01/31/96 10.311946
02/28/96 10.349071 02/28/96 02/28/96 10.349071
03/31/96 10.386643 03/31/96 03/31/96 10.386643
04/30/96 10.427510 04/30/96 04/30/96 10.427510
05/31/96 10.467828 05/31/96 05/31/96 10.467828
06/30/96 10.505018 06/30/96 06/30/96 10.505018
07/31/96 10.548632 07/31/96 07/31/96 10.548632
08/31/96 10.589387 08/31/96 08/31/96 10.589387
09/30/96 10.630813 09/30/96 09/30/96 10.630813
10/31/96 10.672082 10/31/96 10/31/96 10.672082
11/30/96 10.709946 11/30/96 11/30/96 10.709946
12/31/96 10.246253 12/31/96 12/31/96 0.5034 10.246253 490.050382 47.827277
<CAPTION>
TOTAL
SHARES
<S> <C>
12/31/95 973.539110
01/31/96 973.539110
02/28/96 973.539110
03/31/96 973.539110
04/30/96 973.539110
05/31/96 973.539110
06/30/96 973.539110
07/31/96 973.539110
08/31/96 973.539110
09/30/96 973.539110
10/31/96 973.539110
11/30/96 973.539110
12/31/96 1021.366387
</TABLE>
<PAGE>
GROSS CAF: MONEY MARKET FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<TABLE>
<S> <C> <C> <C>
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
1166.644884 10.25 11953.7386
PURCHASE DATE: 12/31/91
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.22 11953.7386 10,000.00 (1953.7386)
SHARES PURCHASED: 978.4735812
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(1953.7386) 10,000.00 0.1954
GROSS 5 YEAR RETURN: 19.54%
ANNUALIZED GROSS 5 YEAR RETURN: 3.63%
</TABLE>
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 10.220000 12/31/91 12/31/91 0.513289 10.220000 175,624.63
01/31/92 10.248921 01/31/92 01/31/92 10.248921
02/28/92 10.275814 02/28/92 02/28/92 10.275814
03/31/92 10.305377 03/31/92 03/31/92 10.305377
04/30/92 10.332586 04/30/92 04/30/92 10.332586
05/31/92 10.360020 05/31/92 05/31/92 10.360020
06/30/92 10.386424 06/30/92 06/30/92 10.386424
07/31/92 10.410719 07/31/92 07/31/92 10.410719
08/31/92 10.433551 08/31/92 08/31/92 10.433551
09/30/92 10.458103 09/30/92 09/30/92 10.458103
10/31/92 10.473089 10/31/92 10/31/92 10.473089
11/30/92 10.490953 11/30/92 11/30/92 10.490953
12/31/92 10.224693 12/31/92 12/31/92 0.289496 0.000002 10.224693 112,012.79
01/31/93 10.241677 01/31/93 01/31/93 10.241677
02/28/93 10.258708 02/28/93 02/28/93 10.258708
03/31/93 10.281631 03/31/93 03/31/93 10.281631
04/30/93 10.299324 04/30/93 04/30/93 10.299324
05/31/93 10.316329 05/31/93 05/31/93 10.316329
06/30/93 10.339935 06/30/93 06/30/93 10.339935
07/31/93 10.360750 07/31/93 07/31/93 10.360750
08/31/93 10.380618 08/31/93 08/31/93 10.380618
09/30/93 10.401556 09/30/93 09/30/93 10.401556
10/31/93 10.421846 10/31/93 10/31/93 10.421846
11/30/93 10.440622 11/30/93 11/30/93 10.440622
12/31/93 10.259162 12/31/93 12/31/93 0.2030 0.0001 10.259162 100,194.81
01/31/94 10.279000 01/31/94 01/31/94 10.279000
02/28/94 10.297060 02/28/94 02/28/94 10.297060
03/31/94 10.318002 03/31/94 03/31/94 10.318002
04/30/94 10.338249 04/30/94 04/30/94
05/31/94 10.365119 05/31/94 05/31/94
06/30/94 10.390870 06/30/94 06/30/94 10.390870
07/31/94 10.419448 07/31/94 07/31/94
08/31/94 10.450635 08/31/94 08/31/94
09/30/94 10.482911 09/30/94 09/30/94 10.482911
<CAPTION>
SHARES TOTALS
$ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/91
01/31/92 978.473581
02/28/92 978.473581
03/31/92 978.473581
04/30/92 978.473581
05/31/92 978.473581
06/30/92 978.473581
07/31/92 978.473581
08/31/92 978.473581
09/30/92 978.473581
10/31/92 978.473581
11/30/92 978.473581
12/31/92 978.473581
01/31/93 283.266145 27.704122 1006.177703
02/28/93 1006.177703
03/31/93 1006.177703
04/30/93 1006.177703
05/31/93 1006.177703
06/30/93 1006.177703
07/31/93 1006.177703
08/31/93 1006.177703
09/30/93 1006.177703
10/31/93 1006.177703
11/30/93 1006.177703
12/31/93 1006.177703
01/31/94 204.352679 19.919042 1026.096746
02/28/94 1026.096746
03/31/94 1026.096746
04/30/94 1026.096746
05/31/94 1026.096746
06/30/94 1026.096746
07/31/94 1026.096746
08/31/94 1026.096746
09/30/94 1026.096746
1026.096746
</TABLE>
<PAGE>
GROSS CAF: MONEY MARKET FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
10/31/94 10.518326 10/31/94 10/31/94
11/30/94 10.554537 11/30/94 11/30/94
12/31/94 10.249792 12/31/94 01/03/95 0.3462 10.249792 259,434.83
01/31/95 10.290241 01/31/95 01/31/95 10.290241
02/28/95 10.330295 02/28/95 02/28/95 10.330295
03/31/95 10.376299 03/31/95 03/31/95 10.376299
04/28/95 10.416963 04/28/95 04/28/95 10.416963
05/31/95 10.464851 05/31/95 05/31/95 10.464851
06/30/95 10.508592 06/30/95 06/30/95 10.508592
07/31/95 10.552914 07/31/95 07/31/95 10.552914
08/31/95 10.596497 08/31/95 08/31/95 10.596497
09/30/95 10.637749 09/30/95 09/30/95 10.637749
10/31/95 10.682268 10/31/95 10/31/95 10.682268
11/30/95 10.725870 11/30/95 11/30/95 10.725870
12/31/95 10.271801 12/31/95 12/31/95 0.4964 10.271801 401,686.14
01/31/96 10.311946 01/31/96 01/31/96 10.311946
02/28/96 10.349071 02/28/96 02/28/96 10.349071
03/31/96 10.386643 03/31/96 03/31/96 10.386643
04/30/96 10.427510 04/30/96 04/30/96 10.427510
05/31/96 10.467828 05/31/96 05/31/96 10.467828
06/30/96 10.505018 06/30/96 06/30/96 10.505018
07/31/96 10.548632 07/31/96 07/31/96 10.548632
08/31/96 10.589387 08/31/96 08/31/96 10.589387
09/30/96 10.630813 09/30/96 09/30/96 10.630813
10/31/96 10.672082 10/31/96 10/31/96 10.672082
11/30/96 10.709946 11/30/96 11/30/96 10.709946
12/31/96 10.246253 12/31/96 12/31/96 0.5034 10.246253
<S> <C> <C> <C>
10/31/94 1026.096746
11/30/94 1026.096746
12/31/94 355.257267 34.659949 1060.756694
01/31/95 1060.756694
02/28/95 1060.756694
03/31/95 1060.756694
04/28/95 1060.756694
05/31/95 1060.756694
06/30/95 1060.756694
07/31/95 1060.756694
08/31/95 1060.756694
09/30/95 1060.756694
10/31/95 1060.756694
11/30/95 1060.756694
12/31/95 526.511889 51.257992 1112.014686
01/31/96 1112.014686
02/28/96 1112.014686
03/31/96 1112.014686
04/30/96 1112.014686
05/31/96 1112.014686
06/30/96 1112.014686
07/31/96 1112.014686
08/31/96 1112.014686
09/30/96 1112.014686
10/31/96 1112.014686
11/30/96 1166.644884
12/31/96 559.754833 54.630198 1166.644884
</TABLE>
<PAGE>
GROSS CAF: MONEY MARKET FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
--------------
PURCHASE DATE: 08/01/85
INITIAL INVESTMENT: $10,000.00
INITIAL VALUE: 10.06
SHARES PURCHASED: 994.036
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
1706.796906 10.25 17488.2729
GROSS VALUE - INITIAL INVESTMENT NET VALUE
17488.2729 10,000.00 (7488.2729)
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(7488.2729) 10,000.00 0.7488
GROSS RATE OF RETURN SINCE INCEPTION: 74.88%
ANNUALIZED GROSS RATE OF RETURN SINCE INCEPTION: 5.01%
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS
<S> <C> <C> <C> <C> <C>
08/01/85 10.060000 08/01/85 08/01/85
08/31/85 10.109922 08/31/85 08/31/85
09/30/85 10.168525 09/30/85 09/30/85
10/31/85 10.221058 10/31/85 10/31/85
11/30/85 10.273969 11/30/85 11/30/85
12/31/85 10.334031 12/31/85 12/31/85
01/31/86 10.379673 01/31/86 01/31/86
02/28/86 10.428895 02/28/86 02/28/86
03/31/86 10.483993 03/31/86 03/31/86
04/01/86 10.490000 04/01/86 04/01/86 0.33
04/30/86 10.212532 04/30/86 04/30/86
05/31/86 10.295073 05/31/86 05/31/86
06/30/86 10.344354 06/30/86 06/30/86
07/31/86 10.389806 07/31/86 07/31/86
08/31/86 10.429832 08/31/86 08/31/86
09/30/86 10.469425 09/30/86 09/30/86
10/31/86 10.508642 10/31/86 10/31/86
11/30/86 10.506834 11/30/86 11/30/86
12/31/86 10.556109 12/31/86 12/31/86
01/31/87 10.599582 01/31/87 01/31/87
02/28/87 10.150733 02/28/87 02/28/87
03/31/87 10.174001 03/31/87 03/31/87
04/01/87 10.170000 04/01/87 04/01/87 0.5122
04/30/87 10.200265 04/30/87 04/30/87
05/31/87 10.227052 05/31/87 05/31/87
06/30/87 10.259622 06/30/87 06/30/87
07/31/87 10.297469 07/31/87 07/31/87
08/31/87 10.344069 08/31/87 08/31/87
09/30/87 10.394908 09/30/87 09/30/87
10/31/87 10.448850 10/31/87 10/31/87
11/30/87 10.492539 11/30/87 11/30/87
12/31/87 10.085865 12/31/87 12/31/87 0.4511
01/31/88 10.130703 01/31/88 01/31/88
02/28/88 10.178268 02/28/88 02/28/88
<CAPTION>
SHARES TOTALS
DATE REINVEST NAV AMOUNT $ TO DIST. REINV. SHARES
<S> <C> <C> <C> <C> <C>
08/01/85 10.060000 994.035785
08/31/85 10.109922 994.035785
09/30/85 10.168525 994.035785
10/31/85 10.221058 994.035785
11/30/85 10.273969 994.035785
12/31/85 10.334031 994.035785
01/31/86 10.379673 994.035785
02/28/86 10.428895 994.035785
03/31/86 10.483993 994.035785
04/01/86 10.490000 32,533.00 328.031809 31.270906 1025.306692
04/30/86 10.212532 1025.306692
05/31/86 10.295073 1025.306692
06/30/86 10.344354 1025.306692
07/31/86 10.389806 1025.306692
08/31/86 10.429832 1025.306692
09/30/86 10.469425 1025.306692
10/31/86 10.508642 1025.306692
11/30/86 10.506834 1025.306692
12/31/86 10.556109 1025.306692
01/31/87 10.599582 1025.306692
02/28/87 10.150733 1025.306692
03/31/87 10.174001 1025.306692
04/01/87 10.170000 60,645.00 525.162088 51.638357 1076.945048
04/30/87 10.200265 1076.945048
05/31/87 10.227052 1076.945048
06/30/87 10.259622 1076.945048
07/31/87 10.297469 1076.945048
08/31/87 10.344069 1076.945048
09/30/87 10.394908 1076.945048
10/31/87 10.448850 1076.945048
11/30/87 10.492539 1076.945048
12/31/87 10.085865 65,901.00 485.809911 48.167402 1125.112450
01/31/88 10.130703 1125.112450
02/28/88 10.178268 1125.112450
</TABLE>
<PAGE>
GROSS CAF: MONEY MARKET FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
--------------
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV
<S> <C> <C> <C> <C> <C> <C>
03/31/88 10.225347 03/31/88 03/31/88 10.225347
04/30/88 10.275893 04/30/88 04/30/88 10.275893
05/31/88 10.331694 05/31/88 05/31/88 10.331694
06/30/88 10.381242 06/30/88 06/30/88 10.381242
07/31/88 10.433533 07/31/88 07/31/88 10.433533
08/31/88 10.490025 08/31/88 08/31/88 10.490025
09/30/88 10.548161 09/30/88 09/30/88 10.548161
10/31/88 10.612295 10/31/88 10/31/88 10.612295
11/30/88 10.665012 11/30/88 11/30/88 10.665012
12/31/88 10.164476 12/31/88 12/31/88 0.56 10.164476
01/31/89 10.229000 01/31/89 01/31/89 10.229000
02/28/89 10.287000 02/28/89 02/28/89 10.287000
03/31/89 10.358000 03/31/89 03/31/89 10.358000
04/30/89 10.419101 04/30/89 04/30/89 10.419101
05/31/89 10.490000 05/31/89 05/31/89 10.490000
06/30/89 10.554000 06/30/89 06/30/89 10.554000
07/31/89 10.622000 07/31/89 07/31/89 10.622000
08/31/89 10.681000 08/31/89 08/31/89 10.681000
09/30/89 10.736757 09/30/89 09/30/89 10.736757
10/31/89 10.798000 10/31/89 10/31/89 10.798000
11/30/89 10.876000 11/30/89 11/30/89 10.876000
12/31/89 10.181000 12/31/89 12/31/89 0.755523 10.181000
01/31/90 10.249911 01/31/90 01/31/90 10.249911
02/28/90 10.310286 02/28/90 02/28/90 10.310286
03/31/90 10.359670 03/31/90 03/31/90 10.359670
04/30/90 10.414995 04/30/90 04/30/90 10.414995
05/31/90 10.480941 05/31/90 05/31/90 10.480941
06/30/90 10.540132 06/30/90 06/30/90 10.540132
07/31/90 10.610158 07/31/90 07/31/90 10.610158
08/31/90 10.672740 08/31/90 08/31/90 10.672740
09/30/90 10.728073 09/30/90 09/30/90 10.728073
10/31/90 10.789012 10/31/90 10/31/90 10.789012
11/30/90 10.850259 11/30/90 11/30/90 10.850259
12/31/90 10.213298 12/31/90 12/31/90 0.697537 10.213298
01/31/91 10.270000 01/31/91 01/31/91 10.270000
02/28/91 10.310000 02/28/91 02/28/91 10.310000
03/31/91 10.350000 03/31/91 03/31/91 0.005781 10.350000
04/30/91 10.400000 04/30/91 04/30/91 10.400000
05/31/91 10.450000 05/31/91 05/31/91 10.450000
06/30/91 10.480000 06/30/91 06/30/91 10.480000
07/31/91 10.530000 07/31/91 07/31/91 10.530000
08/31/91 10.570000 08/31/91 08/31/91 10.570000
09/30/91 10.610000 09/30/91 09/30/91 10.610000
10/31/91 10.650000 10/31/91 10/31/91 10.650000
11/30/91 10.690000 11/30/91 11/30/91 10.690000
12/31/91 10.220000 12/31/91 12/31/91 0.513289 10.220000
01/31/92 10.248921 01/31/92 01/31/92 10.248921
02/28/92 10.275814 02/28/92 02/28/92 10.275814
03/31/92 10.305377 03/31/92 03/31/92 10.305377
04/30/92 10.332586 04/30/92 04/30/92 10.332586
<CAPTION>
SHARES TOTALS
DATE AMOUNT $ TO DIST. REINV. SHARES
<S> <C> <C> <C> <C>
03/31/88 1125.112450
04/30/88 1125.112450
05/31/88 1125.112450
06/30/88 1125.112450
07/31/88 1125.112450
08/31/88 1125.112450
09/30/88 1125.112450
10/31/88 1125.112450
11/30/88 1125.112450
12/31/88 116,402.00 630.062972 61.986764 1187.099214
01/31/89 1187.099214
