CHACONIA
INCOME &
GROWTH FUND
[LOGO]
SEMI ANNUAL REPORT
o June 30, 2000 o
<PAGE>
LETTER TO SHAREHOLDERS
Chaconia Income & Growth Fund, Inc.
Dear Shareholders:
Enclosed please find the unaudited financial statements for the six month period
ended June 30, 2000.
The performance of the Fund during the period essentially mirrored the
performance of the two major segments of the US money and capital markets, as
reflected in the respective indices. In the circumstances, capital values
declined and some investors opted to adopt a defensive position with respect to
the Fund. With the change of the Fund's Investment Adviser which took effect on
July 5, 2000, and hopefully greater stability in the market for the remainder of
2000, the Board of Directors anticipates that the second half will produce
better results for investors.
We appreciate your investment in the Fund, and look forward to providing
additional information in the coming period on its performance.
If you have any questions, please contact the Fund at 1-800-368-3322.
Sincerely,
/S/ JUDY Y CHANG
----------------
Chairman
/S/ CLARRY BENN
---------------
President
August 7, 2000
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS 78.61%
BANKING 1.04%
<C> <S> <C>
10,600 Fannie Mae $ 553,187
-----------
BASIC MATERIALS 1.71%
5,800 Alcoa Inc. 168,200
10,500 Dow Chemical Co. 316,969
8,000 International Paper Co. 238,500
5,000 Praxair, Inc. 187,188
-----------
910,857
-----------
CAPITAL GOODS 6.78%
6,500 Emerson Electric Co. 392,437
24,000 General Electric Co. 1,272,000
7,900 Illinois Tool Works, Inc. 450,300
4,000 Johnson Controls, Inc. 205,250
4,900 Minnesota Mining & Manufacturing Co. 404,250
5,700 Textron, Inc. 309,581
5,000 Tyco International 236,875
6,000 United Technologies Corp. 353,250
-----------
3,623,943
-----------
COMMUNICATION SERVICES 3.68%
11,000 AT&T Corp. 347,875
8,000 Bell Atlantic Corp. 406,500
5,500 Sprint Corp. 280,500
20,250 Worldcom, Inc.* 928,969
-----------
1,963,844
-----------
CONSUMER CYCLICALS 4.52%
8,600 Costco Wholesale Corp.* 283,800
3,500 Eastman Kodak Co. 208,250
6,000 Ford Motor Co. 258,000
8,500 Lowe's Companies, Inc. 349,031
19,000 Mattel, Inc. 250,563
31,700 Office Depot, Inc.* 198,125
3,500 Target Corp. 203,000
786 Visteon Corp.* 9,525
11,400 Wal Mart Stores, Inc. 656,925
-----------
2,417,219
-----------
CONSUMER STAPLES 6.66%
11,000 Albertsons, Inc. 365,750
5,000 Alltel Corp. 309,687
7,200 Anheuser Busch Co., Inc. 537,750
4,500 Comcast Corp. Class A 182,250
5,600 Gannett Co, Inc. 334,950
8,000 Kimberly Clark Corp. 459,000
11,200 McDonalds Corp.* 368,900
5,000 Procter & Gamble Co. 286,250
18,400 Supervalu, Inc. 350,750
4,800 Time Warner, Inc. 364,800
-----------
3,560,087
-----------
FINANCE 3.71%
13,000 Bank Of America Corp. 559,000
12,000 Chase Manhattan Corp. 552,750
8,100 Comerica, Inc. 363,487
10,000 First Union Corp. 248,125
15,000 National City Corp. 255,938
-----------
1,979,300
-----------
FINANCIAL SERVICES 7.18%
7,700 American General Corp. 469,700
2,900 American International Group 340,750
10,000 Associates First Capital Corp. 223,125
14,000 Citigroup, Inc. 843,500
17,000 Fleet Boston Financial Corp. 578,000
10,000 Household International, Inc. 415,625
3,700 Marsh & McLennan Companies, Inc. 386,419
3,474 Morgan Stanley Dean Witter & Co. 578,421
-----------
3,835,540
-----------
HEALTH CARE 8.42%
8,000 American Home Products Corp. 470,000
4,100 Biogen, Inc.* 264,450
9,200 Bristol-Meyers Squibb Co. 535,900
5,000 Johnson & Johnson 509,375
9,000 Lilly (Eli) & Co. 898,875
9,000 Merck & Co, Inc. 689,625
11,000 Pfizer, Inc. 528,000
11,900 Schering Plough Corp. 600,950
-----------
4,497,175
-----------
MUTUAL FUNDS 5.77%
1,544,123 T&T Unit Trust Corp/1st Unit Scheme 3,081,761
-----------
PETROLEUM 3.67%
4,764 BP Amoco PLC Sponsored ADR 269,465
7,000 Chevron Corp. 593,687
11,400 Exxon Mobil Corp. 894,900
4,000 Phillips Petroleum Co. 202,750
-----------
1,960,802
-----------
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
SHARES VALUE
------ -----
TECHNOLOGY 24.79%
16,000 Adaptec, Inc.* 364,000
10,000 ADC Telecommunications* 838,750
2,669 Agilent Technologies* 196,839
15,000 Cadence Design Systems, Inc.* 305,625
