[DESCRIPTION] ANNUAL REPORT
{.TX}1-14
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CHESAPEAKE INVESTORS, INC.
ANNUAL REPORT
SEPTEMBER 30, 2000
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Dear Shareholder:
The financial report, contained herein, shows results for the fiscal year
ended September 30, 2000. Net investment income totalled $761,639 or $.20 per
share compared to $767,329 or $.20 per share for the previous year. The net
asset value decreased to $4.06 per share from $4.08 per share as of September
30, 1999.
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
November 20, 2000
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INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
Chesapeake Investors, Inc.
We have audited the accompanying statement of assets and liabilities of
Chesapeake Investors, Inc., including the schedule of investments in
securities, as of September 30, 2000, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 2000, by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Chesapeake Investors, Inc. as of September 30, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles.
STOY, MALONE & COMPANY,P.C.
Bethesda, Maryland
November 20, 2000
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CHESAPEAKE INVESTORS, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
<S>
<C>
ASSETS:
Investments in Long-Term Securities, at Value
(Amortized Cost $13,791,958) $14,406,276
Investments in Short-Term Securities
(at cost which approximates market) 725,794
Accrued Interest Receivable 250,711
-----------
Total Assets 15,382,781
-----------
LIABILITIES:
Accounts Payable and Accrued Expenses 17,745
-----------
Total Liabilities 17,745
-----------
NET ASSETS:
Net Assets (Equivalent to $4.06 per share based on
3,783,960 shares of capital stock outstanding) $15,365,036
===========
</TABLE>
See Notes to Financial Statements
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CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
SEPTEMBER 30, 2000
<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 4/1/19 AA $ 420,000 $ 420,000 $ 393,876
------------ ------------- ------------
Arizona:
Salt River Project,
Arizona - Series C Revenue
5.5%, due 1/1/28 AA 700,000 687,460 678,860
Maricopa County
Arizona School District
5.5%, due 7/1/05 AAA 650,000 659,804 674,050
----------- ------------- ------------
Total Arizona 1,350,000 1,347,264 1,352,910
----------- ------------- ------------
Arkansas:
Jefferson County, Arkansas
Single Family Mortgage
7.25%, due 12/1/10 Aaa 355,000 326,492 406,226
Little Rock, Arkansas
Single Family Mortgage,
7.3%:
due 9/1/01 AAA 25,000 24,870 25,647
due 9/1/02 AAA 30,000 29,686 31,533
due 9/1/03 AAA 35,000 34,463 37,601
due 9/1/04 AAA 35,000 34,306 38,367
due 9/1/05 AAA 40,000 39,040 44,656
due 9/1/06 AAA 35,000 34,024 39,701
due 9/1/07 AAA 45,000 43,583 51,746
due 9/1/08 AAA 50,000 48,258 58,175
due 9/1/09 AAA 50,000 48,100 58,770
due 9/1/10 AAA 30,000 28,772 35,568
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Total Arkansas 730,000 691,594 827,990
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</TABLE>
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CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Face Amortized
Rating* Amount Cost Value
------ ------------ ------------- ------------
<C> <C> <C> <C>
<S>
Florida:
City of Gainesville, Florida,
Utility System Revenue,
9.125%, due 10/1/05 AAA 500,000 500,000 578,850
------------ ------------- ------------
Georgia:
Municipal Electric Authority
6%, due 1/1/05 AAA 700,000 720,486 735,560
------------ ------------- ------------
