________________________________________________________________________________
THE CHESAPEAKE AGGRESSIVE
GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
Annual Report 2000
FOR THE YEAR ENDED AUGUST 31
INVESTMENT ADVISOR
Gardner Lewis Asset Management
285 Wilmington-West Chester Pike
Chadds Ford, Pennsylvania 19317
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-430-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus. Mutual fund shares are not deposits
or obligations of, or guaranteed by, any depository institution. Shares are not
insured by the FDIC, Federal Reserve Board or any other agency, and are subject
to investment risks, including possible loss of principal amount invested.
Neither the fund nor the fund's distributor is a bank.
For more information about The Chesapeake Aggressive Growth Fund, including
charges and expenses, call the fund for a free prospectus. You should read the
prospectus carefully before you invest or send money.
<PAGE>
[LETTERHEAD]
_________________________________
THE CHESAPEAKE FUNDS
_________________________________
October 2, 2000
Dear Shareholder:
The Chesapeake Aggressive Growth Fund closed the third quarter with a
year-to-date gain of 1.6%. This gain compares to a loss of 1.4% for the S&P 500
and a gain of 4.2% for the Russell 2000. The fund was down 2.7% for the third
quarter. As a result of our concentration on fundamentals, avoidance of
speculative excess, and focus on companies without heavy sensitivity to things
like interest rates and energy pricing, our portfolio has benefited in a year
that has been difficult for many growth investors. The Nasdaq Composite's
decline of over 25% from its March high and its loss of almost 10% year-to-date
give some context to the difficulty investors have faced, as well as the degree
to which the market has already digested their concerns.
Although the market continues to be volatile, its volatility has
dissipated when compared to the spring. And despite the pain this volatility has
caused, it is in fact a healthy thing. The market is simply undergoing a
systematic cleansing, purging the excesses left within it. The result should be
the realignment of companies' stock prices in the context of reasonable
prospects for them. This cleansing began with the internet related space and has
now worked its way through much of the market.
Most importantly, most companies with negative cash flow and little
hope of near term profitability have now been all but abandoned by investors.
Prior darlings are on the ropes both financially and in the eyes of Wall Street.
Examples of these abound. TheGlobe, one of the hottest IPO's in history, now
trades at $0.25 per share, down from $40. Priceline now trades at $12, down from
$160, emphasizing the fact that ultimately a company's stock price reflects its
underlying business. Despite this, investors have not changed their attitudes
about the opportunities that continue to develop as a result of the tremendous
changes occurring in the global economy.
Although it sometimes becomes overly enthusiastic, the investing
community does not become enamored without reason. Opportunities relating to the
internet, telecom, and technology are just as strong today as they were before
investors got carried away with their enthusiasm for companies that might have
participated in them. Thus, it is not the opportunity that has changed, but
investors' willingness to extrapolate unrealistic rates of growth. The bottom
line is that expectations were too high and progress toward earnings too slow.
Therefore, the capital needed to execute many companies' strategies dried up and
as a result large numbers of them will perish, unable to construct the rest of
the bridge necessary to bring them profit. In their place will be those
companies whose approach has been more measured, those more soundly footed,
those with the capital, knowledge, and ability to execute.
Similar cycles of enthusiasm have occurred throughout modern economic
history. The advent of the steam locomotive in the 19th century created a rush
of investment that capitalized hundreds of marginal railroads that eventually
failed or were consolidated into their stronger competitors. Likewise, the
telephone spawned hundreds of publicly traded telephone companies, almost all of
which failed or were overtaken.
<PAGE>
Then, just as now, investors recognized profound changes that would
drive the economy in ways never before possible. Their enthusiasm eventually
overtook reason, some good capital chased poor business plans, but eventually
rational thinking returned. Most importantly though, the economy sailed through
these sentiment changes virtually untouched, and investors were able to re-focus
on those enterprises benefiting most directly from the newfound productivity and
its resultant prosperity.
Imagine a decades old telecom emerging the victor in the bandwidth war,
or an old-line retailer the victor in e-tailing. We sure can, as we can those
working in conjunction with them. Companies like these now have the opportunity
to capitalize on the misfortune of others before them, who may have had the
right idea but an inability to see it to fruition.
