{.TX}1-13
<PAGE>
CHESAPEAKE INVESTORS, INC.
SEMI-ANNUAL REPORT
MARCH 31, 1999
<PAGE>
Dear Shareholder:
The financial report, contained herein, shows results for the six month
period ended March 31, 1999. Net investment income totalled $378,356 or
$.10 per share compared to $380,625 or $.10 per share for the six month period
ended March 31, 1998. The net asset value increased to $4.25 per share from
$4.23 per share as of March 31, 1998.
It is the Company's intent to provide as high a level of income as
possible, consistent with sound investment policies. The market is
constantly monitored to achieve the objectives of a high level of income
and the preservation of net asset value.
Sincerely,
Albert W. Turner, Warren W. Pearce, Jr.,
Chairman of the Board President
May 17, 1999
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<PAGE>
CHESAPEAKE INVESTORS, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
<S>
<C>
ASSETS:
Investments in Long-Term Securities, at Value
(Amortized Cost $14,404,865) $15,740,976
Investments in Short-Term Securities
(at cost which approximates market) 78,886
Accrued Interest Receivable 270,364
------------
Total Assets 16,090,226
------------
LIABILITIES:
Accounts Payable and Accrued Expenses 17,808
------------
Total Liabilities 17,808
------------
NET ASSETS:
Net Assets (Equivalent to $4.25 per share based on
3,783,960 shares of capital stock outstanding) $16,072,418
============
</TABLE>
See Notes to Financial Statements
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<PAGE>
CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Face Amortized
Rating* Amount Cost Value
------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Investments in Long-Term
Securities:
Alabama:
Birmingham, Alabama,
Refunding UT GO Bond
5.0%, due 7/1/19 AA $ 520,000 $ 520,000 $ 518,648
------------ ------------- ------------
Arizona:
Salt River Project,
Arizona - Series C Revenue
5.5%, due 1/1/28 AA $ 700,000 $ 686,770 $ 714,840
Maricopa County
Arizona School District
5.5%, due 7/1/05 AAA 650,000 662,900 702,455
------------ ------------- ------------
Total Arizona 1,350,000 1,349,670 1,417,295
------------ ------------- ------------
Arkansas:
Jefferson County, Arkansas
Single Family Mortgage
7.25%, due 12/1/10 Aaa 365,000 331,364 435,226
Little Rock, Arkansas
Single Family Mortgage,
7.3%:
due 9/1/00 AAA 25,000 24,790 26,372
due 9/1/01 AAA 25,000 24,656 27,105
due 9/1/02 AAA 30,000 29,440 33,393
due 9/1/03 AAA 35,000 34,187 39,218
due 9/1/04 AAA 35,000 34,040 39,592
due 9/1/05 AAA 40,000 38,747 45,568
due 9/1/06 AAA 35,000 33,777 40,211
due 9/1/07 AAA 45,000 43,276 52,146
due 9/1/08 AAA 50,000 47,928 61,465
due 9/1/09 AAA 50,000 47,781 62,090
due 9/1/10 AAA 30,000 28,586 35,109
------------ ------------- ------------
Total Arkansas 765,000 718,572 897,495
------------ ------------- ------------
</TABLE>
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<PAGE>
CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Face Amortized
Rating* Amount Cost Value
------ ------------ ------------- ------------
<C> <C> <C> <C>
<S>
California:
Los Angeles, California
Electric Revenue
5.875%, due 9/1/30 AA 300,000 278,301 324,210
------------ ------------- ------------
District of Columbia:
Georgetown University
Revenue Bond
7.4%, due 4/1/18 AA- 750,000 733,475 776,475
------------ ------------- ------------
Florida:
City of Gainesville, Florida,
Utility System Revenue,
9.125%, due 10/1/05 AAA 500,000 500,000 617,700
Florida State Board
of Education - Cap Outlay
7.25%, due 6/1/23 AA 200,000 198,904 212,461
------------ ------------- ------------
Total Florida 700,000 698,904 830,161
------------ ------------- ------------
Georgia:
Municipal Electric Authority
6%, due 1/1/05 AAA 700,000 727,716 768,670
------------ ------------- ------------
Illinois:
Chicago, Illinois
UTGO Public Library
