CHACONIA INCOME & GROWTH FUND INC, N-1A/A, 1997-10-31

CHACONIA INCOME & GROWTH FUND INC
N-1A/A, 1997-10-31

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<PAGE> 1

As filed with the Securities and Exchange Commission on October 31, 1997

Registration Nos. 33-37426
and 811-6194

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A/A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. [ ]
---

Post-Effective Amendment No. 12 [X]
------

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Post-Effective Amendment No. 12 [X]
----

(Check appropriate box or boxes)
- --------------------------------------------------------------------------------

THE CHACONIA INCOME & GROWTH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o American Data Services, Inc.
The Hauppauge Corporate Center, 150 Motor Parkway, Suite 109,
Hauppauge, New York 11788
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: 516-951-0500 or
1-800-368-3322

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The Corporation Trust Company
32 South Street
Baltimore, MD 21202
(Name and Address of Agent for Service)
Copies to:
Ulice Payne, Jr., Esq.
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.
1000 North Water Street, Suite 2100, Milwaukee, WI 53202
414-298-8233
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Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.

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

It is proposed that this filing will become effective on October 31, 1997
pursuant to paragraph (b) of Rule 485.

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<PAGE> 2

Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940,
registrant hereby elects to register an indefinite number of shares of its
securities under The Securities Act of 1933. Registrant has filed a Rule
24(f)-2 Notice within six months of the fiscal year ended December 31.

<PAGE> 3

THE CHACONIA INCOME & GROWTH FUND, INC.

Prospectus October 31, 1997

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C>
Cross-Reference Sheet 3

Cover Sheet 5

Summary of Fund Expenses 6

Prospectus Summary 8

Investment Objective and Policies 9

Basic Investment Techniques 10

Certain Investment Strategies and Special Risk Considerations 13

Management 14

How to Purchase Shares 16

Distribution Plan and Service Fees 17

How to Redeem Shares 17

Retirement Plans 19

Dividends, Distributions and Taxes 19

General Information 21
</TABLE>

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

No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus,
and if given or made, such information or representation may not be relied upon
as being authorized by the Fund, the Advisor, certain registered broker-dealers
("selected broker-dealers") or any affiliate thereof. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy in any state
to any person to whom it is unlawful to make such offer in such state.

<PAGE> 4

THE CHACONIA INCOME & GROWTH FUND, INC.

Cross-Reference Sheet
(as required by Rule 495)

Form N-1A Item
Part A
Prospectus Caption

<S> <C>
1 Cover Page Cover Page
2 Synopsis Summary of Fund Expenses;
Prospectus Summary
3 Condensed Financial Information Not Applicable
4 General Description of Registrant Investment Objective and Policies;
The Fund and Its Management;
Cover Page; Investment
Restrictions; Prospectus Summary
5 Management of the Fund Management; Back Cover; Investment
Objective and Policies
6 Capital Stock and Other Securities Dividends, Distributions and
Taxes; General Information
7 Purchase of Securities Being Offered How to Purchase Shares
8 Redemption or Repurchase How to Redeem Shares
9 Pending Legal Proceedings Legal Proceedings

Part B

Statement of Additional Information Caption

10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and History Management
13 Investment Objectives and Policies Investment Objectives and
Policies; Investment
Restrictions; Portfolio
Transactions and Brokerage
14 Management of the Fund Management
15 Control Persons and Principal Holders
of Securities Directors and Officers
16 Investment Advisory and Other Services Management
17 Brokerage Allocation and Other
Practices Portfolio Transactions and
Brokerage
18 Capital Stock and Other Securities Prospectus-General Information
19 Purchase, Redemption and Pricing of
Securities Being Offered How to Purchase Shares; How to
Redeem Shares
20 Tax Status Dividends, Distributions and
Taxes
21 Underwriters Not applicable
22 Calculation of Performance Data Not applicable
23 Financial Statements Financial Statements

</TABLE>

<PAGE> 5

Part C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

<PAGE> 6

DATED OCTOBER 31, 1997

THE CHACONIA INCOME & GROWTH FUND, INC.

c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Suite 109
Hauppauge, NY 11788

1-800-368-3322

The Chaconia Income & Growth Fund, Inc. (the "Fund") is an open-end,
nondiversified management investment company which seeks high current income
and capital appreciation. It seeks to meet its objective by investing the
Fund's assets in: U.S. Government securities including U.S. Treasury
obligations and obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, investment grade corporate bonds, investment grade foreign
government bonds, equity securities of U.S., Canadian, British and Trinidad and
Tobago companies, the First and Second Unit Schemes (the "Schemes") of the
Trinidad and Tobago Unit Trust Corporation, certificates of deposit and money
market funds. The minimum initial investment is $250. Subsequent investments
will be a minimum of $100, and stockholders have the option of making
subsequent purchases through a continuing automatic transfer plan. (See "How
to Purchase Shares"). For further information, contact the Fund at the address
or telephone number shown above. There can be no assurance that the Fund's
investment objective will be achieved.

INVESCO CAPITAL MGMT. INC. (the "Investment Manager") serves as Investment
Manager to the Fund. The Investment Manager receives a management fee from the
Fund and may be reimbursed by the Fund for certain distribution expenses in
connection with a Rule 12b-1 distribution plan.

This prospectus concisely sets forth information a prospective investor
should know about the Fund before investing. A Statement of Additional
Information about the Fund and an Annual Report to Shareholders of the Fund has
been filed with the Securities and Exchange Commission and is available upon
request and without charge by calling or writing the Fund at the above address
or by contacting certain registered broker-dealers ("selected broker-dealers").
The "Statement of Additional Information" is dated October 31, 1997 and is
incorporated by reference into this Prospectus in its entirety.

_________________________________________

Investors are advised to read this Prospectus and retain it for future
reference.
_________________________________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<PAGE> 7

SUMMARY OF FUND EXPENSES

Shareholder Transaction Expenses:

<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price) None
Deferred Sales Load (as a percentage of
original purchase price or redemption
proceeds, as applicable) None
Redemption Fees (as a percentage of
amount redeemed) None
Exchange Fee None

Annual Fund Operating Expenses
(as a percentage of average net assets):

Management Fees(a) (variable--as a
percentage of average daily net assets) 0.68%
12b-1 Fees 0.50%
Service Fees(b) 0.00%
Other Expenses 1.97%
Total Fund Operating Expenses(a)(b) 3.15%
</TABLE>

(a)The management fee will vary depending upon the Fund's average daily
net assets and will be the greater of $50,000 or 0.75% of 1% on the first $10
million, 0.50% of 1% on the next $10 million and 0.25% of 1% over $20 million
of the Fund's average daily net assets. Total Fund operating expenses will
vary depending upon the management fee.

(b)The service fees are payments made by the Fund to registered
broker-dealers for personal service and/or the maintenance of shareholder
accounts. No service fee payments have been earned or paid to date, but
service fees could be paid in the future by the Fund up to 0.25% of 1% of the
Fund's net assets. The total Fund Operating Expense ratio is 3.15% as of
September 30,
1997.

<TABLE>
<CAPTION>
Example 1 year 3 years 5 years 10 years
------- ------ ------- ------- --------

<S> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000 investment, assuming
(i) 5% annual return and
(ii) redemption at the end of
each time period: $32 $ 97 $165 $346

</TABLE>

The purpose of this table is to assist the investor in understanding the
various costs and expenses of an investment in the Fund. The example should
not be considered a representation of past or future expenses; actual expenses
may be greater or less than those shown.

<PAGE> 8
FINANCIAL HIGHLIGHTS

The following Financial Highlights for a share of beneficial interest
outstanding throughout the period shown has been audited by Coopers & Lybrand,
L.L.P., independent accountants, whose most recent report on the financial
statements appears in the Fund's annual report, as filed with the Securities
and Exchange Commission (the "SEC") on February 27, 1997. The Fund's
Semi-Annual Report to Shareholders for the period ended June 30, 1996 was filed
with the SEC on August 29, 1997. This table should be read in conjunction with
the financial statements and notes thereto which are contained in such annual
and semiannual reports.

<TABLE>
<CAPTION>
1997(1) 1996 1995 1994 1993
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period $10.44 $12.13 $9.94 $10.20 $10.00
Income from investment operations:
Net investment income 0.02 0.13 0.24 0.13 0.03
Net realized and unrealized gain (loss) on
investments 1.93 0.55 2.47 (0.13) 0.21
Total from investment operations 1.95 0.68 2.71 0.00 0.24
Less distributions:
Dividend from net investment income 0.00 (0.17) (0.23) (0.13) (0.04)
Distribution in excess of net investment
income and realized gains 0.00 (0.01) 0.00(2) 0.00(2) 0.00(2)
Distribution from realized gains 0.00 (2.15) (0.28) (0.13) 0.00(2)
Distribution in excess of net realized gains on
investments 0.00 (0.04) 0.00 (0.00) 0.00
Total distributions 0.00 (2.37) (0.51) (0.26) (0.04)
Net asset value, end of period $12.39 $10.44 $12.13 $9.94 $10.20
Total return based on net asset value per share 25.81%(3) 5.61% 27.16% 0% 2.40%
Ratios/supplemental data:
Net assets, end of period (in thousands) $15,448 $10,132 $17,809 $12,315 $12,105
Ratios to average net assets:
Expenses 3.15%(3) 2.84% 2.37% 2.87% 2.73%(3)
Net investment income 0.25%(3) 1.03% 2.09% 1.25% 0.53%(3)
Portfolio turnover rate 11.04% 72.91% 26.23% 40.13% 0.55%
Average commission rate per share(4) $.0572 $.06131 N/A N/A N/A

</TABLE>

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

1. Unaudited financial numbers for the period January 1, 1997 through
September 30, 1997.

2. Less than $.01 per share.

3. Annualized.

4. 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.

<PAGE> 9

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus:

THE FUND: The Fund is a Maryland corporation, incorporated on October 24,
1990, and registered as a open-ended, nondiversified, management investment
company under the Investment Company Act of 1940 ("1940 Act").

INVESTMENT OBJECTIVE: The Fund's investment objective is to seek high
current income and capital appreciation. It seeks to meet its objective by
investing the Fund's assets in: U.S. Government securities including U.S.
Treasury obligations and obligations issued or guaranteed by U.S. Government
agencies or instrumentalities, investment grade corporate bonds, investment
grade foreign government bonds, equity securities of U.S., Canadian, British
and Trinidad and Tobago companies, American Depository Receipts ("ADRs"), the
Schemes of the Trinidad and Tobago Unit Trust Corporation, certificates of
deposit and money market funds. Under normal market conditions, the Fund will
maintain a level of at least 25% of its total assets invested in debt
securities and at least 25% of its total assets invested in equity securities.
For purposes of this investment policy, equity securities are defined as:
common stocks, preferred stocks, warrants, stock rights, convertible bonds and
convertible debentures.

There is no assurance that the Fund will achieve its investment objective.
The investment objective of the Fund and its investment restrictions described
in the Statement of Additional Information are fundamental and may not be
changed without stockholder approval. Its other investment policies may be
changed by the Board of Directors without stockholder approval.

INVESTMENT RISKS: All investments, including mutual funds, have risks and
no investment is suitable for all investors. The Fund may invest in both large
and small companies. Investment in small companies involve greater risk than
is customarily associated with more established companies. The Fund may invest
in short, medium or long term interest bearing obligations which have the risk
of principal fluctuation due to changing interest rates and the ability of the
issuer to repay the obligation at maturity. The Fund may invest in securities
of companies and governments of foreign nations that involve certain risks
which are in addition to the usual risks inherent in U.S. investments.

MANAGEMENT AND FEES: The Investment Manager is compensated for its
services and its related expenses at an annual rate of the greater of $50,000
or 0.75 of 1% on first $10 million, 0.50 of 1% on next $10 million and 0.25% of
1% over $20 million of the Fund's average daily net assets. The Investment
Manager may receive 12b-1 fees as reimbursement for certain distribution
expenses.

HOW TO PURCHASE SHARES: Shares of the Fund may be purchased through
selected broker-dealers and from American Data Services, Inc., Transfer Agent
for the Fund ("Transfer Agent"), at the public offering price per share next
determined after receipt of an order by either a registered broker-dealer or
the Fund's Transfer Agent, in proper form with accompanying check or other bank
wire payment arrangements satisfactory to the Fund. The minimum initial
investment is $250. Subsequent investments will be a minimum of $100.
Stockholders may opt to make subsequent investments through the continuing
automatic transfer plan. See "How to Purchase Shares." Investments through an
Individual Retirement Account or other retirement plans, however, have
different requirements. See "Retirement Plans."

HOW TO SELL SHARES: Shares of the Fund may be redeemed through selected
broker-dealers and the Transfer Agent by the stockholder at any time at the net
asset value per share next determined after the redemption request is received
by either a registered broker-dealer or the Transfer Agent in proper form. See
"How to Redeem Shares."

<PAGE> 10

DIVIDENDS AND REINVESTMENT: Each dividend and capital gains distribution,
if any, declared by the Fund on its outstanding shares will, unless a
stockholder elects otherwise, be paid on the payment date in additional shares
of the Fund having an aggregate net asset value as of the ex-dividend date of
such dividend or distribution equal to the cash amount of such distribution.
An election may be changed by notifying the Fund in writing at any time prior
to the record date for a particular dividend or distribution. There are no
sales or other charges in connection with the reinvestment of dividends and
capital gains distributions. There is no fixed dividend rate, and there can be
no assurance that the Fund will pay any dividends or realize any capital gains.
However, the Fund currently intends to pay dividends and capital gains
distributions, if any, on an annual basis. See "Dividends, Distributions and
Taxes."

