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Gardner Lewis Investment Trust
P.O. Drawer 69
Rocky Mount, North Carolina 27802-0069
March 12, 1996 Telephone 919-972-9922
U.S. WATS 800-525-FUND
Facsimile 919-442-4226
To the Shareholders of The Chesapeake Growth Fund:
We are pleased to enclose the semi-annual report for The Chesapeake Growth
Fund. Should you have any questions or desire additional information, please
feel free to contact the Fund Administrator at (800) 525-3863, or the offices
of Gardner Lewis Asset Management at (610) 558-2800.
<PAGE>
THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ----------------
<S> <C> <C>
COMMON STOCKS - 90.96%
ADVERTISING - 0.92%
(a) National Media Corporation 237,400 $ 4,213,850
----------------
AUTO PARTS - ORIGINAL EQUIPMENT - 0.82%
Titan Wheel International, Inc. 247,500 3,774,375
----------------
AUTO PARTS - REPLACEMENT EQUIPMENT - 0.73%
(a) Custom Chrome, Inc. 133,700 3,342,500
----------------
BROADCAST - RADIO & TELEVISION - 0.86%
(a) Westcott Communications, Inc. 305,000 3,965,000
----------------
COMMERCIAL SERVICES - 2.62%
(a) Career Horizons, Inc. 188,000 4,512,000
(a) CDI Corporation 289,900 7,537,400
----------------
12,049,400
----------------
COMPUTER SOFTWARE & SERVICES - 11.68%
(a) Black Box Corporation 271,100 4,676,475
(a) BMC Software, Inc. 237,800 13,257,350
Computer Associates International, Inc. 160,300 11,020,625
(a) Network General Corporation 121,200 4,878,300
(a) Sterling Software, Inc. 94,900 6,322,712
System Software Associates, Inc. 641,850 13,478,850
----------------
53,634,312
----------------
COMPUTERS - 13.22%
(a) 3Com Corporation 199,100 9,731,012
(a) Applied Magnetics Corporation 282,000 4,441,500
(a) Auspex Systems, Inc. 277,500 5,654,063
(a) Komag, Inc. 341,800 10,723,975
(a) Optical Data Systems, Inc. 173,700 4,776,750
(a) Seagate Technology, Inc. 108,400 7,073,100
(a) Sequent Computer Systems, Inc. 161,100 1,892,925
(a) StorMedia, Inc. 121,500 3,766,500
(a) Stratus Computer, Inc. 262,800 7,621,200
(a) Zebra Technologies Corporation 164,200 5,049,150
----------------
60,730,175
----------------
</TABLE>
(CONTINUED)
<PAGE>
THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ----------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONICS - 5.60%
(a) Altron, Inc. 97,500 $ 2,973,750
(a) C.P. Clare Corporation 194,000 3,540,500
Harman International Industries, Inc. 57,230 2,031,665
(a) Symbol Technologies, Inc. 186,100 7,071,800
Technitrol, Inc. 208,800 5,350,500
(a) Zygo Corporation 141,400 4,736,900
----------------
25,705,115
----------------
ELECTRONICS - SEMICONDUCTOR - 6.98%
(a) Adaptec, Inc. 230,700 12,933,619
(a) Atmel Corporation 305,400 8,169,450
(a) MEMC Electronic Materials, Inc. 219,300 7,456,200
(a) Paradigm Technology, Inc. 135,800 2,037,000
(a) Photronics, Inc. 66,100 1,454,200
----------------
32,050,469
----------------
ENGINEERING & CONSTRUCTION - 0.74%
(a) American Buildings Company 159,800 3,375,775
----------------
ENVIRONMENTAL CONTROL - 3.20%
(a) United Waste Systems, Inc. 116,700 5,426,550
(a) USA Waste Services, Inc. 433,900 9,274,612
----------------
14,701,162
----------------
MACHINE - DIVERSIFIED - 11.53%
(a) Advanced Semiconductor Materials International N.V. 105,000 3,885,000
(a) Applied Materials, Inc. 163,400 5,841,550
(a) ASM Lithography Holding 167,600 8,128,600
(a) Credence Systems Corporation 188,550 3,582,450
(a) FSI International, Inc. 213,400 2,800,875
(a) KLA Instruments Corporation 286,400 6,873,600
(a) Lam Research Corporation 50,900 1,876,937
(a) Novellus Systems, Inc. 136,100 7,128,237
(a) Tegal Corporation 433,600 3,902,400
(a) Teradyne, Inc. 178,600 3,683,625