Wall Street represents human nature. It has an ability to fixate as
well as carry to extreme. Prior to the spring of this year the sky was the limit
for a promising company's stock price. But from spring until early summer
interest rates cast a shadow over the market, dampening investors' excitement
and in turn becoming almost all that was talked about. In fact, at that time,
most investors could have told you when the Fed would next meet. This, as we
discussed in our last letter, signaled that concerns regarding rates were
already factored into stock prices. With the focus now having changed, the
likelihood today is that an amazing number of investors have no idea that the
Fed meets on October 3rd. Why? Because the fixation is different. It has gone
from interest rates to the economic impact of higher energy prices and a much
lower Euro/Dollar exchange.
Ironically, because of the status of energy prices and the Euro, the
market is now more focused on the potential need for a rate cut than a hike, and
the word stagflation has entered the mix. As a result, governments have
intervened to support the Euro and a concerted effort is taking place to lower
energy prices. In other words, these issues have taken center stage. Therefore,
our position on them is the same as was our position on rates this summer. These
cards are on the table! Thus, investors have already been discounting these
factors into stock prices, and in many cases this discounting has gone too far.
In the last several weeks it has not only been difficult for stocks to
rise, but also there has been significant selling pressure on many we think
unaffected by current macro issues. However, coming earnings periods should
start to create distinction. As to the economy as a whole, we are less concerned
that energy and Euro related issues will become far more problematic, but if
they do, our portfolio, as always, is constructed to minimize any macroeconomic
impact on our companies' earnings.
The slowing of the market's rate of rise is a good thing. So too is
investors' renewed scrutiny of fundamentals and valuation. A more normalized
environment is a longer lasting one in which stock prices react to information
more rationally. It is one where research typically pays off and one we should
now be that much closer to.
In one final note, we would like to welcome Brian Konigsberg and Tom
Wilcox to our research staff and Kristine Woodruff to administration. Have a
pleasant holiday season!
Sincerely,
/S/ W. Whitfield Gardner /s/ John L. Lewis, IV
W. Whitfield Gardner John L. Lewis, IV
<PAGE>
___________________________________________
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
___________________________________________
September 30, 2000
Investment Strategy
--------------------------------------------------------------------------------
The Chesapeake Aggressive Growth Fund seeks capital appreciation primarily
through investments in small and medium growth equities. The cornerstone of the
fund's intensive in-house fundamental analysis is 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 20% 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.
The Largest Industry Groups
--------------------------------------------------------------------------------
Business Services 3.7%
Computer Software 7.0%
Computer & Peripherals 6.6%
Electronics/Instruments 9.7%
Energy Services 8.1%
Financial Services 5.8%
Healthcare Delivery 5.1%
Pharmaceuticals 6.7%
Semiconductors & Related 21.5%
All Others 18.3%
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 $4 billion in growth equities for both
institutions and individuals including some of the top foundations, endowments,
and pension plans in the U.S. Gardner Lewis was founded in 1990 and employs a
staff of 34. The research team is comprised of 17.
<PAGE>
Ten Largest Holdings
--------------------------------------------------------------------------------
1. Power-One, Inc. 7.9%
2. TriQuint Semiconductor 3.4%
3. McDATA Corp. 3.4%
4. EMC Corporation 3.3%
5. Semtech Corp. 3.0%
6. Lifepooint Hospitals Inc. 3.0%
7. Jones Apparel Group, Inc. 2.7%
8. Gilead Sciences, Inc. 2.1%
9. Americredit Corp. 1.9%
10.Cognizant Tech. Solutions 1.9%
Portfolio Characteristics
--------------------------------------------------------------------------------
Overall Assets ($MM) 279
Number of Companies 93
5 Yr. Historical Earnings Growth 20%
Earnings Growth - net year 37%
P/E Ratio - next year 21
(Gardner Lewis earnings estimates)
Performance Summary
--------------------------------------------------------------------------------
Annualized
--------------------------------------------------------------------------------
The Chesapeake Quarter 1 Year 5 Year Since
Aggressive Growth Fund End Inception
--------------------------------------------------------------------------------
Without the sales load
deduction -2.7% 39.4% 10.4% 17.5%
--------------------------------------------------------------------------------
Net of the maximum
Sales load^1 -5.6% 35.2% 9.7% 17.0%
--------------------------------------------------------------------------------
1 The maximum sales load for the Fund is 3%. The inception date of the Fund was
January 4, 1993. 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.
