DK INVESTORS, INC.
1997 ANNUAL REPORT
DK INVESTORS, INC.
205 Lexington Avenue, 16th Floor
New York, New York 10016
(212) 779-4233
To Our Shareholders:
I take pleasure in again contacting our shareholders and forwarding
the annexed annual report of DK Investors, Inc.
As you all must be aware, interest rates have fallen over the past
few years. This has had an effect on our holdings. Several of our higher
interest paying bonds have been called or expired as their term ended.
Although our investment advisor has worked diligently to replace these
bonds, it is impossible to duplicate those with the high coupons that have
been called or redeemed. However, through the efforts of our investment
advisor and in coordination with your Board of Directors, we have been
able to pay dividends to our shareholders during 1997 of $0.6305 per share.
As always, the dividends are federally tax exempt. A letter giving
shareholders a state-by-state breakdown of the origins of DK's earnings for
use by them in filing state returns were mailed in January 1998. During
1997, DK Investors, Inc., earned net investment income of $777,078. The
company distributes at least 90 percent of its tax-exempt earnings, thereby
qualifying its dividends as federally tax exempt in the hands of our
shareholders.
At the end of 1997, the net asset value of the company was
$15,369,263; this translates to a net asset value per share of $13.07. The
Board of Directors meets regularly, and a representative of the Board is in
almost daily contact with our investment advisor, Chase Asset Management
Co. The Board is committed to trying to obtain the maximum income for
distribution to shareholders consistent with our investment policies. We
will never sacrifice safety for income; therefore, our investment advisor
has instructions never to invest in any security with less than an A rating.
During 1997, DK Investors, Inc., lost a dear friend and valued
colleague, Glenn O. Thornhill, who had been associated with DK and its
predecessor business, Donnkenny, Inc., for many years. We will all miss
his penetrating mind and southern charm.
Our annual meeting of shareholders will be held on May 11, 1998, at
our new office--205 Lexington Avenue, 16th Floor, New York, New York. I
look forward to greeting any shareholders that might attend.
Sincerely,
Gene Nadler
<PAGE>
To the Shareholders and Board of Directors
DK Investors Inc.
We have examined the statements of assets and liabilities of DK
Investors Inc. including the portfolio of investments as of December 31,
1996 and 1995 and the related statements of operations and changes in net
assets for the years then ended and supplementary information for the five
years then ended. Our examination was made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as we considered
necessary in the circumstances, including confirmation of securities owned
at December 31, 1996 by correspondence with the custodian.
In our opinion, the financial statements referred to above present
fairly the net assets of DK Investors Inc. at December 31, 1996 and 1995
and the results of its operations and the changes in its net assets for
the years then ended, in conformity with generally accepted accounting
principles applied on a consistent basis. Also, in our opinion, the
supplementary information for the five years ended December 31, 1996 is
fairly stated in all respects material in relation to the financial
statements taken as a whole.
CUMMINGS & CARROLL, P.C.
Certified Public Accountants
February 12, 1997
Great Neck, New York
<PAGE>
DK INVESTORS INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31,
ASSETS
1997 1996
Investments in securities at market
(identified cost - 1997 $15,215,926
1996 $15,745,758) $15,288,662 $15,830,370
Accrued interest receivable 299,483 321,244
Deferred charge 28,199 67,574
Cash 102,074 23,450
-----------
- -----------
Total Assets $15,718,418 $16,242,638
LIABILITIES
Payable for securities purchased $ 103,371 $ 528,389
Accrued expenses 34,155 53,009
Dividends payable
(1997 - January 5, 1998
1996 - January 6, 1997) 211,629 176,358
Total Liabilities 349,155 757,756
Net assets
(equivalent to $13.07 and $13.17 per
share respectively, based on 1,175,664
shares capital stock outstanding) $15,369,263 $15,484,882
See notes to financial statements.
<PAGE>
DK INVESTORS INC.
INVESTMENT IN SECURITIES
DECEMBER 31, 1997
(Unaudited)
% OF
INVESTMENT
COUPON PRINCIPAL COST OR MARKET BASED
SECURITIES RATE MATURITY AMOUNT BASIS VALUE ON M.V.
