GARDNER LEWIS INVESTMENT TRUST, 485BPOS, 1996-07-08

GARDNER LEWIS INVESTMENT TRUST
485BPOS, 1996-07-08

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As filed with the Securities and Exchange Commission on April 25, 1996
Securities Act File No. 33-53800
Investment Company Act File No. 811-7324

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Post-Effective Amendment No. 11 |X|

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 13 |X|

GARDNER LEWIS INVESTMENT TRUST
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone (919) 972-9922

AGENT FOR SERVICE:

Frank P. Meadows III, Chairman
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069

With copies to:

M. Guy Brooks, III, Esq.
Poyner & Spruill, L.L.P.
3600 Glenwood Avenue
Raleigh, North Carolina 27612

It is proposed that this filing will become effective:

X Immediately upon filing pursuant _ on , 1995 pursuant
to Rule 485(b), or to Rule 485(b), or

_ 60 days after filing pursuant _ on , 1995 pursuant
to Rule 485(a)(1), to Rule 485(a)(1), or

_ 75 days after filing pursuant _ on , 1995 pursuant
to Rule 485(a)(2) to Rule 485(a)(2), or

The issuer has previously registered an indefinite number of shares of two
series: The Chesapeake Growth Fund and The Chesapeake Fund, under the Securities
Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment Company Act
of 1940, as amended. The Rule 24f-2 Notice for The Chesapeake Growth Fund for
the year ended August 31, 1995 was filed on October 25, 1995. The Rule 24f-2
Notice for The Chesapeake Fund for the year ended February 29, 1996 was filed on
April 29, 1996.

<PAGE>

This filing includes the Prospectus and Statement of Additional Information of
The Chesapeake Growth Fund, which are incorporated herein by reference to Post-
Effective Amendment No. 9 to the Registrant's Registration Statement on Form
N-1A filed with the Commission on October 26, 1995. Supplements to the
Prospectus of such Fund and the Statement of Additional Information of The
Chesapeake Growth Fund are set forth herein, along with a new Prospectus for The
Chesapeake Fund - Super-Institutional Shares and a new Statement of Additional
Information for The Chesapeake Fund.

PART A

PROSPECTUS Cusip Number 36559B401

GARDNER LEWIS INVESTMENT TRUST

THE CHESAPEAKE FUND - INSTITUTIONAL SHARES

The INSTITUTIONAL CLASS of THE CHESAPEAKE FUND (the "Fund"), a series of the
Gardner Lewis Investment Trust (the "Trust"), is designed to provide
institutional clients with core growth investment management by Gardner Lewis
Asset Management. The investment objective of the Fund is to seek capital
appreciation through investments in equity securities of medium and large
capitalization companies, consisting primarily of common and preferred stocks
and securities convertible into common stocks. While there is no assurance that
the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus. The Fund has a
net asset value that will fluctuate in accordance with the value of its
portfolio securities. An investor may invest, reinvest or redeem shares at any
time.

This Prospectus relates to shares ("Institutional Shares") representing
interests in the Fund. The Institutional Shares are offered to institutional
investors without any sales or redemption charges or shareholder servicing or
distribution fees. See "Prospectus Summary - Offering Price."

INVESTMENT ADVISOR
GARDNER LEWIS ASSET MANAGEMENT
CHADDS FORD, PENNSYLVANIA

The Fund is a diversified series of the Trust, a registered open-end management
investment company. This Prospectus sets forth concisely the information about
the Fund that a prospective investor should know before investing. Investors
should read this Prospectus and retain it for future reference. Additional
information about the Fund has been filed with the Securities and Exchange
Commission and is available upon request and without charge. You may request the
Statement of Additional Information dated July 1, 1996, and as amended from time
to time, which is incorporated in this Prospectus by reference, by writing the
Fund at Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069, or by
calling 1-800-430-3863.

INVESTMENT IN THE FUND INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, AND SUCH SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.

<PAGE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

The date of this Prospectus is July 1, 1996.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY......................................... 2

SYNOPSIS OF COSTS AND EXPENSES............................. 3

FINANCIAL HIGHLIGHTS....................................... 4

INVESTMENT OBJECTIVE AND POLICIES.......................... 4

RISK FACTORS............................................... 7

INVESTMENT LIMITATIONS..................................... 8

FEDERAL INCOME TAXES....................................... 9

DIVIDENDS AND DISTRIBUTIONS................................ 10

HOW SHARES ARE VALUED...................................... 10

HOW SHARES MAY BE PURCHASED................................ 10

HOW SHARES MAY BE REDEEMED................................. 12

MANAGEMENT OF THE FUND..................................... 14

OTHER INFORMATION.......................................... 16

THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN ANY
STATE IN WHICH THE OFFERING IS UNAUTHORIZED. NO SALES REPRESENTATIVE, DEALER OR
OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.

THE FUND RESERVES THE RIGHT IN ITS SOLE DISCRETION TO WITHDRAW ALL OR ANY PART
OF THE OFFERING MADE BY THIS PROSPECTUS OR TO REJECT PURCHASE ORDERS. ALL ORDERS
TO PURCHASE SHARES ARE SUBJECT TO ACCEPTANCE BY THE FUND AND ARE NOT BINDING
UNTIL CONFIRMED OR ACCEPTED IN WRITING.

<PAGE>

PROSPECTUS SUMMARY

The Fund The Chesapeake Fund (the "Fund") is a diversified series
of the Gardner Lewis Investment Trust (the "Trust"), a
registered open-end management investment company
organized as a Massachusetts business trust. This
Prospectus relates to Institutional Shares of the Fund.
See "Other Information - Description of Shares."

Offering Price The Institutional Shares are offered to institutional
investors at net asset value without a sales charge. The
Institutional Shares are not subject to any shareholder
servicing or distribution fees. The minimum initial
investment is $1,000,000. The minimum subsequent
investment is $5,000. See "How Shares May be Purchased."

Investment Objective The investment objective of the Fund is to seek capital
and Special Risk appreciation through investments in equity securities of
Considerations medium and large capitalization companies, consisting
primarily of common and preferred stocks and securities
convertible into common stocks. Realization of current
income is not a significant investment consideration, and
any income realized will be incidental to the Fund's
objective. See "Investment Objective and Policies." The
Fund is not intended to be a complete investment program,
and there can be no assurance that the Fund will achieve
its investment objective. While the Fund will invest
primarily in common stocks traded in U.S. securities
markets, some of the Fund's investments may include
foreign securities, illiquid securities, and securities
purchased subject to a repurchase agreement or on a
"when-issued" basis, which involve certain risks. The Fund
may borrow only under certain limited conditions
(including to meet redemption requests) and not to
purchase securities. It is not the intent of the Fund to
borrow except for temporary cash requirements. Borrowing,
if done, would tend to exaggerate the effects of market
and interest rate fluctuations on the Fund's net asset
value until repaid. See "Risk Factors."

Manager Subject to the general supervision of the Trust's Board of
Trustees and in accordance with the Fund's investment
policies, Gardner Lewis Asset Management of Chadds Ford,
Pennsylvania (the "Advisor") manages the Fund's
investments. The Advisor currently manages approximately
$3 billion in assets. For its advisory services, the
Advisor receives a monthly fee based on the Fund's daily
net assets at the annual rate of 1.00%. See "Management of
the Fund - The Advisor."

Dividends Income dividends, if any, are paid at least annually;
capital gains, if any, are distributed at least annually
or retained for reinvestment by the Fund. Dividends and
capital gains distributions are automatically reinvested
in additional shares of the same Class at net asset value
unless the shareholder elects to receive cash. See
"Dividends and Distributions."

Distributor Capital Investment Group, Inc. (the "Distributor") serves
as distributor of shares of the Fund. See "How Shares May
Be Purchased - Distributor."

Redemption of Shares There is no charge for redemptions. Shares may be
redeemed at any time at the net asset value next
determined after receipt of a redemption request by the
Fund. A shareholder who submits appropriate written
authorization may redeem shares by telephone. See "How
Shares May Be Redeemed."

<PAGE>

SYNOPSIS OF COSTS AND EXPENSES

The following tables set forth certain information in connection with the
expenses of the Institutional Shares of the Fund for the current fiscal year.
The information is intended to assist the investor in understanding the various
costs and expenses borne by the Institutional Shares of the Fund, and therefore
indirectly by its investors, the payment of which will reduce an investor's
return on an annual basis.

SHAREHOLDER TRANSACTION EXPENSES FOR INSTITUTIONAL SHARES

Maximum sales load imposed on purchases
(as a percentage of offering price)......................................None
Maximum sales charge imposed on reinvested dividends........................None
Deferred sales load.........................................................None
Redemption fees.............................................................None
Exchange fee................................................................None

ANNUAL FUND OPERATING EXPENSES FOR INSTITUTIONAL SHARES - AFTER FEE WAIVERS(1)
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Investment advisory fees..........................................0.84% (1)
12b-1 fees.........................................................None
Other expenses.................................................. 0.65% (1)

Total operating expenses............................ 1.49% (1)
=======

EXAMPLE: You would pay the following expenses on a $1,000 investment in
Institutional Shares of the Fund, whether or not you redeem at the end of the
period, assuming a 5% annual return:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

$15 $47 $81 $178

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

(1) The "Total operating expenses" shown above are based upon actual operating
expenses incurred by the Institutional Shares for the fiscal year ended
February 29, 1996, which, after fee waivers, were 1.49% of average daily net
assets of the Institutional Shares. Absent such waivers, the "Investment
advisory fees" and the "Total operating expenses" for the Institutional
Shares of the Fund for the fiscal year ended February 29, 1996 would have
been 1.00% and 1.65%, respectively, of average daily net assets. There can
be no assurance that the Advisor's voluntary fee waivers and expense
reimbursements in the past will continue in the future. The Advisor
anticipates that the percentage shown under "Other expenses" will decline as
assets of the Fund grow. The investment advisory fee is higher than that
paid by most other investment companies.

See "Management of the Fund" below for more information about the fees and costs
of operating the Fund. The assumed 5% annual return in the example is required
by the Securities and Exchange Commission. THE HYPOTHETICAL RATE OF RETURN IS
NOT INTENDED TO BE REPRESENTATIVE OF PAST OR FUTURE PERFORMANCE OF THE FUND; THE
ACTUAL RATE OF RETURN FOR THE FUND MAY BE GREATER OR LESS THAN 5%.

<PAGE>

FINANCIAL HIGHLIGHTS

The shares of the Fund are divided into multiple Classes representing interests
in the Fund. This Prospectus relates to Institutional Shares of the Fund. See
"Other Information - Description of Shares." The financial data included in the
table below has been derived from audited financial statements of the Fund. The
financial data for the fiscal year ended February 29, 1996 and the fiscal period
ended February 28, 1995 has been audited by KPMG Peat Marwick LLP, independent
accountants, whose report covering such fiscal year end and period is included
in the Statement of Additional Information. The information in the table below
should be read in conjunction with the Fund's audited financial statements and
notes thereto, which are also included in the Statement of Additional
Information, a copy of which may be obtained at no charge by calling the Fund.
Further information about the performance of the Fund is contained in the Annual
Report of the Fund, a copy of which may be obtained at no charge by calling the
Fund.

INSTITUTIONAL CLASS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
Fiscal Year ended Fiscal Period ended
February 29, 1996 February 28, 1995 (a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.31 $10.00
INCOME(LOSS) FROM INVESTMENT OPERATIONS
Net investment loss (0.05) (0.04)
Net realized and unrealized gains on investments 3.38 1.35
---- ----
TOTAL FROM INVESTMENT OPERATIONS 3.33 1.31
---- ----

DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gain from investment transactions (0.11) 0.00
Tax return of capital (0.08) 0.00
------ ----
TOTAL DISTRIBUTIONS (0.19) 0.00
------ ----

NET ASSET VALUE, END OF PERIOD $14.45 $11.31
====== ======

TOTAL RETURN 29.66% 13.12%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of period $80,252,481 $15,088,350
=========== ===========

RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense reimbursements and waived fees 1.65% 2.75% (b)
After expense reimbursements and waived fees 1.49% 1.73% (b)

RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS
Before expense reimbursements and waived fees (0.98)% (1.80)% (b)
After expense reimbursements and waived fees (0.82)% (0.78)% (b)

PORTFOLIO TURNOVER RATE 99.33% 64.92%

</TABLE>

(a) For the period from April 6, 1994 (commencement of operations) to
February 28, 1995.

(b) Annualized.

INVESTMENT OBJECTIVE AND POLICIES

<PAGE>

convertible into common stocks. Realization of current income will not be a
significant investment consideration, and any such income realized should be
considered incidental to the Fund's objective. The Fund's investment objective
and fundamental investment limitations described herein may not be altered
without the prior approval of a majority of the Fund's shareholders.

INVESTMENT SELECTION. The Fund's portfolio will include equity securities which
the Advisor feels show superior prospects for growth. The Advisor will focus
attention on proven medium and large capitalization companies which, in the view
of the Advisor, exhibit internal changes such as a promising new product, new
distribution strategy, new manufacturing technology, or new management team or
management philosophy. Many of the portfolio companies will be responsible for
technological breakthroughs and/or unique solutions to market needs. By focusing
upon internal rather than external factors, the Fund will seek to minimize the
risk associated with macro-economic forces such as changes in commodity prices,
currency exchange rates and interest rates.

In selecting portfolio companies, the Advisor uses analysis which includes the
growth rate in earnings, financial performance, management strengths and
weaknesses, and current market valuation in relation to earnings growth as well
as historic and comparable company valuations. The Advisor also analyzes the
level and nature of the company's debt, cash flow, working capital and the
quality of the company's assets. Typically companies included in the Fund's
portfolio will show strong earnings growth versus the previous year's comparable
period. Companies that the Advisor determines have excessive levels of debt are
generally avoided.

By developing and maintaining contacts with management, customers, competitors
and suppliers of current and potential portfolio companies, the Advisor attempts
to invest in those companies undergoing positive changes that have not yet been
recognized by "Wall Street" analysts and the financial press. Lack of
recognition of these changes often causes securities to be less efficiently
priced. The Advisor believes these companies offer unique and potentially
superior investment opportunities. The Advisor favors portfolio companies whose
price when purchased is between 8 and 15 times projected earnings for the coming
year.

While portfolio securities are generally acquired for the long term, they may be
sold under any of the following circumstances:

a) the anticipated price appreciation has been achieved or is no longer
probable;
b) the company's fundamentals appear, in the analysis of the Advisor, to be
deteriorating;
c) general market expectations regarding the company's future performance
exceed those expectations held by the Advisor;
d) alternative investments offer, in the view of the Advisor, superior
potential for appreciation.

The equity securities in which the Fund may invest include common stock,
convertible preferred stock, straight preferred stock, participating and
non-participating preferred stock, and investment grade convertible bonds. All
securities will be traded on domestic and foreign securities exchanges or on the
over-the-counter markets. Up to 10% of the Fund's total assets may consist of
foreign securities.

Under normal conditions, at least 90% of the Fund's total assets will be
invested in equity securities. As a temporary defensive measure, however, when
the Advisor determines that market conditions so warrant, the Fund may invest up
to 100% of the Fund's total assets in investment grade bonds, U.S. Government
Securities, repurchase agreements, or money market instruments. When the Fund
invests its assets in investment grade bonds, U.S. Government Securities or
money market instruments as a temporary defensive measure, it is not pursuing
its stated investment objective. Under normal circumstances, however, the Fund
will also hold money market or repurchase agreement instruments for funds
awaiting investment, to accumulate cash for anticipated purchases of portfolio
securities, to allow for shareholder redemptions, and to provide for Fund
operating expenses.

<PAGE>

Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home Administration
("FHA"), Federal Farm Credit Bank ("FFCB"), Federal Home Loan Bank ("FHLB"),
Student Loan Marketing Association ("SLMA"), Resolution Trust Corporation, and
The Tennessee Valley Authority. U.S. Government Securities may be acquired
subject to repurchase agreements. While obligations of some U.S. Government
sponsored entities are supported by the full faith and credit of the U.S.
Government (e.g. GNMA), several are supported by the right of the issuer to
borrow from the U.S. Government (e.g. FNMA, FHLMC), and still others are
supported only by the credit of the issuer itself (e.g. SLMA, FFCB). No
assurances can be given that the U.S. Government will provide financial support
to U.S. Government agencies or instrumentalities in the future, other than as
set forth above, since it is not obligated to do so by law. The guarantee of the
U.S. Government does not extend to the yield or value of the Fund's shares.

MONEY MARKET INSTRUMENTS. Money market instruments may be purchased for
temporary defensive purposes, to accumulate cash for anticipated purchases of
portfolio securities and to provide for shareholder redemptions and operating
expenses of the Fund. Money market instruments mature in thirteen months or less
from the date of purchase and may include U.S. Government Securities, corporate
debt securities (including those subject to repurchase agreements), bankers
acceptances and certificates of deposit of domestic branches of U.S. banks, and
commercial paper (including variable amount demand master notes) rated in one of
the two highest rating categories by any of the nationally recognized
statistical rating organizations or if not rated, of equivalent quality in the
Advisor's opinion. The Advisor may, when it believes that unusually volatile or
unstable economic and market conditions exist, depart from the Fund's investment
approach and assume temporarily a defensive portfolio posture, increasing the
Fund's percentage investment in money market instruments, even to the extent
that 100% of the Fund's total assets may be so invested.

REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. The Fund will not enter into any repurchase agreement that will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.

FOREIGN SECURITIES. The Fund may invest up to 10% of its total assets in foreign
securities. The same factors would be considered in selecting foreign securities
as with domestic securities. Foreign securities investment presents special
consideration 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 U.S. Securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. 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, the
Fund will generally limit foreign investments to those traded domestically as
American Depository Receipts ("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 trade in the
over-the-counter market. The prices of ADRs are denominated in U.S. dollars
while the underlying security may be denominated in a foreign currency.

<PAGE>

The Fund may invest in both sponsored and unsponsored ADRs. Unsponsored ADR
programs are organized independently and without the cooperation of the issuer
of the underlying foreign securities. As a result, available information
concerning the issuer may not be as current as for sponsored ADRs, and the
prices of unsponsored ADRs may be more volatile than if such instruments were
sponsored by the issuer. The issuers of the securities underlying unsponsored
ADRs are not obligated to disclose material information in the U.S. and,
therefore, there any be no correlation between such information and the market
value of the ADRs. Because of the additional risks inherent in unsponsored ADRs,
the Fund will tend to invest in sponsored ADRs over unsponsored ADRs, to the
extent it invests in ADRs.

ADRs purchased by the Fund, if any, will not be considered foreign securities
for purposes of the 10% limit on investments in foreign securities. To the
extent the Fund invests in other foreign securities, subject to the 10% limit,
it will generally limit such investments to foreign securities traded on foreign
securities exchanges.

INVESTMENT COMPANIES. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's total assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's total assets. The Fund will only invest in other investment companies by
purchase of such securities on the open market where no commission or profit to
a sponsor or dealer results from the purchase other than the customary broker's
commissions or when the purchase is part of a plan of merger, consolidation,
reorganization, or acquisition. To the extent the Fund invests in other
investment companies, the shareholders of the Fund would indirectly pay a
portion of the operating costs of the underlying investment companies. These
costs include management, brokerage, shareholder servicing and other operational
expenses. Shareholders of the Fund would then indirectly pay higher operational
costs than if they owned shares of the underlying investment companies directly.
The Advisor will waive its advisory fee for that portion of the Fund's assets
invested in other investment companies, except when such purchase is part of a
plan of merger, consolidation, reorganization, or acquisition.

REAL ESTATE SECURITIES. The Fund will not invest in real estate or real estate
mortgage loans (including limited partnership interests), but may invest in
readily marketable securities secured by real estate or interests therein or
issued by companies that invest in real estate or interests therein. The Fund
may also invest in readily marketable interests in real estate investment trusts
("REITs"). REITs are generally publicly traded on the national stock exchanges
and in the over-the-counter market and have varying degrees of liquidity.
Although the Fund is not limited in the amount of these types of real estate
securities it may acquire, it is not presently expected that within the next 12
months the Fund will have in excess of 5% of its total assets in real estate
securities.

RISK FACTORS

INVESTMENT POLICIES AND TECHNIQUES. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Fund and the specific securities and investment
techniques that may be employed by the Fund, including the risks associated with
repurchase agreements and foreign securities. A more complete discussion of
certain of these securities and investment techniques and their associated risks
is contained in the Statement of Additional Information.

FLUCTUATIONS IN VALUE. To the extent that the major portion of the Fund's
portfolio consists of common stocks, it may be expected that its net asset value
will be subject to greater fluctuation than a portfolio containing mostly fixed
income securities. Given that a portion of the Fund's assets will be invested in
equity securities of medium capitalization companies, that portion of the Fund's
portfolio may exhibit more volatility than the portion of the Fund's portfolio
invested in large capitalization companies. Because there is risk in any
investment, there can be no assurance that the Fund will achieve its investment
objective.

PORTFOLIO TURNOVER. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Nevertheless, the Fund's portfolio turnover generally will not
exceed 100% in any one year. Portfolio turnover generally involves some expense
to the Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio

<PAGE>

turnover may also have capital gains tax consequences. See "Financial
Highlights" for the Fund's portfolio turnover rate for prior fiscal periods.

BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary or emergency purposes and 15% of its total assets to meet
redemption requests, which might otherwise require untimely disposition of
portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the 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. The Fund will borrow only from a
bank. The Fund will not make any investments if the borrowing exceeds 5% of its
assets until such time as repayment has been made to bring the total borrowing
below 5% of its total assets.

ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. The Fund will not invest in restricted securities, which cannot be sold
to the public without registration under the federal securities laws. Unless
registered for sale, restricted securities can only be sold in privately
negotiated transactions or pursuant to an exemption from registration.

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-
issued or forward commitment basis with the intention of acquiring securities
for its portfolio, the Fund may dispose of a when-issued security or forward
commitment prior to settlement if the Advisor deems it appropriate to do so. The
Fund may realize short-term gains or losses upon such sales.