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.
Must be accompanied or preceded by a prospectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
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___________________________________________
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
___________________________________________
PORTFOLIO OF INVESTMENTS
(unaudited)
September 30, 2000
------------------------------------------------------------ ----------------------------------------------------------
Quantity Security Market Value Quantity Security Market Value
============================================================ ==========================================================
35,000 ART Technology Group, Inc. 3,316,250 37,500 International Rectifier, Inc. 1,893,750
69,500 ASM International N.V. 1,216,250 281,900 Jones Apparel Group, Inc. 7,470,350
3,779 Acclaim Entertainment Wrnts 151 39,700 Kopin Corp. 714,600
5,056 Acclaim Entertainment, Inc.- R 8,848 128,200 LSI Logic Corp. 3,749,850
13,701 Akamai Technologies 719,517 182,200 LTX Corp. 3,450,412
100,800 American Capital Strategies 2,387,700 103,700 Lam Research Corp. 2,171,219
37,900 American Freightways Corp. 601,662 63,000 Lifeminders, Inc. 1,445,062
181,600 Americredit Corp. 5,232,350 231,400 Lifepoint Hospitals Inc. 8,214,700
112,200 Amkor Technology Inc. 2,931,225 29,200 MKS Instruments, Inc. 799,350
85,000 Antec Corp. 2,507,500 57,300 MRV Communications, Inc. 2,596,406
100,550 Atlas Air Inc. 4,248,237 81,100 Marine Drilling Companies, Inc 2,316,419
176,600 Atmel Corp. 2,682,112 75,000 McDATA Corp. 9,216,797
3,281,536 Aura Systems, Inc. 2,953,382 67,100 Michaels Stores, Inc. 2,684,000
140,700 BE Aerospace, Inc. 2,268,787 59,900 Nabors Industries, Inc. 3,138,760
58,600 Bally Total Fitness Holdings 1,465,000 79,400 National Oilwell Inc. 2,481,250
108,700 Biomatrix, Inc. 1,902,250 58,300 Netro Corp. 3,454,275
84,750 Biomet, Inc. 2,966,250 101,100 Novellus Systems, Inc. 4,707,469
56,200 Brooks Automation, Inc. 1,861,625 147,500 O2Micro International Ltd. 2,537,461
122,000 CEC Entertainment Inc. 3,904,000 69,100 Omnivision Technologies, Inc. 2,500,556
28,800 CV Therapeutics, Inc. 2,240,100 75,100 Onyx Software, Corp. 1,548,937
64,950 Cable Design Technologies 1,579,097 85,800 Peregrine Systems, Inc. 1,624,837
291,400 Caremark RX, Inc. 3,278,250 30,800 Phone.com, Inc. 3,499,650
81,400 Cash America International 595,237 56,000 Pinnacle Holdings, Inc. 1,491,000
93,000 Checkfree Corp. 3,895,828 66,000 PolyMedica Corp. 2,829,750
130,900 Cognizant Technology Solutions 5,105,100 356,400 Power-One, Inc. 21,567,769
35,920 Comverse Technology, Inc. 3,879,360 51,600 Progenics Pharmaceuticals 1,415,775
20,100 Critical Path Inc. 1,221,075 97,700 RadVision, Ltd. 2,753,919
97,700 DMC Stratex Networks, Inc. 1,569,306 171,400 Rowan Companies 4,970,600
58,300 Diversinet Corp. 342,512 54,000 SEI Investments Company 3,820,500
42,900 Dupont Photomask, Inc. 2,520,375 193,800 Semtech Corp. 8,357,625
50,000 Dynatech Corp. 1,518,750 79,900 Sonic Automotive, Inc. 664,169
92,000 EMC Corporation 9,119,500 56,000 Southern Energy 1,757,000
255,300 EXcelon Corp. 3,159,337 103,300 Swift Transportation Co. 1,349,356
82,000 Edison Schools, Inc. 2,603,500 85,700 Texas BioTechnology Corp. 1,371,200
110,600 Ensco International, Inc. 4,230,450 66,800 Titan Pharmaceuticals 4,342,000
58,100 First American Financial 1,212,837 253,900 TriQuint Semiconductor 9,251,481