02/28/89 1187.099214
03/31/89 1187.099214
04/30/89 1187.099214
05/31/89 1187.099214
06/30/89 1187.099214
07/31/89 1187.099214
08/31/89 1187.099214
09/30/89 1187.099214
10/31/89 1187.099214
11/30/89 1187.099214
12/31/89 172,428.87 896.880759 88.093582 1275.192796
01/31/90 1275.192796
02/28/90 1275.192796
03/31/90 1275.192796
04/30/90 1275.192796
05/31/90 1275.192796
06/30/90 1275.192796
07/31/90 1275.192796
08/31/90 1275.192796
09/30/90 1275.192796
10/31/90 1275.192796
11/30/90 1275.192796
12/31/90 186,082.00 889.494157 87.091766 1362.284562
01/31/91 1362.284562
02/28/91 1362.284562
03/31/91 1,880.00 7.875367 0.760905 1363.045467
04/30/91 1363.045467
05/31/91 1363.045467
06/30/91 1363.045467
07/31/91 1363.045467
08/31/91 1363.045467
09/30/91 1363.045467
10/31/91 1363.045467
11/30/91 1363.045467
12/31/91 175,624.63 699.636245 68.457558 1431.503025
01/31/92 1431.503025
02/28/92 1431.503025
03/31/92 1431.503025
04/30/92 1431.503025
</TABLE>
<PAGE>
GROSS CAF: MONEY MARKET FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<S> <C> <C> <C> <C> <C>
05/31/92 10.360020 05/31/92 05/31/92
06/30/92 10.386424 06/30/92 06/30/92
07/31/92 10.410719 07/31/92 07/31/92
08/31/92 10.433551 08/31/92 08/31/92
09/30/92 10.458103 09/30/92 09/30/92
10/31/92 10.473089 10/31/92 10/31/92
11/30/92 10.490953 11/30/92 11/30/92
12/31/92 10.224693 12/31/92 12/31/92 0.289496 0.000002
01/31/93 10.241677 01/31/93 01/31/93
02/28/93 10.258708 02/28/93 02/28/93
03/31/93 10.281631 03/31/93 03/31/93
04/30/93 10.299324 04/30/93 04/30/93
05/31/93 10.316329 05/31/93 05/31/93
06/30/93 10.339935 06/30/93 06/30/93
07/31/93 10.360750 07/31/93 07/31/93
08/31/93 10.380618 08/31/93 08/31/93
09/30/93 10.401556 09/30/93 09/30/93
10/31/93 10.421846 10/31/93 10/31/93
11/30/93 10.440622 11/30/93 11/30/93
12/31/93 10.259162 12/31/93 12/31/93 0.2030 0.0001
01/31/94 10.279000 01/31/94 01/31/94
02/28/94 10.297060 02/28/94 02/28/94
03/31/94 10.318002 03/31/94 03/31/94
04/30/94 10.338249 04/30/94 04/30/94
05/31/94 10.365119 05/31/94 05/31/94
06/30/94 10.390870 06/30/94 06/30/94
07/31/94 10.419448 07/31/94 07/31/94
08/31/94 10.450635 08/31/94 08/31/94
09/30/94 10.482911 09/30/94 09/30/94
10/31/94 10.518326 10/31/94 10/31/94
11/30/94 10.554537 11/30/94 11/30/94
12/31/94 10.249792 12/31/94 01/03/95 0.3462
01/31/95 10.290241 01/31/95 01/31/95
02/28/95 10.330295 02/28/95 02/28/95
03/31/95 10.376299 03/31/95 03/31/95
04/28/95 10.416963 04/28/95 04/28/95
05/31/95 10.464851 05/31/95 05/31/95
06/30/95 10.508592 06/30/95 06/30/95
07/31/95 10.552914 07/31/95 07/31/95
08/31/95 10.596497 08/31/95 08/31/95
09/30/95 10.637749 09/30/95 09/30/95
10/31/95 10.682268 10/31/95 10/31/95
11/30/95 10.725870 11/30/95 11/30/95
12/31/95 10.271801 12/31/95 12/31/95 0.4964
01/31/96 10.311946 01/31/96 01/31/96
02/28/96 10.349071 02/28/96 02/28/96
03/31/96 10.386643 03/31/96 03/31/96
04/30/96 10.427510 04/30/96 04/30/96
05/31/96 10.467828 05/31/96 05/31/96
06/30/96 10.505018 06/30/96 06/30/96
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
05/31/92 10.360020 1431.503025
06/30/92 10.386424 1431.503025
07/31/92 10.410719 1431.503025
08/31/92 10.433551 1431.503025
09/30/92 10.458103 1431.503025
10/31/92 10.473089 1431.503025
11/30/92 10.490953 1431.503025
12/31/92 10.224693 112,012.79 414.417263 40.531023 1472.034048
01/31/93 10.241677 1472.034048
02/28/93 10.258708 1472.034048
03/31/93 10.281631 1472.034048
04/30/93 10.299324 1472.034048
05/31/93 10.316329 1472.034048
06/30/93 10.339935 1472.034048
07/31/93 10.360750 1472.034048
08/31/93 10.380618 1472.034048
09/30/93 10.401556 1472.034048
10/31/93 10.421846 1472.034048
11/30/93 10.440622 1472.034048
12/31/93 10.259162 100,194.81 298.967171 29.141481 1501.175528
01/31/94 10.279000 1501.175528
02/28/94 10.297060 1501.175528
03/31/94 10.318002 1501.175528
04/30/94 1501.175528
05/31/94 1501.175528
06/30/94 10.390870 1501.175528
07/31/94 1501.175528
08/31/94 1501.175528
09/30/94 10.482911 1501.175528
10/31/94 1501.175528
11/30/94 1501.175528
12/31/94 10.249792 259,434.83 519.739994 50.707370 1551.882898
01/31/95 10.290241 1551.882898
02/28/95 10.330295 1551.882898
03/31/95 10.376299 1551.882898
04/28/95 10.416963 1551.882898
05/31/95 10.464851 1551.882898
06/30/95 10.508592 1551.882898
07/31/95 10.552914 1551.882898
08/31/95 10.596497 1551.882898
09/30/95 10.637749 1551.882898
10/31/95 10.682268 1551.882898
11/30/95 10.725870 1551.882898
12/31/95 10.271801 401,686.14 770.284836 74.990241 1626.873139
01/31/96 10.311946 1626.873139
02/28/96 10.349071 1626.873139
03/31/96 10.386643 1626.873139
04/30/96 10.427510 1626.873139
05/31/96 10.467828 1626.873139
06/30/96 10.505018 1626.873139
</TABLE>
<PAGE>
GROSS CAF: MONEY MARKET FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<S> <C> <C> <C> <C> <C>
07/31/96 10.548632 07/31/96 07/31/96 10.548632
08/31/96 10.589387 08/31/96 08/31/96 10.589387
09/30/96 10.630813 09/30/96 09/30/96 10.630813
10/31/96 10.672082 10/31/96 10/31/96 10.672082
11/30/96 10.709946 11/30/96 11/30/96 10.709946
12/31/96 10.246253 12/31/96 12/31/96 0.5034 10.246253
</TABLE>
<TABLE>
<S> <C> <C> <C>
07/31/96 1626.873139
08/31/96 1626.873139
09/30/96 1626.873139
10/31/96 1626.873139
11/30/96 1626.873139
12/31/96 818.919132 79.923766 1706.796906
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: GOLD FUND
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
617.627147 16.61 10256.6221
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 16.61 10256.6221 10,000.00 (256.6221)
SHARES PURCHASED: 601.9994448
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(256.6221) 10,000.00 0.0257
ONE YEAR NET RATE OF RETURN: 2.57%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS
<S> <C> <C> <C> <C> <C>
12/31/95 16.611311 12/31/95 12/31/95 0.090755
01/31/96 19.757299 01/31/96 01/31/96
02/28/96 20.541210 02/28/96 02/28/96
03/31/96 20.801448 03/31/96 03/31/96
04/30/96 20.937018 04/30/96 04/30/96
05/31/96 21.901484 05/31/96 05/31/96
06/30/96 18.901726 06/30/96 06/30/96
07/31/96 18.106184 07/31/96 07/31/96
08/31/96 19.343179 08/31/96 08/31/96
09/30/96 17.901470 09/30/96 09/30/96
10/31/96 17.906436 10/31/96 10/31/96
11/30/96 17.311221 11/30/96 11/30/96
12/31/96 16.606495 12/31/96 12/31/96 0.431099
<CAPTION>
SHARES TOTALS
DATE REINVEST NAV AMOUNT $ TO DIST. REINV. SHARES
<S> <C> <C> <C> <C> <C>
12/31/95 16.611311 37,520.90 601.999445
01/31/96 19.757299 601.999445
02/28/96 20.541210 601.999445
03/31/96 20.801448 601.999445
04/30/96 20.937018 601.999445
05/31/96 21.901484 601.999445
06/30/96 18.901726 601.999445
07/31/96 18.106184 601.999445
08/31/96 19.343179 601.999445
09/30/96 17.901470 601.999445
10/31/96 17.906436 601.999445
11/30/96 17.311221 601.999445
12/31/96 16.606495 259.521359 15.627702 617.627147
</TABLE>
<PAGE>
GROSS CAF: GOLD FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<TABLE>
<CAPTION>
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
869.951457 16.61 14446.8445
PURCHASE DATE: 12/31/91
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 11.99 14446.8445 10,000.00 (4446.8445)
SHARES PURCHASED: 834.028357
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(4446.8445) 10,000.00 0.4447
GROSS 5 YEAR RETURN: 44.47%
ANNUALIZED GROSS 5 YEAR RETURN: 7.64%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 11.990000 12/31/91 12/31/91 0.069530 11.990000 26,801.64
01/31/92 12.537230 01/31/92 01/31/92 12.537230
02/28/92 12.465343 02/28/92 02/28/92 12.465343
03/31/92 11.512562 03/31/92 03/31/92 11.512562
04/30/92 10.665906 04/30/92 04/30/92 10.665906
05/31/92 11.609132 05/31/92 05/31/92 11.609132
06/30/92 12.422040 06/30/92 06/30/92 12.422040
07/31/92 13.000353 07/31/92 07/31/92 13.000353
08/31/92 12.614457 08/31/92 08/31/92 12.614457
09/30/92 12.503699 09/30/92 09/30/92 12.503699
10/31/92 11.893408 10/31/92 10/31/92 11.893408
11/30/92 10.920135 11/30/92 11/30/92 10.920135
12/31/92 11.574689 12/31/92 01/04/93 0.026120 11.574689 9,790.26
01/31/93 11.259309 01/31/93 01/31/93 11.259309
02/28/93 12.041281 02/28/93 02/28/93 12.041281
03/31/93 13.707730 03/31/93 03/31/93 13.707730
04/30/93 15.032484 04/30/93 04/30/93 15.032484
05/31/93 17.307920 05/31/93 05/31/93 17.307920
06/30/93 17.755083 06/30/93 06/30/93 17.755083
07/31/93 19.380805 07/31/93 07/31/93 19.380805
08/31/93 17.495044 08/31/93 08/31/93 17.495044
09/30/93 15.186717 09/30/93 09/30/93 15.186717
10/31/93 17.110323 10/31/93 10/31/93 17.110323
11/30/93 16.950429 11/30/93 11/30/93 16.950429
12/31/93 19.000000 12/31/93 12/31/93 0.016533 19.000000
01/31/94 19.505582 01/31/94 01/31/94 19.505582
02/28/94 18.694719 02/28/94 02/28/94 18.694719
03/31/94 19.057402 03/31/94 03/31/94 0.001700 19.057402 738.50
04/30/94 17.233519 04/30/94 04/30/94
05/31/94 18.028666 05/31/94 05/31/94
06/30/94 17.022927 06/30/94 06/30/94 17.022927
07/31/94 16.989959 07/31/94 07/31/94
08/31/94 17.587124 08/31/94 08/31/94
09/30/94 19.326626 09/30/94 09/30/94 0.017529 17.922432 8,614.00
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/91 834.028357
01/31/92 834.028357
02/28/92 834.028357
03/31/92 834.028357
04/30/92 834.028357
05/31/92 834.028357
06/30/92 834.028357
07/31/92 834.028357
08/31/92 834.028357
09/30/92 834.028357
10/31/92 834.028357
11/30/92 834.028357
12/31/92 21.784821 1.882109 835.910465
01/31/93 835.910465
02/28/93 835.910465
03/31/93 835.910465
04/30/93 835.910465
05/31/93 835.910465
06/30/93 835.910465
07/31/93 835.910465
08/31/93 835.910465
09/30/93 835.910465
10/31/93 835.910465
11/30/93 835.910465
12/31/93 13.820108 0.727374 836.637840
01/31/94 836.637840
02/28/94 836.637840
03/31/94 1.422284 0.074632 836.712471
04/30/94 836.712471
05/31/94 836.712471
06/30/94 836.712471
07/31/94 836.712471
08/31/94 836.712471
09/30/94 14.666695 0.818343 837.530814
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: GOLD FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<S> <C> <C> <C> <C> <C> <C> <C>
10/31/94 17.733997 10/31/94 10/31/94
11/30/94 15.740820 11/30/94 11/30/94
12/31/94 16.253582 12/31/94 12/31/94 0.112518 16.253582 50,892.72
01/31/95 14.529860 01/31/95 01/31/95 14.529860
02/28/95 14.953955 02/28/95 02/28/95 14.953955
03/31/95 16.573346 03/31/95 03/31/95 0.000059 16.573346 33.66
04/28/95 16.544379 04/28/95 04/28/95 16.544379
05/31/95 16.646587 05/31/95 05/31/95 16.646587
06/30/95 16.677838 06/30/95 06/30/95 16.677838
07/31/95 17.085146 07/31/95 07/31/95 17.085146
08/31/95 17.208702 08/31/95 08/31/95 17.208702
09/30/95 17.476544 09/30/95 09/30/95 17.476544
10/31/95 15.430857 10/31/95 10/31/95 15.430857
11/30/95 16.558341 11/30/95 11/30/95 16.558341
12/31/95 16.611311 12/31/95 12/31/95 0.090755 16.611311 37,520.90
01/31/96 19.757299 01/31/96 01/31/96 19.757299
02/28/96 20.541210 02/28/96 02/28/96 20.541210
03/31/96 20.801448 03/31/96 03/31/96 20.801448
04/30/96 20.937018 04/30/96 04/30/96 20.937018
05/31/96 21.901484 05/31/96 05/31/96 21.901484
06/30/96 18.901726 06/30/96 06/30/96 18.901726
07/31/96 18.106184 07/31/96 07/31/96 18.106184
08/31/96 19.343179 08/31/96 08/31/96 19.343179
09/30/96 17.901470 09/30/96 09/30/96 17.901470
10/31/96 17.906436 10/31/96 10/31/96 17.906436
11/30/96 17.311221 11/30/96 11/30/96 17.311221
12/31/96 16.606495 12/31/96 12/31/96 0.431099 16.606495
<CAPTION>
<S> <C> <C> <C>
10/31/94 837.530814
11/30/94 837.530814
12/31/94 94.237292 5.797940 843.328754
01/31/95 843.328754
02/28/95 843.328754
03/31/95 0.049548 0.002990 843.331744
04/28/95 843.331744
05/31/95 843.331744
06/30/95 843.331744
07/31/95 843.331744
08/31/95 843.331744
09/30/95 843.331744
10/31/95 843.331744
11/30/95 843.331744
12/31/95 76.536572 4.607497 847.939241
01/31/96 847.939241
02/28/96 847.939241
03/31/96 847.939241
04/30/96 847.939241
05/31/96 847.939241
06/30/96 847.939241
07/31/96 847.939241
08/31/96 847.939241
09/30/96 847.939241
10/31/96 847.939241
11/30/96 869.951457
12/31/96 365.545759 22.012216 869.951457
</TABLE>
<PAGE>
GROSS CAF: GOLD FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<CAPTION>
SHARES TO DATEX (NAV +NOT REINVESTE GROSS VALUE
1071.454152 16.61 17793.0980
PURCHASE DATE: 08/01/85