INVESTMENT LIMITATIONS

To limit the Fund's exposure to risk, the Fund has adopted certain fundamental
investment limitations. Some of these restrictions are that the Fund will not:
(1) 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 the Fund's total assets or, (b) in
order to meet redemption requests, in amounts not exceeding 15% of its total
assets. The Fund will not make any investments if borrowing exceeds 5% of its
total assets until such time as total borrowing represents less than 5% of Fund
assets; (2) make loans of money or securities, except that the Fund may invest
in repurchase agreements (but repurchase agreements having a maturity of longer
than seven days, together with other illiquid securities, are limited to 10% of
the Fund's net assets); (3) invest in securities of issuers which have a record
of less than three years' continuous operation (including predecessors and, in
the case of bonds, guarantors), if more than 5% of its total assets would be
invested in such securities; (4) write, purchase or sell puts, calls, warrants
or combinations thereof, or purchase or sell commodities, commodities contracts,
futures contracts or related options, or invest in oil, gas or mineral leases or
exploration programs, or real estate; (5) invest more than 5% of the value of
its total assets in the securities of any one issuer nor hold more than 10% of
the voting stock of any issuer; (6) invest in restricted securities; (7) invest
more than 10% of the Fund's total assets in foreign securities (which shall not
be deemed to include ADRs); and (8) invest more than 25% of the Fund's total
assets in the securities of issuers in any one industry. See "Investment
Limitations" in the Fund's Statement of Additional Information for a complete
list of investment limitations.

<PAGE>

Prospectus, or in the Statement of Additional Information, as being fundamental,
is non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will not constitute a
violation of such limitation. In order to permit the sale of the Fund's shares
in certain states, the Fund may make commitments that are more restrictive than
the investment policies and limitations described above and in the Statement of
Additional Information. Such commitments may have an effect on the investment
performance of the Fund. Should the Fund determine that any such commitment is
no longer in the best interests of the Fund, it may revoke the commitment and
terminate sales of its shares in the state involved.

FEDERAL INCOME TAXES

TAXATION OF THE FUND. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust, including the Fund, as a separate
regulated investment company. Each series of the Trust, including the Fund,
intends to qualify or remain qualified as a regulated investment company under
the Code by distributing substantially all of its "net investment income" to
shareholders and meeting other requirements of the Code. For the purpose of
calculating dividends, net investment income consists of income accrued on
portfolio assets, less accrued expenses. Upon qualification, the Fund will not
be liable for federal income taxes to the extent earnings are distributed. The
Board of Trustees retains the right for any series of the Trust, including the
Fund, to determine for any particular year if it is advantageous not to qualify
as a regulated investment company. Regulated investment companies, such as each
series of the Trust, including the Fund, are subject to a non-deductible 4%
excise tax to the extent they do not distribute the statutorily required amount
of investment income, determined on a calendar year basis, and capital gain net
income, using an October 31 year end measuring period. The Fund intends to
declare or distribute dividends during the calendar year in an amount sufficient
to prevent imposition of the 4% excise tax.

TAXATION OF SHAREHOLDERS. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Fund or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November or December of a year and paid in
January of the following year will be considered to be paid on December 31 of
the year of declaration.

Distributions paid by the Fund from long-term capital gains, whether received in
cash or reinvested in additional shares, are taxable as long-term capital gains,
regardless of the length of time an investor has owned shares in the Fund.
Capital gain distributions are made when the Fund realizes net capital gains on
sales of portfolio securities during the year. Dividends and capital gain
distributions paid by the Fund shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.

The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual fund).

The Trust will inform shareholders of the Fund of the source of their dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.

Federal income tax law requires investors to certify that the social security
number or taxpayer identification number provided to the Fund is correct and
that the investor is not subject to 31% withholding for previous under-reporting
to the Internal Revenue Service (the "IRS"). Investors will be asked to make the
appropriate certification on their application to purchase shares. If a
shareholder of the Fund has not complied with the applicable statutory and IRS
requirements, the Fund is generally required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends and
redemption amounts).

<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends and distribute capital gains, if any, at least
once each year. The Fund may, however, determine either to distribute or to
retain all or part of any long-term capital gains in any year for reinvestment.

Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Class of the Fund at the net asset value per share next determined. Shareholders
wishing to receive their dividends or capital gains in cash may make their
request in writing to the Fund at 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069. That request must be received
by the Fund prior to the record date to be effective as to the next dividend. If
cash payment is requested, checks will be mailed within five business days after
the distribution of the dividends or capital gains, as applicable. Each
shareholder of the Fund will receive a quarterly summary of his or her account,
including information as to reinvested dividends from the Fund. Tax consequences
to shareholders of dividends and distributions are the same if received in cash
or in additional shares of the Fund.

In order to satisfy certain requirements of the Code, the Fund may declare
special year-end dividend and capital gains distributions during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.

HOW SHARES ARE VALUED

Net asset value for each Class of Shares of the Fund is determined at 4:00 p.m.,
New York time, Monday through Friday, except on business holidays when the New
York Stock Exchange is closed. The net asset value of the shares of the Fund for
purposes of pricing sales and redemptions is equal to the total market value of
its investments, less all of its liabilities, divided by the number of its
outstanding shares. Net asset value is determined separately for each Class of
Shares of the Fund and reflects any liabilities allocated to a particular Class
as well as the general liabilities of the Fund.

Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the latest quoted sales price, if available, at the time of valuation,
otherwise, at the latest quoted bid price. Temporary cash investments with
maturities of 60 days or less will be valued at amortized cost, which
approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.

HOW SHARES MAY BE PURCHASED

Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-430-3863, or by writing to the Fund at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Fund. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
the Fund's net asset value next determined after your order is received by the
Fund in proper form as indicated herein.

The minimum initial investment is $1,000,000. The minimum subsequent investment
is $5,000. The Fund may, in the Advisor's sole discretion, accept certain
accounts with less than the stated minimum initial investment. You may invest in
the following ways:

<PAGE>

PURCHASES BY MAIL. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the Fund, to The Chesapeake Fund, Institutional Shares, 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069. Subsequent investments in an existing account in the Fund may be
made at any time by sending a check payable to the Fund, to the address stated
above. Please enclose the stub of your account statement and include the amount
of the investment, the name of the account for which the investment is to be
made and the account number. PLEASE REMEMBER TO ADD A REFERENCE TO
"INSTITUTIONAL SHARES" TO YOUR CHECK TO ENSURE PROPER CREDIT TO YOUR ACCOUNT.

PURCHASES BY WIRE. To purchase shares by wiring federal funds, the Fund must
first be notified by calling 1-800-430-3863 to request an account number and
furnish the Fund with your tax identification number. Following notification to
the Fund, federal funds and registration instructions should be wired through
the Federal Reserve System to:

Wachovia Bank of North Carolina, N.A.
Winston-Salem, North Carolina
ABA # 053100494
For credit to the Rocky Mount Office
For The Chesapeake Fund - Institutional Shares
Acct #6764-020807
For further credit to (shareholder's name and SS# or EIN#)

It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. A completed
application with signature(s) of registrant(s) must be mailed to the Fund
immediately after the initial wire as described under "Purchases by Mail" above.
Investors should be aware that some banks may impose a wire service fee.

GENERAL. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders become effective, and shares are purchased at, the next
determined net asset value per share after an investment has been received by
the Fund, which is as of 4:00 p.m., New York time, Monday through Friday,
exclusive of business holidays. Orders received by the Fund and effective prior
to 4:00 p.m. will purchase shares at the net asset value determined at that
time. Otherwise, your order will purchase shares as of 4:00 p.m. New York time
on the next business day. For orders placed through a qualified broker-dealer,
such firm is responsible for promptly transmitting purchase orders to the Fund.

If checks are returned unpaid due to nonsufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.

Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Fund, at its sole discretion, may
allow payment in kind for Fund shares purchased by accepting securities in lieu
of cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for additional information on purchases in
kind.

The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions and, in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number. Instructions to
exchange or transfer shares held in established accounts will be refused until
the certification has been provided. In order to avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Administrator, that your taxpayer identification number is
correct and that you are not currently subject to backup withholding or you are
exempt from backup withholding.

DISTRIBUTOR. Capital Investment Group, Inc., Post Office Box 32249, Raleigh,
North Carolina 27622 (the "Distributor"), is the national distributor for the
Fund under a Distribution Agreement with the Trust. The Distributor may sell
Fund shares to or through qualified securities dealers or others.

<PAGE>

The Distributor, at its expense, may provide compensation to dealers in
connection with sales of shares of the Fund. Compensation may include financial
assistance to dealers in connection with conferences, sales or training programs
for their employees, seminars for the public, advertising campaigns regarding
the Fund, and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

EXCHANGE FEATURE. Investors will have the privilege of exchanging shares of the
Fund for shares of any other series of the Trust established by the Advisor. An
exchange is a taxable transaction that involves the simultaneous redemption of
shares of one series and purchase of shares of another series at the respective
closing net asset value next determined after a request for redemption has been
received plus applicable sales charge. Each series of the Trust will have a
different investment objective, which may be of interest to investors in each
series. Shares of the Fund may be exchanged for shares of any other series of
the Trust affiliated with the Advisor at the net asset value plus the percentage
difference between that series' sales charge and any sales charge previously
paid in connection with the shares being exchanged. For example, if a 2% sales
charge was paid on shares that are exchanged into a series with a 3% sales
charge, there would be an additional sales charge of 1% on the exchange.
Exchanges may only be made by investors in states where shares of the other
series are qualified for sale. An investor may direct the Fund to exchange his
shares by writing to the Fund at its principal office. The request must be
signed exactly as the investor's name appears on the account, and it must also
provide the account number, number of shares to be exchanged, the name of the
series to which the exchange will take place and a statement as to whether the
exchange is a full or partial redemption of existing shares. Notwithstanding the
foregoing, exchanges of shares may only be within the same class or type of
class of shares involved. For example, Investor Shares may not be exchanged for
Institutional Shares. Notwithstanding the foregoing, unless otherwise determined
by the Fund, an investor may not exchange shares of the Fund for shares of The
Chesapeake Growth Fund, another series of the Trust affiliated with the Advisor,
unless such investor has an existing account with such Fund.

A pattern of frequent exchange transactions may be deemed by the Advisor to be
an abusive practice that is not in the best interests of the shareholders of the
Fund. Such a pattern may, at the discretion of the Advisor, be limited by the
Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The Advisor
will consider all factors it deems relevant in determining whether a pattern of
frequent purchases, redemptions and/or exchanges by a particular investor is
abusive and not in the best interests of the Fund or its other shareholders.

A shareholder should consider the investment objectives and policies of any
series into which the shareholder will be making an exchange, as described in
the prospectus for that other series. The Board of Trustees of the Trust
reserves the right to suspend or terminate, or amend the terms of, the exchange
privilege upon 60 days written notice to the shareholders.

AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($1,000 minimum), which will be automatically invested in
shares at the public offering price on or about the 21st day of the month. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.

STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

<PAGE>

prior to 4:00 p.m. New York time, Monday through Friday, except for business
holidays, will redeem shares at the net asset value determined at that time.
Otherwise, your order will redeem shares as of 4:00 p.m. New York time on the
next business day. There is no charge for redemptions from the Fund. You may
also redeem your shares through a broker-dealer or other institution, who may
charge you a fee for its services.

The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $1,000,000 (due to redemptions, exchanges
or transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $1,000,000 or more during
the notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.

If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-430-3863, or write to the address shown below.

REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Chesapeake
Fund, Institutional Shares, 105 North Washington Street, Post Office Drawer 69,
Rocky Mount, North Carolina 27802-0069. Your request for redemption must
include:

1) Your letter of instruction specifying the account number, and the number of
shares or dollar amount to be redeemed. This request must be signed by all
registered shareholders in the exact names in which they are registered;

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for the Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.

TELEPHONE AND BANK WIRE REDEMPTIONS. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. The Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder; and
4) Shareholder signature as it appears on the application then on file with
the Fund.

The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. Shareholders can choose to have
redemption proceeds mailed to them at their address of record, their bank, or to
any other authorized person, or they can have the proceeds sent by bank wire to
their bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which your bank is not open for business. Shareholders can change
redemption instructions anytime by filing a letter including new redemption
instructions with the Fund. (See "Signature Guarantees" below.) The Fund
reserves the right to restrict or cancel telephone and bank wire

<PAGE>

redemption privileges for shareholders, without notice, if the Fund believes it
to be in the best interest of the shareholders to do so. During drastic economic
and market changes, telephone redemption privileges may be difficult to
implement.

There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from the
shareholder's account by redemption of shares in the account. The shareholder's
bank or brokerage firm may also impose a charge for processing the wire. If wire
transfer of funds is impossible or impractical, the redemption proceeds will be
sent by mail to the designated account.

You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-430-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and, if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.

SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of the Fund valued at
$1,000,000 or more at current net asset value may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $1,000. Each month or quarter as specified, the Fund will
automatically redeem sufficient shares from your account to meet the specified
withdrawal amount. Call or write the Fund for an application form. See the
Statement of Additional Information for further details.

SIGNATURE GUARANTEES. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, (2) requests to
establish or change exchange privileges or telephone redemption service other
than through your initial account application, and (3) requests for redemptions
in excess of $50,000. Signature guarantees are acceptable from a member bank of
the Federal Reserve System, a savings and loan institution, credit union (if
authorized under state law), registered broker-dealer, securities exchange or
association clearing agency, and must appear on the written request for
redemption, establishment or change in exchange privileges, or change of
registration.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS. The Fund is a diversified series of the Gardner Lewis
Investment Trust (the "Trust"), an investment company organized as a
Massachusetts business trust. The Board of Trustees of the Trust is responsible
for the management of the business and affairs of the Trust. The Trustees and
executive officers of the Trust and their principal occupations for the last
five years are set forth in the Statement of Additional Information under
"Management of the Fund - Trustees and Officers." The Board of Trustees of the
Trust is primarily responsible for overseeing the conduct of the Trust's
business. The Board of Trustees elects the officers of the Trust who are
responsible for its and the Fund's day-to-day operations.

THE ADVISOR. Subject to the authority of the Board of Trustees, Gardner Lewis
Asset Management (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities, pursuant to an Investment
Advisory Agreement (the "Advisory Agreement") with the Trust.

The Advisor is registered under the Investment Advisors Act of 1940.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Delaware corporation in 1990 and converted to a
Pennsylvania limited partnership in 1994, is controlled by W. Whitfield Gardner.
The Advisor currently serves as investment advisor to approximately $3 billion
in assets. The Advisor has been rendering investment counsel, utilizing
investment strategies substantially similar to that of the Fund, to individuals,
banks and thrift institutions, pension and profit sharing plans, trusts,
estates, charitable organizations and corporations since its formation. The
Advisor's address is 285 Wilmington-West Chester Pike, Chadds Ford, Pennsylvania
19317.

<PAGE>

Under the Advisory Agreement with the Fund, the Advisor receives a monthly
management fee equal to an annual rate of 1.00% of the average daily net asset
value of the Fund. Although the investment advisory fee is higher than that paid
by most other investment companies, the Board of Trustees believes the fee to be
comparable to advisory fees paid by many funds having similar objectives and
policies. The Advisor may periodically voluntarily waive or reduce its advisory
fee to increase the net income of the Fund. The Advisor has voluntarily waived a
portion of its fee for the fiscal year ended February 29, 1996. The total fees
waived amounted to $98,808 (the Advisor received $545,139 of its fee).

The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
the Fund may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. For further information, see
"Investment Objective and Policies - Investment Transactions" in the Statement
of Additional Information.

W. Whitfield Gardner and John L. Lewis, IV, principals of the Advisor and
executive officers of the Trust, have been responsible for day-to-day management
of the Fund's portfolio since its inception in 1994. They have been with the
Advisor since its inception. Additional information about these gentlemen is set
forth in the Statement of Additional Information under "Management of the Fund -
Trustees and Officers."

THE ADMINISTRATOR. The Trust has entered into an Administration Agreement with
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.075% of the average daily
net assets of the Institutional Shares of the Fund. In addition, the
Administrator currently receives a base monthly fee of $1,750 for each Class of
shares of the Fund for accounting and recordkeeping services for the Fund. The
Administrator also charges the Fund for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.

Subject to the authority of the Board of Trustees, the services the
Administrator provides to the Fund include coordinating and monitoring any third
parties furnishing services to the Fund; providing the necessary office space,
equipment and personnel to perform administrative and clerical functions for the
Fund; preparing, filing and distributing proxy materials, periodic reports to
shareholders, registration statements and other documents; and responding to
shareholder inquiries.

The Administrator was established as a North Carolina corporation in 1988 and
converted to a North Carolina limited liability company in 1995. With its
predecessors and affiliates, the Administrator has been operating as a financial
services firm since 1985. Frank P. Meadows III, Chairman and Trustee of the
Trust, is the firm's Managing Director and controlling member.

THE CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING/PRICING AGENT. Wachovia Bank
of North Carolina, N.A. (the "Custodian"), 301 North Main Street, Winston-Salem,
North Carolina 27102, serves as Custodian of the Fund's assets. The Custodian
acts as the depository for the Fund, safekeeps its portfolio securities,
collects all income and other payments with respect to portfolio securities,
disburses monies at the Fund's request and maintains records in connection with
its duties.

The Administrator also serves as the Fund's transfer agent. As transfer agent,
it maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
shareholder services functions.

The Administrator also performs certain accounting and pricing services for the
Fund as pricing agent, including the daily calculation of the Fund's net asset
value.

<PAGE>

the fees and expenses of the Custodian, the fees and expenses of the
Administrator, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by the Fund, Securities and
Exchange Commission fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. The Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, including
the Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular Class of
Shares of the Fund will be borne solely by such Class.

OTHER INFORMATION

DESCRIPTION OF SHARES. The Trust was organized as a Massachusetts business trust
on August 12, 1992 under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Fund, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of five Classes
("Series A, Series C, and Series D Investor Shares," "Institutional Shares," and
"Super-Institutional Shares") representing equal pro rata interests in the
Fund, except that the Classes bear different expenses that reflect the
differences in services provided to them. Investor Shares are sold with a sales
charge (except for Series C Shares) and bear potential distribution expenses and
service fees at different levels. Institutional and Super-Institutional Shares
are sold without a sales charge and bear no shareholder servicing or
distribution fees. The Super-Institutional Shares, however, receive fewer
investor services than the Institutional and Investor Shares due to the size and
nature of accounts holding Super-Institutional Shares. As a result of different
charges, fees, and expenses between the Classes, the total return of the Fund's
Investor Shares will generally be lower than the total return on the
Institutional and Super-Institutional Shares, and the total return on the
Institutional Shares will generally be lower than the total return on the
Super-Institutional Shares. Standardized total return quotations will be
computed separately for each Class of Shares of the Fund.

THIS PROSPECTUS RELATES PRIMARILY TO THE FUND'S INSTITUTIONAL SHARES AND
DESCRIBES ONLY THE POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING
TO THE INSTITUTIONAL SHARES. THE FUND ALSO ISSUES A CLASS OF SUPER-INSTITUTIONAL
SHARES AND THREE CLASSES OF INVESTOR SHARES. SUCH OTHER CLASSES MAY HAVE
DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT PERFORMANCE. INVESTORS
MAY CALL THE FUND AT 1-800-430-3863 TO OBTAIN MORE INFORMATION CONCERNING OTHER
CLASSES AVAILABLE TO THEM THROUGH THEIR SALES REPRESENTATIVE. INVESTORS MAY
OBTAIN INFORMATION CONCERNING THOSE CLASSES FROM THEIR SALES REPRESENTATIVE, THE
DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH IS OFFERING OR MAKING AVAILABLE
TO THEM THE SECURITIES OFFERED IN THIS PROSPECTUS.

When issued, the shares of each series of the Trust, including the Fund, and
each class of shares, will be fully paid, nonassessable and redeemable. The
Trust does not intend to hold annual shareholder meetings; it may, however, hold
special shareholder meetings for purposes such as changing fundamental policies
or electing Trustees. The Board of Trustees shall promptly call a meeting for
the purpose of electing or removing Trustees when requested in writing to do so
by the record holders of a least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at least
two-thirds of the outstanding shares of the Trust may remove a Trustee from that
position either by declaration in writing filed with the Custodian or by votes
cast in person or by proxy at a meeting called for that purpose.

The Trust's shareholders will vote in the aggregate and not by series (fund) or
class, except where otherwise required by law or when the Board of Trustees
determines that the matter to be voted on affects only the interests of the
shareholders of a particular series or class. Matters affecting an individual
series, such as the Fund, include, but are not limited to, the investment
objectives, policies and restrictions of that series. Shares have no
subscription, preemptive or conversion rights. Share certificates will not be
issued. Each share is entitled to one vote (and fractional shares are entitled
to proportionate fractional votes) on all matters submitted for a vote, and
shares have equal voting rights except that only shares of a particular series
or class are entitled to vote on matters affecting only that series or class.
Shares do not have cumulative

<PAGE>

voting rights. Therefore, the holders of more than 50% of the aggregate number
of shares of all series of the Trust may elect all the Trustees.

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust and
its shares.

REPORTING TO SHAREHOLDERS. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent accountants. In addition, the
Administrator, as transfer agent, will send to each shareholder having an
account directly with the Fund a quarterly statement showing transactions in the
account, the total number of shares owned and any dividends or distributions
paid. Inquiries regarding the Fund may be directed in writing to 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069
or by calling 1-800-430-3863.

CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
average annual total return for each Class of Shares. The "average annual total
return" refers to the average annual compounded rates of return over 1, 5 and 10
year periods that would equate an initial amount invested at the beginning of a
stated period to the ending redeemable value of the investment. The calculation
assumes the reinvestment of all dividends and distributions, includes all
recurring fees that are charged to all shareholder accounts and deducts all
nonrecurring charges at the end of each period. The calculation further assumes
the maximum sales load is deducted from the initial payment. If the Fund has
been operating less than 1, 5 or 10 years, the time period during which the Fund
has been operating is substituted.

