<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1995
COMMON STOCKS
<C> <S> <C>
Market
Shares Value
COMMON STOCKS (61.12%)
Aircraft (3.20%)
4,000 Boeing Co. $ 313,500
3,260 Lockheed Martin Corp. 257,540
571,040
AUTOMOTIVE (0.98%)
6,000 Ford Motor Co. 174,000
BANKING (4.01%)
2,300 Federal National Mortgage Assoc. 285,488
4,800 First Chicago N B D Corp. 189,600
3,500 Suntrust Banks Inc. 239,750
714,838
BUSINESS SERVICES (1.48%)
3,500 Deluxe Corp. 101,500
2,500 Dun and Bradstreet Corp. 161,875
263,375
CAPITAL GOODS-MACHINERY (1.62%)
6,000 Compaq Computer Corp. 288,000
CHEMICALS (1.39%)
1,800 Dow Chemical Co. 126,675
4,000 Nalco Chemical Co. 120,500
247,175
CLOTHING (0.97%)
6,200 Liz Claiborne Inc. 172,050
DRUGS & HEALTH CARE (11.23%)
6,600 Abbott Labs 275,550
3,000 American Home Products Corp. 291,000
3,200 Bristol-Meyers Squibb 274,800
4,500 Columbia/HCA Healthcare Corp. 228,375
6,800 Lilly, Eli & Co. 382,500
5,300 Merck & Co. Inc. 348,475
COMMON STOCKS (continued)
Market
Shares Value
DRUGS & HEALTH CARE (continued)
8,500 Mylan Labs Inc. $ 199,750
2,000,450
ELECTRONICS (2.64%)
2,400 Emerson Electric Co. 196,200
5,800 Raytheon Co. 274,050
470,250
FOODS (7.22%)
3,200 Anheuser Busch Cos. Inc. 214,000
4,400 Fleming Cos. Inc. 90,750
8,550 Heinz H.J. Co. 283,219
2,800 Kellogg Co. 216,300
5,800 McDonalds Corp. 261,725
8,400 Tyson Foods Inc. Class A 219,450
1,285,444
INDUSTRIALS (3.13%)
8,000 Browning Ferris Inds. Inc. 236,000
9,300 Hanson Plc. ADR 141,825
6,000 WMX Technologies 179,250
557,075
INSURANCE (6.50%)
2,100 Chubb Corp. 203,175
1,500 General Re Corp. 232,500
3,500 Loews Corp. 274,313
5,000 Old Republic International Corp. 177,500
5,200 Safeco Corp. 179,400
1,900 Unitrin Inc. 91,200
1,158,088
MUTUAL FUNDS (2.35%)
175,406 Trinidad & Tobago Unit Trust Corp./
First Unit Scheme 418,782
See notes to financial statements
<PAGE>
COMMON STOCKS (continued)
Market
Shares Value
PAPER PRODUCTS (0.82%)
5,250 Westvaco Corp. $ 145,688
PETROLEUM (3.56%)
3,200 Amoco Corp. 230,000
2,900 Exxon Corp. 232,362
2,100 Shell Transportation and Trading 170,887
633,249
RAILROADS (1.20%)
2,700 Norfolk Southern Corp. 214,313
RETAIL (2.63%)
6,000 J C Penney Inc. 285,750
8,300 K mart Corp. 60,175
4,000 Melville Corp. 123,000
468,925
TECHNOLOGY (1.27%)
2,700 Hewlett Packard Co 226,125
TOBACCO (1.62%)
3,200 Philip Morris Cos. Inc. 289,600
UTILITIES (3.30%)
6,000 Cinergy Corp. 183,750
6,700 Telefonos De Mexico ADR 213,562
5,800 Unicom Corporation 189,950
587,262
TOTAL COMMON STOCKS
(Cost $8,822,393) 10,885,729
BONDS
Principal Market
Amount Value
BONDS (31.93%)
U.S. Government Securities (30.76%)
$ 250,000 U.S. Treasury Note
5.625% due 01/31/98 $ 252,109
600,000 U.S. Treasury Note
6.375% due 01/15/99 618,750
500,000 U.S. Treasury Note
8.00% due 08/15/99 544,063
250,000 U.S. Treasury Note
7.875% due 08/15/01 279,609
500,000 U.S. Treasury Note
6.25% due 02/15/03 522,030
750,000 U.S. Treasury Note
5.875% due 02/15/04 765,469
300,000 U.S. Treasury Note
7.50% due 02/15/05 340,593
650,000 U.S. Treasury Note
8.125% due 05/15/21 822,858
1,150,000 U.S. Treasury Note
7.25% due 08/15/22 1,331,844
5,477,325
CORPORATE BONDS (1.17%)
100,000 Norwest Corp. Med. Term Notes
