GARDNER LEWIS INVESTMENT TRUST, 497, 1999-07-15

GARDNER LEWIS INVESTMENT TRUST
497, 1999-07-15

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Cusip Number 36559B401 NASDAQ Symbol CHESX
________________________________________________________________________________

THE CHESAPEAKE GROWTH FUND

A series of the
Gardner Lewis Investment Trust

INSTITUTIONAL SHARES
________________________________________________________________________________

PROSPECTUS
June 30, 1999

The Chesapeake Growth Fund (the "Fund") seeks capital appreciation. In seeking
to achieve its objective, the Fund will invest primarily in equity securities of
medium and large capitalization companies. This Fund also offers other classes
of shares: Super-Institutional Class Shares, Investor Class A Shares, Investor
Class C Shares, and Investor Class D Shares, which are offered by other
prospectuses.

Investment Advisor
------------------

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

1-800-430-3863

The Securities and Exchange Commission has not approved the securities being
offered by this prospectus or determined whether this prospectus is accurate and
complete. It is unlawful for anyone to make any representation to the contrary.
<PAGE>

TABLE OF CONTENTS

Page
----

THE FUND.......................................................................2
- -------
Investment Objective.....................................................2
Principal Investment Strategies..........................................2
Principal Risks of Investing in the Fund.................................3
Bar Chart and Performance Table..........................................4
Fees and Expenses of the Fund............................................5

MANAGEMENT OF THE FUND.........................................................6
- ----------------------
The Investment Advisor...................................................6
The Administrator........................................................7
The Transfer Agent.......................................................7
The Distributor..........................................................7

INVESTING IN THE FUND..........................................................7
- ---------------------
Minimum Investment.......................................................7
Purchase and Redemption Price............................................7
Purchasing Shares........................................................8
Redeeming Your Shares....................................................9

OTHER IMPORTANT INVESTMENT INFORMATION........................................11
- --------------------------------------
Dividends, Distributions, and Taxes.....................................11
Year 2000...............................................................12
Financial Highlights ...................................................12
Additional Information..........................................Back Cover

<PAGE>
THE FUND
--------

INVESTMENT OBJECTIVE

The Chesapeake Growth Fund seeks capital appreciation. In seeking to achieve its
objective, the Fund will invest primarily in equity securities of medium and
large capitalization companies.

PRINCIPAL INVESTMENT STRATEGIES

The Fund, which is a diversified separate investment portfolio of the Gardner
Lewis Investment Trust (the "Trust"), seeks capital appreciation by investing
primarily in equity securities of medium and large capitalization companies. The
Fund considers a medium capitalization company to be one that has a market
capitalization, measured at the time that the Fund purchases the security,
between 1 billion and 10 billion. The Fund considers a large capitalization
company to be one that has a market capitalization, measured at the time that
the Fund purchases the security, of at least 10 billion. The Fund's investments
in these medium and large capitalization companies will be primarily in equity
securities, such as common and preferred stocks and securities convertible into
common stocks.

In making investment decisions for the Fund, Gardner Lewis Asset Management
("Advisor") will base those decisions on its analysis of companies that show
superior prospects for growth. 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. These changes often include:

o new product introductions,
o new distribution strategies,
o new manufacturing technology, and/or
o new management team or management philosophy.

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.

Additionally, companies in which the Fund invests typically will show strong
earnings growth when compared to the previous year's comparable period. The
Advisor also favors portfolio investments in companies whose price when
purchased is between 8 and 15 times projected earnings for the coming year. In
selecting these portfolio companies, the Advisor includes analysis of the
following:

o growth rate of earnings,
o financial performance,
o management strengths and weaknesses,
o current market valuation in relation to earnings growth,
o historic and comparable company valuations,
o level and nature of the company's debt, cash flow, working capital, and
o quality of the company's assets.

Under normal market conditions, the Fund will invest at least 90% of the Fund's
total assets in equity securities, of which no more than 25% of the Fund's total
assets will be invested in the securities of any one industry. Up to 10% of the
Fund's total assets may consist of foreign securities and sponsored ADRs.
However, all securities will be traded on domestic and foreign securities
exchanges or on the over-the-counter markets. While portfolio securities are
generally acquired for the long term, they may be sold under any of the
following circumstances:

2
<PAGE>

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

PRINCIPAL RISKS OF INVESTING IN THE FUND

An investment in the Fund is subject to investment risks, including the possible
loss of the principal amount invested and there can be no assurance that the
Fund will be successful in meeting its objective. The following sections
describe some of the risks involved with portfolio investments of the Fund.

Equity Securities: To the extent that the majority of the Fund's portfolio
consists of common stocks, it is expected that the Fund's net asset value will
be subject to greater price fluctuation than a portfolio containing mostly fixed
income securities.

Market Risk: Market risk refers to the risk related to investments in securities
in general and the daily fluctuations in the securities markets. The Fund's
performance will change daily based on many factors, including fluctuation in
interest rates, the quality of the instruments in the Fund's investment
portfolio, national and international economic conditions and general market
conditions.

Internal Change: Investing in companies which are undergoing internal change,
such as implementing new strategies or introducing new technologies, as
described above, may involve greater than average risk due to their unproven
nature.

Medium Capitalization Companies: As noted above, the Fund may invest a
significant portion of its assets in the equity securities of medium
capitalization companies. To the extent the Fund's assets are invested in medium
capitalization companies, the Fund may exhibit more volatility than if it were
invested exclusively in large capitalization companies because of the fact that
the fact that the securities of mid-cap companies usually have more limited
marketability and, therefore, may be more volatile than securities of larger,
more established companies or the market averages in general. Because mid-cap
companies normally have fewer shares outstanding than larger companies, it may
be more difficult to buy or sell significant amounts of such shares without an
unfavorable impact on prevailing prices. Another risk factor is that mid-cap
companies often have limited product lines, markets, or financial resources and
may lack management depth. Additionally, mid-cap companies are typically subject
to greater changes in earnings and business prospects than are larger, more
established companies, and there typically is less publicly available
information concerning mid-cap companies than for larger, more established
companies.

Although investing in securities of medium-sized companies offers potential
above-average returns if the companies are successful, the risk exists that the
companies will not succeed, and the prices of the companies' shares could
significantly decline in value. Therefore, an investment in the Fund may involve
a greater degree of risk than an investment in other mutual funds that seek
capital growth by investing in more established, larger companies.

3
<PAGE>

Portfolio Turnover: The Fund may sell portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities or changing market conditions. Since portfolio turnover may
involve paying brokerage commissions and other transaction costs, there could be
additional expenses for the Fund. The degree of portfolio activity may also have
an effect on the tax consequences of capital gain distributions. See "Financial
Highlights" for the Fund's portfolio turnover rate for prior periods.

Short-Term Investments: As a temporary defensive measure, the Advisor may
determine that market conditions warrant investing in investment-grade bonds,
U.S. Government Securities, repurchase agreements, money market instruments, and
to the extent permitted by applicable law and the Fund's investment
restrictions, shares of other investment companies. Under such circumstances,
the Advisor may invest up to 100% of the Fund's assets in these investments.
Since investment companies investing in other investment companies pay
management fees and other expenses relating to those investment companies,
shareholders of the Fund would indirectly pay both the Fund's expenses and the
expenses relating to those other investment companies with respect to the Fund's
assets invested in such investment companies. To the extent the Fund is invested
in short-term investments, it will not be pursuing its 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.

BAR CHART AND PERFORMANCE TABLE

The bar chart and table shown below provide an indication of the risks of
investing in the Chesapeake Growth Fund Institutional Shares by showing (on a
calendar year basis) changes in the Fund's average annual total returns from
year to year for the Fund's Institutional Shares and by showing (on a calendar
year basis) how the Fund's Institutional Shares average annual returns for one
year, three years, and since inception compare to those of a broad-based
securities market index. How the Fund has performed in the past is not
necessarily an indication of how the Fund will perform in the future.

[chart to be inserted here]
1998 12.50%
1997 15.40%
1996 16.76%
1995 27.05%

4
<PAGE>

o During the 4-year period shown in the bar chart, the highest return for a
calendar quarter was 27.93% (quarter ended December 31, 1998).
o During the 4-year period shown in the bar chart, the lowest return for a
calendar quarter was -22.31% (quarter ended September 30, 1998).
o The year-to-date return of the Institutional Shares as of the most recent
calendar quarter was -1.23% (quarter ended March 31, 1999).

- ---------------------------------- ------------- -------------- ---------------
Average Annual Total Returns Past 1 Year Past 3 Years Since
Period ended December 31, 1998 Inception*
- ---------------------------------- ------------- -------------- ---------------
The Chesapeake Growth Fund
Institutional Shares 12.50% 14.86% 16.80%
- ---------------------------------- ------------- -------------- ---------------
NASDAQ Industrial Index ** 7.22% 11.03% 11.69%
- ---------------------------------- ------------- -------------- ---------------
S&P 500 Total Return Index *** 28.58% 28.20% 26.42%
- ---------------------------------- ------------- -------------- ---------------

* April 6, 1994 (inception date of the Fund's Institutional Shares)
** The NASDAQ Industrial Index is a capitalization-weighted, unmanaged
index of all NASDAQ stocks in the industrial sector.
*** The S&P 500 Total Return Index is the Standard & Poor's Composite Index
of 500 stocks and is a widely recognized, unmanaged index of common
stock prices.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund:

Shareholder Fees for Institutional Shares
(fees paid directly from your investment)
-----------------------------------------

Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) ..............None
Redemption fee .......................................None

Annual Fund Operating Expenses for Institutional Shares
(expenses that are deducted from Fund assets)
---------------------------------------------

Management Fees.......................................1.00%
Distribution and/or Service (12b-1) Fees..............None
Other Expenses........................................0.22%
----
Total Annual fund Operating Expenses......................1.22%*
Fee Waivers and/or Expense Reimbursement.................(0.07%)
----
Net Expenses..............................................1.15%
====

* "Total Annual Fund Operating Expenses" are based upon actual
expenses incurred by the Institutional Shares of the Fund for the
fiscal year ended February 28, 1999. The Fund has entered into
brokerage/service arrangements in which several brokers have
agreed to pay certain expenses of the Fund. Absent these
arrangements, the Total Annual Fund Operating Expenses would have
been 1.22% of the average daily net assets of the Institutional
Shares of the Fund for the fiscal year ended February 28, 1999.
There can be no assurance that the Fund's brokerage/service
arrangements will continue in the future. See the
"Brokerage/Service Arrangements" section below.

5
<PAGE>

Example. This Example shows you the expenses you may pay over time by investing
in the Fund. Since all funds use the same hypothetical conditions, it should
help you compare the costs of investing in the Fund versus other funds. The
Example assumes the following conditions:

(1) You invest $10,000 in the Fund for the periods shown;
(2) You reinvest all dividends and distributions;
(3) You redeem all of your shares at the end of those periods;
(4) You earn a 5% total return; and
(5) The Fund's expenses remain the same.

Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above.

- ------------------------ ------------- -------------- ------------ -------------
Period Invested 1 Year 3 Years 5 Years 10 Years
- ------------------------ ------------- -------------- ------------ -------------
Your Costs $117 $387 $670 $1,477
- ------------------------ ------------- -------------- ------------ -------------

MANAGEMENT OF THE FUND
----------------------

THE INVESTMENT ADVISOR

The Fund's Advisor, Gardner Lewis Asset Management, established as a Delaware
corporation in 1990 and converted to a Pennsylvania limited partnership in 1994,
is controlled by W. Whitfield Gardner. Mr. Gardner and John L. Lewis, IV are
principals of the Advisor and executive officers of the Trust. They have been
responsible for day-to-day management of the Fund's portfolio since its
inception in 1993. They have been with the Advisor since its inception on
September 1, 1990. The Advisor has approximately $3.5 billion in assets under
management and provides investment advice to corporations, trusts, pension and
profit sharing plans, other business and institutional accounts, individuals, as
well as other investment companies.

Brokerage/Service Arrangements. The Fund has entered into brokerage/service
arrangements with certain brokers who paid a portion of the Fund's expenses for
the fiscal year ended February 28, 1999. This program has been reviewed by the
Board of Trustees, subject to the provisions and guidelines as clearly outlined
in the securities laws and legal precedent of the United States. There can be no
assurance that the Fund's brokerage/service arrangements will continue in the
future.

Brokerage Practices. In selecting brokers and dealers to execute portfolio
transactions, the Advisor may consider research and brokerage services furnished
to the Advisor or its affiliates. Subject to seeking the most favorable net
price and execution available, the Advisor may also consider sales of shares of
the Fund as a factor in the selection of brokers and dealers.

6
<PAGE>

THE ADMINISTRATOR

The Nottingham Company, Inc. ("Administrator") assists the Trust in the
performance of its administrative responsibilities to the Fund, coordinates the
services of each vendor of services to the Fund, and provides the Fund with
other necessary administrative, fund accounting and compliance services. In
addition, the Administrator makes available the office space, equipment,
personnel and facilities required to provide such services to the Fund.

THE TRANSFER AGENT

NC Shareholder Services, LLC ("NCSS") serves as the transfer agent and dividend
disbursing agent of the Fund. As indicated later in the section of this
Prospectus, "Investing in the Fund," NCSS will handle your orders to purchase
and redeem shares of the Fund, and will disburse dividends paid by the Fund.

THE DISTRIBUTOR

Capital Investment Group, Inc. ("Distributor") is the principal underwriter and
distributor of the Fund's shares and serves as the Fund's exclusive agent for
the distribution of Fund shares. Capital Investment Group, Inc. may sell the
Fund's shares to or through qualified securities dealers or others.

Other Expenses. In addition to the management fees and the 12b-1 fees for the
Investor Classes of Shares, the Fund pays all expenses not assumed by the Fund's
Advisor, including, without limitation: the fees and expenses of its independent
auditors and of its legal counsel; the costs of printing and mailing to
shareholders annual and semi-annual reports, proxy statements, prospectuses,
statements of additional information and supplements thereto; the costs of
printing registration statements; bank transaction charges and custodian's fees;
any proxy solicitors' fees and expenses; filing fees; any federal, state or
local income or other taxes; any interest; any membership fees of the Investment
Company Institute and similar organizations; fidelity bond and Trustees'
liability insurance premiums; and any extraordinary expenses, such as
indemnification payments or damages awarded in litigation or settlements made.
All general Trust expenses are allocated among and charged to the assets of each
separate series of the Trust, such as the Fund, on a basis that the Trustees
deem fair and equitable, which may be on the basis of relative net assets of
each series or the nature of the services performed and relative applicability
to each series.

INVESTING IN THE FUND
---------------------

MINIMUM INVESTMENT

Institutional Shares of the Fund are sold and redeemed at net asset value.
Shares may be purchased by any account managed by the Advisor and any other
institutional investor or any broker-dealer authorized to sell shares of the
Fund. The minimum initial investment is $1,000,000 and the minimum additional
investment is $5,000 ($100 for those participating in the automatic investment
plan.) The Fund may, in the Advisor's sole discretion, accept certain accounts
with less than the minimum investment.

PURCHASE AND REDEMPTION PRICE

Determining the Fund's Net Asset Value. The price at which you purchase or
redeem shares is based on the next calculation of net asset value after an order
is received in good form. An order is considered to be in good form if it
includes a complete and accurate application and payment in full of the purchase
amount. The Fund's net asset value per share is calculated by dividing the value
of the Fund's total assets, less liabilities (including Fund expenses, which are
accrued daily), by the total number of outstanding shares of that Fund. The net
asset value per share of the Fund is normally determined at the time regular
trading closes on the New York Stock Exchange (currently 4:00 p.m. Eastern time,
Monday through Friday), except on business holidays when the New York Stock
Exchange is closed.

