[Federal Register Volume 64, Number 197 (Wednesday, October 13, 1999)]
[Notices]
[Pages 55502-55503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26671]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24074; 812-11762]


Van Eck/Chubb Funds, Inc. and Chubb Asset Managers, Inc.; Notice 
of Applicants

October 6, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of an application under section 17(b) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 17(a) 
of the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit Van Eck/
Chubb Growth and Income Fund, a series of Van Eck/Chubb Funds, Inc. 
(``Company''), to acquire the assets and liabilities of Van Eck/Chubb 
Capital Appreciation Fund, also a series of Van Eck/Chubb Funds, Inc. 
(the ``Reorganization''). Because of certain affiliations, applicants 
may not rely on rule 17a-8 under the Act.

APPLICANTS: Company and Chubb Asset Managers, Inc. (``Adviser'').

FILING DATES: The application was filed on August 27, 1999. Applicants 
have agreed to file an amendment to the application during the notice 
period, the substance of which is reflected in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief will be issued unless the SEC orders a hearing. Interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicants with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on October 
28, 1999, and should be accompanied by proof of service on applicants 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549-0609. Applicants: Company, 99 Park Avenue, New York, N.Y. 10016; 
Adviser, 15 Mountain View Road, Warren N.J. 07059.

.FOR FURTHER INFORMATION CONTACT: Susan K. Pascocello, Senior Counsel, 
at (202) 942-0674, or Michael W. Mundt, Branch Chief, at (202) 942-0564 
(Office of Investment Company Regulation, Division of Investment 
Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 
20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. The Company, a Maryland corporation, is registered under the Act 
as an open-end management investment company. Van Eck/Chubb Capital 
Appreciation Fund (``Capital Appreciation Fund'') and Van Eck/Chubb 
Growth and Income Fund (``Growth and Income Fund,'' together with 
Capital Appreciation Fund, the ``Funds'') are series of the Company. 
The Adviser, a Delaware corporation, serves as investment adviser to 
the Funds and is registered as an investment adviser under the 
Investment Advisers Act of 1940. The Adviser is a wholly-owned 
subsidiary of The Chubb Corporation (``Chubb''), which owned in excess 
of 25% of the outstanding shares of each Fund as of July 1999.
    2. On May 13, 1999, the board of directors of the Company (the 
``Board''), including all of the directors who are not ``interested 
persons,'' as defined in section 2(a)(19) of the Act (``Independent 
Directors''), unanimously approved a plan of reorganization (the 
``Reorganization Plan'') under which the Growth and Income Fund will 
acquire the assets and liabilities of the Capital Appreciation Fund in 
exchange for Growth and Income Fund shares. Each shareholder of the 
Capital Appreciation Fund will receive shares of the Growth and Income 
Fund having an aggregate net asset value equal to the aggregate net 
asset value of the capital Appreciation Fund's shares held by that 
shareholder, as determined at the close of the business day next 
preceding the closing date of the Reorganization, currently anticipated 
to occur on November 1, 1999. Portfolio securities of the Funds will be 
valued in accordance with the valuation procedures described in each 
Fund's current prospectus and statement of additional information. As 
soon as practicable after the closing date, Capital Appreciation Fund 
will liquidate and distribute pro rata to its shareholders the Growth 
and Income Fund shares. No sales charges will be imposed in connection 
with the Reorganization.
    3. Applicants state that the investment objectives and policies of 
the Growth and Income Fund are similar to those of the Capital 
Appreciation Fund. The Funds each offer one class of shares sold with a 
maximum initial sales charge of 5.75% or with no sales charge for 
purchases that equal or exceed $1,000,000. Shares of both funds are 
sold subject to similar distribution plans adopted pursuant to rule 
12b-1 under the Act.
    4. The Board, including all of the Independent Directors, 
determined that the Reorganization is in the best interests of each 
Fund, and that the interests of the existing shareholders of each Fund 
would not be diluted by the Reorganization. In assessing the 
Reorganization, the Board considered various factors, including: (a) 
The compatibility of each Fund's investment objective, policies and 
restrictions, and shareholder services; (b) the terms and conditions of 
the Reorganization; (c) the expense ratios of each Fund; (d) the tax-
free nature of the Reorganization; and (e) potential economies of scale 
to be gained from the Reorganization. All Reorganization expenses will 
be borne by Capital Appreciation Fund, as determined by its Board.
    5. The Reorganization is subject to a number of conditions, 
including that: (a) The Reorganization Plan is approved by the Board 
and the shareholders of Capital Appreciation Fund; (b) the Funds 
receive an opinion of counsel that the Reorganization will be tax-free; 
(c) applicants receive exemptive relief from the SEC as requested in 
the

