CHUBB INVESTMENT FUNDS INC, N-30D, 1997-03-03

CHUBB INVESTMENT FUNDS INC
N-30D, 1997-03-03

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- ------------------------------------ Chubb --------------------------------
- ------------------------------------ Investment --------------------------------
- ------------------------------------ FUNDS --------------------------------

Annual Report
1996

Money Market Fund

Government Securities Fund

Total Return Fund

Tax-Exempt Fund

Growth and Income Fund

Capital Appreciation Fund

Global Income Fund

<PAGE>

CHUBB INVESTMENT FUNDS, INC.

One Granite Place
Concord, New Hampshire 03301

Dear Fellow Shareholders:

Nineteen ninety-six was another excellent year for owners of long-term
financial assets. Most of the return came in the second half of the year as
the bond market rallied, responding to evidence of moderate economic growth
with low inflation; stock prices rose steadily, driven by cash flow into
equity mutual funds. All of the Chubb Investment Funds' portfolios performed
well, responding to our management style and the market's overall momentum.

While many of the economic conditions that drove last year's markets remain in
place, 1997 is certain to provide its own unique investment opportunities.
Currency and financial markets worldwide have been deregulated and are now truly
global. Competition for investment capital is fierce, not only between companies
but also between countries. Those countries which are able to maintain stable
fiscal and monetary policies will be most attractive from an investment
perspective.

Of the major industrialized countries, the United States stands at the forefront
and its position is unlikely to be challenged for the foreseeable future. The
European countries remain hampered by government bureaucracy and regulation that
limits business expansion and new job opportunities. Japan is struggling under a
tightly controlled financial system and a highly protected corporate sector,
making them relatively less attractive from an investment perspective. Among
emerging markets, East Asia and Latin America should continue to rapidly develop
as long as the political environment remains stable and pro-business.

Overall, the market should continue to be fueled by pressures to increase
individual savings. The baby boom population is aging and faces the challenge of
funding an adequate retirement with possibly very little help from the social
security system. All of this suggests that the steady flow of new cash by
individuals into securities is going to continue. Looking forward, we expect to
capitalize on these trends. Our investment strategy remains the same; we plan to
invest your money in accordance with the prospectus to maximize return over the
long term.

All of us at Chubb Investment Funds wish you a healthy and prosperous 1997.

Sincerely,

/s/ Michael O'Reilly

Michael O'Reilly
President
Chubb Investment Funds, Inc.

<PAGE>

[This page intentionally left blank]

<PAGE>

Chubb Money Market Fund
by Thomas J. Swartz, III
Chubb Asset Managers, Inc.

The investment objective of the Fund is to provide an investment vehicle that
minimizes credit quality risk and net asset fluctuations. The Fund continues to
meet this objective by investing in high quality short-term investment vehicles.
Taking into account the narrow yield differential between U.S. Treasury bills
and lesser quality alternative investments such as commercial paper, we continue
to feel it is prudent to invest primarily in government and quasi-government
securities.

The Fed Funds Rate has been stable at 5.25% since January 1996. Given the
expected strong final Gross Domestic Product (GDP) number for the fourth quarter
of 1996, there is presently some debate over whether the Federal Reserve Bank
needs to ratchet up short-term rates in order to moderate the pace of economic
growth to a level consistent with low inflation. However, there are factors
supporting the slower growth in early 1997 as opposed to early 1996 prior to an
economic acceleration. For example, bond yields and oil prices are now
substantially higher than a year ago and banks' willingness to lend to consumers
has lessened. If the Fed does make a pre-emptive move by raising short-term
rates, we would anticipate incremental adjustments to the Fed funds rate, rather
than dramatic moves, such as raising the discount rate.

An investment in the fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00.

<PAGE>

Chubb Government Securities Fund
by Ned I. Gerstman
Chubb Asset Managers, Inc.

- --------------------------------------------------------------------------------
[PLOT POINTS FOR LINE CHART]

Comparison of Change in Value of $10,000 Investment in the
Government Securities Fund and the Lehman Brothers Government Bond Index

-------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEAR INCEPTION
-------------------------------------------------------------------
GOVERNMENT SECURITIES FUND 0.12% 5.94% 8.57%
-------------------------------------------------------------------
LEHMAN BROS GOVT BOND INDEX 2.77% 6.88% 8.86%
-------------------------------------------------------------------

Government Securities Lehman Brothers
Fund Gov't Bond Index
--------------------- ----------------
9745 10119
1987 9745 10119
10139 10453
10291 10551
10551 10729
1988 10591 10830
10731 10945
11536 11825
11654 11923
1989 12124 12372
11985 12218
12419 12646
12502 12751
1990 13202 13451
13449 13743
13583 13928
14456 14722
1991 15311 15511
14815 15240
15542 15842
16468 16624
1992 16450 16631
17002 17383
17503 17885
17690 18466
1993 17978 18404
17487 17925
17298 17647
17352 17721
1994 17377 17783
18295 18621
19307 19775
19613 20125
1995 20417 21045
20063 20569
20095 20667
20447 21014
1996 21068 21628

- --------------------------------------------------------------------------------
Commencement of operations December 1, 1987. Past performance is not
predictive of future performance.

This graph compares an initial $10,000 investment made in the Chubb
Government Securities Fund (the "Fund") at its inception with a
similar investment in the Lehman Brothers Government Bond Index. For
the purpose of this graph and the accompanying table, the average
annual total return for the Fund reflects all recurring expenses
(advisory fees, account fees) and a maximum 3% sales load, and
includes the reinvestment of all dividends and distributions.

The Lehman Brothers Government Bond Index is an unmanaged index and
includes the reinvestment of all dividends, but does not reflect the
payment of transaction costs, advisory fees or expenses that are
associated with an investment in the Fund.

Performance data quoted represents past performance and the investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.

We entered 1996 after a furious bond market rally during 1995 that resulted from
slowing economic growth and continued moderate inflation. In response, the
Federal Reserve had been easing monetary policy throughout 1995. It was expected
that these trends would continue and result in lower interest rates for the
coming year. Early in 1996 it became apparent that the economy, led by the
housing sector, auto sales, low rates, strong employment growth and strong
exports, had gained momentum. As a result, need for further Fed easing did not
come to pass and interest rates responded by rising 75 basis points during the
first quarter of 1996. After strong economic growth during the first half of the
year, including a very strong 4.7% GDP in the second quarter, the rise in rates
and waning demand resulted in growth slowing to 2.1% in the third quarter.
Interest rates moved in a narrow range over the last three quarters, moving
higher as evidence of stronger growth surfaced, and moving lower as signs of
economic weakness materialized. By the end of 1996, rates were somewhat below
the low end of that trading range. For the full year, the benchmark 10 year
treasury yield rose 85 basis points.

continued

<PAGE>

While 1996 was not a great year for the bond market, our conservative
intermediate maturity strategy and prudent security selection helped us to
outperform (excluding sales charges) both the Lipper General and Intermediate
U.S. Government bond fund averages for the third consecutive year, which had
returns of 1.72% and 2.90%, respectively. Of course, past performance is no
guarantee of future results and Lipper Averages exclude the effects of sales
charges, which if included may have been compared differently.

Going into 1997, the bond market appears to be fairly valued. During 1996,
inflation measures put in a mixed performance. Core measures of inflation
actually fell during the year. On a year over year basis, core Consumer Price
Index (CPI) fell from 3.0% to 2.6% and core Producer Price Index (PPI) fell
sharply from 2.6% to 0.6%. Only a sharp rise in energy prices pushed the overall
numbers higher. The employment cost index, closely watched by Alan Greenspan,
the Fed Chairman, fell to 2.8% at the end of the third quarter, down from 3.2%
at the end of last year. Gold, often viewed as an indicator of future inflation,
fell to its lowest level in four years. By many of these comparisons, inflation
still appears to be a falling trend and real inflation adjusted yields in the
bond market seem historically attractive. The one negative on this front was the
rise during the year in average hourly earnings due to the tight labor markets.
But as long as growth stays below 2.5% on average over the coming quarters,
those pressures should abate. Given our outlook for stable interest rates, the
Government Securities Fund expects to be more heavily weighted in higher yield
mortgage-backed securities whose returns should benefit in that environment.

iii

<PAGE>

Chubb Total Return Fund
by Robert Witkoff and Michael O'Reilly
Chubb Asset Managers, Inc.

- --------------------------------------------------------------------------------
[PLOT POINTS FOR LINE CHART]

Comparison of Change in Value of $10,000 Investment
in the Total Return Fund, the S&P 500 Index and
the Lipper Balanced Fund Index

-------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEAR INCEPTION
-------------------------------------------------------------------
TOTAL RETURN FUND 11.19% 11.08% 12.76%
-------------------------------------------------------------------
S&P 500 INDEX 22.96% 15.18% 16.21%
-------------------------------------------------------------------
LIPPER BALANCED FUND AVERAGE 13.01% 11.13% 12.69%
-------------------------------------------------------------------

Total Return S & P 500 Lipper Balanced Fund
Fund Index Index
------------ --------- --------------------
1987 9508 9917 10567
9757 10481 11021
10362 11173 11459
10112 11209 11523
1988 10298 11553 11748
10693 12369 12223
11462 13458 13088
12504 14897 13861
1989 12938 15201 14062
12930 14743 13733
13543 15666 14367
12406 13523 13205
1990 12876 14729 14154
14012 16860 15628
14542 16823 15670
15245 17722 16661
1991 16634 19197 17810
16590 18714 17600
16596 19070 17882
16962 19671 18449
1992 17817 20657 19102
18658 21557 19980
18932 21659 20354
19712 22216 21085
1993 20312 22731 21337
19753 21875 20650
19589 21970 20480
20002 23044 21064
1994 19444 23039 20805
20910 25285 22050
23029 27677 23598
24521 29862 24869
1995 25303 31643 25921
25765 33341 26797
26579 34837 27341
27032 35914 28058
1996 29615 38908 29620

- --------------------------------------------------------------------------------
Commencement of operations December 1, 1987. Past performance is not
predictive of future performance.

This graph compares an initial $10,000 investment made in the Chubb
Total Return Fund (the "Fund") at its inception with a similar
investment in the S&P 500 Index and the Lipper Balanced Fund Average.
For the purpose of this graph and the accompanying table, the average
annual total return for the Fund reflects all recurring expenses
(advisory fees, account fees) and a maximum 5% sales load, and
includes the reinvestment of all dividends and distributions.

The S&P 500 Index and Lipper Balanced Fund Average are unmanaged and
include the reinvestment of all dividends, but do not reflect the
payment of transaction costs, advisory fees or expenses that are
associated with an investment in the Fund.

It was a good year for both stocks and bonds. The Dow Jones Industrial Average
was up 26.5% and interest rates declined. The underpinnings of the stock
market's strength - low interest rates, rising profits and sustained economic
growth - have not changed over the last two years. This has led to a record
inflow of money into equity mutual funds and a favorable demand for stocks.

The stock market exhibited volitility throughout the year and the fourth quarter
was no excpetion. The stock market rose for most of October and November, fell
dramatically in early December, rallied late in the month and finally fell 2% on
the last trading day. We used this volatility to make some adjustments in the
stock portion of the Fund's portfolio. We added Burlington Northern and
increased our holdings in Owens Illinois, Reebok and Singer. We eliminated
Archer Daniels, May Department Stores, Canadian National and Imperial Tobacco.
We continued the disciplined approach to managing the Fund by

continued

<PAGE>

investing in companies that are selling at a significant discount to the market
averages as measured by earnings multiple, but also have above average growth
prospects. We sell those stocks that no longer provide this discounted
valuation. Please refer to pages 3 -4 for a complete listing of the Fund's
investments.

The fixed income markets were well behaved during the last three months of 1996.
Economic statistics indicating the economy was growing slowly and inflation was
not increasing gave investors confidence that the Federal Reserve would not
tighten monetary policy. Retail sales during the very important Christmas
selling period were sluggish, but, in mid-December, conflicting evidence arose.
Economic growth accelerated, as construction spending and exports increased.
Following that, bonds retraced some earlier gains. These concerns continue as of
this writing in mid-January. For the full year, bond returns were below equities
and the Fund benefited from the decision to minimize bond holdings.

The re-election of President Clinton and the continuation of Republican control
of the Senate and House of Representatives has given confidence to the
securities markets that government initiatives of new spending will be subdued.
Perhaps the budget might be in balance by 2002. Inflation and political trends
are favorable for bonds; with the likelihood that economic growth will remain
moderate, the fixed income portion of your Fund should continue to positively
impact returns. Unless economic growth slows significantly, superior bond
performance is unlikely. Given the maturity of this economic cycle and the
marginal incremental yields offered by corporate bonds, emphasis continues to be
on U.S. government securities.

We remain cautiously optimistic regarding the overall outlook for 1997. Moderate
economic growth, benign inflation, fiscally conservative politics and stable
Federal Reserve policy suggest a friendly securities environment. But much of
this is already reflected in current prices. Nineteen ninety seven is likely to
be volatile as minor cross currents temporarily impact investor psychology in
major ways. It is an environment in which our disciplined value approach should
reward shareholders.

Results for the Total Return Fund for the full year 1996 were excellent. The
Fund returned 17.04% (excluding sales charges) versus 13.01% for the Lipper
Balanced Fund Index. We ranked 35 out of 272 funds for 1996 and, very
importantly, we were 18 out of 72 funds over the past five years.

<PAGE>

Chubb Tax-Exempt Fund
by Frederick W. Gaertner and Thomas J. Swartz, III
Chubb Asset Managers, Inc.

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[PLOT POINTS FOR LINE CHART]

Comparison of Change in Value of $10,000 Investment in the Tax-Exempt Fund
and the Lehman Brothers Municipal Bond Index

-------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEAR INCEPTION
-------------------------------------------------------------------
TAX-EXEMPT FUND 0.90% 6.18% 8.10%
-------------------------------------------------------------------
LEHMAN BROS MUNICIPAL BOND 4.43% 7.28% 8.40%
-------------------------------------------------------------------

Tax-Exempt Lehman Brothers
Fund Municipal Bond Index
---------- --------------------
9841 10145
1987 9841 10145
10101 10490
10434 10689
10836 10967
1988 11214 11176
11221 11254
12151 11918
12003 11930
1989 12513 12383
12343 12433
12680 12731
12520 12744
1990 13151 13292
13415 13597
13620 13896
14147 14438
1991 14559 14929
14650 14974
15225 15543
15611 15652
1992 15897 15934
16585 16523
17072 17068
17676 17649
1993 17871 17896
16998 16913
17042 17099
17079 17217
1994 16804 16971
17926 18171
18327 18609
18653 19143
1995 19473 19934
19268 18995
19351 19845
19782 20299
1996 20253 20817

- --------------------------------------------------------------------------------
Commencement of Operations December 1, 1987. Past performance is not
predictive of future performance.