INITIAL INVESTME $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.04 17793.0980 10,000.00 (7793.0980)
SHARES PURCHASED 996.016
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(7793.0980) 10,000.00 0.7793
GROSS RATE OF RETURN SINCE INCEPTION: 77.93%
ANNUALIZED GROSS RATE OF RETURN SINCE INCE 5.17%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
08/01/85 10.040000 08/01/85 08/01/85 10.270000
08/30/85 10.606109 08/30/85 08/30/85 9.862001
09/30/85 9.640605 09/30/85 09/30/85 9.357841
10/31/85 9.570376 10/31/85 10/31/85 9.772022
11/30/85 10.174766 11/30/85 11/30/85 10.370973
12/31/85 10.000000 12/31/85 12/31/85 10.000000
01/31/86 10.878179 01/31/86 01/31/86 10.883980
02/28/86 10.125862 02/28/86 02/28/86 12.195507
03/31/86 10.258072 03/31/86 03/31/86 13.280718
04/01/86 9.900000 04/01/86 04/01/86 0.080000 9.900000 8,360.00 79.681275
04/30/86 9.966539 04/30/86 04/30/86 13.385027
05/31/86 9.828679 05/31/86 05/31/86 9.828679
06/30/86 10.100434 06/30/86 06/30/86 10.100434
07/31/86 10.406548 07/31/86 07/31/86 10.406548
08/31/86 11.830752 08/31/86 08/31/86 11.830752
09/30/86 12.934295 09/30/86 09/30/86 12.934295
10/31/86 13.449433 10/31/86 10/31/86 13.449433
11/30/86 13.793036 11/30/86 11/30/86 13.793036
12/31/86 13.590663 12/31/86 12/31/86 13.590663
01/31/87 15.971436 01/31/87 01/31/87 15.971436
02/28/87 18.008619 02/28/87 02/28/87 18.008619
03/31/87 22.073838 03/31/87 03/31/87 22.073838
04/30/87 23.392579 04/30/87 04/30/87 23.392579
05/31/87 20.912506 05/31/87 05/31/87 20.912506
06/30/87 20.309814 06/30/87 06/30/87 20.309814
07/31/87 24.062335 07/31/87 07/31/87 24.062335
08/31/87 23.364187 08/31/87 08/31/87 23.364187
09/30/87 24.660495 09/30/87 09/30/87 24.660495
10/31/87 16.328519 10/31/87 10/31/87 16.328519
11/30/87 18.917959 11/30/87 11/30/87 18.917959
12/31/87 18.244344 12/31/87 12/31/87 0.006300 18.244344 1,321.00 6.325607
01/31/88 15.238558 01/31/88 01/31/88 15.238558
02/29/88 15.320911 02/29/88 02/29/88 15.320911
03/31/88 16.827233 03/31/88 03/31/88 16.827233
<CAPTION>
SHARES TOTALS
DATE REINV. SHARES
<S> <C> <C>
08/01/85 996.015936
08/30/85 996.015936
09/30/85 996.015936
10/31/85 996.015936
11/30/85 996.015936
12/31/85 996.015936
01/31/86 996.015936
02/28/86 996.015936
03/31/86 996.015936
04/01/86 8.048614 1004.064550
04/30/86 1004.064550
05/31/86 1004.064550
06/30/86 1004.064550
07/31/86 1004.064550
08/31/86 1004.064550
09/30/86 1004.064550
10/31/86 1004.064550
11/30/86 1004.064550
12/31/86 1004.064550
01/31/87 1004.064550
02/28/87 1004.064550
03/31/87 1004.064550
04/30/87 1004.064550
05/31/87 1004.064550
06/30/87 1004.064550
07/31/87 1004.064550
08/31/87 1004.064550
09/30/87 1004.064550
10/31/87 1004.064550
11/30/87 1004.064550
12/31/87 0.346716 1004.411266
01/31/88 1004.411266
02/29/88 1004.411266
03/31/88 1004.411266
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: GOLD FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<S> <C> <C> <C> <C> <C> <C> <C> <C>
04/30/88 16.637987 04/30/88 04/30/88 16.637987
05/31/88 16.446398 05/31/88 05/31/88 16.446398
06/30/88 16.681648 06/30/88 06/30/88 16.681648
07/31/88 16.880585 07/31/88 07/31/88 16.880585
08/31/88 15.861418 08/31/88 08/31/88 15.861418
09/30/88 14.701129 09/30/88 09/30/88 14.701129
10/31/88 14.887833 10/31/88 10/31/88 14.887833
11/30/88 15.070704 11/30/88 11/30/88 15.070704
12/31/88 14.369903 12/31/88 12/31/88 14.369903
01/31/89 14.951000 01/31/89 01/31/89 14.951000
02/28/89 15.585000 02/28/89 02/28/89 15.585000
03/31/89 15.182000 03/31/89 03/31/89 15.182000
04/30/89 14.349388 04/30/89 04/30/89 14.349388
05/31/89 13.582000 05/31/89 05/31/89 13.582000
06/30/89 14.301000 06/30/89 06/30/89 14.301000
07/31/89 14.386000 07/31/89 07/31/89 14.386000
08/31/89 14.713000 08/31/89 08/31/89 14.713000
09/30/89 14.940000 09/30/89 09/30/89 14.940000
10/31/89 15.041000 10/31/89 10/31/89 15.041000
11/30/89 17.327000 11/30/89 11/30/89 17.327000
12/31/89 16.950000 12/31/89 12/31/89 0.067820 0.116290 16.950000 64,139.42 184.922158
01/31/90 17.270054 01/31/90 01/31/90 17.270054
02/28/90 16.498380 02/28/90 02/28/90 16.498380
03/31/90 15.573094 03/31/90 03/31/90 15.573094
04/30/90 14.180843 04/30/90 04/30/90 14.180843
05/31/90 14.726217 05/31/90 05/31/90 14.726217
06/30/90 13.577403 06/30/90 06/30/90 13.577403
07/31/90 14.838629 07/31/90 07/31/90 14.838629
08/31/90 14.578930 08/31/90 08/31/90 14.578930
09/30/90 14.622013 09/30/90 09/30/90 14.622013
10/31/90 12.114504 10/31/90 10/31/90 12.114504
11/30/90 11.903974 11/30/90 11/30/90 11.903974
12/31/90 12.763909 12/31/90 12/31/90 0.074160 12.763909 31,137.00 75.296215
01/31/91 11.290000 01/31/91 01/31/91 11.290000
02/28/91 12.250000 02/28/91 02/28/91 12.250000
03/31/91 12.080000 03/31/91 03/31/91 0.000800 12.080000 314.51 0.816976
04/30/91 11.760000 04/30/91 04/30/91 11.760000
05/31/91 12.310000 05/31/91 05/31/91 12.310000
06/30/91 13.250000 06/30/91 06/30/91 13.250000
07/31/91 13.010000 07/31/91 07/31/91 13.010000
08/31/91 11.730000 08/31/91 08/31/91 11.730000
09/30/91 11.940000 09/30/91 09/30/91 11.940000
10/31/91 12.490000 10/31/91 10/31/91 12.490000
11/30/91 12.480000 11/30/91 11/30/91 12.480000
12/31/91 11.990000 12/31/91 12/31/91 0.069530 11.990000 26,801.64 71.010148
01/31/92 12.537230 01/31/92 01/31/92 12.537230
02/28/92 12.465343 02/28/92 02/28/92 12.465343
03/31/92 11.512562 03/31/92 03/31/92 11.512562
04/30/92 10.665906 04/30/92 04/30/92 10.665906
05/31/92 11.609132 05/31/92 05/31/92 11.609132
<CAPTION>
<S> <C> <C>
04/30/88 1004.411266
05/31/88 1004.411266
06/30/88 1004.411266
07/31/88 1004.411266
08/31/88 1004.411266
09/30/88 1004.411266
10/31/88 1004.411266
11/30/88 1004.411266
12/31/88 1004.411266
01/31/89 1004.411266
02/28/89 1004.411266
03/31/89 1004.411266
04/30/89 1004.411266
05/31/89 1004.411266
06/30/89 1004.411266
07/31/89 1004.411266
08/31/89 1004.411266
09/30/89 1004.411266
10/31/89 1004.411266
11/30/89 1004.411266
12/31/89 10.909862 1015.321128
01/31/90 1015.321128
02/28/90 1015.321128
03/31/90 1015.321128
04/30/90 1015.321128
05/31/90 1015.321128
06/30/90 1015.321128
07/31/90 1015.321128
08/31/90 1015.321128
09/30/90 1015.321128
10/31/90 1015.321128
11/30/90 1015.321128
12/31/90 5.899150 1021.220278
01/31/91 1021.220278
02/28/91 1021.220278
03/31/91 0.067630 1021.287908
04/30/91 1021.287908
05/31/91 1021.287908
06/30/91 1021.287908
07/31/91 1021.287908
08/31/91 1021.287908
09/30/91 1021.287908
10/31/91 1021.287908
11/30/91 1021.287908
12/31/91 5.922448 1027.210356
01/31/92 1027.210356
02/28/92 1027.210356
03/31/92 1027.210356
04/30/92 1027.210356
05/31/92 1027.210356
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: GOLD FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/30/92 12.422040 06/30/92 06/30/92 12.422040
07/31/92 13.000353 07/31/92 07/31/92 13.000353
08/31/92 12.614457 08/31/92 08/31/92 12.614457
09/30/92 12.503699 09/30/92 09/30/92 12.503699
10/31/92 11.893408 10/31/92 10/31/92 11.893408
11/30/92 10.920135 11/30/92 11/30/92 10.920135
12/31/92 11.574689 12/31/92 01/04/93 0.026120 11.574689 9,790.26 26.830735
01/31/93 11.259309 01/31/93 01/31/93 11.259309
02/28/93 12.041281 02/28/93 02/28/93 12.041281
03/31/93 13.707730 03/31/93 03/31/93 13.707730
04/30/93 15.032484 04/30/93 04/30/93 15.032484
05/31/93 17.307920 05/31/93 05/31/93 17.307920
06/30/93 17.755083 06/30/93 06/30/93 17.755083
07/31/93 19.380805 07/31/93 07/31/93 19.380805
08/31/93 17.495044 08/31/93 08/31/93 17.495044
09/30/93 15.186717 09/30/93 09/30/93 15.186717
10/31/93 17.110323 10/31/93 10/31/93 17.110323
11/30/93 16.950429 11/30/93 11/30/93 16.950429
12/31/93 19.000000 12/31/93 12/31/93 0.016533 19.000000 17.021193
01/31/94 19.505582 01/31/94 01/31/94 19.505582
02/28/94 18.694719 02/28/94 02/28/94 18.694719
03/31/94 19.057402 03/31/94 03/31/94 0.001700 19.057402 738.50 1.751721
04/30/94 17.233519 04/30/94 04/30/94
05/31/94 18.028666 05/31/94 05/31/94
06/30/94 17.022927 06/30/94 06/30/94 17.022927
07/31/94 16.989959 07/31/94 07/31/94
08/31/94 17.587124 08/31/94 08/31/94
09/30/94 19.326626 09/30/94 09/30/94 0.017529 17.922432 8,614.00 18.063871
10/31/94 17.733997 10/31/94 10/31/94
11/30/94 15.740820 11/30/94 11/30/94
12/31/94 16.253582 12/31/94 12/31/94 0.112518 16.253582 50,892.72 116.065025
01/31/95 14.529860 01/31/95 01/31/95 14.529860
02/28/95 14.953955 02/28/95 02/28/95 14.953955
03/31/95 16.573346 03/31/95 03/31/95 0.000059 16.573346 33.66 0.061024
04/28/95 16.544379 04/28/95 04/28/95 16.544379
05/31/95 16.646587 05/31/95 05/31/95 16.646587
06/30/95 16.677838 06/30/95 06/30/95 16.677838
07/31/95 17.085146 07/31/95 07/31/95 17.085146
08/31/95 17.208702 08/31/95 08/31/95 17.208702
09/30/95 17.476544 09/30/95 09/30/95 17.476544
10/31/95 15.430857 10/31/95 10/31/95 15.430857
11/30/95 16.558341 11/30/95 11/30/95 16.558341
12/31/95 16.611311 12/31/95 12/31/95 0.090755 16.611311 37,520.90 94.264373
01/31/96 19.757299 01/31/96 01/31/96 19.757299
02/28/96 20.541210 02/28/96 02/28/96 20.541210
03/31/96 20.801448 03/31/96 03/31/96 20.801448
04/30/96 20.937018 04/30/96 04/30/96 20.937018
05/31/96 21.901484 05/31/96 05/31/96 21.901484
06/30/96 18.901726 06/30/96 06/30/96 18.901726
07/31/96 18.106184 07/31/96 07/31/96 18.106184
<CAPTION>
<S> <C> <C>
06/30/92 1027.210356
07/31/92 1027.210356
08/31/92 1027.210356
09/30/92 1027.210356
10/31/92 1027.210356
11/30/92 1027.210356
12/31/92 2.318052 1029.528408
01/31/93 1029.528408
02/28/93 1029.528408
03/31/93 1029.528408
04/30/93 1029.528408
05/31/93 1029.528408
06/30/93 1029.528408
07/31/93 1029.528408
08/31/93 1029.528408
09/30/93 1029.528408
10/31/93 1029.528408
11/30/93 1029.528408
12/31/93 0.895852 1030.424261
01/31/94 1030.424261
02/28/94 1030.424261
03/31/94 0.091918 1030.516179
04/30/94 1030.516179
05/31/94 1030.516179
06/30/94 1030.516179
07/31/94 1030.516179
08/31/94 1030.516179
09/30/94 1.007892 1031.524071
10/31/94 1031.524071
11/30/94 1031.524071
12/31/94 7.140889 1038.664960
01/31/95 1038.664960
02/28/95 1038.664960
03/31/95 0.003682 1038.668642
04/28/95 1038.668642
05/31/95 1038.668642
06/30/95 1038.668642
07/31/95 1038.668642
08/31/95 1038.668642
09/30/95 1038.668642
10/31/95 1038.668642
11/30/95 1038.668642
12/31/95 5.674710 1044.343352
01/31/96 1044.343352
02/28/96 1044.343352
03/31/96 1044.343352
04/30/96 1044.343352
05/31/96 1044.343352
06/30/96 1044.343352
07/31/96 1044.343352
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: GOLD FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<S> <C> <C> <C> <C> <C> <C>
08/31/96 19.343179 08/31/96 08/31/96 19.343179
09/30/96 17.901470 09/30/96 09/30/96 17.901470
10/31/96 17.906436 10/31/96 10/31/96 17.906436
11/30/96 17.311221 11/30/96 11/30/96 17.311221
12/31/96 16.606495 12/31/96 12/31/96 0.431099 16.606495 450.215375
<CAPTION>
<S> <C> <C>
08/31/96 1044.343352
09/30/96 1044.343352
10/31/96 1044.343352
11/30/96 1044.343352
12/31/96 27.110801 1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
1071.454152
</TABLE>
<PAGE>
GROSS CAF: BOND FUND
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
<TABLE>
<CAPTION>
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
998.236931 10.27 10247.1616
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.59 10247.1616 10,000.00 (247.1616)
SHARES PURCHASED: 944.2804649
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(247.1616) 10,000.00 0.0247
ONE YEAR NET RATE OF RETURN: 2.47%
INCOME CAPITAL SHARES
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST. REINV.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 10.590074 12/31/95 12/31/95 0.739921 10.590074 644,899.59
01/31/96 10.662341 01/31/96 01/31/96 10.662341
02/28/96 10.444631 02/28/96 02/28/96 10.444631
03/31/96 10.364393 03/31/96 03/31/96 10.364393
04/30/96 10.283018 04/30/96 04/30/96 10.283018
05/31/96 10.234674 05/31/96 05/31/96 10.234674
06/30/96 10.369929 06/30/96 06/30/96 10.369929
07/31/96 10.392209 07/31/96 07/31/96 10.392209
08/31/96 10.375166 08/31/96 08/31/96 10.375166
09/30/96 10.559353 09/30/96 09/30/96 10.559353
10/31/96 10.783077 10/31/96 10/31/96 10.783077
11/30/96 10.967412 11/30/96 11/30/96 10.967412