7.125% due 04/01/00 105,267
100,000 Rockwell Intl. Corp. Note
6.625% due 06/01/05 104,081
209,348
TOTAL BONDS
(Cost $5,046,332) 5,686,673
SHORT TERM INVESTMENTS (6.52%)
1,160,380 Citibank Money Market Fund
(Cost $1,160,380) 1,160,380
TOTAL INVESTMENTS
(Cost $15,029,105) (99.57%) 17,732,782
Other assets less
liabilities (0.43%) 76,600
TOTAL NET ASSETS (100.00%) $ 17,809,382
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Statement of Assets and Liabilities
December 31, 1995
<S> <C>
Assets
Investments in securities, at value
(cost $15,029,105) $ 17,732,782
Dividends and interest receivable 145,879
Receivable for fund shares sold 760,283
Other assets 740
Total assets 18,639,684
Liabilities
Dividends payable 718,318
Payable for fund shares redeemed 5,177
Accrued adviser fee 26,935
Accrued distribution fee 23,251
Accrued legal fee 22,552
Other accrued expenses 34,069
Total liabilities 830,302
Net Assets $17,809,382
Net Assets Consist of:
Capital stock, no par value; unlimited
shares authorized; 1,467,830 shares
outstanding $15,122,346
Distribution in excess of net investment income (16,641)
Net unrealized appreciation on investments 2,703,677
Net Assets $17,809,382
Net asset value, redemption and offering
price per share ($17,809,382/1,467,830) $ 12.13
</TABLE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Statement of Operations
For the year ended December 31, 1995
<S> <C>
Investment Income:
Interest $ 396,433
Dividends 254,600
Total Investment Income 651,033
Expenses:
Adviser fees 97,881
Distribution fees 72,881
Legal fees 50,000
Administrative fees 43,755
Custodian fees 20,322
Audit fees 16,151
Accounting services 16,500
Transfer agent fees 13,500
Printing expense 9,483
Directors' fees and expenses 1,032
Other expenses 4,107
Total expenses 345,612
Net investment income 305,421
Realized and Unrealized Gains
on Investments
Net realized gains on investments 408,399
Net increase in unrealized appreciation
on investments 2,764,622
Net gains on investments 3,173,021
Net increase in net assets resulting
from operations $ 3,478,442
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Statements of changes in Net Assets
<S> <C> <C>
For the For the
year ended year ended
Dec. 31, 1995 Dec. 31, 1994
Operations:
Net investment income $ 305,421 $ 155,073
Net realized gains on investments 408,399 159,017
Net increase/(decrease) in unrealized
appreciation on investments 2,764,622 (307,619)
Net increase in net assets
resulting from operations 3,478,442 6,471
Dividends and Distributions to Shareholders:
Dividend from net investment income (305,421) (150,862)
Distribution in excess of net
investment income and capital gains (4,498) (12,143)
Distribution from capital gains (408,399) (159,017)
Total distributions payable (718,318) (322,022)
Fund Share Transactions:
Proceeds from shares sold 2,051,054 631,631
Dividends reinvested 914,562 35,272
Payment for shares redeemed (231,691) (140,923)
Net increase in net assets from fund
share transactions 2,733,925 525,980
Net increase in net assets 5,494,049 210,429
Net Assets, Beginning of Year 12,315,333 12,104,904
Net Assets, End of Year $ 17,809,382 $ 12,315,333
</TABLE>
CHACONIA INCOME & GROWTH FUND, INC.