This graph compares an initial $10,000 investment made in the Chubb
Tax-Exempt Fund (the "Fund") made at its inception with a similar
investment in the Lehman Brothers Municipal Bond Index. For the
purposes of this graph and the accompanying table, the average annual
total return for the Fund reflects all recurring expenses (advisory
fees, account fees) and a maximum 3% sales load, and includes the
reinvestment of all dividends and distributions.

The Lehman Brothers Municipal Bond Index is an unmanaged index and
includes the reinvestment of all dividends, but does not reflect the
payment of transaction costs, advisory fees or expenses that are
associated with an investment in the Fund.

Municipal interest rates remained in a rather narrow range during 1996, after
rising substantially in 1994 and declining just as dramatically during 1995. The
Municipal Bond Buyer 20 yield increased by 22 basis points for the year to a
closing yield of 5.66%. Municipal bonds outperformed long Treasury bonds during
the year, as the long government bond yield rose 66 basis points to 6.64% at the
close of 1996. The municipal market's low prices at the start of 1996 reflected
investor concerns regarding tax reform and the Flat Tax, which were mainly in
the news during the early primaries. We stated at the beginning of 1996 that
uncertainty regarding tax reform had created opportunities in the municipal
market, and that yields appeared attractive relative to inflation and compared
to other fixed income investments on a tax adjusted basis.

The supply and demand picture for the municipal market became less favorable
during 1996 than during the prior year. Municipal volume totaled $183 billion
during 1996, an increase of 14% over

continued

<PAGE>

1995 and the fourth highest year on record. Much of the growth in issuance
during 1996 was a result of increased refunding issuance. However, new issue
volume was generally offset by maturities and redemptions. As a result, the
total par value of outstanding municipal bonds remained unchanged during 1996,
after declining during the two prior years. New issue volume during 1997 is
expected to be close to the 1996 volume. Investor demand for municipal bonds has
recently been soft. Direct household ownership of municipal bonds declined by
$15 billion during the first three quarters of 1996, according to Federal
Reserve data. Moreover, net inflows into tax-exempt mutual funds were basically
flat during the year. The reduced retail demand reflected investor preference
for equities over bonds due to a soaring stock market and lower yields in the
wake of 1995's bond market rally. Looking forward, once investors believe they
have adequately increased their exposure to equities, they may allocate more
resources to other financial assets, including municipals.

During 1996, we continued to manage the Fund according to the principles that
have historically contributed to our success. First, our investment commitments
are "credit-driven," as we search for and identify value in the municipal
marketplace. For example, we continue to overweight midwestern and Texas
holdings, due to the favorable relative economic performance in both those
regions. The Fund maintained its commitment to high quality state housing bonds
with attractive current yields, which helped to bolster performance during the
past year's challenging market environment. Given the narrow yield differential
between higher and lower rated credits, our new purchases during 1996 were
concentrated in the higher rated AA and AAA categories, and many are insured.
Chubb also leverages its presence as a major tax-exempt institutional investor
to access and utilize the product, research and market-making capabilities of
the major institutional dealers in the marketplace. Through the application of
these investment principles, we strive to deliver the competitive total returns
that our shareholders have enjoyed to date.

The Fund's higher coupon profile and relatively short maturity structure
positioned it well during a rather challenging year for the fixed income
markets. The Fund's 4.0% rate of return (excluding sales charges) for 1996
exceeded the 3.3% Lipper General Municipal Bond Fund average. Our annual return
for the past year was below the 4.43% annual performance of the Lehman Municipal
Bond Index. However, it should be noted that the Lehman Index is difficult to
measure for all municipal funds, because it includes no operating expenses and
transaction costs and is always fully invested.

Note: Income from the Fund may be subject to state and local taxes and the
alternative minimum tax for certain investors.

vii

<PAGE>

Chubb Growth & Income Fund
by Robert Witkoff and Michael O'Reilly
Chubb Asset Managers, Inc.

- --------------------------------------------------------------------------------
[PLOT POINTS FOR LINE CHART]

Comparison of Change in Value of $10,000 Investment in the
Growth & Income Fund and the S&P 500 Index

-------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEAR INCEPTION
-------------------------------------------------------------------
GROWTH & INCOME FUND 16.36% 13.18% 14.15%
-------------------------------------------------------------------
S&P 500 INDEX 22.96% 15.18% 16.21%
-------------------------------------------------------------------

Growth & Income Fund S&P 500 Index
-------------------- -------------
9490 9917
1987 9490 9917
9633 10481
10351 11173
9660 11209
1988 9910 11553
10577 12369
11339 13458
12707 14897
1989 13132 15201
13234 14743
13900 15666
12287 13523
1990 12698 14729
14007 16860
14731 16823
15486 17722
1991 16925 19197
17201 18714
16786 19070
16913 19671
1992 18083 20657
18955 21557
19110 21659
19958 22216
1993 20839 22731
20241 21875
20012 21970
20712 23044
1994 19932 23039
21605 25285
24358 27677
26463 29862
1995 27011 31643
27752 33341
29061 34837
29657 35914
1996 33089 38908

- --------------------------------------------------------------------------------
Commencement of Operations December 1, 1987. Past performance is not
predictive of future performance.

This graph compares an initial $10,000 investment made in the Chubb
Growth and Income Fund (the "Fund") at its inception with a similar
investment in the S&P 500 Index. For the purposes of this graph and
the accompanying table, the average annual total return for the Fund
reflects all recurring expenses (advisory fees, account fees) and a
maximum 5% sales load, and includes the reinvestment of all dividends
and distributions.

The S&P 500 Index is an unmanaged index and includes the reinvestment
of all dividends, but does not reflect the payment of transaction
costs, advisory fees or expenses that are associated with an
investment in the Fund.

It was another great year for the financial markets. Stocks advanced across the
board with the Dow Jones Industrials Average (DJIA) up 26.5%, the Standard &
Poor's (S&P) 500 up 22.96%, and the NASDAQ composite up 21.5%. The story is
"old-hat" by now, but the underpinnings of the market's strength have basically
not changed over the last two years; declining short term rates supported by low
long term rates, sustained economic non-inflationary growth, and rising
corporate profits. This favorable economic climate has led to a record inflow of
money into equity mutual funds and a favorable demand for stocks. Combined, they
have helped the market achieve many new record highs. The DJIA, which toppled
two thousand point milestones (4000 and 5000) last year surpassed the 6000 this
year and 6500 just a month later. This two year appreciation (68.2%) stands up
against many of the best of this century. Even more impressive for stocks is how
this was achieved with no real help from the bond market.

continued

viii

<PAGE>

During the fourth quarter, the stock markets rose for most of October and
November, fell dramatically in early December, rallied late in the month to
erase the decline and finally fell close to 2% on the last trading day.
Employing the same disciplined approach to managing, the Fund we used this
volatility to make some adjustments in the Fund's composition. We sought out and
added companies selling at a significant discount to the broad market averages
on their earnings multiple yet with above average future growth prospects
including: Black & Decker, PMI Group, Great Atlantic & Pacific (A&P), Equitable
and UCAR. We sold those positions that no longer provided a discounted valuation
including: Archer Daniels, Atlantic Richfield, May Department Stores, Canadian
National and Whirlpool. Please refer to pages 9-10 for a complete listing of the
Fund's investments.

Despite the change in Fund managers, the investment tenets and approach taken by
the Fund will not change. We will stick to 35-40 equally weighted large
capitalization stocks, stay fully invested, and minimize our exposure to any one
sector. We believe that this focused value approach should continue to reward
our shareholders with above average performance over the long-term.

<PAGE>

Chubb Capital Appreciation Fund
by Robert Witkoff
Chubb Asset Managers, Inc.

- --------------------------------------------------------------------------------
[PLOT POINTS FOR LINE CHART]

Comparison of Change in Value of $10,000 Investment in the Capital
Appreciation Fund, the S&P 500 Index and the Lipper Equity Mid Cap Index

------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
------------------------------------------------------
CAPITAL APPRECIATION FUND 21.12% 19.39%
------------------------------------------------------
S&P 500 INDEX 22.96% 25.82%
------------------------------------------------------
LIPPER EQUITY MID-CAP AVERAGE 16.28% 16.38%
------------------------------------------------------

Capital Appreciation S&P 500 Lipper Equity
Fund Index Mid-Cap Index
-------------------- ----- -------------
9497 10000 10000
09/95 9497 10422 10314
9525 10385 10074
9839 10840 10363
12/95 9933 11049 10445
10086 11200 10547
10096 11400 10982
03/96 10239 11642 11201
10526 11800 11825
10764 11900 12209
06/96 10946 12164 11802
10440 12200 10754
10803 12350 11384
09/96 11137 12540 12090
11634 12900 11836
12312 13300 12289
12/96 12668 13585 12224

- --------------------------------------------------------------------------------

Commencement of Operations September 1, 1995. Past performance is not
predictive of future performance.

This graph compares an initial $10,000 investment made in the Chubb
Capital Appreciation Fund (the "Fund") at its inception with a similar
investment in the S&P 500 Index and the Lipper Equity Mid Cap Average.
For the purposes of this graph and the accompanying table, the average
annual total return for the fund reflects all recurring expenses
(advisory fees, account fees) and a maximum 5% sales load, and
includes the reinvestment of all dividends and distributions.

The S&P 500 Index and the Lipper Equity Mid Cap Average are unmanaged
and include the reinvestment of all dividends, but do not reflect the
payment of transaction costs, advisory fees or expenses that are
associated with an investment in the Fund.

Nineteen-ninety six was an excellent year for the Capital Appreciation Fund. The
Fund's total return (excluding sales charges) for the year was 27.53% compared
to 22.96% for the S&P 500 and 16.28% for the Lipper Equity Mid-Cap Average. This
yearly performance placed us 10th out of 168 mid-cap funds that Lipper monitors.

Overall, it was a great year for the financial markets. The stock market finally
got some support from the bond market and investors continued to respond
favorably to lower interest rates, low inflation, moderate growth, and decent
corporate profits.

continued

<PAGE>

The fourth quarter stock market performance was very typical of the entire year.
Tremendous volatility and abrupt changes in market sentiment with a mostly
upward bias. The overall market rose early in October and November, fell for
most of December, rallied late in the month and fell close to 2% on the last
trading day.

A further breakdown in the fourth quarter reveals many interesting trends in
investors stock selection. Clearly, bigger was better as the higher
capitalization weighted DJIA and S&P 500, outperformed the smaller Midcap and
Nasdaq Composites. Investors revealed their cautiousness in selecting the
liquidity and perceived security in these stocks. In regards to sector analysis
no real patterns emerged. The best industries were semiconductor capital
equipment, semiconductor, toys brokerage, and home building. The laggards were
retail building, supply, advertising, hotel/gaming, metals and mining, and
chemicals.

We again took advantage of the market volatility to make various changes in the
portfolio. We divested our positions in Asia Pulp and Paper, Hanson, King World,
Life Re, Millennium Chemicals, and PHH. We experienced our second takeover this
year and subsequently eliminated our position in Pioneer Financial Services. We
selectively added to existing holdings and took new positions in Alumax, Bard,
Beverly Enterprises, International Multifoods, Living Centers of America, and
Northeast Utilities. Please refer to pages 11-12 for a complete listing of
Fund's investments. We focused on stocks with solid future prospects, selling
appreciably below their year highs, with discounted valuations. Accordingly, we
continue to believe that disciplined individual stock selection should continue
to reward long term investors.

<PAGE>

Chubb Global Income Fund
BY ROGER C. P. BROOKHOUSE AND MARJORIE D. RAINES
Chubb Asset Managers, Inc.

- --------------------------------------------------------------------------------
[PLOT POINTS FOR LINE CHART]

Comparison of Change in Value of $10,000 Investment in the Global Income
Fund, the Salomon World Govt Bond Index, and the Lipper Global Fund Index

------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
------------------------------------------------------
GLOBAL INCOME FUND 2.73% 4.55%
------------------------------------------------------
SALOMON WORLD GOVT BOND INDEX 3.62% 6.72%
------------------------------------------------------
LIPPER GLOBAL FUND AVERAGE 10.40% 9.77%
------------------------------------------------------

Global Income Salomon Brothers Lipper Global Fund
Fund World Gov't Bond Index Index
------------- ---------------------- ------------------
9699 10000 10000
09/95 9634 10223 10153
9748 10300 10170
9861 10416 10200
12/95 10016 10525 10215
9943 10450 10220
9826 10400 10230
03/96 9795 10328 10248
9830 10287 10300
9842 10289 10400
06/96 9888 10370 10470
10064 10568 10550
10107 10610 10700
09/96 10202 10653 10880
10387 10852 11000
10626 10995 11200
12/96 10612 10906 11313

- --------------------------------------------------------------------------------
Commencement of Operations September 1, 1995. Past performance is not
predictive of future performance.

This graph compares an initial $10,000 investment made in the Chubb
Global Income Fund (the "Fund") at its inception with a similar
investment in the Salomon World Govt Bond Index and the Lipper Global
Fund Average. For the purposes of this graph and the accompanying
table, the average annual total return for the fund reflects all
recurring expenses (advisory fees, account fees) and a maximum 3%
sales load, and includes the reinvestment of all dividends and
distributions.

The Salomon World Govt Bond Index and the Lipper Global Fund Average
are unmanaged and include the reinvestment of all dividends, but do
not reflect the payment of transaction costs, advisory fees or
expenses that are associated with an investment in the Fund.

The final quarter of 1996 saw a continued recovery in bond markets from their
sharp first quarter US-lead set back, albeit, tempered in late November by
cautionary remarks about "irrational exuberance" from the Federal Reserve
Board chairman. High-yielding European markets such as Spain and Italy
performed best as their yields dropped to converge with core European
markets, while German bonds ended the year at generally new highs. This
reflected slower growth and lower inflation than had been widely forecasted,
in part a consequence of tightening fiscal policies ahead of European
monetary union in 1998. The policy of locking in high yields at longer
maturities while accepting short-term volatility rewarded shareholders.
Having been cautious earlier, maturities of Japanese bonds were extended as
the rally in prices commenced when it became clear that the economic recovery

continued

xii

<PAGE>

was weakening after a false high growth start. A long position was also taken in
Australia to exploit similar conditions. The US and the UK did not perform as
well with the latter just returning to its January level by year-end and the
former making up only part of the ground reflecting relatively healthy growth
without the feared inflation.

The Fund benefited from the currency strategy which continued to emphasize the
US dollar and the UK pound sterling, where the weight was increased in the
closing months of 1996. Both currencies appreciated strongly reflecting the
effect of falling interest rates on the currencies of slower growth countries.

