THE CHEAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
February 28, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Value
Shares (note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.25%
Advertising - 0.54%
(a)AccuStaff, Inc. 130,800 $2,714,100
------- ----------
Apparel - Textiles - 6.19%
(a)Jones Apparel Group, Inc. 373,000 13,847,624
Liz Claiborne, Inc. 203,700 8,249,850
Warnaco Group, Inc. 289,400 9,224,624
------- ---------
31,322,098
----------
Bicycles - 0.74%
(a)Cannondale Corporation 182,600 3,720,475
------- ---------
Building Materials - 2.33%
Apogee Enterprises, Inc. 257,400 5,115,825
Lowe's Companies, Inc. 183,300 6,690,450
------- ---------
11,806,275
----------
Commercial Services - 0.74%
(a)Personnel Group of America, Inc. 145,400 3,725,875
------- ---------
Computers - 11.53%
(a)3Com Corporation 96,500 3,195,057
(a)Applied Magnetics Corporation 133,200 5,178,150
(a)Compaq Computer Corporation 93,500 7,409,875
(a)Dell Computer Corporation 117,400 8,350,074
(a)EMC Corporation 186,800 6,724,800
(a)Komag, Inc. 69,800 2,094,000
(a)Network Computing Devices, Inc. 180,300 2,276,288
(a)Quantum Corporation 182,200 7,242,450
(a)Read-Rite Corporation 163,500 5,017,406
(a)Seagate Technology, Inc. 145,200 6,860,700
(a)SMART Modular Technologies, Inc. 137,100 3,993,038
------- ---------
58,341,838
----------
Computer Software & Services - 8.69%
(a)BancTec, Inc. 216,800 5,528,400
(a)BMC Software, Inc. 174,400 7,466,500
(a)Cadence Design Systems, Inc. 179,550 6,620,906
(a)Hummingbird Communications Ltd. 127,000 3,651,250
(a)Network General Corporation 187,200 4,141,800
(a)Structural Dynamics Research Corporat 256,100 5,089,988
(a)System Software Associates, Inc. 675,850 7,011,944
(a)Vanstar Corporation 323,900 4,453,625
------- ---------
43,964,413
----------
(Continued)
<PAGE>
THE CHEAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
February 28, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Value
Shares (note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Cosmetics & Personal Care - 0.53%
Nature's Sunshine Products, Inc. 174,200 $2,678,325
------- ----------
Electronics - 1.95%
(a)Flextronics International, Ltd. 18,300 414,038
Innovex, Inc. 102,700 2,195,213
Technitrol, Inc. 162,000 7,249,500
------- ---------
9,858,751
---------
Electronics - Semiconductor - 8.82%
(a)Adaptec, Inc. 488,900 18,608,755
(a)Advanced Micro Devices, Inc. 156,200 5,603,675
(a)ESS Technology, Inc. 142,500 3,749,531
(a)Lattice Semiconductor Corporation 99,200 4,736,800
(a)MEMC Electronic Materials, Inc. 95,500 2,339,750
(a)PRI Automation, Inc. 85,600 4,226,500
(a)S3 Incorporated 312,500 5,410,156
------- ---------
44,675,167
----------
Emerging Technology - 1.09%
Cognizant Corporation 158,000 5,510,250
------- ---------
Engineering & Construction - 0.49%
(a)American Buildings Company 94,000 2,491,000
------ ---------
Environmental Control - 2.68%
(a)Philip Environmental, Inc. 80,850 1,323,919
(a)USA Waste Services, Inc. 339,400 12,218,399
------- ----------
13,542,318
----------
Financial - Banks, Commercial - 1.45%
(a)AmeriCredit Corporation 144,000 2,808,000
The Money Store, Inc. 174,900 4,525,538
------- ---------
7,333,538
---------
Foreign Securities - 4.32%
ECI Telecommunications Limited 385,300 9,150,874
(a)Petroleum Geo-Services ASA 99,800 4,191,600
Teva Pharmaceutical Industries Ltd. 137,800 8,517,763
------- ---------
21,860,237
----------
Hand & Machine Tools - 0.52%
SPX Corporation 57,400 2,633,225
------ ---------
Imaging - 1.08%
Polaroid Corporation 128,900 5,446,025
------- ---------
Lodging - 1.03%
(a)Prime Hospitality Corp. 314,900 5,195,850
------- ---------
(Continued)
<PAGE>
THE CHEAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
February 28, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Value
Shares (note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Machine - Diversified - 2.96%