18,000 Cisco Systems, Inc.* 1,144,125
12,000 Computer Associates International, Inc. 614,250
14,000 Compuware Corp.* 145,250
1,200 Corning, Inc. 323,850
11,000 First Data Corp. 545,875
7,000 Hewlett Packard Co. 874,125
14,000 Intel Corp 1,871,625
8,200 IBM Corp. 898,412
16,500 Microsoft Corp.* 1,320,000
7,500 Motorola, Inc. 217,969
8,000 Nokia Corp. Sponsored ADR 399,500
13,000 Oracle Corp.* 1,092,813
8,800 Sun Microsystems, Inc.* 800,250
3,000 Synopsys, Inc.*" 103,688
6,000 Tellabs, Inc.* 410,625
7,000 Texas Instruments, Inc. 480,813
6,000 Unisys Corp.* 87,375
10,000 Xerox Corp. 207,500
-----------
13,243,259
-----------
UTILITIES 0.68%
13,400 GPU, Inc. 362,637
-----------
TOTAL COMMON STOCKS
(Cost $39,652,289) 41,989,611
-----------
Principal
Amount Value
------ -----
BONDS 20.88%
U.S. GOVERNMENT SECURITIES 2.89%
$ 100,000 U.S. Treasury Bond 10.625% due 08/15/15 142,219
150,000 U.S. Treasury Bond 8.875% due 08/15/17 190,828
100,000 U.S. Treasury Bond 8.125% due 05/15/21 121,781
150,000 U.S. Treasury Bond 7.875% due 02/15/21 178,172
150,000 U.S. Treasury Bond 6.875% due 08/15/25 163,125
300,000 U.S. Treasury Bond 6.00% due 02/15/26 293,344
200,000 U.S. Treasury Bond 5.50% due 08/15/28 183,500
50,000 U.S. Treasury Note 6.625% due 07/31/01 50,094
50,000 U.S. Treasury Note 6.50% due 08/15/05 50,547
175,000 U.S. Treasury Note 5.625% due 05/15/08 168,820
-----------
1,542,430
-----------
AUTOMOTIVE 1.04%
300,000 Ford Motor Co. 6.50% due 08/01/18 258,977
300,000 Honda Auto Lease Trust 6.65% due 07/15/05 298,076
-----------
557,053
-----------
BANKING 3.46%
200,000 American Express Co. 7.20% due 09/17/07 200,495
250,000 Bank of America Corp. 6.75% due 09/15/05 240,862
400,000 Bank One Corp. 6.40% due 08/01/02 392,926
250,000 National City Corp. 6.625% due 03/01/04 241,346
100,000 Nations Bank Corp. 6.50% due 03/15/06 94,718
315,000 Wachovia Corp. 6.25% due 08/04/08 285,315
400,000 Wells Fargo & Co. 6.625% due 07/15/04 390,509
-----------
1,846,171
-----------
COMMUNICATIONS 1.20%
350,000 Cox Communications Inc. 6.875% due 06/15/05 338,620
350,000 Sprint Capital Corp. 6.875% due 11/15/28 303,639
-----------
642,259
-----------
CONSUMER CYCLICALS 0.54%
250,000 Lowe's Companies, Inc. 6.875% due 02/15/28 214,336
75,000 Wal Mart Stores, Inc. 8.625% due 04/01/01 75,840
-----------
290,176
-----------
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
Principal
Amount Value
CRUISELINES 0.58%
350,000 Carnival Corp. 6.15% due 04/15/08 312,306
-----------
FINANCIAL SERVICES 1.20%
125,000 Ameritech Cap Funding Co. 6.30% due 10/15/04 120,781
550,000 Associates Corp. 5.75% due 11/01/03 520,031
-----------
640,812
-----------
FOODS 0.18%
100,000 Bestfoods 6.15% due 01/15/06 95,745
-----------
INDUSTRIALS 3.08%
350,000 Dana Corp. 6.25% due 03/01/04 330,457
350,000 Household Finance Corp. 7.20% due 07/15/06 337,819
200,000 IBM Corp. 5.37% due 09/22/03 189,915
350,000 Ingersoll Rand 6.255% due 02/15/01 347,764
175,000 Pepsico, Inc. 5.75% due 01/02/03 168,700
200,000 Phillips Petroleum 6.65% due 07/15/18 174,140
100,000 Rockwell International Corp. 6.625% due 06/01/05 97,964
-----------
1,646,759
-----------
INSURANCE 0.58%
325,000 Travelers Property Casualty Corp. 6.75% due 11/15/06 310,349
-----------
MORTGAGE BACKED-CMO 4.51%
19,572 FHLMC POOL #G00365 GOLD 8.00% due 06/01/25 19,743
38,590 FHLMC GOLD POOL #10518 8.00% due 10/01/10 39,041
88,324 FNMA POOL #251698 7.00% due 05/01/28 85,296
59,323 FHLMC POOL #E00534 7.00% due 02/01/13 58,261
457,149 FHLMC POOL #C00701 6.50% due 01/01/29 432,114
369,596 FNMA POOL #499501 6.50% due 06/01/14 356,509
400,774 FNMA POOL #421224 6.50% due 05/01/13 386,583
100,000 FNMA MT MTNF 6.375% due 06/15/09 94,925
375,000 FHLMC 6.25% due 07/15/04 364,934
75,781 FNMA POOL #050985 6.00% due 02/01/09 71,711
300,000 Federal Home Loan Bank 5.575% due 09/02/03 288,016
37,242 GNMA II POOL #001869 8.00% due 09/20/24 37,597
67,199 GNMA POOL #417287 7.50% due 03/15/26 66,788
66,073 GNMA POOL #364705 7.00% due 10/15/23 64,283
43,087 GNMA POOL #780369 7.00% due 9/15/09 42,822
-----------
2,408,623
-----------
PETROLEUM 0.60%
350,000 Atlantic Richfield Co. 5.90% due 04/15/09 320,186