The investment strategy for first quarter 1997 remains broadly unchanged. The
managers' view inflation posing a negligible threat, which may lessen further in
an environment of generally weak growth and widespread spare capacity. As a
result of more settled conditions accompanied with the higher yields in emerging
markets, the Fund experts to take from convergent higher-yielding European
investments and increasing the weighting of dollar denominated emerging market
securities.

xiii

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
PORTFOLIO COMPOSITION

MONEY MARKET FUND
- --------------------------------------------------------------------------------
% OF PORTFOLIO++

[PLOT POINTS FOR PIE CHART]

Short-Term Obligations 98.45%
Cash 1.55%

PORTFOLIO QUALITY DOLLAR WEIGHTED AVERAGE MATURITY

% OF
RATING PORTFOLIO RATING DAYS
AAA 100.00% AAA 44.75

DOLLAR WEIGHTED AVERAGE COUPON
5.00%

- --------------------------------------------------------------------------------

GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
% OF PORTFOLIO++

[PLOT POINTS FOR PIE CHART]

U.S. Government and Agency Obligations 99.44%
Cash 0.56%

DOLLAR WEIGHTED AVERAGE MATURITY DOLLAR WEIGHTED AVERAGE COUPON
YEARS

20.82 8.34%

PORTFOLIO DURATION 30 DAY SEC YIELD
YEARS
5.18 6.53%

- --------------------------------------------------------------------------------

++ Represents market value of investments plus uninvested cash.

xiv

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
PORTFOLIO COMPOSITION-Continued

TOTAL RETURN FUND
- --------------------------------------------------------------------------------
% OF PORTFOLIO++

[PLOT POINTS FOR PIE CHART]

Common Stock 68.11%
Cash 2.33%
U.S. Government and Agency Obligations 29.56%

% OF
TOP TEN EQUITIES PORTFOLIO

Owens-Illinois, Inc. 3.28%
Reebok International, Ltd. 2.74%
Mellon Bank Corp. 2.54%
Philip Morris Companies, Inc. 2.52%
Progressive Corp. 2.41%
Tektronix, Inc. 2.35%
Merrill Lynch & Co., Inc. 2.33%
Avnet, Inc. 2.27%
Singer Co., N.V. 2.25%
Chase Manhattan Corp. 2.23%

% OF
TOP TEN INDUSTRIES PORTFOLIO

Banking 8.52%
Insurance 7.69%
Electronics 4.45%
Food Processing 4.34%
Financial Services 4.02%
Building Materials 3.89%
Automotive Parts & Accessories 3.89%
Packaging & Containers 3.28%
Automotive Manufacturing 3.02%
Textiles & Apparel 2.74%

- --------------------------------------------------------------------------------

TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
% OF PORTFOLIO++

[PLOT POINTS FOR PIE CHART]

Municipal Bonds 98.41%
Cash 1.59%

PORTFOLIO QUALITY DOLLAR WEIGHTED AVERAGE MATURITY
YEARS
% OF 14.92
RATING PORTFOLIO
AAA 31.79% PORTFOLIO DURATION
AA 27.23% YEARS
A 28.59% 6.03
BBB 5.31%
B 7.08% 30 DAY SEC YIELD
4.19%

- --------------------------------------------------------------------------------

++ Represents market value of investments plus uninvested cash.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
PORTFOLIO COMPOSITION-Continued

GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
% OF PORTFOLIO++

[PLOT POINTS FOR PIE CHART]

Common Stock 99.28%
Cash 0.72%

% OF
TOP TEN EQUITIES PORTFOLIO

Owens-Illinois, Inc. 3.78%
Merrill Lynch & Co., Inc. 3.42%
Mellon Bank Corp. 3.20%
Reebok International, Ltd. 3.13%
Old Republic International Corp. 3.04%
Progressive Corp. 3.04%
The PMI Group, Inc. 3.04%
Chase Manhattan Corp. 3.03%
Singer Co., N.V. 2.96%
KeyCorp 2.94%

% OF
TOP TEN INDUSTRIES PORTFOLIO

Banking 14.67%
Insurance 13.83%
Financial Services 5.86%
Electronics 5.44%
Food Processing 5.06%
Automotive Manufacturing 4.86%
Building Materials 4.27%
Mining & Metals 4.23%
Automotive Parts & Accessories 4.13%
Packaging & Container 3.78%

- --------------------------------------------------------------------------------

CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
% OF PORTFOLIO++

[PLOT POINTS FOR PIE CHART]

Common Stock 97.01%
Cash 2.99%

% OF
TOP TEN EQUITIES PORTFOLIO

Singer Company, N.V. 3.27%
Owens-Illinois, Inc. 3.22%
Living Centers of America, Inc. 3.20%
Lehman Brothers Holding, Inc. 3.14%
Cagle's, Inc. - Class A 3.09%
BancTec, Inc. 2.85%
Ball Corp. 2.80%
International Multifoods Corp. 2.79%
Black & Decker Corp. 2.78%
Security-Connecticut Corp. 2.75%

% OF
TOP TEN INDUSTRIES PORTFOLIO

Food Processing 12.43%
Insurance 12.19%
Financial Services 7.66%
Packaging & Containers 6.02%
Health Services 5.75%
Transportation - Shipping 5.47%
Building Materials 4.95%
Medical Supplies 4.89%
Electrical Equipment 4.40%
Mining & Metals 4.15%

- --------------------------------------------------------------------------------

++ Represents market value of investments plus uninvested cash.

xvi

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
PORTFOLIO COMPOSITION-Continued

GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
% OF PORTFOLIO

[PLOT POINTS FOR PIE CHART]

U.S. and Foreign Government Obligations 66.46%
Cash 9.80%
Corporate Bonds 23.74%
% OF
TOP TEN COUNTRIES PORTFOLIO

United States 26.37%
Germany 16.30%
United Kingdom 9.66%
Italy 8.15%
Spain 7.16%
Netherlands 6.30%
Canada 5.08%
Brazil 4.27%
Portugal 3.98%
Japan 3.82%

PORTFOLIO DURATION DOLLAR WEIGHTED AVERAGE MATURITY
YEARS YEARS
6.72 8.34

- --------------------------------------------------------------------------------

++ Represents market value of investments plus uninvested cash.

xvii

<PAGE>

[This page intentionally left blank]

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB MONEY MARKET FUND
December 31, 1996

Market
Principal Value
Value (Note B)
--------- --------

SHORT-TERM OBLIGATIONS-98.54%

Federal Farm Credit Bank Discount Note, 5.200%,
due 02/12/97 .................................... $4,000,000 $3,975,733
Federal Home Loan Bank Discount Note, 5.270%,
due 01/30/97 .................................... 400,000 398,302
U.S. Treasury Bill, 4.850%, due 02/13/97 .......... 2,900,000 2,883,200
U.S. Treasury Bill, 4.840%, due 03/06/97 .......... 1,480,000 1,467,266
----------

TOTAL INVESTMENTS
(Cost $8,724,501*) ............................ 98.54% 8,724,501

Other assets, less liabilities .................... 1.46 129,515
---------- ----------

TOTAL NET ASSETS ............................... 100.00% $8,854,016
========== ==========

- ----------
*Aggregate cost for Federal income tax purposes.

See notes to financial statements.

1
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB GOVERNMENT SECURITIES FUND
December 31, 1996

<TABLE>
<CAPTION>
Market
Principal Value
Value (Note B)
--------- -----------

<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-98.65%

Federal Home Loan Mortgage Corporation, CMO,
Series 1058-H, 8.000%, due 04/15/21 ....................................... $ 707,032 $ 722,328
Federal National Mortgage Association, Pool #294290,
9.000%, due 07/01/01 ...................................................... 28,836 30,214
Federal National Mortgage Association, Pool #282883,
7.000%, due 05/01/24 ...................................................... 205,450 201,277
Federal National Mortgage Association, Pool #306175,
7.000%, due 01/01/25 ...................................................... 3,149,062 3,085,095
Government National Mortgage Association, Pool #166009,
9.000%, due 06/15/16 ...................................................... 101,011 106,567
Government National Mortgage Association, Pool #780339,
8.000%, due 12/15/23 ...................................................... 1,358,158 1,393,849
Government National Mortgage Association, Pool #402766,
8.000%, due 08/15/25 ...................................................... 1,463,804 1,494,910
Kidder Peabody Acceptance Corporation, CMO,
Series 20-D, 9.900%, due 10/01/18 ......................................... 104,398 107,118
U.S. Treasury Bond, 10.375%, due 11/15/12 ................................... 3,125,000 4,026,366
U.S. Treasury Note, 6.750%, due 04/30/00 .................................... 200,000 203,875
U.S. Treasury Note, 6.125%, due 09/30/00 .................................... 550,000 549,828
U.S. Treasury Note, 8.000%, due 05/15/01 .................................... 300,000 320,625
U.S. Treasury Note, 6.625%, due 07/31/01 .................................... 200,000 203,250
U.S. Treasury Note, 6.250%, due 02/15/03 .................................... 200,000 199,875
-----------

TOTAL INVESTMENTS
(Cost $12,605,865*) ..................................................... 98.65% 12,645,177

Other assets, less liabilities .............................................. 1.35 173,273
---------- -----------

TOTAL NET ASSETS ......................................................... 100.00% $12,818,450
========== ===========
</TABLE>

- ----------
*Aggregate cost for Federal income tax purposes

See notes to financial statements.

2
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB TOTAL RETURN FUND
December 31, 1996

<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------

<S> <C> <C>
COMMON STOCK-67.49%

Aerospace - Defense-1.47%
General Motors Corp., Class H ............................................... 8,100 $ 455,625
----------

Automotive Manufacturing-2.99%
Chrysler Corp. .............................................................. 15,200 501,600
Ford Motor Co. .............................................................. 13,400 427,125
----------
928,725
----------

Automotive Parts & Accessories-3.86%
Borg-Warner Automotive, Inc. ................................................ 13,900 535,150
Cummins Engine, Inc. ........................................................ 14,400 662,400
----------
1,197,550
----------

Banking-8.45%
Chase Manhattan Corp. ....................................................... 7,700 687,225
First Chicago NBD Corp. ..................................................... 10,860 583,725
KeyCorp ..................................................................... 11,327 572,014
Mellon Bank Corp. ........................................................... 11,000 781,000
----------
2,623,964
----------

Building Materials-3.86%
Lafarge Corp. ............................................................... 29,500 593,688
Owens Corning ............................................................... 14,200 605,275
----------
1,198,963
----------

Chemicals-0.05%
Millennium Chemicals, Inc.+ ................................................. 964 17,111
----------

Electronics-4.41%
Philips Electronics, N.V .................................................... 16,200 648,000
Tektronix, Inc. ............................................................. 14,100 722,625
----------
1,370,625
----------

Financial Services-3.98%
Merrill Lynch & Co., Inc. ................................................... 8,800 717,200
PaineWebber Group, Inc. ..................................................... 18,450 518,906
----------
1,236,106
----------

Number Market
of Value
Company Shares (Note B)
- ------- ------ --------

Food Processing-4.30%
IBP, Inc. ................................................................... 23,000 $ 557,750
Philip Morris Companies, Inc. ............................................... 6,900 777,113
----------
1,334,863
----------

Forest Products & Paper-1.83%
Asia Pulp & Paper Co., Ltd.,
ADR+ ...................................................................... 50,100 569,888
----------

Holding Companies-0.29%
Hanson, PLC, ADR ............................................................ 13,500 91,125
----------

Household Appliances-2.23%
Singer Co., N.V ............................................................. 31,000 693,625
----------

Insurance-7.62%
LaSalle Re Holdings, Ltd. ................................................... 20,000 585,000
Old Republic International
Corp ..................................................................... 22,200 593,850
Progressive Corp. ........................................................... 11,000 741,125
W.R. Berkley Corp. .......................................................... 8,800 446,600
----------
2,366,575
----------

Metal Fabrications-1.91%
Carpenter Technology Corp. .................................................. 16,200 593,325
----------

Mining & Metals-1.84%
Cyprus Amax Minerals Co. .................................................... 24,500 572,687
----------

Oil - Domestic-1.71%
Atlantic Richfield Co. ...................................................... 4,000 530,000
----------

Oil - International-1.59%
YPF Sociedad Anonima, S.A.,
ADR ....................................................................... 19,500 492,375
----------

Oil - Refining-1.92%
Ultramar Diamond Shamrock
Corp ...................................................................... 18,900 597,712
----------

Packaging & Containers-3.25%
Owens-Illinois, Inc.+ ....................................................... 44,400 1,010,100
----------
</TABLE>

- ----------
+ Non-income producing security.

See notes to financial statements.

3
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB TOTAL RETURN FUND--(Continued)
December 31, 1996

<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------
<S> <C> <C>
COMMON STOCK-Continued
Retail - Specialty-1.66%
Circuit City Stores, Inc. ................................................... 17,100 $ 515,137
----------

Shipping & Freight-1.69%
Federal Express Corp.+ ...................................................... 11,800 525,100
----------

Technology - Semiconductors-2.25%
Avnet, Inc. ................................................................. 12,000 699,000
----------

Textiles & Apparel-2.72%
Reebok International, Ltd. .................................................. 20,100 844,200
----------

Transportation - Rail & Truck-1.61%
Burlington Northern Santa Fe ................................................ 5,800 500,975
----------

TOTAL COMMON STOCK
(Cost $15,777,513) ...................................................... 20,965,356
----------

Market
Principal Value
Value (Note B)
--------- --------

U.S. GOVERNMENT AND
AGENCY OBLIGATIONS-29.29%

U.S. Treasury Note, 6.250%,
due 02/15/03 .............................................................. $ 3,750,000 $ 3,747,656
U.S. Treasury Note, 7.250%,
due 08/15/04 .............................................................. 2,900,000 3,054,063
U.S. Treasury Note, 7.875%,
due 11/15/04 .............................................................. 700,000 764,093
U.S. Treasury Note, 6.875%,
due 05/15/06 .............................................................. 1,000,000 1,031,250
U.S. Treasury Note, 6.500%,
due 10/15/06 .............................................................. 500,000 502,968
-----------

TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost $9,187,860) ....................................................... 9,100,030
-----------

TOTAL INVESTMENTS
(Cost $24,965,373*) ..................................................... 96.78% 30,065,386

Other assets, less liabilities............................................... 3.22 998,713
----------- -----------

TOTAL NET ASSETS ......................................................... 100.00% $31,064,099
=========== ===========
</TABLE>

- ----------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.

See notes to financial statements.