Houston TX Indp Sch 7.000 1998 175,000 177,943 178,537 1.17%
S Dakota St Bldg Auth 7.750 1998 185,000 189,107 189,945 1.24%
Chicago IL Met San 7.600 1999 50,000 51,066 50,955 0.33%
Texas Hsg Agcy 7.250 1999 30,000 30,150 30,428 0.20%
Univ. N. TX 7.300 1999 100,000 103,935 104,363 0.68%
NYS Dorm 7.200 1999 100,000 103,857 104,317 0.68%
Austin TX Utility 7.200 1999 50,000 52,216 52,407 0.34%
Chicago Metro San 7.650 2000 140,000 142,338 142,505 0.93%
Garland TX Lt G.O. 8.000 2000 195,000 206,010 210,621 1.38%
Indiana Transp Fin Au 6.900 2000 150,000 157,482 159,396 1.04%
Wisc.Pub Pwr Sys 7.000 2000 500,000 530,393 535,020 3.50%
NY State Mtg Agency 7.050 2000 5,000 5,027 5,173 0.03%
Chicago Metro San 7.700 2001 300,000 314,225 300,033 1.96%
Ohio Mental Hlth Rev. 7.300 2001 100,000 103,887 103,446 0.68%
Delaware Trans Auth 7.100 2001 150,000 159,798 163,604 1.07%
NYS Environ.Fac Corp. 7.300 2002 500,000 524,509 544,615 3.56%
Washoe Cnty Nev Wtr 7.200 2004 110,000 111,629 111,660 0.73%
Nevada State G/O 7.000 2004 125,000 132,980 133,310 0.87%
Louisiana St Gas Fuel 7.250 2004 100,000 107,176 107,118 0.70%
San Antonia TX Wtr 7.300 2005 250,000 267,317 256,700 1.68%
FL St Brd Mand SKG 7.500 2005 20,000 21,112 21,101 0.14%
Seattle Wash Mun L&P 7.750 2005 275,000 290,304 280,552 1.84%
Wash.Cnty NV Wtr/Swr 7.200 2005 120,000 121,018 121,811 0.80%
NY Dorm Auth 7.800 2005 275,000 292,975 288,492 1.89%
Port Seattle Wash Rev 7.300 2005 300,000 329,406 329,121 2.15%
Hawaii State 7.000 2006 500,000 519,770 534,600 3.50%
Ohio Bldg. Auth 8.000 2007 100,000 106,744 102,358 0.67%
Harris Cnty TX Pub Fa 7.750 2007 425,000 468,485 449,285 2.94%
Corpus Christi TX G/O 7.000 2008 100,000 103,371 103,314 0.68%
Los Vegas Valley Wtr 7.000 2008 225,000 245,975 245,131 1.60%
NY State Mtg Agency 7.850 2008 475,000 495,839 478,259 3.13%
Austin TX Util Sys 7.750 2008 200,000 215,449 210,646 1.38%
San Antonio TX Elec&G 7.000 2009 60,000 63,303 62,608 0.41%
Columbus Indiana Swr 7.250 2009 260,000 283,567 281,453 1.84%
WI St. Sr E 6.900 2009 250,000 253,391 255,135 1.67%
Pampa TX Wtr 7.400 2009 100,000 108,282 108,520 0.71%
Clark Cnty Nev Sch D 7.000 2009 350,000 366,487 384,731 2.52%
SE TX Hosp fin Agy 7.500 2009 100,000 104,971 117,311 0.77%
New Mexico Mtg Fin Au 6.850 2010 85,000 86,145 89,787 0.59%
NV Hsg Dev 7.550 2010 460,000 471,019 479,877 3.14%
<PAGE>
DK INVESTORS INC.
INVESTMENT IN SECURITIES
DECEMBER 31, 1997
(Unaudited)
% OF
INVESTMENT
COUPON PRINCIPAL COST OR MARKET BASED
SECURITIES RATE MATURITY AMOUNT BASIS VALUE ON M.V.