7
<PAGE>

Other Matters. All redemption requests will be processed and payment with
respect thereto will normally be made within seven days after tenders. The Fund
may suspend redemption, if permitted by the 1940 Act, for any period during
which the New York Stock Exchange is closed or during which trading is
restricted by the Securities Exchange Commission ("SEC") or if the SEC declares
that an emergency exists. Redemptions may also be suspended during other periods
permitted by the SEC for the protection of the Fund's shareholders.
Additionally, during drastic economic and market changes, telephone redemption
privileges may be difficult to implement. Also, if the Trustees determine that
it would be detrimental to the best interest of the Fund's remaining
shareholders to make payment in cash, the Fund may pay redemption proceeds in
whole or in part by a distribution-in-kind of readily marketable securities.

PURCHASING SHARES

Regular Mail Orders. Payment for shares must be made by check or money order
from a U.S. bank and payable in U.S. dollars. If checks are returned due to
insufficient funds or other reasons, the Fund will charge a $20 fee or may
redeem shares of the Fund already owned by the purchaser to recover any such
loss. For regular mail orders, please complete the attached Fund Shares
Application and mail it, along with your check made payable to "The Chesapeake
Growth Fund," to:

The Chesapeake Growth Fund
Institutional Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Please remember to add a reference to "Institutional Shares" to your check to
ensure proper credit to your account. The application must contain your social
security number or Taxpayer Identification Number ("TIN"). If you have applied
for a social security number or TIN at the time of completing your account
application but you have not received your number, please indicate this on the
application. Taxes are not withheld from distributions to U.S. investors if
certain IRS requirements regarding the TIN are met.

Bank Wire Orders. Purchases may also be made through bank wire orders. To
establish a new account or add to an existing account by wire, please call the
Fund at 1-800-430-3863, before wiring funds, to advise the Fund of the
investment, dollar amount, and the account identification number. Additionally,
please have your bank use the following wire instructions:

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For: The Chesapeake Growth Fund - Institutional Shares
Acct. # 2000000862068
For further credit to (shareholder's name and SS# or TIN#)

Additional Investments. You may also add to your account by mail or wire at any
time by purchasing shares at the then current public offering price. The minimum
additional investment is $5,000. Before adding funds by bank wire, please call
the Fund at 1-800-430-3863 and follow the above directions for wire purchases.
Mail orders should include, if possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, please identify your
account in a letter accompanying your purchase payment.

8
<PAGE>

Automatic Investment Plan. 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
fund 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 Fund.

Exchange Feature. You may exchange shares of the Fund for shares any other
series of the Trust advised by the Advisor and offered for sale in the state in
which you reside. Shares may be exchanged for shares of any other series of the
Trust at the net asset value plus the percentage difference between that series'
sales charge and any sales charge, previously paid by you in connection with the
shares being exchanged. Prior to making an investment decision or giving us your
instructions to exchange shares, please read the prospectus for the series in
which you wish to invest.

A pattern of frequent purchase and redemption transactions is considered by the
Advisor to not be in the best interest 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 Board of Trustees reserves the right to suspend or terminate, or amend the
terms of, the exchange privilege upon 60-days' written notice to the
shareholders.

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., Class C Shares may not be exchanged for Class A or Class
D Shares and Class D Shares may not be exchanged for Class 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
Aggressive Growth Fund, another series of the Trust affiliated with the Advisor,
unless such investor has an existing account with such Fund.

Stock Certificates. You do not have the option of receiving stock certificates
for your shares. Evidence of ownership will be given by issuance of periodic
account statements that will show the number of shares owned.

REDEEMING YOUR SHARES

Regular Mail Redemptions. Regular mail redemption request should be addressed
to:

The Chesapeake Growth Fund
Institutional Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

9
<PAGE>

Regular mail redemption request should include:

1) Your letter of instruction specifying the account number and number of
shares, or the 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 normally will be sent to you within 7 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 receipt of the request for redemption will be used in
processing the redemption request.

Telephone and Bank Wire Redemptions. You may also redeem shares by telephone and
bank wire under certain limited conditions. The Fund will redeem shares in this
manner when so requested by the shareholder only if the shareholder confirms
redemption instructions in writing.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:

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

The Fund in its discretion may choose to pass through to redeeming shareholders
any charges imposed by the Custodian for wire redemptions. The Custodian
currently charges the Fund $10.00 per transaction for wiring redemption
proceeds. If this cost is passed through to redeeming shareholders by the Fund,
the charge will be deducted automatically from your account by redemption of
shares in your account. Your 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.

10
<PAGE>

Small Accounts. The Board of Trustees reserves the right to redeem involuntarily
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
60-days' written notice. If the shareholder brings his account net asset value
up to at least $1,000,000 during the notice period, the account will not be
redeemed. Redemptions from retirement plans may be subject to federal income tax
withholding.

Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$1,000,000 or more at the current offering price 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 your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested in shares of the Fund or paid in cash. Call or
write the Fund for an application form.

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 to change exchange privileges or telephone and bank wire redemption
service other than through your initial account application, and (3) redemption
requests 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 change
of registration, establishment or change in exchange privileges, or redemption
request.

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.

OTHER IMPORTANT INVESTMENT INFORMATION
--------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following information is meant as a general summary for U.S. taxpayers.
Additional tax information appears in the SAI. Shareholders should rely their
own tax advisers for advice about the particular federal, state and local tax
consequences to them of investing in the Fund.

The Fund will distribute most of its income and gains to its shareholders every
year. Income dividends, if any, will be paid quarterly and capital gains
distributions, if any, will be made at least annually. Although the Fund will
not be taxed on amounts it distributes, shareholders will generally be taxed,
regardless of whether distributions are received in cash or are reinvested in
additional Fund shares. A particular distribution generally will be taxable as
either ordinary income or long-term capital gains. If a Fund designates a
distribution as a capital gain distribution, it will be taxable to shareholders
as long-term capital gains, regardless of how long they have held their Fund
shares.

11
<PAGE>

If the Fund declares a dividend in October, November or December but pays it in
January, it may be taxable to shareholders as if they received it in the year it
was declared. Each year each shareholder will receive a statement detailing the
tax status of any Fund distributions for that year.

Distributions may be subject to state and local taxes, as well as federal taxes.

Shareholders who hold Fund shares in a tax-deferred account, such as a
retirement plan, generally will not have to pay tax on Fund distributions until
they receive distributions from the account.

A shareholder who sells or redeems shares will generally realize a capital gain
or loss, which will be long-term or short-term, generally depending upon the
shareholder's holding period for the Fund shares. An exchange of shares may be
treated as a sale.

As with all mutual funds, the Fund may be required to withhold U.S. federal
income tax at the rate of 31% of all taxable distributions payable to
shareholders who fail to provide the Fund with their correct taxpayer
identification numbers or to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding. Backup
withholding is not an additional tax; rather, it is a way in which the IRS
ensures it will collect taxes otherwise due. Any amounts withheld may be
credited against a shareholder's U.S. federal income tax liability.

YEAR 2000

Like other mutual funds, the Fund and the service providers for the Fund rely
heavily on the reasonably consistent operation of their computer systems. Many
software programs and certain computer hardware in use today cannot properly
process information after December 31, 1999, because of the method by which
dates are encoded and calculated in such programs and hardware. This problem,
commonly referred to as the "Year 2000 Issue," could, among other things,
negatively impact the processing of trades, the distribution of securities, the
pricing of securities and other investment-related and settlement activities.
The Trust is currently obtaining and assessing information with respect to the
actions that have been taken and the actions that are planned to be taken by
each of its service providers to prepare their computer systems for the Year
2000. While the Trust expects that each of the Fund's service providers will
have adapted their computer systems to address the Year 2000 Issue, there can be
no assurance that this will be the case or that the steps taken by the Trust
will be sufficient to avoid any adverse impact to the Fund.

FINANCIAL HIGHLIGHTS

The financial data included in the table below have been derived from audited
financial statements of the Fund. The financial data for the fiscal years ended
February 28, 1999, 1998, and 1997, has been audited by Deloitte & Touche LLP,
independent auditors, whose report covering such periods is included in the
Statement of Additional Information. The financial data for the prior fiscal
year and period were audited by KPMG Peat Marwick LLP, independent auditors.
This information should be read in conjunction with the Fund's latest audited
annual 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.

12
<PAGE>

Institutional Shares

(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the
period from
April 6, 1994
(commencement of
Year ended Year ended Year ended Year ended operations) to
February 28, February 28, February 28, February 29, February 28,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of period ...................... $17.86 $16.26 $14.45 $11.31 $10.00

Income from investment operations
Net investment loss ............................... (0.17) (0.15) (0.13) (0.05) (0.04)
Net realized and unrealized (loss) gain on investments (0.63) 4.22 1.94 3.38 1.35
------- ------- ------- ------- -------

Total from investment operations ............... (0.80) 4.07 1.81 3.33 1.31
------- ------- ------- ------- -------

Distributions to shareholders from
Net investment income ............................. (0.00) 0.00 0.00 (0.11) 0.00
Tax return of capital ............................. 0.00 (0.53) 0.00 0.00 0.00
Distribution in excess of net realized gains ...... (0.03) 0.00 0.00 0.00 0.00
Net realized gain from investment transactions .... (0.43) (1.94) 0.00 (0.08) 0.00
------- ------- ------- ------- -------

Total distributions ............................ (0.46) (2.47) 0.00 (0.19) 0.00
------- ------- ------- ------- -------

Net asset value, end of period ............................ $16.60 $17.86 $16.26 $14.45 $11.31
======= ======= ======= ======= =======

Total return (a) .......................................... (4.51)% 25.25 % 12.53 % 29.66 % 13.12 % (c)
======= ======= ======= ======= =======

Ratios/supplemental data
Net assets, end of period (000's) .................... $63,426 $92,858 $77,858 $80,252 $15,088
======= ======= ======= ======= =======

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ..... 1.22 % 1.19 % 1.23 % 1.65 % 2.75 % (b)
After expense reimbursements and waived fees ...... 1.15 % 1.16 % 1.22 % 1.49 % 1.73 % (b)

Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ..... (0.87)% (0.90)% (0.85)% (0.98)% (1.80)% (b)
After expense reimbursements and waived fees ...... (0.80)% (0.88)% (0.84)% (0.82)% (0.78)% (b)

Portfolio turnover rate .............................. 121.48 % 105.60 % 126.44 % 99.33 % 64.92 %

(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
(c) Aggregate return. Not annualized.
</TABLE>

13
<PAGE>

ADDITIONAL INFORMATION

________________________________________________________________________________

THE CHESAPEAKE GROWTH FUND

INSTITUTIONAL SHARES
________________________________________________________________________________

Additional information about the Fund is available in the Fund's Statement of
Additional Information. The Fund's Annual and Semi-annual Reports include a
discussion of market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year.

These reports are available free of charge upon request by contacting us:

By telephone: 1-800-430-3863

By mail: The Chesapeake Growth Fund
Institutional Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365

By e-mail: [email protected]

On the Internet: www.ncfunds.com

Information about the Fund can also be reviewed and copied at the Securities
Exchange Commission's ("Commission") Public Reference Room in Washington, D.C.
Inquiries on the operations of the public reference room may be made by calling
the Commission at 1-800-SEC-0330. Reports and other information about the Fund
are available on the Commission's Internet site at http://www.sec.gov and copies
of this information may be obtained, upon payment of a duplicating fee, by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-6009.

Investment Company Act file number 811-07324
<PAGE>

Cusip Number 36559B609 NASDAQ Symbol CHSIX

________________________________________________________________________________

THE CHESAPEAKE GROWTH FUND

A series of the
Gardner Lewis Investment Trust

SUPER-INSTITUTIONAL SHARES
________________________________________________________________________________

PROSPECTUS
June 30, 1999

The Chesapeake Growth Fund (the "Fund") seeks capital appreciation. In seeking
to achieve its objective, the Fund will invest primarily in equity securities of
medium and large capitalization companies. This Fund also offers other classes
of shares: Institutional Class Shares, Investor Class A Shares, Investor Class C
Shares, and Investor Class D Shares, which are offered by other prospectuses.

Investment Advisor
------------------

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

1-800-430-3863

TABLE OF CONTENTS

Page
----

<PAGE>
THE FUND
--------

INVESTMENT OBJECTIVE

The Chesapeake Growth Fund seeks capital appreciation. In seeking to achieve its
objective, the Fund will invest primarily in equity securities of medium and
large capitalization companies.

PRINCIPAL INVESTMENT STRATEGIES

o new product introductions,
o new distribution strategies,
o new manufacturing technology, and/or
o new management team or management philosophy.

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.

2
<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE FUND

3
<PAGE>

BAR CHART AND PERFORMANCE TABLE

The bar chart and table shown below provide an indication of the risks of
investing in the Chesapeake Growth Fund's Super-Institutional Shares by showing
(on a calendar year basis) changes in the Fund's average annual total returns
from year to year for the Fund's Super-Institutional Shares and by showing (on a
calendar year basis) how the Super-Institutional Shares' average annual returns
for one year and since inception compare to those of a broad-based securities
market index. How the Fund has performed in the past is not necessarily an
indication of how the Fund will perform in the future.

[bar chart to be inserted here]
1998 12.65%
1997 15.58%

o During the 2-year period shown in the bar chart, the highest return for a
calendar quarter was 27.96% (quarter ended December 31, 1998).
o During the 2-year period shown in the bar chart, the lowest return for a
calendar quarter was -22.28% (quarter ended September 30, 1998).
o The year-to-date return of the Super-Institutional Shares as of the most
recent calendar quarter was -1.17% (quarter ended March 31, 1999).

- ---------------------------------------------- --------------- ----------------
Average Annual Total Returns Past 1 Year Since
Period ended December 31, 1998 Inception *
- ---------------------------------------------- --------------- ----------------
The Chesapeake Growth Fund
Super-Institutional Shares 12.65% 11.91%
- ---------------------------------------------- --------------- ----------------
NASDAQ Industrial Index ** 7.22% 5.00%
- ---------------------------------------------- --------------- ----------------
S&P 500 Total Return Index*** 28.58% 29.13%
- ---------------------------------------------- --------------- ----------------

* June 12, 1996 (inception date of the Fund's Super-Institutional Shares)
** The NASDAQ Industrial Index is a capitalization-weighted, unmanaged
index of all NASDAQ stocks in the industrial sector.
*** The S&P 500 Total Return Index is the Standard & Poor's Composite Index
of 500 stocks and is a widely recognized, unmanaged index of common
stock prices.
4
<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
Super-Institutional Shares of the Fund:

Shareholder Fees for Super-Institutional Shares
(fees paid directly from your investment)
-----------------------------------------

Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) .................None
Redemption fee ..........................................None

Annual Fund Operating Expenses for Super-Institutional Shares
(expenses that are deducted from Fund assets)
---------------------------------------------

Management Fees..........................................1.00%
Distribution and/or Service (12b-1) Fees.................None
Other Expenses...........................................0.05%*
----
Total Annual fund Operating Expenses..........................1.05%
Fee Waivers and/or Expense Reimbursement.....................(0.06%)
----
Net Expenses..................................................0.99%
====

* "Total Annual Fund Operating Expenses" are based upon actual
expenses incurred by the Super-Institutional Shares of the Fund
for the fiscal year ended February 28, 1999. The Fund has entered
into brokerage/service arrangements in which several brokers have
agreed to pay certain expenses of the Fund. Absent these
arrangements, the Total Annual Fund Operating Expenses would have
been 1.05% of the average daily net assets of the
Super-Institutional Shares of the Fund for the fiscal year ended
February 28, 1999. There can be no assurance that the Fund's
brokerage/service arrangements will continue in the future. See
the "Brokerage/Service Arrangements" section below.

5
<PAGE>

Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above.