AGCO Corporation 191,400 $5,430,975
(a)ASM Lithography Holding 52,800 3,511,200
DT Industries, Inc. 146,100 4,309,950
(a)Special Devices, Inc. 79,600 1,761,150
------ ---------
15,013,275
----------
Medical - Hospital Management & Service - 4.00%
(a)Genesis Health Ventures, Inc. 251,500 8,708,188
(a)HEALTHSOUTH Corporation 148,900 5,993,225
(a)MedPartners, Inc. 251,500 5,533,000
------- ---------
20,234,413
----------
Medical Supplies - 2.04%
(a)Coherent, Inc. 105,500 4,971,688
(a)Sofamor Danek Group, Inc. 135,200 5,357,300
------- ---------
10,328,988
----------
Metal Fabrication & Hardware - 0.51%
UNR Industries, Inc. 347,100 2,603,250
------- ---------
Office & Business Equipment - 1.33%
(a)U.S. Office Products Company 210,700 6,742,400
------- ---------
Oil & Gas - Equipment & Services - 2.78%
(a)J. Ray McDermott, S.A. 207,700 4,777,100
(a)Reading & Bates Corporation 199,900 4,847,575
(a)Rowan Companies, Inc. 223,200 4,436,100
------- ---------
14,060,775
----------
Pharmaceuticals - 0.98%
(a)Watson Pharmaceuticals, Inc. 114,000 4,973,250
------- ---------
Restaurants & Food Service - 1.76%
(a)Boston Chicken, Inc. 147,600 4,833,900
CKE Restaurants, Inc. 210,300 4,074,563
------- ---------
8,908,463
---------
Retail - Apparel - 4.17%
(a)AnnTaylor Stores Corporation 286,800 5,736,000
Ross Stores, Inc. 79,700 3,825,600
(a)Stage Stores, Inc. 272,000 5,780,000
TJX Companies, Inc. 138,400 5,778,200
------- ---------
21,119,800
----------
Retail - Department Stores - 3.15%
(a)Consolidated Stores Corporation 153,000 5,374,125
(a)Fred Meyer, Inc. 135,500 5,369,188
(a)Proffitt's, Inc. 160,300 5,189,713
------- ---------
15,933,026
----------
(Continued)
<PAGE>
THE CHEAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
February 28, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Value
Shares (note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Retail - Specialty Line - 5.25%
(a)Borders Group, Inc. 172,500 $7,266,563
Cash America International, Inc. 35,600 339,245
(a)Eagle Hardware & Garden, Inc. 57,300 1,117,350
(a)Footstar, Inc. 16,100 406,525
(a)General Nutrition Companies, Inc. 273,300 4,919,400
(a)Hollywood Entertainment Corporation 66,900 1,605,600
(a)Inacom Corporation 127,900 3,325,400
(a)Staples, Inc. 350,500 7,579,563
------- ---------
26,559,646
----------
Telecommunications - 1.85%
(a)MasTec, Inc. 78,800 4,137,000
(a)Tel-Save Holdings, Inc. 293,400 5,244,525
------- ---------
9,381,525
---------
Telecommunications Equipment - 2.76%
(a)Cable Design Technologies 89,900 2,382,350
(a)Newbridge Networks Corporation 163,100 5,198,813
(a)U.S. Robotics Corporation 114,500 6,390,531
------- ---------
13,971,694
----------
Transportation - Air - 2.65%
(a)AirNet Systems, Inc. 163,200 2,325,600
Comair Holdings, Inc. 194,825 4,018,266
(a)Gulfstream Aerospace Corporation 203,600 4,428,300
(a)Mesa Air Group, Inc. 413,400 2,635,425
------- ---------
13,407,591
----------
Utilities - Electric - 3.84%
(a)Calenergy Co., Inc. 462,100 15,422,587
(a)Calpine Corporation 217,500 3,996,563
------- ---------
19,419,150
----------
Utilities - Telecommunications - 1.88%
(a)WorldCom, Inc. 357,800 9,526,424
------- ---------
Wholesale - Special Line - 0.62%
(a)CellStar Corporation 120,300 3,112,763
------- ---------
Total Common Stocks (Cost $398,678,639) 492,116,193
-----------
(Continued)
<PAGE>
THE CHEAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
February 28, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Principal Value
Amount (note 1)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (b) - 1.25%
Wachovia Bank $6,322,443 $6,322,443
---------- ----------
5.38%, due March 3, 1997
(Cost $6,322,443)
Total Value of Investments (Cost $405,001,082 (c)) 98.50% $498,438,636
Other Assets Less Liabilities 1.50% 7,611,163
---- ---------
Net Assets 100.00% $506,049,799
====== ============
(a) Non-income producing investment.