12/31/96 10.265260 12/31/96 12/31/96 0.556560 0.030000 10.265260 553.877149 53.956466
<CAPTION>
TOTALS
DATE SHARES
<S> <C>
12/31/95 944.280465
01/31/96 944.280465
02/28/96 944.280465
03/31/96 944.280465
04/30/96 944.280465
05/31/96 944.280465
06/30/96 944.280465
07/31/96 944.280465
08/31/96 944.280465
09/30/96 944.280465
10/31/96 944.280465
11/30/96 944.280465
12/31/966 998.236931
</TABLE>
<PAGE>
GROSS CAF: BOND FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<TABLE>
<S> <C>
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
1329.543348 10.27 13648.1082
PURCHASE DATE: 12/31/91
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.61 13648.1082 10,000.00 (3648.1082)
SHARES PURCHASED: 942.5070688
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(3648.1082) 10,000.00 0.3648
GROSS 5 YEAR RETURN: 36.48%
ANNUALIZED GROSS 5 YEAR RETURN: 6.42%
</TABLE>
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 10.610000 12/31/91 12/31/91 0.719570 10.610000 223,317.48
01/31/92 10.364336 01/31/92 01/31/92 10.364336
02/28/92 10.379409 02/28/92 02/28/92 10.379409
03/31/92 10.325922 03/31/92 03/31/92 10.325922
04/30/92 10.407260 04/30/92 04/30/92 10.407260
05/31/92 10.601537 05/31/92 05/31/92 10.601537
06/30/92 10.782767 06/30/92 06/30/92 10.782767
07/31/92 11.052732 07/31/92 07/31/92 11.052732
08/31/92 11.156762 08/31/92 08/31/92 11.156762
09/30/92 11.347966 09/30/92 09/30/92 11.347966
10/31/92 11.290826 10/31/92 10/31/92 11.290826
11/30/92 11.240816 11/30/92 11/30/92 11.240816
12/31/92 10.205609 12/31/92 12/31/92 0.658520 0.532550 10.205609 471,791.77
01/31/93 10.396176 01/31/93 01/31/93 10.396176
02/28/93 10.441580 02/28/93 02/28/93 10.441580
03/31/93 10.507183 03/31/93 03/31/93 10.507183
04/30/93 10.626950 04/30/93 04/30/93 10.626950
05/31/93 10.643979 05/31/93 05/31/93 10.643979
06/30/93 10.812965 06/30/93 06/30/93 10.812965
07/31/93 10.847245 07/31/93 07/31/93 10.847245
08/31/93 11.006825 08/31/93 08/31/93 11.006825
09/30/93 10.896467 09/30/93 09/30/93 10.896467
10/31/93 11.121095 10/31/93 10/31/93 11.121095
11/30/93 10.944861 11/30/93 11/30/93 10.944861
12/31/93 10.288953 12/31/93 12/31/93 0.738479 0.063669 10.288953 426,035.79
01/31/94 10.434721 01/31/94 01/31/94 10.434721
02/28/94 10.282937 02/28/94 02/28/94 10.282937
03/31/94 10.074059 03/31/94 03/31/94 10.074059
04/30/94 10.029890 04/30/94 04/30/94
05/31/94 10.061489 05/31/94 05/31/94
06/30/94 10.039993 06/30/94 06/30/94 10.039993
08/31/94 10.228198 08/31/94 08/31/94 10.228198
09/30/94 10.090424 09/30/94 09/30/94 10.090424
12/31/94 9.703418 12/31/94 01/03/95 0.350525 9.703418 472,010.99
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/91 942.507069
01/31/92 942.507069
02/28/92 942.507069
03/31/92 942.507069
04/30/92 942.507069
05/31/92 942.507069
06/30/92 942.507069
07/31/92 942.507069
08/31/92 942.507069
09/30/92 942.507069
10/31/92 942.507069
11/30/92 942.507069
12/31/92 1122.591894 109.997541 1052.504610
01/31/93 1052.504610
02/28/93 1052.504610
03/31/93 1052.504610
04/30/93 1052.504610
05/31/93 1052.504610
06/30/93 1052.504610
07/31/93 1052.504610
08/31/93 1052.504610
09/30/93 1052.504610
10/31/93 1052.504610
11/30/93 1052.504610
12/31/93 844.264468 82.055430 1134.560040
01/31/94 1134.560040
02/28/94 1134.560040
03/31/94 1134.560040
04/30/94 1134.560040
05/31/94 1134.560040
06/30/94 1134.560040
08/31/94 1134.560040
09/30/94 1134.560040
12/31/94 397.691658 40.984698 1175.544738
</TABLE>
<PAGE>
GROSS CAF: BOND FUND
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01/31/95 9.871486 01/31/95 01/31/95 9.871486
02/28/95 10.096927 02/28/95 02/28/95 10.096927
03/31/95 10.148515 03/31/95 03/31/95 10.148515
04/28/95 10.283833 04/28/95 04/28/95 10.283833
05/31/95 10.626033 05/31/95 05/31/95 10.626033
06/30/95 10.700860 06/30/95 06/30/95 10.700860
07/31/95 10.654863 07/31/95 07/31/95 10.654863
08/31/95 10.768987 08/31/95 08/31/95 10.768987
09/30/95 10.871226 09/30/95 09/30/95 10.871226
10/31/95 11.017642 10/31/95 10/31/95 11.017642
11/30/95 11.168842 11/30/95 11/30/95 11.168842
12/31/95 10.590074 12/31/95 12/31/95 0.739921 10.590074 644,899.59
01/31/96 10.662341 01/31/96 01/31/96 10.662341
02/28/96 10.444631 02/28/96 02/28/96 10.444631
03/31/96 10.364393 03/31/96 03/31/96 10.364393
04/30/96 10.283018 04/30/96 04/30/96 10.283018
05/31/96 10.234674 05/31/96 05/31/96 10.234674
06/30/96 10.369929 06/30/96 06/30/96 10.369929
07/31/96 10.392209 07/31/96 07/31/96 10.392209
08/31/96 10.375166 08/31/96 08/31/96 10.375166
09/30/96 10.559353 09/30/96 09/30/96 10.559353
10/31/96 10.783077 10/31/96 10/31/96 10.783077
11/30/96 10.967412 11/30/96 11/30/96 10.967412
12/31/96 10.265260 12/31/96 12/31/96 0.556560 0.030000 10.265260
<CAPTION>
<S> <C> <C> <C>
01/31/95 1175.544738
02/28/95 1175.544738
03/31/95 1175.544738
04/28/95 1175.544738
05/31/95 1175.544738
06/30/95 1175.544738
07/31/95 1175.544738
08/31/95 1175.544738
09/30/95 1175.544738
10/31/95 1175.544738
11/30/95 1175.544738
12/31/95 869.809886 82.134448 1257.679187
01/31/96 1257.679187
02/28/96 1257.679187
03/31/96 1257.679187
04/30/96 1257.679187
05/31/96 1257.679187
06/30/96 1257.679187
07/31/96 1257.679187
08/31/96 1257.679187
09/30/96 1257.679187
10/31/96 1257.679187
11/30/96 1257.679187
12/31/96 737.704304 71.864162 1329.543348
</TABLE>
<PAGE>
GROSS CAF: BOND FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
---------------
PURCHASE DATE: 04/18/86
INITIAL INVESTME $10,000.00
INITIAL VALUE: 10.02
SHARES PURCHASED 998.004
SHARES TO DATEX (NAV +NOT REINVESTE GROSS VALUE
2051.185544 10.27 21055.9529
GROSS VALUE - INITIAL INVESTMENT NET VALUE
21055.9529 10,000.00 (11055.9529)
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(11055.9529) 10,000.00 1.1056
GROSS RATE OF RETURN SINCE INCEPTION: 110.56%
ANNUALIZED GROSS RATE OF RETURN SINCE INCE 7.20%
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS
<S> <C> <C> <C> <C> <C>
04/18/86 10.020000 04/18/86 04/18/86
04/30/86 10.044833 04/30/86 04/30/86
05/31/86 10.087796 05/31/86 05/31/86
06/30/86 10.136403 06/30/86 06/30/86
07/31/86 10.291391 07/31/86 07/31/86
08/31/86 10.302465 08/31/86 08/31/86
09/30/86 10.330913 09/30/86 09/30/86
10/31/86 10.367638 10/31/86 10/31/86
11/30/86 10.403175 11/30/86 11/30/86
12/31/86 10.467900 12/31/86 12/31/86
01/31/87 10.515286 01/31/87 01/31/87
02/28/87 10.176610 02/28/87 02/28/87
03/31/87 10.254520 03/31/87 03/31/87
04/01/87 10.250000 04/01/87 04/01/87 0.387300 0.048500
04/30/87 9.862522 04/30/87 04/30/87
05/31/87 9.748931 05/31/87 05/31/87
06/30/87 9.879700 06/30/87 06/30/87
07/31/87 9.830480 07/31/87 07/31/87
08/31/87 9.756463 08/31/87 08/31/87
09/30/87 9.573253 09/30/87 09/30/87
10/31/87 9.763217 10/31/87 10/31/87
11/30/87 9.821544 11/30/87 11/30/87
12/31/87 9.380374 12/31/87 12/31/87 0.556600
01/31/88 9.655658 01/31/88 01/31/88
02/28/88 9.802955 02/28/88 02/28/88
03/31/88 9.629260 03/31/88 03/31/88
04/30/88 9.590887 04/30/88 04/30/88
05/31/88 9.525979 05/31/88 05/31/88
06/30/88 9.708801 06/30/88 06/30/88
07/31/88 9.637854 07/31/88 07/31/88
08/31/88 9.645629 08/31/88 08/31/88
09/30/88 9.808541 09/30/88 09/30/88
10/31/88 9.957737 10/31/88 10/31/88
11/30/88 9.891693 11/30/88 11/30/88
<CAPTION>
SHARES TOTALS ACCOUNT
DATE REINVEST NAV AMOUNT $ TO DIST. REINV. SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
04/18/86 10.270000 998.003992 10,000
04/30/86 13.385027 998.003992 10,025
05/31/86 10.087796 998.003992 10,068
06/30/86 10.136403 998.003992 10,116
07/31/86 10.291391 998.003992 10,271
08/31/86 10.302465 998.003992 10,282
09/30/86 10.330913 998.003992 10,310
10/31/86 10.367638 998.003992 10,347
11/30/86 10.403175 998.003992 10,382
12/31/86 10.467900 998.003992 10,447
01/31/87 10.515286 998.003992 10,494
02/28/87 10.176610 998.003992 10,156
03/31/87 10.254520 998.003992 10,234
04/01/87 10.250000 44,932.00 434.930140 42.432209 1040.436201 10,664
04/30/87 9.862522 1040.436201 10,261
05/31/87 9.748931 1040.436201 10,143
06/30/87 9.879700 1040.436201 10,279
07/31/87 9.830480 1040.436201 10,228
08/31/87 9.756463 1040.436201 10,151
09/30/87 9.573253 1040.436201 9,960
10/31/87 9.763217 1040.436201 10,158
11/30/87 9.821544 1040.436201 10,219
12/31/87 9.380374 72,958.00 579.106789 61.736002 1102.172203 10,339
01/31/88 9.655658 1102.172203 10,642
02/28/88 9.802955 1102.172203 10,805
03/31/88 9.629260 1102.172203 10,613
04/30/88 9.590887 1102.172203 10,571
05/31/88 9.525979 1102.172203 10,499
06/30/88 9.708801 1102.172203 10,701
07/31/88 9.637854 1102.172203 10,623
08/31/88 9.645629 1102.172203 10,631
09/30/88 9.808541 1102.172203 10,811
10/31/88 9.957737 1102.172203 10,975
11/30/88 9.891693 1102.172203 10,902
</TABLE>
<PAGE>
GROSS CAF: BOND FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
---------------
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS
<S> <C> <C> <C> <C> <C>
12/31/88 9.287353 12/31/88 12/31/88 0.620000
01/31/89 9.386000 01/31/89 01/31/89
02/28/89 9.346000 02/28/89 02/28/89
03/31/89 9.330000 03/31/89 03/31/89
04/30/89 9.504834 04/30/89 04/30/89
05/31/89 9.729000 05/31/89 05/31/89
06/30/89 10.068000 06/30/89 06/30/89
07/31/89 10.289000 07/31/89 07/31/89
08/31/89 10.085000 08/31/89 08/31/89
09/30/89 10.123473 09/30/89 09/30/89
10/31/89 10.372000 10/31/89 10/31/89
11/30/89 10.465000 11/30/89 11/30/89
12/31/89 9.756000 12/31/89 12/31/89 0.730230
01/31/90 9.637354 01/31/90 01/31/90
02/28/90 9.652223 02/28/90 02/28/90
03/31/90 9.641818 03/31/90 03/31/90
04/30/90 9.509274 04/30/90 04/30/90
05/31/90 9.813398 05/31/90 05/31/90
06/30/90 9.996726 06/30/90 06/30/90
07/31/90 10.127276 07/31/90 07/31/90
08/31/90 9.920391 08/31/90 08/31/90
09/14/90 9.960000 09/14/90 09/14/90 0.015730
09/30/90 10.016618 09/30/90 09/30/90
10/31/90 10.158372 10/31/90 10/31/90
11/30/90 10.408633 11/30/90 11/30/90
12/31/90 9.825677 12/31/90 12/31/90 0.736970
01/31/91 9.950000 01/31/91 01/31/91
02/28/91 10.040000 02/28/91 02/28/91
03/31/91 10.070000 03/31/91 03/31/91 0.007670
04/30/91 10.150000 04/30/91 04/30/91
05/31/91 10.210000 05/31/91 05/31/91
06/30/91 10.180000 06/30/91 06/30/91
07/31/91 10.300000 07/31/91 07/31/91
08/31/91 10.540000 08/31/91 08/31/91
09/30/91 10.740000 09/30/91 09/30/91
10/31/91 10.860000 10/31/91 10/31/91
11/30/91 10.960000 11/30/91 11/30/91
12/31/91 10.610000 12/31/91 12/31/91 0.719570
01/31/92 10.364336 01/31/92 01/31/92
02/28/92 10.379409 02/28/92 02/28/92
03/31/92 10.325922 03/31/92 03/31/92
04/30/92 10.407260 04/30/92 04/30/92
05/31/92 10.601537 05/31/92 05/31/92
06/30/92 10.782767 06/30/92 06/30/92
07/31/92 11.052732 07/31/92 07/31/92
08/31/92 11.156762 08/31/92 08/31/92
09/30/92 11.347966 09/30/92 09/30/92
10/31/92 11.290826 10/31/92 10/31/92
11/30/92 11.240816 11/30/92 11/30/92
12/31/92 10.205609 12/31/92 12/31/92 0.658520 0.532550
<CAPTION>
SHARES TOTALS ACCOUNT
DATE REINVEST NAV AMOUNT $ TO DIST. REINV. SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
12/31/88 9.287353 108,564.00 683.346766 73.578205 1175.750408 10,920
01/31/89 9.386000 1175.750408 11,036
02/28/89 9.346000 1175.750408 10,989
03/31/89 9.330000 1175.750408 10,970
04/30/89 9.504834 1175.750408 11,175
05/31/89 9.729000 1175.750408 11,439
06/30/89 10.068000 1175.750408 11,837
07/31/89 10.289000 1175.750408 12,097
08/31/89 10.085000 1175.750408 11,857
09/30/89 10.123473 1175.750408 11,903
10/31/89 10.372000 1175.750408 12,195
11/30/89 10.465000 1175.750408 12,304
12/31/89 9.756000 159,458.32 858.568221 88.004123 1263.754531 12,329
01/31/90 9.637354 1263.754531 12,179
02/28/90 9.652223 1263.754531 12,198
03/31/90 9.641818 1263.754531 12,185
04/30/90 9.509274 1263.754531 12,017
05/31/90 9.813398 1263.754531 12,402
06/30/90 9.996726 1263.754531 12,633
07/31/90 10.127276 1263.754531 12,798
08/31/90 9.920391 1263.754531 12,537
09/14/90 9.960000 4,089.00 19.878859 1.995869 1265.750400 12,607
09/30/90 10.016618 1265.750400 12,679
10/31/90 10.158372 1265.750400 12,858
11/30/90 10.408633 1265.750400 13,175
12/31/90 9.825677 202,726.00 932.820072 94.936977 1360.687377 13,370
01/31/91 9.950000 1360.687377 13,539
02/28/91 10.040000 1360.687377 13,661