- ------------------------ ------------- -------------- ------------ -------------
Period Invested 1 Year 3 Years 5 Years 10 Years
- ------------------------ ------------- -------------- ------------ -------------
Your Costs $101 $334 $579 $1,283
- ------------------------ ------------- -------------- ------------ -------------

MANAGEMENT OF THE FUND
----------------------

THE INVESTMENT ADVISOR

6
<PAGE>

THE ADMINISTRATOR

THE TRANSFER AGENT

THE DISTRIBUTOR

INVESTING IN THE FUND
---------------------

MINIMUM INVESTMENT

Super-Institutional Shares of the Fund are sold and redeemed at net asset value.
Shares may be purchased by any account managed by the Advisor and any other
institutional investor or any broker-dealer authorized to sell shares of the
Fund. The minimum initial investment is $50,000,000 and the minimum additional
investment is $100,000. The Fund may, in the Advisor's sole discretion, accept
certain accounts with less than the minimum investment.

PURCHASE AND REDEMPTION PRICE

7
<PAGE>

PURCHASING SHARES

The Chesapeake Growth Fund
Super-Institutional Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Please remember to add a reference to "Super-Institutional Shares" to your check
to ensure proper credit to your account. The application must contain your
social security number or Taxpayer Identification Number ("TIN"). If you have
applied for a social security number or TIN at the time of completing your
account application but you have not received your number, please indicate this
on the application. Taxes are not withheld from distributions to U.S. investors
if certain IRS requirements regarding the TIN are met.

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For: The Chesapeake Growth Fund
Super-Institutional Shares
Acct. # 2000000862068
For further credit to (shareholder's name and SS# or TIN#)

Additional Investments. You may also add to your account by mail or wire at any
time by purchasing shares at the then current public offering price. The minimum
additional investment is $100,000. Before adding funds by bank wire, please call
the Fund at 1-800-430-3863 and follow the above directions for wire purchases.
Mail orders should include, if possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, please identify your
account in a letter accompanying your purchase payment.

8
<PAGE>

The Board of Trustees reserves the right to suspend or terminate, or amend the
terms of, the exchange privilege upon 60-days' written notice to the
shareholders.

REDEEMING YOUR SHARES

Regular Mail Redemptions. Regular mail redemption request should be addressed
to:

The Chesapeake Growth Fund
Super-Institutional Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Regular mail redemption request should 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.

9
<PAGE>

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:

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

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

10
<PAGE>

OTHER IMPORTANT INVESTMENT INFORMATION
--------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

Distributions may be subject to state and local taxes, as well as federal taxes.

Shareholders who hold Fund shares in a tax-deferred account, such as a
retirement plan, generally will not have to pay tax on Fund distributions until
they receive distributions from the account.

11
<PAGE>

YEAR 2000

FINANCIAL HIGHLIGHTS

The financial data included in the table below have been derived from audited
financial statements of the Fund. The financial data for the fiscal years ended
February 28, 1999 and 1998, and the period ended February 28, 1997, have been
audited by Deloitte & Touche LLP, independent auditors, whose report covering
such periods is included in the Statement of Additional Information. This
information should be read in conjunction with the Fund's latest audited annual
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 also be obtained
at no charge by calling the Fund.

12
<PAGE>

<TABLE>
<S> <C> <C> <C>
Super-Institutional Shares

(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the
period from
June 12, 1996
(commencement of
Year ended Year ended operations) to
February 28, February 28, February 28,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of period ................................. $17.92 $16.29 $15.53

Income from investment operations
Net investment loss ........................................... (0.11) (0.12) (0.07)
Net realized and unrealized (loss) gain on investments ........ (0.67) 4.22 0.83
-------- -------- --------

Total from investment operations ............................ (0.78) 4.10 0.76
-------- -------- --------

Distributions to shareholders from
Net investment income ......................................... (0.00) 0.00 0.00
Tax return of capital ......................................... 0.00 (0.53) 0.00
Distribution in excess of net realized gains .................. (0.03) 0.00 0.00
Net realized gain from investment transactions ................ (0.43) (1.94) 0.00
-------- -------- --------

Total distributions ......................................... (0.46) (2.47) 0.00
-------- -------- --------

Net asset value, end of period ....................................... $16.68 $17.92 $16.29
======== ======== ========

Total return (a) ..................................................... (4.32)% 25.40 % 4.89 % (c)
======== ======== ========

Ratios/supplemental data
Net assets, end of period (000's) ............................... $113,148 $118,246 $ 94,340
======== ======== ========

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ................. 1.05 % 1.06 % 1.08 % (b)
After expense reimbursements and waived fees .................. 0.99 % 1.04 % 1.04 % (b)

Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ................. (0.71)% (0.77)% (0.75)% (b)
After expense reimbursements and waived fees .................. (0.64)% (0.75)% (0.72)% (b)

Portfolio turnover rate ......................................... 121.48 % 105.60 % 126.44 %

(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
(c) Aggregate return. Not annualized.

See accompanying notes to financial statements
</TABLE>

13
<PAGE>

ADDITIONAL INFORMATION

________________________________________________________________________________

THE CHESAPEAKE GROWTH FUND

SUPER-INSTITUTIONAL SHARES
________________________________________________________________________________

These reports are available free of charge upon request by contacting us:

By telephone: 1-800-430-3863

By mail: The Chesapeake Growth Fund
Super-Institutional Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365

By e-mail: [email protected]

On the Internet: www.ncfunds.com

Investment Company Act file number 811-07324

<PAGE>

Investor Class A Cusip Number 36559B203
Investor Class C Cusip Number 36559B500
Investor Class D Cusip Number 36559B302 Investor Class A NASDAQ Symbol CHEAX
________________________________________________________________________________

THE CHESAPEAKE GROWTH FUND

A series of the
Gardner Lewis Investment Trust

INVESTOR SHARES
________________________________________________________________________________

PROSPECTUS
June 30, 1999

The Chesapeake Growth Fund (the "Fund") seeks capital appreciation. In seeking
to achieve its objective, the Fund will invest primarily in equity securities of
medium and large capitalization companies. This Fund also offers other classes
of shares: Super-Institutional Shares and Institutional Shares, which are
offered by other prospectuses.

Investment Advisor
------------------

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

1-800-430-3863

TABLE OF CONTENTS

Page
----

THE FUND.......................................................................2
- --------
Investment Objective.....................................................2
Principal Investment Strategies..........................................2
Principal Risks of Investing in the Fund.................................3
Bar Charts and Performance Tables........................................4
Fees and Expenses of the Fund............................................7

MANAGEMENT OF THE FUND.........................................................8
- ----------------------
The Investment Advisor...................................................8
The Administrator........................................................9
The Transfer Agent.......................................................9
The Distributor..........................................................9

INVESTING IN THE FUND..........................................................9
- ---------------------
Minimum Investment.......................................................9
Purchase and Redemption Price...........................................10
Purchasing Shares.......................................................11
Redeeming Your Shares...................................................13

OTHER IMPORTANT INVESTMENT INFORMATION........................................15
- --------------------------------------
Dividends, Distributions, and Taxes.....................................15
Year 2000...............................................................16
Financial Highlights ...................................................16
Additional Information..........................................Back Cover

<PAGE>
THE FUND
--------

INVESTMENT OBJECTIVE

The Chesapeake Growth Fund seeks capital appreciation. In seeking to achieve its
objective, the Fund will invest primarily in equity securities of medium and
large capitalization companies.

PRINCIPAL INVESTMENT STRATEGIES

o new product introductions,
o new distribution strategies,
o new manufacturing technology, and/or
o new management team or management philosophy.

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.

2
<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE FUND

3
<PAGE>

BAR CHARTS AND PERFORMANCE TABLES

The bar charts and performance tables shown below provide an indication of the
risks of investing in the Chesapeake Growth Fund Investor Shares by showing (on
a calendar year basis) changes in the Fund's average annual total returns from
year to year for the Fund's Investor Shares and by showing (on a calendar year
basis) how the Fund's Investor Shares average annual returns for one year, three
years, and since inception compare to those of broad-based securities market
indices. How the Fund has performed in the past is not necessarily an indication
of how the Fund will perform in the future.

CLASS A INVESTOR SHARES

[bar chart to be inserted here]
1998 12.12%
1997 14.95%
1996 16.42%

4
<PAGE>

o During the 3-year period shown in the bar chart, the highest return for a
calendar quarter was 27.85% (quarter ended December 31, 1998).
o During the 3-year period shown in the bar chart, the lowest return for a
calendar quarter was -22.43% (quarter ended September 30, 1998).
o The year-to-date return of the Class A Investor Shares as of the most
recent calendar quarter was -1.31% (quarter ended March 31, 1999).
o Sales loads are not reflected in the chart above. If these amounts were
reflected, returns would be less than those shown.

<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------- ------------- ---------------- ------------------
Average Annual Total Returns Past 1 Year Past 3 Years Since Inception**
Period ended December 31, 1998 *
- ------------------------------------------------------------------- ------------- ---------------- ------------------
The Chesapeake Growth Fund - Class A Investor Shares 8.75% 13.31% 15.21%
- ------------------------------------------------------------------- ------------- ---------------- ------------------
NASDAQ Industrials Index *** 7.22% 11.03% 14.47%
- ------------------------------------------------------------------- ------------- ---------------- ------------------
S&P 500 Total Return Index **** 28.58% 28.20% 29.29%
- ------------------------------------------------------------------- ------------- ---------------- ------------------
</TABLE>

* Maximum sales loads are reflected in the table above for the Class A
Investor Shares.
** April 7, 1995 (inception date of the Fund's Class A Investor Shares)
*** The NASDAQ Industrials Index is a capitalization-weighted, unmanaged
index of all NASDAQ stocks in the industrial sector.
**** The S&P 500 Total Return Index is the Standard & Poor's Composite Index
of 500 stocks and is a widely recognized, unmanaged index of common
stock prices.

CLASS C INVESTOR SHARES

[bar chart to be inserted here]
1998 9.95%
1997 13.38%
1996 15.53%

5
<PAGE>

o During the 3-year period shown in the bar chart, the highest return for a
calendar quarter was 27.13% (quarter ended December 31, 1998).
o During the 3-year period shown in the bar chart, the lowest return for a
calendar quarter was -22.79% (quarter ended September 30, 1998).
o The year-to-date return of the Class C Investor Shares as of the most
recent calendar quarter was -1.73% (quarter ended March 31, 1999).
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------- ------------- ---------------- ------------------
Average Annual Total Returns Past 1 Year Past 3 Years Since Inception *
Period ended December 31, 1998
- ------------------------------------------------------------------- ------------- ---------------- ------------------
The Chesapeake Growth Fund - Class C Investor Shares 9.95% 12.92% 14.76%
- ------------------------------------------------------------------- ------------- ---------------- ------------------
NASDAQ Industrials Index ** 7.22% 11.03% 14.47%
- ------------------------------------------------------------------- ------------- ---------------- ------------------
S&P 500 Total Return Index *** 28.58% 28.20% 29.29%
- ------------------------------------------------------------------- ------------- ---------------- ------------------
</TABLE>

* April 7, 1995 (inception date of the Fund's Class C Investor Shares)
** The NASDAQ Industrials Index is a capitalization-weighted, unmanaged
index of all NASDAQ stocks in the industrial sector.
*** The S&P 500 Total Return Index is the Standard & Poor's Composite Index
of 500 stocks and is a widely recognized, unmanaged index of common
stock prices.

CLASS D INVESTOR SHARES

[chart to be inserted here]
1998 11.44%
1997 14.26%
1996 15.83%

o During the 3-year period shown in the bar chart, the highest return for a
calendar quarter was 27.58% (quarter ended December 31, 1998).
o During the 3-year period shown in the bar chart, the lowest return for a
calendar quarter was -22.50% (quarter ended September 30, 1998).
o The year-to-date return of the Class D Investor Shares as of the most
recent calendar quarter was -1.45% (quarter ended March 31, 1999).
o Sales loads are not reflected in the chart above. If these amounts were
reflected, returns would be less than those shown.

6
<PAGE>

<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------- ------------- ---------------- ------------------
Average Annual Total Returns Past 1 Year Past 3 Years Since Inception**
Period ended December 31, 1998 *
- ------------------------------------------------------- ------------- ---------------- ------------------
The Chesapeake Growth Fund - Class D Investor Shares 9.77% 13.24% 15.16%
- ------------------------------------------------------- ------------- ---------------- ------------------
NASDAQ Industrials Index *** 7.22% 11.03% 14.47%
- ------------------------------------------------------- ------------- ---------------- ------------------
S&P 500 Total Return Index **** 28.58% 28.20% 29.29%
- ------------------------------------------------------- ------------- ---------------- ------------------
</TABLE>

* Maximum sales loads are reflected in the table above for the Class D
Investor Shares.
** April 7, 1995 (inception date of the Fund's Class D Investor Shares)
*** The NASDAQ Industrials Index is a capitalization-weighted, unmanaged
index of all NASDAQ stocks in the industrial sector.
**** The S&P 500 Total Return Index is the Standard & Poor's Composite Index
of 500 stocks and is a widely recognized, unmanaged index of common
stock prices.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
Investor Shares of the Fund:
<TABLE>
<S> <C> <C> <C>
Shareholder Fees for Investor Shares
(fees paid directly from your investment)
-----------------------------------------

Class A Class C Class D
------- ------- -------
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) .................3.00% None 1.50%
Redemption fee ...........................................None None None

Annual Fund Operating Expenses for Investor Shares
(expenses that are deducted from Fund assets)
---------------------------------------------

Class A Class C Class D
------- ------- -------

Management Fees............................................1.00% 1.00% 1.00%
Distribution and/or Service (12b-1) Fees...................0.25% 0.75% 0.50%
Other Expenses.............................................0.35% 2.15% 0.84%
---- ---- ----
Total Annual Fund Operating Expenses..................1.60%* 3.90%* 2.34%*
Fee Waivers and/or Expense Reimbursement.............(0.07)% (0.45)% (0.20)%
---- ---- ----
Net Expenses..........................................1.53% 3.45% 2.14%
==== ==== ====
</TABLE>

* "Total Annual Fund Operating Expenses" are based upon actual expenses
incurred by the Class A, Class C, and Class D Investor Shares of the
Fund for the fiscal year ended February 28, 1999. The Fund has entered
into brokerage/service arrangements in which several brokers have agreed
to pay certain expenses of the Fund. Absent these arrangements, the
Total Annual Fund Operating Expenses of the Class A, Class C, and Class
D Investor Shares of the Fund would have been 1.60%, 3.90%, and 2.34%,
respectively, of the average daily net assets of each class of shares
for the fiscal year ended February 28, 1999. There can be no assurance
that the Fund's brokerage/service arrangements will continue in the
future. See the "Brokerage/Service Arrangements" section below.

7
<PAGE>

Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above.
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------- ---------------- ----------------- --------------- ----------------
Period Invested 1 Year 3 Years 5 Years 10 Years
- --------------------------------------- ---------------- ----------------- --------------- ----------------
Class A Investor Shares $451 $790 $1,145 $2,143
- --------------------------------------- ---------------- ----------------- --------------- ----------------
Class C Investor Shares $348 $1,189 $2,004 $4,121
- --------------------------------------- ---------------- ----------------- --------------- ----------------
Class D Investor Shares $364 $869 $1,382 $2,786
- --------------------------------------- ---------------- ----------------- --------------- ----------------
</TABLE>

MANAGEMENT OF THE FUND
----------------------

THE INVESTMENT ADVISOR

8
<PAGE>

THE ADMINISTRATOR

THE TRANSFER AGENT

THE DISTRIBUTOR

INVESTING IN THE FUND
---------------------

MINIMUM INVESTMENT

Class C Investor Shares of the Fund are sold at net asset value. Class A and
Class D Investor Shares are sold at subject to a maximum sales charge of 3.00%
and 1.50%, respectively, so that the term "offering price" includes the
applicable front-end sales load. All shares are redeemed at Net Asset Value.
Shares may be purchased by any account managed by the Advisor and any other
institutional investor or any broker-dealer authorized to sell shares of the
Fund. The minimum initial investment is $25,000 and the minimum additional
investment is $500 ($100 for those participating in the automatic investment
plan.) The Fund may, in the Advisor's sole discretion, accept certain accounts
with less than the minimum investment.