(b) The repurchase agreement is fully collateralized by U. S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreeement is through participation in a joint
account with other funds administered by The Nottingahm Company.
(c) Aggregate cost for financial reporting and federal income tax purposes is
the same. Unrealized appreciation (depreciation) of investments for
financial reporting and federal income tax purposes is as follows:
Unrealized appreciation $107,047,991
Unrealized depreciation (13,610,437)
------------
Net unrealized appreciation $93,437,554
============
See accompanying notes to financial statements
<PAGE>
THE CHESAPEAKE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997
(Unaudited)
ASSETS
Investments, at value (cost $405,001,082) $498,438,636
Cash 975,080
Interest receivable 24,716
Dividends receivable 87,880
Receivable for investments sold 11,082,414
Receivable for fund shares sold 11,866
Prepaid expenses 35,943
Deferred organization expenses, net (note 4) 7,505
---------------
Total assets 510,664,040
---------------
LIABILITIES
Accrued expenses 19,159
Payable for investment purchases 4,595,032
Federal and state income taxes withheld 50
---------------
Total liabilities 4,614,241
---------------
NET ASSETS
(applicable to 27,926,745 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $506,049,799
===============
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($506,049,799 / 27,926,745 shares) $18.12
===============
OFFERING PRICE PER SHARE
(100 / 97 of $18.12) $18.68
===============
NET ASSETS CONSIST OF
Paid-in capital $397,721,209
Undistributed net realized gain on investments 14,891,036
Net unrealized appreciation on investments 93,437,554
---------------
$506,049,799
===============
See accompanying notes to financial statements
<PAGE>
THE CHESAPEAKE GROWTH FUND
STATEMENT OF OPERATIONS
Period ended February 28, 1997
(Unaudited)
INVESTMENT INCOME
Income
Interest $193,919
Dividends 422,915
Miscellaneous 72,703
-------------
Total income 689,537
-------------
Expenses
Investment advisory fees (note 2) 3,108,501
Fund administration fees (note 2) 211,304
Custody fees 16,282
Registration and filing administration fees 3,433
Fund accounting fees (note 2) 10,413
Audit fees 4,056
Legal fees 8,091
Securities pricing fees 3,859
Shareholder administrative fees 37,302
Shareholder recordkeeping fees 8,282
Shareholder servicing expenses 14,416
Registration and filing expenses 23,184
Printing expenses 5,628
Amortization of deferred organization expenses (note 4) 3,993
Trustee fees and meeting expenses 3,214
Other operating expenses 3,092
-------------
Total expenses 3,465,050
-------------
Net investment loss (2,775,513)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 17,967,419
Increase in unrealized appreciation on investments 48,344,088
-------------
Net realized and unrealized gain on investments 66,311,507
-------------
Net increase in net assets resulting from operations $63,535,994
=============
See accompanying notes to financial statements
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
- ---------------------------------------------------------------------------------------------------
Period ended Year ended
February 28, August 31,
1997 1996
- ---------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss $(2,775,513) $(4,857,254)
Net realized gain from investment transactions 17,967,419 48,006,720
Increase (decrease) in unrealized appreciation on investments 48,344,088 (105,477,799)
----------- ------------
Net increase (decrease) in net assets resulting from operation 63,535,994 (62,328,333)
----------- ------------
Distributions to shareholders from
Net realized gain from investment transactions (28,932,672) (30,366,960)
----------- ------------
Capital share transactions
Increase in net assets resulting from capital share transactions 11,138,981 92,716,745
----------- ------------
Total increase in net assets 45,742,303 21,452
NET ASSETS
Beginning of period 460,307,496 460,286,044
----------- -----------
End of period (including accumulated net investment loss of $0 at $506,049,799 $460,307,496
February 28, 1997 and $0 at August 31, 1996) =========== ===========
(a) A summary of capital share activity follows:
- --------------------------------------------------------------------------------------------------
Period ended Year ended