(a) Ultratech Stepper, Inc. 220,600 5,239,250
----------------
52,942,524
----------------
MEDICAL - HOSPITAL MANAGEMENT & SERVICE - 7.75%
Columbia/HCA Healthcare Corporation 76,384 4,182,024
(a) Foundation Health Corporation 235,900 9,200,100
(a) HEALTHSOUTH Corporation 147,600 5,166,000
(a) Living Centers of America, Inc. 100,000 4,050,000
</TABLE>
(CONTINUED)
<PAGE>
THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ----------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MEDICAL - HOSPITAL MANAGEMENT & SERVICE (CONTINUED)
(a) OrNda HealthCorp 256,100 $ 6,562,563
(a) Vivra, Inc. 217,650 6,420,675
----------------
35,581,362
----------------
MEDICAL SUPPLIES - 1.62%
(a) MediSense, Inc. 38,900 1,210,762
(a) Sofamor Danek Group, Inc. 192,300 6,249,750
----------------
7,460,512
----------------
MISCELLANEOUS - MANUFACTURING - 1.13%
Millipore Corporation 116,500 5,169,688
----------------
OIL & GAS - EQUIPMENT & SERVICES - 0.70%
(a) Petroleum Geo-Services A/S 148,000 3,219,000
----------------
RESTAURANTS & FOOD SERVICE - 0.70%
(a) IHOP Corporation 118,800 3,222,450
----------------
RETAIL - APPAREL - 5.81%
Authentic Fitness Corporation 182,700 5,092,763
(a) Jones Apparel Group, Inc. 182,900 7,567,487
(a) Kenneth Cole Productions, Inc. 201,000 2,964,750
(a) Nautica Enterprises, Inc. 94,551 3,876,591
Warnaco Group, Inc. 276,000 7,176,000
----------------
26,677,591
----------------
RETAIL - DEPARTMENT STORES - 0.54%
(a) Consolidated Stores Corporation 95,500 2,483,000
----------------
RETAIL - SPECIALTY LINE - 1.58%
(a) Borders Group, Inc. 313,600 7,252,000
----------------
SHOES - LEATHER - 1.92%
(a) Nine West Group, Inc. 122,200 4,796,350
Wolverine World Wide, Inc. 140,500 4,039,375
----------------
8,835,725
----------------
TELECOMMUNICATIONS EQUIPMENT - 4.50%
ECI Telecommunications Ltd. 116,600 2,973,300
(a) Inter-Tel, Inc. 225,000 4,021,875
(a) InterVoice, Inc. 221,700 5,293,088
(a) Newbridge Networks Corporation 171,800 8,396,725
----------------
20,684,988
----------------
</TABLE>
(CONTINUED)
<PAGE>
THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ----------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TRANSPORTATION - AIR - 2.85%
Comair Holdings, Inc. 128,950 $4,013,569
(a) Mesa Airlines, Inc. 339,000 4,025,625
(a) ValuJet, Inc. 219,200 5,069,000
----------------
13,108,194
----------------
UTILITIES - ELECTRIC - 1.54%
(a) California Energy Company, Inc. 319,700 7,073,363
----------------
UTILITIES - TELECOMMUNICATIONS - 1.42%
(a) WorldCom, Inc. 165,300 6,508,688
----------------
TOTAL COMMON STOCKS (COST $335,802,645) 417,761,218
----------------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C> <C>
REPURCHASE AGREEMENT (B) - 9.86%
Wachovia Bank 45,297,653 45,297,653
5.32%, due March 1, 1996
(Cost $45,297,653)
TOTAL VALUE OF INVESTMENTS (COST $381,100,298) 100.82% 463,058,871
Liabilities In Excess of Other Assets (0.82)% (3,783,800)
--------- ----------------
NET ASSETS 100.00% $459,275,071
========= ================
</TABLE>
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into February 29, 1996, with a
maturity value of $68,302,116 collateralized by $71,660,000 U.S.
Treasury Bills, due September 19, 1996. The aggregate market value
of the collateral at February 29, 1996 was $69,697,130. The Fund's
pro rata interest in the market value of the collateral at February
29, 1996 was $46,229,549. The Fund's pro rata interest in the joint
repurchase agreement collateral is taken into possession by the
Fund's custodian upon entering into the repurchase agreement. The
collateral is marked to market daily to ensure its market value is
at least 102 percent of the sales price of the repurchase agreement.