4
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB TAX-EXEMPT FUND
December 31, 1996

<TABLE>
<CAPTION>
Market
Principal Value
Value (Note B)
--------- --------

MUNICIPAL OBLIGATIONS-96.99%

<S> <C> <C>
Alaska-3.60%
Anchorage, Alaska, Hospital Revenue, (Sisters of Providence Project),
Series 1991, 6.750%, due 10/01/02+ ........................................ $ 150,000 $ 164,689
North Slope Borough, Alaska, General Obligation, Zero Coupon,
Eff. Yield 4.750%, due 06/30/04 ........................................... 550,000 377,868
----------
542,557
----------

Colorado-0.75%
Platte River Power Authority, Colorado, Power Revenue,
Series AA, 6.875%, due 06/01/16+ .......................................... 110,000 112,709
----------

Connecticut-1.18%
Connecticut State, General Obligation, Series C, 7.000%,
Prerefunded to 09/15/00 at 102+ ........................................... 160,000 177,081
----------

District of Columbia-8.77%
District of Columbia, Cert. of Participation, 7.300%, due 01/01/13+ ......... 300,000 310,820
District of Columbia, Series 93-A, Refunding, 5.875%, due 06/01/05 .......... 500,000 498,658
District of Columbia, Series A-3, 5.500%, due 06/01/06 ...................... 250,000 240,918
Metropolitan Washington Airport Authority Revenue Bonds,
Series 92A, MBIA Insured, 6.500%, due 10/01/07+ ........................... 250,000 270,320
----------
1,320,716
----------

Georgia-2.50%
Cartersville, Georgia Development Authority, Water & Wastewater
Facilities-Anheuser Busch, AMT, 6.750%, due 02/01/12+ ..................... 250,000 270,652
Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax Revenue,
Series K, 7.250%, due 07/01/10+ ........................................... 100,000 105,637
----------
376,289
----------

Illinois-7.56%
Cook County, Illinois, General Obligation, MBIA Insured, Series 1990,
7.000%, due 11/01/99 ...................................................... 150,000 161,015
Illinois Housing Development Authority, Residential Mortgage Revenue, AMT,
Series B, 7.750%, due 08/01/23+ ........................................... 55,000 56,874
Illinois State Sales Tax Revenue, 6.800%, Prerefunded to
06/15/00 at 102+ .......................................................... 150,000 164,305
Illinois State Toll Highway, Series 92A, 6.375%, due 01/01/15+ .............. 350,000 365,583
Metropolitan Pier & Exposition Authority, Illinois, 6.500%, Prerefunded to
06/15/03 at 102+ .......................................................... 345,000 385,156
Metropolitan Pier & Exposition Authority, Illinois, 6.500%,
Unrefunded Balance, due 06/15/27+ ......................................... 5,000 5,456
----------
1,138,389
----------
</TABLE>

- ----------
+ Issued with call provisions.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB TAX-EXEMPT FUND--(Continued)
December 31, 1996

<TABLE>
<CAPTION>
Market
Principal Value
Value (Note B)
--------- --------

<S> <C> <C>
Indiana-7.77%
Indiana Bond Bank, Revenue, State Revolving Fund,
6.000%, due 02/01/15+ ..................................................... $ 500,000 $ 514,467
Indiana Municipal Power Supply, 5.650%, MBIA Insured,
due 01/01/16+ .............................................................. 500,000 498,249
Indiana State Housing Finance Authority, Single Family Mortgage 1990,
Series C, AMT, 7.800%, due 01/01/22+ ....................................... 150,000 158,127
----------
1,170,843
----------
Kentucky-1.17%
Kentucky Turnpike Authority, Economic Development Revenue,
7.250%, Prerefunded to 05/15/00 at 101.50+ ................................. 160,000 176,419
----------

Louisiana-1.45%
Jefferson, Louisiana, Sales Tax Revenue, Refunding, FGIC Insured,
Series A, 6.750%, Prerefunded to 12/01/02 at 100+ .......................... 200,000 217,831
----------

Maine-1.46%
Maine Educational Loan Authority, Series 92A, AMT, 6.950%,
due 12/01/07+ .............................................................. 205,000 219,681
----------

Massachusetts-4.23%
Massachusetts State, Construction Loan, Series A, 6.000%,
due 06/01/11+ .............................................................. 600,000 637,139
----------

Minnesota-0.70%
Northern Municipal Power Agency, Minnesota, Electric System Revenue,
Series A, 7.250%, due 01/01/16+ ............................................ 100,000 105,339
----------

Missouri-1.12%
Missouri Health & Educational Facilities Authority, St. Luke's Hospital,
MBIA Insured, 7.000%, Prerefunded to 11/15/01 at 102+ ...................... 150,000 168,929
----------

Nevada-1.07%
Nevada State, General Obligation, Series A, 6.750%,
Prerefunded to 08/01/99 at 102+ ............................................ 150,000 161,921
----------

New Hampshire-1.49%
New Hampshire Turnpike System, Revenue, Series A, FGIC Insured,
6.750%, due 11/01/11+ ...................................................... 200,000 223,883
----------
</TABLE>

- ---------
+ Issued with call provisions.

See notes to financial statements.

6
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB TAX-EXEMPT FUND--(Continued)
December 31, 1996

<TABLE>
<CAPTION>
Market
Principal Value
Value (Note B)
--------- --------

<S> <C> <C>
New Jersey-10.47%
New Jersey Economic Development Authority, The Seeing Eye, Inc.
Project, 7.300%, due 04/01/11+ ............................................. $ 650,000 $ 692,069
New Jersey Wastewater Treatment Revenue, 6.875%, due 06/15/07+ ............... 180,000 195,123
Salem County, New Jersey, PCR Waste Disposal Authority Revenue,
E.I. DuPont Project, AMT, 6.500%, due 11/15/21+ ............................ 650,000 690,248
----------
1,577,440
----------

New York-9.48%
Metropolitan Transportation Authority, New York, Transit Facilities,
Series 2, 8.000%, Prerefunded to 07/01/98 at 102+ .......................... 100,000 107,790
New York City, New York, General Obligation, Series H, 6.875%,
due 02/01/02 ............................................................... 250,000 269,084
New York City, New York, General Obligation, Series H,
Subseries H-I, 5.800%, due 07/01/04 ........................................ 250,000 255,518
New York State Local Government Assistance Corporation, Series B,
5.500%, due 04/01/21+ ...................................................... 450,000 435,911
New York State Medical Care Facilities, Finance Agency Revenue,
FHA Insured, Mortgage Hospital A, 8.000%, due 02/15/25+ .................... 100,000 104,627
New York State Thruway Authority, Highway and Bridge Trust Fund,
Series A, MBIA Insured, 5.600%, due 04/01/10+ .............................. 250,000 255,057
----------
1,427,987
----------

Oklahoma-3.78%
Oklahoma Industrial Development Authority, Sisters of Mercy, Series A,
5.000%, due 06/01/13+ ...................................................... 600,000 569,675
----------

Pennsylvania-2.10%
Philadelphia, PA, Hospital & Higher Education Facility Authority,
(Children's Hospital), 5.000%, due 02/15/21+ ............................... 350,000 315,954
----------

Tennessee-5.10%
Memphis-Shelby Company, Tennessee Airport Authority,
(Federal Express Corp.), AMT, 6.750%, due 09/01/12+ ........................ 250,000 263,557
Tennessee Housing Development Agency, 1993 Series A, 5.900%,
due 07/01/18+ .............................................................. 500,000 504,319
----------
767,876
----------
</TABLE>

- ----------
+ Issued with call provisions.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB TAX-EXEMPT FUND--(Continued)
December 31, 1996

<TABLE>
<CAPTION>
Market
Principal Value
Value (Note B)
--------- --------

<S> <C> <C>
Texas-5.56%
Austin, Texas, Utility System Revenue Combined, Series C, 7.300%,
Prerefunded to 11/15/01 at 100+ ........................................... $ 60,000 $ 67,384
Brazos River Authority, Texas, Revenue Collateral, Houston Light & Power Co.,
7.750%, due 10/01/15+ ..................................................... 60,000 63,847
Houston, Texas, Independent School District, Permanent School Fund,
Zero Coupon, Eff. Yield 6.700%, due 08/15/13 .............................. 1,150,000 459,933
Lower Colorado River Authority, Texas, Revenue, Priority, 7.000%,
Prerefunded to 01/01/97 at 102+ ........................................... 100,000 102,000
Texas State Public Financing Authority Revenue, Series A, 7.375%,
Prerefunded to 02/01/98 at 100+ ........................................... 140,000 144,962
-----------
838,126
-----------

Utah-0.96%
Intermountain Power Agency, Utah, Special Obligation Revenue,
5th Crossover Refunding, 7.200%, due 07/01/19+ ............................ 140,000 144,785
-----------

Virginia-0.68%
Virginia State Housing Development Authority, Commonwealth Mortgage,
6.700%, due 07/01/08+ ..................................................... 100,000 102,016
-----------

Washington-14.04%
Lewis County, Washington, PUD #1, Revenue Series 91, 7.000%,
Prerefunded to 10/01/01 at 102+ ........................................... 250,000 280,944
Washington Health Care Facilities Authority, Revenue,
MBIA Insured, (Group Health Co-Op), 6.750%, due 12/01/11+ ................. 300,000 317,667
Washington Health Care Facilities Authority, Revenue, Series 93,
(Sisters of Providence), 6.250%, due 10/01/13+ ........................... 500,000 509,377
Washington Housing Finance Commission, GNMA/FNMA MBS Programs,
7.100%, due 07/01/22+ ..................................................... 145,000 151,895
Washington State Public Power Supply System, Nuclear Project Number 1,
FSA Insured, 5.750%, due 07/01/11 ......................................... 600,000 601,757
Washington State Public Power Supply System, Nuclear Project Number 2,
Revenue, Series 90C, 7.625%, Prerefunded to 01/01/01 at 102+ .............. 100,000 113,137
Washington State Public Power Supply System, Nuclear Project Number 3,
Revenue, 7.500%, Prerefunded to 07/01/00 at 102+ .......................... 125,000 139,763
-----------
2,114,540
-----------

TOTAL INVESTMENTS (Cost $13,859,222*) .................................... 96.99% 14,608,125

Other assets, less liabilities .............................................. 3.01 453,257
----------- -----------

TOTAL NET ASSETS ......................................................... 100.00% $15,061,382
=========== ===========
</TABLE>

- ----------
* Aggregate cost for Federal income tax purposes.
+ Issued with call provisions.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB GROWTH AND INCOME FUND
December 31, 1996

<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------

COMMON STOCK-98.78%

Automotive Manufacturing-4.83%
<S> <C> <C>
Chrysler Corp. .............................................................. 31,400 $1,036,200
Ford Motor Co. .............................................................. 28,600 911,625
----------
1,947,825
----------

Automotive Parts & Accessories-4.11%
Borg-Warner Automotive, Inc. ................................................ 26,600 1,024,100
Cummins Engine, Inc. ........................................................ 13,700 630,200
----------
1,654,300
----------

Banking-14.60%
Citicorp .................................................................... 10,000 1,030,000
Chase Manhattan Corp. ....................................................... 13,600 1,213,800
First Chicago NBD Corp. ..................................................... 21,901 1,177,179
KeyCorp ..................................................................... 23,311 1,177,205
Mellon Bank Corp. ........................................................... 18,050 1,281,550
----------
5,879,734
----------

Building Materials-4.25%
Lafarge Corp. ............................................................... 42,000 845,250
Owens Corning ............................................................... 20,300 865,288
----------
1,710,538
----------

Chemicals-0.21%
Millennium Chemicals, Inc.+ ................................................. 4,857 86,212
----------

Electrical Equipment-1.87%
UCAR International, Inc.+ ................................................... 20,000 752,500
----------

Electronics-5.41%
Philips Electronics N.V ..................................................... 28,500 1,140,000
Tektronix, Inc. ............................................................. 20,300 1,040,375
----------
2,180,375
----------

Financial Services-5.83%
Merrill Lynch & Co., Inc. ................................................... 16,800 1,369,200
PaineWebber Group, Inc. ..................................................... 34,850 980,156
----------
2,349,356
----------

Number Market
of Value
Company Shares (Note B)
- ------- ------ --------

Food Processing-5.04%
IBP, Inc. ................................................................... 36,300 $ 880,275
Philip Morris Companies, Inc. ............................................... 10,200 1,148,775
----------
2,029,050
----------

Forest Products-2.03%
Asia Pulp & Paper Co., Ltd.,
ADR+ ...................................................................... 71,900 817,862
----------

Holding Companies-1.14%
Hanson PLC, ADR ............................................................. 68,000 459,000
----------

Household Appliances-2.94%
Singer Co., N.V ............................................................. 53,000 1,185,875
----------

Insurance-13.76%
Equitable Companies, Inc. ................................................... 15,000 369,375
LaSalle Re Holdings, Ltd. ................................................... 28,000 819,000
Old Republic International
Corp ...................................................................... 45,600 1,219,800
Progressive Corp. ........................................................... 18,100 1,219,487
The PMI Group, Inc. ......................................................... 22,000 1,218,250
W.R. Berkley Corp. .......................................................... 13,700 695,275
----------
5,541,187
----------

Tools-2.62%
Black & Decker Corp. ........................................................ 35,000 1,054,375
----------

Metal Fabrications-2.36%
Carpenter Technology Corp. .................................................. 26,000 952,250
----------

Mining & Metals-4.21%
Cyprus Amax Minerals Co. .................................................... 35,700 834,488
Inco, Ltd., ADR ............................................................. 27,000 860,625
----------
1,695,113
----------

Oil - International-2.27%
YPF Sociedad Anonima S.A.,
ADR ....................................................................... 36,200 914,050
----------

Oil - Refining-2.81%
Ultramar Diamond Shamrock
Corp ...................................................................... 35,800 1,132,175
----------
</TABLE>
- ----------
+ Non-income producing security.

See notes to financial statements.