9
<PAGE>

PURCHASE AND REDEMPTION PRICE

Sales Charges. The public offering price of Class A and Class D Investor Shares
of the Fund equals net asset value plus a sales charge. Class C Investor Shares
are sold without a sales charge at the net asset value. The Distributor receives
this sales charge and may reallow it in the form of dealer discounts and
brokerage commissions as follows:
<TABLE>
<S> <C> <C> <C>

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
------------------------ -------- ----------- ---------------------
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>

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. The Distributor, at
its expense, may, from time to time, provide additional promotional incentives
to dealers who sell Fund shares.

Determining the Fund's Net Asset Value. The price at which you purchase or
redeem shares is based on the next calculation of net asset value after an order
is received in good form. An order is considered to be in good form if it
includes a complete and accurate application and payment in full of the purchase
amount. The Fund's net asset value per share is calculated by dividing the value
of the Fund's total assets, less liabilities applicable to the particular class
of the Fund (including Fund expenses, which are accrued daily), by the total
number of outstanding shares of that Fund. The net asset value per share of the
Fund is normally determined at the time regular trading closes on the New York
Stock Exchange (currently 4:00 p.m. Eastern time, Monday through Friday), except
on business holidays when the New York Stock Exchange is closed.

Distribution of the Fund's Shares. For the Investor Shares of the Fund, the Fund
has adopted a Distribution Plan in accordance with Rule 12b-1 (the "Distribution
Plan") under the 1940 Act. Pursuant to the Distribution Plan, the Fund
compensates its distributor, Capital Investment Group, Inc., for services
rendered and expenses borne in connection with activities primarily intended to
result in the sale of the Fund's Investor Shares (this compensation is commonly
referred to as "12b-1 fees").

The Distribution Plan provides that the Fund will pay from the Class A Investor
Shares, Class C Investor Shares, and Class D Investor Shares annually 0.25%,
0.75%, and 0.50%, respectively, of the average daily net assets of each of the
Fund's Investor Shares for activities primarily intended to result in the sale
of those shares, including to reimburse entities for providing distribution and
shareholder servicing with respect to the Fund's Investor Shares. Because the
12b-1 fees are paid out of the Fund's assets on an on-going basis, these fees,
over time, will increase the cost of your investment and may cost you more than
paying other types of sales loads.

10
<PAGE>

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

As described under "Investing in the Fund - Sales Charges," the Class A Shares
are sold subject to a maximum sales charge of 3.00%, as compared to a maximum
sales charge of 1.50% for sales of Class D Shares and no sales charge for Class
C Shares. The sales charge is reduced or may be waived in some cases. Class A
Shares, however, bear distribution and service fees under the Distribution Plan
of up to 0.25% of the Class A Shares' average net assets annually, as compared
to distribution and service fees of 0.50% and 0.75% of the Class D and Class C
Shares' average net assets annually, respectively. See "Investing in the Fund -
Distribution of the Fund's Shares."

PURCHASING SHARES

The Chesapeake Growth Fund
Investor Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Please remember to add a reference to "Investor Shares - Class A, Class C, or
Class D" to your check to ensure proper credit to your account. The application
must contain your social security number or Taxpayer Identification Number
("TIN"). If you have applied for a social security number or TIN at the time of
completing your account application but you have not received your number,
please indicate this on the application. Taxes are not withheld from
distributions to U.S. investors if certain IRS requirements regarding the TIN
are met.

11
<PAGE>

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For: The Chesapeake Growth Fund - Investor Shares
Acct. # 2000000862068
For further credit to (shareholder's name and SS# or TIN#)

Additional Investments. You may also add to your account by mail or wire at any
time by purchasing shares at the then current public offering price. The minimum
additional investment is $500. Before adding funds by bank wire, please call the
Fund at 1-800-430-3863 and follow the above directions for wire purchases. Mail
orders should include, if possible, the "Invest by Mail" stub which is attached
to your Fund confirmation statement. Otherwise, please identify your account in
a letter accompanying your purchase payment.

The Board of Trustees reserves the right to suspend, terminate, or amend the
terms of the exchange privilege upon 60-days' written notice to the
shareholders.

12
<PAGE>

Reduced Sales Charges

Concurrent Purchases. For purposes of qualifying for a lower sales charge for
Class A or Class D Investor 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 Class A Investor 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. The sales charge applicable to a current purchase of
shares of the Fund by a person listed above is determined by adding the purchase
price of shares to be purchased to the aggregate value (at current offering
price) of shares of the Fund previously purchased and then owned, provided the
Distributor is notified by such person or his or her broker-dealer each time a
purchase is made which would so qualify. For example, a person who is purchasing
Class A Investor Shares with an aggregate value of $50,000 and who currently
owns shares of the Fund with a value of $200,000 would pay a sales charge of
2.00% of the offering price on the new investment.

Letter of Intent. Sales charges may also be reduced through an agreement to
purchase a specified quantity of shares over a designated thirteen-month period
by completing the "Letter of Intent" section of the Account Application.
Information about the "Letter of Intent" procedure, including its terms, is
contained on the back of the Account Application.

Group Plans. Shares of the Fund may be sold at a reduced or eliminated sales
charge to certain Group Plans under which a sponsoring organization makes
recommendations to, permits group solicitation of, or otherwise facilitates
purchases by, its employees, members or participants. Information about such
arrangements is available from the Distributor.

REDEEMING YOUR SHARES

Regular Mail Redemptions. Regular mail redemption request should be addressed
to:

The Chesapeake Growth Fund
Investor Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Regular mail redemption request should include:

1) Your letter of instruction specifying the account number and number of
shares, or the 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.

13
<PAGE>

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:

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

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

14
<PAGE>

Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$10,000 or more at the current offering price 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 your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested in shares of the Fund or paid in cash. Call or
write the Fund for an application form.

OTHER IMPORTANT INVESTMENT INFORMATION
--------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

Distributions may be subject to state and local taxes, as well as federal taxes.

Shareholders who hold Fund shares in a tax-deferred account, such as a
retirement plan, generally will not have to pay tax on Fund distributions until
they receive distributions from the account.

15
<PAGE>

YEAR 2000

FINANCIAL HIGHLIGHTS

The financial data included in the table below have been derived from audited
financial statements of the Fund. The financial data for the fiscal years ended
February 28, 1999, 1998, and 1997, have been audited by Deloitte & Touche LLP,
independent auditors, whose report covering such periods is included in the
Statement of Additional Information. The financial data for the prior fiscal
period was audited by KPMG Peat Marwick, independent auditors. This information
should be read in conjunction with the Fund's latest audited annual 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 also be obtained at no charge
by calling the Fund.

16
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Series A Investor Shares

(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the
period from
April 7, 1995
(commencement of
Year ended Year ended Year ended operations) to
February 28, February 28, February 28, February 29,
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of period ......................... $17.69 $16.18 $14.42 $11.79

Income from investment operations
Net investment income loss ........................... (0.24) (0.21) (0.18) (0.06)
Net realized and unrealized (loss) gain on investments (0.62) 4.19 1.94 2.88
------- ------- ------- -------

Total from investment operations ................. (0.86) 3.98 1.76 2.82
------- ------- ------- -------

Distributions to shareholders from
Net investment income ................................ (0.00) 0.00 0.00 (0.11)
Tax return of capital ................................ 0.00 (0.53) 0.00 0.00
Distribution in excess of net realized gains ......... (0.03) 0.00 0.00 0.00
Net realized gain from investment transactions ....... (0.43) (1.94) 0.00 (0.08)
------- ------- ------- -------

Total distributions .............................. (0.46) (2.47) 0.00 (0.19)
------- ------- ------- -------

Net asset value, end of period ............................... $16.37 $17.69 $16.18 $14.42
======= ======= ======= =======

Total return (a) ............................................. (4.83)% 24.80 % 12.21 % 23.86 % (c)
======= ======= ======= =======

Ratios/supplemental data
Net assets, end of period (000's) ....................... $25,797 $40,924 $39,376 $32,549
======= ======= ======= =======

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........ 1.60 % 1.55 % 1.54 % 1.88 % (b)
After expense reimbursements and waived fees ......... 1.53 % 1.52 % 1.53 % 1.71 % (b)

Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ........ (1.26)% (1.27)% (1.16)% (1.20)% (b)
After expense reimbursements and waived fees ......... (1.18)% (1.24)% (1.15)% (1.04)% (b)

Portfolio turnover rate ................................. 121.48 % 105.60 % 126.44 % 99.33 %

(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
(c) Aggregate return. Not annualized.

</TABLE>

17
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>

Series C Investor Shares

(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the
period from
April 7, 1995
(commencement of
Year ended Year ended Year ended operations) to
February 28, February 28, February 28, February 29,
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of period ................................ $17.12 $15.97 $14.34 $11.79

Income from investment operations
Net investment income loss .................................. (0.60) (0.52) (0.29) (0.12)
Net realized and unrealized (loss) gain on investments....... (0.54) 4.14 1.92 2.86
------ ------ ------ ------

Total from investment operations ........................ (1.14) 3.62 1.63 2.74
------ ------ ------ ------

Distributions to shareholders from
Net investment income ....................................... (0.00) 0.00 0.00 (0.11)
Tax return of capital ....................................... 0.00 (0.53) 0.00 0.00
Distribution in excess of net realized gains ................ (0.03) 0.00 0.00 0.00
Net realized gain from investment transactions .............. (0.43) (1.94) 0.00 (0.08)
------ ------ ------ ------

Total distributions ..................................... (0.46) (2.47) 0.00 (0.19)
------ ------ ------ ------

Net asset value, end of period ...................................... $15.52 $17.12 $15.97 $14.34
====== ====== ====== ======

Total return (a) .................................................... (6.68)% 22.95 % 11.30 % 23.18 % (c)
====== ====== ====== ======

Ratios/supplemental data
Net assets, end of period (000's) .............................. $2,740 $4,541 $9,192 $7,908
====== ====== ====== ======

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ............... 3.90 % 3.11 % 2.34 % 2.38 % (b)
After expense reimbursements and waived fees ................ 3.45 % 3.05 % 2.33 % 2.18 % (b)

Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ............... (3.55)% (2.84)% (1.97)% (1.77)% (b)
After expense reimbursements and waived fees ................ (3.11)% (2.78)% (1.96)% (1.57)% (b)

Portfolio turnover rate ........................................ 121.48 % 105.60 % 126.44 % 99.33 %

(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
(c) Aggregate return. Not annualized.

</TABLE>

18
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>

Series D Investor Shares

(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the
period from
April 7, 1995
(commencement of
Year ended Year ended Year ended operations) to
February 28, February 28, February 28, February 29,
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of period ......................... $17.45 $16.09 $14.41 $11.79

Income from investment operations
Net investment income loss ........................... (0.34) (0.32) (0.29) (0.11)
Net realized and unrealized (loss) gain on investments (0.61) 4.15 1.97 2.92
------- ------- ------- -------

Total from investment operations ................. (0.95) 3.83 1.68 2.81
------- ------- ------- -------

Total distributions .............................. (0.46) (2.47) 0.00 (0.19)
------- ------- ------- -------

Net asset value, end of period ............................... $16.04 $17.45 $16.09 $14.41
======= ======= ======= =======

Total return (a) ............................................. (5.41)% 24.06 % 11.59 % 23.77 % (c)
======= ======= ======= =======

Ratios/supplemental data
Net assets, end of period (000's) ....................... $ 8,060 $11,448 $10,774 $11,929
======= ======= ======= =======

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........ 2.34 % 2.22 % 2.02 % 2.13 % (b)
After expense reimbursements and waived fees ......... 2.14 % 2.18 % 2.01 % 1.73 % (b)

Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ........ (2.00)% (1.94)% (1.64)% (1.54)% (b)
After expense reimbursements and waived fees ......... (1.79)% (1.89)% (1.63)% (1.14)% (b)

Portfolio turnover rate ................................. 121.48 % 105.60 % 126.44 % 99.33 %

(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
(c) Aggregate return. Not annualized.

</TABLE>

19
<PAGE>

ADDITIONAL INFORMATION

________________________________________________________________________________

THE CHESAPEAKE GROWTH FUND

INVESTOR SHARES
________________________________________________________________________________

These reports are available free of charge upon request by contacting us:

By telephone: 1-800-430-3863

By mail: The Chesapeake Growth Fund
Investor Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365

By e-mail: [email protected]

On the Internet: www.ncfunds.com

Investment Company Act file number 811-07324
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

THE CHESAPEAKE GROWTH FUND

June 30, 1999

A Series of
GARDNER LEWIS INVESTMENT TRUST
107 North Washington Street, Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone 1-800-430-3863

Table of Contents
-----------------
Page
----
INVESTMENT OBJECTIVE AND POLICIES.............................................2
INVESTMENT LIMITATIONS........................................................4
PORTFOLIO TRANSACTIONS........................................................5
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
FINANCIAL STATEMENTS.........................................................16
APPENDIX A - DESCRIPTION OF RATINGS..........................................17

This Statement of Additional Information (the "SAI") is meant to be read in
conjunction with the Prospectuses for the Institutional, Super-Institutional,
and Class A, C, and D Investor Shares of The Chesapeake Growth Fund (the
"Fund"), each of which is dated the same date as this SAI, and is incorporated
by reference in its entirety into each Prospectus. Because this SAI 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. Capitalized terms used but not defined herein have the same
meanings as in each Prospectus.
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund was organized in 1994 as a diversified, open-end management company.
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. Attached
to this SAI is Appendix A, which contains descriptions of the rating symbols
used by Rating Agencies for securities in which the Fund may invest.

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 seven 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 Services ("S&P"), Fitch Investors 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.

Foreign Securities. The Fund may invest up to 10% of its total assets in foreign
securities and sponsored ADRs. 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
sponsored 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. To the
extent the Fund invests in other foreign securities, 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. 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.

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.

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

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 or sponsored 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);

(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;

(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.

PORTFOLIO 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 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 Fund may also enter into brokerage/service arrangements pursuant to which
selected brokers executing portfolio transactions for the Fund may pay a portion
of the Fund's operating expenses. For the fiscal year ended February 28, 1999,
the Fund participated in a brokerage/service arrangement with Ernst and Company,
of New York, New York. During such year the firm received $253,852 in brokerage
commissions from the Fund and paid $169,241 of the Fund's operating expenses.
There can be no assurance that such arrangement will continue in the future.

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, although the Advisor has not utilized such a broker during the last
three fiscal years. 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 years ended February 28, 1999, 1998, and 1997, the Fund paid
brokerage commissions of $845,558, $574,295, and $686,397, respectively.

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 of Trustees
approves such allocation. Subject to the provisions of the Amended and Restated
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 the
time normal trading closes on the New York Stock Exchange (currently 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, Martin Luther King, Jr. 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.

The Fund has entered into brokerage/service arrangements with certain brokers
who paid a portion of the Fund's expenses for the fiscal year ended February 28,
1999. This program has been reviewed by the Board of Trustees, subject to the
provisions and guidelines as clearly outlined in the securities laws and legal
precedent of the United States. There can be no assurance that the Fund's
brokerage/service arrangements will continue in the future.

For the fiscal year ended February 28, 1999, the total expenses of the Fund
(after expense reductions of $169,241 paid by a broker pursuant to the
brokerage/service arrangement with the Fund, waiver of $25,000 of shareholder
administration fees, and waiver of $941 of distribution fees) were $2,816,768
(0.99%, 1.15%, 1.53%, 3.45%, and 2.14% of the average daily net assets of the
Fund's Super-Institutional, Institutional, Series A Shares, Series C Shares, and
Series D Shares, respectively). For the fiscal year ended February 28, 1998, the
total expenses of the Fund (after expense reductions of $26,313 paid by a broker
pursuant to the brokerage/services arrangement with the Fund and waiver of
$25,000 of shareholder administration fees) were $3,164,112 (1.04%, 1.16%,
1.52%, 3.05%, and 2.18% of the average daily net assets of the Fund's
Super-Institutional, Institutional, Series A Shares, Series C Shares, and Series
D Shares, respectively). For the fiscal year ended February 28, 1997, the total
expenses of the Fund (after expense reductions of $21,927 paid by a broker
pursuant to the brokerage/services arrangement with the Fund) were $2,561,976
(1.04%, 1.22%, 1.53%, 2.33%, and 2.01% of the average daily net assets of the
Fund's Super-Institutional, Institutional, Series A Shares, Series C Shares, and
Series D Shares, 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
Classes of Shares, along with the information on current purchases, rights of
accumulation, and letters of intent. See "Investing in the Fund" in the
Prospectus.

Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for each Class of the Investor Shares of the Fund pursuant to Rule 12b-1 under
the 1940 Act (see "Investing in the Fund - Distribution Plan" in the Investor
Shares Prospectus). Under the Plan the Fund may expend a percentage of the
Investor Classes of Shares' average net assets annually to finance any activity
which is primarily intended to result in the sale of shares of the Investor
Class 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. The current fees paid under the Plan are 0.25%, 0.50%,
and 0.75% of the average net assets of the Class A, Class D, and Class 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
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 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
Class of the Investor Shares, by a majority vote of the Investor Shares'
outstanding voting stock relating to that particular Class. Any amendment
materially increasing the maximum percentage payable under the Plan, with
respect to a particular Class of the Investor Shares, must likewise be approved
by a majority vote of that Class of Investor Shares' outstanding voting stock
relating to that particular Class, 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 28, 1999, the Fund incurred $78,349, $25,054,
and $47,633, net of waived fees, for costs in connection with the Plan under
Rule 12b-1, with respect to the Class A, Class C, and Class D Investor Shares,
respectively. Such costs were spent primarily on compensation to sales personnel
for sale of Investor Shares and servicing of shareholder accounts for Investor
Shares, with a small portion spent on miscellaneous costs incurred in connection
with distribution of the Fund.

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 "Investing in
the Fund - Redeeming Your Shares," 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 Amended and Restated
Declaration of Trust currently provides for the shares of three series, as
follows: the Fund, The Chesapeake Aggressive Growth Fund, and The Chesapeake
Core Growth Fund, all managed by the Advisor. The shares of The Chesapeake
Aggressive Growth Fund and the Chesapeake Core Growth Fund are all of one class;
the shares of the Fund are divided into five classes (Institutional Shares,
Super-Institutional Shares, and Class A, Class C, and Class 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
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 SAI, 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 SAI, shares of
the Fund will be fully paid and non-assessable.

The Amended and Restated 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 Amended and Restated 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 Internal Revenue 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.

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 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 to properly
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."

Dividends paid by the Fund derived from net investment income or net short-term
capital gains are taxable to shareholders as ordinary income, whether received
in cash or reinvested in additional shares. Long-term capital gains
distributions, if any, are taxable as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held.

The Fund will send shareholders information each year on the tax status of
dividends and disbursements. A dividend or capital gains distribution paid
shortly after shares have been purchased, although in effect a return of
investment, is subject to federal income taxation. Dividends from net investment
income, along with capital gains, will be taxable to shareholders, whether
received in cash or shares and no matter how long you have held Fund shares,
even if they reduce the net asset value of shares below your cost and thus, in
effect, result in a return of a part of your investment.

MANAGEMENT OF THE FUND

Trustees and Officers. The Trustees and executive officers of the Trust, their
addresses and ages, and their principal occupations for the last five years are
as follows:
<TABLE>
<S> <C>

Name, Age*, Position(s) Principal Occupation(s)
and Address During Past 5 Years
----------------------- -----------------------
Jack E. Brinson, 67 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, 36 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

Stephen J. Kneeley, 36 Chief Operating Officer
Trustee Turner Investment Partners (investment manager)
1235 Westlakes Drive Berwyn, Pennsylvania
Suite 350
Berwyn, Pennsylvania 19312

John L. Lewis, IV, 35 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

William D. Zantzinger, 37 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
Chadds Ford, Pennsylvania 19317

C. Frank Watson III, 28 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)

Julian G. Winters, 30 Legal and Compliance Director
Treasurer and Assistant Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina (Administrator to the Chesapeake
Rocky Mount, North Carolina 27802 Funds), since 1996; previously Operations Manager, Tar Heel Medical,
Nashville, North Carolina
- -------------------------------
</TABLE>
* As of June 30, 1999
** Indicates that Trustee is an "interested person" of the Trust for purposes of
the 1940 Act.

Compensation. 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 or $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.
<TABLE>
<S> <C> <C> <C> <C>

Compensation Table

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 Fund Expenses Retirement Trustees
- -------------------- ------------ ------------ ------------- ------------
Jack E. Brinson $3,050 None None $9,150
Trustee

W. Whitfield Gardner None None None None
Trustee

Stephen J. Kneeley $3,050 None None $9,150
Trustee

Figures are for the fiscal year ended February 28, 1999.
</TABLE>

Principal Holders of Voting Securities. As of April 19, 1999, 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. On the same date the following shareholders owned of record more than
5% of the outstanding shares of beneficial interest of each Class of the 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
April 19, 1999.
<TABLE>
<S> <C> <C>

Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership* of Class
------------------- -------------------- --------

INSTITUTIONAL SHARES

Norwest Bank Minnesota, N.A., Trustee 478,086.088 Shares 13.082%
FBO COBANK ACB Retirement Plan
P. O. Box 1533
Minneapolis, Minnesota 55480

Strafe & Company FAO Blanchard 238,050.802 Shares 6.514%
Valley Health Association Plan
P.O. Box 160
Westerville, Ohio 43086-0160

United Care Corporation 203,393.058 Shares 5.566%
105 McKnight Drive
Middletown, Ohio 45044

Huston Foundation 203,340.704 Shares 5.564%
2 Tower Bridge, Suite 190
One Fayette Street
Conshohocken, Pennsylvania 19428

National City Bank of Kentucky Trustee for 194,274.849 Shares 5.316%
Vermont American Corporation Retirement
Plan DTD 10-2-97
P.O. Box 94984
Cleveland, Ohio 44101-4984

SERIES A INVESTOR SHARES

Charles Schwab & Company, Inc. 110,904.800 Shares 7.561%
Custody Account FBO Customers
101 Montgomery Street
San Francisco, CA 94104

SERIES C INVESTOR SHARES

Wachovia Securities, Inc. 56,556.623 Shares 32.247%**
FBO William Jones
P.O. Box 1220
Charlotte, North Carolina 28201-1220

Dorothy Matthews Marital 32,727.972 Shares 18.661%
Deduction Trust No. 2
Salvador E. Rodriguez, Trustee
2000 W. Loop South
Suite 1750
Houston, Texas 77027

David L. Giles & Monya K. Giles JTWROS 24,600.232 Shares 14.026%
310 Bayou View
Seabrook, Texas 77586

Lynspen & Company 10,978.546 Shares 6.260%
420 N. 20th Street, 8th Floor
Birmingham, Alababma 35203

SERIES D INVESTOR SHARES

J. C. Bradford & Co. 29,616.568 Shares 7.321%
FBO Scott M. Niswonger
330 Commerce Street
Nashville, Tennessee 37201-1809

SUPER-INSTITUTIONAL SHARES

Ohio School 6,782,886.242 Shares 100.00%**
Employee Retirement System
45 North 4th Street
Columbus, Ohio 43214-3634
</TABLE>

* 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 and its duties and compensation as Advisor is contained in
the Prospectuses for each class of shares of the Fund. The Advisor supervises
the Fund's investments pursuant to an Investment Advisory Agreement (the
"Advisory Agreement"). The Advisory Agreement is currently effective for a
one-year period and will be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of the Fund's outstanding voting securities, provided
the continuance is also approved by a majority of the Trustees who are not
parties to the Advisory Agreement or interested persons of any such party. The
Advisory Agreement is terminable without penalty on 60-days' notice by the Board
of Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund. The Advisory Agreement provides that it will terminate
automatically in the event of its assignment.

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. For the fiscal years
ended February 28, 1999, 1998, and 1997, the Advisor received its fee in the
amount of $2,360,591, $2,532,147, and $1,940,587, respectively.

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 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.

Administrator. The Trust has entered into a Fund Accounting and Compliance
Administration Agreement with The Nottingham Company, Inc. (the
"Administrator"), 105 North Washington Street, Post Office Drawer 69, Rocky
Mount, North Carolina 27802-0069, pursuant to which the Administrator receives
an annual administration fee of $12,500 per each Investor Class and
Institutional Class plus a fee at the annual rate of 0.075% of the average daily
net assets of each Class of Investor and Institutional Shares of the Fund and
0.015% of the average daily net assets of the Super-Institutional Shares of the
Fund for general administration services. In addition, the Administrator
currently receives a base monthly fund accounting fee of $1,750 for each Class
of Investor and Institutional Shares for fund accounting and recordkeeping
services for such classes of Shares of 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. For services to the
Fund for the fiscal years ended February 28, 1999, 1998, and 1997, the
Administrator received aggregate administration fees of $201,802 (waiving
$25,000 of administration fees), $183,081 (waiving $25,000 of shareholder
administration fees), and $146,824, respectively. For such fiscal years, the
Administrator received $84,000 each year for fund accounting and recordkeeping
services.

The Administrator performs 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 SEC 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 provide certain accounting and pricing services for the Fund.

Transfer Agent. The Trust has also entered into a Dividend Disbursing and
Transfer Agent Agreement with NC Shareholder Services, LLC (the "Transfer
Agent"), a North Carolina limited liability company, 107 North Washington
Street, Post Office Box 4365, Rocky Mount, North Carolina 27803-0365 to serve as
transfer, dividend paying, and shareholder servicing agent for the Fund. For its
services, the Transfer Agent is compensated $15 per shareholder per year, with a
minimum fee of $750 per month per class. Prior to March 1, 1999, the Transfer
Agent was compensated by the Administrator for its services to the Fund.

Distributor. Capital Investment Group, Inc. ( "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 SEC 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 28, 1999, the aggregate dollar amount of
sales charges paid on the sales of Fund shares was $25,067, from which the
Distributor retained sales charges of $1,865. For the fiscal year ended February
28, 1998, the aggregate dollar amount of sales charges paid on the sale of Fund
shares was $52,735, from which the Distributor retained sales charges of $5,616.
For the fiscal year ended February 28, 1997, the aggregate dollar amount of
sales charges paid on the sale of Fund shares was $110,001, from which the
Distributor retained sales charges of $8,836.

Custodian. First Union National Bank of North Carolina (the "Custodian"), Two
First Union Center, Charlotte, North Carolina 28288-1151, 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 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. Deloitte & Touche LLP, 2500 One PPG Place, Pittsburgh,
Pennsylvania 15222-5401, serves as independent auditors for the Fund, and audits
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 SAI whenever it is requested by a shareholder or
prospective investor.

Legal Counsel. Dechert Price & Rhoads serves as legal counsel to the New
Providence Investment Trust and the Fund.

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 Fund 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
Fund.

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 Growth Fund
[Investor Class A, C, or D Shares (please specify)] or [Institutional Shares]
or [Super-Institutional Shares]
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

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.

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.

Reduced Sales Charges for Investor Class Shares

Concurrent Purchases. For purposes of qualifying for a lower sales charge,
investors have the privilege of combining concurrent purchases of the Fund and
another series of the Trust advised by 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 $25,000, and shares in the Fund at the total public
offering price of $25,000, the sales charge would be that applicable to a
$50,000 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 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 advised by the Advisor 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 by executing a
letter of intent. A letter of intent allows an investor to purchase shares of
the Fund over a 13-month period at reduced sales charges based on the total
amount intended to be purchased 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 advised by the Advisor 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 backdating period can be used to include earlier purchases 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 shares of the Fund in shares of the Fund or in shares of another
series of the Trust advised by the Advisor and sold with a sales charge, within
90 days after the redemption. If the other series 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 series 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, 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.

ADDITIONAL INFORMATION ON PERFORMANCE

From time to time, the total return of 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.

The average annual total returns for the Institutional Shares of the Fund for
the year ended February 28, 1999, the three years ended February 28, 1999, and
since inception (April 6, 1994 to February 28, 1999) were -4.51%, 10.40%, and
14.83%, respectively. The cumulative total return for the Institutional Shares
of the Fund since inception through February 28, 1999, was 96.95%.

The average annual total returns for the Series A, Series C, and Series D
Investor Shares of the Fund for the year ended February 28, 1999, were -7.69%,
- -6.68%, and -6.83%, respectively. The average annual total returns for the
Series A, Series C, and Series D Investor Shares of the Fund for the three years
ended February 28, 1999, were 8.94%, 8.49%, and 8.85%, respectively. The average
annual total returns for the Series A, Series C, and Series D Investor Shares of
the Fund since inception (April 7, 1995 to February 28, 1999) were 12.83%,
12.32%, and 12.75%, respectively. Without reflecting the effects of the maximum
sales load, the average annual total returns for the Series A and Series D
Investor Shares of the Fund for the year ended February 28, 1999, were -4.83%
and -5.41%, respectively. Without reflecting the effects of the maximum sales
load, the average annual total returns for the Series A and Series D Investor
Shares of the Fund for the three years ended February 28, 1999, were 10.05% and
9.40%, respectively. Without reflecting the effects of the maximum sales load,
the average annual total returns for the Series A and Series D Investor Shares
of the Fund since inception (April 7, 1995 to February 28, 1999) were 13.72% and
13.19%, respectively. The cumulative total returns for the Series A, Series C,
and Series D Investor Shares of the Fund since inception through February 28,
1999, were 60.12%, 57.29%, and 59.65%, respectively. Without reflecting the
effects of the maximum sales load, the cumulative total returns for the Series A
and Series D Investor Shares of the Fund since inception through February 28,
1999, was 65.07% and 62.08%, respectively.

The Fund may also quote the performance of the Class A Investor Shares of the
Fund from the original inception of the Fund on April 6, 1994, as opposed to the
inception of the class of Series A Investor Shares on April 7, 1995. Under such
circumstances, historical performance of the Series A Shares will be calculated
by using the performance of the original class of the Fund (now called the
Institutional Shares) from inception on April 6, 1994, until the date of
issuance of the class of Series A Shares on April 7, 1995, and combining such
performance with the performance of the Series A Shares since April 7, 1995.
Calculated in this manner, the average annual return of the Series A Shares of
the Fund since inception through February 28, 1999, with and without reflecting
the effects of the maximum sales load, was 13.84% and 14.55%, respectively, and
the cumulative total return of the Series A Shares of the Fund since inception
through February 28, 1999, with and without reflecting the effects of the
maximum sales load, was 88.78% and 94.62%, respectively.

The average annual total returns for the Super-Institutional Shares of the Fund
for the year ended February 28, 1999 and since inception (June 12, 1996 to
February 28, 1999) were -4.32% and 8.85%, respectively. The cumulative total
return for the Super-Institutional Shares of the Fund through February 28, 1999
was 25.85%.

These performance quotations should not be considered representative of the
Fund's performance for any specified period in the future.

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. The
Fund may also compare its performance to the Russell 2000 Index, which is
generally considered to be representative of the performance of unmanaged common
stocks of small capitalization companies 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 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.

FINANCIAL STATEMENTS

The audited financial statements for the fiscal year ended February 28, 1999,
including the financial highlights appearing in the Annual Report to
shareholders are incorporated by reference and made a part of this document.
<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 SAI. 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 Services. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Services ("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 of the obligor to meet its
financial commitment on the obligation.

AA - Debt rated AA differs from AAA issues only in a small degree. The
obligor's capacity to meet its financial commitment on the obligation is
very strong.

A - Debt rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in
higher-rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.

BBB - Debt rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

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 having
significant speculative characteristics with respect to the obligor's capacity
to meet its financial commitment on 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 may be 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 short term notes and
indicates strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation. The rating SP-2 indicates a satisfactory capacity to pay principal
and interest, with some vulnerability to adverse financial and economic changes
over the term of the notes.