Notes to Financial Statements
1. ORGANIZATION
Chaconia Income & Growth Fund, Inc. (the "Fund") is organized as a Maryland
Corporation, incorporated on October 24, 1990, and registered as an open-end,
non-diversified, management investment company under the Investment Company Act
of 1940, as amended. The Fund commenced operations on May 11, 1993.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
A. Security Valuation - Securities traded on national securities exchanges are
valued at the last sales price. Over-the-counter securities and listed
securities for which no sales price is available, are valued at the mean
between the latest bid and asked prices. Short-term securities which mature in
60 days or less are valued at cost, which, when combined with accrued interest
receivable, approximates value.
B. Security Transactions - Security transactions are accounted for on the trade
date (date the order to buy or sell is executed). Realized gains and losses on
security transactions are determined on the specific identification method.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily.
C. Federal Income Tax Status - No provision for federal income taxes is
required since the Fund intends to qualify as a regulated investment company
and distribute all of its taxable income to its shareholders.
D. Dividends and Distributions to Shareholders - The Fund records dividends and
distributions to shareholders on the ex-dividend date.
E. Other - The fund may periodically make reclassifications among certain of
its capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulations which may differ from generally accepted accounting
principles.
3. INVESTMENT TRANSACTIONS:
Investment transactions, excluding short-term investments, for the year ended
December 31, 1995 were as follows:
Purchases......................$ 4,688,354
Sales.......................... 3,716,624
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Notes to Financial Statements
(continued)
At December 31, 1995, the cost of securities for federal income tax purposes
was $15,029,105. Aggregate gross unrealized appreciation for all securities in
which there was an excess of value over tax cost was $3,127,749 and aggregate
gross unrealized depreciation for all securities in which there was an excess
of tax cost over value was $424,072.
4. INVESTMENT MANAGEMENT AGREEMENT:
The Fund has an investment advisory and management agreement with Invesco
Capital Management, Inc. ("Adviser"). Under this agreement, the Adviser provides
the Fund with investment advisory and management services for which the Fund
pays a fee at an annual rate of the greater of $50,000 or 0.75% of the portion
of the daily net assets not exceeding $10 million; 0.50% of the portion of the
daily net assets exceeding $10 million but not exceeding $20 million and 0.25%
of the portion of the daily net assets exceeding $20 million.
5. DISTRIBUTION FEES:
The Board of Directors has adopted a Distribution Plan applicable to the Fund
under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder. Pursuant to the
Plan, registered broker-dealers and qualified recipients will be reimbursed by
the Fund for distribution expenditures up to a limit of 0.50% of 1% on an
annual basis of the Fund's average daily net assets.
6. FUND SHARE TRANSACTIONS:
At December 31, 1995, there were 2,000,000 shares authorized at $.01 par value.
<TABLE>
<S> <C> <C>
For the For the
year ended year ended
Dec. 31, 1995 Dec. 31, 1994
Shares sold 170,791 62,615
Dividend reinvestmment 79,702 3,458
Shares repurchased (21,210) (13,880)
229,283 52,193
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
<S> <C> <C> <C>
For the period
May 11, 1993
(Commencement
For the For the of operations)
year ended year ended through
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
Net asset value, begining of period $ 9.94 $10.20 $10.00
Income from investment operations
Net investment income .24 .13 .03
Net realized and unrealized
gains (losses) on investments 2.47 (.13) .21
Total from investment operations 2.71 .00 .24
Less dividends and distributions
Dividend from net investment income (.23) (.13) (.04)
Distribution in excess of net
investment income .00 + .00 + .00 +
Distribution from realized gains (.28) (.13) .00 +
Total dividends and distributions (.51) (.26) (.04)
Net asset value, end of period $ 12.13 $ 9.94 $ 10.20
Total return based on net asset
value per share 27.16% 0% 2.40%
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $ 17,809 $ 12,315 $ 12,105
Ratios to Average Net Assets:
Expenses 2.37% 2.87% 2.73% **
Net investment income 2.09% 1.25% .53% **
Portfolio turnover rate 26.23% 40.13% .55%
<FN>
** Annualized.
+ Less than $.01 per share
</FN>
</TABLE>
See notes to financial statements
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and
Board of Directors of
Chaconia Income & Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Chaconia Income & Growth Fund, Inc., including the schedule of investments, as
of December 31, 1995, 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 two years
in the period then ended and for the period from May 11, 1993 (commencement of
operations) to December 31, 1993. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian. 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
Chaconia Income & Growth Fund, Inc. as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods referred to above, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
February 19, 1996
<PAGE>
LETTER TO SHAREHOLDERS
CHACONIA INCOME & GROWTH FUND, INC.
February 22, 1996
Dear Shareholder,
We are happy once more to report on the financial and investment performance of
Chaconia Income & Growth Fund Inc. (the "Fund") for the fiscal year ended
December 31, 1995. The Board is pleased with the performance of the Fund during
the period and I hope that shareholders are equally satisfied with the returns
achieved in this second full year of the operation of the Fund. We enclose for
your information and review the audited financial statements for the year ended
December 31, 1995.
Market Overview
The US equity markets produced a terrific result in 1995: the S&P 500 recorded
its best performance since 1958. Almost all the industry sectors performed well
for the year, with healthcare, financial services, and technology up the most.
Significantly, your Chaconia portfolio produced very strong results without a
heavy weighting in the volatile technology sector. According to Lipper, a
preeminent performance evaluation service, the average U.S. stock fund was up
30.2% compared with 36.0% for the stocks in the Chaconia Growth & Income Fund.
A confluence of economic factors combined to produce the 1995 scenario. The
demand for equities was at a record level, as measured by net inflows to mutual
funds, this broke the 1993 record of $91 billion by more than 15%. Meanwhile
the supply of equities declined, as share buybacks and mergers significantly
exceeded new issues. The US economy grew at 3.0%, inflation remained under
3.0%, and corporate profits increased over 20%. This permitted the Federal
Reserve to reverse its position from one of tightening to one of easing. This
produced a 2% decline in long-term interest rates; the result higher stock
valuations.
Strong performance by the major averages concealed a rather narrow market. The
major indexes showed significantly better performance on a capitalization-
weighted basis than on an equal-weighted basis. The largest 20 US stocks on a
capitalization basis produced 30% of the return for the S&P 500.
Despite the outstanding performance of the past year, INVESCO (the "Investment
Adviser") remains constructive on the U.S. equity market. The Investment
Adviser expects stocks to produce returns consistent with their long-term
average. As a residual of their bottom-up stock selection approach, the
Chaconia Fund continues to overweight consumer discretionary, consumer stable,
and finance stocks while underweighting capital goods and energy stocks.
Chaconia continues to dispatch its investment process with a keen eye to
maintaining less than market risk.
The Board wishes to thank INVESCO for the excellent job they are doing in
managing the portfolio. Further, we are indeed grateful to our shareholders
for the confidence they have reposed in the Board and the Fund. We look forward
to Chaconia producing strong, risk-adjusted results in 1996.
/s/ Rolston Nelson
Mr. Rolston Nelson
Chairman
/s/ E. Henry Sealy
Mr. E. Henry Sealy
President
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN CHACONIA FUND & THE BENCHMARK
SINCE INCEPTION OF 5/11/93
(Performance Graph Here)
This graph compares the Fund against the a Benchmark comprised of an equal
weighting between the S&P 500 and LBGC Bond Index. The Value for the
Fund and the comparative Benchmark at 12/31/95 are:
CHACONIA INCOME & GROWTH FUND $13,918
Benchmark $13,470
(end of graph)
Annualized Return
1 Year 3 Year Since Inception
27.16% N/A 11/42%
Past performance in not predictive of future performance.
Benchmark represents an index which consists of an equal weighting between
the S&P 500 and the LBGC Bond Index.
NA Means not applicable since the Fund began 5/11/93.
Chaconia's performance is gross of fees.
<PAGE>
CHACONIA
INCOME & GROWTH FUND
ANNUAL REPORT
December 31, 1995