9
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB GROWTH AND INCOME FUND--(Continued)
December 31, 1996

<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------
<S> <C> <C>
COMMON STOCK-Continued

Packaging & Containers-3.76%
Owens-Illinois, Inc.+ ....................................................... 66,600 $ 1,515,150
-----------

Retail - Food-1.98%
Great Atlantic & Pacific Tea Co. ............................................ 25,000 796,875
-----------

Retail - Specialty-2.49%
Circuit City Stores, Inc. ................................................... 33,300 1,003,163
-----------

Shipping & Freight-2.30%
Federal Express Corp.+ ...................................................... 20,800 925,600
-----------

Technology - Semiconductors-2.53%
Avnet, Inc.+ ................................................................ 17,500 1,019,375
-----------

Number Market
of Value
Company Shares (Note B)
- ------- ------- -----------

Textiles & Apparel-3.12%
Reebok International, Ltd. .................................................. 29,900 $ 1,255,800
-----------

Transportation - Rail & Truck-2.31%
Burlington Northern Santa Fe ................................................ 10,800 932,850
-----------

TOTAL INVESTMENTS
(Cost $31,348,117*) ..................................................... 98.78% 39,790,590

Other assets, less liabilities .............................................. 1.22 491,259
------ -----------

TOTAL NET ASSETS ......................................................... 100.00% $40,281,849
====== ===========
</TABLE>
- ------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB CAPITAL APPRECIATION FUND
December 31, 1996

<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------

COMMON STOCK-97.94%
<S> <C> <C>
Building Materials-5.00%
Lafarge Corp. ............................................................... 7,500 $150,937
Ply-Gem Industries, Inc. .................................................... 13,800 170,775
--------
321,712
--------

Computers-2.88%
BancTec, Inc.+ .............................................................. 9,000 185,625
--------

Electrical Equipment-4.44%
Ametek, Inc. ................................................................ 6,100 135,725
UCAR International, Inc.+ ................................................... 4,000 150,500
--------
286,225
--------

Electronics-2.39%
Tektronix, Inc. ............................................................. 3,000 153,750
--------

Financial Services-7.74%
Dime Bancorp, Inc.+ ......................................................... 10,000 147,500
GreenPoint Financial Corp. .................................................. 3,100 146,862
Lehman Brothers Holding, Inc. ............................................... 6,500 203,938
--------
498,300
--------

Food Processing-12.55%
Archer-Daniels Midland Co. .................................................. 120 2,640
Cagle's, Inc., Class A ...................................................... 14,000 201,250
Great Atlantic & Pacific Tea Co. ............................................ 5,400 172,125
Hudson Foods, Inc., Class A ................................................. 6,200 117,800
IBP, Inc. ................................................................... 5,500 133,375
International Multifoods Corp. .............................................. 10,000 181,250
--------
808,440
--------

Forest Products-2.36%
Buckeye Cellulose Corp.+ ................................................... 5,700 151,763
--------

Health Services-5.80%
Beverly Enterprises+ ........................................................ 13,000 165,750
Living Centers of America,
Inc.+ ..................................................................... 7,500 208,125
--------
373,875
--------

Number Market
of Value
Company Shares (Note B)
- ------- ------ --------

Household Appliances-3.30%
Singer Co., N.V. ............................................................ 9,500 $212,563
--------

Insurance-12.31%
Commerce Group, Inc. ........................................................ 7,000 176,750
LaSalle ReHoldings, Ltd. .................................................... 5,400 157,950
Old Republic International
Corp. ..................................................................... 5,450 145,787
Security Connecticut Corp. .................................................. 5,100 179,137
The PMI Group, Inc. ......................................................... 2,400 132,900
--------
792,524
--------

Machinery - Industrial-2.51%
Albany International Corp. .................................................. 7,000 161,875
--------

Medical Supplies-4.93%
Bard (C.R.), Inc. ........................................................... 6,000 168,000
West Co., Inc. .............................................................. 5,300 149,725
--------
317,725
--------

Metal Fabrications-2.27%
Carpenter Technology Corp. .................................................. 4,000 146,500
--------

Mining & Metals-4.19%
Alumax, Inc.+ ............................................................... 5,000 166,875
Cyprus Amax Minerals Co. .................................................... 4,400 102,850
--------
269,725
--------

Office Technology-2.37%
Moore Corp., Ltd. ........................................................... 7,500 152,812
--------

Packaging & Containers-6.08%
Ball Corp. .................................................................. 7,000 182,000
Owens-Illinois, Inc.+ ....................................................... 9,200 209,300
--------
391,300
--------
</TABLE>
- ------
+ Non-income producing security.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB CAPITAL APPRECIATION FUND-(Continued)
December 31, 1996

<TABLE>
<CAPTION>
Number Market
of Value
Company Shares (Note B)
- ------- ------ --------
<S> <C> <C>
COMMON STOCK-Continued
Railroads-2.36%
Canadian National Railway ................................................... 4,000 $ 152,000
----------

Textiles & Apparel-3.46%
Burlington Industries, Inc.+ ................................................ 4,600 50,600
Reebok International, Ltd. .................................................. 4,100 172,200
----------
222,800
----------

Transportation - Shipping-5.52%
Canadian Pacific, Ltd. ...................................................... 3,800 100,700
Rollins Truck Leasing ....................................................... 9,500 119,938
Ryder System, Inc. .......................................................... 4,800 135,000
----------
355,638
----------

Number Market
of Value
Company Shares (Note B)
- ------- -------- ----------

Tools-2.81%
Black & Decker Corp. ........................................................ 6,000 $ 180,750
----------

Utilities - Electric-2.67%
Northeast Utilities ......................................................... 13,000 172,250
----------

TOTAL INVESTMENTS
(Cost $5,444,126*) ...................................................... 97.94% 6,308,152

Other assets, less liabilities .............................................. 2.06 132,419
---------- ----------

TOTAL NET ASSETS ......................................................... 100.00% $6,440,571
========== ==========
</TABLE>

- ----------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing security.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB GLOBAL INCOME FUND
December 31, 1996

<TABLE>
<CAPTION>
Market
Local Par Value
Currency Value (Note B)
-------- --------- --------

GOVERNMENT AND AGENCY OBLIGATIONS-65.23%

<S> <C> <C> <C>
Australia-1.42%
New South Wales Treasury, 9.250%, due 06/20/05 AUD 200,000 $ 173,253
-----------

Belgium-2.48%
Kingdom of Belgium, 6.500%, due 03/31/05 ...... BEF 4,000,000 132,752
Kingdom of Belgium, 7.000%, due 05/15/06 ...... BEF 5,000,000 170,001
-----------
302,753
-----------

Canada-4.68%
Government of Canada, 6.500%, due 06/01/04 .... CAD 225,000 167,957
Government of Canada, 7.000%, due 12/01/06 .... CAD 210,000 160,189
Government of Canada, 8.000%, due 06/01/23 .... CAD 300,000 244,272
-----------
572,418
-----------

Denmark-1.61%
Kingdom of Denmark, 8.000%, due 05/15/03 ...... DKK 1,050,000 197,170
-----------

France-3.25%
France O.A.T., 8.500%, due 10/25/08 ........... FRF 1,700,000 397,180
-----------

Italy-7.80%
BTPS, 12.000%, due 05/01/02 ................... ITL 700,000,000 560,276
BTPS, 9.500%, due 02/01/06 .................... ITL 525,000,000 393,620
-----------
953,896
-----------

Netherlands-6.18%
Government of Netherlands, 8.250%, due 02/15/07 NLG 550,000 377,054
Government of Netherlands, 8.250%, due 09/15/07 NLG 550,000 378,167
-----------
755,221
-----------

Portugal-3.91%
Republic of Portugal, 7.700%, due 06/07/05 .... FRF 2,200,000 477,932
-----------

Spain-7.03%
Government of Spain, 10.300%, due 06/15/02 .... ESP 24,000,000 220,357
Government of Spain, 8.800%, due 04/30/06 ..... ESP 28,000,000 240,553
Kingdom of Spain, 4.750%, due 03/14/05 ........ ESP 40,000,000 398,466
-----------
859,376
-----------

United Kingdom-9.34%
U.K. Treasury, 8.000%, due 09/25/09 ........... GBP 310,000 547,792
U.K. Treasury, 6.250%, due 11/25/10 ........... GBP 393,000 594,200
-----------
1,141,992
-----------
</TABLE>

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
CHUBB GLOBAL INCOME FUND--(Continued)
December 31, 1996

<TABLE>
<CAPTION>
Market
Local Par Value
Currency Value (Note B)
-------- --------- --------

GOVERNMENT AND AGENCY OBLIGATIONS-Continued

<S> <C> <C> <C>
United States-17.53%
U.S. Treasury Bond, 10.375%, due 11/15/12 .......... USD 500,000 $ 644,219
U.S. Treasury Note, 6.250%, due 10/31/01 ........... USD 500,000 500,468
U.S. Treasury Note, 6.250%, due 02/15/03 ........... USD 1,000,000 999,375
-----------
2,144,062
-----------

TOTAL GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $7,589,884) .............................. 7,975,253
-----------

CORPORATE BONDS-23.29%

Brazil-4.19%
Tevecap, S.A., Series 144A, 12.625%, due 11/26/04 .. USD 500,000 511,875
-----------

Germany-15.52%
Deutsche Ausgleichsbank, 6.125%, due 11/08/06 ...... DEM 724,000 474,053
International Bank for Reconstruction & Development,
6.125%, due 09/27/02 ............................. DEM 1,050,000 718,123
International Bank for Reconstruction & Development,
5.875%, due 11/10/03 ............................. DEM 1,050,000 705,859
-----------
1,898,035
-----------

Japan-3.58%
Export-Import Bank of Japan, 2.875%, due 07/28/05 .. JPY 50,000,000 438,313
-----------

TOTAL CORPORATE BONDS
(Cost $2,886,308) .............................. 2,848,223
-----------

TOTAL INVESTMENTS
(Cost $10,476,192*) ............................ 88.52% 10,823,476

Other assets, less liabilities ..................... 11.48 1,403,402
----------- -----------

TOTAL NET ASSETS ................................ 100.00% $12,226,878
=========== ===========
</TABLE>

- --------------------------------------------------------------------
CURRENCY VALUE
- --------------

Australian dollar ....... AUD German mark................. DEM
Belgium franc ........... BEF Italian lira ............... ITL
Canadian dollar ......... CAD Japanese yen ............... JPY
Danish krone ............ DKK Netherlands guilder ........ NLG
French franc ............ FRF Spanish peseta ............. ESP
Great British pound ..... GBP United States dollar ....... USD
- --------------------------------------------------------------------

- ------
*Aggregate cost for Federal income tax purposes.

See notes to financial statements.

14
<PAGE>

[This page intentionally left blank]

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996

<TABLE>
<CAPTION>
Chubb
Chubb Government Chubb
Money Market Securities Total Return
Fund Fund Fund
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS
Investments at cost - see
accompanying portfolios ........................ $ 8,724,501 $ 12,605,865 $24,965,373
============ ============ ============
Investments at market value (Notes B & C) ....... $ 8,724,501 $ 12,645,177 $30,065,386
Cash and currencies ............................. 137,551 70,959 717,499
Receivable for portfolio securities sold ........ 198,770
Receivable for Fund shares sold ................. 98,974 90 84,000
Receivable for accrued investment income ........ 470 113,674 236,198
Deferred organization costs (Note F) ............
------------ ------------ ------------
Total Assets ............................... 9,160,266 12,829,900 31,103,083
------------ ------------ ------------
LIABILITIES
Dividends payable ............................... 1,088 60
Payable for portfolio securities purchased
Payable for Fund shares redeemed ................ 301,100 787 9,710
Payable to affiliate (Note D) ................... 4,062 10,603 29,274
Net payable for foreign forward contracts
Organization costs payable (Note F) .............
------------ ------------ ------------
Total Liabilities .......................... 306,250 11,450 38,984

NET ASSETS ....................................... $ 8,854,016 $ 12,818,450 $31,064,099
============ ============ ============
NET ASSETS CONSIST OF:

Par value ....................................... $ 88,549 $ 12,227 $ 17,842
Capital paid in excess of par ................... 8,766,310 13,186,595 25,765,231
Undistributed net investment income
Accumulated net realized gain (loss)
from investments ............................... (843) (419,684) 181,013
Net unrealized gain from investments ............ 39,312 5,100,013
Net unrealized loss on translation of assets
and liabilities in foreign currencies ..........
Distributions required for Federal tax purposes
over amounts recognized for financial
reporting (Note C) .............................
------------ ------------ ------------
Net Assets ............................... $ 8,854,016 $12,818,450 $31,064,099
============ ============ ============
Shares of common stock outstanding (.01 par value,
100,000,000 shares auth. each Fund) ............. 8,854,862 1,222,744 1,784,176
============ ============ ============

NET ASSET VALUE PER SHARE ........................ $ 1.00 $ 10.48 $ 17.41
============ ============ ============
MAXIMUM OFFERING PRICE PER SHARE
(Net asset value divided by .97 on
Government Securities Fund, Tax-Exempt Fund,
and Global Income Fund, and by .95 on Total
Return Fund, Growth and Income Fund and
Capital Appreciation Fund. Money Market Fund
is offered at Net Asset Value per share) ........ $ 1.00 $ 10.81 $ 18.33
============ ============ ============
</TABLE>

See notes to financial statements.

<PAGE>

<TABLE>
<CAPTION>
Chubb
Growth Chubb Chubb
Chubb and Capital Global
Tax-Exempt Income Appreciation Income
Fund Fund Fund Fund
------------ ------------ ------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost - see
accompanying portfolios ........................ $13,859,222 $31,348,117 $ 5,444,126 $ 10,476,192
=========== =========== =========== ============
Investments at market value (Notes B & C) ....... $14,608,125 $39,790,590 $ 6,308,152 $ 10,823,476
Cash and currencies ............................. 236,176 287,287 194,662 1,176,481
Receivable for portfolio securities sold ........
Receivable for Fund shares sold ................. 16,563 245,844 30,128
Receivable for accrued investment income ........ 238,821 82,475 9,870 248,924
Deferred organization costs (Note F) ............ 9,808 9,808
----------- ----------- ---------- ------------
Total Assets ............................... 15,099,685 40,406,196 6,552,620 12,258,689
----------- ----------- ---------- ------------

LIABILITIES
Dividends payable ...............................
Payable for portfolio securities purchased ...... 79,280
Payable for Fund shares redeemed ................ 25,278 87,357 16,795
Payable to affiliate (Note D) ................... 13,025 36,990 6,166 14,613
Net payable for foreign forward contracts ....... 7,390
Organization costs payable (Note F).............. 9,808 9,808
----------- ----------- ---------- -----------

Total Liabilities .......................... 38,303 124,347 112,049 31,811

NET ASSETS ....................................... $15,061,382 $40,281,849 $ 6,440,571 $ 12,226,878
=========== =========== =========== ============
NET ASSETS CONSIST OF:

Par value ....................................... $ 12,396 $ 19,143 $ 4,957 $ 11,939
Capital paid in excess of par ................... 14,300,120 31,370,336 5,466,031 11,876,703
Undistributed net investment income ............. 969
Accumulated net realized gain (loss)
from investments ............................... 449,897 105,557 80,582
Net unrealized gain from investments ............ 748,903 8,442,473 864,026 347,284
Net unrealized loss on translation of assets
and liabilities in foreign currencies .......... (7,327)
Distributions required for Federal tax purposes
over amounts recognized for financial
reporting (Note C) ............................. (37) (83,272)
----------- ----------- ---------- ------------
Net Assets ............................... $15,061,382 $40,281,849 $ 6,440,571 $ 12,226,878
=========== =========== =========== ============
Shares of common stock outstanding (.01 par value,
100,000,000 shares auth. each Fund) ............. 1,239,556 1,914,289 495,668 1,193,895
=========== =========== =========== ============