105,400 First Health Group Corp. 3,399,150 31,280 Universal Health Services, Inc 2,678,350
60,000 Galileo Technology Ltd. 1,905,000 106,017 Varco International, Inc. 2,206,479
58,700 Getty Images Inc. New 1,786,681 36,600 Veeco Instruments, Inc. 3,889,322
51,300 Gilead Sciences, Inc. 5,626,969 71,200 Verity, Inc. 2,540,950
118,700 Global Industries, Ltd. 1,483,750 96,700 Viasystems Group, Inc 1,643,900
74,600 ILEX Oncology, Inc. 2,247,325 60,400 Westell Technologies, Inc. 777,650
61,500 Immunomedics 1,287,656 64,100 Western Wireless Corp. 2,283,562
43,725 Insight Enterprises, Inc. 1,191,506 11,956 Wilshire Technologies Warrants 120
45,100 Integrated Devices Tech. 4,081,550 217,300 Wolverine World Wide, Inc. 2,023,606
33,400 Interdigital Communications 467,600 31,300 Zale Corporation 1,015,294
143,500 International Fibercom Inc. 2,098,687
TOTAL EQUITY 274,037,077
CASH EQUIVALENT 4,923,207
TOTAL ASSETS 278,960,284
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THE CHESAPEAKE AGGRESSIVE GROWTH FUND
Performance Update - $25,000 Investment
For the period from January 4, 1993 (Commencement of Operations)
to August 31, 2000
[LINE GRAPH]:
Value of Investment
--------------------------------------------------------------------------------
The Chesapeake Russell 2000 S&P 500 Total
Date Aggressive Growth Fund Index Return Index
--------------------------------------------------------------------------------
01/04/93 $24,250 $25,000 $25,000
02/28/93 24,066 25,301 25,562
08/31/93 28,765 28,007 27,113
02/28/94 35,797 30,207 27,692
08/31/94 33,489 29,273 28,596
02/28/95 36,044 29,188 29,731
08/31/95 51,058 34,888 34,730
02/29/96 46,152 37,398 40,048
08/31/96 44,517 38,725 41,234
02/28/97 50,735 42,088 50,526
08/31/97 62,831 49,872 57,995
02/28/98 64,010 54,728 68,212
08/31/98 42,652 40,288 62,689
02/28/99 51,097 47,072 81,675
08/31/99 58,075 51,718 87,655
02/29/00 100,165 70,311 91,255
08/31/00 94,769 65,882 101,959
This graph depicts the performance of The Chesapeake Aggressive Growth Fund
versus the S&P 500 Total Return Index and the Russell 2000 Index. It is
important to note that The Chesapeake Aggressive Growth Fund is a professionally
managed mutual fund while the indices are not available for investment and are
unmanaged. The comparison is shown for illustrative purposes only.
Average Annual Total Return
---------------------------- ----------- ------------- -------------------------
Since Commencement
One Year Five Years Of Operations (1/4/93)
---------------------------- ----------- ------------- -------------------------
No Sales Load 63.18 % 13.15 % 19.47 %
---------------------------- ----------- ------------- -------------------------
3.00% Maximum Sales Load 58.29 % 12.47 % 19.00 %
---------------------------- ----------- ------------- -------------------------
>> The graph assumes an initial $25,000 investment ($24,250 after maximum
sales load of 3.00%) at January 4, 1993 (commencement of operations). All
dividends and distributions are reinvested.
>> At August 31, 2000, the value of The Chesapeake Aggressive Growth Fund
would have increased to $94,769 - a cumulative total investment return of
279.08% since January 4, 1993. Without the deduction of the 3.00% maximum
sales load, the value of The Chesapeake Aggressive Growth Fund would have
increased to $97,700 - a cumulative total investment return of 290.80%
since January 4, 1993. The sales load may be reduced or eliminated for
larger purchases.
