SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GARDNER LEWIS INVESTMENT TRUST
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY PROXY MATERIALS
GARDNER LEWIS INVESTMENT TRUST
P.O. DRAWER 69
ROCKY MOUNT, NORTH CAROLINA 27802-0069
(800) 430-3863
MAY __, 1996
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the Gardner Lewis Investment Trust:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of The Chesapeake
Growth Fund and The Chesapeake Fund (referred to individually as the "Fund" and
collectively as the "Funds"), series of the Gardner Lewis Investment Trust, an
unincorporated business trust organized under the laws of The Commonwealth of
Massachusetts (the "Trust"), will be held at the offices of The Nottingham
Company, 105 North Washington Street, Rocky Mount, North Carolina, on Friday,
June 28, 1996, at 10:00 a.m., local time, for the following purposes:
(1) To elect four Trustees to the Board of Trustees of the Trust;
(2) To change certain fundamental investment limitations applicable to the
Funds relating to foreign securities to permit purchases of American
Depository Receipts without limitation;
(3) To change certain fundamental investment limitations
applicable to the Funds relating to borrowing to permit
limited amounts of borrowing;
(4) To ratify or reject the Trustees' selection of KPMG Peat Marwick LLP as
the Trust's independent accountants for the fiscal year ending August
31, 1996 for The Chesapeake Growth Fund and February 28, 1997 for The
Chesapeake Fund; and
(5) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record as of the close of business on May 2, 1996 are entitled
to notice of and to vote at the meeting and at any and all adjournments thereof.
Shareholders are entitled to one vote for each share held. Items 1 and 4 are to
be voted upon by all shareholders of the Trust (both Funds) as a single class
and not by separate Fund or class of shares of a Fund. Items 2 and 3 are to be
voted upon by all shareholders of each Fund separately as a single class and not
by separate class of shares of a Fund.
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By order of the Trustees,
C. Frank Watson III, Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. TO AVOID UNNECESSARY EXPENSE TO THE TRUST, PLEASE RETURN
YOUR PROXY NO MATTER HOW LARGE OR SMALL YOUR HOLDING MAY BE.
<PAGE>
GARDNER LEWIS INVESTMENT TRUST
P.O. DRAWER 69
ROCKY MOUNT, NORTH CAROLINA 27802-0069
(800) 430-3863
SPECIAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Gardner Lewis Investment Trust, an unincorporated business trust
organized under the laws of The Commonwealth of Massachusetts (the "Trust"), for
use at the Special Meeting of Shareholders of The Chesapeake Growth Fund and The
Chesapeake Fund (referred to individually as the "Fund" and collectively as the
"Funds"), series of the Trust, to be held at the offices of The Nottingham
Company, 105 North Washington Street, Rocky Mount, North Carolina, on Friday,
June 28, 1996, at 10:00 a.m., local time, and at any and all adjournments
thereof. This Proxy Statement and the accompanying form of proxy will first be
sent to shareholders on or about May 28, 1996.
At the meeting, shareholders of the Funds will vote on four nominees for
Trustees of the Trust and to ratify or reject the Trustees' selection of
independent accountants for the Funds. In addition, the shareholders of each
Fund will be asked to approve changes to certain fundamental investment
limitations applicable to the Funds relating to foreign securities and
borrowing. Proxies are being solicited by the Board of Trustees of the Trust,
which recommends the slate of nominees for election as Trustees and an
affirmative vote on the other proposals.
If the accompanying form of proxy is properly executed and returned in time to
be voted at the meeting, the shares covered thereby will be voted in accordance
with the instructions marked thereon by the shareholder. Executed proxies that
are unmarked will be voted FOR the nominees for Trustees and the other
proposals. Any proxy may be revoked at any time prior to its exercise by written
notice of revocation addressed to and received by the Secretary of the Trust, by
delivering a duly executed proxy bearing a later date, or by attending the
meeting and voting in person.
The Annual Reports of the Funds for the period ended August 31, 1995 (for The
Chesapeake Growth Fund) and February 29, 1996 (for The Chesapeake Fund),
including financial statements, have been previously mailed to shareholders of
the Funds. EACH FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT
AND ITS MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT, IF ANY, TO
A SHAREHOLDER UPON REQUEST. REQUESTS SHOULD BE DIRECTED TO A FUND BY WRITING THE
FUND AT POST OFFICE DRAWER 69, ROCKY MOUNT, NORTH CAROLINA 27802-0069, OR BY
CALLING THE FUND AT 1-800-430-3863.
<PAGE>
The Trustees have fixed the close of business on May 2, 1996 as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting. At the record date, 26,790,726.34 shares of beneficial interest of The
Chesapeake Growth Fund and 9,263,758.38 shares of beneficial interest of The
Chesapeake Fund were outstanding. In total, 36,054,484.72 shares of beneficial
interest in the Trust were outstanding on the record date. See "Additional
Information - Principal Holders of Voting Securities" below for information
concerning the principal holders of voting securities of the Funds. Each share
of the Trust is entitled to one vote, and each fractional share is entitled to a
proportionate vote, on each matter submitted to a vote of the Trust at the
meeting on which it is entitled to vote.
The costs of the meeting, including the solicitation of proxies, will be paid
for by the Trust and allocated between the Funds. Solicitation of proxies may be
made in person or by mail, or by telephone or facsimile transmission, by
Trustees, officers, and regular employees of the Trust, none of whom will be
specially compensated therefor. Persons holding shares as nominees will be
reimbursed, upon request, for their reasonable expenses in sending soliciting
material to the principals of the accounts. Failure of a quorum to be present in
person or by proxy at the meeting will necessitate adjournment of the meeting
and will subject the Trust to additional expense. ACCORDINGLY, SHAREHOLDERS ARE
URGED TO COMPLETE AND RETURN THEIR PROXIES PROMPTLY, NO MATTER HOW LARGE OR
SMALL THEIR HOLDINGS MAY BE.