(c) Aggregate cost for federal income tax purposes is the same as for
financial reporting purposes. Unrealized appreciation (depreciation)
of investments for financial reporting and federal income tax
purposes is as follows:
Unrealized appreciation $98,760,535
Unrealized depreciation (16,801,963)
----------------
NET UNREALIZED APPRECIATION $81,958,572
================
SEE ACCCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
THE CHESAPEAKE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at value (Cost $381,100,298) $463,058,871
Cash 108,949
Interest receivable 202,888
Dividends receivable 7,046
Receivable for investments sold 3,401,247
Fund shares sold receivable 131,535
Transaction losses receivable 5,609
Reserve Premium 11,486
Deferred organization expenses, net (note 3) 15,557
-----------------
TOTAL ASSETS 466,943,188
-----------------
LIABILITIES
Accrued expenses 11,857
Payable for investment purchases 7,606,054
Payable for fund shares redeemed 40,079
Payable to Investment Advisor 10,127
-----------------
TOTAL LIABILITIES 7,668,117
-----------------
NET ASSETS
(applicable to 26,251,353 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $459,275,071
=================
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($459,275,071 / 26,251,353 shares) $17.50
=================
OFFERING PRICE PER SHARE
(100 / 97 of $17.50 adjusted to nearest cent) $18.04
=================
NET ASSETS CONSIST OF:
Paid-in capital $373,428,886
Undistributed net investment loss (2,476,422)
Undistributed net realized gain on investments 6,364,035
Net unrealized appreciation on investments 81,958,572
-----------------
$459,275,071
=================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
THE CHESAPEAKE GROWTH FUND
STATEMENT OF OPERATIONS
SIX MONTH PERIOD ENDED FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S>
INVESTMENT INCOME <C>
INCOME
Interest $ 482,997
Dividends 213,085
Miscellaneous 2,461
---------------
TOTAL INCOME 698,543
---------------
EXPENSES
Investment advisory fees (note 2) 2,795,168
Fund administration fees (note 2) 192,402
Professional fees 25,998
Custody fees 18,679
Shareholder recordkeeping fees 12,823
Fund accounting fees (note 2) 10,500
Securities pricing fees 2,813
Registration and filing administration fees 2,186
Registration and filing expenses 69,125
Printing expenses 24,169
Shareholder servicing expenses 10,520
Amortization of deferred organization expenses (note 3) 4,015
Operating expenses 3,790
Trustee fees and meeting expenses 2,777
---------------
TOTAL EXPENSES 3,174,965
---------------
NET INVESTMENT LOSS (2,476,422)
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from security transactions 25,738,953
Increase in unrealized depreciation on investments (68,612,693)
---------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (42,873,740)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($45,350,162)
===============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
THE CHESAPEAKE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 29, YEAR ENDED
1996 AUGUST 31,
(UNAUDITED) 1995
---------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss $ (2,476,422) $ (3,232,264)
Net realized gain from investment transactions 25,738,953 18,861,310
Increase (decrease) in unrealized appreciation on
investments (68,612,693) 133,249,034
---------------- --------------
Net increase (decrease) in net assets resulting from
operations (45,350,162) 148,878,080
---------------- --------------
Distributions to shareholders from
Net investment income 0 0
Net realized gain from investment transactions (30,366,959) 0
---------------- --------------
Decrease in net assets resulting from distributions (30,366,959) 0
---------------- --------------
Capital share transactions
(a) Increase in net assets resulting from
capital share transactions 74,706,148 132,185,206
---------------- --------------
Total increase (decrease) in net assets (1,010,973) 281,063,286
NET ASSETS
Beginning of period 460,286,044 179,222,758
---------------- --------------
End of period $459,275,071 $460,286,044
---------------- --------------
</TABLE>
(a) A summary of capital share activity follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995
SHARES VALUE SHARES VALUE
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 3,922,332 $71,441,444 10,830,373 $160,528,590
Shares issued for reinvestment
of distributions 1,453,621 27,517,060 0 0
---------- ----------- ---------- ------------
5,375,953 98,958,504 10,830,373 160,528,590
Shares redeemed (1,361,368) (24,252,356) (1,793,318) (28,343,384)
---------- ----------- ---------- ------------
Net increase 4,014,585 $74,706,148 9,037,055 $132,185,206
========== =========== ========== ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 4, 1993
SIX MONTHS ENDED (COMMENCEMENT
FEBRUARY 29, YEAR ENDED YEAR ENDED OF OPERATIONS) TO
1996 AUGUST 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 1995 1994 1993
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 20.70 $ 13.58 $ 11.86 $ 10.00
Income (loss) from investment operations
Net investment loss (0.09) (0.15) (0.05) (0.01)
Net realized and unrealized gain
(loss) on investments (1.95) 7.27 1.98 1.87
Total from investment operations (2.04) 7.12 1.93 1.86
Distributions to shareholders from
Net investment income 0.00 0.00 (0.16) 0.00
Net realized gain from
