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Previous: CHASE MANHATTAN BANK USA, 8-K, 1999-03-05 |
Next: CHACONIA INCOME & GROWTH FUND INC, NSAR-B, 1999-03-05 |
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1998
Shares Value
- ------------------------------------------------------------------------------
COMMON STOCKS - 56.49%
ADVERTISING SERVICES - 0.01%
<C> <S> <C>
300 R.H. Donnelley Corp ................................ $ 4,369
-----------
AEROSPACE & DEFENSE - 3.06%
14,300 Boeing Co .......................................... 466,537
5,760 Lockheed Martin Corp ............................... 488,160
7,200 Raytheon Co Cl B ................................... 383,400
-----------
1,338,097
-----------
AUTOMOTIVE - 1.29%
9,600 Ford Motor Co ...................................... 563,400
-----------
BANKING - 4.10%
4,672 Associates First Capital Corp ...................... 197,976
7,494 Bank One Corp ...................................... 382,662
10,600 Fannie MAE ......................................... 784,400
5,600 Suntrust Banks Inc ................................. 428,400
-----------
1,793,438
-----------
BUSINESS SERVICES - 0.11%
1,500 Dun and Bradstreet Corp ............................ 47,344
-----------
CAPITAL GOODS - 0.34%
2,400 Emerson Electric Co ................................ 150,150
-----------
DIVERSIFIED OPERATIONS - 1.01%
6 Berkshire Hathaway Inc - Cl A * .................... 441,000
-----------
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1998
Shares Value
- ------------------------------------------------------------------------------
DRUGS & HEALTHCARE - 9.70%
12,000 Abbott Laboratories ................................ $ 588,000
8,800 American Home Products Corp ........................ 495,550
13,200 Becton Dickinson & Co .............................. 563,475
4,600 Bristol-Meyers Squibb Co ........................... 615,537
7,200 Lilly, Eli & Co .................................... 639,900
4,600 Merck & Co Inc ..................................... 679,363
8,800 Warner-Lambert Co .................................. 661,650
-----------
4,243,475
-----------
FINANCIAL SERVICES - 1.54%
9,500 Morgan Stanley Dean Witter & Co .................... 674,500
-----------
FOODS - 1.76%
18,020 Archer-Daniels-Midland Co .......................... 309,719
8,150 Heinz H.J. Co ...................................... 461,494
-----------
771,213
-----------
GREETING CARDS - 0.81%
8,600 American Greetings Corp Cl A ....................... 353,138
-----------
INDUSTRIALS - 1.78%
4,300 Browning Ferris Industries Inc ..................... 122,281
11,900 Schering Plough Corp ............................... 657,475
-----------
779,756
-----------
INSURANCE - 3.85%
7,300 The Chubb Corp ..................................... 473,587
31,275 Old Republic International Corp .................... 703,687
11,800 Safeco Corp ........................................ 506,663
-----------
1,683,937
-----------
MUTUAL FUNDS - 1.65%
384,813 Trinidad & Tobago Unit Trust Corp/First Unit Scheme 723,332
-----------
PAPER PRODUCTS - 1.02%
8,200 Kimberly Clark Corp ................................ 446,900
-----------
PETROLEUM - 3.86%
3,600 Amoco Corp ......................................... 217,350
8,000 Exxon Corp ......................................... 585,000
8,500 Shell Transportation and Trading Co ADR ............ 316,094
20,400 YPF S.A. Sponsored ADR ............................. 569,925
-----------
1,688,369
-----------
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1998
Shares Value
- ------------------------------------------------------------------------------
RAILROADS - 1.40%
19,400 Norfolk Southern Corp .............................. $ 614,738
-----------
RETAIL - 2.35%
12,000 The Gap Inc ........................................ 675,000
23,200 K Mart Corp * ...................................... 355,250
-----------
1,030,250
-----------
TECHNOLOGY - 7.26%
11,500 Cisco Systems Inc* ................................. 1,067,344
18,000 Compaq Computer Corp ............................... 754,875
7,000 Intel Corp ......................................... 829,937
8,600 Motorola Inc ....................................... 525,137
-----------
3,177,293
-----------
TOYS - 0.84%
16,100 Mattel Inc ......................................... 367,281
-----------
UTILITIES - 8.75%
12,300 Century Telephone Enterprise Inc ................... 830,250
8,900 Cinergy Corp ....................................... 305,937
