[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