NET ASSET VALUE PER SHARE ........................ $12.15 $21.04 $12.99 $10.24
=========== =========== =========== ============

MAXIMUM OFFERING PRICE PER SHARE
(Net asset value divided by .97 on
Government Securities Fund, Tax-Exempt Fund,
and Global Income Fund, and by .95 on Total
Return Fund, Growth and Income Fund and
Capital Appreciation Fund. Money Market Fund
is offered at Net Asset Value per share) ........ $12.53 $22.15 $13.67 $10.56
=========== =========== =========== ============
</TABLE>

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>

Chubb
Chubb Government Chubb
Money Market Securities Total Return
Fund Fund Fund
------------ ---------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest ................................ $ 456,595 $ 930,139 $ 474,649
Dividends ............................... 407,580
Foreign taxes withheld .................. (4,420)
Miscellaneous Income .................... 7,628
----------- ----------- -----------
Total investment
income ................................ 456,595 930,139 885,437
----------- ----------- -----------
Expenses:
Administrative fees (Note D) ............ 30,450 60,384 118,619
Advisory fees (Note D) .................. 13,048 26,891 52,825
Distribution fees (Note D) .............. 21,712 67,099 131,810
State registration fees ................. 9,720 14,855 29,200
Shareholder reports ..................... 3,569 5,616 10,586
Professional fees ....................... 4,710 7,264 14,250
Directors' fees ......................... 1,155 1,788 3,485
Shareholder servicing costs ............. 16,324 25,123 49,435
Custodian fees .......................... 3,504 2,992 4,704
Security valuation ...................... 772 2,663 3,616
Organization expense (Note F)
Miscellaneous expenses .................. 1,428 2,212 4,310
----------- ----------- -----------

Total expenses ......................... 106,392 216,887 422,840

Fees waived by Chubb
Asset Managers, Inc., Chubb
Investment Advisory Corp.,
Chubb Securities Corp., and
expenses assumed by Chubb Life
(Note D) ............................... (62,544) (90,680) (137,018)
----------- ----------- -----------

Net expenses ........................... 43,848 126,207 285,822
----------- ----------- -----------

Net investment income .................. 412,747 803,932 599,615

REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain (loss) on investments ... (82) 82,884 1,864,506
Net realized loss from foreign
currency transactions ....................
Net unrealized gain (loss) on investments . (483,663) 1,949,555
Net unrealized loss on translation
of assets and liabilities in foreign
currencies ...............................
----------- ----------- -----------

Net gain (loss) on investments and
foreign currencies ....................... (82) (400,779) 3,814,061
----------- ----------- -----------

Net increase in net
assets resulting from operations ......... $ 412,665 $ 403,153 $ 4,413,676
=========== =========== ===========
</TABLE>

See notes to financial statements.

<PAGE>

<TABLE>
<CAPTION>
Chubb
Growth Chubb Chubb
Chubb and Capital Global
Tax-Exempt Income Appreciation Income
Fund Fund Fund Fund
------------ ---------- ------------ --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest ................................ $ 931,093 $ 35,120 $ 15,181 $ 781,945
Dividends ............................... 789,283 61,577
Foreign taxes withheld .................. (19,666) (1,718) (13,767)
Miscellaneous Income .................... 6,387
--------- --------- --------- ----------
Total investment
income ................................ 931,093 811,124 75,040 768,178
--------- --------- --------- ----------
Expenses:
Administrative fees (Note D) ............ 69,581 153,793 16,785 51,052
Advisory fees (Note D) .................. 30,987 68,489 7,475 22,735
Distribution fees (Note D) .............. 77,318 170,894 18,651 56,729
State registration fees ................. 17,086 37,231 3,906 12,339
Shareholder reports ..................... 6,456 13,780 1,360 4,650
Professional fees ....................... 8,367 18,490 2,009 6,135
Directors' fees ......................... 2,059 4,523 485 1,506
Shareholder servicing costs ............. 29,033 64,010 6,977 21,286
Custodian fees .......................... 5,224 4,748 4,080 5,493
Security valuation ...................... 7,882 3,058 3,126 4,973
Organization expense (Note F) 2,697 2,697
Miscellaneous expenses .................. 2,548 5,594 600 1,862
--------- --------- --------- ----------

Total expenses ......................... 256,541 544,610 68,151 191,457

Fees waived by Chubb
Asset Managers, Inc., Chubb
Investment Advisory Corp.,
Chubb Securities Corp., and
expenses assumed by Chubb Life
(Note D) ............................... (104,278) (178,462) (25,605) (51,243)
--------- --------- --------- ----------

Net expenses ........................... 152,263 366,148 42,546 140,214
--------- --------- --------- ----------

Net investment income .................. 778,830 444,976 32,494 627,964

REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain (loss) on investments ... 67,216 3,562,614 205,469 80,582
Net realized loss from foreign
currency transactions .................... (71,480)
Net unrealized gain (loss) on investments . (249,230) 3,263,516 841,609 45,524
Net unrealized loss on translation
of assets and liabilities in foreign
currencies ............................... 16,614
--------- --------- --------- ----------

Net gain (loss) on investments and
foreign currencies ....................... (182,014) 6,826,130 1,047,078 71,240
--------- --------- --------- ----------

Net increase in net
assets resulting from operations ......... $ 596,816 $7,271,106 $1,079,572 $ 699,204
========= ========== ========== ==========
</TABLE>

See notes to financial statements.

19
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
Chubb
Chubb Government Chubb
Money Market Securities Total Return
Fund Fund Fund
------------------------ ------------------------ ------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
December December December December December December
31, 1996 31, 1995 31, 1996 31, 1995 31, 1996 31, 1995
---------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:

From operations:

Net investment income ................... $ 412,747 $ 386,265 $ 803,932 $ 838,956 $ 599,615 $ 481,934

Net realized gain (loss) on
investments ............................ (82) 21 82,884 129,275 1,864,506 908,600

Net realized loss from
foreign currency transactions ..........

Net unrealized gain (loss) on
investments and translations
of assets and liabilities
in foreign currency .................... (483,663) 1,222,240 1,949,555 3,699,707
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations .............. 412,665 386,286 403,153 2,190,471 4,413,676 5,090,241

Dividends to shareholders from
net investment income ................... (412,747) (386,265) (803,932) (838,956) (599,615) (481,934)

Dividends to shareholders in
excess of net
investment income .......................

Distributions to shareholders
from capital gains ...................... (1,467,709) (908,076)

Distributions to shareholders
in excess of capital gains .............. (215,784)

Returns of capital .......................

Increase (decrease) in net assets
derived from shareholder
transactions (Note E) ................... 1,233,892 125,442 (667,249) 323 6,546,421 2,255,684
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets ............................. 1,233,810 125,463 (1,068,028) 1,351,838 8,892,773 5,740,131

Net Assets:
Beginning of period ..................... 7,620,206 7,494,743 13,886,478 12,534,640 22,171,326 16,431,195
----------- ----------- ----------- ----------- ----------- -----------
End of period ........................... $ 8,854,016 $ 7,620,206 $12,818,450 $13,886,478 $31,064,099 $22,171,326
=========== =========== =========== =========== =========== ===========
Accumulated net
investment income ....................... $0 $0 $0 $0 $0 $0
=========== =========== =========== =========== =========== ===========
</TABLE>
(A) Commencement of operations on September 1, 1995.

See notes to financial statements.

20
<PAGE>

<TABLE>
<CAPTION>
Chubb
Growth Chubb Chubb
Chubb and Capital Global
Tax-Exempt Income Appreciation Income
Fund Fund Fund Fund
------------------------ ----------------------- ----------------------- ------------------------
Period from Period from
Year Year Year Year Year Sept. 1, Year Sept. 1,
Ended Ended Ended Ended Ended 1995 to Ended 1995 to
December December December December December December December December
31, 1996 31, 1995 31, 1996 31, 1995 31, 1996 31, 1995(A) 31, 1996 31, 1995(A)
----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets:

From operations:

Net investment income .... $ 778,830 $ 769,800 $ 444,976 $ 297,612 $ 32,494 $ 5,709 $ 627,964 $ 119,880

Net realized gain
(loss) on investments ... 67,216 9,393 3,562,614 1,290,658 205,469 3,429 80,582 12,320

Net realized loss
from foreign currency
transactions ............ (71,480) (23,114)

Net unrealized gain (loss)
on investments and
translations of assets
and liabilities
in foreign currency ..... (249,230) 1,383,807 3,263,516 5,697,972 841,609 22,417 62,138 277,819
---------- ----------- ----------- ----------- ----------- ---------- ---------- -----------
Net increase in net
assets resulting from
operations .............. 596,816 2,163,000 7,271,106 7,286,242 1,079,572 31,555 699,204 386,905

Dividends to shareholders
from net investment
income ................... (778,830) (769,800) (444,976) (297,589) (32,494) (5,709) (556,484) (119,880)

Dividends to shareholders
inexcess of net
investment income ........ (71,480) (29)

Distributions to
shareholders from
capital gains ............ (52,938) (12,148) (2,606,711) (1,290,658) (99,912) (3,429)

Distributions to
shareholders in excess
of capital gains ......... (37) (14,278) (504,237)

Returns of capital ........ (1,903)

Increase (decrease) in
net assets derived from
shareholder transactions
(Note E) ................. 37,022 (81,364) 6,918,269 5,273,078 3,897,151 1,573,837 1,450,076 10,438,566
---------- ----------- ----------- ----------- ----------- ---------- ---------- -----------
Net increase (decrease)
in net assets ........... (197,967) 1,285,410 11,137,688 10,464,933 4,844,317 1,596,254 1,521,316 10,705,562

Net Assets:
Beginning of period ...... 15,259,349 13,973,939 29,144,161 18,679,228 1,596,254 0 10,705,562 0
---------- ----------- ----------- ----------- ----------- ---------- ---------- -----------
End of period ............
$15,061,382 $15,259,349 $40,281,849 $29,144,161 $ 6,440,571 $1,596,254 $12,226,878 $10,705,562
Accumulated net =========== =========== =========== =========== =========== ========== =========== ===========
investment income ........
$0 $0 $0 $0 $0 $0 969 $ (19,073)
=========== =========== =========== =========== =========== ========== =========== ===========
</TABLE>

See notes to financial statements.

21
<PAGE>

NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE A--ORGANIZATION

Chubb Investment Funds, Inc. (the "Company") was incorporated under the laws of
the State of Maryland on April 27, 1987 and is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end series management
investment company. The Company consists of seven Funds (the "Funds"): Chubb
Money Market Fund, Chubb Government Securities Fund, Chubb Total Return Fund,
Chubb Tax-Exempt Fund, Chubb Growth and Income Fund, Chubb Capital Appreciation
Fund, and Chubb Global Income Fund. The Company was established through the sale
and issuance on December 1, 1987, of shares to Chubb Life Insurance Company of
America ("Chubb Life"), which is a wholly-owned subsidiary of The Chubb
Corporation ("Chubb"). At December 31, 1996, Chubb, and its wholly-owned
subsidiaries, owned:

December 31, 1996 % of
Shares Owned Shares
----------------- --------
Chubb Money Market Fund ........... 1,703,552 19.24%
Chubb Government Securities Fund .. 228,500 18.69%
Chubb Total Return Fund ........... 18,338 1.03%
Chubb Tax-Exempt Fund ............. 189,080 15.25%
Chubb Growth and Income Fund ...... 17,566 0.92%
Chubb Capital Appreciation Fund ... 109,868 22.17%
Chubb Global Income Fund .......... 1,084,475 90.84%

NOTE B--SIGNIFICANT ACCOUNTING POLICIES

VALUATION OF INVESTMENTS:Equity securities are valued at the closing sales price
on the exchange on which such securities are principally traded; or, if traded
in the over-the-counter market or on a national exchange for which no sales took
place on the day of valuation, at the mean of the bid and asked prices at the
close of trading. Quotations of foreign securities in foreign currencies are
converted to the U.S. dollar equivalents using appropriately translated foreign
market closing prices. Securities listed on a foreign exchange are valued at the
last quoted sale price available before the time when net assets are valued.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by the Board
of Directors. Debt instruments are valued on the basis of valuations provided by
a pricing service that determines valuations for institutional size trading
units of securities, without exclusive reliance upon quoted prices. These
valuations are believed to more accurately reflect fair market value. Short-term
debt instruments with a remaining maturity of less than 60 days are valued by
the amortized cost method, which approximates market value.

Trading in securities on most foreign exchanges and over-the-counter markets
is normally completed before the close of the domestic market and may also
take place on days on which the domestic market is closed. If events
materially affecting the value of foreign securities occur between the time
when the exchange on which they are traded closes and the time when the
Fund's net asset value is calculated, such securities will be valued at fair
value in accordance with procedures established by and under general
supervision of the Board of Directors.

<PAGE>

NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE B--SIGNIFICANT ACCOUNTING POLICIES--(Continued)

The books and records of the Funds are maintained in U.S. dollars. The market
values of investments, other assets and liabilities and forward contracts stated
in foreign currencies are translated at the prevailing exchange rates at the end
of the period. Purchases, sales, income and expenses are translated at the
exchange rate prevailing on the respective dates of such transactions.

Since the net assets of the Funds are presented at the exchange rates and
market value prevailing at the end of the period, the Funds do not isolate
the portion of the results of operations arising as a result of changes in
foreign exchange rates on securities from the fluctuations arising from
changes in the market prices of securities held during the period. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.

Reported net realized gain or loss from foreign currency transactions arise
from sales and maturities of short-term securities, sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized gain or loss from foreign currency transactions arise
from changes in the value of assets and liabilities other than investments in
securities at fiscal year end, resulting from fluctuations in exchange rates.