In addition, the Fund may advertise other total return performance data other
than average annual total return for each Class of Shares. This data shows as a
percentage rate of return encompassing all elements of return (i.e. income and
capital appreciation or depreciation); it assumes reinvestment of all dividends
and capital gain distributions. Such other total return data may be quoted for
the same or different periods as those for which average annual total return is
quoted. This data may consist of a cumulative percentage rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in the Fund for
various periods.

The total return of the Fund could be increased to the extent the Advisor may
waive a portion of its fees or may reimburse a portion of the Fund's expenses.
Total return figures are based on the historical performance of the Fund, show
the performance of a hypothetical investment, and are not intended to indicate
future performance. The Fund's quotations may from time to time be used in
advertisements, sales literature, shareholder reports, or other communications.
For further information, see "Additional Information on Performance" in the
Statement of Additional Information.

17
<PAGE>

GARDNER LEWIS INVESTMENT TRUST

THE CHESAPEAKE FUND - INSTITUTIONAL SHARES

PROSPECTUS

July 1, 1996

THE CHESAPEAKE FUND
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863

INVESTMENT ADVISOR
Gardner Lewis Asset Management
285 Wilmington-West Chester Pike
Chadds Ford, Pennsylvania 19317

ADMINISTRATOR, FUND ACCOUNTANT, AND
DIVIDEND DISBURSING & TRANSFER AGENT
The Nottingham Company
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069

DISTRIBUTOR
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

CUSTODIAN
Wachovia Bank of North Carolina, N.A.
301 N. Main Street
Winston-Salem, North Carolina 27102

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
1021 East Cary Street, Suite 1900
Richmond, Virginia 23219-4023

<PAGE>

Investor Class A Cusip Number 36559B203
PROSPECTUS Investor Class C Cusip Number 36559B500
Investor Class D Cusip Number 36559B302

THE CHESAPEAKE FUND
INVESTOR SHARES

The investment objective of The Chesapeake Fund (the "Fund") is to seek capital
appreciation through investments in equity securities of medium and large
capitalization companies, consisting primarily of common and preferred stocks
and securities convertible into common stocks. While there is no assurance that
the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus. The Fund has a
net asset value that will fluctuate in accordance with the value of its
portfolio securities. An investor may invest, reinvest or redeem shares at any
time.

This Prospectus relates to three Classes of shares from which investors may
choose representing interests in the Fund: Series A Investor Shares ("Series A
Shares"), Series C Investor Shares ("Series C Shares"), and Series D Investor
Shares ("Series D Shares" and, collectively with Series A Shares and Series C
Shares, "Investor Shares"). Series A and Series D Shares are sold with a sales
charge. Series C Shares are sold without a sales charge. The Investor Shares are
offered to the general public. See "Prospectus Summary - Offering Price."

INVESTMENT ADVISOR
GARDNER LEWIS ASSET MANAGEMENT
CHADDS FORD, PENNSYLVANIA

The Fund is a diversified series of the Gardner Lewis Investment Trust (the
"Trust"), a registered open-end management investment company. This Prospectus
sets forth concisely the information about the Fund that a prospective investor
should know before investing. Investors should read this Prospectus and retain
it for future reference. Additional information about the Fund has been filed
with the Securities and Exchange Commission and is available upon request and
without charge. You may request the Statement of Additional Information dated
July 1, 1996, and as amended from time to time, which is incorporated in this
Prospectus by reference, by writing the Fund at Post Office Drawer 69, Rocky
Mount, North Carolina 27802-0069, or by calling 1-800-430-3863.

The date of this Prospectus is July 1, 1996.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY............................................ 2

SYNOPSIS OF COSTS AND EXPENSES................................ 3

FINANCIAL HIGHLIGHTS.......................................... 4

INVESTMENT OBJECTIVE AND POLICIES............................. 5

RISK FACTORS.................................................. 7

INVESTMENT LIMITATIONS........................................ 8

FEDERAL INCOME TAXES.......................................... 8

DIVIDENDS AND DISTRIBUTIONS................................... 9

HOW SHARES ARE VALUED......................................... 10

HOW SHARES MAY BE PURCHASED................................... 10

HOW SHARES MAY BE REDEEMED.................................... 16

MANAGEMENT OF THE FUND........................................ 18

OTHER INFORMATION............................................. 19

THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES DESCRIBED HEREIN IN ANY
STATE IN WHICH THE OFFERING IS UNAUTHORIZED. NO SALES REPRESENTATIVE, DEALER OR
OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.

<PAGE>

PROSPECTUS SUMMARY

The Fund The Chesapeake Fund (the "Fund") is a diversified series
of the Gardner Lewis Investment Trust (the "Trust"), a
registered open-end management investment company
organized as a Massachusetts business trust. This
Prospectus relates to Investor Shares of the Fund. See
"Other Information - Description of Shares."

Offering Price The Investor Shares are offered to the general public at
net asset value plus a 3% sales charge for Series A
Shares and a 1.5% sales charge for Series D Shares,
which sales charge is reduced on purchases involving
larger amounts. The Series C Shares are offered at net
asset value without a sales charge. The Investor Shares
are also subject to potential 12b-1 distribution and
service fees annually of up to 0.25%, 0.75%, and 0.50%,
respectively, of the average net assets of the Series A,
Series C, and Series D Shares, respectively. See
"Distributor and Distribution Fee" below. The minimum
initial investment is $25,000. The minimum subsequent
investment is $500. See "How Shares May be Purchased."

Investment The investment objective of the Fund is to seek capital
Objective and appreciation through investments in equity securities of
Special Risk medium and large capitalization companies, consisting
Considerations primarily of common and preferred stocks and securities
convertible into common stocks. Realization of current
income is not a significant investment consideration,
and any income realized will be incidental to the Fund's
objective. See "Investment Objective and Policies." The
Fund is not intended to be a complete investment
program, and there can be no assurance that the Fund
will achieve its investment objective. While the Fund
will invest primarily in common stocks traded in U.S.
securities markets, some of the Fund's investments may
include foreign securities, illiquid securities, and
securities purchased subject to a repurchase agreement
or on a "when-issued" basis, which involve certain
risks. The Fund may borrow only under certain limited
conditions (including to meet redemption requests) and
not to purchase securities. It is not the intent of the
Fund to borrow except for temporary cash requirements.
Borrowing, if done, would tend to exaggerate the effects
of market and interest rate fluctuations on the Fund's
net asset value until repaid. See "Risk Factors."

Manager Subject to the general supervision of the Trust's Board
of Trustees and in accordance with the Fund's investment
policies, Gardner Lewis Asset Management of Chadds Ford,
Pennsylvania (the "Advisor") manages the Fund's
investments. The Advisor currently manages approximately
$3 billion in assets. For its advisory services, the
Advisor receives a monthly fee based on the Fund's daily
net assets at the annual rate of 1.00%. See "Management
of the Fund - The Advisor."

Dividends Income dividends, if any, are paid at least annually;
capital gains, if any, are distributed at least annually
or retained for reinvestment by the Fund. Dividends and
capital gains distributions are automatically reinvested
in additional shares of the same Class at net asset
value unless the shareholder elects to receive cash. See
"Dividends and Distributions."

Distributor and Capital Investment Group, Inc. (the "Distributor")
Distribution Fee serves as distributor of shares of the Fund. For its
services, which include payments to qualified securities
dealers for sales of Fund shares, the Distributor
receives commissions consisting of the portion of the
sales charge for Series A and Series D Shares remaining
after the discounts it allows to securities dealers.
Under the Fund's Distribution Plan with respect to each
class of Investor Shares, expenditures by the Fund for
distribution activities and service fees annually may
not exceed 0.25%, 0.75%, and 0.50%, respectively, of the
average net assets of the Series A, Series C, and Series
D Shares, respectively. See "How Shares May Be Purchased
- Sales Charges" and "- Distribution Plan."

Redemption of There is no charge for redemptions. Shares may be
Shares redeemed at any time at the net asset value next
determined after receipt of a redemption request by the
Fund. A shareholder who submits appropriate written
authorization may redeem shares by telephone. See "How
Shares May Be Redeemed."

<PAGE>

SYNOPSIS OF COSTS AND EXPENSES

The following tables set forth certain information in connection with the
expenses of the Investor Shares of the Fund for the current fiscal year. The
information is intended to assist the investor in understanding the various
costs and expenses borne by the Investor Shares of the Fund, and therefore
indirectly by its investors, the payment of which will reduce an investor's
return on an annual basis.

SHAREHOLDER TRANSACTION EXPENSES FOR INVESTOR SHARES

Series A Series C Series D

Maximum sales load imposed on purchases
(as a percentage of offering price) 3.00%(1) None 1.50%(1)
Maximum sales charge imposed
on reinvested dividends.... None None None
Deferred sales load......... None None None
Redemption fees............. None None None
Exchange fee................ None None None

ANNUAL FUND OPERATING EXPENSES FOR INVESTOR SHARES
AFTER FEE WAIVERS(2)

(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Series A Series C Series D

Investment advisory fees.... 0.84%(2) 0.84%(2) 0.84%(2)
12b-1 fees.................. 0.24%(3) 0.71%(3) 0.26%(3)
Other expenses.............. 0.63%(2) 0.63%(2) 0.63%(2)
----- ---- ----
Total operating expenses.. 1.71%(2) 2.18%(2) 1.73%(2)
===== ==== ====

EXAMPLE: You would pay the following expenses (including the maximum initial
sales charge) on a $1,000 investment in Investor Shares of the Fund, whether or
not you redeem at the end of the period, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C>
Series A $47 $82 $120 $226
Series C $22 $68 $117 $251
Series D $32 $69 $107 $216
</TABLE>
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

1 Reduced for larger purchases. See "How Shares May Be Purchased - Sales
Charges."

2 The "Total operating expenses" shown above are based upon actual operating
expenses incurred by the Investor Shares of the Fund for the fiscal period
ended February 29, 1996, which, after fee waivers, were 1.71%, 2.18%, and
1.73% of average daily net assets of the Series A, Series C, and Series D
Investor Shares, respectively. Absent such waivers, the "Investment advisory
fees," "12b-1 fees," and "Total operating expenses" for the Investor Shares
of the Fund for the fiscal period ended February 29, 1996 would have been
1.00%, 0.25%, and 1.88%, respectively, of average daily net assets of the
Series A Shares, 1.00%, 0.75%, and 2.38%, respectively, of average daily net
assets of the Series C Shares, and 1.00%, 0.50%, and 2.13%, respectively, of
average daily net assets of the Series D Shares. There can be no assurance
that the Advisor's voluntary fee waivers and expense reimbursements in the
past will continue in the future. The investment advisory fee is higher than
that paid by most other investment companies. The Advisor anticipates that
the percentage shown under "Other expenses" will decline as assets of the
Fund grow.

3 The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), with respect to
each Class of Investor Shares, which provides that the Fund may pay certain
distribution expenses and service fees annually with respect to the Investor
Shares up to 0.25%, 0.75%, and 0.50%, respectively, of the average net assets
of the Series A, Series C, and Series D Shares, respectively. See "How Shares
May Be Purchased - Distribution Plan." Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers.

See "How Shares May Be Purchased" and "Management of the Fund" below for more
information about the fees and costs of operating the Fund. The assumed 5%
annual return in the example is required by the Securities and Exchange
Commission. THE HYPOTHETICAL RATE OF RETURN IS NOT INTENDED TO BE REPRESENTATIVE
OF PAST OR FUTURE PERFORMANCE OF THE FUND; THE ACTUAL RATE OF RETURN FOR THE
FUND MAY BE GREATER OR LESS THAN 5%.

<PAGE>

FINANCIAL HIGHLIGHTS

The shares of the Fund are divided into multiple Classes representing interests
in the Fund. This Prospectus relates to Investor Shares. See "Other Information
- - Description of Shares." The financial data included in the table below has
been derived from audited financial statements of the Fund. The financial data
for the fiscal period ended February 29, 1996 has been audited by KPMG Peat
Marwick LLP, independent accountants, whose report covering such period is
included in the Statement of Additional Information. The information in the
table below should be read in conjunction with the Fund's audited financial
statements and notes thereto, which are also included in the Statement of
Additional Information, a copy of which may be obtained at no charge by calling
the Fund. Further information about the performance of the Fund is contained in
the Annual Report of the Fund, a copy of which may be obtained at no charge by
calling the Fund.

INVESTOR SHARES

(For a Share Outstanding Throughout the Period)

<TABLE>
<CAPTION>
FOR THE PERIOD FROM APRIL 7, 1995
(COMMENCEMENT OF OPERATIONS) TO FEBRUARY 29, 1996

SERIES A SERIES C SERIES D
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.79 $11.79 $11.79
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment loss (0.06) (0.12) (0.11)
Net realized and unrealized gain on
investments 2.88 2.86 2.92
TOTAL FROM INVESTMENT OPERATIONS 2.82 2.74 2.81
------- ------- -------

DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gain from investment
transactions (0.11) (0.11) (0.11)
Tax return of capital (0.08) (0.08) (0.08)

TOTAL DISTRIBUTIONS (0.19) (0.19) (0.19)
----- ----- -----

NET ASSET VALUE, END OF PERIOD $14.42 $14.34 $14.41
====== ====== ======
TOTAL RETURN 23.86%(a) 23.18%(a) 23.77%(a)

RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $32,548,733 $7,907,607 $11,929,234
=========== ========== ===========
RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense reimbursements 1.88%(b) 2.38%(b) 2.13% (b)
After expense reimbursements 1.71%(b) 2.18%(b) 1.73% (b)

RATIO OF NET INVESTMENT LOSS TO AVERAGE
NET ASSETS
Before expense reimbursements (1.20)%(b) (1.77)%(b) (1.54)%(b)
After expense reimbursements (1.04)%(b) (1.57)%(b) (1.14)%(b)

PORTFOLIO TURNOVER RATE 99.33% 99.33% 99.33%

</TABLE>

(a) Total return does not reflect payment of a sales charge. Annualized total
return for the period is 26.89%, 26.11%, and 26.79%, respectively, for the
Series A, Series C, and Series D Investor Shares.

(b) Annualized.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek capital
appreciation through investments in equity securities of medium and large
capitalization companies, consisting primarily of common and preferred stocks
and securities convertible into common stocks. Realization of current income
will not be a significant investment consideration, and any such income realized
should be considered incidental to the Fund's objective. The Fund's investment
objective and fundamental investment limitations described herein may not be
altered without the prior approval of a majority of the Fund's shareholders.

INVESTMENT SELECTION. The Fund's portfolio will include equity securities which
the Advisor feels show superior prospects for growth. The Advisor will focus
attention on proven medium and large capitalization companies which, in the view
of the Advisor, exhibit internal changes such as a promising new product, new
distribution strategy, new manufacturing technology, or new management team or
management philosophy. Many of the portfolio companies will be responsible for
technological breakthroughs and/or unique solutions to market needs. Investing
in companies which are undergoing internal change, such as implementing new
strategies or introducing new technologies, may involve greater than average
risk due to their unproven nature. By focusing upon internal rather than
external factors, the Fund will seek to minimize the risk associated with
macro-economic forces such as changes in commodity prices, currency exchange
rates and interest rates.

While portfolio securities are generally acquired for the long term, they may be
sold under any of the following circumstances:

<PAGE>

U.S. GOVERNMENT SECURITIES. The Fund may invest a portion of the portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Administration ("FHA"), Federal Farm Credit Bank ("FFCB"), Federal Home Loan
Bank ("FHLB"), Student Loan Marketing Association ("SLMA"), Resolution Trust
Corporation, and The Tennessee Valley Authority. U.S. Government Securities may
be acquired subject to repurchase agreements. While obligations of some U.S.
Government sponsored entities are supported by the full faith and credit of the
U.S. Government (e.g. GNMA), several are supported by the right of the issuer to
borrow from the U.S. Government (e.g. FNMA, FHLMC), and still others are
supported only by the credit of the issuer itself (e.g. SLMA, FFCB). No
assurances can be given that the U.S. Government will provide financial support
to U.S. Government agencies or instrumentalities in the future, other than as
set forth above, since it is not obligated to do so by law. The guarantee of the
U.S. Government does not extend to the yield or value of the Fund's shares.

<PAGE>

The Fund may invest in both sponsored and unsponsored ADRs. Unsponsored ADR
programs are organized independently and without the cooperation of the issuer
of the underlying foreign securities. As a result, available information
concerning the issuer may not be as current as for sponsored ADRs, and the
prices of unsponsored ADRs may be more volatile than if such instruments were
sponsored by the issuer. The issuers of the securities underlying unsponsored
ADRs are not obligated to disclose material information in the U.S. and,
therefore, there may be no correlation between such information and the market
value of the ADRs. Because of the additional risks inherent in unsponsored ADRs,
the Fund will tend to invest in sponsored ADRs over unsponsored ADRs, to the
extent it invests in ADRs.

RISK FACTORS

<PAGE>

capitalization companies. Because there is risk in any investment, there can be
no assurance that the Fund will achieve its investment objective.

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when- issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-
issued or forward commitment basis with the intention of acquiring securities
for its portfolio, the Fund may dispose of a when-issued security or forward
commitment prior to settlement if the Advisor deems it appropriate to do so. The
Fund may realize short-term gains or losses upon such sales.

INVESTMENT LIMITATIONS

<PAGE>

total assets in foreign securities (which shall not be deemed to include ADRs);
and (8) invest more than 25% of the Fund's total assets in the securities of
issuers in any one industry. See "Investment Limitations" in the Fund's
Statement of Additional Information for a complete list of investment
limitations.

If the Board of Trustees of the Trust determines that the Fund's investment
objective can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will not constitute a
violation of such limitation. In order to permit the sale of the Fund's shares
in certain states, the Fund may make commitments that are more restrictive than
the investment policies and limitations described above and in the Statement of
Additional Information. Such commitments may have an effect on the investment
performance of the Fund. Should the Fund determine that any such commitment is
no longer in the best interests of the Fund, it may revoke the commitment and
terminate sales of its shares in the state involved.

FEDERAL INCOME TAXES

<PAGE>

purchase shares. If a shareholder of the Fund has not complied with the
applicable statutory and IRS requirements, the Fund is generally required by
federal law to withhold and remit to the IRS 31% of reportable payments (which
may include dividends and redemption amounts).

DIVIDENDS AND DISTRIBUTIONS

Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Class of the Fund at the net asset value per share next determined. Reinvested
dividends and capital gains are exempt from any sales load. Shareholders wishing
to receive their dividends or capital gains in cash may make their request in
writing to the Fund at 105 North Washington Street, Post Office Drawer 69, Rocky
Mount, North Carolina 27802-0069. That request must be received by the Fund
prior to the record date to be effective as to the next dividend. If cash
payment is requested, checks will be mailed within five business days after the
distribution of the dividends or capital gains, as applicable. Each shareholder
of the Fund will receive a quarterly summary of his or her account, including
information as to reinvested dividends from the Fund. Tax consequences to
shareholders of dividends and distributions are the same if received in cash or
in additional shares of the Fund.

In order to satisfy certain requirements of the Code, the Fund may declare a
special year-end dividend and capital gains distributions during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.

There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. The Fund's net investment
income available for distribution to holders of Investor Shares will be reduced
by the amount of any expenses allocated to the Investor Shares, and any expenses
allocated among the Classes of the Investor Shares, including the distribution
and service fees under the Fund's Distribution Plan, which vary depending on the
particular Class of the Investor Shares.

HOW SHARES ARE VALUED

The net asset value of each Class of Shares will be affected by expenses accrued
and payable by such Class. Because the distribution and service fees
attributable to the Investor Shares vary depending on the particular Class of
the Investor Shares in question, the net income attributable to and the
dividends payable by the Series C Shares will be lower than the net income
attributable to and the dividends payable by the Series A and Series D Shares,
and the net income attributable to and the dividends payable by the Series D
Shares will be lower than the net income attributable to and the dividends
payable by the Series A Shares.

<PAGE>

HOW SHARES MAY BE PURCHASED

Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-430-3863, or by writing to the Fund at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Fund. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
the Fund's public offering price next determined after your order is received by
the Fund in proper form as indicated herein.

The minimum initial investment is $25,000. The minimum subsequent investment is
$500. The Fund may, in the Advisor's sole discretion, accept certain accounts
with less than the stated minimum initial investment. You may invest in the
following ways:

PURCHASES BY MAIL. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the Fund, to The Chesapeake Fund, Investor Shares, 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069. Subsequent investments in an existing account in the Fund may be
made at any time by sending a check payable to the Fund, to the address stated
above. Please enclose the stub of your account statement and include the amount
of the investment, the name of the account for which the investment is to be
made and the account number. PLEASE REMEMBER TO ADD A REFERENCE TO "SERIES A,"
"SERIES C," OR "SERIES D" TO YOUR CHECK TO ENSURE PROPER CREDIT TO YOUR ACCOUNT.

Wachovia Bank of North Carolina, N.A.
Winston-Salem, North Carolina
ABA # 053100494
For credit to the Rocky Mount Office
For The Chesapeake Fund
Investor Shares
Acct #6764-020807
For further credit to (shareholder's name and SS# or EIN#)

GENERAL. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders become effective, and shares are purchased at, the next
determined public offering price per share after an investment has been received
by the Fund, which is as of 4:00 p.m., New York time, Monday through Friday,
exclusive of business holidays. Orders received by the Fund and effective prior
to such 4:00 p.m. time will purchase shares at the public offering price
determined at that time. Otherwise, your order will purchase shares as of such
4:00 p.m. time on the next business day. For orders placed through a qualified
broker-dealer, such firm is responsible for promptly transmitting purchase
orders to the Fund. Investors may be charged a fee if they effect transactions
in the Fund shares through a broker or agent.