Illinois:
Chicago, Illinois
UTGO Public Library
6.60%, due 1/1/04 AAA 700,000 708,665 734,020
Chicago, Illinois
School Finance Authority
5%, due 6/1/09 AAA 650,000 624,939 652,015
------------ ------------- ------------
Total Illinois 1,350,000 1,333,604 1,386,035
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Louisiana:
Shreveport, Louisiana,
Single Family Mortgage,
6.75%, due 9/1/10 Aaa 380,000 341,058 412,072
------------- ------------- ------------
Massachusetts:
Massachusetts State Utility
Government Bond,
7.625%, due 6/1/08 Aaa 500,000 538,232 520,350
Massachusetts Bay
Transit Authority
5.75%, due 7/1/15 AAA 500,000 516,994 519,350
------------- ------------- ------------
Total Massachusetts 1,000,000 1,055,226 1,039,700
------------- ------------- ------------
</TABLE>
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CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Face Amortized
Rating* Amount Cost Value
------ ------------ ------------- -----------
<C> <C> <C> <C>
<S>
Minnesota:
Southern Minnesota Municipal
Power Agency, Serial A
5.7%, due 1/1/05 A+ 650,000 659,925 673,855
------------ ------------- ------------
New Jersey:
New Jersey State Ref-Ser F
5.25%, due 8/1/14 AA+ 750,000 760,742 748,275
------------ ------------- ------------
New York:
New York State
Local Revenue
5.375%, due 4/1/16 A+ 200,000 188,949 197,160
New York State
Local Revenue
5.125%, due 4/1/10 AAA 400,000 393,893 406,520
------------ ------------- ------------
Total New York 600,000 582,842 603,680
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North Carolina:
North Carolina Municipal
Power Agency
7.25%, due 1/1/07 BBB+ 400,000 422,130 438,880
Charlotte, NC Utility
General Obligation
5.5%, due 7/1/07 AAA 500,000 513,176 516,100
------------ ------------- ------------
Total North Carolina 900,000 935,306 954,980
------------ ------------- ------------
</TABLE>
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CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 2000
<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 700,000 675,265 706,370
Commonwealth of Pennsylvania
Utility Government Obligation
6.3%, due 11/1/02 AAA 700,000 705,807 724,150
Pennsylvania Intergovernmental
Coop Authority Special
Tax Revenue
7%, due 6/15/04 AAA 500,000 509,828 540,650
------------ ------------- ------------
Total Pennsylvania 1,900,000 1,890,900 1,971,170
------------ ------------- ------------
Texas:
Cypress-Fairbanks, Texas
Independent School District
5.5%, due 2/15/10 AAA 700,000 700,000 708,408
Texas Water Development
Board Revenue
5.5%, due 7/15/10 AAA 750,000 751,961 770,625
------------ ------------- ------------
Total Texas 1,450,000 1,451,961 1,479,033
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</TABLE>
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CHESAPEAKE INVESTORS, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED)
SEPTEMBER 30, 2000
<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 700,000 708,323 869,330
------------ ------------- ------------
Washington:
Washington State Public Power
5.125%, due 7/1/17 AAA 400,000 392,727 378,960
------------ ------------- ------------
Total Investments in
Long-Term Securities $ 13,780,000 $ 13,791,958 $ 14,406,276
============ ============= ============
* 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, 3.29% $ 725,794 $ 725,794
Total Investments ------------- --------------
in Short-Term Securities $ 725,794 $ 725,794
============= ===============
</TABLE>
See Notes to Financial Statements
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CHESAPEAKE INVESTORS, INC.