13,400 GPU Inc ............................................ 592,113
11,500 Southern Co ........................................ 334,219
7,700 Telefonos De Mexico S A ADR ........................ 374,894
19,400 MCI-Worldcom Inc * ................................ 1,391,950
-----------
3,829,363
-----------
TOTAL COMMON STOCKS
(Cost $21,393,545) .............................. 24,721,343
-----------
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1998
Principal
Amount Value
- ------------------------------------------------------------------------------
BONDS - 35.86%
AUTOMOTIVE - 0.70%
$ 300,000 Ford Motor Co
6.50% due 08/01/18............................... $ 307,378
-----------
BANKING - 1.22%
100,000 Nations Bank Corp
6.50%, due 03/15/06 ............................. 104,660
100,000 Norwest Corp
7.125%, due 04/01/00 ............................ 101,945
315,000 Wachovia Corp
6.25%, due 08/04/08 ............................. 327,896
-----------
534,501
-----------
CONSUMER PRODUCTS - 0.12%
50,000 Sherwin Williams Co
6.25%, due 02/01/00 ............................. 50,502
-----------
CRUISE LINES - 0.23%
100,000 Carnival Corp
6.15%, due 04/15/08 ............................. 101,937
-----------
FINANCIAL SERVICES - 1.57%
125,000 Ameritech Cap Funding Co
6.30%, due 10/15/04 ............................. 131,654
550,000 Associates Corp
5.75%, due 11/03/03 ............................. 554,506
-----------
686,160
-----------
FOODS - 0.24%
100,000 Bestfoods
6.15%, due 01/15/06 ............................. 104,215
-----------
INDUSTRIALS - 1.60%
200,000 IBM Corp
5.37%, due 09/22/03 ............................. 202,312
175,000 Pepsico Inc
5.75%, due 01/02/03 ............................. 176,894
300,000 Textron Inc
6.625%, due 11/15/07 ............................ 320,490
-----------
699,696
-----------
INSURANCE - 1.01%
100,000 CNA Financial
6.45%, due 01/15/08 ............................. 98,844
325,000 Travelers Property Casualty Corp.
6.75%, due 11/15/06 ............................. 341,965
-----------
440,809
-----------
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1998
Principal
Amount Value
- ------------------------------------------------------------------------------
MORTGAGE BACKED - 5.62%
$ 83,053 FHLMC
7.00%, due 02/01/13 ............................. $ 84,974
36,187 FHLMC
8.00%, due 06/01/25 ............................. 37,498
121,651 FHLMC
6.00%, due 04/01/28 ............................. 120,308
67,509 FHLMC Gold
8.00%, due 10/01/10 ............................. 69,661
300,000 Federal Home Loan Bank
5.575%, due 09/02/03 ............................ 304,682
478,745 Fannie MAE
6.50%, due 05/01/13 ............................. 485,777
101,764 Fannie MAE
6.00%, due 02/01/09 ............................. 102,019
110,854 Fannie MAE
7.00%, due 05/01/28 ............................. 113,140
300,000 Fannie MAE
6.21%, due 11/07/07 ............................. 319,705
61,260 GNMA 7.00%, due 09/15/09 ........................... 63,128
86,817 GNMA 7.00%, due 10/15/23 ........................... 88,905
59,933 GNMA II 8.00%, due 09/20/24 ........................ 61,881
102,846 GNMA 7.50%, due 03/15/26 ........................... 106,157
497,828 GNMA 6.50%, due 09/15/28 ........................... 503,275
-----------
2,461,110
-----------
RETAIL - 0.18%
75,000 Wal-Mart Stores Inc
8.625%, due 04/01/01 ............................ 80,737
-----------
TECHNOLOGY - 1.20%
300,000 Motorola Inc
5.80%, due 10/15/08 ............................. 307,291
100,000 Motorola Inc
7.60%, due 01/01/07 ............................. 112,427
100,000 Rockwell Intl Corp
6.625%, due 06/01/05 ............................ 106,483
-----------
526,201
-----------
TOYS - 0.69%
300,000 Mattel Inc
6.00%, due 07/15/03 ............................. 303,210
-----------
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1998
Principal
Amount Value
- ------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES - 20.91%
$ 100,000 U.S. Treasury Note
8.875%, due 02/15/99 ............................ $ 100,500
350,000 U.S. Treasury Note
6.875%, due 08/31/99 ............................ 355,031
500,000 U.S. Treasury Note
7.875%, due 11/15/99 ............................ 513,594
200,000 U.S. Treasury Note
6.25%, due 05/31/00 ............................. 204,313
400,000 U.S. Treasury Note
6.625%, due 03/31/02 ............................ 422,875
500,000 U.S. Treasury Note