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 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 supporting institutions) are considered to have a
superior ability for repayment of short-term promissory obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protection; broad margins in earning
coverage of fixed financial charges and high internal cash generation; and well
established access to a range of financial markets and assured sources of
alternative liquidity. Issuers rated Prime-2 (or supporting institutions) are
considered to have a strong ability 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 two highest ratings 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.

MIG-2; VMIG-2 - Obligations bearing these designations are of a high
quality with ample margins of protection.

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. A "ratings outlook" is used to describe the
most likely direction of any rating change over the intermediate term. It is
described as "Positive" or "Negative." The absence of a designation indicates a
stable outlook.

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.

The following summarizes the two 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+.

The term symbol "LOC" indicates that the rating is based on a letter of credit
issued by a commercial bank.

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>

________________________________________________________________________________

THE CHESAPEAKE GROWTH FUND
________________________________________________________________________________

a series of the Gardner Lewis Investment Trust

Annual Report 1999

FOR THE YEAR ENDED FEBRUARY 28

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

THE CHESAPEAKE GROWTH FUND
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-430-3863
<PAGE>

______________________________________

THE CHESAPEAKE FUNDS
______________________________________

April 1, 1999

Dear Shareholder:

The Chesapeake Growth Fund Institutional Class closed the first quarter
with a loss of 1.2%. This compares to a loss of 5.4% for the Russell 2000 and a
gain of 5.0% for the S&P 500. Despite their stock price performance, the factors
that should support demand for smaller and mid-capitalization companies are
strengthening, making this quarter's activity even more contradictory. It was
once again a quarter led by the largest of the large caps, and in our universe,
the highest PE stocks and the internet. (Without internet stocks the Russell
2000 would have been down an additional 3%.) Despite our understanding that this
is primarily due to an anomalistic market environment, disfavoring our types of
companies, we expect to do better.

There is no doubt that we have had great difficulty rationalizing an
environment in which valuation has been all but ignored. This is particularly
true since our strategy has historically allowed us to outstrip market returns,
not only because we have been able to ferret out inefficiencies, but also
because price has historically mattered.

The net result of the market's unprecedented larger capitalization run
is that smaller companies now sell at their lowest relative price earnings
ratios in history. We are being proactive in our efforts to capitalize on this
historic anomaly, one characterized by an investing environment hostile to
smaller companies. Most importantly, we are increasing our exposure to our best
names for little change in price. This process is tending to lower our portfolio
name count, is forcing a sharper selling discipline, and is allowing our most
senior people to more effectively direct the research process. We believe this
will enhance our performance, regardless of market environment, and just as
importantly, is positioning us to best capitalize on the inevitable market turn.

History leaves little question that market environments cycle and that
ultimately there is a regression to the mean. Trying to understand when this
regression will occur is what is difficult. Suffice it to say, it is most likely
to occur when it is least expected. For example, in December, headlines
suggested that neither Japan nor the emerging markets would ever revive. This
quarter both Japan and the emerging markets were up more than 12%, surpassing
the returns of all major markets. Thus recent press suggesting that the current
domestic market trend will last forever, and that the leadership will not
change, is in fact a positive sign.

Many are not aware that in 1998 the S&P 500's advance was due solely to
price earnings ratio expansion. In fact, last year S&P 500 earnings were
actually down from 1997. Its multiple expansion was primarily due to three
things. The first was the demand for big cap liquidity and stability as
potential shelter from the global economic difficulty primarily impacting the
developing economies and Japan. (This occurred despite the fact that most of
these companies relied on the world's developing economies and in part Japan for
their expected growth in profits.) The second was a declining interest rate
environment. And, the third was the money flow momentum initiated by the first
two, and furthered as the performance of these stocks caused others to `pile
on'.
<PAGE>

Smaller companies are expected to grow their earnings next year at more
than two times the rate of the S&P 500. In addition to this, a stabilizing
global economic platform is putting upward pressure on the domestic economy,
impeding further rate reduction and thus multiple expansion. This should make
earnings growth the driver for stock price appreciation.

We believe that the money flow into larger company funds, which has
been the fuel for their advances, is chasing yesterday's returns. So too do many
large pension plans, whose assets as a whole still dominate the market. In fact,
despite most investors believing the contrary, large pension plans, due to
concerns over valuation and portfolio diversification, have been decreasing
their exposure to S&P 500 index funds, completely offsetting continuing inflows
from retail investors. Both Vanguard and Standard & Poor's have confirmed this
in recent press. This does not say that the market cannot do well; it does say
that the S&P is not as likely to maintain its performance pace. Since the
fundamentals are in place for a turn, it now boils down to money flow. And,
additional evidence of a potential shift in money flow can be found in the fact
that among the large institutions, over the next several quarters, there is a
significant amount of smaller cap manager search activity planned, suggesting
that the direction of money flow into these stocks could soon turn positive.
This would obviously benefit our portfolio greatly, but so too should the steps
we have employed to position ourselves in this environment.

Sincerely,

/S/ Whit /s/ John
W. Whitfield Gardner John L. Lewis, IV
<PAGE>

Relative Valuations

This graph shows the P/E ratio of the Salomon Smith Barney Emerging Growth Index
relative to that of the S&P 500. It clearly illustrates that relative valuations
of small and mid cap companies have reached historic lows.

[Graph Included Here]

<PAGE>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

March 31, 1999

Investment Strategy
- -------------------
The Chesapeake Growth Fund seeks capital appreciation through investments in
small, medium, and large growth equities. The cornerstone of the fund's
intensive in-house fundamental analysis is in constant contact with the
management, customers, competitors, and suppliers of both current and potential
investments.

Investment Guidelines
- ---------------------
The Fund seeks companies that:
o are experiencing a rapid growth rate - companies in our portfolio are
forecasted to grow their profits in excess of 15% annually;
o are selling at a stock price not yet fully reflective of their growth rate;
o are undergoing a positive change created by new products, managements,
distribution strategies or manufacturing technologies;
o have a strong balance sheet
o are less susceptible to macroeconomic change.

Ten Largest Industry Groups
- ---------------------------

[pie chart here]
Apparel - 4.6%
Business Services - 5.6%
Computer Software - 10.1%
Computers & Peripherals - 13.3%
Energy Services - 7.0%
Environmental Services - 4.6%
Financial Services - 5.1%
Pharmaceuticals - 6.3%
Retail Sales & Distribution - 9.8%
Telecommunications - 11.4%
All Others - 22.4%

About The Investment Advisor
- ----------------------------
Gardner Lewis Asset management serves as investment advisor to the Chesapeake
Family of Funds. Overall, through the funds and separately managed accounts,
Gardner Lewis invests approximately $3 billion in growth equities for both
institutions and individuals including some of the top foundations, endowments,
and pension plans in the U.S. Gardner Lewis was founded in 1990 and employs a
staff of 29. The research team is comprised of 15.

For More complete information regarding the Fund including charges
and expenses, obtain a prospectus by calling the Fund directly at (800)430-3863
or Gardner Lewis Asset Management, the Investment Advisor at (610)558-2800.
<PAGE>

Ten Largest Holdings
- --------------------
1. EMC Corporation 8.0%
2. MCI Worldcom Inc. 5.6%
3. Jones Apparel Group, Inc. 3.7%
4. Checkfree Holdings Corp. 2.9%
5. MidAmerican Energy Holdings 2.3%
6. Diamond Offshore Drilling 2.3%
7. LSI Logic Corp. 2.3%
8. United States Filter 2.0%
9. Allmerica Financial Corp. 1.9%
10. Forest Laboratories 1.9%

Portfolio Characteristics
- -------------------------
Overall Assets ($MM) 219
Number of Companies 68
5 Yr. Historical Earnings Growth 24%
Earnings Growth - net year 28%
P/E Ratio - next year 21
(Gardner Lewis earnings estimates)

Performance Summary
- ------------------- Annualized
- --------------------------------------------------------------------------------
Quarter Since
End 1 Year 3 Year Inception
- --------------------------------------------------------------------------------
The Chesapeake Growth Fund
Institutional Shares -1.2% -1.9% 12.3% 15.7%
- --------------------------------------------------------------------------------

Historical performance for The Chesapeake Growth Fund Institutional Series has
been calculated by using the performance of an original class of The Fund (known
as the A Shares) from inception on April 6,1994 until the date of issuance of
the new Institutional Series on April 7, 1995, and combining such performance
with the performance of the Institutional Series since April 7, 1995. The
performance quoted represents past performance and is not a guarantee of future
results. Share price and investment return will vary, so you may have a gain or
loss when you sell shares.

Must be accompanied or preceded by a prospectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
<PAGE>
<TABLE>
<S> <C> <C> <C>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

PORTFOLIO OF INVESTMENTS
(unaudited)
March 31, 1999

============================================================ ===========================================================
Quantity Security Market Value Quantity Security Market Value
============================================================ ===========================================================
67,900 ADC Telecommunications, Inc. 3,237,981 156,300 LSI Logic Corp. 4,874,606
65,000 AES Corporation 2,421,250 26,700 Lexmark Holdings, Inc. 2,987,062
31,100 Abercrombie & Fitch Co. 2,868,975 135,600 MCI Worldcom Inc. 12,009,075
117,500 Adaptec, Inc. 2,680,469 6,700 Mattel, Inc. 167,081
43,300 Airborne Freight Corp. 1,342,300 44,000 Maytag 2,656,500
128,800 Allied Waste 1,859,550 181,400 MidAmerican Energy Holdings 5,079,200
76,400 Allmerica Financial Corp. 4,206,775 102,500 Mohawk Industries, Inc. 3,075,000
84,400 Amerisource Health Corp. 2,885,425 147,300 Mylan Laboratories, Inc. 4,041,544
79,500 BE Aerospace, Inc. 1,172,625 67,500 NCR Corporation 3,375,000
92,700 BMC Software, Inc. 3,435,694 41,600 Networks Associates, Inc. 1,276,600
67,400 Best Buy Company, Inc. 3,504,800 66,100 Nova Corporation 1,735,125
47,500 Biomet, Inc. 1,992,031 108,100 Parametric Technology Corp. 2,134,975
64,700 Cadence Design Systems 1,666,025 671,700 PharMerica, Inc. 3,358,500
148,400 Checkfree Holdings Corp. 6,316,275 50,500 Plantronics Inc. 3,159,406
33,900 Circuit City Stores, Inc. 2,597,587 108,200 Platinum Technology Int'l, Inc. 2,759,100
103,650 Comair Holdings, Inc. 2,448,731 61,500 Saks, Inc. 1,599,000
80,900 Concord EFS, Inc. 2,229,806 70,700 Scientific-Atlanta, Inc. 1,926,575
92,500 Conexant Systems, Inc. 2,561,094 73,000 Snyder Communications 2,034,875
121,200 Consolidated Stores Corp. 3,673,875 32,000 Sun Microsystems, Inc. 4,002,000
89,700 Cooper Cameron Corp. 3,038,587 135,900 Symantec Corp. 2,301,806
144,900 DSP Communications, Inc. 2,300,287 43,600 Synopsys 2,343,500
155,900 Diamond Offshore Drilling 4,930,337 286,200 System Software Associates, Inc. 643,950
70,300 E C I Telecom, Ltd. 2,460,500 31,500 Tellabs, Inc. 3,079,125
135,600 EMC Corporation 17,322,900 34,200 Teradyne, Inc. 1,866,037
68,500 Federal-Mogul Corp. 2,928,375 58,900 Toronto-Dominion Bank 2,705,719
73,600 Forest Laboratories, Inc. 4,149,200 48,500 U.S.Foodservice 2,255,250
49,000 Gulfstream Aerospace Corp. 2,125,375 77,800 Unisys Corp. 2,154,087
105,500 Heller Financial 2,479,250 72,500 United Healthcare Corp. 3,815,312
58,700 Home Depot, Inc. 3,654,075 144,700 United States Filter 4,431,437
73,400 Houghton Mifflin Company 3,440,625 67,600 Universal Health Services, Inc. 2,923,700
31,300 Intimate Brands,Inc. 1,506,312 83,500 Waste Management, Inc. 3,705,312
285,400 Jones Apparel Group, Inc. 7,973,362 14,700 Wellpoint Health Networks Inc. 1,114,444
78,100 Jones Pharma Inc. 2,713,975 74,500 Westpoint Stevens, Inc. 2,062,719
112,000 K Mart Corp. 1,883,000 66,200 Young & Rubicam Inc. 2,697,650

TOTAL EQUITY 216,358,706

CASH EQUIVALENT 3,325,612

TOTAL ASSETS 219,684,319
</TABLE>
<PAGE>

______________________________________

THE CHESAPEAKE FUNDS
______________________________________

April 1, 1999

Dear Shareholder:

The Chesapeake Growth Fund Series C closed the first quarter with a loss
of 1.7%. This compares to a loss of 5.4% for the Russell 2000 and a gain of 5.0%
for the S&P 500. Despite their stock price performance, the factors that should
support demand for smaller and mid-capitalization companies are strengthening,
making this quarter's activity even more contradictory. It was once again a
quarter led by the largest of the large caps, and in our universe, the highest
PE stocks and the internet. (Without internet stocks the Russell 2000 would have
been down an additional 3%.) Despite our understanding that this is primarily
due to an anomalistic market environment, disfavoring our types of companies, we
expect to do better.

Sincerely,

/S/ Whit /s/ John
W. Whitfield Gardner John L. Lewis, IV
<PAGE>

Relative Valuations

[Graph Included Here]

<PAGE>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

March 31, 1999

Ten Largest Industry Groups
- ---------------------------

Performance Summary
- ------------------- Annualized
- --------------------------------------------------------------------------------
Quarter Since
End 1 Year 3 Year Inception
- --------------------------------------------------------------------------------
The Chesapeake
Growth Fund Series C -1.7% -4.1% 10.3% 13.3%
- --------------------------------------------------------------------------------

The inception date of the Series C of the Fund was April 7, 1995. The
performance quoted represents past performance and is not a guarantee of future
results. Share price and investment return will vary, so you may have a gain or
loss when you sell shares.

Must be accompanied or preceded by a prospectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
<PAGE>
<TABLE>
<S> <C> <C> <C>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

PORTFOLIO OF INVESTMENTS
(unaudited)
March 31, 1999

TOTAL EQUITY 216,358,706

CASH EQUIVALENT 3,325,612

TOTAL ASSETS 219,684,319
</TABLE>
<PAGE>

______________________________________

THE CHESAPEAKE FUNDS
______________________________________

April 1, 1999

Dear Shareholder:

The Chesapeake Growth Fund Series A closed the first quarter with a
loss of 1.3%. This compares to a loss of 5.4% for the Russell 2000 and a gain of
5.0% for the S&P 500. Despite their stock price performance, the factors that
should support demand for smaller and mid-capitalization companies are
strengthening, making this quarter's activity even more contradictory. It was
once again a quarter led by the largest of the large caps, and in our universe,
the highest PE stocks and the internet. (Without internet stocks the Russell
2000 would have been down an additional 3%.) Despite our understanding that this
is primarily due to an anomalistic market environment, disfavoring our types of
companies, we expect to do better.

Sincerely,

/S/ Whit /s/ John
W. Whitfield Gardner John L. Lewis, IV
<PAGE>

Relative Valuations

[Graph Included Here]

<PAGE>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

March 31, 1999

Ten Largest Industry Groups
- ---------------------------

Performance Summary
- ------------------- Annualized
- --------------------------------------------------------------------------------
The Chesapeake Quarter Since
Growth Fund Series A End 1 Year 3 Year Inception
- --------------------------------------------------------------------------------
Without the sales load
deduction -1.3% -2.2% 12.0% 15.4%
- --------------------------------------------------------------------------------
Net of the maximum
sales load^1 -4.3% -5.2% 10.8% 14.7%
- --------------------------------------------------------------------------------
______
1. The maximum sales load for the Fund is 3%. Historical performance for the
Chesapeake Growth Fund Series A has been calculated by using the performance of
the original class of The Fund now called the Institutional Shares) from
inception on April 6, 1994 until the date of issuance of the new Series A Shares
on April 7, 1995, and combining such performance with the performance of the
Series A Shares since April 7, 1995. The performance quoted represents past
performance and is not a guarantee of future results. Share price and investment
return will vary, so you may have a gain or loss when you sell shares.

