<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
June 30, 1997 - (Unaudited)
COMMON STOCKS
<C> <S> <C>
MARKET
SHARES VALUE
------ -----
COMMON STOCKS (65.04%)
AEROSPACE & DEFENSE (1.03%)
2,700 Raytheon Co. ................................... $137,700
---------
AIRCRAFT (1.45%)
1,860 Lockheed Martin Corp. .......................... 192,626
---------
ATHLETIC FOOTWEAR (1.58%)
3,600 Nike Inc. Cl B ................................. 210,150
---------
AUTOMOTIVE (1.16%)
4,100 Ford Motor Co. Del ............................. 154,775
---------
BANKING (4.82%)
5,400 Federal National Mortgage Assoc ................ 235,575
3,700 First Chicago NBD Corp. ........................ 223,850
3,300 Suntrust Banks Inc. ............................ 181,706
---------
641,131
---------
BUSINESS SERVICES (0.30%)
1,500 Dun and Bradstreet Corp. ....................... 39,375
---------
CAPITAL GOODS (0.99%)
2,400 Emerson Electric Co. ........................... 132,150
---------
CONSUMER PRODUCTS _ MISC. (1.28%)
4,600 American Greetings Corp. Cl A .................. 170,775
---------
DRUGS & HEALTH CARE (11.68%)
4,000 Abbott Labs .................................... 267,000
2,700 American Home Products Corp. ................... 206,550
3,800 Becton Dickinson & Co. ......................... 192,375
2,800 Bristol-Meyers Squibb .......................... 226,800
3,000 Columbia/HCA Healthcare Corp. .................. 117,937
2,600 Lilly, Eli & Co. ............................... 284,212
2,500 Merck & Co. Inc. ............................... 258,750
---------
1,553,624
---------
FOODS (4.23%)
4,600 Anheuser Busch Cos. Inc. ....................... 192,913
8,000 Archer Daniels Midland ......................... 188,000
3,950 Heinz H.J. Co. ................................. 182,194
---------
563,107
---------
COMMON STOCKS (continued)
MARKET
SHARES VALUE
------ -----
INDUSTRIALS (3.47%)
4,300 Browning Ferris Inds. Inc. ..................... $142,975
4,100 Schering Plough Corp. .......................... 196,287
3,800 Waste Management Inc. .......................... 122,075
---------
461,337
---------
INSURANCE (5.36%)
2,800 Chubb Corp ..................................... 187,250
900 General RE Corp. ............................... 163,800
5,650 Old Republic International Corp. ............... 171,266
4,100 Safeco Corp. ................................... 191,419
---------
713,735
---------
MANUFACTURING/PROCESSING (1.41%)
2,200 Phelps Dodge Corp. ............................. 187,412
MUTUAL FUNDS (1.44%)
69,406 Trinidad & Tobago Unit Trust Corp./First
Unit Scheme ................................ 191,922
PAPER PRODUCTS (1.27%)
3,400 Kimberly Clark Corp. ........................... 169,150
PETROLEUM (4.77%)
2,300 Amoco Corp. .................................... 199,956
4,200 Exxon Corp. .................................... 258,300
1,400 Shell Transportation and Trading ............... 176,050
---------
634,306
---------
RAILROADS (1.29%)
1,700 Norfolk Southern Corp .......................... 171,275
RETAIL (2.22%)
5,000 Gap Inc. ....................................... 194,375
8,200 K mart Corp.* .................................. 100,450
---------
294,825
---------
TECHNOLOGY (6.98%)
2,600 Compaq Computer Corp.* ......................... 258,050
3,800 Hewlett Packard Co. ............................ 212,800
1,700 Intel Corp. .................................... 241,081
2,400 International Business Machines Inc ............ 216,450
---------
928,381
---------
See notes to financial statements Page 1
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments (continued)
June 30, 1997 - (Unaudited)
COMMON STOCKS (continued)
MARKET
SHARES VALUE
------ -----
TOBACCO (1.26%)
13,075 Imperial Tobacco ............................... $167,523
TOYS (1.25%)
4,900 Mattel Inc. .................................... 165,988
UTILITIES (5.80%)
3,900 Cinergy Corp. .................................. 135,769
2,300 Motorola Inc. .................................. 174,800
7,200 Southern Co. ................................... 157,500
4,000 Telefones De Mexico ............................ 191,000
1,037 The Energy Group ............................... 43,943
3,100 Unicom Corp.* .................................. 68,975
---------
771,987
---------
TOTAL COMMON STOCKS
(Cost $6,172,873) ............................... 8,653,254
BONDS
PRINCIPAL MARKET
AMOUNT VALUE
------ -------
LONG TERM INVESTMENTS (32.52%)
U.S. GOVERNMENT SECURITIES (25.55%)
$350,000 U.S. Treasury Note 8.625%, due 08/15/97 ........ 351,532
300,000 U.S. Treasury Note 8.875%, due 11/15/97 ........ 311,438
300,000 U.S. Treasury Note 8.875%, due 02/15/99 ........ 313,125
300,000 U.S. Treasury Note 8.00%, due 08/15/99 ......... 311,156
500,000 U.S. Treasury Note 7.875%, due 11/15/99 ........ 518,594
200,000 U.S. Treasury Note 6.25%, due 05/31/00 ......... 200,188
300,000 U.S. Treasury Note 5.875%, due 02/15/04 ........ 290,719
400,000 U.S. Treasury Bond 9.375%, due 02/15/06 ........ 474,250
250,000 U.S. Treasury Bond 8.875%, due 08/15/17 ........ 304,453
100,000 U.S. Treasury Bond 8.125%, due 05/15/21 ........ 114,438
BONDS (continued)
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
$200,000 U.S. Treasury Bond 7.25%, due 08/15/22 ......... $208,750
---------
3,398,643
---------
BANKING (1.48%)
100,000 Nations Bank Corp. 6.50%, due 03/15/06 ......... 96,010
100,000 Norwest Corp. Med. Term Notes 7.125%,
due 04/01/00 ............................... 101,548
---------
197,558
---------
MORTGAGE BACK-CMO (4.15%)
74,961 FHLMC 8.00%, due 06/01/25 ...................... 76,765
116,922 FHLMC Gold 8.00%, due 10/01/10 ................. 120,320
131,782 FNMA 6.00%, due 02/01/09 ....................... 127,129
84,515 GNMA 7.00%, due 09/15/09 ....................... 84,959