6.60%, due 1/1/04 AAA 700,000 712,665 769,440
Chicago, Illinois
School Finance Authority
5%, due 6/1/09 AAA 650,000 620,602 675,740
------------ ------------- ------------
Total Illinois 1,350,000 1,333,267 1,445,180
------------ ------------- ------------
</TABLE>
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PAGE>
CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Face Amortized
Rating* Amount Cost Value
------ ------------ ------------- -----------
<C> <C> <C> <C>
<S>
Louisiana:
Shreveport, Louisiana,
Single Family Mortgage,
6.75%, due 9/1/10 Aaa 405,000 357,218 460,202
------------ ------------- ------------
Massachusetts:
Massachusetts State Utility
Government Bond,
7.625%, due 6/1/08 Aaa 500,000 545,712 551,100
------------ ------------- ------------
Minnesota:
Southern Minnesota Municipal
Power Agency, Serial A
5.7%, due 1/1/05 A+ 650,000 663,428 694,655
------------ ------------- ------------
New York:
New York State
Local Revenue
5.375%, due 4/1/16 A+ 200,000 187,880 205,560
New York State
Local Revenue
5.125%, due 4/1/10 AAA 400,000 392,929 419,440
------------ ------------- ------------
Total New York 600,000 580,809 625,000
------------ ------------- ------------
North Carolina:
North Carolina Municipal
Power Agency
7.25%, due 1/1/07 A- 400,000 427,441 468,080
Charlotte, NC Utility
General Obligation
5.5%, due 7/1/07 AAA 500,000 516,104 528,800
------------ ------------- ------------
Total North Carolina 900,000 943,545 996,880
------------ ------------- ------------
</TABLE>
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<PAGE>
CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Face Amortized
Rating* Amount Cost Value
------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
Pennsylvania:
Allegheny County, Pennsylvania
Hospital Development Authority
6.0%, due 11/1/23 AAA 700,000 673,657 752,430
Commonwealth of Pennsylvania
Utility Government Obligation
6.3%, due 11/1/02 AAA 700,000 709,988 757,330
Pennsylvania State Higher
Educational Facility
Authority
7.15%, due 6/15/15 AAA 500,000 503,285 521,950
Pennsylvania Intergovernmental
Coop Authority Special
Tax Revenue
7%, due 6/15/04 AAA 500,000 513,849 571,400
------------ ------------- ------------
Total Pennsylvania 2,400,000 2,400,779 2,603,110
------------ ------------- ------------
Texas:
Cypress-Fairbanks, Texas
Independent School District
5.5%, due 2/15/10 AAA 700,000 700,000 731,980
Texas Water Development
Board Revenue
5.5%, due 7/15/10 AAA 750,000 752,261 795,525
------------ ------------- ------------
Total Texas 1,450,000 1,452,261 1,527,505
------------ ------------- ------------
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<PAGE>
CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
</TABLE>
<TABLE>
<CAPTION>
Face Amortized
Rating* Amount Cost Value
------- ------------ ------------- ------------
<C> <C> <C> <C>
<S>
Utah:
Salt Lake City, Utah
Hospital Revenue
8.125%, due 5/15/15 AAA 700,000 709,174 904,470
------------ ------------- ------------
Washington:
Washington State Public Power
5.125%, due 7/1/17 AAA 400,000 392,034 399,920
------------ ------------- ------------
Total Investments in
Long-Term Securities $ 14,440,000 $ 14,404,865 $ 15,740,976
============ ============= ============
* Ratings - Standard & Poor's or Moody's
Unaudited
<CAPTION>
Face
Amount Cost
------------- --------------
<S>
Investments in Short-Term Securities:
State Street Global Advisor
Tax Free Money Market Fund, 2.13% $ 78,886 $ 78,886
Total Investments ------------- --------------
in Short-Term Securities $ 78,886 $ 78,886
============= ===============
</TABLE>
See Notes to Financial Statements
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PAGE>
CHESAPEAKE INVESTORS, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
<C>
<S>
INVESTMENT INCOME:
Interest Income $ 447,763
------------
EXPENSES:
Investment Advisory Fee 27,960