Must be accompanied or preceded by a prospectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
<PAGE>
<TABLE>
<S> <C> <C> <C>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

PORTFOLIO OF INVESTMENTS
(unaudited)
March 31, 1999

TOTAL EQUITY 216,358,706

CASH EQUIVALENT 3,325,612

TOTAL ASSETS 219,684,319
</TABLE>
<PAGE>

______________________________________

THE CHESAPEAKE FUNDS
______________________________________

April 1, 1999

Dear Shareholder:

The Chesapeake Growth Fund Series D closed the first quarter with a
loss of 1.5%. This compares to a loss of 5.4% for the Russell 2000 and a gain of
5.0% for the S&P 500. Despite their stock price performance, the factors that
should support demand for smaller and mid-capitalization companies are
strengthening, making this quarter's activity even more contradictory. It was
once again a quarter led by the largest of the large caps, and in our universe,
the highest PE stocks and the internet. (Without internet stocks the Russell
2000 would have been down an additional 3%.) Despite our understanding that this
is primarily due to an anomalistic market environment, disfavoring our types of
companies, we expect to do better.

Sincerely,

/S/ Whit /s/ John
W. Whitfield Gardner John L. Lewis, IV
<PAGE>

Relative Valuations

[Graph Included Here]

<PAGE>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

March 31, 1999

Ten Largest Industry Groups
- ---------------------------

Performance Summary
- ------------------- Annualized
- --------------------------------------------------------------------------------
The Chesapeake Quarter Since
Growth Fund Series D End 1 Year 3 Year Inception
- --------------------------------------------------------------------------------
Without the sales load
deduction -1.5% -2.9% 11.3% 14.9%
- --------------------------------------------------------------------------------
Net of the maximum
sales load^1 -2.9% -4.3% 10.7% 14.6%
- --------------------------------------------------------------------------------
________
1. The maximum sales load for the Fund is 1.5%. Historical performance for the
Chesapeake Growth Fund Series D has been calculated by using the performance of
the original class of The Fund (known as the B shares) from inception on April
6, 1994 until the conversion into the new Series D Shares on April 7, 1995, and
combining such performance with the performance of the Series D Shares since
April 7, 1995. The performance quoted represents past performance and is not a
guarantee of future results. Share price and investment return will vary, so you
may have a gain or loss when you sell shares.

Must be accompanied or preceded by a prospectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
<PAGE>
<TABLE>
<S> <C> <C> <C>

_______________________________________________

THE CHESAPEAKE GROWTH FUND
_______________________________________________

PORTFOLIO OF INVESTMENTS
(unaudited)
March 31, 1999

TOTAL EQUITY 216,358,706

CASH EQUIVALENT 3,325,612

TOTAL ASSETS 219,684,319
</TABLE>
<PAGE>

THE CHESAPEAKE GROWTH FUND
Super-Institutional Shares

Performance Update - $50,000,000 Investment

For the period from June 12, 1996 (commencement of
operations) to February 28, 1999

Super- NASDAQ
Institutional S&P 500 Industrials
Shares Index Index

6/12/96 $50,000,000 $50,000,000 $50,000,000
8/31/96 44,816,484 48,940,746 45,188,818
11/30/96 51,513,200 56,981,759 48,033,613
2/28/97 52,446,877 59,969,752 47,256,720
5/31/97 55,730,844 64,648,986 48,958,651
8/31/97 64,713,458 68,834,821 55,463,315
11/30/97 62,649,033 73,428,371 54,059,331
2/28/98 65,766,812 80,962,184 56,725,008
5/31/98 65,620,093 84,486,705 57,655,355
8/31/98 48,160,527 74,406,542 42,016,157
11/30/98 60,264,848 90,802,549 52,740,221
2/28/99 62,923,801 96,941,275 56,635,298

This graph depicts the performance of The Chesapeake Growth Fund
Super-Institutional Shares versus the NASDAQ Industrials Index and the S&P 500
Total Return Index. It is important to note that The Chesapeake Growth Fund is a
professionally managed mutual fund while the indexes are not available for
investment and are unmanaged. The comparison is shown for illustrative purposes
only

Average Annual Total Return
- ---------------------------------------------------
Since Inception One Year
- ---------------------------------------------------
8.85% (4.32)%
- ---------------------------------------------------

The graph assumes an initial $50,000,000 investment at June 12, 1996. All
dividends and distributions are reinvested.

At February 28, 1999, the Super-Institutional Shares of The Chesapeake Growth
Fund would have grown to $62,923,801 - total investment return of 25.85% since
June 12, 1996.

At February 28, 1999, a similar investment in the NASDAQ Industrials Index would
have been worth $56,635,298 - total investment return of 13.27%; while a similar
investment in the S&P 500 Total Return Index would have grown to $96,941,275 -
total investment return of 93.88% since June 12, 1996.

Past performance is not a guarantee of future results. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.
<PAGE>

THE CHESAPEAKE GROWTH FUND
Institutional Shares

Performance Update - $1,000,000 Investment

For the period from April 6,1994 (commencement of
operations) to February 28, 1999

NASDAQ
Institutional S&P 500 Industrials
Shares Index Index

4/6/94 $1,000,000 $1,000,000 $1,000,000
5/31/94 1,013,000 1,023,703 947,950
8/31/94 1,058,200 1,073,692 979,838
11/30/94 1,081,100 1,031,962 961,061
2/28/95 1,128,600 1,116,296 988,000
5/31/95 1,247,000 1,230,372 1,053,310
8/31/95 1,535,000 1,303,973 1,226,306
11/30/95 1,467,366 1,413,574 1,240,874
2/29/96 1,463,316 1,503,656 1,287,605
5/31/96 1,571,672 1,580,241 1,516,725
8/31/96 1,408,631 1,548,170 1,347,959
11/30/96 1,618,255 1,802,536 1,432,818
2/28/97 1,646,610 1,897,057 1,409,644
5/31/97 1,748,890 2,045,077 1,460,158
8/31/97 2,030,414 2,177,490 1,654,155
11/30/97 1,965,454 2,322,801 1,612,282
2/28/98 2,062,399 2,561,122 1,691,784
5/31/98 2,057,783 2,672,615 1,719,531
8/31/98 1,509,579 2,353,744 1,253,103
11/30/98 1,888,128 2,872,408 1,572,941
2/28/99 1,969,483 3,066,598 1,689,109

This graph depicts the performance of The Chesapeake Growth Fund Institutional
Shares versus the NASDAQ Industrials Index and the S&P 500 Total Return Index.
It is important to note that The Chesapeake Growth Fund is a professionally
managed mutual fund while the indexes are not available for investment and are
unmanaged. The comparison is shown for illustrative purposes only.

Average Annual Total Return
- -------------------------------------------------------
Since Inception One Year Three Years
- -------------------------------------------------------
14.83% (4.51)% 10.40%
- -------------------------------------------------------

The graph assumes an initial $1,000,000 investment at April 6, 1994. All
dividends and distributions are reinvested.

At February 28, 1999, the Institutional Shares of The Chesapeake Growth Fund
would have grown to $1,969,483 - total investment return of 96.95% since April
6, 1994.

At February 28, 1999, a similar investment in the NASDAQ Industrials Index would
have grown to $1,689,109 - total investment return of 68.91%; while a similar
investment in the S&P 500 Total Return Index would have grown to $3,066,598 -
total investment return of 206.66% since April 6, 1994.

THE CHESAPEAKE GROWTH FUND
Series C Investor Shares

Performance Update - $25,000 Investment

For the period from April 7,1995 (commencement of
operations) to February 28, 1999

NASDAQ
Series C Industrials S&P 500
Shares Index Index

4/7/95 $25,000 $25,000 $25,000
5/31/95 26,421 25,834 26,443
8/31/95 32,528 30,077 28,025
11/30/95 30,966 30,434 32,020
2/29/96 30,794 31,580 33,109
5/31/96 33,028 37,200 33,963
8/31/96 29,506 33,061 33,274
11/30/96 33,779 35,142 38,741
2/28/97 34,273 34,574 40,772
5/31/97 36,292 35,813 43,983
8/31/97 41,983 40,571 46,799
11/30/97 40,368 39,544 49,922
2/28/98 42,138 41,494 55,044
5/31/98 41,818 42,174 57,440
8/31/98 30,485 30,734 50,587
11/30/98 37,885 38,579 61,734
2/28/99 39,323 41,428 65,908

This graph depicts the performance of The Chesapeake Growth Fund Series C
Investor Shares versus the NASDAQ Industrials Index and the S&P 500 Total Return
Index. It is important to note that The Chesapeake Growth Fund is a
professionally managed mutual fund while the indexes are not available for
investment and are unmanaged. The comparison is shown for illustrative purposes
only.

Average Annual Total Return
- -------------------------------------------------------
Since Inception One Year Three Years
- -------------------------------------------------------
12.32% (6.68)% 8.49%
- -------------------------------------------------------

The graph assumes an initial $25,000 investment at April 7, 1995. All dividends
and distributions are reinvested.

At February 28, 1999, the Series C Investor Shares of The Chesapeake Growth Fund
would have grown to $39,323 - total investment return of 57.29% since April 7,
1995.

At February 28, 1999, a similar investment in the NASDAQ Industrials Index would
have grown to $41,428 - total investment return of 65.71%; while a similar
investment in the S&P 500 Total Return Index would have grown to $65,908 - total
investment return of 163.63% since April 7, 1995.

THE CHESAPEAKE GROWTH FUND
Series A Investor Shares

Performance Update - $25,000 Investment

For the period from April 7,1995 (commencement of
operations) to February 28, 1999

NASDAQ
Series A Industrials S&P 500
Shares Index Index

4/7/95 $24,250 $25,000 $25,000
5/31/95 25,628 25,834 26,443
8/31/95 31,572 30,077 28,025
11/30/95 30,140 30,434 32,020
2/29/96 30,036 31,580 33,109
5/31/96 32,244 37,200 33,963
8/31/96 28,890 33,061 33,274
11/30/96 33,139 35,142 38,741
2/28/97 33,702 34,574 40,772
5/31/97 35,785 35,813 43,983
8/31/97 41,492 40,571 46,799
11/30/97 40,136 39,544 49,922
2/28/98 42,061 41,494 55,044
5/31/98 41,942 42,174 57,440
8/31/98 30,726 30,734 50,587
11/30/98 38,402 38,579 61,734
2/28/99 40,029 41,428 65,908

This graph depicts the performance of The Chesapeake Growth Fund Series A
Investor Shares versus the NASDAQ Industrials Index and the S&P 500 Total Return
Index. It is important to note that The Chesapeake Growth Fund is a
professionally managed mutual fund while the indexes are not available for
investment and are unmanaged. The comparison is shown for illustrative purposes
only.

Average Annual Total Return
- ------------------------------------------------------------------
Since Inception One Year Three Years
- ------------------------------------------------------------------
No Sales Load 13.72% (4.83)% 10.05%
- ------------------------------------------------------------------
With 3.00% Sales Load 12.83% (7.69)% 8.94%
- ------------------------------------------------------------------

The graph assumes an initial $25,000 investment at April 7, 1995 ($24,250 after
maximum sales load of 3.00%). All dividends and distributions are reinvested.

At February 28, 1999, the Series A Investor Shares of The Chesapeake Growth Fund
would have grown to $40,029 - total investment return of 60.12% since April 7,
1995. Without the deduction of the 3.00% maximum sales load, the Series A
Investor Shares of The Chesapeake Growth Fund would have grown to $41,267 -
total investment return of 65.07% since April 7, 1995. The sales load may be
reduced or eliminated for larger purchases.

THE CHESAPEAKE GROWTH FUND
Series D Investor Shares

Performance Update - $25,000 Investment

For the period from April 7,1995 (commencement of
operations) to February 28, 1999

NASDAQ
Series D Industrials S&P 500
Shares Index Index

4/7/95 $24,625 $25,000 $25,000
5/31/95 26,045 25,834 26,443
8/31/95 32,040 30,077 28,025
11/30/95 30,606 30,434 32,020
2/29/96 30,479 31,580 33,109
5/31/96 32,700 37,200 33,963
8/31/96 29,231 33,061 33,274
11/30/96 33,504 35,142 38,741
2/28/97 34,012 34,574 40,772
5/31/97 36,084 35,813 43,983
8/31/97 41,795 40,571 46,799
11/30/97 40,310 39,544 49,922
2/28/98 42,196 41,494 55,044
5/31/98 42,002 42,174 57,440
8/31/98 30,740 30,734 50,587
11/30/98 38,353 38,579 61,734
2/28/99 39,912 41,428 65,908

This graph depicts the performance of The Chesapeake Growth Fund Series D
Investor Shares versus the NASDAQ Industrials Index and the S&P 500 Total Return
Index. It is important to note that The Chesapeake Growth Fund is a
professionally managed mutual fund while the indexes are not available for
investment and are unmanaged. The comparison is shown for illustrative purposes
only.

Average Annual Total Return
- ------------------------------------------------------------------
Since Inception One Year Three Years
- ------------------------------------------------------------------
No Sales Load 13.19% (5.41)% 9.40%
- ------------------------------------------------------------------
With 1.50% Sales Load 12.75% (6.83)% 8.85%
- ------------------------------------------------------------------

The graph assumes an initial $25,000 investment at April 7, 1995 ($24,625 after
maximum sales load of 1.50%). All dividends and distributions are reinvested.

At February 28, 1999, the Series D Investor Shares of The Chesapeake Growth Fund
would have grown to $39,912 - total investment return of 59.65% since April 7,
1995. Without the deduction of the 1.50% maximum sales load, the Series D
Investor Shares of The Chesapeake Growth Fund would have grown to $40,519 -
total investment return of 62.08% since April 7, 1995. The sales load may be
reduced or eliminated for larger purchases.