141,843 GNMA 7.50%, due 03/15/26 ....................... 142,376
-----------
551,549
-----------
RETAIL (0.60%)
75,000 Walmart Stores Inc. 8.625%, due 04/01/01 ....... 80,057
-----------
UTILITIES (0.74%)
100,000 Rockwell Intl. Corp. Note 6.625%, due 06/01/05.. 98,584
----------
TOTAL LONG TERM INVESTMENTS
(Cost $4,286,295) ............................. 4,326,391
----------
SHORT TERM INVESTMENTS (5.53%)
735,127 Star Treasury Fund
(Cost $735,127) ............................... 735,127
----------
TOTAL INVESTMENTS
(Cost $11,194,295) 103.09% 13,714,772
Liabilities less other assets (3.09%) (411,157)
-----------
TOTAL NET ASSETS 100.00% $13,303,615
===========
<FN>
* Non-income Producing
</FN>
</TABLE>
Page 2 See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997 (Unaudited)
<S> <C>
ASSETS
Investments in securities, at value
(cost $11,194,295) ........................... $ 13,714,772
Dividends and interest receivable .................... 98,355
Receivable for fund shares sold ...................... 115,953
Other assets ......................................... 4,366
------------
Total assets ......................................... 13,933,446
------------
LIABILITIES
Payable for securities purchased ..................... 427,946
Payable for fund shares redeemed ..................... 25,715
Accrued adviser fee .................................. 20,414
Accrued distribution fee ............................. 26,104
Accrued legal fee .................................... 24,588
Other accrued expenses ............................... 105,064
------------
Total liabilities .................................... 629,831
------------
Net Assets ........................................... $ 13,303,615
============
NET ASSETS CONSIST OF:
Capital stock, $.01 par value; 2,000,000
shares authorized; 1,148,361 shares
outstanding .................................. $ 10,780,012
Distribution in excess of net
investment income ............................ (20,374)
Net realized gains on investments in excess
of distributions ............................. 23,499
Net unrealized appreciation on investments .......... 2,520,478
------------
Net Assets ....................................... $ 13,303,615
============
Net asset value, redemption and offering
price per share ($13,303,615/1,148,361) ...... $ 11.58
============
</TABLE>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INVESTMENT INCOME:
Interest ............................................. $ 135,012
Dividends ............................................ 79,072
----------
Total Investment Income .............................. 214,084
----------
EXPENSES:
Adviser fees ......................................... 41,401
Distribution fees .................................... 29,003
Legal fees ........................................... 24,726
Administrative fees .................................. 29,807
Custodian fees ....................................... 11,868
Audit fees ........................................... 8,902
Accounting services .................................. 11,260
Transfer agent fees .................................. 10,643
Printing expense ..................................... 16,898
Directors' fees and expenses ......................... 2,472
Service fees ......................................... 9,361
Other expenses ....................................... 13,655
----------
Total expenses ....................................... 209,996
----------
Net investment income ................................ 4,088
----------
REALIZED AND UNREALIZED GAINS
ON INVESTMENTS
Net realized gains on investments .................... 59,031
Net increase in unrealized appreciation
on investments ............................... 1,198,999
----------
Net gains on investments ............................. 1,258,030
----------
Net increase in net assets resulting
from operations .............................. $1,262,118
==========
See notes to financial statements. Page 3
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<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DEC. 31, 1996
----------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income .......................... $ 4,088 $ 136,722
Net realized gains on
investments ............................ 59,031 1,723,063
Net increase/(decrease) in
unrealized appreciation
on investments ......................... 1,198,999 (1,382,198)
------------ ------------
Net increase in net assets
resulting from operations .............. 1,262,118 477,587
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividend from net
investment income ...................... 0 (136,722)
Distribution in excess of
net investment income .................. 0 (7,820)
Distribution from net realized gains
on investments ......................... 0 (1,728,862)
Distribution in excess of net realized
gains on investments ................... 0 (29,733)
------------ ------------
Total dividends and distributions .............. 0 (1,903,137)
------------ ------------
FUND SHARE TRANSACTIONS:
Proceeds from shares sold ...................... 2,508,818 5,807,966
Dividends reinvested ........................... 0 1,777,784
Payment for shares redeemed .................... (599,351) (13,837,552)
------------ ------------
Net increase/(decrease) in net assets
from fund share transactions ........... 1,909,467 (6,251,802)
------------ ------------
Net increase/(decrease) in
net assets ............................. 3,171,585 (7,677,352)
NET ASSETS, BEGINNING OF
PERIOD ................................. 10,132,030 17,809,382
------------ ------------
NET ASSETS, END OF PERIOD ...................... $ 13,303,615 $ 10,132,030
============ ============
</TABLE>
CHACONIA INCOME & GROWTH FUND, INC.