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to seek high current income and
capital appreciation. It seeks to meet its objective by investing the Fund's
assets in: U.S. Government securities including U.S. Treasury obligations and
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, investment grade corporate bonds, investment grade foreign
government bonds, equity securities of U.S., Canadian, British and Trinidad and
Tobago companies, ADRs, the Schemes of the Trinidad and Tobago Unit Trust
Corporation, certificates of deposit and money market funds. There can be no
assurance that the Fund will be able to achieve its objective.

The Fund intends to invest in the Schemes of the Trinidad and Tobago Unit
Trust Corporation only if the Fund determines that there are no adverse
restrictions to realizing an investment in the Schemes of the Trinidad and
Tobago Unit Trust Corporation and the Investment Manager believes the potential
rewards from the Schemes of the Trinidad and Tobago Unit Trust Corporation are
greater than the other investments described above.

The Fund's investment policy will emphasize debt instruments to achieve
the Fund's current income objective. Under normal market conditions, the Fund
will maintain a level of at least 25% of its total assets invested in debt
securities and at least 25% of its total assets invested in equity securities.
The investment in equity securities versus debt securities will depend upon the
Investment Manager's evaluation of the relative merits and risks of equity
securities versus bonds.

The attractiveness of nongovernment instruments will be judged based upon
their potential return enhancement and creditworthiness. Potential return is
determined by observing the existing yield spread differential within a
historical context and purchasing such instruments only when the differential
is at levels which are above a long-term mean. Within the investment credit
spectrum, to ensure protection of principal, additional credit analysis will be
undertaken in employing the Investment Manager's proprietary analytical
techniques and data bases to further reduce the risk.

In determining the maturity of the debt securities the Fund invests in,
the Investment Manager will focus on whether the level of real yield, after
taking into account inflation, is adequate to compensate for the greater
volatility and risks associated with debt securities having a greater maturity.
Generally, the longer the maturity of a debt security, the greater its price
volatility. Conversely, the shorter the maturity, the lower its price
volatility. During a typical credit cycle, the average duration implied by
this discipline will likely average 5 years within a range normally of 2.5 to 8
years.

In determining what equity securities the Fund will invest in, the
Investment Manager will focus on the actual earnings, return on equity and
dividend history of the company. The Investment Manager will seek to invest in
equity securities of companies whose shares are undervalued based on the
current price relative to the long-term record of the company. For purposes of
this investment policy, equity securities are defined as: U.S. and foreign
common stocks, ADRs, warrants, convertible bonds, convertible debentures,
preferred stock and stock rights. No more than 5% of the Fund's net assets may
be used to purchase warrants or stock rights. For purposes of this investment
policy, a warrant is defined as a certificate giving the holder the right to
purchase securities at a stipulated price within a specified time limit or
perpetually. Sometimes a warrant is offered with securities as an

<PAGE> 11

inducement to buy. The prices of warrants do not necessarily correlate
with the prices of the underlying securities. The Fund may not purchase options
on equity securities. Debt securities are defined as: U.S. and foreign
nonconvertible company bonds, U.S. and foreign government securities and
commercial paper.

The Fund intends to invest in a variety of securities, with differing
issuers, maturities and interest rates. If the Investment Manager believes
that stocks in general are overvalued, or that interest rates may rise
substantially, or that the general economic environment may be deteriorating,
the Investment Manager may assume a temporary defensive position and may invest
up to 100% of the Fund's assets in high quality commercial paper and short-term
U.S. Government securities such as Treasury Bills and Treasury Notes. The Fund
intends to operate as a "regulated investment company" under Subchapter M of
the Internal Revenue Code. See "Dividends, Distributions and Taxes." The
average U.S. dollar weighted duration of the Fund's portfolio is not expected
to exceed ten years.

The Fund does not expect to trade in securities for short-term gain. It
is anticipated that the annual portfolio turnover rate will not exceed 100%.
The portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the average monthly value of the Fund's
portfolio securities. For purposes of this calculation, portfolio securities
exclude debt securities having a maturity at the date of purchase of one year
or less.

Subject to its investment policy of normally investing at least 25% of its
total assets in U.S. Government securities, investment grade corporate bonds
and investment grade foreign government bonds, the Fund is permitted to invest
in (1) U.S. dollar denominated debt securities, similar in nature to those
described above, regardless of the domicile of the issuers and (2) income
producing equity securities of companies domiciled in the United States (some
of which may be denominated other than in U.S. dollars). Some of these
securities are issued in the Eurodollar market by multinational banks and
companies which may have operations in Trinidad and Tobago.

The Fund may not borrow money except for (1) short-term credits from banks
as may be necessary for the clearance of portfolio transactions, and (2)
borrowings from banks for temporary or emergency purposes, including the
meeting of redemption requests, which would otherwise require the untimely
disposition of its portfolio securities. Borrowing for any purpose including
redemptions may not, in the aggregate, exceed 5% of total assets after giving
effect to the borrowing and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Fund's total assets after
giving effect to the borrowing. The Investment Manager of the Fund will not
purchase securities when borrowings exceed 5% of total assets. The Fund may
mortgage, pledge or hypothecate assets to secure such borrowings.

BASIC INVESTMENT TECHNIQUES

Securities Subject to Reorganization

The Fund may invest in both debt and equity securities for which a tender
or exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or reorganization proposal has been
announced if, in the judgment of the Investment Manager, there is a reasonable
prospect of capital appreciation significantly greater than the brokerage and
other transaction expenses involved.

<PAGE> 12

received as a result of the contemplated transaction but also
the financial resources and business motivation of the offeror and the dynamics
and business climate when the offer or proposal is in process. In making these
investments, the Fund will not violate any of its investment restrictions
including the requirement that: (a) as to 75% of its total assets, it will not
invest more than 5% of its total assets in the securities of any one issuer,
and (b) it will not invest 25% or more of its total assets in any one industry.
Since such investments are ordinarily short-term in nature, they will tend to
increase the turnover ratio of the Fund, thereby increasing its brokerage and
other transaction expenses, as well as make it more difficult for the Fund to
meet the test for favorable tax treatment as a "Regulated Investment Company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code") (see
"Dividends, Distributions and Taxes"). The Investment Manager intends to
select investments of the type described which, in its view, have a reasonable
prospect of capital appreciation which is significant in relation to both risk
involved and the potential of available alternative investments, as well as to
monitor the effect of such investments on the tax qualifications test of the
Code.

The Fund may not invest more than 15% of its net assets in (1) securities
which are restricted or for which market quotations are not readily available;
(2) fixed time deposits subject to withdrawal penalties (other than overnight
deposits); (3) repurchase agreements having a maturity of more than seven days;
and (4) other illiquid securities. The Fund will also treat non-U.S.
Government interest-only or principal-only securities as illiquid securities so
long as the staff of the SEC maintains its position that such securities are
illiquid.

Nonconvertible Debt Securities

Under normal market conditions, the Fund will invest at least 25% of its
assets in nonconvertible debt securities. For purposes of this investment
policy, nonconvertible debt securities are defined as: (1) Rated corporate
bonds, as well as variable amount master demand notes; (2) Government
securities which include securities of, or guaranteed by, the U.S. Government,
its agencies or instrumentalities; (3) Commercial paper which include
commercial paper of companies rated A-1 or A-2 by Standard & Poor's Corporation
("S&P") or rated P-1 or P-2 by Moody's Investors Service, Inc. ("Moody's").
Fixed income securities rated, at the time of investment, less than BBB by S&P
or Baa by Moody's or which are unrated but of comparable quality as determined
by the Investment Manager, are not investment grade. These securities are
viewed by the rating agencies as being predominantly speculative in nature.
They may be characterized by substantial risk concerning payments of interest
and principal, sensitivity to economic conditions and changes in interest
rates, as well as by market price volatility and/or relative lack of secondary
market trading, among other risks. The Fund will not invest any of its assets
in noninvestment grade debt securities.

Although fixed income securities rated BBB by S&P or Baa by Moody's, at
the time of investment, are investment grade, these securities are subject to
risks such as market price volatility, creditworthiness, relative liquidity of
secondary trading market and other speculative characteristics of lower-rated
securities which could have an adverse effect on the net asset value of the
Fund. These securities are subject to certain risks with respect to the
issuing entity and to greater market fluctuations than certain lower-yielding,
higher-rated, investment grade fixed income securities. The Fund will
liquidate any fixed income securities held in its portfolio whose rating is
downgraded below BBB by S&P or Baa by Moody's. The net asset value of the Fund
could be adversely affected by such liquidation transactions.

The market values of fixed income securities generally fall when interest
rates rise and, conversely, rise when interest rates fall.

U.S. Government Securities

The U.S. Government Securities in which the Fund may invest include direct
obligations of the U.S. Treasury, such as Treasury bills, notes and bonds, and
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, including securities that are supported by the full faith
and credit of the United States, such as Government National Mortgage
Association ("GNMA") certificates, securities that are supported by the right
of the issuer to borrow from the U.S. Treasury, such as securities of the
Federal Home Loan Banks,

<PAGE> 13
and securities supported solely by the creditworthiness of the issuer,
such as Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") securities.

The Fund may invest in mortgage-backed securities issued or guaranteed by
GNMA, FNMA or FHLMC and representing undivided ownership interests in pools of
mortgages. The mortgages backing these securities include, among others,
conventional 30-year fixed-rate mortgages, 15-year fixed-rate mortgages,
graduated payment mortgages and adjustable rate mortgages. The U.S. Government
or the issuing agency guarantees the payment of the interest on and principal
of these securities. The guarantees do not extend to the securities' yield or
value, however, which are likely to vary inversely with fluctuations in
interest rates, and, the guarantees do not extend to the yield or value of the
Fund's shares. These securities are in most cases "pass-through" instruments,
through which the holders receive a share of all interest and principal
payments from the mortgages underlying the securities, net of certain fees.
The principal amounts of such underlying mortgages generally may be prepaid in
whole or in part by the mortgagees at any time without penalty and the
prepayment characteristics of the underlying mortgages may vary. During
periods of declining interest rates, prepayment of mortgages underlying
mortgage-backed securities can be expected to accelerate. When the mortgage
obligations are prepaid, the Fund will reinvest the prepaid amounts in other
income producing securities, the yields of which will reflect interest rates
prevailing at the time. Accelerated prepayments adversely affect yields for
pass-through securities purchased at a premium and may involve additional risk
of loss of principal because the premium may not have been fully amortized at
the time the obligation is repaid. The opposite is true for pass-through
securities purchased at a discount.

In addition to GNMA, FNMA or FHLMC certificates through which the holder
receives a share of all interest and principal payments from the mortgages
underlying the certificate, the Fund may also invest in mortgage pass-through
securities issued by the U.S. Government or its agencies and instrumentalities,
commonly referred to as mortgage-backed security strips or MBS strips. MBS
strips are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. A common type of stripped mortgage security will have one class
receiving some of the interest and most of the principal from the mortgage
assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive
all of the interest (the interest-only or "IO" class), while the other class
will receive all of the principal (the principal-only or "PO" class). The
yields to maturity on IOs and POs are sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage assets, and
principal payments may have a material effect on yield to maturity. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the Fund may not fully recoup its initial investments in IOs.
Conversely, if the underlying mortgage assets experience less than anticipated
prepayments of principal, the yield on POs could be materially adversely
affected.

The Schemes of the Trinidad and Tobago Unit Trust Corporation

The Unit Trust Corporation was created by the Unit Trust Corporation of
Trinidad and Tobago Act, 1981 (Republic of Trinidad and Tobago Act No. 26 of
1981). The Unit Trust Corporation's main office is located in the City of
Port-of-Spain, Trinidad. The affairs of the Unit Trust Corporation are managed
by a board of directors.

The Schemes of the Trinidad and Tobago Unit Trust Corporation are
investment companies as defined under the 1940 Act and their respective
investments are at all times identified separate from the investments of the
Unit Trust Corporation itself. Accounts of each of the Schemes of the Trinidad
and Tobago Unit Trust Corporation are prepared separately from those of the
Unit Trust Corporation. When an investor purchases units from the Unit Trust
Corporation, he is purchasing units issued from the Schemes of the Trinidad and
Tobago Unit Trust Corporation. The transaction is administered by the Unit
Trust Corporation on behalf of the Schemes of the Trinidad and Tobago Unit
Trust Corporation.

The assets of the Schemes of the Trinidad and Tobago Unit Trust
Corporation are predominantly invested in equity securities of Trinidad and
Tobago corporations, and in fixed income securities of those corporations, as
well as in Trinidad and Tobago government securities. As of September 30,
1997,
<PAGE> 14
the Schemes of the Trinidad and Tobago Unit Trust Corporation had an
aggregate of $302,153,361 (U.S. dollars) under management and approximately
165,025 unitholders.

The financial records of the Unit Trust Corporation are examined and
audited by the Auditor General of Trinidad and Tobago. The financial
statements and records of the Unit Trust Corporation are prepared in accordance
with the Trinidad and Tobago Accounting Standards and are reported in Trinidad
and Tobago dollars.