<PAGE>

SALES CHARGES. The public offering price of Investor Shares of the Fund equals
net asset value plus a sales charge for Series A and Series D Shares. Series C
Shares are sold without a sales charge. Capital Investment Group, Inc. (the
"Distributor") receives this sales charge as Distributor and may reallow it in
the form of dealer discounts and brokerage commissions as follows:

<TABLE>
<CAPTION>
Sales Sales
Charge As Charge As Dealers Discounts
% of Net % of Public and Brokerage
Amount of Transaction Amount Offering Commissions as % of
At Public Offering Price Invested Price Public Offering Price
<S> <C>
Series A Shares
Less than $250,000................... 3.09% 3.00% 2.80%
$250,000 but less than $500,000...... 2.04% 2.00% 1.80%
$500,000 or more..................... 1.01% 1.00% 0.90%

Series D Shares
Less than $250,000................... 1.52% 1.50% 1.35%
$250,000 but less than $500,000...... 1.01% 1.00% 0.90%
$500,000 or more..................... 0.50% 0.50% 0.45%
</TABLE>

At times the Distributor may reallow the entire sales charge to selected
dealers. From time to time dealers who receive dealer discounts and brokerage
commissions from the Distributor may reallow all or a portion of such dealer
discounts and brokerage commissions to other dealers or brokers. Pursuant to the
terms of the Distribution Agreement, the sales charge payable to the Distributor
and the dealer discounts may be suspended, terminated or amended. Dealers who
receive 90% or more of the sales charge may be deemed to be "underwriters" under
the Securities Act of 1933, as amended.

The dealer discounts and brokerage commissions schedule above applies to all
dealers who have agreements with the Distributor. The Distributor, at its
expense, may also provide additional compensation to dealers in connection with
sales of shares of the Fund. Compensation may include financial assistance to
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising campaigns regarding the Fund,
and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

<PAGE>

REDUCED SALES CHARGES

CONCURRENT PURCHASES. For purposes of qualifying for a lower sales charge
for Series A or Series D Shares, investors have the privilege of combining
concurrent purchases of the Fund and any other series of the Trust affiliated
with the Advisor and sold with a sales charge. For example, if a shareholder
concurrently purchases shares in another series of the Trust affiliated with the
Advisor and sold with a sales charge at the total public offering price of
$250,000, and Series A Shares in the Fund at the total public offering price of
$250,000, the sales charge would be that applicable to a $500,000 purchase as
shown in the appropriate table above. This privilege may be modified or
eliminated at any time or from time to time by the Trust without notice thereof.

RIGHTS OF ACCUMULATION. Pursuant to the right of accumulation, investors are
permitted to purchase shares at the public offering price applicable to the
total of (a) the total public offering price of the Series A or Series D Shares
of the Fund then being purchased plus (b) an amount equal to the then current
net asset value of the purchaser's combined holdings of the shares of all of the
series of the Trust affiliated with the Advisor of the same Class and sold with
a sales charge. To receive the applicable public offering price pursuant to the
right of accumulation, investors must, at the time of purchase, provide
sufficient information to permit confirmation of qualification, and confirmation
of the purchase is subject to such verification. This right of accumulation may
be modified or eliminated at any time or from time to time by the Trust without
notice.

LETTERS OF INTENT. Investors may qualify for a lower sales charge for Series
A or Series D Shares by executing a letter of intent. A letter of intent allows
an investor to purchase Series A or Series D Shares of the Fund (as applicable)
over a 13-month period at reduced sales charges based on the total amount
intended to be purchased of the applicable Class plus an amount equal to the
then current net asset value of the purchaser's combined holdings of the shares
of all of the series of the Trust affiliated with the Advisor of the same Class
and sold with a sales charge. Thus, a letter of intent permits an investor to
establish a total investment goal to be achieved by any number of purchases over
a 13-month period. Each investment made during the period receives the reduced
sales charge applicable to the total amount of the intended investment.

The letter of intent does not obligate the investor to purchase, or the Fund to
sell, the indicated amount. If such amount is not invested within the period,
the investor must pay the difference between the sales charge applicable to the
purchases made and the charges previously paid. If such difference is not paid
by the investor, the Distributor is authorized by the investor to liquidate a
sufficient number of shares held by the investor to pay the amount due. On the
initial purchase of shares, if required (or subsequent purchases, if necessary)
shares equal to at least five percent of the amount indicated in the letter of
intent will be held in escrow during the 13-month period (while remaining
registered in the name of the investor) for this purpose. The value of any
shares redeemed or otherwise disposed of by the investor prior to termination or
completion of the letter of intent will be deducted from the total purchases
made under such letter of intent.

A 90-day back-dating period can be used to include earlier purchases of the
applicable Class at the investor's cost (without a retroactive downward
adjustment of the sales charge); the 13-month period would then begin on the
date of the first purchase during the 90-day period. No retroactive adjustment
will be made if purchases exceed the amount indicated in the letter of intent.
Investors must notify the Administrator or the Distributor whenever a purchase
is being made pursuant to a letter of intent.

Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Fund Shares
Application accompanying this Prospectus or is otherwise available from the
Administrator or the Distributor. This letter of intent option may be modified
or eliminated at any time or from time to time by the Trust without notice.

REINVESTMENTS. Investors may reinvest, without a sales charge, proceeds from
a redemption of Series A or Series D Shares of the Fund in either Series A or
Series D Shares of the Fund (as applicable) or in shares of another series of
the Trust affiliated with the Advisor of the same Class and sold with a sales
charge, within 90 days after the redemption. If the other class charges a sales
charge higher than the sales charge the investor paid in connection with the
shares redeemed, the investor must pay the difference. In addition, the shares
of the class to be acquired must be registered for sale in the investor's state
of residence. The amount that may be so reinvested may not exceed the amount of
the redemption proceeds,

<PAGE>

00000000000 and a written order for the purchase of such shares must be received
by the Fund or the Distributor within 90 days after the effective date of the
redemption.

If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number of
shares purchased by reinvestment and the period of time that has elapsed after
the redemption, although for tax purposes, the amount disallowed is added to the
cost of the shares acquired upon the reinvestment.

PURCHASES BY RELATED PARTIES AND GROUPS. Reductions in sales charges apply
to purchases by a single "person," including an individual, members of a family
unit, consisting of a husband, wife and children under the age of 21 purchasing
securities for their own account, or a trustee or other fiduciary purchasing for
a single fiduciary account or single trust estate.

Reductions in sales charges also apply to purchases by individual members of a
"qualified group." The reductions are based on the aggregate dollar value of
shares purchased by all members of the qualified group and still owned by the
group plus the shares currently being purchased. For purposes of this paragraph,
a qualified group consists of a "company," as defined in the 1940 Act, which has
been in existence for more than six months and which has a primary purpose other
than acquiring shares of the Fund at a reduced sales charge, and the "related
parties" of such company. For purposes of this paragraph, a "related party" of a
company is: (i) any individual or other company who directly or indirectly owns,
controls, or has the power to vote five percent or more of the outstanding
voting securities of such company; (ii) any other company of which such company
directly or indirectly owns, controls, or has the power to vote five percent of
more of its outstanding voting securities; (iii) any other company under common
control with such company; (iv) any executive officer, director or partner of
such company or of a related party; and (v) any partnership of which such
company is a partner.

SALES AT NET ASSET VALUE. The Fund may sell shares at a purchase price equal
to the net asset value of such shares, without a sales charge, to Trustees,
officers, and employees of the Trust, the Fund, and the Advisor, and to
employees and principals of related organizations and their families and certain
parties related thereto, including clients and related accounts of the Advisor.
In addition, the Fund may sell shares at a purchase price equal to the net asset
value of such shares, without a sales charge, to investment advisors, financial
planners and their clients who are charged a management, consulting or other fee
for their services; and clients of such investment advisors or financial
planners who place trades for their own accounts if the accounts are linked to
the master account of such investment advisor or financial planner on the books
and records of the broker or agent. The public offering price of shares of the
Fund may also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal holding
company or a public or private investment company.

DISTRIBUTION PLAN. Capital Investment Group, Inc., Post Office Box 32249,
Raleigh, North Carolina 27622 (the "Distributor"), is the national distributor
for the Fund under a Distribution Agreement with the Trust. The Distributor may
sell Fund shares to or through qualified securities dealers or others.

The Trust has adopted a Distribution Plan (the "Plan") for each Class of the
Investor Shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. Under the
Plan the Fund may reimburse any expenditures to finance any activity primarily
intended to result in sale of the Investor Shares of the Fund or the servicing
of shareholder accounts, including, but not limited to, the following: (i)
payments to the Distributor, securities dealers, and others for the sale of
Investor Shares of the Fund; (ii) payment of compensation to and expenses of
personnel who engage in or support distribution of Investor Shares of the Fund
or who render shareholder support services not otherwise provided by the
Administrator or Custodian; and (iii) formulation and implementation of
marketing and promotional activities. The categories of expenses for which
reimbursement is made are approved by the Board of Trustees of the Trust.
Expenditures by the Fund pursuant to the Plan are accrued based on the Investor
Shares' average daily net assets (of the particular Class in question) and may
not exceed 0.25%, 0.75%, 0.50%, respectively, of the average net assets of the
Series A, Series C, and Series D Shares, respectively, for each year elapsed
subsequent to adoption of the Plan. Such expenditures paid as service fees to
any person who sells Fund shares may not exceed 0.25% of the Investor Shares'
average annual net asset value of such shares of the particular Class in
question.

<PAGE>

The Plan may not be amended to increase materially the amount to be spent under
the Plan without shareholder approval. The continuation of the Plan must be
approved by the Board of Trustees annually. At least quarterly the Board of
Trustees must review a written report of amounts expended pursuant to the Plan
and the purposes for which such expenditures were made.

The Fund incurred $32,342, $31,522, and $40,697 in distribution and service fees
under the Plan with respect to Series A, Series C, and Series D Investor Shares,
respectively, for the fiscal period ended February 29, 1996. The Distributor has
voluntarily waived a portion of such distribution and service fees under the
Plan amounting to $20,409 for the fiscal period ending February 29, 1996.

CHOOSING AMONG INVESTOR SHARES

Investors who purchase Investor Shares must specify at the time of purchase
whether they are purchasing Series A, Series C, or Series D Shares Investor
Shares. Investors should understand the differences between each such Class of
Investor Shares before purchasing Investor Shares.

As described under "How Shares May Be Purchased - Sales Charges," the Series A
Shares are sold subject to a maximum sales charge of 3%, as compared to a
maximum sales charge of 1.5% for sales of Series D Shares and no sales charge
for Series C Shares. The sales charge is reduced or may be waived in some cases.
Series A Shares, however, bear potential distribution and service fees under the
Distribution Plan of up to 0.25% of the Series A Shares' average net assets
annually, as compared to potential distribution and service fees under the
Distribution Plan for the other Classes of Investor Shares of up to 0.50% and
0.75%, respectively, of the Series D and Series C Shares' average net assets
annually, respectively. See "How Shares May Be Purchased - Distribution Plan."

Before deciding among the three Classes of Investor Shares of the Fund, an
investor should carefully consider the amount and intended length of his or her
investment in Investor Shares. Specifically, an investor should consider whether
the accumulated distribution and servicing fees applicable to Series C or Series
D Shares (and the lower sales charge for Series D Shares) would be less than the
sales charge and accumulated distribution and servicing fees applicable to
Series A Shares purchased at the same time and held for the same period, and the
extent to which the differences between those amounts would be offset by the
higher returns associated with Series A Shares. A similar analysis should be
made between Series C Shares and Series D Shares. Because the operating expenses
of Series C and Series D Shares will be greater than those of Series A Shares,
and the operating expenses of Series C Shares will be greater than those of
Series D Shares, the dividends on Series A Shares will be higher than the
dividends on Series C and Series D Shares, and the dividends on Series D Shares
will be higher than the dividends on Series C Shares. However, since the sales
charge is deducted at the time of purchase of Series A or Series D Shares, not
all of the purchase amount will purchase Series A or Series D Shares.
Consequently, the same initial investment will purchase more Series C or Series
D Shares than Series A Shares, and more Series C Shares than Series D Shares.

Because of reductions in the sales charge for purchases of Series A or Series D
Shares aggregating $250,000 or more, it may be advantageous for investors
purchasing large quantities of Investor Shares to purchase Series A or Series D
Shares. Investors who may qualify for any exemption from the sales charge
ordinarily payable with respect to purchases of Investor Shares should purchase
Series A Shares. In addition, because the accumulated higher operating expenses
of Series C and Series D Shares may exceed the amount of the sales charge and
distribution and servicing fees associated with Series A Shares, investors who
intend to hold their Investor Shares for an extended period of time should
consider purchasing Series A Shares.

Investors who would not qualify for a reduction in the sales charge for
purchases of Series A or Series D Shares may decide that it is more advantageous
to have the entire purchase amount invested immediately in Series C Shares
notwithstanding the higher operating expenses associated with Series C Shares.
These higher operating expenses may be offset by any return an investor receives
from the additional Series C Shares received as a result of not having to pay a
sales charge. However, an investor should understand that the Fund's future
return cannot be predicted, and that there is no assurance that such return, if
any, would compensate for the higher operating expenses associated with Series C
Shares.

<PAGE>

EXCHANGE FEATURE. Investors will have the privilege of exchanging shares of the
Fund for shares of any other series of the Trust established by Advisor. An
exchange involves the simultaneous redemption of shares of one series and
purchase of shares of another series at the respective closing net asset value
next determined after a request for redemption has been received plus applicable
sales charge, and is a taxable transaction. Each series of the Trust will have a
different investment objective, which may be of interest to investors in each
series. Shares of the Fund may be exchanged for shares of any other series of
the Trust affiliated with the Advisor at the net asset value plus the percentage
difference between that series' sales charge and any sales charge previously
paid in connection with the shares being exchanged. For example, if a 2% sales
charge was paid on shares that are exchanged into a series with a 3% sales
charge, there would be an additional sales charge of 1% on the exchange.
Exchanges may only be made by investors in states where shares of the other
series are qualified for sale. An investor may direct the Fund to exchange his
shares by writing to the Fund at its principal office. The request must be
signed exactly as the investor's name appears on the account, and it must also
provide the account number, number of shares to be exchanged, the name of the
series to which the exchange will take place and a statement as to whether the
exchange is a full or partial redemption of existing shares. Notwithstanding the
foregoing, exchanges of shares may only be within the same class or type of
class of shares involved. For example, Investor Shares may not be exchanged for
Institutional or Super-Institutional Shares, and Investor Shares may not be
exchanged among the various Classes of Investor Shares (i.e., Series C Shares
may not be exchanged for Series A or Series D Shares and Series D Shares may not
be exchanged for Series A Shares). Notwithstanding the foregoing, unless
otherwise determined by the Fund, an investor may not exchange shares of the
Fund for shares of The Chesapeake Growth Fund, another series of the Trust
affiliated with the Advisor, unless such investor has an existing account with
such Fund.

AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($100 minimum), which will be automatically invested in
shares at the public offering price on or about the 21st day of the month. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.

STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, Monday through Friday, except for business holidays, will redeem
shares at the net asset value determined at that time. Otherwise, your order
will redeem shares as of such 4:00 p.m. time on the next business day. There is
no charge for redemptions from the Fund. You may also redeem your shares through
a broker-dealer or other institution, who may charge you a fee for its services.

The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $25,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $25,000 or more during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.

<PAGE>

If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-430-3863, or write to the address shown below.

REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Chesapeake
Fund, Investor Shares, 105 North Washington Street, Post Office Drawer 69, Rocky
Mount, North Carolina 27802-0069. Your request for redemption must include:

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. Shareholders can choose to have
redemption proceeds mailed to them at their address of record, their bank, or to
any other authorized person, or they can have the proceeds sent by bank wire to
their bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which the bank is not open for business. Shareholders can change
redemption instructions anytime by filing a letter including new redemption
instructions with the Fund. (See "Signature Guarantees" below.) The Fund
reserves the right to restrict or cancel telephone and bank wire redemption
privileges for shareholders, without notice, if the Fund believes it to be in
the best interest of the shareholders to do so. During drastic economic and
market changes, telephone redemption privileges may be difficult to implement.

<PAGE>

file with the Fund. Telephone redemption privileges authorize the Fund to act on
telephone instructions from any person representing himself or herself to be the
investor and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and, if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.

SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of the Fund valued at
$10,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from the account to meet the specified withdrawal amount. Call
or write the Fund for an application form. See the Statement of Additional
Information for further details.

SIGNATURE GUARANTEES. To protect an account and the Fund from fraud, signature
guarantees are required to authorize a change in registration, or standing
instructions, for your account. Signature guarantees are required for (1) change
of registration requests, (2) requests to establish or change exchange
privileges or telephone redemption service other than through the initial
account application, and (3) requests for redemptions in excess of $50,000.
Signature guarantees are acceptable from a member bank of the Federal Reserve
System, a savings and loan institution, credit union (if authorized under state
law), registered broker-dealer, securities exchange or association clearing
agency, and must appear on the written request for redemption, establishment or
change in exchange privileges, or change of registration.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS. The Fund is a diversified series of the Gardner Lewis
Investment Trust (the "Trust"), a registered open-end management investment
company organized as a Massachusetts business trust. The Board of Trustees of
the Trust is responsible for the management of the business and affairs of the
Trust. The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth in the Statement of Additional
Information under "Management of the Fund - Trustees and Officers." The Board of
Trustees of the Trust is primarily responsible for overseeing the conduct of the
Trust's business. The Board of Trustees elects the officers of the Trust who are
responsible for its and the Fund's day-to-day operations.

Under the Advisory Agreement with the Fund, the Advisor receives a monthly
management fee equal to an annual rate of 1.00% of the average daily net asset
value of the Fund. Although the investment advisory fee is higher than that paid
by most other investment companies, the Board of Trustees believes the fee to be
comparable to advisory fees paid by many funds having similar objectives and
policies. The Advisor may voluntarily waive or reduce its advisory fee
periodically to increase the net income of the Fund. The Advisor has voluntarily
waived a portion of its fee for the fiscal year ended February 29, 1996. The
total fees waived amounted to $98,808 (the Advisor received $545,139 of its
fee).

The Advisor supervises and implements the investment activities of the Fund,
including making specific decisions as to the purchase and sale of portfolio
investments. Among the responsibilities of the Advisor under the Advisory
Agreement is the selection of brokers and dealers through whom transactions in
the Fund's portfolio investments will be effected. The Advisor

<PAGE>

attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
the Fund may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. For further information, see
"Investment Objective and Policies - Investment Transactions" in the Statement
of Additional Information.

THE ADMINISTRATOR. The Trust has entered into an Administration Agreement with
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.075% of the average daily
net assets of the Investor Shares of the Fund. In addition, the Administrator
currently receives a base monthly fee of $1,750 for each Class of shares for
accounting and recordkeeping services for the Fund. The Administrator also
charges the Fund for certain costs involved with the daily valuation of
investment securities and is reimbursed for out-of-pocket expenses.

The Administrator was incorporated as a North Carolina corporation in 1988 and
converted to a North Carolina limited liability company in 1995. With its
predecessors and affiliates, the Administrator has been operating as a financial
services firm since 1985. Frank P. Meadows III, Chairman and Trustee of the
Trust, is the firm's Managing Director and controlling member.

The Administrator also performs certain accounting and pricing services for the
Fund as pricing agent, including the daily calculation of the Fund's net asset
value.

OTHER EXPENSES. The Fund is responsible for the payment of its expenses. These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Fund's
assets, the fees and expenses of the Custodian, the fees and expenses of the
Administrator, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by the Fund, Securities and
Exchange Commission fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. The Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, including
the Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular Class of
Shares of the Fund will be borne solely by such Class.

<PAGE>

OTHER INFORMATION

DESCRIPTION OF SHARES. The Trust was organized as a Massachusetts business trust
on August 12, 1992 under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Fund, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of five Classes
("Series A, Series C, and Series D Investor Shares," "Institutional Shares," and
Super-Institutional Shares") representing equal pro rata interests in the Fund,
except that the Classes bear different expenses that reflect the differences in
services provided to them. Investor Shares are sold with a sale charge (except
for Series C Shares) and bear potential distribution expenses and service fees
at different levels. See "How Shares May Be Purchased - Sales Charges" and " -
Distribution Plan." Institutional and Super-Institutional Shares are sold
without a sales charge and bear no shareholder servicing or distribution fees.
The Super-Institutional Shares, however, receive fewer investor services than
the Institutional and Investor Shares due to the size and nature of accounts
holding Super-Institutional Shares. As a result of different charges, fees, and
expenses between the Classes, the total return on the Fund's Investor Shares
will generally be lower than the total return on the Institutional and
Super-Institutional Shares, the total return on the Fund's Series C Shares will
generally be lower than the total return on the Series A and Series D Shares,
and the total return on the Series D Shares will generally be lower than the
total return on the Series A Shares. Standardized total return quotations will
be computed separately for each Class of Shares of the Fund.

THIS PROSPECTUS RELATES TO THE FUND'S INVESTOR SHARES (INCLUDING THE THREE
CLASSES OF INVESTOR SHARES) AND DESCRIBES ONLY THE POLICIES, OPERATIONS,
CONTRACTS, AND OTHER MATTERS PERTAINING TO THE INVESTOR SHARES. THE FUND ALSO
ISSUES A CLASS OF INSTITUTIONAL SHARES AND A CLASS OF SUPER-INSTITUTIONAL
SHARES. SUCH OTHER CLASSES MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH
MAY AFFECT PERFORMANCE. INVESTORS MAY CALL THE FUND AT 1-800-430-3863 TO OBTAIN
MORE INFORMATION CONCERNING OTHER CLASSES AVAILABLE TO THEM THROUGH THEIR SALES
REPRESENTATIVE. INVESTORS MAY OBTAIN INFORMATION CONCERNING OTHER CLASSES FROM
THEIR SALES REPRESENTATIVE, THE DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH
IS OFFERING OR MAKING AVAILABLE TO THEM THE SECURITIES OFFERED IN THIS
PROSPECTUS.

As of June 21, 1996, the following persons owned of record or beneficially more
than 25% of a Class of the Investor Shares of the Fund: J.C. Bradford & Company,
Custodian FBO Arthur Demoss Foundation, 330 Commerce Street, Nashville,
Tennessee 37201, record owner with respect to 45.101% of the Series C Investor
Shares. Accordingly, this entity may be deemed to be a "controlling person" of
the Series C Investor Shares of the Fund within the meaning of the 1940 Act.