03/31/91 10.070000 2,222.88 10.436472 1.036392 1361.723770 13,713
04/30/91 10.150000 1361.723770 13,821
05/31/91 10.210000 1361.723770 13,903
06/30/91 10.180000 1361.723770 13,862
07/31/91 10.300000 1361.723770 14,026
08/31/91 10.540000 1361.723770 14,353
09/30/91 10.740000 1361.723770 14,625
10/31/91 10.860000 1361.723770 14,788
11/30/91 10.960000 1361.723770 14,924
12/31/91 10.610000 223,317.48 979.855573 92.352080 1454.075850 15,428
01/31/92 10.364336 1454.075850 15,071
02/28/92 10.379409 1454.075850 15,092
03/31/92 10.325922 1454.075850 15,015
04/30/92 10.407260 1454.075850 15,133
05/31/92 10.601537 1454.075850 15,415
06/30/92 10.782767 1454.075850 15,679
07/31/92 11.052732 1454.075850 16,072
08/31/92 11.156762 1454.075850 16,223
09/30/92 11.347966 1454.075850 16,501
10/31/92 11.290826 1454.075850 16,418
11/30/92 11.240816 1454.075850 16,345
12/31/92 10.205609 471,791.77 1731.906123 169.701399 1623.777249 16,572
</TABLE>
<PAGE>
GROSS CAF: BOND FUND
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
---------------
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS
<S> <C> <C> <C> <C> <C>
01/31/93 10.396176 01/31/93 01/31/93
02/28/93 10.441580 02/28/93 02/28/93
03/31/93 10.507183 03/31/93 03/31/93
04/30/93 10.626950 04/30/93 04/30/93
05/31/93 10.643979 05/31/93 05/31/93
06/30/93 10.812965 06/30/93 06/30/93
07/31/93 10.847245 07/31/93 07/31/93
08/31/93 11.006825 08/31/93 08/31/93
09/30/93 10.896467 09/30/93 09/30/93
10/31/93 11.121095 10/31/93 10/31/93
11/30/93 10.944861 11/30/93 11/30/93
12/31/93 10.288953 12/31/93 12/31/93 0.738479 0.063669
01/31/94 10.434721 01/31/94 01/31/94
02/28/94 10.282937 02/28/94 02/28/94
03/31/94 10.074059 03/31/94 03/31/94
04/30/94 10.029890 04/30/94 04/30/94
05/31/94 10.061489 05/31/94 05/31/94
06/30/94 10.039993 06/30/94 06/30/94
08/31/94 10.228198 08/31/94 08/31/94
09/30/94 10.090424 09/30/94 09/30/94
12/31/94 9.703418 12/31/94 01/03/95 0.350525
01/31/95 9.871486 01/31/95 01/31/95
02/28/95 10.096927 02/28/95 02/28/95
03/31/95 10.148515 03/31/95 03/31/95
04/28/95 10.283833 04/28/95 04/28/95
05/31/95 10.626033 05/31/95 05/31/95
06/30/95 10.700860 06/30/95 06/30/95
07/31/95 10.654863 07/31/95 07/31/95
08/31/95 10.768987 08/31/95 08/31/95
09/30/95 10.871226 09/30/95 09/30/95
10/31/95 11.017642 10/31/95 10/31/95
11/30/95 11.168842 11/30/95 11/30/95
12/31/95 10.590074 12/31/95 12/31/95 0.739921
01/31/96 10.662341 01/31/96 01/31/96
02/28/96 10.444631 02/28/96 02/28/96
03/31/96 10.364393 03/31/96 03/31/96
04/30/96 10.283018 04/30/96 04/30/96
05/31/96 10.234674 05/31/96 05/31/96
06/30/96 10.369929 06/30/96 06/30/96
07/31/96 10.392209 07/31/96 07/31/96
08/31/96 10.375166 08/31/96 08/31/96
09/30/96 10.559353 09/30/96 09/30/96
10/31/96 10.783077 10/31/96 10/31/96
11/30/96 10.967412 11/30/96 11/30/96
12/31/96 10.265260 12/31/96 12/31/96 0.556560 0.030000
<CAPTION>
SHARES TOTALS ACCOUNT
DATE REINVEST NAV AMOUNT $ TO DIST. REINV. SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
01/31/93 10.396176 1623.777249 16,881
02/28/93 10.441580 1623.777249 16,955
03/31/93 10.507183 1623.777249 17,061
04/30/93 10.626950 1623.777249 17,256
05/31/93 10.643979 1623.777249 17,283
06/30/93 10.812965 1623.777249 17,558
07/31/93 10.847245 1623.777249 17,614
08/31/93 11.006825 1623.777249 17,873
09/30/93 10.896467 1623.777249 17,693
10/31/93 11.121095 1623.777249 18,058
11/30/93 10.944861 1623.777249 17,772
12/31/93 10.288953 426,035.79 1302.509673 126.593024 1750.370273 18,009
01/31/94 10.434721 1750.370273 18,265
02/28/94 10.282937 1750.370273 17,999
03/31/94 10.074059 1750.370273 17,633
04/30/94 1750.370273 17,556
05/31/94 1750.370273 17,611
06/30/94 10.039993 1750.370273 17,574
08/31/94 10.228198 1750.370273 17,903
09/30/94 10.090424 1750.370273 17,662
12/31/94 9.703418 472,010.99 613.548540 63.230146 1813.600419 17,598
01/31/95 9.871486 1813.600419 17,903
02/28/95 10.096927 1813.600419 18,312
03/31/95 10.148515 1813.600419 18,405
04/28/95 10.283833 1813.600419 18,651
05/31/95 10.626033 1813.600419 19,271
06/30/95 10.700860 1813.600419 19,407
07/31/95 10.654863 1813.600419 19,324
08/31/95 10.768987 1813.600419 19,531
09/30/95 10.871226 1813.600419 19,716
10/31/95 11.017642 1813.600419 19,982
11/30/95 11.168842 1813.600419 20,256
12/31/95 10.590074 644,899.59 1341.920492 126.714931 1940.315350 20,548
01/31/96 10.662341 1940.315350 20,688
02/28/96 10.444631 1940.315350 20,266
03/31/96 10.364393 1940.315350 20,110
04/30/96 10.283018 1940.315350 19,952
05/31/96 10.234674 1940.315350 19,858
06/30/96 10.369929 1940.315350 20,121
07/31/96 10.392209 1940.315350 20,164
08/31/96 10.375166 1940.315350 20,131
09/30/96 10.559353 1940.315350 20,488
10/31/96 10.783077 1940.315350 20,923
11/30/96 10.967412 1940.315350 21,280
12/31/96 10.265260 1138.111372 110.870194 2051.185544 21,056
2051.185544 21,056
2051.185544 21,056
2051.185544 21,056
2051.185544 21,056
2051.185544 21,056
</TABLE>
<PAGE>
GROSS CAF: DOMESTIC GROWTH
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
<TABLE>
<CAPTION>
SHARES TO DATE X (NAV + NOT REINVESTED)= GROSS VALUE
640.397067 18.19 11645.6418
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 17.87 11645.6418 10,000.00 (1645.6418)
SHARES PURCHASED: 559.7256986
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(1645.6418) 10,000.00 0.1646
ONE YEAR NET RATE OF RETURN: 16.46%
INCOME
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION
<S> <C> <C> <C> <C>
12/31/95 17.865894 12/31/95 12/31/95 0.1490
01/31/96 18.177014 01/31/96 01/31/96
02/28/96 19.005129 02/28/96 02/28/96
03/31/96 18.988648 03/31/96 03/31/96
04/30/96 20.280198 04/30/96 04/30/96
05/31/96 20.492822 05/31/96 05/31/96
06/30/96 19.680827 06/30/96 06/30/96
07/31/96 17.817545 07/31/96 07/31/96
08/31/96 18.497727 08/31/96 08/31/96
09/30/96 19.425804 09/30/96 09/30/96
10/31/96 19.164560 10/31/96 10/31/96
11/30/96 19.879980 11/30/96 11/30/96
12/31/96 18.185033 12/31/96 12/31/96 0.0591
CAPITAL SHARES TOTALS
DATE DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST. REINV. SHARES
<S> <C> <C> <C> <C> <C> <C>
12/31/95 2.0819 17.865894 6,058,448.01 559.725699
01/31/96 18.177014 559.725699
02/28/96 19.005129 559.725699
03/31/96 0.3619 18.988648 1,180,115.95 202.536744 10.666201 570.391900
04/30/96 20.280198 570.391900
05/31/96 20.492822 570.391900
06/30/96 19.680827 570.391900
07/31/96 17.817545 570.391900
08/31/96 18.497727 570.391900
09/30/96 19.425804 570.391900
10/31/96 19.164560 570.391900
11/30/96 19.879980 570.391900
12/31/96 2.1728 18.185033 1273.046274 70.005167 640.397067
</TABLE>
<PAGE>
GROSS CAF: DOMESTIC GROWTH
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
PURCHASE DATE: 12/31/91
INITIAL INVESTMENT: $10,000.00
INITIAL VALUE: 12.96
SHARES PURCHASED: 771.6049383
SHARES TO DATE X (NAV + NOT REINVESTED)= GROSS VALUE
1311.351978 18.19 23846.9790
GROSS VALUE - INITIAL INVESTMENT NET VALUE
23846.9790 10,000.00 (13846.9790)
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(13846.9790) 10,000.00 1.3847
GROSS 5 YEAR RETURN: 138.47%
ANNUALIZED GROSS 5 YEAR RETURN: 18.98%
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 12.960000 12/31/91 12/31/91 0.235430 0.316700 12.960000 636,943.64
01/31/92 13.675530 01/31/92 01/31/92 13.675530
02/28/92 14.430921 02/28/92 02/28/92 14.430921
03/31/92 14.112158 03/31/92 03/31/92 0.1440 14.112158 172,821.71
04/30/92 14.140495 04/30/92 04/30/92 14.140495
05/31/92 14.105116 05/31/92 05/31/92 14.105116
06/30/92 13.578563 06/30/92 06/30/92 13.578563
07/31/92 14.194976 07/31/92 07/31/92 14.194976
08/31/92 13.943753 08/31/92 08/31/92 13.943753
09/30/92 13.982111 09/30/92 09/30/92 13.982111
10/31/92 14.538375 10/31/92 10/31/92 14.538375
11/30/92 15.571509 11/30/92 11/30/92 15.571509
12/31/92 15.161860 12/31/92 12/31/92 0.1433 0.9256 15.161860 1,409,007.13
01/31/93 15.501407 01/31/93 01/31/93 15.501407
02/28/93 15.527260 02/28/93 02/28/93 15.527260
03/31/93 15.978463 03/31/93 03/31/93 0.0185 15.978463 26,288.19
04/30/93 15.613121 04/30/93 04/30/93 15.613121
05/31/93 15.995905 05/31/93 05/31/93 15.995905
06/30/93 15.861024 06/30/93 06/30/93 15.861024
07/31/93 15.644269 07/31/93 07/31/93 15.644269
08/31/93 16.443016 08/31/93 08/31/93 16.443016
09/30/93 16.836855 09/30/93 09/30/93 16.836855
10/31/93 17.333372 10/31/93 10/31/93 17.333372
11/30/93 17.356363 11/30/93 11/30/93 17.356363
12/31/93 16.144659 12/31/93 12/31/93 0.1165 1.2903 16.144659 2,211,099.49
01/31/94 16.880870 01/31/94 01/31/94 16.880870
02/28/94 17.017107 02/28/94 02/28/94 17.017107
03/31/94 15.732500 03/31/94 03/31/94 0.4493 15.732500 792,232.75
04/30/94 15.600181 04/30/94 04/30/94 15.600181
05/31/94 15.683237 05/31/94 05/31/94 15.683237
06/30/94 15.326167 06/30/94 06/30/94 15.326167
07/31/94 15.592477 07/31/94 07/31/94
08/31/94 16.615128 08/31/94 08/31/94
09/30/94 16.668750 09/30/94 09/30/94 16.668750
</TABLE>
<TABLE>
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/91 771.604938
01/31/92 771.604938
02/28/92 771.604938
03/31/92 111.111111 7.873432 779.478370
04/30/92 779.478370
05/31/92 779.478370
06/30/92 779.478370
07/31/92 779.478370
08/31/92 779.478370
09/30/92 779.478370
10/31/92 779.478370
11/30/92 779.478370
12/31/92 833.200019 54.953681 834.432051
01/31/93 834.432051
02/28/93 834.432051
03/31/93 15.403616 0.964024 835.396075
04/30/93 835.396075
05/31/93 835.396075
06/30/93 835.396075
07/31/93 835.396075
08/31/93 835.396075
09/30/93 835.396075
10/31/93 835.396075
11/30/93 835.396075
12/31/93 1175.312054 72.798816 908.194890
01/31/94 908.194890
02/28/94 908.194890
03/31/94 408.051964 25.936880 934.131770
04/30/94 934.131770
05/31/94 934.131770
06/30/94 934.131770
07/31/94 934.131770
08/31/94 934.131770
09/30/94 934.131770
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: DOMESTIC GROWTH
RATE OF RETURN
5 YEAR PREPARED ON: 12/31/96
ROLLING
................
<S> <C> <C> <C> <C> <C> <C> <C>
10/31/94 16.720431 10/31/94 10/31/94
11/30/94 16.391805 11/30/94 11/30/94
12/31/94 15.937479 12/31/94 12/31/94 0.0948 0.8663 15.937479 1,896,978.99
01/31/95 16.194817 01/31/95 01/31/95 16.194817
02/28/95 16.762053 02/28/95 02/28/95 16.762053
03/31/95 16.304901 03/31/95 03/31/95 0.4686 16.304901 1,027,481.30
04/28/95 16.613506 04/28/95 04/28/95 16.613506
05/31/95 16.774539 05/31/95 05/31/95 16.774539
06/30/95 17.168069 06/30/95 06/30/95 17.168069
07/31/95 18.265263 07/31/95 07/31/95 18.265263
08/31/95 18.607519 08/31/95 08/31/95 18.607519
09/30/95 19.147250 09/30/95 09/30/95 19.147250
10/31/95 18.495201 10/31/95 10/31/95 18.495201
11/30/95 19.528515 11/30/95 11/30/95 19.528515
12/31/95 17.865894 12/31/95 12/31/95 0.1490 2.0819 17.865894 6,058,448.01
01/31/96 18.177014 01/31/96 01/31/96 18.177014
02/28/96 19.005129 02/28/96 02/28/96 19.005129
03/31/96 18.988648 03/31/96 03/31/96 0.3619 18.988648 1,180,115.95
04/30/96 20.280198 04/30/96 04/30/96 20.280198
05/31/96 20.492822 05/31/96 05/31/96 20.492822
06/30/96 19.680827 06/30/96 06/30/96 19.680827
07/31/96 17.817545 07/31/96 07/31/96 17.817545
08/31/96 18.497727 08/31/96 08/31/96 18.497727
09/30/96 19.425804 09/30/96 09/30/96 19.425804
10/31/96 19.164560 10/31/96 10/31/96 19.164560
11/30/96 19.879980 11/30/96 11/30/96 19.879980
12/31/96 18.185033 12/31/96 12/31/96 0.0591 2.1728 18.185033
<CAPTION>
<C> <C>
10/31/94 934.131770
11/30/94 934.131770
12/31/94 897.738931 56.328791 990.460562
01/31/95 990.460562
02/28/95 990.460562
03/31/95 464.128135 28.465560 1018.926122
04/28/95 1018.926122
05/31/95 1018.926122
06/30/95 1018.926122
07/31/95 1018.926122
08/31/95 1018.926122
09/30/95 1018.926122
10/31/95 1018.926122
11/30/95 1018.926122
12/31/95 2273.144191 127.233722 1146.159844
01/31/96 1146.159844
02/28/96 1146.159844
03/31/96 414.737939 21.841362 1168.001206
04/30/96 1168.001206
05/31/96 1168.001206
06/30/96 1168.001206
07/31/96 1168.001206
08/31/96 1168.001206
09/30/96 1168.001206
10/31/96 1168.001206
11/30/96 1168.001206
12/31/96 2606.838531 143.350773 1311.351978
</TABLE>
<PAGE>
GROSS CAF: DOMESTIC GROWTH
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
....................