The 1940 Act limits the extent to which the Fund may purchase equity
securities of the Schemes of the Trinidad and Tobago Unit Trust Corporation or
any other investment companies. No more than 10% of the Fund's total assets
may be used to purchase any securities of investment companies. The Fund will
not purchase more than 3% of the total outstanding voting stock of an
investment company nor purchase securities of an investment company having an
aggregate value in excess of 5% of the value of the total assets of the
investment company. The Fund will pay an investment management fee when it
invests in the Schemes of the Trinidad and Tobago Unit Trust Corporation.

As of September 30, 1997, the Unit Trust Corporation beneficially owned
8.909% of the outstanding voting stock of the Fund.

CERTAIN INVESTMENT STRATEGIES AND SPECIAL RISK CONSIDERATIONS

All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. The Fund is designed for long term
investors who can accept the fluctuations in portfolio value and other risks
associated with the primary objective of seeking current income and capital
appreciation through investment in securities. There can be no assurance that
the Fund will achieve its objective.

The Fund will not make significant investments in securities of any one
issuer to reduce risk. Although risk cannot be eliminated, this strategy
reduces the impact of any single investment. The Fund may invest in both large
and small companies. Investments in small companies involve greater risk than
is customarily associated with more established companies. Smaller companies
often have limited product lines, markets, management personnel, research
and/or financial resources. The securities of small companies, which may be
thinly capitalized, may have more limited marketability and be subject to more
abrupt or erratic market movements than securities of larger companies or the
market averages in general.

Any investment by the Fund in short, medium or long term interest bearing
obligations has the risk of principal fluctuation due to changing interest
rates and the ability of the issuer to repay the obligation at maturity. Fixed
income instrument prices are inversely related to interest rate movements, but
proportional to the maturity of the instruments. That is, long-term instrument
prices rise or fall more than short-term instruments for a given change in
interest rates. Certain risk factors are also associated with other investment
practices of the Fund (none of which is expected to involve more than 25% of
the Fund's net assets), including investing in debt securities and investing in
foreign securities. Although the Fund does not purchase securities with a view
of rapid turnover, there are no limitations on the length of time portfolio
securities must be held. The Fund's portfolio turnover rate is not expected to
exceed 100%. A portfolio turnover exceeding 100% generally results in
increased transaction expenses and the realization of capital gains and losses.

There are certain risks involved in investing in securities of companies
and governments of foreign nations that are in addition to the usual risks
inherent in U.S. investments. These risks include those resulting from
fluctuations in currency exchange rates, devaluation of currencies, future
adverse political and economic developments and the possible imposition of
currency exchange blockages or from other foreign governmental laws or
restrictions. Changes in foreign currency exchange rates may affect the value
of the Fund's assets, the value of dividends and interest earned, gains and
losses realized on the sale of securities and net investment income and gains
to be distributed to shareholders by the Fund. In addition, many of the
securities held by the Fund will not be registered with, nor the issuers
thereof be subject to reporting requirements of, the SEC. Accordingly, there
may be less publicly available information about the securities and about the
foreign

<PAGE> 15

company or government issuing them than is available about a U.S.
company or U.S. Government entity. Foreign issuers are not subject to uniform
financial reporting standards, practices and requirements comparable to those
applicable to U.S. issuers. Furthermore, with respect to some foreign
countries, there is the possibility of expropriation, nationalization or
confiscatory taxation, limitations on the removal of funds or other assets of
the Fund, including the withholding of dividends, political or social
instability or domestic developments that could affect U.S. investments in
those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital investment, resource
self-sufficiency and balance of payments positions. The Fund may invest in
securities of foreign governments (or agencies or instrumentalities thereof)
and many, if not all, of the foregoing considerations apply to such investments
as well. Finally, securities of some foreign companies are less liquid and
their prices are more volatile than securities of comparable U.S. companies,
and certain foreign countries are known to experience long delays between the
trade and settlement dates of securities purchased or sold.

Foreign securities may be subject to foreign government taxes that would
reduce the net return on such securities and the Fund may be affected
unfavorably by exchange control regulations. Investment in foreign securities
will also result in higher expenses due to the cost of converting foreign
currency into U.S. dollars, the payment of fixed brokerage commissions on
foreign exchanges and the expense of maintaining securities with foreign
custodians.

MANAGEMENT

Board of Directors

The overall management of the business and affairs of the Fund is vested
with its Board of Directors. The Board of Directors approves all significant
agreements between the Fund and persons or companies furnishing services to it,
including the Fund's agreement with its Investment Manager, its Custodian, its
Transfer Agent, selected broker-dealers and its Administrator. The day-to-day
operations of the Fund are delegated to its officers, subject to the investment
objectives and policies of the Fund and to general supervision by the Board of
Directors.

The Board of Directors is presently comprised of five members, four of
whom reside outside the United States. Directors Renrick Nickie, Roosevelt
Williams, Judy Chang and Clarry Benn are residents of the Republic of Trinidad
and Tobago. Clarry Benn and Renrick Nickie also serve as executive officers of
the Fund.

The Maryland General Corporation Law subjects all directors and officers
of the Fund to fiduciary duties for the lawful management of the Fund's
organization and operation, including federal and state securities laws.
Investors of the Fund may not be able to effect service of process within the
United States upon the Fund's nonresident directors and officers for the
enforcement of civil liabilities under federal and state securities laws. The
Fund has appointed an agent for service of process in the states where the Fund
has registered its securities for offer and sale.

The United States and the Republic of Trinidad and Tobago are not parties
to a convention governing the mutual recognition and enforcement of foreign
money judgments. Investors of the Fund may not be able to enforce a United
States or Trinidad and Tobago court judgment against nonresident directors and
officers of the Fund.

The Investment Manager

The Investment Manager is subject to the control of the Fund's Board of
Directors. The Investment Manager was incorporated as a registered investment
advisor in 1971. In November 1985, the Investment Manager entered into a
limited partnership with Britannia Arrow Holdings, PLC, a major U.K. financial
services company, to pursue global investment business. The Investment Manager
was the general

<PAGE> 16
partner. In December 1988, the two firms completed a merger,
creating the global investment organization of INVESCO, with offices worldwide.
In February 1997, a subsidiary of INVESCO PLC, ultimate parent to the
Investment Manager, merged with A I M Management Group, Inc., one of the
largest mutual fund managers in the United States, which resulted in a new
financial services company, well-equipped to provide the Fund and investors
with a competitive spectrum of investment management capabilities.

The Investment Manager manages over $35 billion in retirement fund assets
for over 300 institutional clients located throughout the U.S., the U.K. and
Japan. The Investment Manager's clients include corporate pension and profit
sharing plans, public funds, jointly-trusteed funds, endowment and foundation
accounts. The Investment Manager has provided investment advisory services to
registered investment companies.

The Investment Manager is authorized to consider sales of shares of the
Fund as a factor in the selection of brokers to execute brokerage and principal
transactions, subject to the requirements of "best execution," i.e., prompt and
efficient execution at the most favorable securities price.

Under the Investment Management Agreement, between the Fund and the
Investment Manager, the Fund pays the Investment Manager a fee, computed daily,
and payable monthly, at the annual rate of the greater of $50,000 or 0.75% of
1% on first $10 million, 0.50% of 1% on next $10 million and 0.25% of 1% over
$20 million of the Fund's average daily net assets. The minimum management fee
of $50,000 or 0.75% of 1% on the first $10 million is higher than most
investment companies are charged. The management fee charged on average daily
net assets in excess of $10 million is not higher than most investment
companies are charged. The Fund and the Investment Manager believe the fee is
appropriate considering the investment objective of the Fund.

Administrator

American Data Services, Inc. (the "Administrator"), located at The
Hauppauge Corporate Center, 150 Motor Parkway, Suite 109, Hauppauge, New York
11788, serves pursuant to an agreement with the Fund (the "Administrative
Services Agreement"). Pursuant to the Administrative Services Agreement,
subject to the overall authority of the Fund's Board of Directors in accordance
with Maryland law, the Administrator will assist in the Fund's administration
and operation, including, but not limited to, the preparation of statistical
and research data, data processing services, preparation of management reports
for performance and compliance, as well as prepare and maintain the Fund's
operating expense budget.

Fund Operating Expenses

<PAGE> 17

Investment Company Institute or any successor; (xi) Rule 12b-1 fees paid by the
Fund in connection with the Distribution Plan; (xii) service fees paid by the
Fund in connection with the personal service and/or maintenance of shareholder
accounts; and (xiii) such nonrecurring expenses as may arise, including
litigation affecting the Fund and the legal obligations with respect to which
the Fund may have to indemnify its officers and directors.

See the Statement of Additional Information for more information as to the
Fund's Board of Directors, Officers, the Investment Manager and its operating
expenses.

HOW TO PURCHASE SHARES

Opening an Account

In order to invest in the Fund, an investor must first complete and sign
an account application. Shares of the Fund may be purchased either by mail or
by telephone through selected broker-dealers who have a sales agreement with
the Fund or through the Transfer Agent, at the offering price next determined
after receipt of an order by selected broker-dealers or the Transfer Agent, in
proper form. The offering price is the net asset value per share of the Fund.

The Fund may from time to time pay a bonus or other incentive to the
selected dealers that employ a sales representative who sells a minimum dollar
amount of shares of the Fund. Such bonus or other incentives may take the form
of payment for travel expense including lodging, incurred in connection with
trips taken by qualifying registered representatives and members of their
families to places within or without the United States.

The minimum initial investment in the Fund including purchases for an
Individual Retirement Account is $250. Subsequent investments are a minimum of
$100. Existing shareholders may elect to make subsequent investments through a
continuing automatic transfer plan.

To elect the continuing automatic transfer plan, complete the continuing
automatic transfer plan section of the Fund's account application and include a
voided unsigned check from the bank account to be debited. You should consider
your financial ability to continue in the continuing automatic transfer plan in
light of the Fund's right to close your account under certain circumstances or
that you may find it necessary to redeem your account, either of which may
occur in periods of declining Fund share prices or during periods of rising
prices.

The Fund reserves the right to reject any order.

Purchase orders may either be placed with selected broker-dealers or
submitted to the Transfer Agent as follows:

Purchase Placed With Selected Broker-Dealers

Selected broker-dealers may place orders for shares of the Fund on behalf
of clients at the offering price next determined after receipt of the client's
order made by calling the Transfer Agent. If the order is placed by a client
with a selected dealer prior to 4 p.m. Eastern time on any day the New York
Stock Exchange is open for trading, and forwarded to the Transfer Agent prior
to 5 p.m. Eastern time on that day, it will be confirmed to the selected dealer
at the applicable offering price determined that day. The selected
broker-dealer is responsible for placing purchase orders promptly with the
Transfer Agent and for forwarding payment.

<PAGE> 18

Purchase Placed With Transfer Agent

Investors may mail an application form, together with a check payable to
the Fund, directly to the Transfer Agent, at the following address:

American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Suite 109
Hauppauge, NY 11788

If the purchase being made is a subsequent investment, the stockholder
should send a stub from a confirmation previously received from the Transfer
Agent in lieu of the application form. If no such stub is available, a brief
letter giving the registration of the account, the name of the Fund and the
account number should accompany the check. In addition, the stockholder's
account number should be written on the check. Checks do not need to be
certified but are accepted subject to face value in United States dollars and
must be drawn on United States banks.

Shares of the Fund will be purchased for the account of the investor by
the Transfer Agent as agent for the investor's selected dealer at the offering
price next determined after receipt by the Transfer Agent of the check together
with the appropriate form or other identifying information.

The Fund offers additional services to investors, including plans for the
systematic investment and withdrawal of money as well as prototype retirement
programs. Information about these services is also available in the Statement
of Additional Information or from selected broker-dealers or the Transfer
Agent.

Net Asset Value

The Fund's net asset value per share is determined on each day that the
New York Stock Exchange (the "Exchange") is open for trading, as of the close
of the Exchange, currently 4 p.m., Eastern time. The net asset value per share
is the value of the Fund's assets, less its liabilities, divided by the number
of shares of the Fund outstanding. The value of the Fund's portfolio
securities will be the market value of such securities. See the Statement of
Additional Information for further information.

DISTRIBUTION PLAN AND SERVICE 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 others ("Qualified
Recipients") that have rendered distribution assistance (whether direct,
administrative or both) and that enter into written agreements with the Fund
may receive fees at rates determined by the Fund's Board of Directors. In
addition, the Fund will purchase advertising, sales literature, other
promotional material and marketing services. The Fund will reimburse the
Investment Manager and Qualified Recipients for these expenditures, including
interest expenses and other overhead items, during a fiscal year of the Fund,
up to a limit of 0.50% of 1% on an annual basis of the Fund's average daily net
assets, subject to compliance with guidelines adopted from time to time by the
Board of Directors of the Fund.

No reimbursements under the Plan will be made for expenditures or fees for
fiscal years prior to the fiscal year in question or in contemplation of future
fees or expenditures. In addition to payments received pursuant to the Plan,
Qualified Recipients which are selected dealers will receive a service fee in
the amount of .25% of each shareholder account opened with the Fund as a result
of a sale made by them of Fund shares. The service fee is paid by the Fund to
the Qualified Recipient for the personal service and/or maintenance of

<PAGE> 19

shareholder accounts; and the Qualified Recipient may receive commissions on
Fund portfolio transactions subject to the provisions of the Management
Agreement (see the Statement of Additional Information).

The enactment of the National Securities Markets Improvement Act in
October 1996 created an amendment to the 1940 Act. The changes in legislation
will enable the Fund to distribute its shares to a broader number of states.