February 28, 1997 August 31, 1996
- --------------------------------------------------------------------------------------------------
Shares Value Shares Value
Shares sold 2,013,175 $36,411,084 6,577,730 $118,581,825
Shares issued for reinvestment
of distributions 1,565,933 26,934,053 1,453,621 27,517,060
------------ ----------- --------- -----------
3,579,108 63,345,137 8,031,351 146,098,885
Shares redeemed (2,917,967) (52,206,156) (3,002,515) (53,382,140)
------------ ----------- -------- ----------- -
Net increase 661,141 $11,138,981 5,028,836 $92,716,745
============ =========== ======== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
-----------------------------------------------------------------------------------------------------------------------------------
For the
period from
January 4, 1993
(commencement
Period ended Year ended Year ended Year ended of operations)to
February 28, August 31, August 31, August 31, August 31,
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.88 $20.70 $13.58 $11.86 $10.00
Income (loss) from investment operations
Net investment loss (0.10) (0.18) (0.15) (0.05) (0.01)
Net realized and unrealized gain (loss) on inv 2.40 (2.53) 7.27 1.98 1.87
------- ------- ------- ------- -------
Total from investment operations 2.30 (2.71) 7.12 1.93 1.86
------- ------- ------- ------- -------
Distributions to shareholders from
Net investment income 0.00 0.00 0.00 (0.16) 0.00
Net realized gain from investment transactions (1.06) (1.11) 0.00 (0.05) 0.00
------- ------- ------- ------- -------
Total distributions (1.06) (1.11) 0.00 (0.21) 0.00
------- ------- ------- ------- -------
Net asset value, end of period $18.12 $16.88 $20.70 $13.58 $11.86
======= ======= ======= ======= =======
Total return (a) 13.97% (12.81)% 52.45% 16.42% 29.76%
======= ======= ======= ======= =======
Ratios/supplemental data
Net assets, end of period $506,049,799 $460,307,496 $460,286,044 $179,222,758 $25,421,085
============ ============ ============ ============ ===========
Ratio of expenses to average net assets
Before expense reimbursements 1.39%(b) 1.42% 1.43% 1.57 % 2.29%(b)
After expense reimbursements 1.39%(b) 1.42% 1.43% 1.49 % 1.54%(b)
Ratio of net investment loss to average net assets
Before expense reimbursements (1.11)%(b) (1.05)% (1.07)% (0.87)% (1.22)%(b)
After expense reimbursements (1.11)%(b) (1.05)% (1.07)% 0.79 % (0.47)%(b)
Portfolio turnover rate 64.23% 110.04% 75.42% 66.03% 45.95%
Average broker commission per share $0.06
(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
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-ended 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 investment objective
of The Fund is to seek capital appreciation through investments in equity
securities, consisting primarily of common and preferred stocks and securities
convertible into common stocks. 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
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.
Short-term investments are valued at cost which approximates 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.
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 an 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.
E. Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
(Continued)
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
(Unaudited)
F. 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 which 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 a repurchase agreement which will cause more than 10% of its
net assets to be invested in repurchase agreements which 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 Investment Company Act of 1940.
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, (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 period ended
February 28, 1997, the Distributor retained sales charges in the amount of $722.
Certain Trustees and officers of the Trust are also officers of the Advisor or
the Administrator.
(Continued)
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
(Unaudited)
NOTE 3 - DEFERRED ORGANIZATION EXPENSES
Expenses totalling $39,700 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.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments other than short-term investments aggregated
$313,572,232 and $325,808,063, respectively, for the period ended February 28,
1997.