>> At August 31, 2000, the value of a similar investment in the S&P 500 Total
Return Index would have increased to $101,959 - a cumulative total
investment return of 307.84% since January 4, 1993; while the value of a
similar investment in the Russell 2000 Index would have grown to $65,882 -
a cumulative total investment return of 163.53% since January 4, 1993. The
Russell 2000 Index is used in the graph above because the Investment
Advisor feels that the Russell 2000 Index is a more accurate representation
of The Chesapeake Aggressive Growth Fund's investment strategy than the
NASDAQ Industrials Index. The Russell 2000 Index replaces the NASDAQ
Industrials Index used for illustrative purposes in prior annual reports.
For the fiscal year ended August 31, 2000, the investment in The Chesapeake
Aggressive Growth Fund would have increased in value by $36,694; the
similar investment in the Russell 2000 Index would have increased in value
by $14,164; and the similar investment in the NASDAQ Industrials Index
would have increased in value by $25,002.
>> 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 total returns are historical in nature
and measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
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THE CHESAPEAKE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 98.79%
Aerospace & Defense - 0.72%
(a)BE Aerospace, Inc. ................................................................ 140,700 $ 2,277,581
------------
Apparel Manufacturing - 2.17%
(a)Jones Apparel Group, Inc. ......................................................... 281,900 6,906,550
------------
Biopharmaceuticals - 1.06%
(a)CV Therapeutics, Inc. ............................................................. 24,600 1,845,000
(a)Progenics Pharmaceuticals, Inc. ................................................... 51,600 1,522,200
------------
3,367,200
------------
Commercial Services - 0.80%
(a)Edison Schools Inc. ............................................................... 82,000 2,542,000
------------
Computer Software & Services - 11.93%
(a)Acclaim Entertainment, Inc. ....................................................... 5,056 9,480
(a)Acclaim Entertainment, Inc. - Non-Callable Warrants, expire 4/4/2002 .............. 3,779 1,323
(a)Akamai Technologies, Inc. ......................................................... 13,701 1,035,282
(a)Art Technology Group, Inc. ........................................................ 35,000 3,567,812
(a)CheckFree Corp. ................................................................... 93,000 4,818,563
(a)Cognizant Technology Solutions Corporation ........................................ 130,900 5,595,975
(a)Critical Path, Inc. ............................................................... 20,100 1,552,725
(a)Diversinet Corp. .................................................................. 58,300 528,344
(a)eXcelon Corporation ............................................................... 255,300 2,058,356
(a)LifeMinders, Inc. ................................................................. 63,000 1,890,000
(a)McDATA Corporation ................................................................ 75,000 8,067,187
(a)Peregrine Systems, Inc. ........................................................... 85,800 2,740,238
(a)Phone.com, Inc. ................................................................... 30,800 2,847,075
(a)Verity, Inc. ...................................................................... 71,200 3,257,400
------------
37,969,760
------------
Computers - 2.83%
(a)EMC Corporation ................................................................... 92,000 9,016,000
------------
Diversified Operations - 0.48%
(a)Aura Systems, Inc. ................................................................ 3,281,536 1,542,322
------------
Electrical Equipment - 1.03%
(a)Veeco Instruments Inc. ............................................................ 36,600 3,280,275
------------
(Continued)
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THE CHESAPEAKE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Electronics - 10.79%
CTS Corporation ............................................................ 46,500 $ 2,386,031
(a)Kopin Corporation .......................................................... 111,500 3,728,281
(a)Power-One, Inc. ............................................................ 178,200 28,233,562
------------
34,347,874
------------
Electronics - Semiconductor - 23.82%
(a)Amkor Technology, Inc. ..................................................... 112,200 3,828,825
(a)Atmel Corporation .......................................................... 176,600 3,532,000
(a)Brooks Automation, Inc. .................................................... 56,200 3,108,562
(a)Credence Systems Corporation ............................................... 66,100 3,870,981
(a)DuPont Photomasks, Inc. .................................................... 18,800 1,426,450
(a)Galileo Technology Ltd. .................................................... 60,000 1,766,250
(a)Integrated Device Technology, Inc. ......................................... 45,100 3,957,525
(a)International Rectifier Corporation ........................................ 40,000 2,517,500
(a)Lam Research Corporation ................................................... 103,700 3,123,963
(a)LSI Logic Corporation ...................................................... 128,200 4,607,187
(a)LTX Corporation ............................................................ 156,500 4,000,531
(a)Novellus Systems, Inc. ..................................................... 101,100 6,223,969
(a)MKS Instruments, Inc. ...................................................... 29,200 1,025,650