The principal executive offices of the Trust and the Funds are located at 105
North Washington Street, Rocky Mount, North Carolina 27802, which is the address
of The Nottingham Company (the "Administrator"), which serves as administrator,
transfer agent, and fund accounting/pricing agent for the Trust and the Funds.
The Funds' investment advisor is Gardner Lewis Asset Management, L.P. (the
"Investment Advisor"), whose address is 285 Wilmington-West Chester Pike, Chadds
Ford, Pennsylvania 19317. The principal underwriter and distributor of the Funds
is Capital Investment Group, Inc., whose address is 17 Glenwood Avenue, Raleigh,
North Carolina 27603.
ELECTION OF TRUSTEES
(ITEM 1)
The Trust is an unincorporated business trust, and, as such, is not required to
hold annual meetings of shareholders for the election of Trustees. Under the
Declaration of Trust, the Trustees are permitted to reelect themselves or to
elect others as Trustees to fill any vacancies that may occur from time to time.
Under the Investment Company Act of 1940, as amended (the "1940 Act"), however,
the Board of Trustees cannot fill vacancies unless
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after such vacancy is filled, at least two-thirds of the trustees holding office
have been elected by shareholders. Furthermore, the Trust is required under the
1940 Act to hold a meeting of shareholders to elect Trustees if less than a
majority of the Trustees have been elected by shareholders. Since less than a
majority of the present and proposed Trustees have been elected by shareholders,
and the Board of Trustees cannot fill vacancies, the Board has called this
special meeting of shareholders of the Funds to elect trustees of the Trust.
The table below identifies the nominees for election as Trustees and indicates
their principal occupations for the past five years and certain other
information. Three of the nominees, Messrs. Brinson, Kneeley, and Meadows, are
the current Trustees of the Trust (Mr. Kneeley having been elected to the Board
on May 2, 1996). The remaining nominee, Mr. Gardner, was nominated by the
Trustees for election by the shareholders along with the current Trustees. A
shareholder using the enclosed form of proxy may authorize the proxies to vote
for all or any of the nominees or may withhold from the proxies authority to
vote for all or any of the nominees. If no contrary instructions are given, the
proxies will vote for all of the nominees.
Subject to the provisions of the 1940 Act, each person elected as Trustee at the
meeting will serve as a Trustee until the next meeting of shareholders, if any,
called for the purpose of electing Trustees and until the election and
qualification of his successor or until such Trustee sooner dies, resigns, or is
removed as provided in the Declaration of Trust of the Trust. The Trustees have
the power under the Declaration of Trust to set and alter the term of office of
the Trustees and at any time to lengthen or shorten their own terms or make
their terms of unlimited duration, to elect their own successors, and to appoint
Trustees to fill vacancies. Since the Trust does not hold annual shareholder
meetings, Trustees will hold office for an indefinite period. Officers of the
Trust are elected periodically by the Trustees and generally serve for an
indefinite period, subject to removal, with or without cause, at any time by the
Trustees.
The Board of Trustees has set the number of Trustees at four and has nominated
the slate of four nominees for election as Trustees set forth below. The Board
recommends election of all such nominees. Each of the nominees has consented to
his nomination and has agreed to serve if elected. If, for any reason, any
nominee should not be available for election or able to serve as a Trustee, the
proxies will exercise their voting power in favor of such substitute nominee, if
any, as the Trustees may designate. The Trust has no reason to believe that it
will be necessary to designate a substitute nominee.
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TRUSTEES AND EXECUTIVE OFFICERS
Following are the current Trustees and executive officers of the Trust, the
additional nominee for election as a Trustee of the Trust, their age, their
present position with the Trust or Funds, if any, their principal occupation
during the past 5 years, and their ownership of shares of the Funds. All current
Trustees have been nominated for reelection by the shareholders. There are no
family relationships between the Trustees, nominee for Trustee, and executive
officers of the Trust.
<TABLE>
<CAPTION>
Shares Owned
Beneficially,
Directly or
Name, Age (as of May 2, Principal Occupation During Indirectly, on
1996), and Position Past 5 Years May 2, 1996 *
Trustee Nominees
<S> <C> <C>
Jack E. Brinson (age 63), President, Brinson 0
Trustee (since 1992)(1) Investment Co. (personal
investments), President,
Brinson Chevrolet, Inc.
(auto dealership), Tarboro,
North Carolina
W. Whitfield Gardner (age Chairman and Chief Executive 11,563.348
33), Nominee for Officer, Gardner Lewis Asset Ch. Gr. Fd.(2)
Trustee,** Chief Management, Chadds Ford,
Executive Officer of the Pennsylvania (Investment 46,156.568
Funds (since 1992) Advisor to the Funds) Ch. Fd.
Inst. Shares (3)
Stephen J. Kneeley (age Chief Operating Officer, 21,112.211
33), Trustee (since 1996) Turner Investment Partners, Ch. Gr. Fd.(4)
Inc. (investment manager),
Berwyn, Pennsylvania
Frank P. Meadows, III Managing Director, The 10,157.605
(age 35), Trustee** and Nottingham Company, Rocky Ch. Gr. Fd.(6)
Chairman (since 1992)(5) Mount, North Carolina
(Administrator of the 950.492
Funds); Registered Ch. Fd.