HOW TO REDEEM SHARES

The Fund will redeem for cash all of its full and fractional shares at the
net asset value per share next determined after receipt by the Transfer Agent
of a redemption request in proper form, as described below. A stockholder
wishing to redeem shares may do so at any time by writing to the Fund in care
of its Transfer Agent at The Hauppauge Corporate Center, 150 Motor Parkway,
Suite 109, Hauppauge, New York 11788. The instructions should specify the name
of the Fund, the number of shares to be redeemed and be signed by all
registered owners exactly as the account is registered. The redemption request
will not be accepted unless it contains all required documents in proper form,
as described below.

Proper Form

In addition to written instructions, if any shares being redeemed are
represented by stock certificates, the certificates must be surrendered. The
certificates must either be endorsed or accompanied by a stock power signed by
the registered owners, exactly as the certificates are registered. The
signatures on the certificates or stock powers, as well as the signatures on
any redemption request concerning shares not represented by certificates, must
conform to the requirements of the Transfer Agent. Additional documents may be
required from corporations or other organizations, fiduciaries or anyone other
than the stockholder of record. Any questions concerning documents needed
should be directed to the Transfer Agent.

Payments

Payment for shares tendered will be made within seven days after receipt
by the Transfer Agent of instructions, certificates, if any, and other
documents, all in proper form. Payment may be delayed under unusual
circumstances, as specified in the 1940 Act or as determined by the SEC.
Payment may also be delayed for any shares purchased by check until the Fund
has determined that the purchase check will be honored, which may take up to 15
calendar days.

Redemption in Kind

If the Fund's Board of Directors determines that it would be detrimental
to the best interests of the remaining stockholders of the Fund to make payment
wholly or partly in cash, the redemption value may be paid in whole or in part
by a distribution in kind of securities from the portfolio of the Fund, in lieu
of cash, in conformity with applicable rules of the SEC. The Fund, however,
has elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which
it is obligated to redeem shares of the Fund solely in cash up to the lesser of
$250,000 or one percent of the net asset value of the Fund during any 90-day
period for any one stockholder. Should redemptions by any stockholder exceed
such limitation, the Fund will have the option of redeeming the excess in cash
or in kind. If shares are redeemed in kind, the redeeming stockholder would
incur brokerage costs in converting the assets into cash.

Reinvestment Privilege

A stockholder who has redeemed all or part of his or her shares of the
Fund may reinvest all or part of the redemption proceeds in shares of the Fund
at the net asset value next computed after receipt of the reinvestment order if
such reinvestment is effected within 30 days after the redemption. The
privilege may be exercised only once by a stockholder. However, a stockholder
has not used up this one-time privilege if the sole

<PAGE> 20

purpose of a prior redemption was to invest the proceeds at net asset
value in a qualified retirement plan. If the stockholder has realized a gain
on the redemption, the transaction is taxable and reinvestment will not alter
any capital gains tax payable. If there has been a loss on the redemption,
some or all of the loss may not be allowed as a tax deduction depending on the
amount reinvested.

Redemption of Small Accounts

The Fund's Board of Directors may, in order to reduce the expenses of the
Fund, redeem all of the shares of any stockholder (other than a qualified
retirement plan) whose account has declined to a net asset value of less than
$100, as a result of a transfer or redemption, at the net asset value
determined as of the close of business on the business day preceding the
sending of notice of such redemption. Stockholders will be given 60 days'
prior written notice in which to purchase sufficient shares to avoid such
redemption.

RETIREMENT PLANS

If you are eligible, you may set up your account under an Individual
Retirement Account ("IRA") which is obtainable from selected broker-dealers or
the Transfer Agent. The minimum investment required to open an IRA for
investment in shares of the Fund is $250 for an individual except that both the
individual and his or her spouse would be able to establish separate IRAs if
their combined investment is $400.

If you are under age 70-1/2, you can contribute up to the lesser of $2,000
or 100% of your compensation annually to an IRA. If your spouse is not
employed, contributions of up to $2,000 may be made annually for each spouse
(totaling $4,000) if the combined compensation of both spouses is at least
equal to the contributed amount. Contributions to IRAs are tax deductible only
if you and your spouse are not covered by existing qualified retirement plans
or, if covered, your incomes do not exceed certain amounts. However, whether
your contributions are deductible or not, the income and capital gains on your
IRA are not taxed until they are withdrawn. Investors should consult their own
tax advisors about the establishment of retirement plans.

Fund shares may also be a suitable investment for other types of qualified
pension or profit sharing plans which are employer-sponsored, including
deferred compensation or salary reduction plans known as 401(k) plans which
give participants the right to defer portions of their compensation for
investment on a tax deferred basis until distributions are made from the plans.
The minimum initial investment for an individual under such plans is $50 and a
$50 minimum for additional investments.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions

Each dividend and capital gains distribution, if any, declared by the Fund
on its outstanding shares will, unless the stockholder elects otherwise, be
paid on the payment date fixed by the Fund's Board of Directors in additional
shares of the Fund having an aggregate net asset value as to the ex-dividend
date of such dividend or distribution equal to the cash amount of such
distribution. An election to receive dividends and distributions may be
changed by notifying the Fund in writing at any time prior to the record date
for a particular dividend or distribution. There are no sales or other charges
in connection with the reinvestment of dividends and capital gains
distributions. There is no fixed dividend rate, and there can be no assurance
that the Fund will pay any dividends or realize any capital gains. However,
the Fund currently intends to pay dividends and capital gains distributions, if
any, on an annual basis.

Taxes

The Fund intends to qualify for tax treatment as a "regulated investment
company" under Subchapter M of the Internal Revenue Code (the "Code") in order
to be relieved of federal income tax on that part

<PAGE> 21

of its net investment income and realized capital gains which it pays
out to its stockholders. To qualify as a regulated investment company and to
avoid payment of taxes at the fund level, the Fund will distribute
substantially all of the net ordinary income and net capital gains to its
stockholders as described above.

The Fund must meet the Code's diversification requirement that, at the end
of each calendar quarter, no more than 25% of the Fund's assets may be invested
in securities of a single issuer (other than Government Securities or the
securities of other regulated investment companies) and at least 50% of the
assets of the Fund must be invested in cash, cash items, receivables, U.S.
Government Securities, securities of other regulated investment companies and
other securities provided that, with respect to such other securities, the Fund
does not (i) invest more than 5% of its assets in any one issuer; or (ii) own
more than 10% of the outstanding voting securities of such issuer. The Fund
(i) must also derive at least 90% of its annual gross income from certain
specified sources and (ii) may not derive 30% or more of its annual gross
income from the disposition of securities (or foreign currency positions not
directly related to the Fund's principal business of investing in securities)
held for less than three months. The U.S. Treasury Department is authorized to
promulgate regulations under which certain foreign currency gains realized by
the Fund may no longer be regarded as qualifying income under the 90%
requirement.

All distributions, other than long-term capital gain distributions and
exempt-interest dividends, are taxable to the Fund stockholders as ordinary
income. Distributions of long-term capital gains, if designated as such by the
Fund, are taxable as such, regardless of how long the stockholder has owned
shares in the Fund. If a stockholder disposes of shares at a loss before
having held the shares for longer than six months, such loss will be treated as
a long-term capital loss to the extent a stockholder previously received a
long-term capital gains dividend on the shares. Fund distributions are taxable
whether distributed to stockholders in cash or additional shares. However,
many tax-exempt entities may not be subject to tax on Fund distributions.

The Code generally requires the Fund to distribute, prior to December 31
in each year without regard to its fiscal year end, 98% of its ordinary income
for that year and 98% of the capital gain net income, if any, realized during
the one-year period ending on October 31 in that year. Distributions declared
and payable to stockholders of record in October, November or December and paid
in January will be treated for federal income tax purposes as if received by
the stockholder in December. To the extent that the distribution requirement
for a calendar year is not met, a 4% nondeductible excise tax on the
undistributed amount would be assessed against the Fund.

In addition to the 98% distribution test described above necessary to
avoid excise taxation, a second distribution test applies. To qualify for the
preferential tax treatment under Subchapter M of the Code, the Fund must
distribute annually the sum of 90% of its investment company taxable income
(i.e., its taxable ordinary income and net short-term capital gain) and 90% of
its net tax-exempt interest.

The Fund's investments in foreign currency denominated debt obligations
and hedging activities will likely produce a difference between its book income
and its taxable income. This difference may cause a portion of the Fund's
income distributions to constitute a return of capital for tax purposes or
require the Fund's income distributions to constitute a return of capital for
tax purposes or require the fund to make distributions exceeding book income to
qualify as a regulated investment company.

Current federal tax law requires the holder of a security issued with
"original issue discount" (including a zero coupon U.S. Treasury security) to
accrue as income each year a portion of the discount at which the security was
purchased, even though the holder receives no interest payment in cash on the
security during the year. A security has "original issue discount" if its face
amount at maturity exceeds its issue price by more than a de minimis amount.
Accordingly, the Fund may be required to pay out as an income distribution each
year an amount which is greater than the total amount of cash interest the Fund
actually received. Such distributions may be made from the cash assets of the
Fund or by liquidation of its portfolio securities, if necessary. The Fund may
realize gains or losses from such liquidations. If the Fund realizes net
capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.

<PAGE> 22

The Transfer Agent will send stockholders and the Internal Revenue Service
an annual statement detailing federal tax information, including information
about dividends and distributions (both taxable and tax-exempt) paid to
stockholders during the preceding year. This statement should be kept as a
permanent record. A fee may be charged for any duplicate information
requested.

Before investing in the Fund, individuals are advised to check the
consequences of local and state tax laws, and the consequences for any
retirement plan offering tax benefits.

GENERAL INFORMATION

Description of Shares, Voting Rights and Liabilities

The Fund is a Maryland corporation, incorporated on October 24, 1990, and
registered as an open-ended, nondiversified, management investment company
under the 1940 Act. The authorized capital stock consists of 2,000,000 shares
of common stock having a par value of ($.01) per share. The Fund's Board of
Directors is authorized to divide the unissued shares into one or more classes
of common stock (which may be referred to as portfolios, funds or series), each
class representing a separate, additional Fund portfolio, and to fix the number
of shares in any such class.

Shares of all classes will have identical voting rights, except where by
law, certain matters must be approved by a majority of the shares of the
affected class. Each share of any class of shares when issued has equal
dividend, liquidation and voting rights within the class for which it was
issued and each fractional share has those rights in proportion to the
percentage that the fractional share represents of a whole share. Shares will
be voted in the aggregate.

There are no conversion or preemptive rights in connection with any shares
of the Fund. All shares, when issued in accordance with the terms of the
offering, will be fully paid and nonassessable. Shares will be redeemed at net
asset value, at the option of the stockholder.

The Fund sends semiannual and annual reports to all of its stockholders
which include a list of portfolio securities and the Fund's financial
statements which shall be audited annually.

The shares of the Fund have noncumulative voting rights which means that
the holders of more than 50% of the shares can elect 100% of the directors if
the holders choose to do so, and, in that event, the holders of the remaining
shares will not be able to elect any person or persons to the Board of
Directors. Unless specifically requested in writing to the Transfer Agent by
an investor who is a stockholder of record, the Fund does not issue
certificates evidencing Fund shares.

The Corporation will hold an annual stockholder meeting each year.
Special meetings of the stockholders will be held for the consideration of
proposals requiring stockholder approval by law, such as changing fundamental
policies or upon the written request of 25% of the Fund's outstanding shares.
The directors will promptly call a meeting of stockholders to consider the
removal of a director or directors when requested to do so by the holders of
not less than 10% of the outstanding shares and that stockholders will receive
communication assistance in connection with calling such a meeting. At any
meeting of stockholders duly called and at which a quorum is present, the
stockholders may, by the affirmative vote of the holders of at least two-thirds
of the votes entitled to be cast thereon, remove any director or directors from
office, with or without cause, and may elect a successor or successors to fill
any resulting vacancies for the unexpired term of the removed director.

The Fund's organizing documents have been filed with the SEC as exhibits
to the Fund's registration statement and can be found at the SEC, at the Fund's
principal office or at the offices of the Fund's legal counsel.

<PAGE> 23

Stockholder Approval

Other than elections of directors, which is by plurality, any matter for
which stockholder approval is required by Maryland General Corporation Law and
the 1940 Act, requires the affirmative vote of at least a "majority" (as
defined by the 1940 Act) of the outstanding voting securities of the Fund at a
meeting called for the purpose of considering such approval. A majority of the
Fund's outstanding securities is the lesser of (1) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
present in person or by proxy or (2) more than 50% of the outstanding shares.

Legal Proceedings

There are currently no pending material legal proceedings against the Fund
or the Unit Trust Corporation.

Performance Information

The Fund may furnish data about its investment performance in
advertisements, sales literature and reports to stockholders. "Total return"
represents the annual percentage change in value of $1,000 invested at the
maximum public offering price for the one and five year periods and the life of
the Fund through the most recent calendar quarter, assuming reinvestment of all
dividends and distributions. Quotations of "yield" will be based on the
investment income per share earned during the particular 30-day period, less
expenses accrued during the period, with the remainder being divided by the
maximum offering price per share on the last day of the period. The Fund may
also furnish total return and yield calculations for other periods and/or based
on investments at various sales charge levels or net asset values. Any
performance data which is based on the Fund's net asset value per share would
be reduced if a sales charge were taken into account.

Custodian

Star Bank, N.A. is the custodian for the Fund's cash and securities.