<PAGE>

THE CHESAPEAKE FUND
INVESTOR SHARES

PROSPECTUS

July 1, 1996

THE CHESAPEAKE FUND
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863

INVESTMENT ADVISOR
Gardner Lewis Asset Management
285 Wilmington-West Chester Pike
Chadds Ford, Pennsylvania 19317

ADMINISTRATOR, FUND ACCOUNTANT, AND
DIVIDEND DISBURSING & TRANSFER AGENT
The Nottingham Company
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069

DISTRIBUTOR
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

CUSTODIAN
Wachovia Bank of North Carolina, N.A.
301 N. Main Street
Winston-Salem, North Carolina 27102

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
1021 East Cary Street, Suite 1900
Richmond, Virginia 23219-4023

<PAGE>

PROSPECTUS

THE CHESAPEAKE FUND

SUPER-INSTITUTIONAL SHARES

The SUPER-INSTITUTIONAL SHARES of THE CHESAPEAKE FUND (the "Fund"), a series of
the Gardner Lewis Investment Trust (the "Trust"), are designed to provide
institutional clients purchasing substantial amounts of shares in the Fund with
core growth investment management by Gardner Lewis Asset Management. The
investment objective of the Fund is to seek capital appreciation through
investments in equity securities of medium and large capitalization companies,
consisting primarily of common and preferred stocks and securities convertible
into common stocks. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this Prospectus. The Fund has a net asset value that will fluctuate
in accordance with the value of its portfolio securities. An investor may
invest, reinvest or redeem shares at any time.

This Prospectus relates to shares ("Super-Institutional Shares") representing
interests in the Fund. The Super-Institutional Shares are offered to
institutional investors described herein without any sales or redemption charges
or shareholder servicing or distribution fees. See "Prospectus Summary -
Offering Price."

INVESTMENT ADVISOR
GARDNER LEWIS ASSET MANAGEMENT
CHADDS FORD, PENNSYLVANIA

The date of this Prospectus is July 1, 1996.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY....................................... 2

SYNOPSIS OF COSTS AND EXPENSES........................... 3

FINANCIAL HIGHLIGHTS..................................... 3

INVESTMENT OBJECTIVE AND POLICIES........................ 4

RISK FACTORS............................................. 6

INVESTMENT LIMITATIONS................................... 7

FEDERAL INCOME TAXES..................................... 8

DIVIDENDS AND DISTRIBUTIONS.............................. 8

HOW SHARES ARE VALUED.................................... 9

HOW SHARES MAY BE PURCHASED.............................. 9

HOW SHARES MAY BE REDEEMED............................... 11

MANAGEMENT OF THE FUND................................... 12

OTHER INFORMATION........................................ 14

<PAGE>

PROSPECTUS SUMMARY

The Fund The Chesapeake Fund (the "Fund") is a diversified series
of the Gardner Lewis Investment Trust (the "Trust"), a
registered open-end management investment company
organized as a Massachusetts business trust. This
Prospectus relates to Super-Institutional Shares of the
Fund. See "Other Information - Description of Shares."

Offering Price The Super-Institutional Shares are sold to institutional
investors at net asset value without a sales charge and
are not subject to any shareholder servicing or
distribution fees. The minimum initial investment is
$50,000,000. The minimum subsequent investment is
$100,000. See "How Shares May be Purchased."

Investment Objective
and Special Risk
Considerations The investment objective of the Fund is to seek capital
appreciation through investments in equity securities of
medium and large capitalization companies, consisting
primarily of common and preferred stocks and securities
convertible into common stocks. Realization of current
income is not a significant investment consideration,
and any income realized will be incidental to the Fund's
objective. See "Investment Objective and Policies." The
Fund is not intended to be a complete investment
program, and there can be no assurance that the Fund
will achieve its investment objective. While the Fund
will invest primarily in common stocks traded in U.S.
securities markets, some of the Fund's investments may
include foreign securities, illiquid securities, and
securities purchased subject to a repurchase agreement
or on a "when-issued" basis, which involve certain
risks. The Fund may borrow only under certain limited
conditions (including to meet redemption requests) and
not to purchase securities. It is not the intent of the
Fund to borrow except for temporary cash requirements.
Borrowing, if done, would tend to exaggerate the effects
of market and interest rate fluctuations on the Fund's
net asset value until repaid. See "Risk Factors."

Manager Subject to the general supervision of the Trust's Board
of Trustees and in accordance with the Fund's investment
policies, Gardner Lewis Asset Management of Chadds Ford,
Pennsylvania (the "Advisor") manages the Fund's
investments. The Advisor currently manages approximately
$2.6 billion in assets. For its advisory services, the
Advisor receives a monthly fee based on the Fund's daily
net assets at the annual rate of 1.00%. See "Management
of the Fund - The Advisor."

Dividends Income dividends, if any, are paid at least annually;
capital gains, if any, are distributed at least annually
or retained for reinvestment by the Fund. Dividends and
capital gains distributions are automatically reinvested
in additional shares of the same Class at net asset
value unless the shareholder elects to receive cash. See
"Dividends and Distributions."

Distributor Capital Investment Group, Inc. (the "Distributor")
serves as distributor of shares of the Fund. See "How
Shares May Be Purchased - Distributor."

<PAGE>

SYNOPSIS OF COSTS AND EXPENSES

The following tables set forth certain information in connection with the
expenses of the Super-Institutional Shares of the Fund for the current fiscal
year. The information is intended to assist the investor in understanding the
various costs and expenses borne by the Super-Institutional Shares of the Fund,
and therefore indirectly by its investors, the payment of which will reduce an
investor's return on an annual basis.

SHAREHOLDER TRANSACTION EXPENSES FOR SUPER-INSTITUTIONAL SHARES

ANNUAL FUND OPERATING EXPENSES FOR SUPER-INSTITUTIONAL SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Investment advisory fees..................................1.000%(1)
12b-1 fees..................................................None
Other expenses.......................................... 0.045%(1)

Total operating expenses............................. 1.045%(1)
======

EXAMPLE: You would pay the following expenses on a $1,000 investment in
Super-Institutional Shares of the Fund, whether or not you redeem at the end of
the period, assuming a 5% annual return:

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C>
$11 $33 $58 $128
</TABLE>

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

1 The "Total operating expenses" shown above reflect the expenses anticipated
to be incurred by the Super-Institutional Shares of the Fund for the current
fiscal year. The investment advisory fee is higher than that paid by most
other investment companies.

FINANCIAL HIGHLIGHTS

The shares of the Fund are divided into multiple Classes representing interests
in the Fund. This Prospectus relates to Super-Institutional Shares of the Fund.
See "Other Information - Description of Shares." Since the public offering of
Super-Institutional Shares of the Fund had not commenced during the fiscal
periods covered by the Fund's financial statements and related Financial
Highlights pertaining to the other Classes of shares of the Fund, no financial
statements or related Financial Highlights are available pertaining to the
Super-Institutional Shares of the Fund. Further information about the
performance of the Fund is contained in the Annual Report of the Fund, a copy of
which may be obtained at no charge by calling the Fund.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

While portfolio securities are generally acquired for the long term, they may be
sold under any of the following circumstances:

a) the anticipated price appreciation has been achieved or is no longer
probable;

b) the company's fundamentals appear, in the analysis of the Advisor, to be
deteriorating;

c) general market expectations regarding the company's future performance
exceed those expectations held by the Advisor;

d) alternative investments offer, in the view of the Advisor, superior
potential for appreciation.

<PAGE>

company evidencing ownership of securities of a foreign issuer. ADRs may be
listed on a national securities exchange or may trade in the over-the-counter
market. The prices of ADRs are denominated in U.S. dollars while the underlying
security may be denominated in a foreign currency.

The Fund may invest in both sponsored and unsponsored ADRs. Unsponsored ADR
programs are organized independently and without the cooperation of the issuer
of the underlying foreign securities. As a result, available information
concerning the issuer may not be as current as for sponsored ADRs, and the
prices of unsponsored ADRs may be more volatile than if such instruments were
sponsored by the issuer. The issuers of the securities underlying unsponsored
ADRs are not obligated to disclose material information in the U.S. and,
therefore, there may be no correlation between such information and the market
value of the ADRs. Because of the additional risks inherent in unsponsored ADRs,
the Fund will tend to invest in sponsored ADRs over unsponsored ADRs, to the
extent it invests in ADRs.

RISK FACTORS

<PAGE>

INVESTMENT LIMITATIONS

<PAGE>

FEDERAL INCOME TAXES

<PAGE>

DIVIDENDS AND DISTRIBUTIONS

HOW SHARES ARE VALUED

HOW SHARES MAY BE PURCHASED

The minimum initial investment is $50,000,000. The minimum subsequent investment
is $100,000. The Fund may, in the Advisor's sole discretion, accept certain
accounts with less than the stated minimum initial investment. You may invest in
the following ways:

<PAGE>

PURCHASES BY MAIL. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the Fund, to The Chesapeake Fund, Super-Institutional Shares, 105
North Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069. Subsequent investments in an existing account in the Fund may be
made at any time by sending a check payable to the Fund, to the address stated
above. Please enclose the stub of your account statement and include the amount
of the investment, the name of the account for which the investment is to be
made and the account number. PLEASE REMEMBER TO ADD A REFERENCE TO
"SUPER-INSTITUTIONAL SHARES" TO YOUR CHECK TO ENSURE PROPER CREDIT TO YOUR
ACCOUNT.

Wachovia Bank of North Carolina, N.A.
Winston-Salem, North Carolina
ABA # 053100494
For credit to the Rocky Mount Office
For The Chesapeake Fund - Super-Institutional Shares
Acct #6764-020807
For further credit to (shareholder's name and SS# or EIN#)

<PAGE>

STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, Monday through Friday, except for business holidays, will redeem
shares at the net asset value determined at that time. Otherwise, your order
will redeem shares as of 4:00 p.m. New York time on the next business day. There
is no charge for redemptions from the Fund. You may also redeem your shares
through a broker-dealer or other institution, who may charge you a fee for its
services.

The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $10,000,000 (due to redemptions, exchanges
or transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $10,000,000 or more during
the notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.

If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-430-3863, or write to the address shown below.

REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Chesapeake
Fund, Super-Institutional Shares, 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069. Your request for redemption
must include:

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

<PAGE>

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

Shareholders may redeem shares, subject to the procedures outlined above, by
calling the Fund at 1-800-430-3863. Redemption proceeds will only be sent to the
bank account or person named in the Fund Shares Application currently on file
with the Fund. Telephone redemption privileges authorize the Fund to act on
telephone instructions from any person representing himself or herself to be the
investor and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and, if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.

MANAGEMENT OF THE FUND

<PAGE>

The Advisor is registered under the Investment Advisors Act of 1940.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Delaware corporation in 1990 and converted to a
Pennsylvania limited partnership in 1994, is controlled by W. Whitfield Gardner.
The Advisor currently serves as investment advisor to approximately $2.6 billion
in assets. The Advisor has been rendering investment counsel, utilizing
investment strategies substantially similar to that of the Fund, to individuals,
banks and thrift institutions, pension and profit sharing plans, trusts,
estates, charitable organizations and corporations since its formation. The
Advisor's address is 285 Wilmington-West Chester Pike, Chadds Ford, Pennsylvania
19317.

THE ADMINISTRATOR. The Trust has entered into an Administration Agreement with
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.015% of the average daily
net assets of the Super-Institutional Shares of the Fund. In addition, the
Administrator currently receives a base monthly fee of $1,750 for each Class of
shares of the Fund for accounting and recordkeeping services for the Fund. The
Administrator also charges the Fund for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.

The Administrator was established as a North Carolina corporation in 1988 and
converted to a North Carolina limited liability company in 1995. With its
affiliates and predecessors, the Administrator has been operating as a financial
services firm since 1985. Frank P. Meadows III, Chairman and Trustee of the
Trust, is the firm's Managing Director and controlling member.

<PAGE>

The Administrator also performs certain accounting and pricing services for the
Fund as pricing agent, including the daily calculation of the Fund's net asset
value.

OTHER INFORMATION

THIS PROSPECTUS RELATES PRIMARILY TO THE FUND'S SUPER-INSTITUTIONAL SHARES AND
DESCRIBES ONLY THE POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING
TO THE SUPER-INSTITUTIONAL SHARES. THE FUND ALSO ISSUES A CLASS OF
INSTITUTIONAL SHARES AND THREE CLASSES OF INVESTOR SHARES. SUCH OTHER CLASSES
MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT PERFORMANCE.
INVESTORS MAY CALL THE FUND AT 1-800-430-3863 TO OBTAIN MORE INFORMATION
CONCERNING OTHER CLASSES AVAILABLE TO THEM THROUGH THEIR SALES REPRESENTATIVE.
INVESTORS MAY OBTAIN INFORMATION CONCERNING THOSE CLASSES FROM THEIR SALES
REPRESENTATIVE, THE DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH IS OFFERING
OR MAKING AVAILABLE TO THEM THE SECURITIES OFFERED IN THIS PROSPECTUS.

<PAGE>

On June 30, 1996, the Ohio School Employee Retirement System (45 North Fourth
Street, Columbus, Ohio 43214-3634) owned 100% of the outstanding
Super-Institutional Shares of the Fund and, therefore, pursuant to applicable
SEC regulations, was deemed to control such class of shares of the Fund.

<PAGE>

THE CHESAPEAKE FUND

SUPER-INSTITUTIONAL SHARES

PROSPECTUS

July 1, 1996

THE CHESAPEAKE FUND

105 North Washington Street
Post Office Drawer 69

Rocky Mount, North Carolina 27802-0069
1-800-430-3863

INVESTMENT ADVISOR

Gardner Lewis Asset Management
285 Wilmington-West Chester Pike

Chadds Ford, Pennsylvania 19317

ADMINISTRATOR, FUND ACCOUNTANT, AND
DIVIDEND DISBURSING & TRANSFER AGENT

The Nottingham Company
Post Office Drawer 69

Rocky Mount, North Carolina 27802-0069

DISTRIBUTOR
Capital Investment Group, Inc.

Post Office Box 32249
Raleigh, North Carolina 27622

CUSTODIAN
Wachovia Bank of North Carolina, N.A.

301 N. Main Street
Winston-Salem, North Carolina 27102

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP
1021 East Cary Street, Suite 1900

Richmond, Virginia 23219-4023

<PAGE>

PART B

STATEMENT OF ADDITIONAL INFORMATION

THE CHESAPEAKE FUND

July 1, 1996

A Series of

GARDNER LEWIS INVESTMENT TRUST 105 North
Washington Street, Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone 1-800-430-3863

TABLE OF CONTENTS

INVESTMENT OBJECTIVE AND POLICIES................................. 2
INVESTMENT LIMITATIONS............................................ 4
NET ASSET VALUE................................................... 5
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.................... 6
DESCRIPTION OF THE TRUST.......................................... 7
ADDITIONAL INFORMATION CONCERNING TAXES........................... 8
MANAGEMENT OF THE FUND............................................ 9
SPECIAL SHAREHOLDER SERVICES...................................... 13
ADDITIONAL INFORMATION ON PERFORMANCE............................. 14
APPENDIX A - DESCRIPTION OF RATINGS............................... 17
ANNUAL REPORT OF THE FUND FOR THE FISCAL
YEAR ENDED FEBRUARY 29, 1996................................... ATTACHED

This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus for the Institutional,
Super-Institutional, and Investor Shares of The Chesapeake Fund (the "Fund"),
each dated July 1, 1996, and is incorporated by reference in its entirety into
each Prospectus. Because this Additional Statement is not itself a prospectus,
no investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Fund's Prospectuses may be obtained at no charge
by writing or calling the Fund at the address and phone number shown above. This
Additional Statement is not a prospectus but is incorporated by reference in
each Prospectus in its entirety. Capitalized terms used but not defined herein
have the same meanings as in each Prospectus.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The following policies supplement the Fund's investment objective and policies
as set forth in the Prospectuses for each Class of Shares of the Fund. The Fund,
organized in 1994, has no prior operating history.

ADDITIONAL INFORMATION ON FUND INSTRUMENTS. Attached to this Additional
Statement is Appendix A, which contains descriptions of the rating symbols used
by Rating Agencies for securities in which the Fund may invest.

INVESTMENT TRANSACTIONS. Subject to the general supervision of the Trust's Board
of Trustees, the Advisor is responsible for, makes decisions with respect to,
and places orders for all purchases and sales of portfolio securities for the
Fund.

The annualized portfolio turnover rate for the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period. The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less. Portfolio
turnover of the Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making Fund
decisions, and the Fund may engage in short term trading to achieve its
investment objectives.

Purchases of money market instruments by the Fund are made from dealers,
underwriters and issuers. The Fund currently does not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased directly from or sold directly to an issuer, no
commissions or discounts are paid.

Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. The Fund's fixed income portfolio transactions will normally be
principal transactions executed in over-the-counter markets and will be executed
on a "net" basis, which may include a dealer markup. With respect to securities
traded only in the over-the-counter market, orders will be executed on a
principal basis with primary market makers in such securities except where
better prices or executions may be obtained on an agency basis or by dealing
with other than a primary market maker.

The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.

In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for the Fund. In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. The sale of Fund shares may
be considered when determining the firms that are to execute brokerage
transactions for the Fund. In addition, the Advisor is authorized to cause the
Fund to pay a broker-dealer which furnishes brokerage and research services a
higher commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities of the
Advisor to the Fund. Such brokerage and research services might consist of
reports and statistics relating to specific companies or industries, general
summaries of groups of stocks or bonds and their comparative earnings and
yields, or broad overviews of the stock, bond and government securities markets
and the economy.

Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review any
commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits inuring to the Fund. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which investment discretion is
exercised

<PAGE>

by the Advisor. Conversely, the Fund may be the primary beneficiary of the
research or services received as a result of securities transactions effected
for such other account or investment company.

The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution of transactions from
such broker. The Fund will not execute portfolio transactions through, acquire
securities issued by, make savings deposits in or enter into repurchase
agreements with the Advisor or an affiliated person of the Advisor (as such term
is defined in the 1940 Act) acting as principal, except to the extent permitted
by the Securities and Exchange Commission ("SEC"). In addition, the Fund will
not purchase securities during the existence of any underwriting or selling
group relating thereto of which the Advisor, or an affiliated person of the
Advisor, is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these limitations in
comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.

Investment decisions for the Fund will be made independently from those for any
other series of the Trust, if any, and for any other investment companies and
accounts advised or managed by the Advisor. Such other investment companies and
accounts may also invest in the same securities as the Fund. To the extent
permitted by law, the Advisor may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions. When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund and
another investment company or account, the transaction will be averaged as to
price and available investments allocated as to amount, in a manner which the
Advisor believes to be equitable to the Fund and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.

For the fiscal year ended February 29, 1996 and the fiscal period ended February
28, 1995, the Fund paid brokerage commissions of $226,947 and $29,966,
respectively.

REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to five days of the purchase.

Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"), collateralized by the underlying security.
The Trust will implement procedures to monitor on a continuous basis the value
of the collateral serving as security for repurchase obligations. Additionally,
the Advisor to the Fund will consider the creditworthiness of the vendor. If the
vendor fails to pay the agreed upon resale price on the delivery date, the Fund
will retain or attempt to dispose of the collateral. The Fund's risk is that
such default may include any decline in value of the collateral to an amount
which is less than 100% of the repurchase price, any costs of disposing of such
collateral, and any loss resulting from any delay in foreclosing on the
collateral. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
which extend beyond seven days and other illiquid securities.

DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements), provided that they mature in thirteen months or less
from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft, it assumes liability for its payment. When the Fund acquires a Banker's
Acceptance the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Banker's Acceptance carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured
interest bearing debt obligation of a bank. Commercial Paper is an unsecured,
short term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest bearing instrument. The Fund will
invest in Commercial Paper only if it is rated one of the top two rating
categories by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors

<PAGE>

Service, Inc. ("Fitch") or Duff & Phelps ("D&P") or, if not rated, of equivalent
quality in the Advisor's opinion. Commercial Paper may include Master Notes of
the same quality. Master Notes are unsecured obligations which are redeemable
upon demand of the holder and which permit the investment of fluctuating amounts
at varying rates of interest. Master Notes are acquired by the Fund only through
the Master Note program of the Fund's custodian bank, acting as administrator
thereof. The Advisor will monitor, on a continuous basis, the earnings power,
cash flow and other liquidity ratios of the issuer of a Master Note held by the
Fund.

ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments and, through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features) and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Fund to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days. If through a change in values, net
assets or other circumstances, the Fund were in a position where more than 10%
of its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.

INVESTMENT LIMITATIONS

The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose, means the lesser of
(i) 67% of the Fund's outstanding shares represented in person or by proxy at a
meeting at which more than 50% of its outstanding shares are represented, or
(ii) more than 50% of its outstanding shares. Unless otherwise indicated,
percentage limitations apply at the time of purchase.

As a matter of fundamental policy, the Fund may not:

(1) Invest more than 5% of the value of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting
securities or of any class of securities of any one issuer (except that
securities of the U.S. Government, its agencies and instrumentalities are
not subject to these limitations);

(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);

(3) 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"));

(4) Invest in the securities of any issuer if any of the officers or Trustees
of the Trust or its Investment Advisor who own beneficially more than 1/2
of 1% of the outstanding securities of such issuer together own more than
5% of the outstanding securities of such issuer;

(5) Invest for the purpose of exercising control or management of another
issuer;

(6) Invest in interests in real estate, real estate mortgage loans, real estate
limited partnerships, oil, gas or other mineral exploration leases or
development programs, except that the Fund may invest in the securities of
companies (other than those which are not readily marketable) which own or
deal in such things;

(7) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter under the federal securities laws, in
connection with the disposition of portfolio securities;

(8) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);

<PAGE>

(9) Make short sales of securities or maintain a short position, except short
sales "against the box"; (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no additional
cost securities identical to those sold short.);

(10) Participate on a joint or joint and several basis in any trading account in
securities;

(11) Make loans of money or securities, except that the Fund may invest in
repurchase agreements (but repurchase agreements having a maturity of
longer than seven days, together with other illiquid securities, are
limited to 10% of the Fund's net assets);

(12) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors), if more than 5% of its total assets will be invested in
such securities;

(13) 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 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;

(14) Write, purchase, or sell puts, calls, warrants, or combinations thereof, or
purchase or sell commodities, commodities contracts, futures contracts, or
related options; or

(15) Invest in restricted securities.

Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation.

While the Fund has reserved the right to make short sales "against the box"
(limitation number 9, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.

With respect to investments permitted in other investment companies, see
"Investment Objective and Policies - Investment Companies" in the Prospectus,
which reflects certain limitations placed on such investments, including the
Advisor's waiver of duplicative advisory fees. During any time that shares of
the Fund may be registered in the State of California, it is a fundamental
policy of the Fund that fees incurred in connection with the purchase of shares
of other investment companies will not be duplicative, management fees will not
be duplicated, and initial sales charges incurred for such purchases will not
exceed one percent (1%).

NET ASSET VALUE

The net asset value per share of each Class of the Fund is calculated separately
by adding the value of the Fund's securities and other assets belonging to the
Fund and attributable to that Class, subtracting the liabilities charged to the
Fund and to that Class, and dividing the result by the number of outstanding
shares of such Class. "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Income, realized and unrealized capital gains and losses, and
any expenses of the Fund not allocated to a particular Class of the Fund will be
allocated to each Class of the Fund on the basis of the net asset value of that
Class in relation to the net asset value of the Fund. Assets belonging to the
Fund are charged with the direct liabilities of the Fund and with a share of the
general liabilities of the Trust, which are normally allocated in proportion to
the number of or the relative net asset values of all of the Trust's series at
the time of allocation or in accordance with other allocation methods approved
by the Board of Trustees. Certain expenses attributable to a particular Class of
shares (such as the distribution and service fees attributable to Investor
Shares) will be charged against that Class of shares. Certain other expenses
attributable to a particular Class of shares (such as registration fees,
professional fees, and certain printing and postage expenses) may be charged
against that Class of shares if such expenses are actually incurred in a
different amount by that Class or if the Class receives services of a different
kind or to a different degree than other Classes, and the Board

<PAGE>

of Trustees approves such allocation. Subject to the provisions of the
Declaration of Trust, determinations by the Board of Trustees as to the direct
and allocable liabilities, and the allocable portion of any general assets, with
respect to the Fund and the Classes of the Fund are conclusive.

The net asset value per share of each Class of the Fund is determined at 4:00
p.m., New York time, Monday through Friday, except on business holidays when the
New York Stock Exchange is closed. The New York Stock Exchange generally
recognizes the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas Day.
Any other holiday recognized by the New York Stock Exchange will be considered a
business holiday on which the Fund's net asset value will not be determined.

For the fiscal year ended February 29, 1996, the total expenses of the Fund
after fee waivers were $993,279 (1.49%, 1.71%, 2.18%, and 1.73% of the average
daily net assets of the Fund's Institutional Shares, Series A Shares, Series C
Shares, and Series D Shares, respectively). For the fiscal period ended February
28, 1995, the total expenses of the Fund, after fee waivers and expense
reimbursements were $122,384 (1.73% of the average daily net assets of the
Institutional Shares). Investor Shares of the Fund were not authorized for
issuance during such fiscal period. Super-Institutional Shares of the Fund were
not authorized for issuance during such fiscal year and period, respectively.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

PURCHASES. Shares of the Fund are offered and sold on a continuous basis and may
be purchased through authorized investment dealers or directly by contacting the
Distributor or the Fund. Selling dealers have the responsibility of transmitting
orders promptly to the Fund. The public offering price of shares of the Fund
equals net asset value, plus a sales charge generally for the Investor Shares.
Capital Investment Group, Inc. (the "Distributor") receives this sales charge as
Distributor and may reallow it in the form of dealer discounts and brokerage
commissions. The current schedule of sales charges and related dealer discounts
and brokerage commissions is set forth in the Prospectus for the Investor
Shares, along with the information on current purchases, rights of accumulation,
and letters of intent. See "How Shares May Be Purchased" in the Prospectus.

PLAN UNDER RULE 12B-1. The Trust has adopted a Plan of Distribution (the "Plan")
for each Series of the Investor Shares of the Fund pursuant to Rule 12b-1 under
the 1940 Act (see "How Shares May Be Purchased - Distribution Plan" in the
Prospectus). Under the Plan the Fund may expend a percentage of the Investor
Shares' average net assets annually to finance any activity which is primarily
intended to result in the sale of shares of the Investor Shares of the Fund and
the servicing of shareholder accounts, provided the Trust's Board of Trustees
has approved the category of expenses for which payment is being made. This
percentage is up to 0.25%, 0.50%, and 0.75% of the average net assets of the
Series A, Series D, and Series C Investor Shares, respectively. Such
expenditures paid as service fees to any person who sells shares of the Fund may
not exceed 0.25% of the average annual net asset value of such shares. Potential
benefits of the Plan to the Fund include improved shareholder servicing, savings
to the Fund in transfer agency costs, benefits to the investment process from
growth and stability of assets and maintenance of a financially healthy
management organization.

All of the distribution expenses incurred by the Distributor and others, such as
broker-dealers, in excess of the amount paid by the Fund will be borne by such
persons without any reimbursement from the Fund. Subject to seeking best price
and execution, the Fund may, from time to time, buy or sell portfolio securities
from or to firms which receive payments under the Plan.

From time to time the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

The Plan and the Distribution Agreement with the Distributor have been approved
by the Board of Trustees of the Trust, including a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in the Plan or any related
agreements, by vote cast in person or at a meeting duly called for the purpose
of voting on the Plan and such Agreement. Continuation of the Plan and the
Distribution Agreement must be approved annually by the Board of Trustees in the
same manner as specified above.

Each year the Trustees must determine whether continuation of the Plan is in the
best interest of shareholders of the Fund and that there is a reasonable
likelihood of its providing a benefit to the Fund, and the Board of Trustees has
made such a

<PAGE>

determination for the current year of operations under the Plan. The Plan, the
Distribution Agreement and the Dealer Agreement with any broker/dealers may be
terminated at any time without penalty by a majority of those trustees who are
not "interested persons" or, with respect to a particular Series of the Investor
Shares, by a majority vote of the Investor Shares' outstanding voting stock
relating to that particular Series. Any amendment materially increasing the
maximum percentage payable under the Plan, with respect to a particular Series
of the Investor Shares, must likewise be approved by a majority vote of the
Investor Shares' outstanding voting stock relating to that particular Series, as
well as by a majority vote of those trustees who are not "interested persons."
Also, any other material amendment to the Plan must be approved by a majority
vote of the trustees including a majority of the noninterested Trustees of the
Trust having no interest in the Plan. In addition, in order for the Plan to
remain effective, the selection and nomination of Trustees who are not
"interested persons" of the Trust must be effected by the Trustees who
themselves are not "interested persons" and who have no direct or indirect
financial interest in the Plan. Persons authorized to make payments under the
Plan must provide written reports at least quarterly to the Board of Trustees
for their review.

For the fiscal year ended February 29, 1996, the Fund incurred $32,342, $31,522,
and $40,697 for costs in connection with the Plan under Rule 12b-1, with respect
to the Series A, Series C, and Series D Investor Shares, respectively. Such
costs were spent on compensation to sales personnel for sale of Investor Shares
and servicing of shareholder accounts for Investor Shares. The Distributor
voluntarily waived a portion of its distribution and service fees under the Plan
amounting to $20,409 for the fiscal year ended February 29, 1996.

REDEMPTIONS. Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange is restricted by applicable rules and regulations of
the SEC; (b) the Exchange is closed for other than customary weekend and holiday
closings; (c) the SEC has by order permitted such suspension; or (d) an
emergency exists as determined by the SEC. The Fund may also suspend or postpone
the recordation of the transfer of shares upon the occurrence of any of the
foregoing conditions.

In addition to the situations described in the Prospectus under "How Shares may
be Redeemed," the Fund may redeem shares involuntarily to reimburse the Fund for
any loss sustained by reason of the failure of a shareholder to make full
payment for shares purchased by the shareholder or to collect any charge
relating to a transaction effected for the benefit of a shareholder which is
applicable to Fund shares as provided in the Prospectus from time to time.

DESCRIPTION OF THE TRUST

The Trust is an unincorporated business trust organized under Massachusetts law
on August 12, 1992. The Trust's Declaration of Trust authorizes the Board of
Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of two series, as follows: the Fund and The
Chesapeake Growth Fund, both managed by the Advisor. The shares of The
Chesapeake Growth Fund are all of one class; the shares of the Fund are divided
into five classes (Institutional Shares, Super-Institutional Shares, and Series
A, Series C, and Series D Investor Shares). The number of shares of each series
shall be unlimited. The Trust does not intend to issue share certificates.

In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each shareholder. If there
are any assets, income, earnings, proceeds, funds or payments, that are not
readily identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more of the series as they, in their sole
discretion, deem fair and equitable.

Shareholders of all of the series of the Trust, including the Fund, will vote
together and not separately on a series-by-series or class-by-class basis,
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each series or class affected by the matter. A series
or class is affected by a matter unless it is clear that the interests of each
series or class in the matter are substantially identical or that the matter
does not affect any interest of the series or class. Under Rule 18f-2, the
approval of an investment advisory agreement or any change in a fundamental

<PAGE>

investment policy would be effectively acted upon with respect to a series only
if approved by a majority of the outstanding shares of such series. However, the
Rule also provides that the ratification of the appointment of independent
accountants, the approval of principal underwriting contracts and the election
of Trustees may be effectively acted upon by shareholders of the Trust voting
together, without regard to a particular series or class.

When used in the Prospectus or this Additional Statement, a "majority" of
shareholders means the vote of the lesser of (1) 67% of the shares of the Trust
or the applicable series or class present at a meeting if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (2)
more than 50% of the outstanding shares of the Trust or the applicable series or
class.

When issued for payment as described in the Prospectus and this Additional
Statement, shares of the Fund will be fully paid and non-assessable.

The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as such
liability may arise from his or her own bad faith, willful misfeasance, gross
negligence, or reckless disregard of duties. It also provides that all third
parties shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust. With the exceptions stated,
the Declaration of Trust provides that a Trustee or officer is entitled to be
indemnified against all liability in connection with the affairs of the Trust.

ADDITIONAL INFORMATION CONCERNING TAXES

The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.

Each series of the Trust, including the Fund, will be treated as a separate
corporate entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect to
be a regulated investment company or have made such an election for a previous
year and must satisfy, in addition to the distribution requirement described in
the Prospectus, certain requirements with respect to the source of its income
for a taxable year. At least 90% of the gross income of each series must be
derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities or foreign
currencies, and other income derived with respect to the series' business of
investing in such stock, securities or currencies. Any income derived by a
series from a partnership or trust is treated as derived with respect to the
series' business of investing in stock, securities or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the series in the same manner as by the
partnership or trust.

Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of a series' gross income for a taxable year must
be derived from gains realized on the sale or other disposition of the following
investments held for less than three months: (l) stock and securities (as
defined in Section 2(a) (36) of the 1940 Act); (2) options, futures and forward
contracts other than those on foreign currencies; or (3) foreign currencies (or
options, futures or forward contracts on foreign currencies) that are not
directly related to a series' principal business of investing in stocks or
securities (or options and futures with respect to stocks or securities).
Interest (including original issue discount and, with respect to certain debt
securities, accrued market discount) received by a series upon maturity or
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of this requirement. However, any other income which is attributable
to realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.

An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In

<PAGE>

addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. The
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.

Each series of the Trust, including the Fund, will designate any distribution of
long term capital gains as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long term capital loss
to the extent of the capital gain dividends received with respect to the shares.

A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). Each series of the Trust, including the Fund, intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.

If for any taxable year a series does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the series'
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.

Each series of the Trust, including the Fund, will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of taxable dividends or 31% of
gross proceeds realized upon sale paid to shareholders who have failed to
provide a correct tax identification number in the manner required, or who are
subject to withholding by the Internal Revenue Service for failure properly to
include on their return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup withholding
when required to do so or that they are "exempt recipients."

Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS. The Trustees and executive officers of the Trust, their
ages, and their principal occupations for the last five years are as follows:

<TABLE>
<CAPTION>
Name, Age*, Position(s) Principal Occupation(s)
and Address During Past 5 Years
<S> <C>
Jack E. Brinson, 63 President, Brinson Investment Co. (personal investments)
Trustee President, Brinson Chevrolet, Inc. (auto dealership)
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886

W. Whitfield Gardner, 33 Chairman and Executive Officer
Trustee** Gardner Lewis Asset Management (Advisor to the Chesapeake Funds)
Chief Executive Officer Chadds Ford, Pennsylvania
The Chesapeake Funds
285 Wilmington - West Chester Pike
Chadds Ford, Pennsylvania 19317

<PAGE>

Stephen J. Kneeley, 33 Chief Operating Officer
Trustee Turner Investment Partners (investment manager)
1235 Westlakes Drive Berwyn, Pennsylvania
Suite 350
Berwyn, Pennsylvania 19312

John L. Lewis, IV, 32 President
President Gardner Lewis Asset Management (Advisor to the Chesapeake Funds)
The Chesapeake Funds Chadds Ford, Pennsylvania
285 Wilmington - West Chester Pike
Chadds Ford, Pennsylvania 19317

Frank P. Meadows III, 35 Managing Director
Chairman and Trustee** The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802 (Administrator to the Chesapeake Funds)
Registered Representative and Limited Securities Principal, Capital
Investment Group, Inc., Raleigh, North Carolina (Distributor of the
Chesapeake Funds)

J. Hope Reese, 35 Comptroller, The Nottingham
Treasurer and Assistant Company, Rocky Mount, North
Secretary Carolina (Administrator to the Chesapeake Funds), since 1995;
105 North Washington Street previously, Cash Manager, Law Companies Group, Atlanta, Georgia,
Rocky Mount, North Carolina 27802 since 1993; previously, Financial Manager, MGR Food Services, Atlanta,
Georgia, since 1992; previously Accounts Receivable Manager, Atlanta
Coca-Cola Bottling Co., Atlanta, Georgia.

C. Frank Watson III, 26 Vice President
Secretary and Assistant Treasurer The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina (Administrator to the Chesapeake
Rocky Mount, North Carolina 27802 Funds), since 1992; previously,
Student
University of North Carolina
Chapel Hill, North Carolina

William D. Zantzinger, 34 Director of Trading
Vice President Gardner Lewis Asset Management (Advisor to the Chesapeake Funds)
The Chesapeake Funds Chadds Ford, Pennsylvania
285 Wilmington - West Chester Pike since 1992; previously
Chadds Ford, Pennsylvania 19317 International Equity Trader
Morgan Stanley & Company
New York, New York
Morgan Stanley International
_______________________________ London, England
</TABLE>
* As of July 1, 1996

** Indicates that Trustee is an "interested person" of the Trust for purposes of
the 1940 Act because of his position with the Advisor or Administrator to the
Trust.

The officers of the Trust will not receive compensation from the Trust for
performing the duties of their offices. Each Trustee who is not an "interested
person" of the Trust receives a fee of $7,500 each 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. All Trustees are reimbursed for any out-of-pocket
expenses incurred in connection with attendance at meetings.

<PAGE>

COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension Total
Retirement Compensation
Aggregate Benefits Estimated from the
Compensation Accrued As Annual Trust
Name of Person, from the Part of Fund Benefits Upon Paid to
Position Trust Expenses Retirement Trustees
- ---------------------------------------------------------------------------------------
<S> <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. Messrs Gardner and
Kneeley were not Trustees of the Trust during such period.

PRINCIPAL HOLDERS OF VOTING SECURITIES. As of June 21, 1996, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of each Class of
the Fund except for the Institutional Shares, in which the group owned
62,761.430 shares (1.282% of the Class). On the same date the following
shareholders owned of record more than 5% of the outstanding shares of
beneficial interest of a Class of the Fund. 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 a Class of the Fund as of June 21, 1996.

<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership* of Class
<S> <C>
INSTITUTIONAL SHARES

Crestar Custodian FBO 623,184.687 Shares 12.737%
Carpenter Co. Profit Sharing Plan
P.O. Box 26665
Richmond, Virginia 23267

Norwest Bank Colorado Custodian 413,238.039 Shares 8.446%
FBO COBANK
1740 Broadway
Denver, CO 80274

Jonah Nominees Limited 404,585.300 Shares 8.269%
12 Gough Square
London, England EC4A 3DE

Caribou Nominees Limited 337,154.417 Shares 6.891%
12 Gough Square
London, England EC4A 3DE

Trustees of the Lawrenceville School 270,701.204 Shares 5.533%
P.O. Box 6126
Lawrenceville, NJ 08648

<PAGE>

SERIES A INVESTOR SHARES

Charles Schwab & Company, Inc. 202,826.281 Shares 7.735%
Custody Account
101 Montgomery Street
San Francisco, CA 94104

SERIES C INVESTOR SHARES

JC Bradford & Company Cust FBO 261,283.433 Shares 45.101%**
Arthur Demoss Foundation
330 Commerce Street
Nashville, TN 37201

Interstate Johnson Lane 5,028.902 Shares 11.225%
William W. Jones TTEE
Interstate Tower
P.O. Box 1220
Charlotte, NC 28201-1220

Christ Church 46,187.683 Shares 8.199%
Christiana Hundred
P.O. Box 3510
Wilmington, DE 19807

Strafe & Co. 47,496.913 Shares 7.973%
FAO Southwest Bone & Joint
P.O. Box 160
Westerville, OH 43086

SUPER-INSTITUTIONAL SHARES

Ohio School 5,151,320.000 Shares 100.00%**
Employee Retirement System
45 North 4th Street
Columbus, OH 43214-3634

* The shares indicated are believed by the Fund to be owned both of record and
beneficially, except as indicated above.

** Pursuant to applicable SEC regulations, this shareholder is deemed to control
the indicated Class of Shares of the Fund.

INVESTMENT ADVISOR. Information about Gardner Lewis Asset Management, Chadds
Ford, Pennsylvania (the "Advisor") and its duties and compensation as Advisor is
contained in the Prospectus.

The Advisor will receive a monthly management fee equal to an annual rate of
1.00% of the average daily net asset value of the Fund. Restrictive limitations
may be imposed on the Fund as a result of changes in current state laws and
regulations in those states where the Fund has qualified its shares, or by a
decision of the Trustees to qualify the shares in other states having
restrictive expense limitations.

The Advisor has voluntarily waived a portion of its fee for the fiscal year
ended February 29, 1996. The total fees waived amounted to $98,808 (the Advisor
received $545,139 of its fee). The Advisor has voluntarily waived its fee and
reimbursed a portion of the Fund's operating expenses for the fiscal period
ended February 28, 1995. The total fees waived amounted to $70,747 and expenses
reimbursed amounted to $1,080.

Under the Advisory Agreement, the Advisor is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of such Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross

<PAGE>

negligence on the part of the Advisor in the performance of its duties or from
its reckless disregard of its duties and obligations under the Agreement.

THE ADMINISTRATOR AND TRANSFER AGENT. The Trust has entered into a Fund
Accounting, Dividend Disbursing & Transfer Agent and Administration Agreement
with The Nottingham Company, L.L.C. (the "Administrator"), 105 North Washington
Street, Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant
to which the Administrator receives a fee at the annual rate of 0.075% of the
average daily net assets of the Institutional and Investor Shares of the Fund
and 0.015% of the average daily net assets of the Super-Institutional Shares of
the Fund. In addition, the Administrator currently receives a base monthly fee
of $1,750 for each Class of Fund shares for accounting and recordkeeping
services for the Fund. The Administrator also charges the Fund for certain costs
involved with the daily valuation of investment securities and is reimbursed for
out-of-pocket expenses. The Administrator charges a minimum fee of $3,000 per
month for all of its fees for the Fund taken in the aggregate, analyzed monthly.
For services to the Fund for the fiscal year ended February 29, 1996 and the
fiscal period ended February 28, 1995, the Administrator received administration
fees of $65,947 and $12,844, respectively. For such fiscal year and period, the
Administrator received $78,750 and $19,250, respectively, for accounting and
recordkeeping services.

The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform administrative and
clerical functions for the Fund; (4) supervise the maintenance by third parties
of such books and records of the Fund as may be required by applicable federal
or state law; (5) prepare or supervise the preparation by third parties of all
federal, state and local tax returns and reports of the Fund required by
applicable law; (6) prepare and, after approval by the Trust, file and arrange
for the distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable law; (7) prepare and, after approval by the
Trust, arrange for the filing of such registration statements and other
documents with the Securities and Exchange Commission and other federal and
state regulatory authorities as may be required by applicable law; (8) review
and submit to the officers of the Trust for their approval invoices or other
requests for payment of Fund expenses and instruct the Custodian to issue checks
in payment thereof; and (9) take such other action with respect to the Fund as
may be necessary in the opinion of the Administrator to perform its duties under
the agreement.

The Administrator will also serve as the Fund's transfer agent and dividend
disbursing agent and will provide certain accounting and pricing services for
the Fund.

DISTRIBUTOR. Capital Investment Group, Inc. (the "Distributor"), Post Office Box
32249, Raleigh, North Carolina 27622, acts as an underwriter and distributor of
the Fund's shares for the purpose of facilitating the registration of shares of
the Fund under state securities laws and to assist in sales of Fund shares
pursuant to a Distribution Agreement (the "Distribution Agreement") approved by
the Board of Trustees of the Trust.

In this regard, the Distributor has agreed at its own expense to qualify as a
broker-dealer under all applicable federal or state laws in those states which
the Fund shall from time to time identify to the Distributor as states in which
it wishes to offer its shares for sale, in order that state registrations may be
maintained for the Fund.

The Distributor is a broker-dealer registered with the Securities and Exchange
Commission and a member in good standing of the National Association of
Securities Dealers, Inc.

The Distribution Agreement may be terminated by either party upon 60 days prior
written notice to the other party.