Representative and Limited Inst. Shares(7)
Securities Principal,
Capital Investment Group,
Inc., Raleigh, North
Carolina (Distributor of the
Funds)
Additional Executive
Officers
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John L. Lewis, IV (age President, Gardner Lewis 22,275.829
32), President of the Asset Management, Chadds Ch. Gr. Fd.
Funds (since 1992) Ford, Pennsylvania
10,611.903
Ch.Fd.
Inst. Shares
J. Hope Reese (age 35), Comptroller, The Nottingham 0
Treasurer and Assistant Company, Rocky Mount, North
Secretary (since 1996) Carolina, since 1995;
previously, Cash Manager,
Law Companies Group,
Atlanta, Georgia, since
1993; previously, Financial
Manager, MGR Food Services,
Atlanta, Georgia, since
1992; previously Accounts
Receivable Manager, Atlanta
Coca-Cola Bottling Co.,
Atlanta, Georgia
C. Franklin Watson III Vice President, The 69.930
(age 26), Secretary and Nottingham Company, Rocky Ch. Fd.
Assistant Treasurer Mount, North Carolina, since Inst. Shares
(since 1996) 1992; previously, Student,
University of North
Carolina, Chapel Hill, North
Carolina
William D. Zantzinger Director of Trading, Gardner 603.537
(age 34), Vice President Lewis Asset Management, Ch. Gr. Fd. (8)
of the Funds (since 1992) Chadds Ford, Pennsylvania,
since 1992; previously,
International Equity Trader,
Morgan Stanley & Company,
New York, New York, Morgan
Stanley International,
London, England
</TABLE>
* Except as otherwise noted, the shares indicated are owned of record and
beneficially by each individual with sole voting and investment power
over the shares. Except as otherwise noted, the shares indicated
represent less than one percent of the shares of each class of each Fund
owned by each individual and by the Trustees, nominees, and executive
officers of the Trust as a group (except that the shares owned by such
persons as a group represent 1.099% of the class of Institutional Shares
of The Chesapeake Fund). As of May 2, 1996, the Trustees, nominees, and
executive officers of the Trust as a group (8 persons) owned 65,712,53
shares of The Chesapeake Growth Fund (0.245% of the Fund) and 57,788.893
shares of The Chesapeake Fund (0.624% of the Fund).
** Indicates that the Trustee, or nominee for Trustee, is an "interested
person" of the Trust for purposes of the 1940 Act because of his
position with the Funds' Investment Advisor or Administrator.
(1) Mr. Brinson serves as a trustee of three other investment companies
registered under the 1940 Act, Nottingham Investment Trust, Nottingham
Investment Trust II, and Williamsburg Investment Trust.
5
<PAGE>
(2) Includes 9,530.969 shares over which Mr. Gardner has sole voting and
investment power held of record by a retirement plan of Gardner Lewis
Asset Management, Inc., the General Partner of the Investment Advisor,
for the benefit of its employees.
(3) Represents shares held of record by an entity controlled by Mr. Gardner
over which he has sole voting and investment power.
(4) Includes 824.303 shares held by Mr. Kneeley for the benefit of his minor
child. The remaining shares indicated are owned beneficially and of
record by Mr. Kneeley and his wife, who share voting and investment
power over the shares.
(5) Mr. Meadows serves as a trustee of three other investment companies
registered under the 1940 Act, Nottingham Investment Trust, Nottingham
Investment Trust II, and Albemarle Investment Trust. On November 7,
1994, a petition for reorganization under the Federal bankruptcy laws
was filed by Epsteins, Inc., a clothing store located in Rocky Mount,
North Carolina, for which Mr. Meadows served as an executive officer.
The proceeding was converted to a liquidation proceeding on February 26,
1996.
(6) Includes 106.134 shares held by Mr. Meadows for the benefit of his minor
child. Includes 6,079.027 shares over which Mr. Meadows shares voting
and investment power held of record by the retirement plans of F.P.
Meadows & Co., an affiliate of the Administrator, for the benefit of its
employees.
(7) Represents shares over which Mr. Meadows shares voting and investment
power held of record by a retirement plan of F.P. Meadows & Co., an
affiliate of the Administrator, for the benefit of its employees.
(8) Includes 301.352 shares held of record by Mr. Zantzinger's wife.
COMPENSATION
Each independent Trustee is entitled to a fee of $7,500 per year plus $400 per
series of the Trust per meeting attended in person, and $150 per series of the
Trust per meeting attended by telephone, plus reimbursement for all incidental
and travel expenses. As reflected in the table below, the independent Trustee of
the Trust was paid $10,900 during the calendar year ended December 31, 1995.
During such period, the interested Trustee and the officers of the Trust were
compensated by their employers and received no compensation from the Trust.
During such period, investment advisory and administrative fees and expenses
were paid (or were payable but waived or reimbursed) to the Funds' Investment
Advisor and Administrator. Mr. Brinson currently serves as an independent
trustee of another investment trust administered by the Administrator (but not
advised by the Funds' Investment Advisor) and receives trustee fees from such
other trust.
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Compensation Table*
<TABLE>
<CAPTION>
Pension
Retirement Total
Benefits Estimated Compensa-
Aggregate Accrued As Annual tion from
Compensation Part of Benefits the Trust
Name of Person, From the Fund Upon Paid to
Position Trust Expenses Retirement Trustees
<S> <C> <C> <C> <C>
Jack E. Brinson, $10,900 None None $10,900
Trustee
Frank P. Meadows III, None None None None
Trustee
</TABLE>
* Figures are for the calendar year ended December 31, 1995. Mr. Kneeley
was not a Trustee of the Trust during such period.
COMMITTEES AND BOARD MEETINGS
Messrs. Brinson and Kneeley (since 1996) constitute the Trust's Audit Committee.