PURCHASE DATE: 04/18/86
INITIAL INVESTME $10,000.00
INITIAL VALUE: 10.00
SHARES PURCHASED 1,000.000
SHARES TO DATE X (NAV +NOT REINVESTED GROSS VALUE
2229.159648 18.19 40537.3418
GROSS VALUE - INITIAL INVESTMENT NET VALUE
40537.3418 10,000.00 (30537.3418)
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(30537.3418) 10,000.00 3.0537
GROSS RATE OF RETURN SINCE INCEPTION: 305.37%
ANNUALIZED GROSS RATE OF RETURN SINCE INCEPTION 13.96%
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
04/18/86 10.000000 04/18/86 04/18/86 10.270000
04/30/86 10.096763 04/30/86 04/30/86 13.385027
05/31/86 10.366798 05/31/86 05/31/86 10.366798
06/30/86 10.372049 06/30/86 06/30/86 10.372049
07/31/86 9.554896 07/31/86 07/31/86 9.554896
08/31/86 10.230943 08/31/86 08/31/86 10.230943
09/30/86 9.863223 09/30/86 09/30/86 9.863223
10/31/86 10.349308 10/31/86 10/31/86 10.349308
11/30/86 10.696110 11/30/86 11/30/86 10.696110
12/31/86 10.565075 12/31/86 12/31/86 10.565075
01/31/87 11.642576 01/31/87 01/31/87 11.642576
02/28/87 11.844339 02/28/87 02/28/87 11.844339
03/31/87 11.914436 03/31/87 03/31/87 11.914436
04/01/87 11.910000 04/01/87 04/01/87 0.095800 0.536900 11.910000 70,530.00 632.700000
04/30/87 11.717310 04/30/87 04/30/87 11.717310
05/31/87 11.832248 05/31/87 05/31/87 11.832248
06/30/87 12.166809 06/30/87 06/30/87 12.166809
07/31/87 12.681919 07/31/87 07/31/87 12.681919
08/31/87 13.168272 08/31/87 08/31/87 13.168272
09/30/87 13.006987 09/30/87 09/30/87 13.006987
10/31/87 9.689781 10/31/87 10/31/87 9.689781
11/30/87 9.801571 11/30/87 11/30/87 9.801571
12/31/87 9.540000 12/31/87 12/31/87 0.0277 0.302500 9.540000 115,431.00 347.741355
01/31/88 10.039353 01/31/88 01/31/88 10.039353
02/28/88 10.951058 02/28/88 02/28/88 10.951058
03/31/88 11.122950 03/31/88 03/31/88 11.122950
04/30/88 11.461451 04/30/88 04/30/88 11.461451
05/31/88 11.284545 05/31/88 05/31/88 11.284545
06/30/88 12.092718 06/30/88 06/30/88 12.092718
07/31/88 11.949203 07/31/88 07/31/88 11.949203
08/31/88 11.596872 08/31/88 08/31/88 11.596872
09/30/88 12.069623 09/30/88 09/30/88 12.069623
10/31/88 12.106846 10/31/88 10/31/88 12.106846
11/30/88 11.623761 11/30/88 11/30/88 11.623761
</TABLE>
<TABLE>
<CAPTION>
SHARES TOTALS ACCOUNT
DATE REINV. SHARES VALUE
<S> <C> <C> <C>
04/18/86 1000.000000 10,000
04/30/86 1000.000000 10,097
05/31/86 1000.000000 10,367
06/30/86 1000.000000 10,372
07/31/86 1000.000000 9,555
08/31/86 1000.000000 10,231
09/30/86 1000.000000 9,863
10/31/86 1000.000000 10,349
11/30/86 1000.000000 10,696
12/31/86 1000.000000 10,565
01/31/87 1000.000000 11,643
02/28/87 1000.000000 11,844
03/31/87 1000.000000 11,914
04/01/87 53.123426 1053.123426 12,543
04/30/87 1053.123426 12,340
05/31/87 1053.123426 12,461
06/30/87 1053.123426 12,813
07/31/87 1053.123426 13,356
08/31/87 1053.123426 13,868
09/30/87 1053.123426 13,698
10/31/87 1053.123426 10,205
11/30/87 1053.123426 10,322
12/31/87 36.450876 1089.574301 10,395
01/31/88 1089.574301 10,939
02/28/88 1089.574301 11,932
03/31/88 1089.574301 12,119
04/30/88 1089.574301 12,488
05/31/88 1089.574301 12,295
06/30/88 1089.574301 13,176
07/31/88 1089.574301 13,020
08/31/88 1089.574301 12,636
09/30/88 1089.574301 13,151
10/31/88 1089.574301 13,191
11/30/88 1089.574301 12,665
</TABLE>
<PAGE>
GROSS CAF: BALANCED FUND 05/01/92
RATE OF RETURN 12/31/96
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<CAPTION>
<S> <C>
SHARES TO DATE X (NAV +NOT REINVESTED)= GROSS VALUE
1311.148779 12.07 15819.1202
PURCHASE DATE: 05/01/92
INITIAL INVESTME $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.10 15819.1202 10,000.00 (5819.1202)
SHARES PURCHASED 990.099
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(5819.1202) 10,000.00 0.5819
GROSS RATE OF RETURN SINCE INCEPTION: 58.19%
ANNUALIZED GROSS RATE OF RETURN SINCE INCEP 10.32%
</TABLE>
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
05/01/92 10.100000 05/01/92 05/01/92 10.270000
05/31/92 10.188421 05/31/92 05/31/92 10.188421
06/30/92 10.181371 06/30/92 06/30/92 10.181371
07/31/92 10.429048 07/31/92 07/31/92 10.429048
08/31/92 10.422009 08/31/92 08/31/92 10.422009
09/30/92 10.572145 09/30/92 09/30/92 10.572145
10/31/92 10.578896 10/31/92 10/31/92 10.578896
11/30/92 10.811937 11/30/92 11/30/92 10.811937
12/31/92 10.771608 12/31/92 12/31/92 0.183560 10.771608 118,343.40
01/31/93 10.970768 01/31/93 01/31/93 10.970768
02/28/93 11.110940 02/28/93 02/28/93 11.110940
03/31/93 11.122930 03/31/93 03/31/93 0.176810 11.122930 130,083.84
04/30/93 10.955757 04/30/93 04/30/93 10.955757
05/31/93 11.086170 05/31/93 05/31/93 11.086170
06/30/93 11.266733 06/30/93 06/30/93 11.266733
07/31/93 11.300731 07/31/93 07/31/93 11.300731
08/31/93 11.524167 08/31/93 08/31/93 11.524167
09/30/93 11.589339 09/30/93 09/30/93 11.589339
10/31/93 11.621304 10/31/93 10/31/93 11.621304
11/30/93 11.519782 11/30/93 11/30/93 11.519782
12/31/93 11.219396 12/31/93 12/31/93 0.254692 0.111421 11.219396 381,923.94
01/31/94 11.331436 01/31/94 01/31/94 11.331436
02/28/94 11.245656 02/28/94 02/28/94 10.958543
03/31/94 10.958543 03/31/94 03/31/94 0.073400 10.958543 84,113.53
04/30/94 11.005295 04/30/94 04/30/94
05/31/94 11.030908 05/31/94 05/31/94
06/30/94 10.860720 06/30/94 06/30/94 10.860720
09/30/94 11.000526 09/29/94 09/29/94 11.000526
12/31/94 10.616690 12/31/94 01/03/95 0.322389 0.057255 10.616690 527,979.13
01/31/95 10.754785 01/31/95 01/31/95 10.754785
02/28/95 10.942375 02/28/95 02/28/95 10.942375
03/31/95 11.009063 03/31/95 03/31/95 0.054252 11.009063 79,628.92
04/30/95 11.178012 04/30/95 04/30/95 11.178012
05/31/95 11.429116 05/31/95 05/31/95 11.429116
<CAPTION>
SHARES TOTALS ACCOUNT
DATE $ TO DIST. REINV. SHARES VALUE
<S> <C> <C> <C> <C>
05/01/92 990.099010 10,000
05/31/92 990.099010 10,088
06/30/92 990.099010 10,081
07/31/92 990.099010 10,326
08/31/92 990.099010 10,319
09/30/92 990.099010 10,467
10/31/92 990.099010 10,474
11/30/92 990.099010 10,705
12/31/92 181.742574 16.872372 1006.971382 10,847
01/31/93 1006.971382 11,047
02/28/93 1006.971382 11,188
03/31/93 178.042610 16.006808 1022.978190 11,379
04/30/93 1022.978190 11,208
05/31/93 1022.978190 11,341
06/30/93 1022.978190 11,526
07/31/93 1022.978190 11,560
08/31/93 1022.978190 11,789
09/30/93 1022.978190 11,856
10/31/93 1022.978190 11,888
11/30/93 1022.978190 11,784
12/31/93 374.525614 33.381977 1056.360167 11,852
01/31/94 1056.360167 11,970
02/28/94 1056.360167 11,879
03/31/94 77.536836 7.075469 1063.435636 11,654
04/30/94 1063.435636 11,703
05/31/94 1063.435636 11,731
06/30/94 1063.435636 11,550
09/30/94 1063.435636 11,698
12/31/94 403.726959 38.027573 1101.463210 11,694
01/31/95 1101.463210 11,846
02/28/95 1101.463210 12,053
03/31/95 59.756844 5.427968 1106.891178 12,186
04/30/95 1106.891178 12,373
05/31/95 1106.891178 12,651
</TABLE>
<PAGE>
GROSS CAF: BALANCED FUND 05/01/92
RATE OF RETURN 12/31/96
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
06/30/95 11.606999 06/30/95 06/30/95 11.606999
07/31/95 11.886027 07/31/95 07/31/95 11.886027
08/31/95 11.969300 08/31/95 08/31/95 11.969300
09/30/95 12.178795 09/30/95 09/30/95 12.178795
10/31/95 12.267735 10/31/95 10/31/95 12.267735
11/30/95 12.670689 11/30/95 11/30/95 12.670689
12/31/95 11.907408 12/31/95 12/31/95 0.372800 0.646098 11.907408 1,243,502.82
01/31/96 12.008535 01/31/96 01/31/96 12.008535
02/28/96 12.009893 02/28/96 02/28/96 12.009893
03/31/96 11.851851 03/31/96 03/31/96 0.112950 11.851851 167,827.13
04/30/96 11.934064 04/30/96 04/30/96 11.934064
05/31/96 12.164009 05/31/96 05/31/96 12.164009
06/30/96 12.241626 06/30/96 06/30/96 12.241626
07/31/96 11.769333 07/31/96 07/31/96 11.769333
08/31/96 11.977944 08/31/96 08/31/96 11.977944
09/30/96 12.500212 09/30/96 09/30/96 12.500212
10/31/96 12.863412 10/31/96 10/31/96 12.863412
11/30/96 13.362194 11/30/96 11/30/96 13.362194
12/31/96 12.065084 12/31/96 12/31/96 0.261390 0.714226 12.065084
<CAPTION>
<S> <C> <C> <C> <C>
06/30/95 1106.891178 12,848
07/31/95 1106.891178 13,157
08/31/95 1106.891178 13,249
09/30/95 1106.891178 13,481
10/31/95 1106.891178 13,579
11/30/95 1106.891178 14,025
12/31/95 1127.809207 94.714921 1201.606099 14,308
01/31/96 1201.606099 14,430
02/28/96 1201.606099 14,431
03/31/96 135.721409 11.451495 1213.057593 14,377
04/30/96 1213.057593 14,477
05/31/96 1213.057593 14,756
06/30/96 1213.057593 14,850
07/31/96 1213.057593 14,277
08/31/96 1213.057593 14,530
09/30/96 1213.057593 15,163
10/31/96 1213.057593 15,604
11/30/96 1213.057593 16,209
12/31/96 1183.478397 98.091186 1311.148779 15,819
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: EMERGING GROWTH
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
<S> <C> <C>
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
776.741553 15.23 11829.8647
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 13.29 11829.8647 10,000.00 (1829.8647)
SHARES PURCHASED: 752.3614368
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(1829.8647) 10,000.00 0.1830
ONE YEAR NET RATE OF RETURN: 18.30%
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 13.291484 12/31/95 12/31/95
01/31/96 13.496896 01/31/96 01/31/96
02/28/96 14.094426 02/28/96 02/28/96
03/31/96 14.195044 03/31/96 03/31/96 0.030100 14.195044 33,482.05
04/30/96 15.283049 04/30/96 04/30/96
05/31/96 15.739125 05/31/96 05/31/96
06/30/96 15.316170 06/30/96 06/30/96 15.316170
07/31/96 14.175465 07/31/96 07/31/96 14.175465
08/31/96 14.585213 08/31/96 08/31/96 14.585213
09/30/96 15.904626 09/30/96 09/30/96 15.904626
10/31/96 15.658208 10/31/96 10/31/96 15.658208
11/30/96 16.417983 11/30/96 11/30/96 16.417983
12/31/96 15.230117 12/31/96 12/31/96 0.460258 15.230117
<CAPTION>
SHARES TOTALS
$ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/95 752.361437
01/31/96 752.361437
02/28/96 752.361437
03/31/96 22.646079 1.595351 753.956788
04/30/96 753.956788
05/31/96 753.956788
06/30/96 753.956788
07/31/96 753.956788
08/31/96 753.956788
09/30/96 753.956788
10/31/96 753.956788
11/30/96 753.956788
12/31/96 347.014643 22.784765 776.741553
</TABLE>
<PAGE>
GROSS CAF: EMERGING GROWTH
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<TABLE>
<CAPTION>
SHARES TO DATE X (NAV +NOT REINVESTE GROSS VALUE
1032.404793 15.23 15723.6458
PURCHASE DATE: 05/01/95
INITIAL INVESTMENT $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.00 15723.6458 10,000.00 (5723.6458)
SHARES PURCHASED 1,000.000
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(5723.6458) 10,000.00 0.5724
GROSS RATE OF RETURN SINCE INCEPTION: 57.24%
ANNUALIZED GROSS RATE OF RETURN SINCE INCE 31.10%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
05/01/95 10.000000 05/01/95 05/01/95 10.270000
05/31/95 10.376540 05/31/95 05/31/95
06/30/95 10.962222 06/30/95 06/30/95 10.962222
07/31/95 11.982160 07/31/95 07/31/95
08/31/95 12.208568 08/31/95 08/31/95
09/30/95 12.821304 09/30/95 09/30/95
10/31/95 12.752744 10/31/95 10/31/95
11/30/95 13.374111 11/30/95 11/30/95
12/31/95 13.291484 12/31/95 12/31/95
01/31/96 13.496896 01/31/96 01/31/96
02/28/96 14.094426 02/28/96 02/28/96
03/31/96 14.195044 03/31/96 03/31/96 0.030100 14.195044 33,482.05 30.100000
04/30/96 15.283049 04/30/96 04/30/96
05/31/96 15.739125 05/31/96 05/31/96
06/30/96 15.316170 06/30/96 06/30/96 15.316170
07/31/96 14.175465 07/31/96 07/31/96 14.175465
08/31/96 14.585213 08/31/96 08/31/96 14.585213
09/30/96 15.904626 09/30/96 09/30/96 15.904626
10/31/96 15.658208 10/31/96 10/31/96 15.658208
11/30/96 16.417983 11/30/96 11/30/96 16.417983
12/31/96 15.230117 12/31/96 12/31/96 0.460258 15.230117 461.233958
<CAPTION>
SHARES TOTALS ACCOUNT
DATE REINV. SHARES VALUE
<S> <C> <C> <C>
05/01/95 1000.000000 10,000
05/31/95 1000.000000 10,377
06/30/95 1000.000000 10,962
07/31/95 1000.000000 11,982
08/31/95 1000.000000 12,209
09/30/95 1000.000000 12,821
10/31/95 1000.000000 12,753
11/30/95 1000.000000 13,374
12/31/95 1000.000000 13,291
01/31/96 1000.000000 13,497
02/28/96 1000.000000 14,094
03/31/96 2.120458 1002.120458 14,225
04/30/96 1002.120458 15,315
05/31/96 1002.120458 15,772
06/30/96 1002.120458 15,349
07/31/96 1002.120458 14,206
08/31/96 1002.120458 14,616
09/30/96 1002.120458 15,938
10/31/96 1002.120458 15,691
11/30/96 1002.120458 16,453
12/31/96 30.284335 1032.404793 15,724
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: DOMESTIC GROWTH
RATE OF RETURN
SINCE PREPARED ON: 12/31/96
INCEPTION
...............
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/88 11.709817 12/31/88 12/31/88 0.100000 0.240000 11.709817 197,020.00 370.455263
01/31/89 12.191000 01/31/89 01/31/89 12.191000
02/28/89 12.199000 02/28/89 02/28/89 12.199000
03/31/89 12.398000 03/31/89 03/31/89 0.251300 12.398000 169,212.00 281.760224
04/30/89 12.916926 04/30/89 04/30/89 12.916926
05/31/89 13.520000 05/31/89 05/31/89 13.520000
06/30/89 13.160000 06/30/89 06/30/89 13.160000
07/31/89 13.863000 07/31/89 07/31/89 13.863000
08/31/89 14.266000 08/31/89 08/31/89 14.266000
09/30/89 14.184176 09/30/89 09/30/89 14.184176
10/31/89 13.477000 10/31/89 10/31/89 13.477000
11/30/89 13.538000 11/30/89 11/30/89 13.538000
12/31/89 13.248000 12/31/89 12/31/89 0.205240 0.243870 13.248000 371,155.25 513.753485
01/31/90 12.239163 01/31/90 01/31/90 12.239163
02/28/90 12.549188 02/28/90 02/28/90 12.549188
03/31/90 12.852757 03/31/90 03/31/90 0.083060 12.852757 74,662.00 98.236438
04/30/90 12.307467 04/30/90 04/30/90 12.307467
05/31/90 13.157329 05/31/90 05/31/90 13.157329
06/30/90 13.025380 06/30/90 06/30/90 13.025380
07/31/90 12.762958 07/31/90 07/31/90 12.762958
08/31/90 11.070103 08/31/90 08/31/90 11.070103
09/30/90 10.140362 09/30/90 09/30/90 10.140362
10/31/90 9.496491 10/31/90 10/31/90 9.496491
11/30/90 10.439730 11/30/90 11/30/90 10.439730
12/31/90 10.146331 12/31/90 12/31/90 0.261670 0.310930 10.146331 561,868.00 681.600013
01/31/91 10.870000 01/31/91 01/31/91 10.870000
02/28/91 11.760000 02/28/91 02/28/91 11.760000
03/31/91 12.190000 03/31/91 03/31/91 0.002110 0.002870 12.190000 5,351.13 6.262533
04/30/91 12.250000 04/30/91 04/30/91 12.250000
05/31/91 13.060000 05/31/91 05/31/91 13.060000
06/30/91 12.450000 06/30/91 06/30/91 12.450000
07/31/91 13.010000 07/31/91 07/31/91 13.010000
08/31/91 13.170000 08/31/91 08/31/91 13.170000
09/30/91 12.800000 09/30/91 09/30/91 12.800000
10/31/91 12.820000 10/31/91 10/31/91 12.820000
11/30/91 12.400000 11/30/91 11/30/91 12.400000
12/31/91 12.960000 12/31/91 12/31/91 0.235430 0.316700 12.960000 636,943.64 694.607434
01/31/92 13.675530 01/31/92 01/31/92 13.675530
02/28/92 14.430921 02/28/92 02/28/92 14.430921
03/31/92 14.112158 03/31/92 03/31/92 0.1440 14.112158 172,821.71 188.877135
04/30/92 14.140495 04/30/92 04/30/92 14.140495
05/31/92 14.105116 05/31/92 05/31/92 14.105116
06/30/92 13.578563 06/30/92 06/30/92 13.578563
07/31/92 14.194976 07/31/92 07/31/92 14.194976
08/31/92 13.943753 08/31/92 08/31/92 13.943753
09/30/92 13.982111 09/30/92 09/30/92 13.982111
10/31/92 14.538375 10/31/92 10/31/92 14.538375
11/30/92 15.571509 11/30/92 11/30/92 15.571509
12/31/92 15.161860 12/31/92 12/31/92 0.1433 0.9256 15.161860 1,409,007.13 1416.351896
01/31/93 15.501407 01/31/93 01/31/93 15.501407
12/31/88 31.636298 1121.210600 13,129
01/31/89 1121.210600 13,669
02/28/89 1121.210600 13,678
03/31/89 22.726264 1143.936864 14,183
04/30/89 1143.936864 14,776
05/31/89 1143.936864 15,466
06/30/89 1143.936864 15,054
07/31/89 1143.936864 15,858
08/31/89 1143.936864 16,319
09/30/89 1143.936864 16,226
10/31/89 1143.936864 15,417
11/30/89 1143.936864 15,487
12/31/89 38.779701 1182.716565 15,669
01/31/90 1182.716565 14,475
02/28/90 1182.716565 14,842
03/31/90 7.643219 1190.359784 15,299
04/30/90 1190.359784 14,650
05/31/90 1190.359784 15,662
06/30/90 1190.359784 15,505
07/31/90 1190.359784 15,193
08/31/90 1190.359784 13,177
09/30/90 1190.359784 12,071
10/31/90 1190.359784 11,304
11/30/90 1190.359784 12,427
12/31/90 67.176994 1257.536778 12,759
01/31/91 1257.536778 13,669
02/28/91 1257.536778 14,789
03/31/91 0.513743 1258.050522 15,336
04/30/91 1258.050522 15,411
05/31/91 1258.050522 16,430
06/30/91 1258.050522 15,663
07/31/91 1258.050522 16,367
08/31/91 1258.050522 16,569
09/30/91 1258.050522 16,103
10/31/91 1258.050522 16,128
11/30/91 1258.050522 15,600
12/31/91 53.596253 1311.646774 16,999
01/31/92 1311.646774 17,937
02/28/92 1311.646774 18,928
03/31/92 13.384001 1325.030775 18,699
04/30/92 1325.030775 18,737
05/31/92 1325.030775 18,690
06/30/92 1325.030775 17,992
07/31/92 1325.030775 18,809
08/31/92 1325.030775 18,476
09/30/92 1325.030775 18,527
10/31/92 1325.030775 19,264
11/30/92 1325.030775 20,633
12/31/92 93.415445 1418.446220 21,506
01/31/93 1418.446220 21,988
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: DOMESTIC GROWTH
RATE OF RETURN 04/18/86
SINCE PREPARED ON: 12/31/96 12/31/96
INCEPTION
...............
