CHACONIA
INCOME & GROWTH FUND
SEMI-ANNUAL REPORT
JUNE 30, 1998
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 -D (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS
MARKET
SHARES VALUE
------ -----
COMMON STOCKS (61.93%)
AEROSPACE & DEFENSE (4.46%)
<S> <C>
11,300 Boeing Co. ................... $ 503,556
3,260 Lockheed Martin Corp. ........ 345,152
7,200 Raytheon Co. CI B ............ 425,700
---------
1,274,408
---------
AUTOMOTIVE (1.38%)
6,600 Ford Motor Co. ............... 389,400
---------
BANKING (4.73%)
1,336 Associates First Capital Corp. 102,705
9,400 Fannie MAE ................... 571,050
3,700 First Chicago NBD Corp. ...... 327,913
4,300 Suntrust Banks Inc. .......... 349,643
---------
1,351,311
---------
BUSINESS SERVICES (0.19%)
1,500 Dun and Bradstreet Corp. ..... 54,188
---------
CAPITAL GOODS (0.51%)
2,400 Emerson Electric Co. ......... 144,900
---------
DRUGS & HEALTHCARE (10.51%)
8,000 Abbott Laboratories .......... 327,000
6,800 American Home Products Corp. . 351,900
5,600 Becton Dickinson & Co. ....... 434,700
3,900 Bristol-Meyers Squibb Co. .... 448,256
6,200 Lilly, Eli & Co. ............. 409,587
3,800 Merck & Co. Inc. ............. 508,250
7,500 Warner-Lambert Co. ........... 520,313
---------
3,000,006
---------
FOODS (2.21%)
12,400 Archer-Daniels-Midland Co. ... 240,250
6,950 Heinz H.J. Co. ............... 390,068
---------
630,318
---------
GREETING CARDS (1.18%)
6,600 American Greetings Corp CI A . 336,188
---------
INDUSTRIALS (2.00%)
4,300 Browning Ferris Inds. Inc. ... 149,425
4,600 Schering Plough Corp. ........ 421,475
---------
570,900
---------
INSURANCE (4.87%)
4,300 The Chubb Corp. .............. 345,612
1,800 General RE Corp. ............. 456,300
10,575 Old Republic International
Corp. 309,980
6,100 Safeco Corp. ................. 277,168
---------
1,389,060
---------
MUTUAL FUNDS (0.89%)
138,813 Trinidad & Tobago Unit Trust
Corp./
First Unit Scheme ............ 257,011
---------
PAPER PRODUCTS (1.11%)
6,900 Kimberly Clark Corp. ......... 316,538
---------
PETROLEUM (5.01%)
9,600 Amoco Corp. .................. 399,600
6,700 Exxon Corp. .................. 477,793
7,200 Shell Transportation and
Trading Co. ADR .............. 305,100
8,200 YPF S.A. Sponsored ADR* ...... 246,513
---------
1,429,006
---------
RAILROADS (0.64%)
6,100 Norfolk Southern Corp. ....... 181,856
---------
RETAIL (2.51%)
5,000 The Gap Inc. ................. 308,125
21,200 Kmart Corp.* ................. 408,100
---------
716,225
---------
TECHNOLOGY (10.17%)
7,000 Cisco Systems Inc.*........... 644,438
16,000 Compaq Computer Corp.......... 454,000
7,000 Computer Assoc. International
Inc. 388,938
7,000 Electronic Data Systems Corp. 280,000
7,800 Hewlett Packard Co. ......... 467,025
6,000 Intel Corp. .................. 444,750
4,300 Motorola Inc. ................ 226,019
---------
2,905,170
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. Page 1
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 -- (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
MARKET
SHARES VALUE
------ -----
TOYS (1.62%)
<S> <C>
10,900 Mattel Inc. ........................................ $ 461,206
UTILITIES (7.96%)
10,300 Century Telephone Enterprise Inc. .................. 472,513
6,900 Cinergy Corp. ..................................... 241,500
8,200 GPU Inc. ........................................... 310,063
7,200 Southern Co. ...................................... 199,350
5,000 Telefonos De Mexico S A ADR......................... 240,313
16,700 Worldcom Inc.*...................................... 808,906
-----------
2,272,645
-----------
TOTAL COMMON STOCKS
(Cost $13,781,605) 17,680,336
-----------
BONDS
PRINCIPAL MARKET
AMOUNT VALUE
- ------ -----
BONDS (32.44%)
U.S. Government Securities (25.65%)
$ 100,000 U.S. Treasury Note 8.875%, due 02/15/99............. 102,063
350,000 U.S. Treasury Note 8.875%, due 08/31/99............. 355,359
500,000 U.S. Treasury Note 7.875%, due 11/15/99............. 515,313
200,000 U.S. Treasury Note 6.25%, due 05/31/00.............. 202,688
400,000 U.S. Treasury Note 6.625%, due 03/31/02............. 414,375
500,000 U.S. Treasury Note 6.375%, due 08/15/02............. 515,313
300,000 U.S. Treasury Note 5.875%, due 02/15/04............. 305,718
400,000 U.S. Treasury Note 7.25%, due 05/15/04.............. 434,125
250,000 U.S. Treasury Note 6.50%, due 08/15/05.............. 263,985
650,000 U.S. Treasury Note 6.50%, due 10/15/06.............. 690,625
400,000 U.S. Treasury Bond 9.375%, due 02/15/06............. 494,250
800,000 U.S. Treasury Bond 6.625%, due 05/15/07............. 860,001
150,000 U.S. Treasury Bond 10.625%, due 08/15/15............ 230,672
350,000 U.S. Treasury Bond 8.875%, due 08/15/17............. 477,422
150,000 U.S. Treasury Bond 7.875%, due 02/15/21............. 190,406