Neither person is an "interested person" of the Trust for purposes of the 1940
Act. The Audit Committee reviews annually the nature and cost of the
professional services rendered by the Trust's independent accountants, the
results of their year-end audit, and their findings and recommendations as to
accounting and financial matters, including the adequacy of internal controls.
On the basis of this review, the Audit Committee makes recommendations to the
Trustees as to the appointment of independent accountants for the following
year. The Trustees have not appointed a compensation committee or a nominating
committee. The selection and nomination of independent Trustees are committed to
the discretion of such independent Trustees.
The Trustees held four meetings during the calendar year ended December 31,
1995. The Audit Committee held two meetings during that period. Each of the
Trustees attended at least 75% of the aggregate number of meetings of the
Trustees and of the Audit Committee on which he served during the calendar year
ended December 31, 1995.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE NAMED
ABOVE.
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<PAGE>
CHANGES TO CERTAIN FUNDAMENTAL INVESTMENT
LIMITATIONS APPLICABLE TO THE FUNDS
(ITEMS 2 AND 3)
Under the 1940 Act, the investment objective and certain investment limitations
of the Funds have been designated by the Funds as "fundamental" investment
limitations that cannot be changed without shareholder approval. Management of
the Funds proposes that the shareholders of each Fund approve certain revisions
to the fundamental investment limitations of the Funds as described below. These
changes will allow the Funds greater investment flexibility to respond to future
investment opportunities and to better manage the operations of the Funds.
However, the Funds' Investment Advisor does not anticipate that the proposed
changes, individually or in the aggregate, will materially affect the types of
companies in which the Funds will invest or will result in an appreciable change
in the level of risk associated with an investment in either Fund.
If these proposed changes are approved, the Prospectus and Statement of
Additional Information of each Fund will be revised to reflect them. These
revisions must be filed with the Securities and Exchange Commission and are
subject to review and comment by the staff of the Commission. To the extent
necessary to comply with such comments, if any, the language of these revisions
may be subject to further modification. However, any material change would
require approval of each Fund's shareholders.
The proposed changes require the approval by the holders of a majority, as
defined in the 1940 Act, of each Fund's outstanding shares. See "Additional
Information - Required Vote" below for the definition of such a majority.
ITEM 2 - INVESTMENT IN FOREIGN SECURITIES
Each Fund has a fundamental investment restriction that limits investments in
foreign securities. As set forth in each Fund's Statement of Additional
Information, each Fund has adopted as a fundamental policy the following
limitation:
"[The Fund cannot] invest more than 10% of the value of its total
assets in foreign securities or sponsored ADRs."
It is proposed that this fundamental policy be changed to the following
limitation:
"[The Fund cannot] invest more than 10% of the value of its total
assets in foreign securities (which shall not be deemed to include
American Depository Receipts ("ADRs"))."
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<PAGE>
The effect of this proposed change is to eliminate the restriction on
investments in American Depository Receipts ("ADRs"), which shall no longer be
subject to the 10% limit on investments in foreign securities. The purpose of
this change is to increase each Fund's investment flexibility.
Investment in foreign securities presents special considerations and risks not
typically associated with investment in domestic securities. Foreign taxes may
reduce income. Currency exchange rates and regulations may cause fluctuations in
the value of foreign securities. Foreign securities are subject to different
regulatory environments than in the United States and, compared to the United
States, there may be a lack of uniform accounting, auditing, and financial
reporting standards, less volume and liquidity and more volatility, less public
information, and less regulation of foreign issuers. Countries have been known
to expropriate or nationalize assets, and foreign investments may be subject to
political, financial, or social instability, or adverse diplomatic developments.
There may be difficulties in obtaining service of process on foreign issuers and
difficulties in enforcing judgments with respect to claims under the securities
laws of the United States against such issuers. Favorable or unfavorable
differences between U.S. and foreign economies could affect the value of foreign
securities. The U.S. Government has, in the past, discouraged certain foreign
investments by U.S. investors through taxation or other restrictions, and it is
possible that such restrictions could be imposed again.
Because of the inherent risk of foreign securities over domestic issues, each
Fund has generally limited foreign investments to those traded domestically as
ADRs. ADRs are receipts issued by a U.S. bank or trust company evidencing
ownership of securities of a foreign issuer. ADRs may be listed on a national
securities exchange or may be traded in the over-the-counter market in the
United States. The prices of ADRs are denominated in U.S. dollars while the
underlying security may be denominated in a foreign currency.
While not free of risks, ADRs do not present all of the same investment
considerations and risks typically associated with investment in foreign
securities. Since ADRs are generally listed on a national securities exchange or
traded in the over-the-counter market in the United States, and the prices of
ADRs are denominated in U.S. dollars, the considerations and risks inherent in
investing in ADRs are more akin to the considerations and risks typically
associated with investment in domestic securities. Accordingly, management of
the Funds proposes that ADRs be excluded from the fundamental investment
restrictions applicable to each Fund relating to investments in foreign
securities. As proposed, ADRs purchased by a Fund, if any, will not be
considered foreign securities for purposes of the 10% limit on investments in
foreign securities. To the extent a Fund invests in other foreign
9
<PAGE>
securities, subject to the 10% limit, it will generally limit such investments
to foreign securities traded on foreign securities exchanges.
The Investment Advisor of each Fund believes that some foreign securities
present attractive investment opportunities consistent with the investment
objectives and policies followed by the Funds. Some foreign issuers have
substantial operations in the United States or otherwise have investment
characteristics similar to other companies in which the Funds may invest from
time to time. Accordingly, each Fund may increase its investments in foreign
securities in the future. In the near term, the Investment Advisor does not
anticipate that within the calendar year either Fund will have in excess of 10%
of its total assets in foreign securities, including ADRs.