investment transactions (1.16) 0.00 (0.05) 0.00
Total distributions (1.16) 0.00 (0.21) 0.00
Net Asset Value, End of Period $ 17.50 $ 20.70 $ 13.58 $ 11.86
Total return (a) (9.66)% 52.45% 16.42% 29.76%(b)
Ratios/supplemental data
Net assets, end of period $459,275,071 $460,286,044 $179,222,758 $25,421,085
Ratio of expenses to average net assets
Before expense reimbursements 1.43%(b) 1.43% 1.57% 2.29%(b)
After expense reimbursements 1.43%(b) 1.43% 1.49% 1.54%(b)
Ratio of net investment loss to average
net assets
Before expense reimbursements (1.11)%(b) (1.07)% (0.87)% (1.22)%(b)
After expense reimbursements (1.11)%(b) (1.07)% (0.79)% (0.47)%(b)
Portfolio turnover rate 47.69 % 75.42 % 66.03 % 45.95 %
</TABLE>
(a) Total return does not reflect payment of a sales charge
(b) Annualized
See accompanying notes to financial statements
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Chesapeake Growth Fund (the "FUND") is a diversified series of
shares of beneficial interest of the Gardner Lewis Investment Trust
(the "TRUST"). The Trust is an open-end investment company which was
organized in 1992 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940. The Fund began operations on
January 4, 1993. The following is a summary of significant accounting
policies followed by the Fund:
A. Security Valuation - The Fund's investments in securities are
carried at market value. Securities listed on an exchange or
quoted on a national market system are valued at the last
sales price as of 4:00 p.m. New York time. Other securities
traded in the over-the-counter market and listed securities
for which no sale was reported on that date are valued at the
most recent bid price. Securities for which market quotations
are not readily available, if any, are valued by using an
independent pricing service or by following procedures
approved by the Board of Trustees. Shortterm investments are
valued at cost which approximates market value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
As a result of the Fund's ability to offset a portion of its
short term capital gains with its operating net investment
loss for income tax purposes, a reclassification adjustment of
$3,232,264 in 1995 has been made on the statement of assets
and liabilities to decrease accumulated net investment loss
bringing it to zero and decrease undistributed net realized
gain on investments.
C. Investment Transactions - Investment transactions are
recorded on the trade date. Realized gains and losses are
determined using the specific identification cost method.
Interest income is recorded daily on the accrual basis.
Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, generally payable in March, June, September and
December, on a date selected by the Trust's Trustees. In
addition, distributions may be made annually in November out
of net realized gains through October 31 of that year. The
Fund may make a supplemental distribution subsequent to the
end of its fiscal year ending August 31.
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
FEBRUARY 29, 1996
(UNAUDITED)
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, 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. As compensation for its services, the Advisor receives a
fee at the annual rate of 1.25% of the Fund's average daily net assets.
The Fund's administrator, The Nottingham Company, L.L.C. (the
"ADMINISTRATOR"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to an accounting and administrative agreement with the
Trust. As compensation for its services, the Administrator receives a
fee at the annual rate of 0.20% of the Fund's first $25 million of
average daily net assets, 0.15% of the next $25 million, and 0.075% of
average daily net assets over $50 million. The Administrator also
receives a monthly fee of $1,750 for accounting and recordkeeping
services. Additionally, the Administrator charges the Fund for
servicing of shareholder accounts and registration of the Fund's
shares. The Administrator also charges for certain expenses involved
with the daily valuation of portfolio securities.
Currently, the Fund does not offer its shares for sale in states which
require limitations to be placed on its expenses.
Capital Investment Group, Inc. (the "DISTRIBUTOR") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the six month period ended February 29, 1996, the Distributor retained
sales charges in the amount of $7,494.
Certain Trustees and officers of the Trust are also officers of the
Advisor or the Administrator.
NOTE 3 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization
and the registration of its shares have been assumed by the Fund.
The organization expenses are being amortized over a period of sixty
months. Investors purchasing shares of the Fund bear such expenses only
as they are amortized against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by a
pro rata portion of any unamortized organization expenses in the same
proportion as the number of initial shares being redeemed bears to the
number of initial shares of the Fund outstanding at the time of the
redemption.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments other than short-term investments
aggregated $213,697,424 and $208,045,432, respectively, for the six
month period ended February, 29 1996.
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