6.375%, due 08/15/02 ............................ 527,500
850,000 U.S. Treasury Note
5.625%, due 12/31/02 ............................ 878,156
300,000 U.S. Treasury Note
5.875%, due 02/15/04 ............................ 316,687
400,000 U.S. Treasury Note
7.25%, due 05/15/04 ............................ 448,375
250,000 U.S. Treasury Note
6.50%, due 08/15/05 ............................. 274,766
1,000,000 U.S. Treasury Note
6.50%, due 10/15/06 ............................. 1,110,313
400,000 U.S. Treasury Bond
9.375%, due 02/15/06 ............................ 511,125
1,000,000 U.S. Treasury Bond
6.25%, due 02/15/07 ............................. 1,097,188
600,000 U.S. Treasury Bond
6.625%, due 05/15/07 ............................ 675,000
100,000 U.S. Treasury Bond
10.625%, due 08/15/15 ........................... 159,000
350,000 U.S. Treasury Bond
8.875%, due 08/15/17 ............................ 493,610
150,000 U.S. Treasury Bond
7.875%, due 02/15/21 ............................ 197,719
100,000 U.S. Treasury Bond
8.125%, due 05/15/21 ............................ 135,187
150,000 U.S. Treasury Bond
6.875%, due 08/15/25 ............................ 182,015
500,000 U.S. Treasury Bond
6.00%, due 02/15/26 ............................. 545,781
-----------
9,148,735
-----------
UTILITIES - 0.57%
Alabama Power Co.
5.49%, due 11/01/05 ............................. 248,995
-----------
TOTAL BONDS
(Cost $15,253,806) .............................. 15,694,185
-----------
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Schedule of Investments
December 31, 1998
Principal
Amount Value
- ------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 4.97%
$2,175,000 Star Treasury Fund
(Cost $2,175,000) ............................ $ 2,175,000
-----------
TOTAL INVESTMENTS
(Cost $38,822,351) 97.32% 42,590,528
Other assets less liabilities 2.68% 1,171,645
-----------------------
TOTAL NET ASSETS 100.00% $43,762,173
=======================
<FN>
* Non-Income Producing
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities, at value
(cost $38,822,351) ............................... $ 42,590,528
Cash ............................................. 566,163
Dividends and interest receivable ................ 259,169
Receivable for fund shares sold .................. 994,060
Other assets ..................................... 515
-------------
Total assets ..................................... 44,410,435
-------------
Liabilities
Accrued advisory fee ............................. 40,082
Accrued distribution fee ......................... 91,706
Accrued legal fee ................................ 25,000
Dividends payable ................................ 469,474
Other accrued expenses ........................... 22,000
-------------
Total liabilities ................................ 648,262
-------------
Net Assets .................................. $ 43,762,173
=============
Net Assets Consist of:
Capital stock, $.01 par value; 4,000,000
shares authorized; 3,509,707 shares
outstanding ................................... $ 40,053,637
Distribution in excess of net investment income .. (37,464)
Distribution in excess of net realized gains ..... (22,177)
Net unrealized appreciation of investments ....... 3,768,177
-------------
Net Assets .......................................... $ 43,762,173
=============
Net asset value, redemption and offering
price per share ($43,762,173/3,509,707) .......... $ 12.47
=============
</TABLE>
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
Statement of Operations
For the Year ended December 31, 1998
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends ........................................ $ 262,972
Interest ......................................... 664,727
-------------
Total investment income .......................... 927,699
-------------
EXPENSES:
Advisory fees .................................... 147,215
Distribution fees ................................ 144,784
Administration fees .............................. 65,161
Legal fees ....................................... 50,000
Transfer agent fees .............................. 49,780
Printing expense ................................. 42,045
Accounting services .............................. 29,097
Audit fees ....................................... 25,038
Custody fees ..................................... 19,071
Other expenses ................................... 4,366
-------------
Total expenses ................................... 576,557
-------------