However, the Investment Advisor desires the flexibility to be able to purchase
ADRs for either Fund unrestrained by the 10% limit on investments in foreign
securities. The Investment Advisor believes that the potential risk of
investments in ADRs can be controlled through the investment process. The
Investment Advisor does not believe that this change will materially affect the
types of companies in which the Funds will invest or will increase appreciably
the risk of an investment in the Funds. Accordingly, management believes that it
would be in the best interest of the shareholders of each Fund to amend each
Fund's fundamental investment limitations relating to foreign securities as
described above.
THE BOARD OF TRUSTEES RECOMMENDS APPROVAL OF THE PROPOSED CHANGE TO THE
FUNDAMENTAL INVESTMENT LIMITATIONS OF EACH FUND RELATING TO FOREIGN SECURITIES.
ITEM 3 - BORROWING AUTHORIZATION
Each Fund has a fundamental investment restriction that prohibits each Fund from
borrowing money. As set forth in each Fund's Statement of Additional
Information, each Fund has adopted as a fundamental investment policy the
following investment limitation:
"[The Fund cannot] issue senior securities, borrow
money, or pledge its assets."
It is proposed that this fundamental policy be changed to the following
limitation:
"[The Fund cannot] issue senior securities, borrow
money, or pledge its assets, except that it may borrow
from banks as a temporary measure (a) for extraordinary
or emergency purposes, in amounts not exceeding 5% of its
total assets or (b) in order to meet redemption requests,
in amounts not exceeding 15% of its total assets. The
10
<PAGE>
Fund will not make any further investments if borrowing exceeds 5% of
its total assets until such time as total borrowing represents less than
5% of Fund assets."
The effect of this proposed change is to authorize each Fund to borrow limited
amounts of money from banks as a temporary measure under certain limited
conditions, including to meet redemption requests. The purpose of this change is
to provide management with the ability to borrow limited amounts for
extraordinary or emergency purposes or to meet redemption requests, which might
otherwise require untimely disposition of portfolio holdings. Thus, the change
will aid management's administration of the Funds and increase the Investment
Advisor's investment flexibility to deal with these situations without otherwise
disrupting the portfolio of each Fund. Adoption of the proposal is not expected
to affect the way in which the Funds are managed.
When available cash is not sufficient to meet redemption requests, it may be
advantageous for a Fund to borrow money for a short time instead of raising cash
by selling portfolio securities, which could be disruptive to the Fund's
investment strategy. Without the borrowing authorization, a significant
redemption request from a shareholder could require that the Investment Advisor
dispose of portfolio holdings at unfavorable prices or times that would not be
in the best interest of a Fund and its shareholders. Under such circumstances,
the disposition proceeds to the Fund could be less than those that might
otherwise be available if portfolio securities being liquidated, if necessary,
were liquidated in an orderly fashion at a time deemed by the Investment Advisor
to be in the best interest of the Fund and its shareholders.
Borrowing, if done, would tend to exaggerate the effects of market and interest
rate fluctuations on a Fund's net asset value until repaid. If, while such
borrowing is in effect, the value of a Fund's assets declines, the Fund could be
forced to liquidate portfolio securities when it is disadvantageous to do so.
The Fund would incur interest and other transaction costs in connection with
borrowing.
While these risks will be associated with borrowing, each Fund's borrowing
authorization will be limited. A Fund may borrow, temporarily, only up to 5% of
its total assets for extraordinary or emergency purposes and up to 15% of its
total assets to meet redemption requests. A Fund could borrow only from a bank.
Moreover, a Fund could not make any investments if the borrowing exceeds 5% of
its total assets until such time as repayment has been made to bring the total
borrowing below 5% of Fund assets. A Fund may not borrow to purchase securities.
It will not be the intent of either Fund to borrow except for temporary cash
requirements.
11
<PAGE>
The Funds were each established without any borrowing authorization in order to
avoid the risks associated with borrowing. However, as each Fund has grown in
assets, management has realized that a borrowing authorization under limited
circumstances would be in the best interest of each Fund and its shareholders
and increase each Fund's investment flexibility without increasing appreciably
the risk of an investment in either Fund. As a result, management believes that
it would be in the best interest of the shareholders of each Fund to amend each
Fund's fundamental investment limitations relating to borrowing as described
above.
THE BOARD OF TRUSTEES RECOMMENDS APPROVAL OF THE PROPOSED CHANGE TO THE
FUNDAMENTAL INVESTMENT LIMITATIONS OF EACH FUND RELATING TO BORROWING.
RATIFICATION OR REJECTION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
(ITEM 4)
The Board of Trustees, including the independent Trustee of the Trust in office
at the time, has selected KPMG Peat Marwick LLP as independent accountants to
audit the financial statements of the Funds for the fiscal year ending August
31, 1996 for The Chesapeake Growth Fund and February 28, 1997 for The Chesapeake
Fund. KPMG Peat Marwick LLP has informed the Trust that no member of KPMG Peat
Marwick LLP has any direct financial interest or material indirect financial
interest in the Trust.
KPMG Peat Marwick LLP served as the Trust's independent accountants and audited
the financial statements of The Chesapeake Growth Fund for the fiscal years
ended August 31, 1994 and 1995 and of The Chesapeake Fund for the fiscal period
ended February 28, 1995 and the fiscal year ended February 29, 1996. The reports
of KPMG Peat Marwick LLP on the financial statements of the Funds for such
fiscal period and fiscal years contained no adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles. The Trust's original engagement of KPMG Peat Marwick LLP
as its independent accountants was ratified by the Board of Trustees on October
24, 1994.