100,000 U.S. Treasury Bond 8.125%, due 05/15/21............. 130,250
200,000 U.S. Treasury Bond 7.25%, due 08/15/25.............. 239,438
150,000 U.S. Treasury Bond 6.875%, due 08/15/25............. 173,813
700,000 U.S. Treasury Bond 6.00%, due 02/15/26 ............. 728,438
-----------
7,324,254
-----------
BANKING (0.71%)
100,000 NationsBank Corp. 6.50%, due 03/15/06............... 101,915
100,000 Norwest Corp. Med. Term Notes 7.125%, due 04/01/00.. 102,066
-----------
203,981
-----------
MORTGAGE BACK-CMO (3.38%)
95,468 FHLMC 7.00%, due 02/01/13........................... 97,287
49,297 FHLMC 8.00%, due 06/01/25........................... 50,992
124,587 FHLMC 6.00%, DUE 04/01/28........................... 121,599
84,233 FHLMC G 8.00%, DUE 10/01/10 ........................ 86,945
112,029 FANNIE MAE 6.00%, DUE 02/01/09 ..................... 110,908
123,918 FANNIE MAE 7.00%, due 05/01/28 ..................... 125,815
69,786 GNMA 7.00%, due 09/15/09 ........................... 71,573
95,936 GNMA 7.00%, due 10/15/23............................ 97,555
77,795 GNMA II 8.00%, due 09/20/24......................... 80,081
117,772 GNMA 7.50%, due 03/15/26 ........................... 121,122
-----------
9,638,771
-----------
</TABLE>
Page 2 SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 -- (UNAUDITED)
<TABLE>
<CAPTION>
BONDS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
COMMERCIAL SERVICES (0.35%)
<S> <C> <C>
$100,000 Central Parking Corp. International Inc.
6.15%, due 01/15/06................................. $ 100,803
----------
CONSUMER PRODUCTS (0.18%)
50,000 Sherwin Williams Co. 6.25%, due 02/01/00............ 50,292
----------
CRUISE LINES (0.35%)
100,000 Carnival Corp. 6.15%, due 04/15/08.................. 99,247
----------
FINANCIAL SERVICES (0.44%)
125,000 Ameritech Cap Funding Co. 6.30%, due 10/15/04....... 126,980
----------
INSURANCE (0.35%)
100,000 CNA Financial 6.45%, due 01/15/08................... 99,640
----------
RETAIL (0.28%)
75,000 Walmart Stores Inc. 8.625%, due 04/01/01............ 80,132
----------
TECHNOLOGY (0.74%)
100,000 Motorola Inc. 7.60%, due 01/01/07................... 110,390
100,000 Rockwell Intl. Corp. 6.625%, due 06/01/05........... 103,773
----------
214,163
----------
TOTAL BONDS
(Cost $9,023,333) 9,263,369
----------
SHORT TERM INVESTMENTS (4.86%)
1,386,168 Star Treasury Fund
(Cost $1,386,168)................................... 1,386,168
----------
TOTAL INVESTMENTS
(Cost $24,191,106).................. 99.23% 28,329,873
Other assets less liabilities....... 0.77% 219,448
------- -----------
TOTAL NET ASSETS 100.00% $28,549,321
======= ===========
<FN>
* Non-income Producing
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS. Page 3
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
ASSETS
<S> <C>
Investments in securities, at value
(cost $24,191,106) ............................. $28,329,873
Dividends and interest receivable ...................... 174,334
Receivable for fund shares sold ........................ 193,571
Receivable for securities sold ......................... 238,939
Other assets ........................................... 2,701
-----------
Total assets ........................................... 28,939,418
-----------
LIABILITIES
Payable for fund shares redeemed ....................... 54,438
Accrued adviser fee .................................... 32,043
Accrued distribution fee ............................... 32,713
Accrued legal fee ...................................... 12,672
Payable for securities purchased ....................... 239,158
Other accrued expenses ................................. 19,073
-----------
Total liabilities ...................................... 390,097
-----------
Net Assets ............................................. $28,549,321
===========
NET ASSETS CONSIST OF:
Capital stock, $.01 par value; 4,000,000
shares authorized; 2,285,386 shares
outstanding .................................... $24,300,320
Undsitributed net investment income .................... 104,225
Undistributed net realized gains ....................... 6,009
Net unrealized appreciation on investments ............. 4,138,767
-----------
Net Assets ......................................... $28,549,321
===========
Net asset value, redemption and offering
price per share ($28,549,321/2,265,386) ........ $ 12.60
===========
</TABLE>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends .......................................... $ 117,693
Interest ........................................... 261,614
-----------
Total Investment Income ............................ 379,307
-----------
EXPENSES:
Adviser fees ....................................... 66,319
Distribution fees .................................. 58,609