-----------
TECHNOLOGY 0.19%
100,000 Motorola, Inc. 7.60% due 01/01/07 102,410
-----------
UTILITIES 0.83%
250,000 Alabama Power 5.49% due 11/01/05 228,853
250,000 National Rural Utilities 5.70% due 01/15/10 216,184
-----------
445,037
-----------
TOTAL BONDS
(Cost $11,720,271) 11,160,316
-----------
Shares
SHORT TERM INVESTMENTS 0.61%
323,929 Firstar Treasury Fund
(Cost $323,929) 323,929
-----------
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
TOTAL INVESTMENTS
(Cost $51,696,489) 100.10% 53,473,856
LIABILITIES LESS OTHER ASSETS (0.10)% (51,544)
-------------------------
TOTAL NET ASSETS 100.00% $53,422,312
=========================
<FN>
*Non-Income Producing
CMO-Collateralized Mortgage Obligation
FHLMC-Federal Home Loan Mortgage Company
FNMA-Federal National Mortgage Association
GNMA-Government National Mortgage Association
GO-General Obligation
ADR-American Depositary Receipts
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
ASSETS
<S> <C>
Investments in securities, at value
(cost $51,696,489) $53,473,856
Dividends and interest receivable 250,159
Receivable for fund shares sold 85,779
Other assets 3,792
-----------
Total assets 53,813,586
-----------
LIABILITIES
Payable for fund shares redeemed 46,624
Accrued advisory fee (Note 4) 44,422
Accrued distribution fee (Note 5) 146,660
Other accrued expenses 153,568
-----------
Total liabilities 391,274
-----------
Net Assets $53,422,312
===========
NET ASSETS CONSIST OF:
Capital stock, $.01 par value; 8,000,000
shares authorized; 4,379,501 shares
outstanding $50,837,943
Undistributed net investment income 215,312
Undistributed net realized gains 591,690
Net unrealized appreciation on investments 1,777,367
-----------
Net Assets $53,422,312
===========
Net asset value, redemption and offering price per share
($53,422,312/4,379,501) $ 12.20
===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,2000
(UNAUDITED)
INVESTMENT INCOME:
<S> <C>
Interest $ 504,228
Dividends 294,848
-----------
Total investment income 799,076
-----------
EXPENSES:
Distribution fees (Note 4) 146,661
Advisory fees (Note 5) 110,592
Transfer agent fees 66,611
Legal fees 50,000
Administration fees 45,881
Trustees fees and expenses 35,000
Accounting services 34,052
Custody fees 16,751
Printing expense 8,613
Audit fees 7,656
Other expenses 17,182
-----------
Total expenses 538,999
-----------
Net investment income 260,077
-----------
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gain on investments 618,128
Net decrease in unrealized appreciation
on investments (1,478,380)
-----------
Net losses on investments (860,252)
-----------
Net decrease in net assets resulting
from operations $ (600,175)
===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the
six months ended For the
June 30, 2000 year ended
(Unaudited) Dec 31, 1999
----------- ------------
Operations:
<S> <C> <C>
Net investment income $ 260,077 $ 683,426
Net realized gain from
investment transactions 618,128 1,623,894
Net decrease in unrealized
appreciation on investments (1,478,380) (512,430)
------------ ------------
Net increase (decrease) in
net assets resulting from operation (600,175) 1,794,890
------------ ------------
Dividends and Distributions
to Shareholders:
Dividends from net investment
income 0 (690,727)
Distributions from net
realized gains on investments 0 (1,628,155)
------------ ------------
Total dividends and distributions
to shareholders 0 (2,318,882)
------------ ------------
Fund Share Transactions:
Proceeds from shares sold 5,368,561 28,969,587
Dividends reinvested 0 2,043,086
Payment for shares redeemed (14,245,634) (11,351,294)
------------ ------------
Net increase (decrease) in net
assets from fund share transactions (8,877,073) 19,661,379
------------ ------------
Net increase (decrease) in net asset (9,477,248) 19,137,387
Net Assets, Beginning
of Period 62,899,560 43,762,173
------------ ------------
Net Assets, End of Period,
(including undistributed net investment
income and distribution in excess of
net investment income of $215,312 and $44,765,
respectively) $ 53,422,312 $ 62,899,560
============ =============
</TABLE>
See notes to financial statements.