(a)O2Micro International Limited .............................................. 147,500 3,761,250
(a)OmniVision Technologies, Inc. .............................................. 69,100 3,109,500
(a)Semtech Corporation ........................................................ 96,900 11,476,594
(a)Three-Five Systems, Inc. ................................................... 13,900 462,175
(a)TriQuint Semiconductor, Inc. ............................................... 253,900 14,043,844
------------
75,842,756
------------
Financial - Consumer Credit - 1.57%
(a)AmeriCredit Corp. .......................................................... 181,600 5,005,350
------------
Financial - Non-Banks - 0.76%
American Capital Strategies, Ltd. .......................................... 100,800 2,406,600
------------
Financial Services - 1.99%
SEI Investments Company .................................................... 99,600 6,324,600
------------
Foreign - 0.55%
(a)ASM International N.V ...................................................... 69,500 1,746,188
------------
Insurance - Life & Health - 1.03%
(a)First Health Group Corp. ................................................... 105,400 3,273,988
------------
(Continued)
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THE CHESAPEAKE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Leisure Time - 0.45%
(a)Bally Total Fitness Holding Corporation ....................................... 58,600 $ 1,446,688
------------
Medical - Biotechnology - 4.45%
(a)Gilead Sciences, Inc. ......................................................... 51,300 5,540,400
(a)ILEX Oncology, Inc. ........................................................... 74,600 2,461,800
(a)Immunomedics, Inc. ............................................................ 61,500 1,537,500
(a)Texas Biotechnology Corporation ............................................... 85,700 1,505,106
(a)Titan Pharmaceuticals, Inc. ................................................... 66,600 3,126,037
------------
14,170,843
------------
Medical - Hospital Management & Services - 3.78%
(a)Caremark Rx, Inc. ............................................................. 291,400 2,859,362
(a)LifePoint Hospitals, Inc. ..................................................... 231,400 6,970,925
(a)Universal Health Services, Inc. ............................................... 31,280 2,213,060
------------
12,043,347
------------
Medical Supplies - 2.36%
(a)Biomatrix, Inc. ............................................................... 108,700 2,309,875
Biomet, Inc. .................................................................. 84,750 2,865,609
(a)PolyMedica Corporation ........................................................ 66,000 2,343,000
------------
7,518,484
------------
Miscellaneous - Distribution & Wholesale - 1.23%
(a)Getty Images, Inc. ............................................................ 58,700 2,465,400
(a)Insight Enterprises, Inc. ..................................................... 29,150 1,464,788
------------
3,930,188
------------
Miscellaneous - Manufacturing - 0.00%
(a)Wilshire Technologies, Warrants, expire 11/28/2002 ............................ 11,956 0
------------
Oil & Gas - Equipment & Services - 7.08%
ENSCO International Incorporated .............................................. 110,600 4,410,175
(a)Marine Drilling Companies, Inc. ............................................... 81,100 2,235,319
McDermott International, Inc. ................................................. 142,200 1,093,163
(a)Nabors Industries, Inc. ....................................................... 59,900 2,848,994
(a)National-Oilwell, Inc. ........................................................ 79,400 2,754,188
(a)Noble Drilling Corporation .................................................... 35,900 1,741,150
(a)Rowan Companies, Inc. ......................................................... 171,400 5,313,400
(a)Varco International, Inc. ..................................................... 106,017 2,140,218
------------
22,536,607
------------
Oil & Gas - Exploration - 0.87%
EOG Resources, Inc. ........................................................... 72,300 2,765,475
------------
(Continued)
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THE CHESAPEAKE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Restaurants & Food Services - 1.11%
(a)CEC Entertainment Inc. ...................................................... 122,000 $ 3,530,375
------------
Retail - Automotive Parts - 0.27%
(a)Sonic Automotive, Inc. ...................................................... 79,900 843,944
------------
Retail - Specialty Line - 1.32%
Cash America International, Inc. ............................................ 81,400 610,500
(a)Linens 'n Things, Inc. ...................................................... 4,000 108,000
(a)Michaels Stores, Inc. ....................................................... 67,100 2,348,500
(a)Zale Corporation ............................................................ 31,300 1,156,144
------------
4,223,144
------------
Telecommunications - 3.57%
(a)InterDigital Communications Corporation ..................................... 33,400 597,025
(a)MRV Communications, Inc. .................................................... 47,300 3,645,056
(a)Pinnacle Holdings Inc. ...................................................... 56,000 2,254,000
(a)Viasystems Group, Inc. ...................................................... 96,700 1,595,550
(a)Western Wireless Corporation ................................................ 64,100 3,277,112
------------
11,368,743
------------
Telecommunications Equipment - 8.65%
(a)ANTEC Corporation ........................................................... 85,000 3,065,312