Administrative fees ................................ 34,735
Legal fees ......................................... 25,000
Transfer agent fees ................................ 21,542
Printing expense ................................... 14,939
Accounting services ................................ 14,405
Custody fees ....................................... 7,736
Audit fees ......................................... 7,262
Other expenses ..................................... 2,062
-----------
Total expenses ..................................... 252,609
-----------
Net investment income .............................. 126,698
-----------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS
Net realized gains on investments .......................... 21,264
Net increase in unrealized appreciation
on investments ..................................... 1,995,299
-----------
Net gains on investments ................................... 2,016,563
-----------
Net increase in net assets resulting
from operations .................................... $2,143,261
===========
</TABLE>
Page 4 SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DEC. 31, 1997
---------- -------------
OPERATIONS:
<S> <C> <C>
Net investment income .......................... $ 126,698 $ 134,971
Net realized gain from investment
transactions ........................... 21,264 1,436,330
Net increase in unrealized
appreciation on investments ............ 1,986,299 821,989
------------ ------------
Net increase in net assets
resulting from operations .............. 2,143,261 2,393,290
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividend from net
investment income ...................... 0 (132,533)
Distribution from net realized gains
on investments ......................... 0 (1,413,688)
Change in net assets derived from
investment activities .................. 0 (1,546,221)
------------ ------------
FUND SHARE TRANSACTIONS:
Proceeds from shares sold ...................... 9,540,107 8,179,528
Dividends reinvested ........................... 0 1,421,178
Payment for shares redeemed .................... (1,633,965) (2,079,887)
------------ ------------
Net increase in net assets
from fund share transactions ........... 7,906,142 7,520,819
------------ ------------
Net increase in net assets ..................... 10,049,403 8,367,888
NET ASSETS, BEGINNING
OF PERIOD .............................. 18,499,918 10,132,030
------------ ------------
NET ASSETS, END OF PERIOD ...................... $ 28,549,321 $ 18,499,918
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
CHACONIA INCOME & GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Chaconia Income & Growth Fund, Inc. (the "Fund") is organized as a Maryland
Corporation, incorporated on October 24, 1990, and registered as an open-end,
non-diversified, management investment company under the Investment Company Act
of 1940, as amended. The Fund commenced operations on May 11, 1993.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION - Securities traded on national securities exchanges are
valued at the last sales price. Over-the-counter securities and listed
securities for which no sales price is available are valued at the mean between
the latest bid and asked prices. Short-term securities which mature in 60 days
or less are valued at cost, which, when combined with accrued interest
receivable, approximates value.
B. SECURITY TRANSACTIONS - Security transactions are accounted for on the trade
date (date the order to buy or sell is executed). Realized gains and losses on
security transactions are determined on the specific identification method.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily.
C. FEDERAL INCOME TAX STATUS - No provision for federal income taxes is required
since the Fund intends to qualify as a regulated investment company and
distribute all of its taxable income to its shareholders.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records dividends and
distributions to shareholders on the ex-dividend date.
E. OTHER - The fund may periodically make reclassifications among certain of its
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulations which may differ from generally accepted accounting
principles.
3. INVESTMENT TRANSACTIONS:
Investment transactions, excluding short-term investments, for the six months
ended June 30, 1998 were as follows:
Purchases.................... $10,419,284
Sales........................ $ 2,531,443
At June 30, 1998, the cost of securities for federal income tax purposes was
$24,191,106. Aggregate gross unrealized appreciation for all securities in which
there was an excess of value over tax cost was $4,280.046 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax
cost over value was $141,279.