Net investment income ............................ 351,142
-------------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS
Net realized gain on investments .................... 2,356,344
Net increase in unrealized appreciation
on investments ................................... 1,624,709
-------------
Net gains on investments ............................ 3,981,053
-------------
Net increase in net assets resulting
from operations ............................. $ 4,332,195
=============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Statement of Changes in Net Assets
For the For the
year ended year ended
Dec 31, 1998 Dec 31,1997
------------- -----------
Operations:
<S> <C> <C>
Net investment income .................................... $ 351,142 $ 134,971
Net realized gain from investment transactions ........... 2,356,344 1,436,330
Net increase in unrealized appreciation on investments ... 1,624,709 821,989
------------ ------------
Net increase in net assets resulting from operations ..... 4,332,195 2,393,290
------------ ------------
Dividends and Distributions to Shareholders:
Dividends from net investment income ..................... (366,583) (132,533)
Distributions from net realized gains on investments ..... (2,365,631) (1,413,688)
------------ ------------
Total dividends and distributions to shareholders...... .. (2,732,214) (1,546,221)
------------ ------------
Fund Share Transactions:
Proceeds from shares sold ................................ 26,243,505 8,179,528
Dividends reinvested ..................................... 2,262,655 1,421,178
Payment for shares redeemed .............................. (4,843,886) (2,079,887)
------------ ------------
Net increase in net assets from fund share transactions .. 23,662,274 7,520,819
------------ ------------
Net increase in net assets ............................... 25,262,255 8,367,888
Net Assets, Beginning
of Year ............................................... 18,499,918 10,132,030
------------ ------------
Net Assets, End of Year.. ................................ $ 43,762,173 $ 18,499,918
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Chaconia Income & Growth Fund, Inc. (the "Fund") is organized as a Maryland
Corporation, incorporated on October 24, 1990, and registered as an open-end,
non-diversified, management investment company under the Investment Company Act
of 1940, as amended. The Fund commenced operations on May 11, 1993. The Fund's
investment objective is high current income and capital appreciation.
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. These
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.
<PAGE>
CHACONIA INCOME & GROWTH FUND,INC.
NOTES TO FINANCIAL STATEMENTS
(continued)
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the year ended
December 31, 1998 were as follows:
Purchases .................................... $30,276,520
Sales ........................................ $10,944,303
U.S. Government securities transactions included above were:
Purchases ................................... $26,645,642
Sales ....................................... $ 2,094,787
At December 31, 1998, the cost of securities for federal income tax purposes was
$38,822,351. Aggregate gross unrealized appreciation for all securities in which
there was an excess of value over tax cost was $4,261,538 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax
cost over value was $493,361.
4. INVESTMENT MANAGEMENT AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
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.
During 1998, the Fund incurred legal fees of $50,000 to Foley & Lardner counsel
for the Fund. Mr. Ulice Payne, a partner of the firm, is an officer of the Fund.
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
Transactions in capital shares for the years listed below were as follows:
<TABLE>
For the For the
year ended year ended
DEC. 31, 1998 DEC. 31, 1997
<S> <C> <C>
Shares sold .......................... 2,104,262 694,293
Dividend reinvestment ................ 181,467 123,904
Shares repurchased .................. (389,200) (175,544)
------------ ---------
1,896,529 642,653
============ =========
</TABLE>
7. DISTRIBUTIONS
A distribution of $0.82 per share (including a regular per share distribution
of $0.11 plus capital gains distribution of $0.71 per share) was declared
for shareholders of record on December 30, 1998, ex-date and reinvestment date
December 31, 1998 and payable January 4, 1999.