The Funds may enter into forward foreign currency contracts to protect
securities and related receivables and payables against fluctuations in future
foreign currency rates. A forward contract is an agreement to buy or sell
currencies of different countries on a specified future date at a specified
rate. Risk may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and is
generally limited to the amount of unrealized gain on the contracts, if any, at
the date of default. Risk may also arise from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. Contracts are
marked-to-market daily and the change in market value is recorded as unrealized
appreciation or depreciation. Realized gains or losses arising from such
transactions are included in net realized gains or losses from foreign currency
transactions. At December 31, 1996, the Chubb Global Income Fund had the
following open forward foreign currency contracts:

<TABLE>
<CAPTION>
U.S. Dollar
Foreign Currency Contracts to Value at Net Unrealized
Purchase Contracts Settlement Date Receive Cost 12/31/96 Appreciation
- ------------------- --------------- ------------ -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Japanese yen 06/20/97 68,447,501 $600,153 $604,049 $ 3,896
Great British pound 06/20/97 112,486 186,951 190,092 3,141
-------- -------- --------
$787,104 $794,141 $ 7,037
======== ======== ========
</TABLE>

23
<PAGE>

NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE B--SIGNIFICANT ACCOUNTING POLICIES--(Continued)

<TABLE>
<CAPTION>
U.S. Dollar Net Unrealized
Foreign Currency Contracts to Value at Appreciation/
Sale Contracts Settlement Date Deliver Cost 12/31/96 (Depreciation)
- ------------------- --------------- ------------ -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Belgium franc 06/20/97 6,703,724 $ 211,674 $ 211,557 $ 117
French franc 06/20/97 1,793,856 341,540 345,813 (4,273)
German mark 06/20/97 875,626 566,834 569,400 (2,566)
Italian lira 06/20/97 512,657,501 328,676 333,279 (4,603)
Netherlands guilder 06/20/97 1,091,449 633,348 632,970 378
Spanish peseta 06/20/97 18,727,367 139,155 142,635 (3,480)
---------- ---------- ---------
$2,221,227 $2,235,654 $ (14,427)
========== ========== =========
</TABLE>

SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on a trade date basis. Realized gains and losses on investments sold
are recorded on the basis of the first-in, first-out method. Interest income,
including where applicable, amortization of discount on investments, is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date, except for certain dividends from foreign securities, which are
recorded as soon as the Funds are informed of the dividend.

DIVIDENDS TO SHAREHOLDERS: Dividends to shareholders from net investment
income are declared daily and distributed monthly for the Chubb Money Market
Fund and the Chubb Government Securities Fund; declared and distributed
monthly for the Chubb Tax-Exempt Fund and the Chubb Global Income Fund;
declared and distributed quarterly for the Chubb Total Return Fund; and
declared and distributed annually for the Chubb Growth and Income Fund and
Chubb Capital Appreciation Fund. Dividends from net realized capital gains
are declared and distributed at least once annually. Dividends distributed to
shareholders are recorded on the ex-dividend date.

The Company distinguishes between dividends on a tax basis and a financial
reporting basis and only dividends in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated realized
gains.

FEDERAL INCOME TAXES: It is the policy of the Company for each Fund to
qualify as a regulated investment company by complying with the requirements
of the Internal Revenue Code applicable to regulated investment companies, by
distributing substantially all of its taxable earnings to its shareholders.
Therefore, no Federal tax provision is required.

24
<PAGE>

NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE C--INVESTMENTS

The cost of investment securities held on December 31, 1996 for Federal
income tax purposes is the same as for financial reporting purposes. As of
December 31, 1996, gross unrealized gains and losses were as follows:

Gross Gross Net
Unrealized Unrealized Unrealized
Gains Losses Gain
---------- ---------- -----------
Chubb Government Securities Fund ... $ 139,679 $ 100,367 $ 39,312
Chubb Total Return Fund ............ 5,398,116 298,103 5,100,013
Chubb Tax-Exempt Fund .............. 767,268 18,365 748,903
Chubb Growth and Income Fund ....... 9,167,605 725,132 8,442,473
Chubb Capital Appreciation Fund .... 918,486 54,460 864,026
Chubb Global Income Fund ........... 434,177 86,893 347,284

As of December 31, 1996, the Chubb Global Income Fund has an unrealized loss
on translation of assets and liabilities in foreign currencies of $7,327.

Purchases and sales of investment securities for the period ended December
31, 1996, other than short-term obligations, were as follows:

Proceeds
Cost of from
Investment Investment
Securities Securities
Purchased Sold
--------- ----------

Chubb Government Securities Fund ...... $18,235,177 $18,618,646
Chubb Total Return Fund ............... 11,312,655 6,752,763
Chubb Tax-Exempt Fund ................. 2,422,692 2,421,844
Chubb Growth and Income Fund .......... 18,850,044 14,790,459
Chubb Capital Appreciation Fund ....... 5,594,071 1,411,459
Chubb Global Income Fund .............. 9,408,098 8,460,224

At December 31, 1996, the Chubb Money Market Fund had $750 of accumulated
realized losses, for Federal income tax purposes, of which $66 expires in 2000,
$32 expires in 2001, and $652 expires in 2002. At December 31, 1996, the Chubb
Government Securities Fund had $419,684 of accumulated realized losses expiring
in 2002. These losses are available to be used to offset future realized capital
gains.

During the period from November 1, 1996 through December 31, 1996, the Chubb
Money Market Fund and the Chubb Tax-Exempt Fund incurred capital losses of $93
and $37, respectively. In addition, the Chubb Global Income Fund incurred a
foreign currency loss of $83,272. These losses are treated for Federal income
tax purposes as if they had occurred on January 1, 1997. As a result, the Chubb
Tax-Exempt Fund and the Chubb Global Income Fund made distributions, as required
by Internal Revenue Code Regulations, in excess of amounts recognized for
financial reporting purposes.

25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE D--MANAGEMENT AGREEMENTS AND EXPENSES

Each of the Funds has entered into an investment management agreement with Chubb
Asset Managers, Inc. ("Investment Manager"), a wholly-owned subsidiary of Chubb,
and Chubb Investment Advisory Corporation ("Investment Administrator"), a
wholly-owned subsidiary of Chubb Life.

Under the terms of the agreements, the Investment Manager is responsible for the
overall investment management of each Fund's portfolio, consistent with each
Fund's investment objectives, policies and restrictions. The Investment
Administrator provides certain administrative services and facilities which are
necessary for the Company to conduct its business.

The Company has entered into a distribution agreement under the Investment
Company Act of 1940 with Chubb Securities Corporation ("Distributor"). Under the
terms of the agreement, the Distributor will distribute the Company's shares
among investors and broker-dealers with which it has contracted to sell the
Company's shares. During the year ended December 31, 1996, the Distributor
received $933,597 in sales loads of which $741,540 was reallowed to
broker-dealers. Also, the Company has adopted a plan of distribution pursuant to
Rule 12b-1 that provides that the Company may, directly or indirectly, engage in
activities primarily intended to result in the sale of the Company's shares. The
maximum expenditure the Company may make under the plan will be .25% per annum
of the average daily net assets of the Chubb Money Market Fund and .50% per
annum of the average daily net assets of the Chubb Government Securities Fund,
Chubb Total Return Fund, Chubb Tax-Exempt Fund, Chubb Growth and Income Fund,
Chubb Capital Appreciation Fund and Chubb Global Income Fund. During the period
ended December 31, 1996, payments were made by the Company to the Distributor
under the plan of distribution in the amount of $261,904.

Investment management fees, which compensate both the Investment Manager and
Investment Administrator are computed at the following annual percentages of
average daily net asset value:

<TABLE>
<CAPTION>
Chubb Government Securities Fund
Chubb Total Return Fund
Chubb Tax-Exempt Fund
Chubb Growth and Income Fund
Chubb Money Chubb Capital Appreciation Fund
Market Fund Chubb Global Income Fund
------------------------------ ---------------------------------
Average Daily Investment Investment Investment Investment
Net Assets Manager Administrator Manager Administrator
---------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
First $200 Million ... 0.15% 0.35% 0.20% 0.45%
Next $1.1 Billion .... 0.14% 0.31% 0.19% 0.41%
Over $1.3 Billion .... 0.13% 0.27% 0.18% 0.37%
</TABLE>

The Company is responsible for certain expenses relating to the Company's
operations in addition to the fees described above, including: taxes, transfer
agent, legal, accounting, custodian, audit, printing, registration, directors,
security valuation and miscellaneous other expenses. For the year ended December
31, 1996, the rate for these expenses was 0.50% of

26
<PAGE>

NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE D--MANAGEMENT AGREEMENTS AND EXPENSES--(Continued)

the average daily net assets of the Chubb Money Market Fund, 0.93% of the
average daily net assets of the Chubb Government Securities Fund, 1.08% of the
average daily net assets of the Chubb Total Return Fund, 0.98% of the average
daily net asset of the Chubb Tax-Exempt Fund, 1.06% of the average daily net
assets of the Chubb Growth and Income Fund, 1.13% of the average daily net
assets of the Chubb Capital Appreciation Fund, and 1.23% of the average daily
net assets of the Chubb Global Income Fund. For the year ended December 31,
1996, the Investment Manager, Investment Administrator and Distributor waived
all, or a portion, of their fees. In addition, Chubb Life assumed a portion of
all other expenses.

NOTE E--SHAREHOLDERS' TRANSACTIONS

Following is a summary of transactions with shareholders for each Fund.

<TABLE>
<CAPTION>
Chubb Money Market Fund
-----------------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Shares Dollars Shares Dollars
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold .................... 11,445,668 $ 11,445,668 7,359,452 $ 7,359,452
Shares issued as reinvestment
of dividends ................. 394,000 394,000 356,904 356,904
Shares redeemed ................ (10,605,776) (10,605,776) (7,590,914) (7,590,914)
------------ ------------ ---------- ------------
Net increase ............... 1,233,892 $ 1,233,892 125,442 $ 125,442
============ ============ ========== ============
</TABLE>

<TABLE>
<CAPTION>
Chubb Government Securities Fund
-----------------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Shares Dollars Shares Dollars
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold .................... 413,101 $ 4,317,205 260,999 $ 2,694,700
Shares issued as reinvestment
of dividends ................ 62,283 649,238 64,593 670,221
Shares redeemed ................ (540,335) (5,633,692) (323,982) (3,364,598)
----------- ----------- -------- -----------
Net increase (decrease) .... (64,951) $ (667,249) 1,610 $ 323
=========== =========== ======== ===========
</TABLE>

<PAGE>

NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE E--SHAREHOLDERS' TRANSACTIONS--(Continued)

<TABLE>
<CAPTION>
Chubb Total Return Fund
-----------------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Shares Dollars Shares Dollars
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold .................... 597,305 $ 9,864,163 251,919 $ 3,841,601
Shares issued as reinvestment
of dividends ................ 115,858 1,997,200 154,693 2,317,850
Shares redeemed ................ (317,920) (5,314,942) (259,566) (3,903,767)
----------- ----------- -------- -----------
Net increase ............... 395,243 $ 6,546,421 147,046 $ 2,255,684
=========== =========== ======== ===========
</TABLE>

<TABLE>
<CAPTION>
Chubb Tax-Exempt Fund
-----------------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Shares Dollars Shares Dollars
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold .................... 345,568 $ 4,189,497 271,827 $ 3,241,348
Shares issued as reinvestment
of dividends ................ 59,320 717,135 64,458 771,519
Shares redeemed ................ (403,013) (4,869,610) (343,636) (4,094,231)
----------- ----------- -------- -----------
Net increase (decrease) .... 1,875 $ 37,022 (7,351) $ (81,364)
=========== =========== ======== ===========
</TABLE>

<TABLE>
<CAPTION>
Chubb Growth and Income Fund
-----------------------------------------------------------------
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Shares Dollars Shares Dollars
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold ................. 632,505 $ 12,434,470 360,343 $ 6,302,104
Shares issued as reinvestment
of dividends ............. 141,075 2,968,258 183,869 3,157,445
Shares redeemed ............. (428,191) (8,484,459) (239,731) (4,186,471)
------------ ------------ -------- ------------
Net increase ............ 345,389 $ 6,918,269 304,481 $ 5,273,078
============ ============ ======== ============
</TABLE>

<PAGE>

NOTES TO FINANCIAL STATEMENTS
CHUBB INVESTMENT FUNDS, INC.
December 31, 1996

NOTE E--SHAREHOLDERS' TRANSACTIONS--(Continued)

<TABLE>
<CAPTION>
Chubb Capital Appreciation Fund
-----------------------------------------------------------------
Period From
Year Ended September 1, 1995 to
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Shares Dollars Shares Dollars
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold .................... 356,581 $ 4,046,795 152,567 $ 1,564,589
Shares issued as reinvestment ..
of dividends ................. 10,013 130,064 913 9,484
Shares redeemed ................ (24,388) (279,708) (18) (236)
---------- ----------- ----------- -----------
Net increase ............... 342,206 $ 3,897,151 153,462 $ 1,573,837
========== =========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
Chubb Global Income Fund
-----------------------------------------------------------------
Period From
Year Ended September 1, 1995 to
December 31, 1996 December 31, 1995
------------------------------- ------------------------------
Shares Dollars Shares Dollars
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold .................... 89,229 $ 888,414 1,037,138 $ 10,321,849
Shares issued as reinvestment ..
of dividends ................. 62,431 625,986 11,482 116,885
Shares redeemed ................ (6,369) (64,324) (17) (168)
-------- ------------ ---------- ------------
Net increase ............... 145,291 $ 1,450,076 1,048,603 $ 10,438,566
======== ============ ========== ============
</TABLE>

NOTE F--ORGANIZATION COSTS

Costs incurred in connection with the initial organization of the Chubb
Capital Appreciation Fund and the Chubb Global Income Fund are being
amortized on the straight-line basis over a period of five years. At December
31, 1996, the balances reported as deferred organization costs are payable to
Chubb America Service Corp., an affiliated entity, and have been included as
a liability in the statement of assets and liabilities.

29
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year (A):

<TABLE>
<CAPTION>
Chubb Money Market Fund
-----------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year ................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

Income From Investment
Operations
Net investment income ............... 0.049 0.050 0.034 0.025 0.030
Net gains and
losses on securities (both
realized and unrealized) ...........
---------- ---------- ---------- ---------- ----------
Total from investment
operations ........................ 0.049 0.050 0.034 0.025 0.030

Less Distributions to
Shareholders
Dividends from net
investment income .................. (0.049) (0.050) (0.034) (0.025) (0.030)
Dividends in excess of
net investment income ..............
Distributions from capital
gains ..............................
Distributions in excess of
capital gains ......................
Returns of capital ..................
---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.049) (0.050) (0.034) (0.025) (0.030)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total Return (B) ...................... 4.86% 5.16% 3.41% 2.50% 3.00%
Ratios to Average Net Assets:
Expenses (C) ........................ 0.50% 0.50% 0.50% 0.50% 0.50%
Net investment income ............... 4.71% 5.05% 3.43% 2.48% 3.06%
Portfolio Turnover Rate (D) ........... N/A N/A N/A N/A N/A
Average Commission Rate Paid (E) ...... N/A
Net Assets, At End of Year ............ $8,854,016 $ 7,620,206 $ 7,494,743 $ 5,225,178 $ 4,212,869
</TABLE>

(A) The per share amounts which are shown have been computed based on the
average number of shares outstanding during each year.

(B) Total return assumes reinvestment of all dividends during the year and
does not reflect deduction of sales charge. Investment returns and principal
values will fluctuate and shares, when redeemed, may be worth more or less
than the original cost.

(C) All related party fees have been waived for the period and all other
expenses of the Fund have been assumed in part for 1996, 1995, 1994, 1993
and 1992 by Chubb Life. Had the fees not been waived and expenses not been
assumed, the ratios of expenses to average net assets would have been 1.21%
in 1996, 1.31% in 1995, 1.31% in 1994, 1.50% in 1993, and 2.38% in 1992,
pursuant to the most restrictive state limitation.