[[Page 55503]]

application; (d) the Company declares and pays a dividend to the 
shareholders of Capital Appreciation Fund which distributes all of the 
Fund's taxable income for the taxable years ending at or prior to the 
closing; and (e) a registration statement on Form N-14 shall have been 
filed with the SEC and declared effective. The Reorganization Plan may 
be terminated by either Fund if its Board determines that circumstances 
have changed to make the Reorganization inadvisable. Applicants agree 
not to make any material changes to the Reorganization Agreement 
without prior SEC approval.
    6. A registration statement on Form N-14 was filed with the SEC on 
June 28, 1999, and became effective on August 11, 1999. Proxy 
solicitation materials were mailed to Capital Appreciation Fund 
shareholders on August 12, 1999, and definitive proxy materials have 
been filed with the SEC. A special meeting of Capital Appreciation Fund 
shareholders was held on August 27, 1999, at which the shareholders 
approved the Reorganization Plan.

Applicants' Legal Analysis

    1. Section 17(a) of the Act generally prohibits an affiliated 
person of a registered investment company, or an affiliated person of 
such a person, acting as principal, from selling any security to, or 
purchasing any security from, the company. Section 2(a)(3) of the Act 
defines an ``affiliated person'' of another person to include (a) any 
person directly or indirectly owning, controlling, or holding with 
power to vote 5% or more of the outstanding voting securities of the 
other person; (b) any person 5% or more of whose securities are 
directly or indirectly owned, controlled, or held with power to vote by 
the other person; (c) any person directly or indirectly controlling, 
controlled by or under common control with the other person; and (d) if 
the other person is an investment company, any investment adviser of 
that company.
    2. Rule 17a-8 under the Act exempts from the prohibitions of 
section 17(a) mergers, consolidations, or purchases or sales of 
substantially all of the assets of registered investment companies that 
are affiliated persons, or affiliated persons of an affiliated person, 
solely by reason of having a common investment adviser, common 
directors, and/or common officers, provided that certain conditions set 
forth in the rule are satisfied. Applicants believe that they may not 
rely on rule 17a-8 in connection with the Reorganization because the 
Funds may be deemed to be affiliated by reasons other than those set 
forth in the rule. Applicants state that Chubb, which owns the Adviser, 
owns more than 25% of the outstanding voting securities of each of the 
Funds.
    3. Section 17(b) of the Act provides that the SEC may exempt a 
transaction from the provisions of section 17(a) if the evidence 
establishes that the terms of the proposed transaction, including the 
consideration to be paid, are reasonable and fair and do not involve 
overreaching on the part of any person concerned, and that the proposed 
transaction is consistent with the policy of each registered investment 
company concerned and with the general purposes of the Act.
    4. Applicants request an order under section 17(b) of the Act 
exempting them from section 17(a) to the extent necessary to complete 
the Reorganization. Applicants submit that the Reorganization satisfies 
the standards of section 17(b) of the Act. Applicants believe that the 
terms of the Reorganization are fair and reasonable and do not involve 
overreaching. Applicants state that the Reorganization will be based on 
the Funds' relative net asset values. In addition, applicants state 
that the Board, including all of the Independent Directors, determined 
that the participation of each Fund in the Reorganization is in the 
best interests of each Fund and that such participation will not dilute 
the interests of shareholders of each Fund.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-26671 Filed 10-12-99; 8:45 am]
BILLING CODE 8010-01-M