Independent Accountants

Coopers & Lybrand L.L.P. has been appointed independent accountants for
the Fund.

Information for Stockholders

All stockholder inquiries regarding administrative procedures including
the purchase and redemption of shares should be directed to the Transfer Agent.
For assistance, call 516-951-0500 or 1-800-368-3322.

This Prospectus omits certain information contained in the Registration
Statement filed with the SEC. Copies of the Registration Statement, including
items omitted herein, may be obtained from the Commission by paying the charges
prescribed under its rules and regulations. The Statement of Additional
Information included in such Registration Statement and the Annual Report to
Shareholders of the Fund may be obtained without charge from the Fund or
selected broker-dealers.

<PAGE> 24

ACCOUNT APPLICATION
- -------------------

Mail to: American Data Services, Inc.
- -------------------------------------
The Hauppauge Corporate Center
- --------------------------------------
150 Motor Parkway
- -------------------------
Suite 109
- -----------------
Hauppauge, NY 11788 U.S.A.
- ----------------------------------
800-368-3322 (U.S.)
- ---------------------------
Internet address:
- -------------------------
http://www.trinidad.net/home/tandt/utc/utchome.htm
- ----------------------------------------------------------

For individual, custodial, trust, profit-sharing or pension plan accounts. Do
- -----------------------------------------------------------------------------
not use this form for IRAs. Please contact American Data Services, Inc.
- -----------------------------------------------------------------------
directly for IRA information.
- -----------------------------

ACCOUNT REGISTRATION
- --------------------

- -------------------------------------------------------------------
Name of Owner(s) (Individual, Joint, Custodian, Company or Trustee)
- -------------------------------------------------------------------

- -------------------------------------------------------------------
Mailing Address
- ---------------

- ---------------------------------
City State Zip
- ---------------------------------

- ---------------------------------
Daytime Telephone Number
- ------------------------

- --------------------------------------------------------
Social Security Number or Taxpayer Identification Number
- --------------------------------------------------------

Citizen of:
- -----------
/ / United States
- ---------------------------
/ / Other (specify)
- ---------------------------

INVESTMENT
- ----------

Please indicate the amount you wish to invest ($250.00 minimum).
- -----------------------------------------------------------------

/ / By check(s) made payable to Chaconia Fund $
- -----------------------------------------------------------------

/ / By wire (please call 1-516-951-0500 or 800-368-3322 (U.S.) for
- -----------------------------------------------------------------
instructions.) $
- -----------------------------------------------------------------

Indicate date of wire
- -----------------------------------------------------------------

DISTRIBUTIONS
- -------------

Distributions will be reinvested in additional shares unless one of the
- -----------------------------------------------------------------------
following boxes is checked.
- ---------------------------

/ / Send me a check for all dividends and distributions.
- ----------------------------------------------------------------
/ / Send me a check for dividends, but reinvest capital gain
- ---------------------------------------------------------------------
distributions.
- --------------

SIGNATURES AND CERTIFICATION
- ----------------------------

I (we) understand that certificates for the shares purchased hereby will be
- ---------------------------------------------------------------------------
issued only upon request. I represent that I am of legal age and have legal
- ---------------------------------------------------------------------------
capacity to make this purchase and have received and read a current
- -------------------------------------------------------------------
prospectus of the Fund. I certify under penalty of perjury that:
- ----------------------------------------------------------------

1. The social security or other tax identification number stated is correct.
- ----------------------------------------------------------------------------

2. I am not subject to backup withholding because*
- --------------------------------------------------

/ / A. The IRS has not informed me that I am subject to backup
- -----------------------------------------------------------------------
withholding.
- -------------------------

/ / B. The IRS has notified me that I am no longer subject to backup
- ----------------------------------------------------------------------------
withholding.
- ------------------------

*Check the appropriate box. If this statement is not true and you are
- ---------------------------------------------------------------------
subject to backup withholding, strike out section 2.
- ----------------------------------------------------

- -------------------------------------------------------------------
Signature of Owner, Trustee or Custodian Date
- -------------------------------------------------------------------

- --------------------------------------------------------------------
Signature of Joint Owner (Required if Joint Registration) Date
- --------------------------------------------------------------------

DEALER INFORMATION
- ------------------

- --------------------------------------------------------------------
Dealer Name
- -----------

- --------------------------------------------------------------------
Representative's Name
- ---------------------

- --------------------------------------------------------------------
Branch Address
- --------------

- --------------------------------------------------------------------
Branch Number AE#
- -----------------------------

- --------------------------------------------------------------------
Street
- ------

- --------------------------------------------------------------------
City
- ----

- --------------------------------------------------------------------
State Zip
- --------------------------------------------------------------------

<PAGE> 25
CAT PROGRAM
CONTINUING AUTOMATIC TRANSFER PROGRAM

HOW DOES IT WORK

You choose any amount you would like of $50.00 or more to invest each month.
Your transfer agent ("ADS") will establish a file with the Fund's custodian
bank, Star Bank, N.A. (the ""Custodian"), with the amount you have chosen to
invest. The Custodian then draws an automatic clearinghouse ("ACH") debit
electronically against your checking account each month. Shares of the Fund are
purchased on the same day the Custodian draws the debit, a confirmation of each
purchase is sent to you by ADS, and your bank statement will reflect the amount
of each debit.

HOW DO I SET IT UP?

Existing Shareholders -- Complete this form following the instructions below. Be
sure to check the box below indicating that you already are a shareholder of the
Fund and write your account number in the space provided.

New Shareholder -- You must first complete a regular account application,
enclose a check ($250.00 minimum) made payable to Chaconia Fund to open your
account and complete this form following the instructions below. Be sure to
check the box below indicating that you are a new shareholder with the Fund.

Mark one of your personal checks or savings account deposit slips ""VOID" and
attach the voided check or savings deposit slip to this form. Mail this form,
with the voided check or savings deposit slip attached, to ADS, at the address
below. As soon as your bank accepts your authorization, monthly debits will be
generated and purchases of Fund shares will begin. Please note that your bank
must be able to accept ACH transactions and/or be a member of an ACH
association. Your bank manager should be able to tell you about your bank's
capabilities. The Fund cannot guarantee acceptance by your bank. Please allow
one month for processing of the CAT Application before the first monthly debit
occurs.

MAIL TO: The Chaconia Income & Growth Fund, Inc.
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway, Suite 109
Hauppauge, NY 11788

FOR ADDITIONAL INFORMATION CALL: 800-368-3322 (U.S.)

/ / YES, I authorize the Continuing Automatic Transfer Program ("CAT") be
established for my account with The Chaconia Income & Growth Fund, Inc.
Please begin CAT Investing for me and invest $__________ ($50
minimum) in shares of the Fund on the:

/ / 1st

/ / 15th of each month

Check one:

/ / I am in the process of opening an account with the Fund. Enclosed
is my account application and check ($250 minimum) made payable to
Chaconia Fund, or

/ / I already have an existing account with the Fund; my account number
is: ____________________________.

_______________________________________________________________________________
Name of my bank

_______________________________________________________________________________
Address of my bank

I understand that my ACH debit for my CAT will be dated each month on the day
specified above. I agree that if such debit is not honored upon presentation,
ADS and the Custodian may discontinue this service, and any purchase of Fund
shares may be reversed. I further understand that the net asset value of shares
of the Fund at the time of such reversal may be less than the net asset value on
the day of the original purchase. ADS and the Custodian are authorized to redeem
sufficient additional full and fractional shares from my account to make up the
deficiency. CAT Investing may be discontinued by ADS and the Custodian upon
30 days' written notice or by the investor by written notice to ADS (at the
above address) provided the notice is received no later than 5 business days
prior to the specified investment date.

_______________________________________________________________________________
Signature of depositor Date

_______________________________________________________________________________
Signature of Co-Depositor (required for joint accounts) Date

24
<PAGE> 26

DATED OCTOBER 31, 1997

THE CHACONIA INCOME & GROWTH FUND, INC.

Statement of Additional Information

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission (the "SEC"). These securities may not be
sold nor many any offers to buy be accepted prior to the time the registration
becomes effective.

This Statement of Additional Information is not a prospectus, and it
should be read in conjunction with the Prospectus of The Chaconia Income &
Growth Fund, Inc. (the "Fund"). A copy of the Prospectus may be obtained from
the Fund c/o American Data Services, Inc., The Hauppauge Corporate Center, 150
Motor Parkway, Suite 109, Hauppauge, New York 11788.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Cross-Reference
to Page in the
Page Prospectus
---- ---------------

<S> <C> <C>
Investment Objective and Policies 26 9

Basic Investment Techniques 27 10

U.S. Government Securities 29 11

Certain Investment Strategies and Special
Risk Considerations 30 13

Investment Restrictions 31 -

Management 32 14

Portfolio Transactions and Brokerage 35 -

Purchase and Redemption of Shares 36 16 & 17

Retirement Plans 37 19

Dividends, Distributions and Taxes 38 19

Investment Performance Information 40 -

General Information 41 21

Financial Statements 41 -

Appendix-Description of Ratings 42 -
</TABLE>

<PAGE> 27

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to seek high current income and
capital appreciation. It seeks to meet its objective by investing the Fund's
assets in: U.S. Government securities including U.S. Treasury obligations and
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, investment grade corporate bonds, investment grade foreign
government bonds, equity securities of U.S., Canadian, British and Trinidad and
Tobago companies, American Depository Receipts ("ADRs"), the First and Second
Unit Schemes (the "Schemes") of the Trinidad and Tobago Unit Trust Corporation,
certificates of deposit and money market funds. There can be no assurance that
the Fund will be able to achieve its objective.

The Fund's investment policy will emphasize debt instruments to achieve
the Fund's current income objective. The Fund will maintain a level of at
least 25% of its total assets invested in debt securities and at least 25% of
its total assets invested in equity securities. The investment in equity
securities versus bonds will depend upon the Investment Manager's evaluation of
the relative merits and risks of equity securities versus bonds.

In determining what equity securities the Fund will invest in, the
Investment Manager will focus on the price trend of the company's shares to
determine the volatility of the price trend and how it relates to the earnings,
return on equity and dividend history of the company. The Investment Manager
will seek to invest in equity securities of companies whose shares are
undervalued based on the inherent or long-term record of the company. For
purposes of this investment policy, equity securities are defined as: U.S. and
foreign common stocks, ADRs, warrants, convertible bonds, convertible
debentures, preferred stock and stock rights. No more than 5% of the Fund's
net assets may be used to purchase stock rights. The Fund may not purchase
options on equity securities. Debt securities are defined as: U.S. and
foreign nonconvertible company bonds, U.S. and foreign government securities
and commercial paper.

<PAGE> 28

Subject to its investment policy of normally investing at least 25% of its
assets in U.S. Government securities, investment grade corporate bonds and
investment grade foreign government bonds, the Fund is permitted to invest in
(1) U.S. dollar denominated debt securities, similar in nature to those
described above, regardless of the domicile of the issuers and (2) income
producing equity securities of companies domiciled in the United States (some
of which may be denominated other than in U.S. dollars). Some of these
securities are issued in the Eurodollar market by multinational banks and
companies which may have operations in Trinidad and Tobago.

BASIC INVESTMENT TECHNIQUES

Securities Subject to Reorganization

The Fund may invest in both debt and equity securities for which a tender
or exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or reorganization proposal has been
announced if, in the judgment of INVESCO CAPITAL MGMT., INC. (the "Investment
Manager"), there is a reasonable prospect of capital appreciation significantly
greater than the brokerage and other transaction expenses involved.

In general, securities which are the subject of such an offer or proposal
sell at a premium to their historic market price immediately prior to the
announcement of the offer or may also discount what the stated or appraised
value of the security would be if the contemplated transaction were approved or
consummated. Such investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by stockholders of
the prospective portfolio company as a result of the contemplated transaction;
or fails adequately to recognize the possibility that the offer or proposal may
be replaced or superseded by an offer or proposal of greater value. The
evaluation of such consistencies requires unusually broad knowledge and
experience on the part of the Investment Manager which must appraise not only
the value of the issuer and its component businesses, as well as the assets or
securities to be received as a result of the contemplated transaction but also
the financial resources and business motivation of the offeror and the dynamics
and business climate when the offer or proposal is in process. In making these
investments, the Fund will not violate any of its investment restrictions
including the requirement that: (a) as to 75% of its total assets, it will not
invest more than 5% of its total assets in the securities of any one issuer,
and (b) it will not invest more than 25% of its total assets in any one
industry. Since such investments are ordinarily short-term in nature, they
will tend to increase the turnover ratio of the Fund, thereby increasing its
brokerage and other transaction expenses, as well as make it more difficult for
the Fund to meet the test for favorable tax treatment as a "Regulated
Investment Company" under Subchapter M of the Internal Revenue Code of 1986
(the "Code") (see "Dividends, Distributions and Taxes"). The Investment
Manager intends to select investments of the type described which, in its view,
have a reasonable prospect of capital appreciation which is significant in
relation to both risk involved and the potential of available alternative
investments, as well as to monitor the effect of such investments on the tax
qualifications test of the Code.

Nonconvertible Debt Securities

<PAGE> 29

("Moody's"). Fixed income securities rated, at the time of investment,
less than BBB by S&P or Baa by Moody's or which are unrated but of comparable
quality as determined by the Investment Manager, are not investment grade and
are viewed by the rating agencies as being predominantly speculative in
character and are characterized by substantial risk concerning payments of
interest and principal, sensitivity to economic conditions and changes in
interest rates, as well as by market price volatility and/or relative lack of
secondary market trading, among other risks. The Fund will not invest any of
its assets in noninvestment grade debt securities.