(D) There were no purchases and/or sales of securities other than short-term
obligations during the year. Therefore, the portfolio turnover rate has not
been calculated.

(E) During the year, the Fund 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.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:

<TABLE>
<CAPTION>
Chubb Government Securities Fund
-----------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year .................................. $ 10.780 $ 9.750 $ 10.710 $ 10.700 $ 11.160

Income From Investment
Operations
Net investment income ................. 0.623 0.636 0.607 0.770 0.766
Net gains and
losses on securities (both
realized and unrealized).............. (0.300) 1.030 (0.960) 0.199 0.021
------------ ------------ ------------ ------------ ------------
Total from investment
operations ........................... 0.323 1.666 (0.353) 0.969 0.787

Less Distributions to
Shareholders
Dividends from net
investment income .................... (0.623) (0.636) (0.607) (0.770) (0.766)
Dividends in excess of
net investment income
Distributions from capital
gains ................................ (0.170) (0.481)
Distributions in excess of
capital gains ........................ (0.019)
Returns of capital ....................
------------ ------------ ------------ ------------ ------------
Total distributions ................... (0.623) (0.636) (0.607) (0.959) (1.247)
------------ ------------ ------------ ------------ ------------
Net asset value, end of year ............ $ 10.480 $ 10.780 $ 9.750 $ 10.710 $ 10.700
============ ============ ============ ============ ============
Total Return (A) ........................ 3.19% 17.50% (3.34%) 9.29% 7.44%
Ratios to Average Net Assets:
Expenses (B) .......................... 0.93% 1.00% 1.00% 1.00% 1.00%
Net investment income ................. 5.94 6.16% 5.96% 7.04% 6.94%
Portfolio Turnover Rate ................. 140.94% 276.56% 113.36% 197.08% 310.29%
Average Commission Rate Paid (C) ........ N/A
Net Assets, At End of Year .............. $12,818,450 $13,886,478 $12,534,640 $14,679,255 $7,392,150

</TABLE>

(A) Total return assumes reinvestment of all dividends during the year and does
not reflect deduction of sales charge. Investment returns and principal
values will fluctuate and shares, when redeemed, may be worth more or less
than the original cost.

(B) A portion of all related party fees of the Fund have been waived for 1996,
1995, 1994 and 1993. All related party fees have been waived and all other
expenses of the Fund have been assumed in part for 1992 by Chubb Life. Had
the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.60% in 1996, 1.70% in
1995, 1.71% in 1994, 1.89% in 1993 and 2.50% in 1992, pursuant to the most
restrictive state limitation.

(C) During the year, the Fund held less than 10% of the value of its average
net assets in equity securities. Therefore, the Average Commission Rate
Paid had not been calcluated.

See notes to financial statements.

31
<PAGE>

CHUBB INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:

<TABLE>
<CAPTION>
Chubb Total Return Fund
-----------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year .................................. $ 15.960 $ 13.230 $ 15.010 $13.890 $13.850

Income From Investment
Operations
Net investment income ................. 0.370 0.373 0.373 0.405 0.382
Net gains and
losses on securities (both
realized and unrealized) ............. 2.321 3.586 (0.994) 1.529 0.577
----------- --------- -------- ------- -------
Total from investment
operations ........................... 2.691 3.959 (0.621) 1.934 0.959
Less Distributions to
Shareholders
Dividends from net
investment income .................... (0.370) (0.373) (0.373) (0.405) (0.382)
Dividends in excess of
net investment income
Distributions from capital
gains ................................ (0.871) (0.692) (0.786) (0.409) (0.537)
Distributions in excess of
capital gains ........................ (0.164)
Returns of capital ....................
----------- --------- -------- ------- -------
Total distributions ................... (1.241) (1.229) (1.159) (0.814) (0.919)
----------- --------- -------- ------- -------
Net asset value, end of year ............ $ 17.410 $ 15.960 $ 13.230 $15.010 $ 13.890
=========== ========= ======== ======= ========
Total Return (A) ........................ 17.04% 30.13% (4.21%) 14.03% 7.11%
Ratios to Average Net Assets:
Expenses (B) .......................... 1.08% 1.08% 1.00% 1.00% 1.00%
Net investment income ................. 2.26% 2.45% 2.66% 2.83% 2.97%
Portfolio Turnover Rate ................. 27.01% 57.62% 37.53% 66.15% 73.89%
Average Commission Rate Paid ............ $ 0.0700
Net Assets, At End of Year .............. $31,064,099 $22,171,326 $16,431,195 $14,360,086 $10,000,441
</TABLE>

(B) A portion of all related party fees of the Fund have been waived for 1996,
1995, 1994 and 1993. All related party fees have been waived and all other
expenses of the Fund have been assumed in part for 1992 by Chubb Life. Had
the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.59% in 1996, 1.70% in
1995, 1.73% in 1994, 1.93% in 1993, and 2.41% in 1992, pursuant to the most
restrictive state limitation.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS-(Continued)

For a share outstanding throughout the year:

<TABLE>
<CAPTION>
Chubb Tax-Exempt Fund
-----------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year .................................. $ 12.330 $ 11.220 $ 12.580 $ 11.740 $ 11.380

Income From Investment
Operations
Net investment income ................. 0.611 0.621 0.618 0.583 0.619
Net gains and
losses on securities (both
realized and unrealized).............. (0.137) 1.132 (1.360) 0.850 0.401
--------- --------- --------- --------- --------
Total from investment
operations ........................... 0.474 1.753 (0.742) 1.433 1.020
Less Distributions to
Shareholders
Dividends from net
investment income .................... (0.611) (0.621) (0.618) (0.583) (0.619)
Dividends in excess of
net investment income ................
Distributions from capital
gains ................................ (0.043) (0.010) (0.004) (0.041)
Distributions in excess of
capital gains ........................ (0.012) (0.006)
Returns of capital ....................
--------- --------- --------- --------- --------
Total distributions ................... (0.654) (0.643) (0.618) (0.593) (0.660)
--------- --------- --------- --------- --------
Net asset value, end of year ............ $ 12.150 $ 12.330 $ 11.220 $ 12.580 $ 11.740
========= ========= ========= ========= ========
Total Return (A) ........................ 4.00% 15.88% (5.97%) 12.42% 9.19%
Ratios to Average Net Assets:
Expenses (B) .......................... 0.98% 1.00% 1.00% 1.00% 1.00%
Net investment income ................. 5.00% 5.20% 5.21% 4.81% 5.40%
Portfolio Turnover Rate ................. 16.29% 7.39% 8.37% 1.55% 17.11%
Average Commission Rate Paid (C) ........ N/A
Net Assets, At End of Year .............. $15,061,382 $15,259,349 $13,973,939 $16,406,372 $ 9,250,893
</TABLE>

(B) A portion of all related party fees of the Fund have been waived for 1996,
1995, 1994 and 1993. All related party fees have been waived and all other
expenses of the Fund have been assumed in part for 1992 by Chubb Life. Had
the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.65% for 1996, 1.79% in
1995, 1.80% in 1994, 1.97% in 1993, and 2.42% in 1992, pursuant to the most
restrictive state limitation.

(C) During the year, the Fund held less than 10% of the value of its average
net assets in equity securities. Therefore, the Average Commission Rate
Paid had not been calcluated.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the year:

<TABLE>
<CAPTION>
Chubb Growth and Income Fund
-----------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
December December December December December
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year .................................. $ 18.580 $ 14.770 $ 16.700 $15.140 $14.830

Income From Investment
Operations
Net investment income ................. 0.250 0.204 0.247 0.277 0.214
Net gains and
losses on securities (both
realized and unrealized) ............. 3.931 5.042 (0.954) 2.039 0.794
-------- -------- -------- -------- --------
Total from investment
operations ........................... 4.181 5.246 (0.707) 2.316 1.008
Less Distributions to
Shareholders
Dividends from net
investment income .................... (0.250) (0.204) (0.247) (0.277) (0.214)
Dividends in excess of
net investment income
Distributions from capital
gains ................................ (1.471) (0.885) (0.976) (0.479) (0.484)
Distributions in excess of
capital gains ........................ (0.346)
Returns of capital .................... (0.001)
-------- -------- -------- -------- --------
Total distributions ................... (1.721) (1.436) (1.223) (0.756) (0.698)
-------- -------- -------- -------- --------
Net asset value, end of year ............ $ 21.040 $ 18.580 $ 14.770 $ 16.700 $ 15.140
======== ======== ======== ======== ========
Total Return (A) ........................ 22.50% 35.52% (4.26%) 15.29% 6.84%
Ratios to Average Net Assets:
Expenses (B) .......................... 1.06% 1.08% 1.00% 1.00% 1.00%
Net investment income ................. 1.29% 1.20% 1.66% 2.04% 1.82%
Portfolio Turnover Rate ................. 44.50% 37.59% 46.17% 81.96% 87.87%
Average Commission Rate Paid ............ $ 0.0700
Net Assets, At End of Year .............. $40,281,849 $29,144,161 $18,679,228 $14,885,337 $ 9,457,836
</TABLE>

(B) A portion of all related party fees of the Fund have been waived for 1996,
1995, 1994 and 1993. All related party fees have been waived and all other
expenses of the Fund have been assumed in part for 1992 by Chubb Life. Had
the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.58% for 1996, 1.69% in
1995, 1.71% in 1994, 1.92% in 1993 and 2.50% in 1992, pursuant to the most
restrictive state limitation.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the period:

Chubb Capital Appreciation Fund
---------------------------------------
Period From
Year September 1,
Ended 1995 through
December December
31, 1996 31, 1995
------------- ----------------
Net asset value, beginning of
period .......................... $ 10.400 $ 10.000

Income From Investment
Operations
Net investment income ........... 0.067 0.037
Net gains and
losses on securities (both
realized and unrealized)........ 2.796 0.422
------------ ------------
Total from investment
operations ..................... 2.863 0.459
Less Distributions to
Shareholders
Dividends from net
investment income .............. (0.067) (0.037)
Dividends in excess of
net investment income ..........
Distributions from capital
gains .......................... (0.206) (0.022)
Distributions in excess of
capital gains
Returns of capital ..............
------------ ------------
Total distributions ............. (0.273) (0.059)
------------ ------------
Net asset value, end of period .... $ 12.990 $ 10.400
============ ============
Total Return (A) .................. 27.53% 4.60% (C)
Ratios to Average Net Assets:
Expenses (B) .................... 1.13% 1.25% (C)
Net investment income ........... 0.86% 1.38% (C)
Portfolio Turnover Rate ........... 41.97% 2.73%
Average Commission Rate Paid ...... $ 0.0700
Net Assets, At End of Period ...... $ 6,440,571 $ 1,596,254

(B) A portion of all related party fees of the Fund have been waived, and a
portion of other expenses of the Fund have been assumed for 1996 and 1995.
Had the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.81% in 1996 and 2.50% in
1995, pursuant to the most restrictive state limitation.

See notes to financial statements.

<PAGE>

CHUBB INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS-(Continued)
For a share outstanding throughout the period:

Chubb Global Income Fund
-------------------------------------
Period From
Year September 1,
Ended 1995 through
December December
31, 1996 31, 1995
----------- ---------------
Net asset value, beginning of
period .......................... $ 10.210 $ 10.000

Income From Investment
Operations
Net investment income ........... 0.551 0.116
Net gains and
losses on securities (both
realized and unrealized) ....... 0.030 0.210
---------- ---------
Total from investment
operations ..................... 0.581 0.326
Less Distributions to
Shareholders
Dividends from net
investment income .............. (0.485) (0.116)
Dividends in excess of
net investment income .......... (0.066)
Distributions from capital
gains ..........................
Distributions in excess of
capital gains ..................
Returns of capital ..............
---------- ---------
Total distributions ............. (0.551) (0.116)
---------- ---------
Net asset value, end of period ..... $ 10.240 $ 10.210
========== =========
Total Return (A) ................... 5.95% 3.27% (D)
Ratios to Average Net Assets:
Expenses (B) ..................... 1.23% 1.75% (D)
Net investment income ............ 5.49% 4.48% (D)
Portfolio Turnover Rate ............ 80.70% 14.16%
Average Commission Rate Paid (C) ... N/A
Net Assets, At End of Period ....... $12,226,878 $10,705,562

(B) A portion of all related party fees of the Fund have been waived, and a
portion of other expenses of the Fund have been assumed for 1996 and 1995.
Had the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.68% in 1996 and 2.14% in
1995, pursuant to the most restrictive state limitation.

(C) During the year, the Fund held less than 10% of the value of its average
net assets in equity securities. Therefore, the Average Commission Rate
Paid had not been calcluated.

(D) Per share data and ratios calculated on an annualized basis.

See notes to financial statements.

<PAGE>

Report of Independent Auditors

To the Board of Directors and Shareholders
Chubb Investment Funds, Inc.

We have audited the accompanying statement of assets and liabilities of Chubb
Investment Funds, Inc. (the "Funds", comprising, respectively, the Chubb
Money Market Fund, Chubb Government Securities Fund, Chubb Total Return Fund,
Chubb Tax-Exempt Fund, Chubb Growth and Income Fund, Chubb Capital
Appreciation Fund, and Chubb Global Income Fund), including the related
schedules of investments, as of December 31, 1996, and the related statement
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended for all Funds,
except Chubb Capital Appreciation Fund and Chubb Global Income Fund, for
which the statement of changes in net assets and the financial highlights are
for the year ended December 31, 1996 and for the period from September 1,
1995 (Commencement of Operations) to December 31, 1995. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1996 by correspondence with the custodian
and brokers, or other appropriate auditing procedures where replies from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
each of the respective funds constituting Chubb Investment Funds, Inc. at
December 31, 1996, the results of their operations, the changes in their net
assets and the financial highlights for each of the periods indicated above,
in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
February 14, 1997
<PAGE>

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<PAGE>

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<PAGE>

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<PAGE>

[INSIDE BACK COVER]

This annual report has been prepared for shareholders of the Chubb Investment
Funds. It must be preceded or accompanied by a prospectus if used for
prospecting purposes. Always read the prospectus carefully before investing or
sending money.

[CHUBB LOGO]
CHUBB INVESTMENT FUNDS, INC.
Distributed by Chubb Securities Corporation
One Granite Place, Concord, New Hampshire 03301
1-800-452-4822

<PAGE>

[BACK COVER]

Chubb ---------------
Investment BULK RATE
FUNDS US POSTAGE PAID
One Granite Place PERMIT NO. 9
PO Box 515 BOSTON, MA
Concord, NH 03301 ---------------

Form 3-5914 Ed. 2/97