Custodian Fees 5,809
Transfer Agent and Dividend
Disbursing Agent Fees 8,075
Legal and Auditing Services 13,198
Administrative Services 9,000
Compensation of Directors not
Members of the Investment Adviser's Organization 2,500
Printing Costs 1,912
Miscellaneous 953
------------
Total Expenses 69,407
------------
Net Investment Income 378,356
------------
REALIZED GAIN AND UNREALIZED LOSS ON INVESTMENTS:
Realized Gain From Investment
Transactions (Excluding Short-Term Securities):
Proceeds from Sales 388,040
Cost of Investments Sold 356,200
------------
Net Realized Gain on Investments 31,840
------------
Unrealized Loss on Investments:
Unrealized Appreciation of Investments
at Beginning of Period 1,514,865
Unrealized Appreciation of Investments
at End of Period 1,336,111
------------
Net Unrealized Loss on Investments (178,754)
------------
Net Realized Gain and Unrealized Loss on
Investments (146,914)
------------
Net Increase in Net Assets Resulting
from Operations $ 231,442
============
</TABLE>
See Notes to Financial Statements
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<PAGE>
CHESAPEAKE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Six Month Period Year Ended
Ended March 31, September 30,
1999 1998
(Unaudited) (Audited)
----------------- --------------
<C> <C>
<S>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net Investment Income $ 378,356 $ 787,576
Net Realized Gain on
Investments 31,840 3,666
Net Unrealized Gain (Loss)
on Investments (178,754) 266,109
------------- -------------
Net Increase in Net Assets
Resulting from Operations 231,442 1,057,351
Dividends to Shareholders from:
Net Investment Income
($.11 and $.21 per share,
respectively) (415,074) (785,161)
Net Realized Gain on
Investments (1,155) -
------------- -------------
Total Increase (Decrease)
in Net Assets (184,787) 272,190
NET ASSETS:
Beginning of Period 16,257,205 15,985,015
------------- -------------
End of Period (Including Undistributed
Net Investment Income of $786,497
and $823,215, respectively, and
undistributed net realized gains
of $31,840 and $1,155,
respectively) $ 16,072,418 $ 16,257,205
============= =============
</TABLE>
See Notes to Financial Statements
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<PAGE>
CHESAPEAKE INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
(1) - SIGNIFICANT ACCOUNTING POLICIES
Chesapeake Investors, Inc. (the "Company") is registered under the
Investment Company Act of 1940, as amended, as a diversified closed-end
management investment company and invests solely in municipal obligations.
The following is a summary of significant accounting policies consistently
followed by the Company in the preparation of its financial statements.
The policies are in conformity with generally accepted accounting
principles.
A. Investment Security Valuation - Securities are valued at the mean
between the latest bid and asked prices. Any securities for which market
quotations are not readily available are appraised at fair value as
determined in good faith under methods or procedures authorized by the
Board of Directors.
B. Federal Income Taxes - The Company intends to comply with the provisions
of the Internal Revenue Code available to investment companies and to
distribute to shareholders annually all of its net investment income.
Accordingly, no provision for Federal income tax is necessary. The
Company, based on provisions of the Internal Revenue Code, expects to
distribute income from capital gains to its shareholders. Accordingly,
such gains will be taxable to the shareholders. The character of
dividends from net investment income or net realized gains on investments
may differ from their ultimate characterization for Federal income tax
purposes due to generally accepted accounting principles and tax
differences in the character of income and expense recognition.