For the fiscal year ended February 29, 1996, the aggregate dollar amount of
sales charges paid on the sale of Fund shares was $709,015, from which the
Distributor retained sales charges of $55,149. For the fiscal period ended
February 28, 1995, the aggregate dollar amount of sales charges paid on the sale
of Fund shares was $114,948, from which the Distributor retained sales charges
of $9,495.

CUSTODIAN. Wachovia Bank of North Carolina, N.A. (the "Custodian"), 301 North
Main Street, Winston-Salem, North Carolina 27102 serves as custodian for the
Fund's assets. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's

<PAGE>

request and maintains records in connection with its duties as Custodian. For
its services as Custodian, the Custodian is entitled to receive from the Fund an
annual fee based on the average net assets of the Fund held by the Custodian.

INDEPENDENT AUDITORS. The firm of KPMG Peat Marwick LLP, 1021 East Cary Street,
Richmond, Virginia 23219-4023, serves as independent auditors for the Fund, and
will audit the annual financial statements of the Fund, prepare the Fund's
federal and state tax returns, and consult with the Fund on matters of
accounting and federal and state income taxation. A copy of the most recent
annual report of the Fund will accompany this Additional Statement whenever it
is requested by a shareholder or prospective investor.

SPECIAL SHAREHOLDER SERVICES

The Fund offers the following shareholder services:

REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.

AUTOMATIC INVESTMENT PLAN (INVESTOR AND INSTITUTIONAL SHARES ONLY). The
automatic investment plan enables shareholders to make regular monthly or
quarterly investment in shares through automatic charges to their checking
account. With shareholder authorization and bank approval, the Administrator
will automatically charge the checking account for the amount specified ($100
minimum) which will be automatically invested in shares at the public offering
price on or about the 21st day of the month. The shareholder may change the
amount of the investment or discontinue the plan at any time by writing to the
Administrator.

SYSTEMATIC WITHDRAWAL PLAN (INVESTOR AND INSTITUTIONAL SHARES ONLY).
Shareholders owning shares with a value of $10,000 or more ($1,000,000 or more
for holders of Institutional Shares) may establish a Systematic Withdrawal Plan.
A shareholder may receive monthly or quarterly payments, in amounts of not less
than $100 per payment, by authorizing the Fund to redeem the necessary number of
shares periodically (each month, or quarterly in the months of March, June,
September and December) in order to make the payments requested. The Fund has
the capacity of electronically depositing the proceeds of the systematic
withdrawal directly to the shareholder's personal bank account ($5,000 minimum
per bank wire). Instructions for establishing this service are included in the
Fund Shares Application, enclosed in the Prospectus, or available by calling the
Fund. If the shareholder prefers to receive his systematic withdrawal proceeds
in cash, or if such proceeds are less than the $5,000 minimum for a bank wire,
checks will be made payable to the designated recipient and mailed within 7 days
of the valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees" in the Prospectus). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Fund. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the Fund
upon sixty days written notice or by a shareholder upon written notice to the
Fund. Applications and further details may be obtained by calling the Fund at
1-800-430-3863, or by writing to:

The Chesapeake Fund

[INVESTOR SHARES] OR [INSTITUTIONAL SHARES]

105 North Washington Street
Post Office Drawer 69

Rocky Mount, North Carolina 27802-0069

<PAGE>

PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares in the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Shares are Valued" in the Prospectus. Transactions involving
the issuance of shares in the Fund for securities in lieu of cash will be
limited to acquisitions of securities (except for municipal debt securities
issued by state political subdivisions or their agencies or instrumentalities)
which: (a) meet the investment objectives and policies of the Fund; (b) are
acquired for investment and not for resale; (c) are liquid securities which are
not restricted as to transfer either by law or liquidity of market; and (d) have
a value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange, the New
York Stock Exchange, or NASDAQ.

REDEMPTIONS IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein the Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety-day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net asset value at the beginning of such period.

TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the Fund name and existing account registration; (2) signature(s)
of the registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (See the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.

ADDITIONAL INFORMATION ON PERFORMANCE

From time to time, the total return of the each Class of the Fund may be quoted
in advertisements, sales literature, shareholder reports or other communications
to shareholders. The Fund computes the "average annual total return" of each
Class of the Fund by determining the average annual compounded rates of return
during specified periods that equate the initial amount invested to the ending
redeemable value of such investment. This is done by determining the ending
redeemable value of a hypothetical $1,000 initial payment. This calculation is
as follows:

P(1+T)/n/ = ERV

Where: T = average annual total return.

ERV = ending redeemable value at the end of the period covered
by the computation of a hypothetical $1,000 payment made
at the beginning of the period.
P = hypothetical initial payment of $1,000 from which the
maximum sales load is deducted.
n = period covered by the computation, expressed in terms of
years.

The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.

The calculation of average annual total return and aggregate total return assume
that the maximum sales load is deducted from the initial $1,000 investment at
the time it is made and that there is a reinvestment of all dividends and
capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. The Fund may also quote other total
return information that does not reflect the effects of the sales load.

<PAGE>

The average annual total return for the Institutional Shares of the Fund for the
year ended February 29, 1996 and since inception (April 6, 1994 to February 29,
1996) was 29.66% and 22.24%, respectively. The cumulative total return for the
Institutional Shares of the Fund since inception through February 29, 1996 was
46.50%. The aggregate total return for the Series A, Series C, and Series D
Investor Shares of the Fund since inception (April 7, 1995 to February 29, 1996)
was 20.14%, 23.18%, and 21.92%, respectively. Without reflecting the effects of
the maximum sales load, the aggregate total return for the Series A and Series D
Investor Shares of the Fund since inception (April 7, 1995 to February 29, 1996)
was 23.86% and 23.77%, respectively. This performance quotation should not be
considered representative of the Fund's performance for any specified period in
the future. Aggregate total return is calculated in a similar manner to annual
total return, except that the return is aggregated, rather than annualized. The
Super-Institutional Shares of the Fund were not authorized for issuance during
such periods.

The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the S&P 500 Total Return Index and the NASDAQ Industrials Index, which are
generally considered to be representative of the performance of unmanaged common
stocks that are publicly traded in the United States securities markets.
Comparative performance may also be expressed by reference to a ranking prepared
by a mutual fund monitoring service or by one or more newspapers, newsletters or
financial periodicals. The Fund may also occasionally cite statistics to reflect
its volatility and risk. The Fund may also compare its performance to other
published reports of the performance of unmanaged portfolios of companies. The
performance of such unmanaged portfolios generally does not reflect the effects
of dividends or dividend reinvestment. Of course, there can be no assurance that
the Fund will experience the same results. Performance comparisons may be useful
to investors who wish to compare the Fund's past performance to that of other
mutual funds and investment products. Of course, past performance is not a
guarantee of future results.

The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.

As indicated, from time to time, the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:

o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific
period of time.

o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.

Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.

From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and

<PAGE>

prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.

<PAGE>

APPENDIX A

DESCRIPTION OF RATINGS

The Fund will normally be at least 90% invested in equities. As a temporary
defensive position, however, the Fund may invest up to 100% of its assets in
investment grade bonds, U.S. Government Securities, repurchase agreements, or
money market instruments ("Investment-Grade Debt Securities"). When the Fund
invests in Investment Grade-Debt Securities as a temporary defensive measure, it
is not pursuing its investment objective. Under normal circumstances, however,
the fund may invest in money market or repurchase agreement instruments as
described in the Prospectus. The various ratings used by the nationally
recognized securities rating services are described below.

A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed income
securities in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved in
credit analysis. A rating is not a recommendation to purchase, sell or hold a
security, because it does not take into account market value or suitability for
a particular investor. When a security has received a rating from more than one
service, each rating is evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the rating services from
other sources that they consider reliable. Ratings may be changed, suspended or
withdrawn as a result of changes in or unavailability of such information, or
for other reasons.

STANDARD & POOR'S RATINGS GROUP. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay
principal.

AA - Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in a small
degree.

A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for debt in
higher rated categories.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.

Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.

Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.

The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.

<PAGE>

MOODY'S INVESTORS SERVICE, INC. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc. ("Moody's") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.

A - Debt which is rated A possesses many favorable investment attributes
and is to be considered as an upper medium grade obligation. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa - Debt which is rated Baa is considered as a medium grade obligation,
i.e., it is neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such debt lacks outstanding investment
characteristics and in fact has speculative characteristics as well.

Moody's applies numerical modifiers (l, 2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.

Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not considered
"Investment-Grade Debt Securities" by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because the
protection of interest and principal payments often may be very moderate and not
well safeguarded.

Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period for time may be small. Bonds
which are rated Caa are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriated may be more affected by external conditions. Ample alternate
liquidity is maintained.

The following summarizes the highest rating used by Moody's for short-term notes
and variable rate demand obligations:

MIG-l; VMIG-l - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

<PAGE>

DUFF & PHELPS CREDIT RATING CO. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - Bonds that are rated AAA are of the highest credit quality. The risk
factors are considered to be negligible, being only slightly more than for
risk-free U.S. Treasury debt.

AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.

A - Bonds rated A have average but adequate protection factors. The risk
factors are more variable and greater in periods of economic stress.

BBB - Bonds rated BBB have below average protection factors but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.

Bonds rated BB, B and CCC by D&P are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.

The rating Duff l is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff l+, Duff 1 and
Duff 1- within the highest rating category. Duff l+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

FITCH INVESTORS SERVICE, INC. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc. ("Fitch") for bonds which are deemed to be
"Investment-Grade Debt Securities" by the Advisor:

AAA - Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

AA - Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.

A - Bonds that are rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with
higher ratings.

BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds, and therefore impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.

Bonds rated BB, B and CCC by Fitch are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.

<PAGE>

The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+

F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.

<PAGE>

PART C

Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.

GARDNER LEWIS INVESTMENT TRUST
THE CHESAPEAKE GROWTH FUND

SUPPLEMENT TO PROSPECTUS

The Prospectus dated October 26, 1995 of The Chesapeake Growth Fund (the "Fund")
is hereby supplemented with the following additional information:

The section "INVESTMENT OBJECTIVE AND POLICIES - Foreign Securities" is hereby
amended to reflect the following:

The Fund may invest up to 10% of its total assets in foreign securities.
For purposes of this limitation, American Depository Receipts ("ADRs")
will not be considered foreign securities.

The section "RISK FACTORS" is hereby amended to reflect the following:

BORROWING. The Fund may borrow, temporarily, up to 5% of its total
assets for extraordinary or emergency purposes and 15% of its total
assets to meet redemption requests, which might otherwise require
untimely disposition of portfolio holdings. To the extent the Fund
borrows for these purposes, the effects of market price fluctuations on
portfolio net asset value will be exaggerated. If, while such borrowing
is in effect, the value of the 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. The Fund will borrow only from a bank. The
Fund will not make any investments if the borrowing exceeds 5% of its
assets until such time as repayment has been made to bring the total
borrowing below 5% of its total assets.

The section "INVESTMENT LIMITATIONS" is hereby amended to revise the
first and seventh investment limitations to read as follows:

(1) 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 the Fund's total assets or, (b) in order to meet redemption
requests, in amounts not exceeding 15% of its total assets. The
Fund will not make any investments if borrowing exceeds 5% of its
total assets;

(7) invest more than 10% of the Fund's total assets in foreign
securities (excluding ADRs);

The date of this Supplement is July 1, 1996.

<PAGE>

GARDNER LEWIS INVESTMENT TRUST
THE CHESAPEAKE GROWTH FUND

SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION

The Statement of Additional Information dated October 26, 1995 of The Chesapeake
Growth Fund is hereby supplemented with the following additional information.

The section "INVESTMENT LIMITATIONS" is hereby amended to revise the third and
thirteenth investment limitations as follows:

(3) 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"));

(13) 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 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 section "MANAGEMENT OF THE FUND - Trustees and Officers" is hereby amended
to add the following new Trustees:

Name, Age*, Position(s) Principal Occupation(s)
and Address During Past 5 Years

W. Whitfield Gardner, 33 Analyst, Portfolio Manager
Trustee** Gardner Lewis Asset Management
Chief Executive Officer Chadds Ford, Pennsylvania
The Chesapeake Funds
285 Wilmington - West Chester Pike
Chadds Ford, Pennsylvania 19317

Stephen J. Kneeley, 33 Chief Operating Officer
Trustee Turner Investment Partners
1235 Westlakes Drive Berwyn, Pennsylvania
Suite 350
Berwyn, Pennsylvania 19312

The date of this Supplement is July 1, 1996.

<PAGE>

PART C

GARDNER LEWIS INVESTMENT TRUST

FORM N1-A

OTHER INFORMATION

ITEM 24. Financial Statements and Exhibits

a) Financial Statements: Financial Highlights included in Part A for
each series of the Registrant for the latest fiscal year.

b) Exhibits: Annual Report included in part B for each series of the
Registrant for the latest fiscal year.
(1) Amended and Restated Declaration of Trust - Incorporated by reference;
filed 2/3/95
(2) Amended and Restated By-Laws - Incorporated by reference; filed 2/3/95
(3) Not applicable
(4) Not applicable - the series of the Registrant do not issue certificates
(see Exhibit 1 and 2 for the relevant portions of the Declaration of
Trust and By-Laws)
(5) (a) Investment Advisory Agreement for The Chesapeake Growth Fund -
Incorporated by reference; filed 10/27/92
(b) Investment Advisory Agreement for The Chesapeake
Fund - Incorporated by reference; filed 1/27/94
(6) (a) Distribution Agreement for The Chesapeake Growth Fund - Incorporated
by reference; filed 11/16/94
(b) Distribution Agreement for The Chesapeake Fund - Incorporated
by reference; filed 1/27/94
(7) Not applicable
(8) Custodian Agreement - Incorporated by reference; filed 12/21/93
(9) (a) Fund Accounting, Dividend Disbursing and Transfer Agent and
Administration Agreement - Incorporated by reference; filed 12/21/93
(b) Amendment to the Fund Accounting, Dividend Disbursing and Transfer
Agent and Administration Agreement Incorporated by reference; filed
10/26/95
(c) Amendment to the Fund Accounting, Dividend Disbursing and Transfer
Agent and Administration Agreement - Enclosed Exhibit 9(c)

(10) Opinion of Counsel - Incorporated by reference; filed 10/26/95 and 4/29/96
with 24f-2 notices
(11) Consent of Auditors - Enclosed Exhibit 11
(12) Not Applicable
(13) Not Applicable
(14) Not applicable
(15) (a) Distribution Plan for The Chesapeake Fund Series A Investor Shares -
Incorporated by reference; filed 2/7/95
(b) Distribution Plan for The Chesapeake Fund Series C Investor Shares -
Incorporated by reference; filed 2/7/95
(c) Distribution Plan for The Chesapeake Fund Series D Investor Shares -
Incorporated by reference; filed 2/7/95
(16) Computation of Performance - Enclosed Exhibit 16
(17) Copies of Powers of Attorney - Incorporated by reference; filed 11/16/94;
also Enclosed Exhibit 17
(18) Copies of Amended and Restated Rule 18f-3 Multi-Class Plan -
Enclosed Exhibit 18

ITEM 25. Persons Controlled by or Under Common Control with Registrant

No person is controlled by or under common control with the
Registrant.

ITEM 26. Number of Holders of Securities

As of June 28, 1996, the number of record holders of each class of
securities of Registrant was as follows:

<PAGE>

Number of
Title of Class Record Holders

The Chesapeake Growth Fund.........................................1961
The Chesapeake Fund - Institutional Shares..........................167
The Chesapeake Fund - Series A Investor Shares......................716
The Chesapeake Fund - Series C Investor Shares.......................58
The Chesapeake Fund - Series D Investor Shares......................212
The Chesapeake Fund - Super-Institutional Shares......................1

ITEM 27. Indemnification

The Declaration of Trust and Bylaws of the Registrant contain
provisions covering indemnification of the officers and trustees. The
following are summaries of the applicable provisions.

The Registrant's Declaration of Trust provides that every person who
is or has been a trustee, officer, employee or agent of the
Registrant and every person who serves at the trustees' request as
director, officer, employee or agent of another enterprise will be
indemnified by the Registrant to the fullest extent permitted by law
against all liabilities and against all expenses reasonably incurred
or paid by him in connection with any debt, claim, action, demand,
suit, proceeding, judgment, decree, liability or obligation of any
kind in which he becomes involved as a party or otherwise or is
threatened by virtue of his being or having been a trustee, officer,
employee or agent of the Registrant or of another enterprise at the
request of the Registrant and against amounts paid or incurred by him
in the compromise or settlement thereof.

No indemnification will be provided to a trustee or officer: (i)
against any liability to the Registrant or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office
("disabling conduct"); (ii) with respect to any matter as to which he
shall, by the court or other body by or before which the proceeding
was brought or engaged, have been finally adjudicated to be liable by
reason of disabling conduct; (iii) in the absence of a final
adjudication on the merits that such trustee or officer did not
engage in disabling conduct, unless a reasonable determination, based
upon a review of the facts that the person to be indemnified is not
liable by reason of such conduct, is made by vote of a majority of a
quorum of the trustees who are neither interested persons nor parties
to the proceedings, or by independent legal counsel, in a written
opinion.

The rights of indemnification may be insured against by policies
maintained by the Registrant, will be severable, will not affect any
other rights to which any trustee, officer, employee or agent may now
or hereafter be entitled, will continue as to a person who has ceased
to be such trustee, officer, employee, or agent and will inure to the
benefit of the heirs, executors and administrators of such a person;
provided, however, that no person may satisfy any right of indemnity
or reimbursement except out of the property of the Registrant, and no
other person will be personally liable to provide indemnity or
reimbursement (except an insurer or surety or person otherwise bound
by contract).

Article XIV of the Registrant's Bylaws provides that the Registrant
will indemnify each trustee and officer to the full extent permitted
by applicable federal, state and local statutes, rules and
regulations and the Declaration of Trust, as amended from time to
time. With respect to a proceeding against a trustee or officer
brought by or on behalf of the Registrant to obtain a judgment or
decree in its favor, the Registrant will provide the officer or
trustee with the same indemnification, after the same determination,
as it is required to provide with respect to a proceeding not brought
by or on behalf of the Registrant.

This indemnification will be provided with respect to an action, suit
proceeding arising from an act or omission or alleged act or
omission, whether occurring before or after the adoption of Article
XIV of the Registrant's Bylaws.

ITEM 28. Business and other Connections of Investment Advisor

<PAGE>

See the Statement of Additional Information section entitled
"Management of the Fund" and the Investment Advisor's Form ADV filed
with the Commission for the activities and affiliations of the
officers and directors of the Investment Advisor of the Registrant.
Except as so provided, to the knowledge of Registrant, none of the
directors or executive officers of the Investment Advisor is or has
been at any time during the past two fiscal years engaged in any
other business, profession, vocation or employment of a substantial
nature. The Investment Advisor currently serves as investment advisor
to numerous institutional and individual clients.

ITEM 29. Principal Underwriter

(a) Capital Investment Group, Inc. is underwriter and distributor for The
Chesapeake Growth Fund, The Chesapeake Fund, Capital Value Fund, ZSA
Equity Fund, ZSA Asset Allocation Fund, ZSA Social Conscience Fund,
The Brown Capital Management Equity Fund, The Brown Capital
Management Balanced Fund, The Brown Capital Management Small Company
Fund, GrandView REIT Index Fund, GrandView Realty Growth Fund, and
GrandView Healthcare Realty Income Fund.

(b)

</TABLE>
<TABLE>
<CAPTION>
Name and Principal Position(s) and Offices Position(s) and Offices
Business Address with Underwriter with Reistrant
<S> <C>
Richard K. Bryant President No position with the Trust or
17 Glenwood Avenue its Series
Raleigh, North Carolina

Elmer O. Edgerton, Jr. Vice President No position with the Trust or
17 Glenwood Avenue its Series
Raleigh, North Carolina
</TABLE>

ITEM 30. Location of Accounts and Records

All account books and records not normally held by Wachovia Bank of
North Carolina, N.A., the Custodian to the Registrant, are held by
the Registrant, in the offices of The Nottingham Company, Fund
Accountant, Administrator and Transfer Agent to the Registrant, or by
Gardner Lewis Asset Management, the advisor to the Registrant.

The address of The Nottingham Company is 105 North Washington Street,
Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069. The
address of Gardner Lewis Asset Management is 285 Wilmington-West
Chester Pike, Chadds Ford, Pennsylvania 19317. The address of
Wachovia Bank of North Carolina, N.A. is 301 North Main Street,
Winston-Salem, North Carolina 27102.

ITEM 31. Management Services

The substantive provisions of the Fund Accounting, Dividend
Disbursing & Transfer Agent and Administration Agreement between the
Registrant and The Nottingham Company are discussed in Part B hereof.

ITEM 32. Undertakings

Registrant undertakes to furnish each person to whom a Prospectus is
delivered with a copy of the latest annual report to shareholders of
each series of Registrant upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to its Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Rocky Mount, State of North
Carolina on the 1st day of July 1996.

GARDNER LEWIS INVESTMENT TRUST

By: Frank P. Meadows III
Chairman, Board of Trustees

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

Frank P. Meadows III Trustee and Chairman (Principal Executive Officer)

Jack E. Brinson Trustee

W. Whitfield Gardner Trustee

Steve J. Kneeley Trustee

J. Hope Reese Treasurer (Principal Financial Officer and
Principal Accounting Officer)

* By: Frank P. Meadows III
Attorney-in-Fact Dated: July 1, 1996

<PAGE>

GARDNER LEWIS INVESTMENT TRUST
EXHIBIT INDEX

EXHIBIT NUMBER DESCRIPTION

EXHIBIT 9(c) AMENDMENT TO THE FUND ACCOUNTING,
DIVIDEND DISBURSING AND TRANSFER AGENT
AND ADMINISTRATION AGREEMENT

EXHIBIT 11 CONSENT OF AUDITORS

EXHIBIT 16 COMPUTATION OF PERFORMANCE

EXHIBIT 17 POWERS OF ATTORNEY

EXHIBIT 18 AMENDED AND RESTATED RULE 18F-3
MULTI-CLASS PLAN

EXHIBIT 9(c)

AMENDMENT TO THE FUND ACCOUNTING,
DIVIDEND DISBURSING AND TRANSFER AGENT
AND ADMINISTRATION AGREEMENT

THIS AMENDMENT, made and entered into effective as of the 1st day of May, 1996,
by and between GARDNER LEWIS INVESTMENT TRUST, a Massachusetts business trust
(the "Trust"), and THE NOTTINGHAM COMPANY, L.L.C., a North Carolina limited
liability company (the "Administrator").