NYS Mtg Ser NN 7.450 2010 250,000 257,117 264,638 1.73%
RI Hsg & Mtg 7.700 2010 500,000 516,609 521,345 3.41%
Kenosha, Wisc Wtwks 7.000 2011 350,000 383,541 379,540 2.48%
Austin TX Util Sys 6.750 2012 100,000 105,053 109,795 0.72%
Birmingham ALA UT 6.600 2012 275,000 284,178 303,207 1.98%
Virginia St. Trans 6.900 2012 100,000 106,987 103,144 0.67%
Penn St. Tpke. Comm. 7.500 2012 175,000 193,046 189,614 1.24%
TX Wtr Res Fin Au Rev 7.500 2013 695,000 756,685 731,175 4.78%
San Antonio TX E & G 6.000 2014 200,000 201,663 206,351 1.35%
Arkansas St. Dev Fin 7.000 2014 500,000 542,113 550,325 3.60%
Illinois St Sales Tax 7.250 2014 100,000 106,749 106,666 0.70%
Indiana Mun Pwr 7.100 2015 100,000 107,524 107,656 0.70%
Greenville SC Hosp 7.800 2015 100,000 108,704 103,322 0.67%
PA St. Higher Ed Auth 7.300 2015 425,000 460,585 453,331 2.96%
Met Gov't NashDavCoTN 7.625 2016 60,000 64,785 61,920 0.40%
Missouri St Env Auth 7.200 2016 200,000 218,314 232,040 1.52%
Austin Comb Util 8.000 2016 125,000 140,729 140,074 0.92%
Maine St HSG Auth 7.100 2016 265,000 261,847 280,741 1.84%
Chicago, IL Wtr. 7.200 2016 100,000 107,678 107,585 0.70%
Wisconsin HSG & ECO 7.350 2017 350,000 351,127 378,991 2.48%
Wisconsin HSG & ECO 6.400 2017 350,000 346,500 369,103 2.41%
Michigan St trunk 7.000 2017 100,000 107,732 106,683 0.70%
Michigan St. Hosp. 7.500 2018 175,000 194,555 195,179 1.28%
Wisc. Hlth & Ed. Fac 7.125 2019 425,000 461,230 455,311 2.98%
Georgia Mun Elec Rev 8.125 2020 130,000 141,567 132,616 0.87%
Richmond, VA 6.250 2021 250,000 270,650 270,065 1.77%
$14,395,000 15,215,926 15,288,662 100.00%
See notes to financial statements.
<PAGE>
DK INVESTORS INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
1997 1996
Income
Interest - municipal obligations
(Less amortization of premiums
1997 $100,912; 1996 $96,644) $ 942,481 $ 955,463
Expenses
Investment advisory fee 60,696 61,314
Shareholder servicing costs, including
transfer agent and dividend disbursing
agent fees and expense 4,822 5,801
Reports to shareholders 7,953 8,958
Legal fees 25,170 25,399
Auditing fees 13,500 14,100
Directors fees 7,500 6,900
Insurance 42,581 43,520
Miscellaneous 3,181 3,136
165,403 169,128
Net investment income $ 777,078 $ 786,335
Realized and Unrealized Gain (loss) on Investments
Realized gain (loss) from sale of securities
(excluding short-term securities)
Proceeds from sales $4,500,875 $2,396,850
Cost of securities sold 4,605,135 2,512,936
Realized gain (loss) (104,260) (116,086)
Unrealized appreciation (depreciation of investments)
Beginning of period 84,612 202,944
End of period 72,736 84,612
Increase (decrease) in unrealized appreciation (11,876) (118,332)
Total Realized and Unrealized Gain (loss)
on Investments $ (116,136) $ (234,418)
See notes to financial statements.
<PAGE>
DK INVESTORS INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
1997 1996
INVESTMENT ACTIVITIES
Net investment income $ 777,078 $ 786,335
Realized and unrealized gain (loss) on investments (116,136) (234,418)
Distributions to shareholders (776,561) (764,215)
Increase (decrease) in net assets (115,619) (212,298)
NET ASSETS
Beginning of year 15,484,882 15,697,180
End of year $15,369,263 $15,484,882
See notes to financial statements.