The market values of fixed income securities generally fall when interest
rates rise and, conversely, rise when interest rates fall.

If the Investment Manager believes that stocks in general are overvalued,
or that interest rates may rise substantially, or that the general economic
environment may be deteriorating, the Investment Manager may assume a temporary
defensive position and may invest up to 100% of the Fund's assets in high
quality commercial paper and short term U.S. Government securities such as
Treasury Bills and Treasury Notes.

Warrants and Rights

The Fund may invest up to 5% of its net assets in warrants or rights
(other than those acquired in units or attached to other securities) which
entitle the holder to buy equity securities at a specific price during or at
the end of a specific period of time. The Fund will not invest more than 2% of
its total assets in warrants or rights which are not listed on the New York or
American Stock Exchange. For purposes of this investment policy, a warrant is
defined as a certificate giving the holder the right to purchase securities at
a stipulated price within a specific time limit or perpetually. Sometimes a
warrant is offered with securities as an inducement to buy. The prices of
warrants do not necessarily correlate with the prices of the underlying
securities.

When Issued, Delayed Delivery Securities and Forward Commitments

The Fund may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis in excess
of customary settlement periods for the type of security involved. In some
cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of the
commitment, with payment and delivery taking place in the future, generally a
month or more after the date of the commitment. While the Fund will only enter
into a forward commitment with the intention of actually acquiring the
security, the Fund may sell the security before the settlement date if it is
deemed advisable.

Borrowing

<PAGE> 30

Loans of Portfolio Securities

To increase income, the Fund may lend its portfolio securities to
securities broker-dealers or financial institutions if (1) the loan is
collateralized in accordance with applicable regulatory requirements (2) the
loan is subject to termination by the Fund at any time, (3) the Fund receives
reasonable interest or fee payments on the loan, (4) the Fund is able to
exercise all voting rights with respect to the loaned securities and (5) the
loan will not cause the value of all loaned securities to exceed 33% of the
value of the Fund's assets.

U.S. GOVERNMENT SECURITIES

The U.S. Government securities in which the Fund may invest include direct
obligations of the U.S. Treasury, such as Treasury bills, notes and bonds, and
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, including securities that are supported by the full faith
and credit of the United States, such as Government National Mortgage
Association ("GNMA") certificates, securities that are supported by the right
of the issuer to borrow from the U.S. Treasury, such as securities of the
Federal Home Loan Banks, and securities supported solely by the
creditworthiness of the issuer, such as Federal National Mortgage Association
("FNMA") and Federal Home Loan Mortgage Corporation ("FHLMC") securities.

The Schemes of the Trinidad and Tobago Unit Trust Corporation

<PAGE> 31

September 30, 1997, the Schemes of the Trinidad and Tobago Unit Trust
Corporation had an aggregate of $302,153,361 (U.S. dollars) under management
and approximately 165,025 unitholders.

As of September 30, 1997, the Unit Trust Corporation beneficially owned
8.909% of the outstanding voting stock of the Fund.

CERTAIN INVESTMENT STRATEGIES AND SPECIAL RISK CONSIDERATIONS

There are certain risks involved in investing in securities of companies
and governments of foreign nations that are in addition to the usual risks
inherent in U.S. investments. These risks include those resulting from
fluctuations in currency exchange rates, devaluation of currencies, future
adverse political and economic developments and the possible imposition of
currency exchange blockages or from other foreign governmental laws or
restrictions. Changes in foreign currency exchange rates may affect the value
of the Fund's assets, the value of dividends and interest earned, gains and
losses realized on the sale of securities and net investment income and gains
to be distributed to stockholders by the Fund. In addition, many of the
securities held by the Fund will not be registered with, nor the issuers
thereof be subject to reporting requirements of, the Securities and Exchange
Commission (the "SEC"). Accordingly, there may be less publicly available
information

<PAGE> 32

about the securities and about the foreign company or government
issuing them than is available about a U.S. company or U.S. Government entity.
Foreign issuers are not subject to uniform financial reporting standards,
practices and requirements comparable to those applicable to U.S. issuers.
Furthermore, with respect to some foreign countries, there is the possibility
of expropriation, nationalization or confiscatory taxation, limitations on the
removal of funds or other assets of the Fund, including the withholding of
dividends, political or social instability or domestic developments that could
affect U.S. investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
investment, resource self-sufficiency and balance of payments positions. The
Fund may invest in securities of foreign governments (or agencies or
instrumentalities thereof) and many, if not all, of the foregoing
considerations apply to such investments as well. Finally, securities of some
foreign companies are less liquid and their prices are more volatile than
securities of comparable U.S. companies, and certain foreign countries are
known to experience long delays between the trade and settlement dates of
securities purchased or sold.

INVESTMENT RESTRICTIONS

The Fund has adopted the following restrictions as fundamental policies,
which may not be changed without the favorable vote of the holders of a
"majority," as defined in the Investment Company Act of 1940 (the "1940 Act"),
of the Fund's outstanding voting securities. Under the 1940 Act, the vote of
the holders of a majority of a Fund's outstanding voting securities means the
vote of the holders of the lesser of (i) 67% of the shares of the Fund
represented at a meeting at which the holders of more than 50% of its
outstanding shares are represented or (ii) more than 50% of the outstanding
shares.

The Fund may not:

1. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions.

2. Make short sales of securities or maintain a short position and may not
purchase or write options on securities, indices, foreign currencies or
futures.

3. Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 5% of
its total assets (not including the amount borrowed) and will not purchase
securities while borrowings in excess of 5% of the value of the Fund's total
assets are outstanding.

4. Buy or sell commodities or commodity contracts including futures
contracts or buy or sell real estate or interests in real estate (although it
may purchase and sell securities which are secured by real estate and
securities of companies which invest or deal in real estate).

5. Make loans (except for purchases of publicly-traded debt securities
consistent with the Fund's investment policies).

6. Make investments for the purpose of exercising control or management.

7. Act as underwriter (except to the extent the Fund may be deemed to be
an underwriter in connection with the sale of securities in the Fund's
investment portfolio), exclusive of Fund purchases of restricted securities
(i.e., securities that must be registered under the Securities Act of 1933
before they may be

<PAGE> 33

offered or sold to the public) if such purchases at the time
thereof would not cause more than 15% of the value of the Fund's net assets to
be invested in all such restricted or illiquid assets.

8. Invest 25% or more of its total assets at the time of purchase in any
securities of issuers in one industry. U.S. Government securities are excluded
from this restriction.

The Fund observes the following restrictions as a matter of operating
policy but not fundamental policy, pursuant to positions taken by federal and
state regulatory authorities:

The Fund may not:

9. Invest more than 15% of its net assets in (i) securities which are
restricted or for which market quotations are not readily available; (ii) fixed
time deposits subject to withdrawal penalties (other than overnight deposits);
and (iii) repurchase agreements having a maturity of more than seven days.

10. Purchase any security if as a result the Fund would then hold more
than 10% of any class of securities of an issuer (taking all common stock
issues as a single class, all preferred stock issues as a single class, and all
debt issues as a single class) or more than 10% of the outstanding voting
securities of an issuer.

11. Invest in securities of any issuer if, to the knowledge of the Fund,
any officer or director of the Fund or of the Investment Manager owns more than
1/2 of 1% of the outstanding securities of such issuer, and such directors who
own more than 1/2 of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer.

12. Invest more than 5% of the value of its net assets in warrants
(included, in that amount, but not to exceed 2% of the value of the Fund's net
assets, may be warrants which are not listed on the New York or American Stock
Exchange).

13. Invest in any security if as a result the Fund would have more than 5%
of its total assets invested in securities of companies which together with any
predecessor have been in continuous operation for fewer than three years.

14. Invest in real estate limited partnerships, or oil, gas and other
mineral leases.

MANAGEMENT

Board of Directors

<PAGE> 34

securities laws. Investors of the Fund may not be able to effect
service of process within the United States upon the Fund's nonresident
directors and officers for the enforcement of civil liabilities under federal
and state securities laws. The Fund has appointed an agent for service of
process in the states where the Fund has registered its securities for offer
and sale.

The directors and officers of the Fund, their business addresses and
principal occupations during the past five years are as follows. Directors
deemed to be "interested persons" of the Fund for purposes of the 1940 Act are
indicated by an asterisk.

<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With Registrant During Last Five Years
- ---------------- ---------------- ----------------------
<S> <C> <C>

*Clarry Benn Director and President Executive Director, 9-96
Trinidad and Tobago to Present; Executive
Unit Trust Corporation Manager, Investments and
74 Independence Square Financial Trust
Port-of-Spain Accounting, 8-92
Trinidad and Tobago, W.I. to 8-96; Manager of
Investments both with
Trinidad and Tobago
Unit Trust Corporation.

*Renrick Nickie Director, Vice President and Executive Manager,
Trinidad and Tobago Treasurer Marketing and Operations,
Unit Trust Corporation 8-92 to Present; Manager of
74 Independence Square Marketing, both with the Trinidad
Port-of-Spain and Tobago Unit Trust
Trinidad and Tobago, W.I. Corporation, 10-83 to 8-92.

Dr. John A. Cole Director Visiting Professor of Finance, 8-97
2943 Landing Way to Present, University of North
Orangeburg, SC 29115 Carolina at Charlotte;
Professor of Finance, 8-95 to
Present, South Carolina State
University; Associate Professor of
Finance, 8-89 to 7-95,
Florida A&M University;
Executive Vice President, 9-84 to
Present, Financial Research
Associates, Inc.

</TABLE>

Position(s) Held Principal Occupation
Name and Address With Registrant During Last Five Years
- -------------------------------- ---------------- ----------------------------
<S> <C> <C>
Mrs. Judy Y. Chang Director Chairperson of Trinidad
Trinidad & Tobago Unit Trust and Tobago Unit Trust
Corporation Corporation, 8-97 to
74 Independence Square Present; Consultant, 7-97 to
Port-of-Spain Present; Partner, Price
Trinidad & Tobago, W.I. Waterhouse, 1980 to 1997.

Dr. Roosevelt J. Williams, Ph.D. Director Director, Cipriani College
and Education Consultant of Labour and Cooperative
Cipriani College of Labour and Studies, 8-97 to Present;
Cooperative Studies Education Consultant,
Churchill Roosevelt Highway 1-96 to 7-97; Professor
Valsayn, Trinidad & Tobago, W.I. of Howard University,
1989 to 12-95.

Ulice Payne, Jr. Secretary Attorney and Shareholder,
Reinhart, Boerner, Reinhart, Boerner,
Van Deuren, Norris & Van Deuren, Norris &
Rieselbach, s.c. Rieselbach, s.c.,
1000 North Water Street, February 1990 to Present.
Suite 2100
Milwaukee, WI 53202

</TABLE>

The Unit Trust Corporation pays directors who are not "interested
persons" of the Fund nor employees of the Investment Manager $500 per meeting
of the board attended by the director. Directors also are reimbursed by the
Unit Trust Corporation for any expenses incurred in attending meetings. The
Fund does not pay any form of compensation to the Directors.

The Investment Manager and the Management Agreement

Subject to supervision by the Fund's Board of Directors, investment
management and administration services will be provided to the Fund by INVESCO
CAPITAL MGMT. Inc. (the "Investment Manager") pursuant to an Investment
Management Agreement dated October 29, 1992 ("Management Contract"). Under the
Management Contract, the Investment Manager will provide a continuous
investment program for the Fund and make decisions and place orders to buy,
sell or hold particular securities and futures. The Investment Manager also
will supervise all matters relating to the operation of the Fund and will
obtain clerical staff, office space, equipment and services. As compensation
for its services, the Investment Manager will receive a monthly fee at an
annual rate of the greater of $50,000 or 0.75% of 1% on first $10 million,
0.50% of 1% on next $10 million and 0.25% of 1% over $20 million of the Fund's
average daily net assets. This fee is greater than that paid by most other
funds.

Under the Management Contract, the Investment Manager will not be liable
to the Fund for any error of judgment by the Investment Manager or any loss
sustained by the Fund except in the case of a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages will be limited as provided in the 1940 Act) or of willful misfeasance,
bad faith, gross negligence or reckless disregard of duty.

The Management Contract was approved by the Board of Directors and by a
majority of the directors who neither are interested persons of the Fund nor
have any direct or indirect financial interest in the Management Contract or
any agreement related thereto ("Independent Directors"), and by the Fund's
initial

<PAGE> 36

shareholder on September 25, 1992. The Management Contract will remain
in effect until terminated by either party. The Management Contract shall be
specifically approved at least annually (i) by a majority vote of the
Independent Directors cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund. The Management
Contract will be submitted to the stockholders of the Fund for their approval
at the first meeting of stockholders following the offering of the Fund's
shares.

The Management Contract is terminable by vote of the Board of Directors or
by the holders of a majority of the outstanding voting securities of the Fund
at any time without penalty, on 60 days' written notice to the Investment
Manager. The Management Contract also may be terminated by the Investment
Manager on 60 days' written notice to the Fund. The Management Contract
terminates automatically upon its assignment (as defined in the 1940 Act).