WHEREAS, the parties have previously entered into that certain Fund Accounting,
Dividend Disbursing & Transfer Agent and Administration Agreement, as amended
with respect to all series of the Trust (the "Agreement").

WHEREAS, the Agreement has been amended from time to time by the parties as
provided therein, with amendments from time to time to Exhibit C thereof,
reflecting the Administrator's Compensation Schedule.

WHEREAS, the parties desire to again amend Exhibit C thereof, as provided
herein.

NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:

1. Amendment. The Agreement is hereby amended by deleting Exhibit C
thereof and substituting in lieu thereof a new Exhibit C in the
form attached hereto.

2. Ratification. Except as amended above, the Agreement shall
continue in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment to be signed by their
duly authorized officers on the date first above written.

ATTEST: GARDNER LEWIS INVESTMENT TRUST

By:

(Seal)

ATTEST: THE NOTTINGHAM COMPANY, L.L.C.

By:

(Seal)

<PAGE>

Exhibit C

ADMINISTRATOR'S COMPENSATION SCHEDULE

For the services delineated in the Fund Accounting, Dividend Disbursing &
Transfer Agent and Administration Agreement, as amended, the Administrator shall
be compensated monthly, as of the last day of each month, within five business
days of the month end, a base fee plus a fee based upon net assets according to
the following schedule. The fee is calculated based upon the Trust's average
daily net assets of each Fund:

Base Fee

$1,750 per month per Fund or Class (if applicable)

The Chesapeake Growth Fund

Annual
Net Assets Fee

On the first $25 million 0.200%
On the next $25 million 0.150%
On all assets over $50 million 0.075%

The Chesapeake Fund - Series A, C, and D Investor Shares and Institutional
Shares

Annual
Net Assets Fee

On all assets 0.075%

The Chesapeake Fund - Super-Institutional Shares

Annual
Net Assets Fee

On all assets 0.015%

Shareholder Recordkeeping

$9 per shareholder per year

Blue Sky Administration

$150 per Fund (or Class if applicable) per registered state per year

IRA Accounts

$15 per year (billed directly to the shareholder)

Minimum fee per month

Minimum fee of $3,000 per Fund of the Trust per month for all fees taken
in the aggregate as outlined above, analyzed monthly.

<PAGE>

Securities Pricing

$0.20 per equity security per pricing day
$0.20 per corporate bond, government bond, medium-term bond or mortgage backed
security per pricing day
$0.40 per CMO or asset backed securities per pricing day
$0.40 per municipal security per pricing day
$2.00 per equity per month for corporate action coverage

EXHIBIT 11

CONSENT OF AUDITORS

Independent Auditors' Consent

The Board of Trustees and Shareholders
The Chesapeake Fund:

We consent to the use of our report dated April 22, 1996 included in the
registration statement on Form N-1A and to the reference to our firm under the
heading "Financial Highlights" in the prospectus.

Richmond, Virginia
June 28, 1996

EXHIBIT 16
COMPUTATION OF PERFORMANCE DATA

THE CHESAPEAKE FUND

COMPUTATION OF PERFORMANCE DATA

The Fund computes the "average annual total return" of each Class of the Fund by
determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by determining the ending redeemable value of a
hypothetical $1,000 initial payment. This calculation is as follows:

P(1+T)/n/ = ERV

Where: T = average annual total return.

ERV = ending redeemable value at the end of the period covered
by the computation of a hypothetical $1,000 payment made
at the beginning of the period.

P = hypothetical initial payment of $1,000 from which the maximum
sales load is deducted.

n = period covered by the computation, expressed in terms of years.

The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.

Average Annual Total Return - Institutional Shares:

<TABLE>
<CAPTION>
Inception through February 29, 1996 Year ended February 29, 1996
<S> <C>
1,000(1+T)/1.90/ = 1,465.04 1,000(1+T)/1/ = 1,296.58
T = (1,465.04/1,000)/1.90/ - 1 T = (1,296.58/1,000)/1/ - 1
T = 0.2224 T = 0.2966

T = 22.24% T = 29.66%
ERV = 1,465.04 ERV = 1,296.58
P = 1,000 P = 1,000
n = 1.90 n = 1

</TABLE>
49

<PAGE>

Cumulative Total Return

(ERV - P)/P = TR

Where: ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period

P = hypothetical initial payment of $1,000 from which the
maximum sales load is deducted

TR = total return

Inception through February 29, 1996 - Institutional Shares

(1,465.04 - 1,000)/1,000 = 0.4650

ERV = 1,465.04
P = 1,000
TR = 46.50%

Inception through February 29, 1996 - Series A Investor Shares - with 3% sales
load

(1,201.44 - 1,000)/1,000 = 0.2014

ERV = 1,201.44
P = 1,000
TR = 20.14%

With out sales load

(1,238.59 - 1,000)/1,000 = 0.2386

ERV = 1,238.59
P = 1,000
TR = 23.86%

Inception through February 29, 1996 - Series C Investor Shares

(1,231.77 - 1,000)/1,000 = 0.2318

ERV = 1,231.77
P = 1,000
TR = 23.18%

Inception through February 29, 1996 - Series D Investor Shares - with 1.5% sales
load

(1,219.17 - 1,000)/1,000 = 0.2192

ERV = 1,219.17
P = 1,000
TR = 21.92%

With out sales load

(1,237.73 - 1,000)/1,000 = 0.2377

ERV = 1,237.73
P = 1,000
TR = 23.77%

EXHIBIT 17

POWERS OF ATTORNEY

GARDNER LEWIS INVESTMENT TRUST

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or
trustee of Gardner Lewis Investment Trust (the "Trust") hereby appoints Frank P.
Meadows III, C. Frank Watson III, and J. Hope Reese, officers of the Trust, and
each of them, with full power of substitution, his true and lawful attorneys to
execute in his name, place and stead and on his behalf a registration statement
on Form N-1A for the registration, pursuant to the Securities Act of 1933 and
the Investment Company Act of 1940, of said Trust's shares of beneficial
interest, and any and all amendments to said Registration Statement (including
post-effective amendments), and all instruments necessary or incidental in
connection therewith and to file the same with the U.S. Securities and Exchange
Commission. Said attorneys, and each of them, shall have full power and
authority, with full power of substitution, to do and perform in the name and on
behalf of the undersigned every act whatsoever requisite or desirable to be done
in the premises, as fully and to all intents and purposes as the undersigned
might or could do, the undersigned hereby ratifying and approving all such acts
of such attorneys.

IN WITNESS WHEREOF, the undersigned has executed this instrument
this 25 day of June, 1996.

JEAN W. HARRIS JACK BRINSON
Witness Signature

JACK BRINSON
Name

<PAGE>

GARDNER LEWIS INVESTMENT TRUST

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument
this 25 day of June, 1996.

BETTY SMITH FRANK P. MEADOWS III
Witness Signature

FRANK P. MEADOWS III
Name

<PAGE>

GARDNER LEWIS INVESTMENT TRUST

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument
this 25 day of June, 1996.

BETTY SMITH J. HOPE REESE
Witness Signature

J. HOPE REESE
Name

<PAGE>

GARDNER LEWIS INVESTMENT TRUST

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument
this 27 day of June, 1996.

STEPHEN J. KNEELEY
Witness Signature

STEPHEN J. KNEELEY
Name

<PAGE>

GARDNER LEWIS INVESTMENT TRUST
POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument
this 27 day of June, 1996.

W. WHITFIELD GARDNER
Witness Signature

W. WHITFIELD GARDNER
Name

EXHIBIT 18
AMENDED AND RESTATED RULE 18F-3 MULTI-CLASS PLAN
GARDNER LEWIS INVESTMENT TRUST

AMENDED AND RESTATED

RULE 18F-3 MULTI-CLASS PLAN

I. INTRODUCTION.

Pursuant to Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), the following sets forth the method for allocating
fees and expenses among each class of shares in the following series of the
Gardner Lewis Investment Trust (the "Trust"): The Chesapeake Fund, and any other
fund of the Trust proposed to be brought hereunder in the future by the Board of
Trustees of the Trust. In addition, this Rule 18f-3 Multi-Class Plan (the
"Plan") sets forth the shareholder servicing arrangements, distribution
arrangements, conversion features, exchange privileges, and other shareholder
services of each class of shares in such series.

The Trust is an open-end series investment company registered
under the 1940 Act and the shares of which are registered on Form N-1A under the
Securities Act of 1933 (the "1933 Act"). Upon the effectiveness of applicable
Post-Effective Amendments to the Trust's Registration Statement under the 1933
Act filed in conjunction with this Plan with respect to the shares of each of
the series listed above, the Trust hereby elects to offer multiple classes of
shares in such series pursuant to the provisions of Rule 18f-3 and this Plan.

The series of the Trust listed above (each a "Fund" or
collectively the "Funds") are authorized to issue the following classes of
shares representing interests in the Funds: Super-Institutional Shares,
Institutional Shares, and Series A, C, and D Investor Shares.

II. ALLOCATION OF EXPENSES.

Pursuant to Rule 18f-3 under the 1940 Act, the Trust shall
allocate to each class of shares in a Fund (i) any fees and expenses incurred by
the Trust in connection with the distribution of such class of shares under a
distribution plan (and related agreements) adopted for such class of shares
pursuant to Rule 12b-1, and (ii) any fees and expenses incurred by the Trust
under a shareholder servicing plan (and related agreements) in connection with
the provision of shareholder services to the holders of such class of shares. In
addition, pursuant to Rule 18f-3, the Trust may allocate the following fees and
expenses to a particular class of shares in a single Fund:

(i) transfer agency fees identified by the transfer agent as being
attributable to such class of shares;

(ii) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, notices, prospectuses,
reports, and proxies to current shareholders of such class of shares
or to regulatory agencies with respect to such class of shares;

(iii) blue sky registration or qualification fees incurred by such class
of shares;

(iv) Securities and Exchange Commission registration fees incurred by
such class of shares;

(v) the expense of administrative and personnel services (including, but
not limited to, those of a portfolio accountant, custodian or
dividend paying agent charged with calculating net asset values or
determining or paying dividends) as required to support the
shareholders of such class of shares;

<PAGE>

(vi) litigation or other legal expenses relating solely to such class of
shares;

(vii) fees of the Trustees of the Trust incurred as a result of issues
relating to such class of shares; and

(viii) independent accountants' fees relating solely to such class of
shares.

The initial determination of the class expenses that will be
allocated by the Trust to a particular class of shares and any subsequent
changes thereto will be reviewed by the Board of Trustees of the Trust and
approved by a vote of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust.

Income, realized and unrealized capital gains and losses, and any
expenses of a Fund not allocated to a particular class of such Fund pursuant to
this Plan shall be allocated to each class of the Fund on the basis of the net
asset value of that class in relation to the net asset value of the Fund.

III. CLASS ARRANGEMENTS.

The following summarizes the front-end sales charges, contingent
deferred sales charges, Rule 12b- 1 distribution fees, shareholder servicing
fees, conversion features, exchange privileges and other shareholder services
applicable to each class of shares of the Funds. Additional details regarding
such fees and services are set forth in the relevant Fund's current Prospectus
and Statement of Additional Information.

A. SUPER-INSTITUTIONAL SHARES -- ALL FUNDS.

1. Initial Sales Load: None

2. Contingent Deferred Sales Charge: None

3. Rule 12b-1 Distribution Fees: None

4. Shareholder Servicing Fees: None

5. Conversion Features: None

6. Exchange Privileges: None

7. Other Shareholder Services: None

B. INSTITUTIONAL SHARES -- ALL FUNDS.

1. Initial Sales Load: None

2. Contingent Deferred Sales Charge: None

3. Rule 12b-1 Distribution Fees: None

4. Shareholder Servicing Fees: None

5. Conversion Features: None

<PAGE>

6. Exchange Privileges: Institutional Shares of a Fund may be exchanged
for Institutional Shares of any other series of the Trust established
by the Fund's investment advisor.

7. Other Shareholder Services: The Trust offers a Systematic
Withdrawal Plan and Automatic Investment Plan to holders of
Institutional Shares of the Funds.

C. SERIES A INVESTOR SHARES -- ALL FUNDS.

1. Maximum Initial Sales Load (as a percentage of offering price): 3.00%

2. Contingent Deferred Sales Charge: None

3. Rule 12b-1 Distribution/Shareholder Servicing Fees:
Pursuant to a Distribution Plan adopted under Rule
12b-1, Series A Investor Shares of the Funds may pay a
combined distribution and shareholder servicing fee of
up to 0.25% of the average daily net assets of such
shares.

4. Conversion Features: None

5. Exchange Privileges: Series A Investor Shares of a Fund may be
exchanged for Series A Investor Shares of any other series of the
Trust established by the Fund's investment advisor.

6. Other Shareholder Services: The Trust offers a Systematic Withdrawal
Plan and Automatic Investment Plan to holders of Investor Shares of
the Funds.

D. SERIES C INVESTOR SHARES -- ALL FUNDS.

1. Initial Sales Load: none

2. Contingent Deferred Sales Charge: None

3. Rule 12b-1 Distribution/Shareholder Servicing Fees: Pursuant to a
Distribution Plan adopted under Rule 12b-1, Series C Investor Shares
of the Funds may pay a combined distribution and shareholder servicing
fee of up to 0.75% of the average daily net assets of such shares.

4. Conversion Features: None

5. Exchange Privileges: Series C Investor Shares of a Fund may be
exchanged for Series C Investor Shares of any other series of the
Trust established by the Fund's investment advisor.

6. Other Shareholder Services: The Trust offers a Systematic Withdrawal
Plan and Automatic Investment Plan to holders of Investor Shares of
the Funds.

E. SERIES D INVESTOR SHARES -- ALL FUNDS.

1. Maximum Initial Sales Load (as a percentage of offering price): 1.50%

2. Contingent Deferred Sales Charge: None

3. Rule 12b-1 Distribution/Shareholder Servicing Fees:
Pursuant to a Distribution Plan adopted under Rule
12b-1, Series D Investor Shares of the Funds may pay a
combined distribution and shareholder servicing fee of
up to 0.50% of the average daily net assets of such
shares.

<PAGE>

4. Conversion Features: None

5. Exchange Privileges: Series D Investor Shares of a Fund may be
exchanged for Series D Investor Shares of any other series of the
Trust established by the Fund's investment advisor.

6. Other Shareholder Services: The Trust offers a Systematic Withdrawal
Plan and Automatic Investment Plan to holders of Investor Shares of
the Funds.

IV. BOARD REVIEW.

The Board of Trustees of the Trust shall review this Plan as frequently
as they deem necessary. Prior to any material amendment(s) to this Plan, the
Trust's Board of Trustees, including a majority of the Trustees that are not
interested persons of the Trust, shall find that the Plan, as proposed to be
amended (including any proposed amendments to the method of allocating class
and/or fund expenses), is in the best interest of each class of shares of each
Fund individually and each Fund as a whole. In considering whether to approve
any proposed amendment(s) to the Plan, the Trustees of the Trust shall request
and evaluate such information as they consider reasonably necessary to evaluate
the proposed amendment(s) to the Plan.

Adopted: May 24, 1995, effective April 7, 1995; amended and restated on
May 2, 1996

<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> CLASS A CHESAPEAKE FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-END> FEB-28-1996
<INVESTMENTS-AT-COST> 122,603,863
<INVESTMENTS-AT-VALUE> 135,052,856
<RECEIVABLES> 419,028
<ASSETS-OTHER> 786,033
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 136,257,917
<PAYABLE-FOR-SECURITIES> 3,544,536
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 75,326
<TOTAL-LIABILITIES> 3,619,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 125,362,317
<SHARES-COMMON-STOCK> 9,192,143
<SHARES-COMMON-PRIOR> 1,333,872
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,173,255)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,448,993
<NET-ASSETS> 0
<DIVIDEND-INCOME> 102,939
<INTEREST-INCOME> 299,714
<OTHER-INCOME> 0
<EXPENSES-NET> 993,279
<NET-INVESTMENT-INCOME> (590,626)
<REALIZED-GAINS-CURRENT> (3,843,955)
<APPREC-INCREASE-CURRENT> 11,158,332
<NET-CHANGE-FROM-OPS> 6,723,751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 217,564
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,375,405
<NUMBER-OF-SHARES-REDEEMED> (134,083)
<SHARES-REINVESTED> 16,639
<NET-CHANGE-IN-ASSETS> 117,549,705
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,290,661
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 643,947
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,112,496
<AVERAGE-NET-ASSETS> 14,435,596
<PER-SHARE-NAV-BEGIN> 11.79
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (.06)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.11)
<RETURNS-OF-CAPITAL> (0.08)
<PER-SHARE-NAV-END> 14.42
<EXPENSE-RATIO> 1.714
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> CLASS C CHESAPEAKE FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-END> FEB-28-1996
<INVESTMENTS-AT-COST> 122,603,863
<INVESTMENTS-AT-VALUE> 135,052,856
<RECEIVABLES> 419,028
<ASSETS-OTHER> 786,033
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 136,257,917
<PAYABLE-FOR-SECURITIES> 3,544,536
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 75,326
<TOTAL-LIABILITIES> 3,619,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 125,362,317
<SHARES-COMMON-STOCK> 9,192,143
<SHARES-COMMON-PRIOR> 1,333,872
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,173,255)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,448,993
<NET-ASSETS> 0
<DIVIDEND-INCOME> 102,939
<INTEREST-INCOME> 299,714
<OTHER-INCOME> 0
<EXPENSES-NET> 993,279
<NET-INVESTMENT-INCOME> (590,626)
<REALIZED-GAINS-CURRENT> (3,843,955)
<APPREC-INCREASE-CURRENT> 11,158,332
<NET-CHANGE-FROM-OPS> 6,723,751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 63,794
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 556,093
<NUMBER-OF-SHARES-REDEEMED> (8,518)
<SHARES-REINVESTED> 3,810
<NET-CHANGE-IN-ASSETS> 117,549,705
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,290,661
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 643,947
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,112,496
<AVERAGE-NET-ASSETS> 4,689,848
<PER-SHARE-NAV-BEGIN> 11.79
<PER-SHARE-NII> (0.12)
<PER-SHARE-GAIN-APPREC> 2.86
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.11)
<RETURNS-OF-CAPITAL> (0.08)
<PER-SHARE-NAV-END> 14.34
<EXPENSE-RATIO> 2.178
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> CLASS D CHESAPEAKE FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-END> FEB-28-1996
<INVESTMENTS-AT-COST> 122,603,863
<INVESTMENTS-AT-VALUE> 135,052,856
<RECEIVABLES> 419,028
<ASSETS-OTHER> 786,033
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 136,257,917
<PAYABLE-FOR-SECURITIES> 3,544,536
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 75,326
<TOTAL-LIABILITIES> 3,619,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 125,362,317
<SHARES-COMMON-STOCK> 9,192,143
<SHARES-COMMON-PRIOR> 1,333,872
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,173,255)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,448,993
<NET-ASSETS> 0
<DIVIDEND-INCOME> 102,939
<INTEREST-INCOME> 299,714
<OTHER-INCOME> 0
<EXPENSES-NET> 993,279
<NET-INVESTMENT-INCOME> (590,626)
<REALIZED-GAINS-CURRENT> (3,843,955)
<APPREC-INCREASE-CURRENT> 11,158,332
<NET-CHANGE-FROM-OPS> 6,723,751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 119,764
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 990,621
<NUMBER-OF-SHARES-REDEEMED> (170,814)
<SHARES-REINVESTED> 8,302
<NET-CHANGE-IN-ASSETS> 117,549,705
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,290,661
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 643,947
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,112,496
<AVERAGE-NET-ASSETS> 9,082,417
<PER-SHARE-NAV-BEGIN> 11.79
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 2.92
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.11)
<RETURNS-OF-CAPITAL> (0.08)
<PER-SHARE-NAV-END> 14.41
<EXPENSE-RATIO> 1.728
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> INSTITUTIONAL CLASS CHESAPEAKE FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-END> FEB-28-1996
<INVESTMENTS-AT-COST> 122,603,863
<INVESTMENTS-AT-VALUE> 135,052,856
<RECEIVABLES> 419,028
<ASSETS-OTHER> 786,033
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 136,257,917
<PAYABLE-FOR-SECURITIES> 3,544,536
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 75,326
<TOTAL-LIABILITIES> 3,619,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 125,362,317
<SHARES-COMMON-STOCK> 9,192,143
<SHARES-COMMON-PRIOR> 1,333,872
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,173,255)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,448,993
<NET-ASSETS> 0
<DIVIDEND-INCOME> 102,939
<INTEREST-INCOME> 299,714
<OTHER-INCOME> 0
<EXPENSES-NET> 993,279
<NET-INVESTMENT-INCOME> (590,626)
<REALIZED-GAINS-CURRENT> (3,843,955)
<APPREC-INCREASE-CURRENT> 11,158,332
<NET-CHANGE-FROM-OPS> 6,723,751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 569,416
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,380,621
<NUMBER-OF-SHARES-REDEEMED> (191,923)
<SHARES-REINVESTED> 32,117
<NET-CHANGE-IN-ASSETS> 117,549,705
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,290,661
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 643,947
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,112,496
<AVERAGE-NET-ASSETS> 35,989,654
<PER-SHARE-NAV-BEGIN> 11.31
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 3.38
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.11)
<RETURNS-OF-CAPITAL> (0.08)
<PER-SHARE-NAV-END> 14.45
<EXPENSE-RATIO> 1.495
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>