<PAGE>
DK INVESTORS INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
Note 1 - Summary of Significant Accounting Policies
The Company is registered under the Investment Company Act of 1940
as a diversified, closed-end, management investment company. The
significant accounting policies followed by the Company are
summarized as follows:
a. Security Valuation
Investments in securities were valued at the bid price by Chase
Bank.
b. Federal Income Taxes
The Company qualifies under Subchapter M of the Internal Revenue
Code as a "regulated investment company" for federal income tax
purposes, investing all of its assets in tax-exempt state and local
obligations. The Company intends to distribute all of its net
investment income to its stockholders. The Company will be relieved
of federal income taxes on such income, and dividends so distributed
will be tax-free to shareholders.
c. Income and Expense Recognition
Interest income and related expenses are recognized on the accrual
basis. Amortization of bond premium calculated by the straight-line
method is charged against interest income over the term of the bond.
d. Other
As is common in the industry, security transactions are accounted
for on the date the securities are purchased or sold. Dividend
income and distribution to shareholders are recorded on the
ex-dividend date. Each expense accounting for 5 per cent of total
expense is separately reported.
Note 2 - Purchases and Sales of Securities
During the year ended December 31, 1997, purchases and sales of
securities other than short-term were $4,176,000 and $4,501,000,
respectively. During the year ended December 31, 1996, purchases
and sales of securities other than short-term were $2,638,000 and
$2,397,000, respectively.
Note 3 - Investment Advisory Fee
The Company's agreement with Chase Bank for investment management
and advisory services calls for an annual fee of 4/10ths of 1% of
the average portfolio value. The fee for 1997 amounted to $60,696.
<PAGE>
Note 4 - Distributions
Distributions to shareholders for 1997 were $776,561 or $.6605 per
share. Distributions include $752,501 or $.64 on account of 1997
and $24,060 or $.0205 as a supplemental distribution for 1996.
Undistributed income for 1997 is $24,577 or $.0209 per share.
Note 5 - Contingent Liabilities
In the opinion of management and outside counsel, there are no
other significant legal or other matters pending.
Note 6 - Supplementary Information
Per share income and capital changes (for a share outstanding
throughout the period ended):
1997 1996 1995 1994 1993
Investment income $ .80 $ .81 $ .86 $ .92 $ .93
Expenses .14 .14 .14 .14 .14
Net investment income .66 .67 .72 .78 .79
Distribution to Shareholders ( .66) ( .65) ( .73) ( .78) ( .79)
Net realized and unrealized gain (loss)
on investments ( .10) ( .20) .32 ( .70) .11
Net increase (decrease) in asset value $( .10) $( .18) $ .31 $( .70) $ .11
Net assets value per share
at end of year $13.07 $13.17 $13.35 $13.04 $13.74
Ratio of expenses to average net assets 1.08% 1.09% 1.06% 1.09% 1.01%
Ratio of net investment income to
average net assets 5.0% 5.1% 5.3% 5.8% 5.7%
Portfolio turnover 29.9% 16.1% 23.9% 15.9% 9.3%
Number of shares outstanding during the entire period was 1,175,664.
<PAGE>
DK INVESTORS, INC.
OFFICES: 205 Lexington Avenue, 16th Floor
New York, New York 10016
(212) 779-4233
OFFICERS: Gene Nadler President
Andrew Brucker, Esq. Vice President
Harry Nadler Secretary
DIRECTORS: Gene Nadler Chairman
Harry Nadler
Thomas B. Schulhof
Angelo J. Balafas
Joseph Kell
Andrew Brucker, Esq.
Francine Yellon
LEGAL COUNSEL: POMERANZ GOTTLIEB & MUSHKIN, LLC
205 Lexington Avenue, 16th Floor
New York, New York 10016
AUDITORS: CUMMINGS & CARROLL, P.C.
175 Great Neck Road
Great Neck, New York 11021
INVESTMENT
ADVISORS: Chase Asset Management, Inc.
Division of Chase Manhattan Bank
(formerly Chemical Bank)
1211 Avenue of the Americas
New York, New York 10036
TRANSFER AGENT
AND REGISTRAR: American Stock Transfer & Trust Co.
40 Wall Street, 46th Floor
New York, New York 10005
CUSTODIAN: Chase Manhattan Bank (formerly Chemical Bank)
ANNUAL MEETING:
On May 11, 1998, a regular Annual Meeting of the Shareholders of the
company will be held at 205 Lexington Avenue, 16th Floor, New York, New
York.
REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940 AS A DIVERSIFIED,
CLOSED END MANAGEMENT COMPANY. COPIES OF THE COMPANY'S ANNUAL REPORT
FORM N-2 ARE AVAILABLE TO REGISTERED STOCKHOLDERS UPON WRITTEN REQUEST
TO THE SECRETARY AT THE ABOVE ADDRESS.