Administrator

American Data Services, Inc. (the "Administrator") is located at The
Hauppauge Corporate Center, 150 Motor Parkway, Suite 109, Hauppauge, New York
11788, and serves pursuant to an agreement with the Fund (the "Administrative
Services Agreement"). Pursuant to the Administrative Services Agreement,
subject to the overall authority of the Fund's Board of Directors in accordance
with Maryland law, the Administrator will assist in the Fund's administration
and operation, including, but not limited to, the preparation of statistical
and research data, data processing services, preparation of management reports
for performance and compliance, as well as prepare and maintain the Fund's
operating expense budget.

Fund Operating Expenses

In addition to the management fee payable to the Investment Manager, the
Fund is responsible for its operating expenses, including: (i) interest and
taxes; (ii) brokerage commissions; (iii) insurance premiums; (iv) compensation
and expenses of, directors other than those affiliated with the Investment
Manager; (v) legal and audit expenses; (vi) fees and expenses of the Custodian,
shareholder service or Transfer Agent; (vii) fees and expenses for registration
or qualification of the Fund and its shares under federal or state securities
laws; (viii) expenses of preparing, printing and mailing reports and notices
and proxy material to stockholders; (ix) other expenses incidental to holding
any stockholder meetings; (x) dues or assessments of or contributions to the
Investment Company Institute or any successor; (xi) Rule 12b-1 fees paid by the
Fund in connection with the Distribution Plan; (xii) service fees paid by the
Fund in connection with the personal service and/or maintenance of shareholder
accounts; and (xiii) such nonrecurring expenses as may arise, including
litigation affecting the Fund and the legal obligations with respect to which
the Fund may have to indemnify its officers and directors.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Management Contract states that in connection with its duties to
arrange for the purchase and the sale of securities and futures held in the
portfolio of the Fund by placing purchase and sale orders for the Fund, the
Investment Manager shall select such registered broker-dealers ("brokers") as
shall, in its judgment,

<PAGE> 37

achieve the policy of "best execution," i.e., prompt and efficient
execution at the most favorable securities price. In making such selection,
the Investment Manager is authorized in the Management Contract to consider the
reliability, integrity and financial condition of the brokers. The Investment
Manager also is authorized by the Management Contract to consider whether the
brokers provide brokerage and/or research services to the Fund and/or other
accounts of the Investment Manager.

The Management Contract states that the commissions paid to brokers may be
higher than other brokers would have charged if a good faith determination is
made by the Investment Manager that the commission is reasonable in relation to
the services provided, viewed in terms of either that particular transaction on
the Investment Manager's overall responsibilities as to the accounts as to
which it exercises investment discretion and that the Investment Manager shall
use its judgment in determining that the amount of commissions paid are
reasonable in relation to the value of brokerage and research services provided
and need not place or attempt to place a specific dollar value on such services
or on the portion of commission rates reflecting such services. The Management
Contract provides that to demonstrate that such determinations were in good
faith, and to show the overall reasonableness of commissions paid, the
Investment Manager shall be prepared to show that commissions paid (i) were for
purposes contemplated by the Management Contract; (ii) were for products or
services which provide lawful and appropriate assistance to its decision making
process; and (iii) were within a reasonable range as compared to the rates
charged by brokers to other institutional investors as such rates may become
known from available information. The Investment Manager also is authorized to
consider sales of shares of the Fund and/or of any other investment companies
for which the Investment Manager acts as Investment Manager or advisor as a
factor in the selection of brokers to execute brokerage and principal
transactions, subject to the requirements of "best execution," as defined
above.

The research services discussed above may be in written form or through
direct contact with individuals and may include information as to particular
companies and securities as well as market, economic or institutional areas
and, information assisting the Fund in the valuation of the Fund's investments.
The research which the Investment Manager receives for the Fund's brokerage
commissions, whether or not useful to the Fund, may be useful to it in managing
the accounts of its other advisory clients. Similarly, the research received
for the commissions of such accounts may be useful to the Fund.

The debt securities which will be the principal component of the Fund's
portfolio are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission although the price
of the security usually includes a profit to the dealer. Money market
instruments usually trade on a "net" basis as well. On occasion, certain money
market instruments may be purchased by the Fund directly from an issuer in
which case no commissions or discounts are paid. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount.

Brokerage commissions in Trinidad and Tobago, as in the U.S., are
negotiable. Trinidad and Tobago brokers, which act as agent, and dealers,
which act as principal, are subject to government regulation if they deal with
public investors.

PURCHASE AND REDEMPTION OF SHARES

The procedures for purchasing shares of the Fund are summarized in the
prospectus under "How to Purchase Shares" and the procedures for redemption of
shares are summarized in the prospectus under "How to Redeem Shares."
Investors may now elect to purchase shares through the continuing automatic
transfer plan as described in the prospectus.

The Fund will redeem shares solely in cash up to the lesser of $250,000 or
1% of the net asset value during any 90-day period for any one stockholder.
The Fund reserves the right to pay other redemptions, either total or partial,
by a distribution in kind of readily marketable securities (instead of cash)
from the Fund's portfolio. The securities distributed in such a distribution
would be valued at the same amount as that assigned to

<PAGE> 38

them in calculating the net asset value for the shares being redeemed.
If a stockholder receives a distribution in kind, he or she should expect to
incur transaction costs when he or she converts the securities to cash.

Cancellation of purchase orders for Fund shares (as, for example, when
checks submitted to purchase shares are returned unpaid) cause a loss to be
incurred when the net asset value of the Fund shares on the date of
cancellation is less than the original date of purchase. The investor is
responsible for such loss and the Fund may reimburse itself or selected
broker-dealers for such loss by automatically redeeming shares from any account
registered in that stockholder's name, or by seeking other redress.

Determination of Net Asset Value

The net asset value of the Fund's shares will fluctuate and is determined
as of the close of trading on the New York Stock Exchange (the "Exchange")
(currently 4 p.m. Eastern time) each business day. The Exchange annually
announces the days on which it will not be open for trading. The most recent
announcement indicates that it will not be, open on the following days: New
Years Day, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. However, the Exchange may close on
days not included in that announcement.

The net asset value per share is computed by dividing the value of the
securities held by the Fund plus any cash or other assets (including interest
and dividends accrued but not yet received) minus all liabilities (including
accrued expenses) by the total number of Fund shares outstanding at such time.
The Fund values its assets based on their current market value when market
quotations are readily available. If such value cannot be established, assets
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors.

Securities for which market quotations are not readily available are
valued at fair market value as determined in good faith under procedures
established by the Fund's Board of Directors. Short-term debt securities which
mature in more than 60 days are valued at current market quotations.
Short-term debt securities which mature in 60 days or less are valued at
amortized cost if their term to maturity from the date of purchase was 60 days
or less, or by amortizing their value on the 61st day prior to maturity, if
their term to maturity from the date of purchase exceeded 60 days, unless the
Board of Directors determines that such valuation does not represent fair
value.

Following the calculation of security values in terms of currency in which
the market quotation used is expressed ("local currency"), the valuing agent
shall calculate these values in terms of United States dollars on the basis of
the conversion of the local currencies (if other than U.S.) into United States
dollars at the rates of exchange prevailing at the value time as determined by
the valuing agent. The value of other property owned by the Fund shall be
determined in a manner which, in the discretion of the valuing agent of the
Fund, most fairly reflects fair market value of the property on such date.

Trading in securities on European securities exchanges and
over-the-counter markets is normally completed well before the close of
business on each business day in New York (i.e., a day on which the New York
Stock Exchange is open). In addition, European securities trading generally or
in a particular country or countries may not take place on all business days in
New York. Furthermore, trading takes place in various foreign markets on days
which are not business days in New York and on which the Fund's net asset value
is not calculated. The Fund calculates net asset value per share and,
therefore, effects sales, redemptions and repurchases of its shares, as of the
close of the New York Stock Exchange once on each day on which the New York
Stock Exchange is open. Such calculation does not take place contemporaneously
with the determination of the prices of the majority of the portfolio
securities used in such calculation. If events materially affecting the value
of such securities occur between the time when their price is determined and
the time when the Fund's net asset value is calculated, such securities will be
valued at fair value as determined in good faith by the Board of Directors.

<PAGE> 39

RETIREMENT PLANS

The Fund has made available an Individual Retirement Plan which is
obtainable from selected broker-dealers or the Transfer Agent. The minimum
investment required to open an IRA for investment in shares of the Fund is $250
for an individual except that both the individual and his or her spouse would
be able to establish separate IRAs.

DIVIDENDS, DISTRIBUTIONS AND TAXES

General

The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code and generally intends to take all other action
required to insure that little or no federal income or excise taxes will be
payable by the Fund. If so qualified, the Fund will not be subject to federal
income tax on its net investment income and net short-term capital gains, if
any, realized during any fiscal year in which it distributes such income and
capital gains to its stockholders.

The Fund will determine either to distribute or to retain all or part of
any net long-term capital gains in any year for reinvestment. If any such
gains are retained, the Fund will be subject to a tax of 34% of such amount.
In that event, the Fund expects to designate the retained amount as
undistributed capital gains in a notice to its stockholders, each of whom (1)
will be required to include in income for tax purposes as long-term capital
gains, such stockholders' share of such undistributed amount; (2) will be
entitled to credit proportionate share of the tax paid by the Fund against
federal income tax liability and to claim the Fund to the extent the credit
exceeds such liability; and (3) will increase basis in shares of the Fund by an
amount equal to 66% of the amount of undistributed capital gains included in
such stockholder's gross income.

Under the Code, amounts not distributed on a timely basis in accordance
with certain distribution requirements are subject to a nondeductible 4% excise
tax. To avoid the tax, the Fund must distribute, during each calendar year, an
amount equal to, at the minimum, the sum of (1) 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year; (2) 98%
of its capital gains in excess of its capital losses for the 12-month period
ending on October 31 of the calendar year; and (3) all ordinary income and net
capital gains for previous years that were not previously distributed. A
distribution will be treated as paid during the calendar year if it is paid
during the calendar year or declared by the Fund in October, November or
December of the year, payable to stockholders of record on a date during such
month and paid by the Fund during January of the following year. Any such
distributions paid during January of the following year will be deemed to be
received on December 31 of the year the distributions are declared, rather than
when the distributions are received.

<PAGE> 40

Gains or losses on the sales of securities by the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than 12 months. Gains or losses on the sale of securities held for 12 months
or less will be short-term capital gains or losses.

Taxation of Distributions

Distributions of investment company taxable income (which includes taxable
interest income and the excess of net short-term capital gains over long-term
capital losses) are taxable to a U.S. stockholder as ordinary income, whether
paid in cash or shares. Dividends paid by the Fund will qualify for the 70%
deduction for dividends received by corporations to the extent the Fund's
income consists of qualified dividends received from U.S. corporations.
Distributions of net capital gains (which consist of the excess of long-term
capital gains over net short-term capital losses), if any, are taxable as
long-term capital gains, whether paid in cash or in shares, regardless of how
long the stockholder has held the Fund's shares, and are not eligible for the
dividends received deduction. Stockholders receiving distributions in the form
of newly issued shares will have a basis in such shares of the Fund equal to
the fair market value of such shares on the distribution date. If the net
asset value of shares is reduced below a stockholder's cost as a result of a
distribution by the Fund of current or accumulated earnings and profits, such
distribution will be taxable even though it represents a return of invested
capital. The price of shares purchased at this time may reflect the amount of
the forthcoming distribution. Those purchasing just prior to a distribution
will receive a distribution which will nevertheless be taxable to them.

Sales of Shares

Upon a sale or exchange of his or her shares, a stockholder will realize a
taxable gain or loss depending upon his or her basis in the shares. Such gain
or loss will be treated as capital gain or loss if the shares have been held
for more than one year. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced within a period of
61 days beginning 30 days before and ending 30 days after the shares are
disposed of.

In such case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss. Any loss realized by a stockholder on the sale of Fund
shares held by the stockholder for six months or less will be treated for tax
purposes as a long-term capital loss to the extent of any distributions of net
capital gains received by the stockholder with respect to such shares.

Backup Withholding

The Fund may be required to withhold federal income tax at the rate of 31%
of all taxable distributions payable to stockholders who fail to provide the
Fund with their correct taxpayer identification number

<PAGE> 41

or to make required certifications or who have been notified by the
Internal Revenue Service that they are subject to backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against a stockholder's federal income tax liability.

Foreign Withholding Taxes

Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known.

If more than 50% of the Fund's assets at year-end consist of the debt and
equity securities of foreign corporations, the Fund intends to qualify for and
make the election permitted under Section 853 of the Code, but there can be no
assurance that it will qualify. If the Fund makes such elections, the
stockholders may claim a credit or deduction on their income tax returns for,
and will be required to treat as part of the amount distributed to them, their
pro rata portion of qualified taxes that the Fund paid to foreign countries
(which taxes relate primarily to investment income). A stockholder's ability
to claim such a foreign tax credit will be subject to certain limitations
imposed by the Code, as a result of which stockholders may not get full credit
for the amount of foreign taxes so paid by the Fund. Stockholders who do not
itemize on their federal income tax returns may claim a credit (but no
deduction) for such foreign taxes. Stockholders are urged to consult their
attorneys or tax advisors regarding specific questions as to federal, state or
local taxes.

The Corporation reserves the right to offer investors a range of
investment opportunities by providing a choice of investments in various
portfolios and, consequently, the right to create and issue a number of
different series shares each of which relate to the assets of the separate
portfolios. In such case the shares of each series would participate equally
in the earnings, dividends and assets of a particular portfolio and would vote
separately to approve management agreements or changes in investment policies.
However, shares of all series would vote together in the election or selection
of directors, principal underwriters and accountants and on any proposed
material amendment to the Corporation's Certificate of Incorporation. For
federal tax purposes, each "fund" of a series is treated as a separate
corporation.