C. Other - The Company follows industry practice and records security
transactions on the trade date. Interest income is recorded on the
accrual basis. Bond premiums and discounts are amortized to income
ratably over the total number of months from date of purchase to date of
maturity of the bonds. Certain securities have optional or mandatory
tender features which give them a shorter effective maturity date.
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<PAGE>
(2) - CAPITAL STOCK
At March 31, 1999, there were 6,000,000 shares of $.50 par value
capital stock authorized. Shares issued and outstanding at March 31, 1999
totalled 3,783,960.
(3) - PURCHASES AND SALES OF SECURITIES
Sales and maturities of securities during the six month period ended
March 31, 1999, other than short-term securities, aggregated $388,040.
Purchases of long-term securities during the six month period ended
March 31, 1999 aggregated $520,000.
For Federal income tax purposes, the identified cost of investments
owned, excluding short-term securities, at March 31, 1999, was $14,205,927.
Gross unrealized gains totalled $1,536,401 for Federal income tax purposes
at March 31, 1999.
(4) - INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES
Federated Investment Counseling, Inc. is the investment adviser to the
Company. The advisory contract provides for an annual fee equal to .35 of
1% of the weighted average managed assets of the Company. The investment
advisory fee for the six months ended March 31, 1999 totalled $27,960.
For the six month period ended March 31 1999, fees of $9,000 for
administrative services were paid to Carrollton Enterprises Management
Company, LLC. The Chairman of the Board is the owner of that firm.
(5) - DIVIDENDS
During the six month period ended March 31, 1999, the Company
distributed dividends of $416,229 to its shareholders. On March 30, 1999,
the Company declared a $.05 per share dividend aggregating $189,195 payable
April 27, 1999, to shareholders of record April 13, 1999.
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<PAGE>
CHESAPEAKE INVESTORS, INC.
SUPPLEMENTARY INFORMATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six-Months Fiscal Fiscal Fiscal Fiscal
March 31, Year Year Year Year
1999 1998 1997 1996 1995
------ ------ ------ ------ -------
<C> <C> <C> <C> <C>
<S>
PER SHARE DATA:*
Investment Income $ .12 $ .24 $ .24 $ .25 $ .29
Expenses .02 .03 .03 .03 .03
------ ------ ------ ------ ------
Net Investment Income .10 .21 .21 .22 .26
Dividends from:
Net Investment Income (.11) (.21) (.19) (.23) (.28)
Net Realized Gain
on Investments - - (.04) (.01) -
Net Realized and
Unrealized Gain
(Loss) on Investments (.03) .07 .06 .01 .05
------ ------ ------ ------ ------
Net Increase (Decrease)
in Net Asset Value (.04) .07 .04 (.01) .03
Net Asset Value:
Beginning of Period 4.29 4.22 4.18 4.19 4.16
------ ------ ------ ------ ------
End of Year $ 4.25 $ 4.29 $ 4.22 $ 4.18 $ 4.19
====== ====== ====== ====== ======
RATIOS:
Ratio of Expenses to
Average Net Assets .43% .72% .72% .72% .74%
Ratio of Net Investment
Income to Average Net
Assets 2.35% 4.90% 5.07% 5.22% 6.18%
</TABLE>
*Selected data for a share of capital stock outstanding throughout the year.
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<PAGE>
DIRECTORS INVESTMENT ADVISER
Albert W. Turner Federated Investment
Herndon G. Kilby Counseling, Inc.
Warren W. Pearce, Jr. Pittsburgh, Pennsylvania
John F. Ryon
Harry F Breitbach
CUSTODIAN
State Street Bank
and Trust Company
North Quincy, Massachusetts
OFFICERS TRANSFER AGENT
Albert W. Turner, Registrar and Transfer Company
Chairman of the Board Cranford, New Jersey
Warren W. Pearce, Jr.,
President
Herndon G. Kilby,
Secretary-Treasurer
OFFICES
11785 Beltsville Drive
Beltsville, Maryland
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