<S> <C> <C> <C> <C> <C> <C> <C> <C>
02/28/93 15.527260 02/28/93 02/28/93 15.527260
03/31/93 15.978463 03/31/93 03/31/93 0.0185 15.978463 26,288.19 26.184517
04/30/93 15.613121 04/30/93 04/30/93 15.613121
05/31/93 15.995905 05/31/93 05/31/93 15.995905
06/30/93 15.861024 06/30/93 06/30/93 15.861024
07/31/93 15.644269 07/31/93 07/31/93 15.644269
08/31/93 16.443016 08/31/93 08/31/93 16.443016
09/30/93 16.836855 09/30/93 09/30/93 16.836855
10/31/93 17.333372 10/31/93 10/31/93 17.333372
11/30/93 17.356363 11/30/93 11/30/93 17.356363
12/31/93 16.144659 12/31/93 12/31/93 0.1165 1.2903 16.144659 2,211,099.49 1997.906167
01/31/94 16.880870 01/31/94 01/31/94 16.880870
02/28/94 17.017107 02/28/94 02/28/94 17.017107
03/31/94 15.732500 03/31/94 03/31/94 0.4493 15.732500 792,232.75 693.645175
04/30/94 15.600181 04/30/94 04/30/94 15.600181
05/31/94 15.683237 05/31/94 05/31/94 15.683237
06/30/94 15.326167 06/30/94 06/30/94 15.326167
07/31/94 15.592477 07/31/94 07/31/94
08/31/94 16.615128 08/31/94 08/31/94
09/30/94 16.668750 09/30/94 09/30/94 16.668750
10/31/94 16.720431 10/31/94 10/31/94
11/30/94 16.391805 11/30/94 11/30/94
12/31/94 15.937479 12/31/94 12/31/94 0.0948 0.8663 15.937479 1,896,978.99 1526.061219
01/31/95 16.194817 01/31/95 01/31/95 16.194817
02/28/95 16.762053 02/28/95 02/28/95 16.762053
03/31/95 16.304901 03/31/95 03/31/95 0.4686 16.304901 1,027,481.30 788.968734
04/28/95 16.613506 04/28/95 04/28/95 16.613506
05/31/95 16.774539 05/31/95 05/31/95 16.774539
06/30/95 17.168069 06/30/95 06/30/95 17.168069
07/31/95 18.265263 07/31/95 07/31/95 18.265263
08/31/95 18.607519 08/31/95 08/31/95 18.607519
09/30/95 19.147250 09/30/95 09/30/95 19.147250
10/31/95 18.495201 10/31/95 10/31/95 18.495201
11/30/95 19.528515 11/30/95 11/30/95 19.528515
12/31/95 17.865894 12/31/95 12/31/95 0.1490 2.0819 17.865894 6,058,448.01 3864.104671
01/31/96 18.177014 01/31/96 01/31/96 18.177014
02/28/96 19.005129 02/28/96 02/28/96 19.005129
03/31/96 18.988648 03/31/96 03/31/96 0.3619 18.988648 1,180,115.95 705.010626
04/30/96 20.280198 04/30/96 04/30/96 20.280198
05/31/96 20.492822 05/31/96 05/31/96 20.492822
06/30/96 19.680827 06/30/96 06/30/96 19.680827
07/31/96 17.817545 07/31/96 07/31/96 17.817545
08/31/96 18.497727 08/31/96 08/31/96 18.497727
09/30/96 19.425804 09/30/96 09/30/96 19.425804
10/31/96 19.164560 10/31/96 10/31/96 19.164560
11/30/96 19.879980 11/30/96 11/30/96 19.879980
12/31/96 18.185033 12/31/96 12/31/96 0.0591 2.1728 18.185033 4431.349750
<CAPTION>
<C> <C> <C> <C>
02/28/93 1418.446220 22,025
03/31/93 1.638738 1420.084958 22,691
04/30/93 1420.084958 22,172
05/31/93 1420.084958 22,716
06/30/93 1420.084958 22,524
07/31/93 1420.084958 22,216
08/31/93 1420.084958 23,350
09/30/93 1420.084958 23,910
10/31/93 1420.084958 24,615
11/30/93 1420.084958 24,648
12/31/93 123.750286 1543.835244 24,925
01/31/94 1543.835244 26,061
02/28/94 1543.835244 26,272
03/31/94 44.089952 1587.925196 24,982
04/30/94 1587.925196 24,772
05/31/94 1587.925196 24,904
06/30/94 1587.925196 24,337
07/31/94 1587.925196 24,760
08/31/94 1587.925196 26,384
09/30/94 1587.925196 26,469
10/31/94 1587.925196 26,551
11/30/94 1587.925196 26,029
12/31/94 95.752987 1683.678183 26,834
01/31/95 1683.678183 27,267
02/28/95 1683.678183 28,222
03/31/95 48.388441 1732.066624 28,241
04/28/95 1732.066624 28,776
05/31/95 1732.066624 29,055
06/30/95 1732.066624 29,736
07/31/95 1732.066624 31,637
08/31/95 1732.066624 32,229
09/30/95 1732.066624 33,164
10/31/95 1732.066624 32,035
11/30/95 1732.066624 33,825
12/31/95 216.283869 1948.350493 34,809
01/31/96 1948.350493 35,415
02/28/96 1948.350493 37,029
03/31/96 37.128005 1985.478498 37,702
04/30/96 1985.478498 40,266
05/31/96 1985.478498 40,688
06/30/96 1985.478498 39,076
07/31/96 1985.478498 35,376
08/31/96 1985.478498 36,727
09/30/96 1985.478498 38,570
10/31/96 1985.478498 38,051
11/30/96 1985.478498 39,471
12/31/96 243.681150 2229.159648 40,537
</TABLE>
<PAGE>
GROSS CAF: GROWTH & INCOME FUND
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
<TABLE>
<CAPTION>
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
726.767930 16.91 12287.5839
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 14.41 12287.5839 10,000.00 (2287.5839)
SHARES PURCHASED: 693.8937626
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(2287.5839) 10,000.00 0.2288
ONE YEAR NET RATE OF RETURN: 22.88%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 14.431428 12/31/95 12/31/95 0.145211 0.434560 14.411428 528,058.91
01/31/96 14.727081 01/31/96 01/31/96 14.727081
02/28/96 14.836199 02/28/96 02/28/96 14.836199
03/31/96 14.937809 03/31/96 03/31/96 14.937809
04/30/96 15.505774 04/30/96 04/30/96 15.505774
05/31/96 15.725605 05/31/96 05/31/96 15.725605
06/30/96 15.730731 06/30/96 06/30/96 15.730731
07/31/96 15.054264 07/31/96 07/31/96 15.054264
08/31/96 15.447322 08/31/96 08/31/96 15.447322
09/30/96 15.979138 09/30/96 09/30/96 15.979138
10/31/96 16.352606 10/31/96 10/31/96 16.352606
11/30/96 17.578007 11/30/96 11/30/96 17.578007
12/31/96 16.907163 12/31/96 12/31/96 0.178400 0.622600 16.907163
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/95 693.893763
01/31/96 693.893763
02/28/96 693.893763
03/31/96 693.893763
04/30/96 693.893763
05/31/96 693.893763
06/30/96 693.893763
07/31/96 693.893763
08/31/96 693.893763
09/30/96 693.893763
10/31/96 693.893763
11/30/96 693.893763
12/31/96 555.808904 32.874167 726.767930
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: GROWTH & INCOME FUND
RATE OF RETURN 05/01/92
SINCE PREPARED ON: 12/31/96 12/31/96
INCEPTION
...............
SHARES TO DATE X (NAV +NOT REINVESTE GROSS VALUE
1156.167834 16.91 19547.5180
PURCHASE DATE: 05/01/92
INITIAL INVESTME $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 10.28 19547.5180 10,000.00 (9547.5180)
SHARES PURCHASED 972.763
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(9547.5180) 10,000.00 0.9548
GROSS RATE OF RETURN SINCE INCEPTION: 95.48%
ANNUALIZED GROSS RATE OF RETURN SINCE INCE 15.43%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT $ TO DIST.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
05/01/92 10.280000 05/01/92 05/01/92 10.270000
05/31/92 10.347465 05/31/92 05/31/92 10.347465
06/30/92 9.967004 06/30/92 06/30/92 9.967004
07/31/92 10.273171 07/31/92 07/31/92 10.273171
08/31/92 9.935852 08/31/92 08/31/92 9.935852
09/30/92 10.099468 09/30/92 09/30/92 10.099468
10/31/92 10.366682 10/31/92 10/31/92 10.366682
11/30/92 10.946706 11/30/92 11/30/92 10.946706
12/31/92 11.098443 12/31/92 12/31/92 0.022740 0.001570 11.098443 3,260.84 23.647860
01/31/93 11.287423 01/31/93 01/31/93 11.287423
02/28/93 11.363512 02/28/93 02/28/93 11.363512
03/31/93 11.566575 03/31/93 03/31/93 11.566575
04/30/93 11.371852 04/30/93 04/30/93 11.371852
05/31/93 11.437193 05/31/93 05/31/93 11.437193
06/30/93 11.591291 06/30/93 06/30/93 11.591291
07/31/93 11.729813 07/31/93 07/31/93 11.729813
08/31/93 12.128264 08/31/93 08/31/93 12.128264
09/30/93 12.201715 09/30/93 09/30/93 12.201715
10/31/93 12.424078 10/31/93 10/31/93 12.424078
11/30/93 12.227070 11/30/93 11/30/93 12.227070
12/31/93 12.353706 12/31/93 12/31/93 0.123247 0.279617 12.353706 92,335.42 392.749448
01/31/94 12.713560 01/31/94 01/31/94 12.713560
02/28/94 12.511762 02/28/94 02/28/94 12.511762
03/31/94 11.766922 03/31/94 03/31/94 0.223300 11.766922 64,199.82 224.792854
04/30/94 11.911093 04/30/94 04/30/94
05/31/94 11.899970 05/31/94 05/31/94
06/30/94 11.694551 06/30/94 06/30/94 11.694551
09/30/94 11.940350 09/29/94 09/29/94 11.940350
12/31/94 11.222928 12/31/94 01/03/95 0.130871 0.256322 11.222928 193,562.13 397.178402
01/31/95 11.285551 01/31/95 01/31/95 11.285551
02/28/95 11.820860 02/28/95 02/28/95 11.820860
03/31/95 12.129015 03/31/95 03/31/95 0.000002 12.129015 1.05 0.001841
04/30/95 12.496792 04/30/95 04/30/95 12.496792
05/31/95 12.941101 05/31/95 05/31/95 12.941101
<CAPTION>
SHARES TOTALS ACCOUNT
REINV. SHARES VALUE
<S> <C> <C> <C>
05/01/92 972.762646 10,000
05/31/92 972.762646 10,066
06/30/92 972.762646 9,696
07/31/92 972.762646 9,993
08/31/92 972.762646 9,665
09/30/92 972.762646 9,824
10/31/92 972.762646 10,084
11/30/92 972.762646 10,649
12/31/92 2.130737 974.893383 10,820
01/31/93 974.893383 11,004
02/28/93 974.893383 11,078
03/31/93 974.893383 11,276
04/30/93 974.893383 11,086
05/31/93 974.893383 11,150
06/30/93 974.893383 11,300
07/31/93 974.893383 11,435
08/31/93 974.893383 11,824
09/30/93 974.893383 11,895
10/31/93 974.893383 12,112
11/30/93 974.893383 11,920
12/31/93 31.792035 1006.685417 12,436
01/31/94 1006.685417 12,799
02/28/94 1006.685417 12,595
03/31/94 19.103794 1025.789211 12,070
04/30/94 1025.789211 12,218
05/31/94 1025.789211 12,207
06/30/94 1025.789211 11,996
09/30/94 1025.789211 12,248
12/31/94 35.389909 1061.179120 11,910
01/31/95 1061.179120 11,976
02/28/95 1061.179120 12,544
03/31/95 0.000152 1061.179272 12,871
04/30/95 1061.179272 13,261
05/31/95 1061.179272 13,733
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: GROWTH & INCOME FUND
RATE OF RETURN 05/01/92
SINCE PREPARED ON: 12/31/96 12/31/96
INCEPTION
...............
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/30/95 13.524255 06/30/95 06/30/95 13.524255
07/31/95 14.166138 07/31/95 07/31/95 14.166138
08/31/95 14.294040 08/31/95 08/31/95 14.294040
09/30/95 14.602920 09/30/95 09/30/95 14.602920
10/31/95 14.299785 10/31/95 10/31/95 14.299785
11/30/95 14.839057 11/30/95 11/30/95 14.839057
12/31/95 14.411428 12/31/95 12/31/95 0.145211 0.434560 14.411428 528,058.91 615.240968
01/31/96 14.727081 01/31/96 01/31/96 14.727081
02/28/96 14.836199 02/28/96 02/28/96 14.836199
03/31/96 14.937809 03/31/96 03/31/96 14.937809
04/30/96 15.505774 04/30/96 04/30/96 15.505774
05/31/96 15.725605 05/31/96 05/31/96 15.725605
06/30/96 15.730731 06/30/96 06/30/96 15.730731
07/31/96 15.054264 07/31/96 07/31/96 15.054264
08/31/96 15.447322 08/31/96 08/31/96 15.447322
09/30/96 15.979138 09/30/96 09/30/96 15.979138
10/31/96 16.352606 10/31/96 10/31/96 16.352606
11/30/96 17.578007 11/30/96 11/30/96 17.578007
12/31/96 16.907163 12/31/96 12/31/96 0.178400 0.622600 16.907163 884.200238
<CAPTION>
<S> <C> <C> <C>
06/30/95 1061.179272 14,352
07/31/95 1061.179272 15,033
08/31/95 1061.179272 15,169
09/30/95 1061.179272 15,496
10/31/95 1061.179272 15,175
11/30/95 1061.179272 15,747
12/31/95 42.691187 1103.870459 15,908
01/31/96 1103.870459 16,257
02/28/96 1103.870459 16,377
03/31/96 1103.870459 16,489
04/30/96 1103.870459 17,116
05/31/96 1103.870459 17,359
06/30/96 1103.870459 17,365
07/31/96 1103.870459 16,618
08/31/96 1103.870459 17,052
09/30/96 1103.870459 17,639
10/31/96 1103.870459 18,051
11/30/96 1103.870459 19,404
12/31/96 52.297375 1156.167834 19,548
</TABLE>
<PAGE>
GROSS CAF: CAPITAL GROWTH FUND
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
<TABLE>
<CAPTION>
<S> <C>
SHARES TO DATE X (NAV + NOT REINVESTED) = GROSS VALUE
690.780881 17.26 11924.8136
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 17.38 11924.8136 10,000.00 (1924.8136)
SHARES PURCHASED: 575.5312873
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(1924.8136) 10,000.00 0.1925
ONE YEAR NET RATE OF RETURN: 19.25%
</TABLE>
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 17.375250 12/31/95 12/31/95 0.028857 1.560417 17.375250
01/31/96 17.793325 01/31/96 01/31/96 17.793325 1,602,333.77
02/28/96 18.461690 02/28/96 02/28/96 18.461690
03/31/96 18.614862 03/31/96 03/31/96 0.482880 18.614862
04/30/96 19.186090 04/30/96 04/30/96 19.186090
05/31/96 20.258563 05/31/96 05/31/96 20.258563
06/30/96 20.051892 06/30/96 06/30/96 20.051892
07/31/96 19.152548 07/31/96 07/31/96 19.152548
08/31/96 19.814674 08/31/96 08/31/96 19.814674
09/30/96 20.408833 09/30/96 09/30/96 20.408833
10/31/96 19.884291 10/31/96 10/31/96 19.884291
11/30/96 20.662790 11/30/96 11/30/96 20.662790
12/31/96 17.262802 12/31/96 12/31/96 0.050370 2.882600 17.262802
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/95 575.531287
01/31/96 575.531287
02/28/96 575.531287
03/31/96 277.912548 14.929606 590.460893
04/30/96 590.460893
05/31/96 590.460893
06/30/96 590.460893
07/31/96 590.460893
08/31/96 590.460893
09/30/96 590.460893
10/31/96 590.460893
11/30/96 590.460893
12/31/96 1731.804085 100.319988 690.780881
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: CAPITAL GROWTH FUND
RATE OF RETURN 05/01/92
SINCE PREPARED ON: 12/31/96 12/31/96
INCEPTION
................