PORTFOLIO OF INVESTMENTS

February 28, 1999

- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS - 99.34%

Advertising - 2.41%
(a)Young & Rubicam Inc. ..................................................... 136,100 $ 5,137,775
------------

Aerospace & Defense - 1.58%
(a)BE Aerospace, Inc. ....................................................... 79,500 1,172,625
(a)Gulfstream Aerospace Corporation ......................................... 49,000 2,192,750
------------
3,365,375
------------
Apparel Manufacturing - 3.74%
(a)Jones Apparel Group, Inc. ................................................ 285,400 7,973,362
------------

Auto Parts - Replacement Equipment - 1.58%
Federal-Mogul Corporation ................................................ 68,500 3,369,344
------------

Commercial Services - 1.99%
(a)Concord EFS, Inc. ........................................................ 80,900 2,583,744
(a)NOVA Corporation ......................................................... 66,100 1,652,500
------------
4,236,244
------------
Computers - 12.69%
(a)Adaptec, Inc. ............................................................ 117,500 2,342,656
(a)Apple Computer, Inc. ..................................................... 71,500 2,489,094
(a)EMC Corporation .......................................................... 135,600 13,882,050
(a)Gateway 2000, Inc. ....................................................... 33,800 2,456,838
(a)NCR Corporation .......................................................... 67,500 2,763,281
(a)Sun Microsystems, Inc. ................................................... 32,000 3,114,000
------------
27,047,919
------------
Computer Software & Services - 9.29%
(a)BMC Software, Inc. ....................................................... 68,900 2,816,287
(a)Cadence Design Systems, Inc. ............................................. 64,700 1,556,844
Ceridian Corporation ..................................................... 20,300 1,453,987
(a)CheckFree Holdings Corporation ........................................... 148,400 5,082,700
(a)Network Associates, Inc. ................................................. 43,400 2,039,800
(a)PLATINUM technology International, inc ................................... 108,200 1,433,650
(a)Symantec Corporation ..................................................... 135,900 2,454,694
(a)Synopsys, Inc. ........................................................... 43,600 2,016,500
System Software Associates, Inc. ......................................... 286,200 948,038
------------
19,802,500
------------

(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>

THE CHESAPEAKE GROWTH FUND

PORTFOLIO OF INVESTMENTS

February 28, 1999

COMMON STOCKS - (Continued)

Electronics - 3.13%
(a)Rambus Inc. .............................................................. 38,000 $ 2,762,125
(a)SCI Systems, Inc. ........................................................ 73,400 2,270,813
(a)Teradyne, Inc. ........................................................... 34,200 1,641,600
------------
6,674,538
------------
Electronics - Semiconductor - 3.41%
(a)Conexant Systems, Inc. ................................................... 61,300 1,042,100
(a)LSI Logic Corporation .................................................... 42,500 1,099,688
Micron Technology, Inc. .................................................. 88,800 5,117,100
------------
7,258,888
------------
Environmental Control - 1.91%
Waste Management, Inc. ................................................... 83,500 4,081,062
------------

Financial Services - 1.20%
Heller Financial, Inc. ................................................... 105,500 2,551,781
------------

Financial - Banks, Commercial - 1.14%
Toronto - Dominion Bank .................................................. 58,900 2,429,625
------------

Foreign Securities - 1.37%
ECI Telecom Limited ...................................................... 79,300 2,914,275
------------

Household Products & Housewares - 1.16%
Maytag Corporation ....................................................... 44,000 2,466,750
------------

Human Resources - 1.05%
(a)Modis Professional Services, Inc. ........................................ 164,000 2,244,750
------------

Industrial Materials - 0.38%
(a)Cable Design Technologies Corporation .................................... 63,050 815,709
------------

Insurance - Multiline - 1.91%
Allmerica Financial Corporation .......................................... 76,400 4,077,850
------------

Lodging - 0.79%
(a)Fairfield Communities, Inc. .............................................. 44,500 1,329,737
(a)Sunterra Corporation ..................................................... 108,550 364,344
------------
1,694,081
------------

(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>

THE CHESAPEAKE GROWTH FUND

PORTFOLIO OF INVESTMENTS

February 28, 1999

COMMON STOCKS - (Continued)

Medical - Services - 2.96%
United HealthCare Corporation ............................................ 72,500 $ 3,575,156
Universal Health Services, Inc. .......................................... 67,600 2,746,250
------------
6,321,406
----------
Medical Supplies - 1.87%
Biomet, Inc. ............................................................. 81,700 2,997,369
Medtronic, Inc. .......................................................... 13,887 980,769
------------
3,978,138
------------
Miscellaneous - Manufacturing - 1.71%
(a)American Power Conversion Corporation .................................... 25,000 896,875
Pall Corporation ......................................................... 130,000 2,754,375
------------
3,651,250
------------
Oil & Gas - Equipment & Services - 1.29%
(a)Cooper Cameron Corporation ............................................... 89,700 2,107,950
(a)Global Industries, Ltd. .................................................. 126,800 641,925
------------
2,749,875
------------
Pharmaceuticals - 7.87%
(a)AmeriSource Health Corporation ........................................... 42,200 3,149,175
(a)Forest Laboratories, Inc. ................................................ 73,600 3,638,600
Jones Pharma Incorporated ................................................ 78,100 2,196,563
Mylan Laboratories Inc. .................................................. 147,300 4,023,131
(a)PharMerica, Inc. ......................................................... 671,700 3,778,312
------------
16,785,781
------------
Publishing - Printing - 1.14%
Houghton Mifflin Company ................................................. 56,600 2,433,800
------------

Restaurants & Food Services - 1.16%
CKE Restaurants, Inc. .................................................... 93,097 2,472,889
------------

Retail - Apparel - 1.69%
(a)Abercrombie & Fitch Co. .................................................. 31,100 2,363,600
Intimate Brands, Inc. .................................................... 31,300 1,230,481
------------
3,594,081
------------
Retail - Department Stores - 1.04%
(a)Saks Incorporated ........................................................ 61,500 2,210,156
------------

Retail - Drug Stores - 1.93%
Rite Aid Corporation ..................................................... 99,200 4,104,400
------------

(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>

THE CHESAPEAKE GROWTH FUND

PORTFOLIO OF INVESTMENTS

February 28, 1999

COMMON STOCKS - (Continued)

Retail - General Merchandise - 0.92%
(a)Kmart Corporation ........................................................ 112,000 $ 1,960,000
------------

Retail - Specialty Line - 4.63%
(a)Best Buy Co., Inc. ....................................................... 33,700 3,125,675
Circuit City Stores ...................................................... 59,600 3,233,300
The Home Depot, Inc. ..................................................... 58,700 3,503,656
------------
9,862,631
------------
Textiles - 1.56%
(a)Mohawk Industries, Inc. .................................................. 102,500 3,331,250
------------

Telecommunications Equipment - 4.93%
(a)ADC Telecommunications, Inc. ............................................. 67,900 2,749,950
(a)DSP Communications, Inc. ................................................. 144,900 2,173,500
(a)Plantronics, Inc. ........................................................ 50,500 3,061,563
(a)Tellabs, Inc. ............................................................ 31,500 2,521,969
------------
10,506,982
------------
Toys - 1.59%
Mattel, Inc. ............................................................. 128,600 3,391,825
------------

Transportation - Air - 2.01%
Airborne Freight Corporation ............................................. 43,300 1,688,700
COMAIR Holdings, Inc. .................................................... 69,100 2,599,888
------------
4,288,588
------------
Utilities - Electric - 3.50%
(a)CalEnergy Company, Inc. .................................................. 179,800 5,045,638
The AES Corporation ...................................................... 65,000 2,417,187
------------
7,462,825
------------
Utilities - Telecommunications - 5.25%
(a)MCI WorldCom, Inc. ....................................................... 135,600 11,187,000
------------

Utilities - Water - 1.56%
(a)United States Filter Corporation ......................................... 135,100 3,318,394
------------

Total Common Stocks (Cost $172,887,286) .................................. 211,753,099
------------

(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

THE CHESAPEAKE GROWTH FUND

PORTFOLIO OF INVESTMENTS

February 28, 1999

INVESTMENT COMPANY - 0.86%

Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................. 1,841,153 $ 1,841,153
(Cost $1,841,153) -------------

Total Value of Investments (Cost $174,728,43% (b)) .................................................... 100.20 % $213,594,252
Liabilities In Excess of Other Assets ................................................................. (0.20)% (423,330)
------ ------------
Net Assets ..................................................................................... 100.00 % $213,170,922
====== ============

(a) Non-income producing investment.

(b) Aggregate cost for federal income tax purposes is the $174,931,312. Unrealized appreciation (depreciation) of
investments for and federal income tax purposes is as follows:

Unrealized appreciation $52,256,056
Unrealized depreciation (13,593,116)
-----------

Net unrealized appreciation $38,662,940
===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE CHESAPEAKE GROWTH FUND

STATEMENT OF ASSETS AND LIABILITIES

February 28, 1999

ASSETS
Investments, at value (cost $174,728,439) ..................................................... $ 213,594,252
Cash .......................................................................................... 6,425
Income receivable ............................................................................. 25,085
Receivable for investments sold ............................................................... 768,329
Receivable for fund shares sold ............................................................... 12,791
Other assets .................................................................................. 15,687
-------------

Total assets ............................................................................. 214,422,569
-------------

LIABILITIES
Accrued expenses .............................................................................. 72,215
Payable for investment purchases .............................................................. 1,176,398
Payable for fund shares redeemed .............................................................. 2,593
Other liabilities ............................................................................. 441
-------------

Total liabilities ........................................................................ 1,251,647
-------------

NET ASSETS ........................................................................................... $ 213,170,922
=============

NET ASSETS CONSIST OF
Paid-in capital ............................................................................... $ 175,174,706
Distribution in excess of net realized gains .................................................. (372,638)
Accumulated net realized loss on investments .................................................. (496,959)
Net unrealized appreciation on investments .................................................... 38,865,813
-------------
$ 213,170,922
=============
INSTITUTIONAL SHARES
Net asset value, redemption and offering price per share
($63,425,554 / 3,821,233 shares outstanding) ............................................. $ 16.60
=======

SERIES A INVESTOR SHARES
Net asset value, redemption and offering price per share
($25,796,850/ 1,575,602 shares outstanding) .............................................. $ 16.37
=======
Maximum offering price per share (100 / 97 of $16.37) ......................................... $ 16.88
=======

SERIES C INVESTOR SHARES
Net asset value, redemption and offering price per share
($2,739,700/ 176,486 shares outstanding) ................................................. $ 15.52
=======

SERIES D INVESTOR SHARES
Net asset value, redemption and offering price per share
($8,060,215 / 502,383 shares outstanding) ................................................ $ 16.04
=======
Maximum offering price per share (100 / 98.5 of $16.04) ....................................... $ 16.29
=======

SUPER-INSTITUTIONAL SHARES
Net asset value, redemption and offering price per share
($113,148,603 / 6,782,886 shares outstanding) ............................................ $ 16.68
=======

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE CHESAPEAKE GROWTH FUND

STATEMENT OF OPERATIONS

Year ended February 28, 1999

INVESTMENT LOSS

Income
Dividends ................................................................................... $ 815,856
------------

Expenses
Investment advisory fees (note 2) ........................................................... 2,360,591
Fund administration fees (note 2) ........................................................... 140,800
Distribution fees - Series A (note 3) ....................................................... 78,847
Distribution fees - Series C (note 3) ....................................................... 25,517
Distribution fees - Series D (note 3) ....................................................... 47,913
Custody fees ................................................................................ 15,395
Registration and filing administration fees (note 2) ........................................ 23,374
Fund accounting fees (note 2) ............................................................... 84,000
Audit fees .................................................................................. 9,500
Legal fees .................................................................................. 38,401
Securities pricing fees ..................................................................... 4,384
Shareholder administration fees ............................................................. 50,000
Shareholder recordkeeping fees .............................................................. 36,002
Shareholder servicing expenses .............................................................. 17,382
Registration and filing expenses ............................................................ 35,064
Printing expenses ........................................................................... 17,421
Amortization of deferred organization expenses (note 3) ..................................... 8,636
Trustee fees and meeting expenses ........................................................... 9,017
Other operating expenses .................................................................... 9,706
------------

Total expenses ........................................................................ 3,011,950
------------

Less:
Expense reimbursements ........................................................... (169,241)
Distribution fees waived - Series A (note 3) ..................................... (498)
Distribution fees waived - Series C (note 3) ..................................... (163)
Distribution fees waived - Series D (note 3) ..................................... (280)
Shareholder administration fees waived (note 2) .................................. (25,000)
------------

Net expenses .......................................................................... 2,816,768
------------

Net investment loss .............................................................. (2,000,912)
------------

REALIZED AND UNREALIZED LOSS ON INVESTMENTS

Net realized loss from investment transactions ................................................... (496,959)
Decrease in unrealized appreciation on investments ............................................... (13,218,336)
------------

Net realized and unrealized loss on investments ............................................. (13,715,295)
------------

Net decrease in net assets resulting from operations .................................. $(15,716,207)
============

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND

STATEMENTS OF CHANGES IN NET ASSETS

- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended
February 28, February 28,
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------

(DECREASE) INCREASE IN NET ASSETS
Operations
Net investment loss .................................................................... $ (2,000,912) $ (2,437,229)
Net realized (loss) gain from investment transactions .................................. (496,959) 34,915,833
(Decrease) increase in unrealized appreciation on investments .......................... (13,218,336) 22,557,525
------------ ------------
Net (decrease) increase in net assets resulting from operations .................... (15,716,207) 55,036,129
------------ ------------
Distributions to shareholders from
Tax return of capital .................................................................. 0 (7,366,935)
Distribution in excess of net realized gains ........................................... (372,638) 0
Net realized gain from investment transactions ......................................... (5,445,095) (26,747,385)
------------ ------------
Decrease in net assets resulting from distributions ................................ (5,817,733) (34,114,320)
------------ ------------
Capital share transactions
(Decrease) increase in net assets resulting from capital share transactions (a) (33,312,063) 15,554,185
------------ ------------
Total (decrease) increase in net assets ....................................... (54,846,003) 36,475,994
NET ASSETS
Beginning of year ........................................................................... 268,016,925 231,540,931
------------ ------------
End of year ................................................................................. $213,170,922 $268,016,925
============ ============

(a) A summary of capital share activity follows:
----------------------------------------------------------------------------
Year ended Year ended
February 28, 1999 February 28, 1998
Shares Value Shares Value
----------------------------------------------------------------------------
- -----------------------------------------
Institutional Shares
- -----------------------------------------
Shares sold ......................................... 793,937 $ 13,750,824 1,051,514 $ 19,879,652
Shares issued for reinvestment of distributions ..... 98,122 1,628,824 700,580 12,393,286
Shares redeemed ..................................... (2,269,992) (35,712,491) (1,340,894) (23,569,381)
------------ ------------ ------------ ------------
Net (decrease) increase ........................ (1,377,933) $(20,332,843) 411,200 $ 8,703,557
============ ============ ============ ============
- -----------------------------------------
Series A Shares
- -----------------------------------------
Shares sold ......................................... 115,434 $ 1,960,607 530,549 $ 9,940,125
Shares issued for reinvestment of distributions ..... 42,837 701,668 285,571 5,008,907
Shares redeemed ..................................... (896,110) (14,772,539) (936,063) (17,142,515)
------------ ------------ ------------ ------------
Net decrease ................................... (737,839) $(12,110,264) (119,943) $ (2,193,483)
============ ============ ============ ============
- -----------------------------------------
Series C Shares
- -----------------------------------------
Shares sold ......................................... 4,837 $ 62,950 51,400 $ 892,071
Shares issued for reinvestment of distributions ..... 4,820 74,850 30,187 514,986
Shares redeemed ..................................... (98,489) (1,609,034) (391,932) (6,437,614)
------------ ------------ ------------ ------------
Net decrease ................................... (88,832) $ (1,471,234) (310,345) $ (5,030,557)
============ ============ ============ ============
- -----------------------------------------
Series D Shares
- -----------------------------------------
Shares sold ......................................... 9,442 $ 168,590 21,553 $ 358,036
Shares issued for reinvestment of distributions ..... 14,142 226,988 81,859 1,418,612
Shares redeemed ..................................... (177,343) (2,861,271) (116,844) (2,013,186)
------------ ------------ ------------ ------------
Net decrease .................................. (153,759) $ (2,465,693) (13,432) $ (236,538)
============ ============ ============ ============
- -----------------------------------------
Super-Institutional Shares
- -----------------------------------------
Shares sold ......................................... 0 $ 0 0 $ 0
Shares issued for reinvestment of distributions ..... 183,821 3,067,971 806,720 14,311,206
Shares redeemed ..................................... 0 0 0 0
------------ ------------ ------------ ------------
Net increase ................................... 183,821 $ 3,067,971 806,720 $ 14,311,206
============ ============ ============ ============
- -----------------------------------------
Fund Summary
- -----------------------------------------
Shares sold ......................................... 923,650 $ 15,942,971 1,655,016 $ 31,069,884
Shares issued for reinvestment of distribution ...... 343,742 5,700,301 1,904,917 33,646,997
Shares redeemed ..................................... (3,441,934) (54,955,335) (2,785,733) (49,162,696)
------------ ------------ ------------ ------------
Net (decrease) increase ........................ (2,174,542) $(33,312,063) 774,200 $ 15,554,185
============ ============ ============ ============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>

THE CHESAPEAKE GROWTH FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

Institutional Shares

- ------------------------------------------------------------------------------------------------------------------------------------
For the
period from
April 6, 1994
(commencement of
Year ended Year ended Year ended Year ended operations) to
February 28, February 28, February 28, February 29, February 28,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------