Page 5
<PAGE>
4. INVESTMENT MANAGEMENT AGREEMENT:
The Fund has an investment advisory and management agreement with Invesco
Capital Management, Inc. ("Adviser"). Under this agreement, the Adviser provides
the Fund with investment advisory and management services for which the Fund
pays a fee at an annual rate of the greater of $50,000 or 0.75% of the portion
of the daily net assets not exceeding $10 million; 0.50% of the portion of the
daily net assets exceeding $10 million but not exceeding $20 million and 0.25%
of the portion of the daily net assets exceeding $20 million.
5. DISTRIBUTION FEES:
The Board of Directors has adopted a Distribution Plan applicable to the Fund
under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder. Pursuant to the
Plan, registered broker-dealers and qualified recipients will be reimbursed by
the Fund for distribution expenditures up to a limit of 0.50% of 1% on an annual
basis of the Fund's average daily net assets.
6. FUND SHARE TRANSACTIONS:
At June 30, 1998, there were 4,000,000 shares authorized at $.01 par value.
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DEC. 31, 1997
----------- -------------
Shares sold ................ 786,755 694,294
Dividend reinvestment....... 0 123,904
Shares repurchased.......... (134,547) (175,544)
--------- --------
652,208 (642,654)
========= ========
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 11, 1993
FOR THE SIX (COMMENCEMENT
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE OF OPERATIONS)
JUNE 30, 1998 YEAR ENDED, YEAR ENDED, YEAR ENDED, YEAR ENDED THROUGH
UNAUDITED DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 11.47 $ 10.44 $ 12.13 $ 9.94 $ 10.20 $ 10.00
---------- ---------- ---------- ---------- -------- -----------
Income from investment operations
Net investment income ......................... 0.07 0.08 0.13 0.24 0.13 0.03
Net realized and unrealized gains (losses)
on investments ........................ 1.06 2.00 0.55 2.47 (0.13) 0.21
---------- ---------- ---------- ---------- -------- -----------
Total from investment operations .............. 1.13 2.08 0.68 2.71 0.00 0.24
---------- ---------- ---------- ---------- -------- -----------
Less distributions
Dividend from net investment income ........... 0.00 (0.09) (0.17) (0.23) (0.13) (0.04)
Distribution in excess of net investment income 0.00 0.00 (0.01) 0.00+ 0.00+ 0.00+
Distribution from realized gains .............. 0.00 (0.96) (2.15) (0.28) (0.13) 0.00+
Distribution in excess of net realized gains on
investments ........................... 0.00 0.00 (0.04) 0.00 0.00 0.00
---------- ---------- ---------- ---------- -------- -----------
Total dividends and distributions ............. 0.00 (1.05) (2.37) (0.51) (0.26) (0.04)
---------- ---------- ---------- ---------- -------- -----------
Net asset value, end of period ................ $ 12.50 $ 11.47 $ 10.44 $ 12.13 $ 9.94 $ 10 20
---------- ---------- ---------- ---------- -------- -----------
Total return .................................. 20.66%* 19.98% 5.61% 27.16% 0.00% 2.40%
========== ========== ========== ========== ======== ===========
Ratios/Supplemental Data
Net assets, end of period (in thousands) ...... $ 28,549 $ 18,500 $ 10,132 $ 17,809 $ 12,315 $ 12,105
Ratios to Average Net Assets:
Expenses .............................. 2.15%* 2.55% 2.84% 2.37% 2.87% 2.73%*
Net investment income ................. 1.08%* 0.88% 1.03% 2.09% 1.25% 0.53%*
Portfolio turnover rate ............... 11.38% 35.04% 72.91% 26.23% 40.13% 0.55%
<FN>
* Annualized.
+ Less than $.01 per share
</FN>
</TABLE>
Page 6 SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
SEMI-ANNUAL REPORT TO SHAREHOLDERS
THE CHACONIA INCOME & GROWTH FUND, INC.
August 21, 1998
Dear Shareholder,
Enclosed please find the unaudited financial statements for the six-month period
ended June 30,1998.
The Chaconia Income and Growth Fund ("Fund") continues to adhere strictly to a
conservative policy of investing in higher quality securities, which are
expected to produce a competitive total return by way of current income and
capital appreciation. The Fund is properly structured so as to enable it to
continue to achieve its investment objectives in the ensuing quarters.
We appreciate your investment in the Fund and look forward to providing you with
more detailed information at the end of the year.
If you have any questions, please contact the Fund at 1-800-368-3322.
Yours sincerely,
/S/
- -------------------
Mrs. Judy Y. Chang
Chairman
/S/
- -----------------
Mr. Clarry Benn
President
Page 7