<PAGE>
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'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 dividends and
distributions are paid annually to shareholders and are recorded 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, 2000 were as follows:
Purchases $ 8,606,470
Sales $16,994,768
U.S. Government securities transactions included above were:
Purchases $ 244,475
Sales $7,317,055
At June 30, 2000, the cost of securities for federal income tax purposes was
$51,696,489. Aggregate gross unrealized appreciation for all securities in which
there was an excess of value over tax cost was $7,733,718 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax
cost over value was $5,956,351.
4. INVESTMENT MANAGEMENT AGREEMENT AND OTHER
TRANSACTIONS WITH AFFILIATES
The Fund had 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.
The Fund pays service fees to registered broker-dealers for personal service
and/or the maintenance of shareholder accounts. Service fees are accrued at 0.25
of 1% of the net assets. For the six months ended June 30, 2000, $9,838 of such
fees were accrued.
During 2000, 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.
<PAGE>
CHACONIA INCOME & GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
6. FUND SHARE TRANSACTIONS
Transactions in capital shares for the periods listed below were as follows:
FOR THE FOR THE
SIX MONTHS YEAR ENDED
ENDED ENDED
JUNE 30, 2000 DEC. 31, 1999
------------- -------------
Shares sold 444,811 2,331,796
Dividend reinvestment 0 165,700
Shares repurchased (1,163,961) (908,552)
(719,150) 1,558,944
7. SUBSEQUENT EVENTS
Effective, July 5, 2000 the Fund has a new investment advisory and management
agreement with Earnest Partners, LLC ("Adviser"), with substantially similar
terms as the prior investment advisor.
<PAGE>
<TABLE>
<CAPTION>
CHACONIA INCOME & GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
For the
six months For the For the For the For the For the
ended year ended year ended year ended year ended year ended
Jun 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.34 $ 12.47 $ 11.47 $ 10.44 $ 12.13 $ 9.94
--------- -------- -------- -------- -------- --------
Income from investment operations
Net investment income 0.06 0.14 0.11 0.08 0.13 0.24
Net realized and unrealized gains
(losses) on investments (0.20) 0.20 1.71 2.00 0.55 2.47
--------- -------- -------- -------- -------- --------
Total from investment operations (0.14) 0.34 1.82 2.08 0.68 2.71
--------- -------- -------- -------- -------- --------
Less distributions
Dividend from net investment income 0.00 (0.14) (0.11) (0.09) (0.17) (0.23)
Distribution in excess of net
investment income 0.00 0.00+ 0.00 0.00 (0.01) 0.00+
Distribution from net realized gains 0.00 (0.33) (0.71) (0.96) (2.15) (0.28)
Distribution in excess of net realized
gains on investments 0.00 0.00 0.00 0.00 (0.04) 0.00
--------- -------- -------- -------- -------- --------
Total dividends and distributions 0.00 (0.47) (0.82) (1.05) (2.37) (0.51)
--------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.20 $ 12.34 $ 12.47 $ 11.47 $ 10.44 $ 12.13
========= ======== ======== ======== ======== ========
Total return (1.13%) 2.73% 15.87% 19.98% 5.61% 27.16%
Ratios/Supplemental data
Net assets, end of period
(in thousands) $ 53,422 $ 62,900 $ 43,762 $ 18,500 $ 10,132 $ 17,809
Ratios to Average Net Assets:
Expenses 1.84%* 1.73% 1.99% 2.55% 2.84% 2.37%
Net investment income 0.89%* 1.19% 1.21% 0.98% 1.03% 2.09%
Portfolio turnover rate 14.69% 65.75% 41.23% 35.04% 72.91% 26.23%
<FN>
* Annualized
+ Less than $.01 per share
</FN>
</TABLE>
See notes to financial statements.