SHARES TO DATE X (NAV + NOT REINVESTED) GROSS VALUE
1503.262520 17.26 25950.5232
PURCHASE DATE: 05/01/92
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 9.93 25950.5232 10,000.00 (15950.5232)
SHARES PURCHASED: 1007.049345
NET VALUE / INITIAL INVESTMENT GROSS RATE OF RETURN
(15950.5232) 10,000.00 1.5951
GROSS RATE OF RETURN SINCE INCEPTION 159.51%
ANNUALIZED GROSS RATE OF RETURNS SINCE INCEP 22.65%
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
05/01/92 9.930000 05/01/92 05/01/92 10.270000
05/31/92 10.254229 05/31/92 05/31/92 10.254229
06/30/92 10.016744 06/30/92 06/30/92 10.016744
07/31/92 10.435153 07/31/92 07/31/92 10.435153
08/31/92 10.501541 08/31/92 08/31/92 10.501541
09/30/92 10.848935 09/30/92 09/30/92 10.848935
10/31/92 11.413636 10/31/92 10/31/92 11.413636
11/30/92 12.342512 11/30/92 11/30/92 12.342512
12/31/92 12.416921 12/31/92 12/31/92 0.217530 12.416921 93,617.72
01/31/93 12.553733 01/31/93 01/31/93 12.553733
02/28/93 12.425379 02/28/93 02/28/93 12.425379
03/31/93 13.070798 03/31/93 03/31/93 0.205850 13.070798 128,872.31
04/30/93 12.545382 04/30/93 04/30/93 12.545382
05/31/93 12.897747 05/31/93 05/31/93 12.897747
06/30/93 13.100565 06/30/93 06/30/93 13.100565
07/31/93 13.122456 07/31/93 07/31/93 13.122456
08/31/93 13.655179 08/31/93 08/31/93 13.655179
09/30/93 14.173054 09/30/93 09/30/93 14.173054
10/31/93 14.487483 10/31/93 10/31/93 14.487483
11/30/93 14.607984 11/30/93 11/30/93 14.607984
12/31/93 14.258266 12/31/93 12/31/93 0.988703 14.258266 1,204,052
01/31/94 14.296112 01/31/94 01/31/94 14.296112
02/28/94 14.216043 02/28/94 02/28/94 14.216043
03/31/94 13.637311 03/31/94 03/31/94 0.187100 13.637311 244,098.06
04/30/94 13.651531 04/30/94 04/30/94
05/31/94 13.543518 05/31/94 05/31/94
06/30/94 13.046232 06/30/94 06/30/94 13.046232
07/31/94 13.14 07/31/94 07/31/94 13.14
08/31/94 13.87 08/31/94 08/31/94 13.87
09/30/94 13.785036 09/29/94 09/29/94 13.785036
10/31/94 14.07 10/31/94 10/31/94 14.07 469,710.53
11/30/94 13.61 11/30/94 11/30/94 13.61
12/31/94 13.379326 12/31/94 01/03/95 0.025965 0.202028 13.379326
01/31/95 13.331260 01/31/95 01/31/95 13.331260
<CAPTION>
SHARES TOTALS ACCOUNT
DATE $ TO DIST. REINV. SHARES VALUE
<S> <C> <C> <C> <C>
05/01/92 1007.049345 10,000
05/31/92 1007.049345 10,327
06/30/92 1007.049345 10,087
07/31/92 1007.049345 10,509
08/31/92 1007.049345 10,576
09/30/92 1007.049345 10,925
10/31/92 1007.049345 11,494
11/30/92 1007.049345 12,430
12/31/92 219.063444 17.642332 1024.691678 12,724
01/31/93 1024.691678 12,864
02/28/93 1024.691678 12,732
03/31/93 210.932782 16.137713 1040.829390 13,604
04/30/93 1040.829390 13,058
05/31/93 1040.829390 13,424
06/30/93 1040.829390 13,635
07/31/93 1040.829390 13,658
08/31/93 1040.829390 14,213
09/30/93 1040.829390 14,752
10/31/93 1040.829390 15,079
11/30/93 1040.829390 15,204
12/31/93 1029.071141 72.173653 1113.003043 15,869
01/31/94 1113.003043 15,912
02/28/94 1113.003043 15,822
03/31/94 208.242869 15.270083 1128.273126 15,387
04/30/94 1128.273126 15,403
05/31/94 1128.273126 15,281
06/30/94 1128.273126 14,720
07/31/94 1128.273126 14,826
08/31/94 1128.273126 15,649
09/30/94 1128.273126 15,553
10/31/94 1128.273126 15,875
11/30/94 1128.273126 15,356
12/31/94 257.238375 19.226557 1147.499683 15,353
01/31/95 1147.499683 15,298
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS CAF: CAPITAL GROWTH FUND
RATE OF RETURN 05/01/92
5 YEAR PREPARED ON: 12/31/96 12/31/96
ROLLING
................
<S> <C> <C> <C> <C> <C> <C> <C>
02/28/95 13.623908 02/28/95 02/28/95 13.623908
03/31/95 13.982348 03/31/95 03/31/95 13.982348
04/28/95 13.958892 04/28/95 04/28/95 13.958892
05/31/95 14.289373 05/31/95 05/31/95 14.289373
06/30/95 15.232015 06/30/95 06/30/95 15.232015
07/31/95 16.891452 07/31/95 07/31/95 16.891452
08/31/95 17.224682 08/31/95 08/31/95 17.224682
09/30/95 17.554143 09/30/95 09/30/95 17.554143
10/31/95 17.263599 10/31/95 10/31/95 17.263599 4,559,939.07
11/30/95 18.315685 11/30/95 11/30/95 18.315685
12/31/95 17.375250 12/31/95 12/31/95 0.028857 1.560417 17.375250
01/31/96 17.793325 01/31/96 01/31/96 17.793325 1,602,333.77
02/28/96 18.461690 02/28/96 02/28/96 18.461690
03/31/96 18.614862 03/31/96 03/31/96 0.482880 18.614862
04/30/96 19.186090 04/30/96 04/30/96 19.186090
05/31/96 20.258563 05/31/96 05/31/96 20.258563
06/30/96 20.051892 06/30/96 06/30/96 20.051892
07/31/96 19.152548 07/31/96 07/31/96 19.152548
08/31/96 19.814674 08/31/96 08/31/96 19.814674
09/30/96 20.408833 09/30/96 09/30/96 20.408833
10/31/96 19.884291 10/31/96 10/31/96 19.884291
11/30/96 20.662790 11/30/96 11/30/96 20.662790
12/31/96 17.262802 12/31/96 12/31/96 0.050370 2.882600 17.262802
GROSS
RATE OF RETURN
5 YEAR
ROLLING
................
<S> <C> <C> <C> <C>
02/28/95 1147.499683 15,633
03/31/95 1147.499683 16,045
04/28/95 1147.499683 16,018
05/31/95 1147.499683 16,397
06/30/95 1147.499683 17,479
07/31/95 1147.499683 19,383
08/31/95 1147.499683 19,765
09/30/95 1147.499683 20,143
10/31/95 1147.499683 19,810
11/30/95 1147.499683 21,017
12/31/95 1823.691411 104.959147 1252.458830 21,762
01/31/96 1252.458830 22,285
02/28/96 1252.458830 23,123
03/31/96 604.787320 32.489487 1284.948317 23,919
04/30/96 1284.948317 24,653
05/31/96 1284.948317 26,031
06/30/96 1284.948317 25,766
07/31/96 1284.948317 24,610
08/31/96 1284.948317 25,461
09/30/96 1284.948317 26,224
10/31/96 1284.948317 25,550
11/30/96 1284.948317 26,551
12/31/96 3768.714864 218.314203 1503.262520 25,951
</TABLE>
<PAGE>
GROSS CAF: BALANCED FUND
RATE OF RETURN
1 YEAR PREPARED ON: 12/31/96
................
<TABLE>
<S> <C>
SHARES TO DATE X (NAV + NOT REINVESTED) = GROSS VALUE
916.373700 12.07 11056.1257
PURCHASE DATE: 12/31/95
INITIAL INVESTMENT: $10,000.00 GROSS VALUE - INITIAL INVESTMENT NET VALUE
INITIAL VALUE: 11.91 11056.1257 10,000.00 (1056.1257)
SHARES PURCHASED: 839.813333
NET VALUE / INITIAL INVESTMENT NET RATE OF RETURN
(1056.1257) 10,000.00 0.1056
ONE YEAR NET RATE OF RETURN: 10.56%
</TABLE>
<TABLE>
<CAPTION>
INCOME CAPITAL
DATE NAV EX-DATE PAYABLE DATE DISTRIBUTION DISTRIBUTIONS REINVEST NAV AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 11.907408 12/31/95 12/31/95 0.372800 0.646098 11.907408 1,243,502.82
01/31/96 12.008535 01/31/96 01/31/96 12.008535
02/28/96 12.009893 02/28/96 02/28/96 12.009893
03/31/96 11.851851 03/31/96 03/31/96 0.112950 11.851851 167,827.13
04/30/96 11.934064 04/30/96 04/30/96 11.934064
05/31/96 12.164009 05/31/96 05/31/96 12.164009
06/30/96 12.241626 06/30/96 06/30/96 12.241626
07/31/96 11.769333 07/31/96 07/31/96 11.769333
08/31/96 11.977944 08/31/96 08/31/96 11.977944
09/30/96 12.500212 09/30/96 09/30/96 12.500212
10/31/96 12.863412 10/31/96 10/31/96 12.863412
11/30/96 13.362194 11/30/96 11/30/96 13.362194
12/31/96 12.065084 12/31/96 12/31/96 0.261390 0.714226 12.065084
<CAPTION>
SHARES TOTALS
DATE $ TO DIST. REINV. SHARES
<S> <C> <C> <C>
12/31/95 839.813333
01/31/96 839.813333
02/28/96 839.813333
03/31/96 94.856916 8.003553 847.816886
04/30/96 847.816886
05/31/96 847.816886
06/30/96 847.816886
07/31/96 847.816886
08/31/96 847.816886
09/30/96 847.816886
10/31/96 847.816886
11/30/96 847.816886
12/31/96 827.143719 68.556814 916.373700
</TABLE>
<PAGE>
Ex 99.3
POST-ACQUISITION
JEFFERSON-PILOT CORPORATION
CORPORATE ORGANIZATION CHART
A. Affiliates actually controlled
------------------------------
Jefferson-Pilot Corporation (North Carolina corp.)
Alexander Hamilton Life Insurance Company of America (Michigan corp.)
AH (Michigan) Life Insurance Company (Michigan corp.)
Alexander Hamilton Capital Management, Inc. (Michigan corp.)
Alexander Hamilton Variable Insurance Trust (Massachusetts business
trust)
First Alexander Hamilton Life Insurance Company (New York corp.)
Chubb Life Insurance Company of America (New Hampshire corp.)
Chubb Colonial Life Insurance Company (New Jersey corp.)
Chubb Sovereign Life Insurance Company (New Hampshire corp.)
Chubb America Service Corporation (New Hampshire corp.)
Chubb Securities Corporation (New Hampshire corp.)
ChubbHealth Holdings, Inc. (New Hampshire corp.)
Hampshire Funding Inc. (New Hampshire corp.)
Hampshire Syndications, Inc. (New Hampshire corp.)
Chubb Investment Advisory Corporation (Tennessee corp.)
Volunteer Garage Company, Inc. (Tennessee corp.)
ETRE Capital Corp. (Delaware corp.)
GARCO Capital Corp. (Delaware corp.)
HARCO Capital Corp. (Delaware corp.)
Omega Jefferson Pilot Seguros de Vida S.A. (Argentina corp.)(See
note 2)
Jefferson Pilot Omega Seguros de Vida S.A. (Uruguay
corp.)(pending)
JP Investment Management Company (North Carolina corp.)
Jefferson-Pilot Capital Trust A (Delaware business trust)
Jefferson-Pilot Capital Trust B (Delaware business trust)
Jefferson-Pilot Communications Company (North Carolina corp.)
Jefferson-Pilot Communications Company of California (North Carolina
corp.)
San Diego Broadcasting Corporation (California corp.)
Jefferson-Pilot Communications Company of Virginia (Virginia corp.)
WCSC, Inc. (South Carolina corp.)
Tall Tower, Inc. (South Carolina corp.)
<PAGE>
Jefferson-Pilot Health Care Delivery Systems, Inc. (North Carolina corp.)
Community Choice of North Carolina, Inc. (North Carolina corp.)
Medselect, Inc. (North Carolina corp.)
Jefferson-Pilot Investments, Inc. (North Carolina corp.)
Jefferson-Pilot Investor Services, Inc. (North Carolina corp.)
Jefferson-Pilot Investor Services of Nevada, Inc. (Nevada corp.)
Jefferson-Pilot Life Insurance Company (North Carolina corp.)
Jefferson Standard Life Insurance Company (North Carolina corp.)
Jefferson-Pilot Property Insurance Company (North Carolina corp.)
Notes: (1) Each indentation reflects another tier of ownership. All entities
more than 50% owned are listed.
(2) The immediate parent owns 100% of the voting securities of each
entity except that HARCO owns 70% of Omega.
B. Affiliates not controlled but state Insurance Holding Company Act
-----------------------------------------------------------------
definitions presume control starting at 10% ownership
-----------------------------------------------------
Jefferson-Pilot Life Insurance Company
Athens Newspapers, Inc., Class A Common, Georgia corp., 40.0% owned
International Home Furnishing Center, Inc., Common, North Carolina corp.,
25.06% owned
Markwood, Inc., Common, Delaware corp., 50.0% owned
Carbonic Industries Corporation, Class A Common, Florida. corp, 29.04%
owned Tomco2 Equipment Company, Class A Common, Georgia corp., 29.20%
owned
<PAGE>
CHUBB AMERICA FUND
PRICE CALCULATIONS
<TABLE>
<CAPTION>
12/31/96
N.A.V. AND
OUTSTANDING OFFERING PRICE
PORTFOLIO NET ASSETS SHARES PER SHARE
- ------------------------ ------------- ------------- ---------------
<S> <C> <C> <C>
WORLD GROWTH STOCK PORTFOLIO.... $91,995,634 3,947,054 $23.31
MONEY MARKET PORTFOLIO...... $7,896,257 770,648 $10.25
GOLD STOCK PORTFOLIO........ $7,554,427 454,995 $16.60
DOMESTIC GROWTH STOCK PORTFOLIO... $62,166,366 3,418,546 $18.19
BOND PORTFOLIO............. $11,717,693 1,141,490 $10.27
GROWTH AND INCOME PORTFOLIO.... $23,711,696 1,402,464 $16.91
CAPITAL GROWTH PORTFOLIO...... $70,832,162 4,103,167 $17.26
BALANCED PORTFOLIO........ $18,256,430 1,513,162 $12.07
EMERGING GROWTH PORTFOLIO...... $30,794,030 2,021,917 $15.23
</TABLE>