Tait, Weller & Baker served as the Trust's independent accountants and audited
the financial statements of The Chesapeake Growth Fund for the fiscal period
ended August 31, 1993. Tait, Weller & Baker resigned as auditors of the Trust
effective March 14, 1994. The report of Tait Weller & Baker on the financial
statements of The Chesapeake Growth Fund for the fiscal period ended August 31,
1993 contained no adverse opinion or a disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope, or accounting principles.
The Trust is not aware of any disagreements with Tait, Weller & Baker on any
matter of accounting principles or practices,
12
<PAGE>
financial statement disclosure, or auditing scope or procedure, during the
period from the inception of The Chesapeake Growth Fund through the date of such
resignation, which disagreements, if not resolved to the satisfaction of Tait,
Weller & Baker, would have caused it to make reference to the subject matter of
the disagreements in connection with its report.
The selection of KPMG Peat Marwick LLP as the Trust's independent accountants
for the fiscal year ending August 31, 1996 for The Chesapeake Growth Fund and
February 28, 1997 for The Chesapeake Fund (and for the previous fiscal period
and fiscal years that KPMG Peat Marwick LLP served as the Trust's independent
accountants and audited the financial statements of the Funds) was recommended
to the Board of Trustees by its Audit Committee. Such selection was approved by
the Trustees, subject to receipt of a satisfactory engagement letter from KPMG
Peat Marwick LLP. The Trust is currently negotiating the engagement letter with
KPMG Peat Marwick LLP.
The selection of KPMG Peat Marwick LLP as the Trust's independent accountants
for each Fund's current fiscal year is being submitted to shareholders for
ratification or rejection. It is anticipated that representatives of KPMG Peat
Marwick LLP will not be in attendance at the shareholders' meeting but will be
available should any matter arise requiring their presence. If such
representatives are present at the meeting, they will have the opportunity to
make a statement if they desire to do so and will be expected to be available to
respond to appropriate questions.
The Trustees have recommended that the shareholders approve the ratification of
the selection of KPMG Peat Marwick LLP.
ADDITIONAL INFORMATION
REQUIRED VOTE
The Trust is a "series company" that issues separate series of shares, each
representing participation in a separate pool of assets. The Trust currently
offers two series, the Funds. The Chesapeake Fund also offers four classes of
shares representing equal pro rata interests in such Fund. Each Fund, or series,
has its own investment objective and policies and operates independently for
purposes of investments, dividends, and redemptions. Shareholders of the Funds
vote as a single class on certain matters and separately as a Fund (and/or by
class within The Chesapeake Fund) on other matters. At this meeting, shares will
be voted: (a) as a single class in the aggregate with both Funds in connection
with the election of Trustees under Item 1 and the selection of independent
accountants under Item 4, and not by separate Fund (or by class within The
Chesapeake Fund), and (b) with respect to the change of certain fundamental
investment
13
<PAGE>
limitations applicable to the Funds under Items 2 and 3, by each separate Fund
as a single class within each Fund on each Item and not in the aggregate with
the other Fund (or by class within The Chesapeake Fund).
The election of Trustees under Item 1 requires a plurality of the votes cast at
the meeting (i.e., more votes must be cast favoring the election of a Trustee
than against), provided a quorum of shareholders is present. Items 2 and 3, the
change of certain fundamental investment limitations applicable to the Funds,
each requires the approval of a majority of the outstanding shares of a Fund,
which, under the 1940 Act, means (i) more than 50% of the outstanding shares of
the Fund, or (ii) 67% or more of the shares present at the meeting, if more than
50% of the outstanding shares of the Fund are present in person or represented
by proxy, whichever is less. Each Item (Items 2 and 3) will be considered
separately by each Fund. If such an Item is approved by one of the Funds, it
need not be approved by the other Fund in order to be effective for the first
Fund. Item 4, ratification or rejection of selection of independent accountants,
requires the approval of a majority of the votes cast entitled to vote thereon,
provided a quorum of shareholders is present.
The Declaration of Trust of the Trust provides that, except as otherwise
provided by law, the holders of a majority of the outstanding shares of the
Trust, or, as to any matter to be voted on by a series of the Trust, such as a
Fund, a majority of the outstanding shares of such series, present in person or
by proxy, will be a quorum for the transaction of business at a shareholders'
meeting. If a quorum is not present, the shareholders present in person or by
proxy and entitled to vote at the meeting holding a majority of the shares
present and entitled to vote may vote to adjoin the meeting from time to time to
be held at the same place without further notice than by announcement to be
given at the meeting until a quorum shall be present.
With respect to the election of Trustees, votes may be cast in favor of or
withheld from each nominee. Votes that are withheld will be counted as present
for determining the existence of a quorum and in determining the shares present
or represented at the meeting with respect to the proposal. Since the election
of Trustees is by plurality vote, votes withheld from a nominee will have no
effect in the election of Trustees. With respect to Items 2, 3, and 4,
abstentions may be specified on the proxy. In tallying shareholder votes,
abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum and in determining the shares present or
represented at the meeting with respect to the proposal. Since the approval of
Items 2 and 3 require the approval of a majority of the outstanding shares of a
Fund, abstentions and broker non-votes will have the effect of a negative vote.
Since the approval of Item 4 requires the approval of a majority of the votes
cast at the meeting
14
<PAGE>
entitled to vote thereon, abstentions and broker non-votes will
have no effect.