Upon liquidation of the Fund or any series, stockholders of the affected
series would be entitled to share pro rata in the net assets of their
respective series available for distribution to such stockholders.

INVESTMENT PERFORMANCE INFORMATION

Quotations of yield will be based on the investment income per share
earned during a particular 30-day (or one month) period, less expenses accrued
during the period ("net investment income") and will be computed by dividing
net investment income by the maximum offering price per share on the last day
of the period, according to the following formula:

6
2[ ( a-b + 1) - 1]
-------------------
YIELD = cd

where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends and d =
the maximum offering price per share on the last day of the period.

<PAGE> 42

Quotations of total return will reflect only the performance of a
hypothetical investment in the Fund during the particular time period shown.
The Fund's total return and current yield may vary from time to time depending
on market conditions, the compositions of the Fund's portfolio and operating
expenses. These factors and possible differences in the methods used in
calculating yield should be considered when comparing the Fund's current yield
to yields published for other investment companies and other investment
vehicles. Total return and yield should also be considered relative to changes
in the value of the Fund's shares and the risks associated with the Fund's
investment objectives and policies. At any time in the future, total returns
and yields may be higher or lower than past total returns and yields and there
can be no assurance that any historical return or yield will continue.

In connection with communicating its yield or total return to current or
prospective stockholders, the Fund may also compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but
generally do not reflect deductions for administrative and management costs.

Quotations of the Fund's total return will represent the average annual
compounded rate of return of a hypothetical investment in the Fund over periods
of one, five and ten years (up to the life of the Fund), and are calculated
pursuant to the following formula:
n
P (1 + T) = ERV

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years and ERV = the redeemable value at the end
of the period of a $1,000 payment made at the beginning of the period). All
total return figures will reflect the deduction of Fund expenses (net of
certain expenses reimbursed by the Advisor) on an annual basis and will assume
that all dividends and distributions are reinvested and will deduct the maximum
sales charge, if any is imposed.

GENERAL INFORMATION

The Fund, incorporated in the State of Maryland on October 24, 1990, is
authorized to issue 2,000,000 shares of common stock, $.01 par value (the
"Common Stock"). Shares of the Fund, when issued, are fully transferable and
redeemable at the option of the holder. Shares are also redeemable at the
option of the Fund in certain circumstances as described in the Fund's
Prospectus under "How to Redeem Shares." All Fund shares are equal as to
earnings assets and voting privileges. There are no conversion, preemption or
other subscription rights. Under the Fund's Certificate of Incorporation, the
Board of Directors may authorize the creation of additional series of common
stock, with such preferences, privileges, limitations and voting and dividend
rights as the board may determine. Each share of the Fund outstanding is
entitled to share equally in dividends and other distributions and in the net
assets of the Fund on liquidation. Accordingly, in the event of liquidation,
each share of the Fund's common stock is entitled to its portion of all the
Fund's assets after all debts and expenses have been paid. The shares of the
Fund do not have cumulative voting rights for the election of directors.

<PAGE> 43

The Fund's organizing documents have been filed with the SEC as exhibits
to the Fund's registration statement and can be found at the SEC or at the
Fund's principal office or at the offices of the Fund's legal counsel.

FINANCIAL STATEMENTS

The Fund's audited financial statements were filed with the SEC on
February 27, 1997 as part of the Fund's annual report. The Fund's semiannual
report was filed with the SEC on August 29, 1997. The financial statements
contained in such annual and semiannual reports are incorporated by reference
herein.

<PAGE> 44

APPENDIX--DESCRIPTION OF RATINGS

APPENDIX A TO STATEMENT OF ADDITIONAL INFORMATION

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S ("MOODY'S") CORPORATE BOND
RATINGS

AAA: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues. AA:
Bonds which are rated as Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which made the long-term risks appear somewhat larger than in Aaa
securities. A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future. BAA: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and, in fact, have speculative characteristics, as
well. BA: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class. B: Bonds which are rated B
generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small. CAA: Bonds which are
rated Caa are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest. CA: Bonds
which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or there may be marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

DESCRIPTION OF STANDARD & POOR'S CORPORATION'S ("S&P'S") CORPORATE DEBT RATINGS

AAA: Debt rated AAA has the highest rating assigned by S&P's. Capacity
to pay interest and repay principal is extremely strong. AA: Debt rated AA
has a very strong capacity to pay interest and repay principal and differs from
the highest rated issues only in small degree. A: Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. BBB: Debt rated BBB is
regarded as having adequate capacity to pay interest and repay principal.
Whereas it normally exhibits protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for debt in higher
rated categories. BB, B, CCC, CC, C: Debt rated BBB, B, CCC, CC and C is
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions. CL: The rating Cl is reserved for
income bonds on which no interest is being paid. D: Debt rated D is in
payment default. The D rating category is used when interest payments or
principal payments are not made on the date due even if the applicable grace
period has not expired, unless S&P's believes that such payments will

<PAGE> 45

be made during such grace period. The D rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

DESCRIPTION OF MOODY'S PREFERRED STOCK RATINGS

AAA: An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least
risk of dividend impairment within the universe of preferred stocks. AA: An
issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
A: An issue which is rated a is considered to be an upper medium grade
preferred stock. While risks are judged to be somewhat greater than in the aaa
and aa classifications, earnings and asset protection are nevertheless expected
to be maintained at adequate levels. BAA: An issue which is rated baa is
considered to be medium grade, neither highly protected nor poorly secured.
Earnings and asset protection appear adequate at present, but may be
questionable over great length of time. BA: An issue which is rated ba is
considered to have speculative elements and its future cannot be considered
well assured. Earnings and asset protection may be very moderate and not well
safeguarded during adverse periods. Uncertainty of position characterizes
preferred stocks in this class. B: An issue which is rated b generally lacks
the characteristics of a desirable investment. Assurance of dividend payments
and maintenance of other terms of the issue over any long period of time may be
small. CAA: An issue which is rated caa is likely to be in arrears on
dividend payments. This rating designation does not purport to indicate the
future status of payment. CA: An issue which is rated ca is speculative in a
high degree and is likely to be in arrears on dividends with the little
likelihood of eventual payment. C: This is the lowest rated class of
preferred or preference stock. Issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

DESCRIPTION OF S&P'S PREFERRED STOCK RATINGS

AAA: This is the highest rating that may be assigned by S&P's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations. AA: A preferred stock issue rated AA also
qualifies as a high-quality fixed income security. The capacity to pay
preferred stock obligations is very strong, although not as overwhelming as for
issues rated AAA. A: An issue rated A is backed by a sound capacity to pay
the preferred stock obligations, although it is somewhat more susceptible to
the adverse effect of changes in circumstances and economic conditions. BBB:
An issue rated BBB is regarded as backed by an adequate capacity to pay the
preferred stock obligations. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the A category. BB, B, CCC: Preferred stock
rated BB, B and CCC are regarded on balance as predominantly speculative with
respect to the issuer's capacity to pay preferred stock obligations. BB
indicates the lowest degree of speculation and CCC the highest degree of
speculation. While such issues will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. CC: The rating CC is reserved for a
preferred stock in arrears on dividends or sinking Equity Fund payments but
that is a nonpaying issue with the issuer in default on debt instruments.

PLUS (+) OR MINUS (-): The ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

<PAGE> 46

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements. Included in Part A of the Registration
Statement:
Table of Fees and Expenses
Financial Highlights

Incorporated by Reference in Part B of the Registration Statement:
Audited financial statement dated December 31, 1996
Unaudited financial statements dated June 30, 1997

(b) Exhibits:

(1) Articles of Incorporation3 and Articles of Amendment(3)
(2) By-Laws(4)
(3) Not Applicable
(4) Specimen Stock Certificate(3)
(5) Management Agreement(3)
(6) Distribution Agreement(3)
(7) Not Applicable
(8) Custodial Services Agreement(3)
(9) Fund Accounting Service Agreement, Shareholder
Servicing Agent Agreement, Administration Services
Agreement and Related Agreement(3)
(10) Opinion and Consent of Counsel(3)
(11) Consent of Accountants
(12) Not Applicable
(13) Subscription Agreement(3)
(14) IRA Disclosure Documents(3)
(15) Distribution Plan(5)
(16) Not Applicable

Item 25. Persons Controlled by or under Common Control with Registrant.

See "Management" in Part A of this Registration Statement.

____________________

3. Filed previously by amendment.

4. Filed previously by amendment and revised By-Laws filed by Post-Effective
Amendment.

5. Filed previously by amendment and revised Distribution Plan filed by
Post-Effective Amendment.

<PAGE> 47

Item 26. Number of Holders of Securities.

As of September 30, 1997, the approximate number of holders was:

<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders
---------------- --------------
<S> <C> <C>

Common 2,480
</TABLE>

Item 27. Indemnification.

The basic effect of the respective indemnification provisions of the
Registrant's Articles of Incorporation and By-Laws and section 2-418 of the
Maryland General Corporation Law is to indemnify each officer and director of
both the Registrant, the Investment Manager and selected broker-dealers, to the
full extent permitted under the General Laws of the State of Maryland, except
that such indemnity shall not protect any such person against any liability to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant, Investment Manager and selected broker-dealers pursuant to the
foregoing provisions or otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1940 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, office or controlling person of the Registrant and the
principal underwriter in connection with the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person or the Investment Manager and selected
broker-dealers in connection with the shares being registered, the Registrant
will, unless, in the opinion of its counsel, the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1940 Act and will be governed by the final adjudication of
such issue.

Item 28. Business and Other Connections of Investment Advisor.

Reference is made to Part A of this Registration Statement and to Form ADV
filed under the Investment Advisers Act of 1940 by the Investment Manager.

Item 29. Principal Underwriters.

The Fund has no principal underwriters and has adopted a Distribution Plan
pursuant to section 12 of the Investment Company Act of 1940 and Rule 12b-1
thereunder.

Item 30. Location of Accounts and Records.

The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the 1940 Act and the rules promulgated
thereunder are in the possession of Registrant and Registrant's custodian, as
follows: the documents required to be maintained by paragraphs (4), (5), (6),
(7), (10) and (11) of Rule 31a-1(b) will be maintained by the Registrant, and
all other records will be maintained by the Custodian.

Item 31. Management Services.

The Registrant is not party to any management-related services contract
not discussed in Part A or Part B hereof.

<PAGE> 48

Item 32. Undertakings.

Registrant undertakes to provide its Annual Report to Shareholders without
charge to any recipient of its Prospectus who requests the information.

Registrant undertakes to call a meeting of shareholders for the purpose of
voting upon the question of the removal of a director or directors when
requested in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares and in connection with such meeting to comply
with the provisions of section 16(c) of the Investment Company Act of 1940
relating to shareholder communications.

<PAGE> 49

SIGNATURE

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Port-of-Spain, Country of Trinidad and Tobago,
on the 31st day of October, 1997.

THE CHACONIA INCOME & GROWTH FUND, INC.

BY Clarry Benn
---------------------------------------
Clarry Benn, President

On behalf of the Board of Derectors pursuant
to power of Attorney granted in Post-Effective
Amendment No. 11

BY Clarry Benn
---------------------------------------
Clarry Benn, President

Board of Directors:

Clarry Benn
John A. Cole
Renrick Nickie

Judy Y. Chang

<PAGE> 50

Exhibit Index

Pursuant to Securities Act Rule 483

<TABLE>
<S> <C>
Exhibit 1 Articles of Incorporation and Articles of Amendment(6)

Exhibit 2 By-Laws(6)

Exhibit 4 Specimen Stock Certificate(6)

Exhibit 5 Management Agreement(6)

Exhibit 6 Distribution Agreement(6)

Exhibit 8 Custodial Services Agreement(6)

Exhibit 9 Fund Accounting Service Agreement, Shareholder Servicing Agent
Agreement, Administrative Services Agreement and Related
Agreement(6)

Exhibit 10 Opinion and Consent of Counsel(6)

Exhibit 11 Consent of Accountants

Exhibit 13 Subscription Agreement(6)

Exhibit 14 IRA Disclosure Documents(6)

Exhibit 15 Distribution Plan(6)

Exhibit 16 Power of Attorney(6)
</TABLE>

____________________

6. Incorporated by reference.
<PAGE> 51

The Chaconia Income & Growth Fund, Inc. (the "Fund") is incorporating by
reference Parts A, B and C of Pre-Effective Amendment No. 5 to the Registration
Statement of the Fund, file nos. 33-37426 and 811-6194, dated March 19, 1993.

<PAGE> 1

EXHIBIT 11

CONSENT OF INDEPENDENT ACCOUNTANTS
--------------------------

We consent to the incorporation by reference in Post-Effective Amendment No. 12
to the Registration Statement of The Chaconia Income & Growth Fund, Inc. on
Form N-1A (File No. 33-37426) of our report dated February 6, 1997 on our audit
of the financial statements and the financial highlights of The Chaconia Income
& Growth Fund, Inc. as of December 31, 1996, which report is included in its
annual report to shareholders which is also incorporated by reference in the
Post-Effective Amendment to the Registration Statement.

We also consent to the reference to our Firm under the captions "Financial
Highlights" and "Independent Accountants" in the prospectus.

Coopers & Lybrand L.L.P.

New York, New York
October 31, 1997