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
Financial Highlights
For the For the For the For the For the
year ended, year ended, year ended, year ended, year ended,
Dec 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.47 $10.44 $12.13 $9.94 $10.20
-------- ------- ------- ------ -------
Income from investment operations
Net investment income 0.11 0.08 0.13 0.24 0.13
Net realized and unrealized gains
(losses) on investments 1.71 2.00 0.55 2.47 (0.13)
-------- ------- ------- ------ -------
Total from investment operations 1.82 2.08 0.68 2.71 0.00
-------- ------- ------- ------ -------
Less distributions
Dividend from net investment income (0.11) (0.09) (0.17) (0.23) (0.13)
Distribution in excess of net investment income 0.00 0.00 (0.01) 0.00 + 0.00 +
Distribution from realized gains (0.71) (0.96) (2.15) (0.28) (0.13)
Distribution in excess of net realized gains
on investments 0.00 0.00 (0.04) 0.00 0.00
-------- ------- ------- ------ -------
Total dividends and distributions (0.82) (1.05) (2.37) (0.51) (0.26)
Net asset value, end of period $12.47 $11.47 $10.44 $12.13 $9.94
========= ======= ======= ======= ======
Total return 15.87% 19.98% 5.61% 27.16% 0.00%
Ratios/Supplemental data
Net assets, end of period (in thousands) $43,762 $18,500 $10,132 $17,809 $12,315
Ratios to Average Net Assets:
Expenses 1.99% 2.55% 2.84% 2.37% 2.87%
Net investment income 1.21% 0.98% 1.03% 2.09% 1.25%
Portfolio turnover rate 41.23% 35.04% 72.91% 26.23% 40.13%
<FN>
+ Less than $.01 per share
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
CHACONIA INCOME & GROWTH FUND INC.
YEAR FUND BENCHMARK
1993 $ 10,240 $ 10,624
1994 10,240 10,508
1995 13,021 13,470
1996 13,751 15,171
1997 16,491 18,397
1998 19,108 22,029
<PAGE>
LETTER TO SHAREHOLDERS
CHACONIA INCOME & GROWTH FUND, INC.
Dear Shareholders:
We are indeed please to report on the financial and investment performance of
the Chaconia Income & Growth Fund, Inc. (the "Fund") for the fiscal year ended
December 31, 1998. The audited financial statements for the year then ended are
also enclosed. The Board is pleased with the results of the Fund during our
fifth year of operations. Our investment manager, INVESCO, has managed the
investment portfolio very successfully in keeping with our objective to seek
high current income and capital appreciation.
Significant growth was achieved during the year. The Fund Size increased by
137% or $25.3 million to $43.8 million. The number of shareholders increased by
144% from 4,333 to 7,336. In addition to its record growth during the year,
the Fund also gained widespread international exposure on CNNfn for being
adjudged the best performing fund in its class as at November 5, 1998 by Lipper
Analytical Services Inc. We are very satisfied with our achievements during the
year and we express the hope that shareholders will be equally pleased with the
performance of their investments.
U.S. MARKET REVIEW FOR 1998
The U.S. equity market turned in a strong fourth quarter capping yet another
remarkable year for the market and the Fund. The value of the stocks in the
Fund appreciated 24.8% during the year, while the average stock in the S&P 500
gained about 14% for the year. The U.S. equity market performance continues to
be dominated by large-cap companies. The Fund benefitted from its diversified
positioning among the major economic sectors. The bond market also posted
a strong year. Long-term bond yields fell to historically low levels,
reaching 4.69% on October 5, 1998. The fixed-income segment of the Fund returned
a solid 10.2% for the year. On the fixed income side, the Fund's quality-and-
value oriented approach provided positive returns from exercising focused
positions on strategic sector disciplines.
Overall the Fund benefitted from our above neutral weightings in stocks
relative to bonds. A healthy U.S. economy and favorable interest rates benefited
U.S. stocks and bonds, while financial and economic turmoil led to weak
performance in most intermational markets.
/s/ Judy Y. Chang
Judy Y. Chang
Chairman
/s/ Clarry Benn
Mr. Clarry Benn
President
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Chaconia Income & Growth Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and
changes in net assets and financial highlights present fairly, in all material
respects, the financial position of Chaconia Income & Growth Fund, Inc. (the
"Fund") at December 31, 1998, and the results of its operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for the five years in each of
the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
New York, New York
February 24, 1999
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