A broker non-vote occurs when a nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal and has not received
instructions from the beneficial owner (despite voting on at least one other
proposal for which it does have discretionary authority or for which it has
received instructions). For example, brokers will generally have no
discretionary authority to vote shares of the Funds with respect to Items 2 and
3, relating to the change of certain fundamental investment limitations, without
receiving voting instructions from beneficial owners, but will have
discretionary authority to vote in the election of Trustees and the selection of
independent accountants if voting instructions are not received from beneficial
owners.
THE BOARD OF TRUSTEES RECOMMENDS THE SLATE OF NOMINEES FOR ELECTION AS TRUSTEES
AND AN AFFIRMATIVE VOTE ON THE OTHER PROPOSALS.
PRINCIPAL HOLDERS OF VOTING SECURITIES
As of May 2, 1996, the Trustees and executive officers of the Trust individually
and as a group owned beneficially (i.e., voting and/or investment power) less
than 1% of the then outstanding shares of each class of the Funds (except that
the shares owned by such persons as a group represented 1.099% of the class of
Institutional Shares of The Chesapeake Fund). On the same date, the following
shareholders owned of record more than 5% of the outstanding shares of
beneficial interest of each class of the Funds. Except as provided below, no
person is known by the Trust to be the beneficial owner of more than 5% of the
outstanding shares of beneficial interest of a class of the Funds as of May 2,
1996.
15
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial of
Name of Fund and Name and Address of Beneficial Ownership* Class
Class Owner
<S> <C> <C> <C>
The Chesapeake Fund Carpenter Co. Profit Sharing Plan 623,184.687 11.852%
Institutional Shares P.O. Box 26665 shares
Richmond, Virginia 23267
Cobank-Norwest Bank Co. 409,668.091 7.791%
1740 Broadway shares
Denver, Colorado 80274
Johah Nominees Ltd. 404,585.300 7.694%
12 Gough Sq. shares
London England EC4A3DE
Lawrenceville School 338,914.028 6.445%
P.O. Box 6126 shares
Lawrenceville, New Jersey 08648
Caribou Nominees Ltd. 337,154.417 6.412%
12 Gough Sq. shares
London, England EC4A3DE
The Chesapeake Fund, Charles Schwab & Co. 195,856.627 7.607%
Series A Investor 101 Montgomery St. shares
Shares San Francisco, California 94104
The Chesapeake Fund, Arthur Demoss Foundation 261,283.433 46.705%**
Series C Investor 330 Commerce Street shares
Shares Nashville, Tennessee 37201
William T. Jones 65,028.902 11.624%
P.O. Box 1220 shares
Charlotte, North Carolina 28201
Strafe & Co. FAO 46,527.591 8.317%
Southwest shares
P.O. Box 160
Westerville, Ohio 43086
Christ Church Christiana 46,187.683 8.256%
P.O. Box 3510 shares
Wilmington, Delaware 19807
</TABLE>
* The shares indicated are owned both of record and beneficially, except as
otherwise noted.
** Pursuant to applicable SEC regulations, this shareholder is deemed to control
the indicated class of shares of the indicated Fund.
16
<PAGE>
PROPOSALS OF SHAREHOLDERS
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings, but will hold shareholder meetings of the Trust or a
particular series of the Trust, such as the Fund or Funds, when required or
deemed desirable. Since the Trust does not hold regular shareholder meetings,
the anticipated date of the next shareholder meeting cannot be provided. Any
shareholder proposal which may properly be included in the proxy solicitation
material for a shareholder meeting must be received by the Trust no later than
four months prior to the date proxy statements are mailed to shareholders.
Shareholders wishing to submit a shareholder proposal should send it to the
Secretary of the Trust at 105 North Washington Street, Rocky Mount, North
Carolina 27802.
OTHER MATTERS
The Trustees know of no other matters to be presented at the meeting other than
those specified in the attached notice of meeting. However, if any other matters
properly come before the meeting, it is intended that the persons named in the
enclosed proxy will vote thereon in their discretion.
If sufficient votes in favor of the items set forth in the notice of meeting are
not received at the meeting, persons named as proxies will propose one or more
adjournments of the meeting for the period or periods of not more than 90 days
in the aggregate from the record date for the meeting to permit further
solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of the
shares of the Trust present in person or represented by proxy at the
commencement of the meeting to be adjourned. The persons named as proxies will
vote in favor of such adjournment those shares which they are entitled to vote
in favor of the matters set forth in the notice of meeting. They will vote
against any such adjournment those shares required to be voted against any of
such matters.
May __, 1996 By order of the Trustees,
C. Frank Watson III, Secretary
TO AVOID ADDITIONAL EXPENSE TO THE TRUST, PLEASE EXECUTE AND RETURN THE ENCLOSED
PROXY PROMPTLY TO ENSURE THAT A QUORUM IS PRESENT AT THE MEETING. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
17
<PAGE>
THE CHESAPEAKE GROWTH FUND
PROXY
The undersigned shareholder of The Chesapeake Growth Fund (the "Fund"), an
investment series of the Gardner Lewis Investment Trust, an unincorporated
business trust organized under the laws of The Commonwealth of Massachusetts
(the "Trust"), hereby constitutes and appoints C. Frank Watson III and J. Hope
Reese, and each of them singly, to serve as proxy and attorney for the
undersigned, with full power of substitution, for and in the name of the
undersigned to vote and act upon all matters (unless and except as expressly
limited below) at the Special Meeting of Shareholders to be held on Friday, June
28, 1996 at the offices of The Nottingham Company, 105 North Washington Street,
Rocky Mount, North Carolina, at 10:00 a.m., local time, and at any and all
adjournments thereof, in respect of all shares of the Fund held by the
undersigned or in respect of which the undersigned would be entitled to vote or
act, with all the powers the undersigned would possess if personally present.
All proxies heretofore given by the undersigned in respect of said meeting are
hereby revoked.