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEBER 30, 2000
<TABLE>
<CAPTION>
<C>
<S>
INVESTMENT INCOME:
Interest Income $ 874,239
------------
EXPENSES:
Investment Advisory Fee 51,834
Custodian Fees 7,817
Transfer Agent and Dividend
Disbursing Agent Fees 11,721
Legal and Auditing Services 13,250
Administrative Services 18,000
Compensation of Directors not
Members of the Investment Adviser's Organization 4,000
Printing Costs 3,575
Miscellaneous 2,403
------------
Total Expenses 112,600
------------
Net Investment Income 791,639
------------
REALIZED GAIN AND UNREALIZED LOSS ON INVESTMENTS:
Realized Gain On Investments
Transactions (Excluding Short-Term Securities):
Proceeds from Sales 1,062,950
Cost of Investments Sold 1 037,696
------------
Net Realized Gain on Investments 25,254
------------
Unrealized Loss on Investments:
Unrealized Appreciation of Investments
at Beginning of Year 668,382
Unrealized Appreciation of Investments
at End of Year 614,318
------------
Net Unrealized Loss on Investments (54,064)
------------
Net Realized Gain and Unrealized Loss on
Investments (28,810)
------------
Net Increase in Net Assets Resulting
from Operations $ 732,829
============
</TABLE>
See Notes to Financial Statements
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CHESAPEAKE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<C> <C>
<S>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net Investment Income $ 761,639 $ 767,329
Net Realized Gain on
Investments 25,254 62,316
Net Unrealized Loss
on Investments (54,064) (846,483)
------------- -------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 732,829 (16,838)
Dividends to Shareholders from:
Net Investment Income (751,224) (793,465)
Net Realized Gain on Investments (62,316) (1,155)
-------------- -------------
Total Decrease
in Net Assets (80,711) (811,458)
NET ASSETS:
Beginning of Year 15,445,747 16,257,205
-------------- --------------
End of Year (Including Undistributed
Net Investment Income of $807,494
and $797,079, respectively, and
undistributed net realized gains
of $25,254 and $62,316,
respectively) $ 15,365,036 $ 15,445,747
============= =============
</TABLE>
See Notes to Financial Statements
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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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(2) - CAPITAL STOCK
At September 30, 2000, there were 6,000,000 shares of $.50 par value
capital stock authorized. Shares issued and outstanding at September 30, 2000
totalled 3,783,960.
(3) - PURCHASES AND SALES OF SECURITIES
Sales and maturities of securities during fiscal year 2000, other than
short-term securities, aggregated $1,062,950.
Purchases of long-term securities during fiscal year 2000 aggregated
$517,090.
For Federal income tax purposes, the identified cost of investments
owned, excluding short-term securities, at September 30, 2000, was $13,590,724.
Gross unrealized gains and losses totalled $889,901 and $74,349, respectively,
for Federal income tax purposes at September 30, 2000.
(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 fiscal year 2000 totalled $51,834.
For fiscal year 2000, fees of $18,000 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 fiscal year 2000, the Company distributed dividends of $813,540
to its shareholders. On October 5, 2000, the Company declared a $.055 per
share dividend, aggregating $208,118, payable November 2, 2000, to
shareholders of record October 19, 2000.
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CHESAPEAKE INVESTORS, INC.
SUPPLEMENTARY INFORMATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<C> <C> <C> <C> <C>
<S>
PER SHARE DATA:*
Investment Income $ .23 $ .23 $ .24 $ .24 $ .25
Expenses .03 .03 .03 .03 .03
------ ------ ------ ------ ------
Net Investment Income .20 .20 .21 .21 .22
Dividends from:
Net Investment Income (.20) (.21) (.21) (.19) (.23)
Net Realized Gain
on Investments (.02) - - (.04) (.01)
Net Realized and
Unrealized Gain
(Loss) on Investments - (.20) .07 .06 .01
------ ------ ------ ------ ------
Net Increase (Decrease)
in Net Asset Value (.02) (.21) .07 .04 (.01)
Net Asset Value:
Beginning of Year 4.08 4.29 4.22 4.18 4.19
------ ------ ------ ------ ------
End of Year $ 4.06 $ 4.08 $ 4.29 $ 4.22 $ 4.18
====== ====== ====== ====== ======
RATIOS:
Ratio of Expenses to
Average Net Assets .73% .79% .72% .72% .72%
Ratio of Net Investment
Income to Average Net
Assets 4.96% 4.82% 4.90% 5.07% 5.22%
</TABLE>
*Selected data for a share of capital stock outstanding throughout the year.
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DIRECTORS INVESTMENT ADVISER
Albert W. Turner Federated Investment
Herndon G. Kilby Counseling, Inc.
Warren W. Pearce, Jr. Pittsburgh, Pennsylvania
Edna L. Ryon
Harry F. Breitback
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, INDEPENDENT AUDITORS
Secretary-Treasurer
Stoy, Malone & Company,P.C.
Bethesda, Maryland
OFFICES
11785 Beltsville Drive
Beltsville, Maryland
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