Notes to Financial Statements
(Unaudited)
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 six months
ended June 30, 1997 were as follows:
Purchases....................... $2,464,718
Sales........................... 567,357
At June 30, 1997, the cost of securities for federal income tax purposes was
$11,194,295. Aggregate gross unrealized appreciation for all securities in which
there was an excess of value over tax cost was $2,616,157 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax
cost over value was $95,679.
- 4 -
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Notes to Financial Statements
(continued)
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 June 30, 1997, there were 2,000,000 shares authorized at $.01 par value.
<TABLE>
<CAPTION>
For the
six months ended For the
June 30, 1997 year ended
(Unaudited) Dec. 31, 1996
<S> <C> <C>
Shares sold........................... 230,620 474,665
Dividend reinvestment................. 0 170,632
Shares repurchased.................... (52,784) (1,142,602)*
177,836 (497,305)
<FN>
* During the year ended December 31, 1996 the Fund's largest shareholder
redeemed 1,065,612 shares representing it's entire holding.
</FN>
</TABLE>
===============================================================================
<TABLE>
<CAPTION>
Financial Highlights
For the period
For the May 11, 1993
six months (Commencement
ended For the For the For the of operations)
June 30, 1997 year ended, year ended, year ended through
(Unaudited) Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
----------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $10.44 $12.13 $ 9.94 $10.20 $10.00
Income from investment operations
Net investment income................... .00 + .13 .24 .13 .03
Net realized and unrealized
gains (losses) on investments...... 1.14 .55 2.47 (.13) .21
Total from investment operations............. 1.14 .68 2.71 .00 .24
Less dividends and distributions
Dividend from net investment income.......... .00 (.17) (.23) (.13) (.04)
Distribution in excess of net
investment income....................... .00 (.01) .00 + .00 + .00 +
Distribution from realized gains............. .00 (2.15) (.28) (.13) .00 +
Distribution in excess of net realized
gains on investments.................... .00 (.04) .00 .00 .00
Total dividends and distributions............ .00 (2.37) (.51) (.26) (.04)
Net asset value, end of period............... $ 11.58 $ 10.44 $ 12.13 $ 9.94 $ 10.20
Total returnbased on net asset value
per share............................... 23.31% 5.61% 27.16% 0% 2.40%
Ratios/Supplemental Data
Net assets, end of period (in thousands)..... $ 13,304 $ 10,132 $17,809 $12,315 $12,105
Ratios to Average Net Assets:
Expenses................................ 3.61% ** 2.84% 2.37% 2.87% 2.73% **
Net investment income................ 0.07% ** 1.03% 2.09% 1.25% .53% **
Portfolio turnover rate...................... 5.07% 72.91% 26.23% 40.13% .55%
Average commission rate per share ++......... $.0593 $.0613 N/A N/A N/A
- ----------
<FN>
** Annualized.
+ Less than $.01 per share
++ For fiscal years beginning on or after September 1, 1995, a portfolio is
required to disclose the average commission rate per share it paid for
trades on which commissions are charged.
</FN>
</TABLE>
- 5 -
<PAGE>
LETTER TO SHAREHOLDERS
CHACONIA INCOME & GROWTH FUND, INC.
August 29, 1997
Dear Shareholder, Enclosed please find the unaudited financial statements for
the period ended June 30, 1997.
The Chaconia Income and Growth Fund ("Fund") continues to adhere strictly to a
conservative policy of investing in higher quality securities, which are
expected to produce a competitive total return by way of current income and
capital appreciation. The Fund continues to be properly structured to achieve
its investment objectives in the ensuing quarters.
Finally, we appreciate your investment in the Fund and look forward to providing
additional information in the coming months.
If you have any questions, please contact the Fund at 1-800-368-3322.
Yours sincerely,
/s/ Clarry Benn
Mr. Clarry Benn
President
<PAGE>
CHACONIA
INCOME & GROWTH FUND
SEMI-ANNUAL REPORT
June 30, 1997