ITEM 1. To elect Trustees
/ / FOR electing all nominees / / WITHHOLD AUTHORITY
listed except as marked to vote for all below
nominees so marked
Jack E. Brinson; W. Whitfield Gardner; Stephen J. Kneeley; Frank P. Meadows III
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
THROUGH THAT PERSON'S NAME IN THE LISTING ABOVE.)
ITEM 2. To change the fundamental investment limitation applicable to the Fund
relating to foreign securities to permit purchases of American Depository
Receipts without limitation.
/ /FOR / /AGAINST / /ABSTAIN
ITEM 3. To change the fundamental investment limitation applicable to the Fund
relating to borrowing to permit limited amounts of borrowing.
/ /FOR / /AGAINST / /ABSTAIN
ITEM 4. To ratify or reject the selection of KPMG Peat Marwick LLP as the
Trust's independent accountants for the fiscal year ending August 31, 1996 for
The Chesapeake Growth Fund and February 28, 1997 for The Chesapeake Fund.
/ /FOR / /AGAINST / /ABSTAIN
SPECIFY DESIRED ACTION BY CHECK MARKS IN THE APPROPRIATE SPACES. THIS PROXY WILL
BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED FOR
THE NOMINEES FOR ELECTION AS TRUSTEES AND THE OTHER ITEMS REFERRED TO ABOVE. THE
PERSONS NAMED PROXIES HAVE DISCRETIONARY AUTHORITY, WHICH THEY INTEND TO
EXERCISE IN FAVOR OF THE PROPOSALS REFERRED TO AND ACCORDING TO THEIR BEST
JUDGMENT AS TO ANY OTHER MATTERS WHICH PROPERLY COME BEFORE THE MEETING.
PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE.
<PAGE>
Date _____________ Signature(s) of Shareholder(s):
-------------------------------
-------------------------------
The signature(s) on this Proxy
should correspond exactly with
the shareholder's name as
printed hereon.
THIS PROXY IS SOLICITED BY THE BOARD
OF TRUSTEES
<PAGE>
THE CHESAPEAKE FUND
PROXY
The undersigned shareholder of The Chesapeake Fund (the "Fund"), an investment
series of the Gardner Lewis Investment Trust, an unincorporated business trust
organized under the laws of The Commonwealth of Massachusetts (the "Trust"),
hereby constitutes and appoints C. Frank Watson III and J. Hope Reese, and each
of them singly, to serve as proxy and attorney for the undersigned, with full
power of substitution, for and in the name of the undersigned to vote and act
upon all matters (unless and except as expressly limited below) at the Special
Meeting of Shareholders to be held on Friday, June 28, 1996 at the offices of
The Nottingham Company, 105 North Washington Street, Rocky Mount, North
Carolina, at 10:00 a.m., local time, and at any and all adjournments thereof, in
respect of all shares of the Fund held by the undersigned or in respect of which
the undersigned would be entitled to vote or act, with all the powers the
undersigned would possess if personally present. All proxies heretofore given by
the undersigned in respect of said meeting are hereby revoked.
ITEM 1. To elect Trustees
/ / FOR electing all nominees / / WITHHOLD AUTHORITY
listed except as marked to vote for all below
nominees so marked
Jack E. Brinson; W. Whitfield Gardner; Stephen J. Kneeley; Frank P. Meadows III
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
THROUGH THAT PERSON'S NAME IN THE LISTING ABOVE.)
ITEM 2. To change the fundamental investment limitation applicable to the Fund
relating to foreign securities to permit purchases of American Depository
Receipts without limitation.
/ /FOR / /AGAINST / /ABSTAIN
ITEM 3. To change the fundamental investment limitation applicable to the Fund
relating to borrowing to permit limited amounts of borrowing.
/ /FOR / /AGAINST / /ABSTAIN
ITEM 4. To ratify or reject the selection of KPMG Peat Marwick LLP as the
Trust's independent accountants for the fiscal year ending August 31, 1996 for
The Chesapeake Growth Fund and February 28, 1997 for The Chesapeake Fund.
/ /FOR / /AGAINST / /ABSTAIN
SPECIFY DESIRED ACTION BY CHECK MARKS IN THE APPROPRIATE SPACES. THIS PROXY WILL
BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED FOR
THE NOMINEES FOR ELECTION AS TRUSTEES AND THE OTHER ITEMS REFERRED TO ABOVE. THE
PERSONS NAMED PROXIES HAVE DISCRETIONARY AUTHORITY, WHICH THEY INTEND TO
EXERCISE IN FAVOR OF THE PROPOSALS REFERRED TO AND ACCORDING TO THEIR BEST
JUDGMENT AS TO ANY OTHER MATTERS WHICH PROPERLY COME BEFORE THE MEETING.
PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE.
<PAGE>
Date _____________ Signature(s) of Shareholder(s):
-------------------------------
-------------------------------
The signature(s) on this Proxy
should correspond exactly with
the shareholder's name as
printed hereon.
THIS PROXY IS SOLICITED BY THE BOARD
OF TRUSTEES
TAIT, WELLER & BAKER
Certified Public Accountants
Philadelphia, PA o New York, NY o Edison, NJ
Two Penn Center Plaza, Suite 700, Philadelphia, PA 19102-1707
(215) 568-2209 o FAX (215) 568-1544
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
We were previously accountants of The Chesapeake Growth Fund from
inception of the Fund to March 14, 1994. On March 14, 1994 we resigned as
accountants for the Fund. We have read the Fund's statements included under item
4 of the current proxy materials as they relate to information required by Item
304(a) of Regulation SK and we agree with such statements.
Very truly yours,
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
May 15, 1996