(a)Cable Design Technologies Corporation ....................................... 64,950 1,753,650
(a)Comverse Technology, Inc. ................................................... 35,920 3,302,395
(a)Corvis Corporation .......................................................... 56,000 5,813,500
(a)DMC Stratex Networks, Inc. .................................................. 97,700 2,497,456
(a)Dynatech Corporation ........................................................ 50,000 1,950,000
(a)International FiberCom, Inc. ................................................ 143,500 3,390,187
(a)Netro Corporation ........................................................... 58,300 4,817,038
(a)Westell Technologies, Inc. .................................................. 60,400 966,400
------------
27,555,938
------------
Transportation - Air - 1.37%
(a)Atlas Air, Inc. ............................................................. 100,550 4,348,788
------------
Transportation - Miscellaneous - 0.75%
(a)American Freightways Corporation ............................................ 37,900 622,981
(a)Swift Transportation Co., Inc. .............................................. 103,300 1,762,556
------------
2,385,537
------------
Total Common Stocks (Cost $165,330,555) ..................................... 314,517,145
------------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY - 0.11%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ..................................... 349,806 $ 349,806
(Cost $349,806) ------------
Total Value of Investments (Cost $165,680,361 (b)) ...................................... 98.90 % $314,866,951
Other Assets Less Liabilities ........................................................... 1.10 % 3,501,348
------ ------------
Net Assets ........................................................................ 100.00 % $318,368,299
====== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $166,180,711. Unrealized appreciation (depreciation) of investments for
federal income tax purposes is as follows:
Unrealized appreciation ...................................................... $154,500,186
Unrealized depreciation ...................................................... (5,813,946)
------------
Net unrealized appreciation $148,686,240
============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000
ASSETS
Investments, at value (cost $165,680,361) ........................................................ $314,866,951
Income receivable ................................................................................ 21,434
Receivable for investments sold .................................................................. 3,621,392
Receivable for fund shares sold .................................................................. 20,345
------------
Total assets ................................................................................ 318,530,122
------------
LIABILITIES
Accrued expenses ................................................................................. 39,739
Payable for fund shares redeemed ................................................................. 52,066
Disbursements in excess of cash on demand deposit ................................................ 70,018
------------
Total liabilities ........................................................................... 161,823
------------
NET ASSETS
(applicable to 12,004,911 shares outstanding; unlimited
shares of no par value beneficial interest authorized) .......................................... $318,368,299
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($318,368,299 / 12,004,911 shares) ............................................................... $ 26.52
============
OFFERING PRICE PER SHARE
(100 / 97% of $26.52) ............................................................................ $ 27.34
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $115,461,716
Undistributed net realized gain on investments ................................................... 53,719,993
Net unrealized appreciation on investments ....................................................... 149,186,590
------------
$318,368,299
============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended August 31, 2000
NET INVESTMENT LOSS
Income
Dividends ................................................................................... $ 581,912
-------------
Expenses
Investment advisory fees (note 2) ........................................................... 4,108,081
Fund administration fees (note 2) ........................................................... 296,485
Custody fees ................................................................................ 18,813
Registration and filing administration fees (note 2) ........................................ 6,211
Fund accounting fees (note 2) ............................................................... 21,000
Audit fees .................................................................................. 16,271
Legal fees .................................................................................. 17,521
Securities pricing fees ..................................................................... 7,445
Shareholder servicing fees .................................................................. 50,000
Shareholder recordkeeping fees .............................................................. 11,820
Shareholder servicing expenses .............................................................. 31,920
Registration and filing expenses ............................................................ 10,598
Printing expenses ........................................................................... 31,161
Trustee fees and meeting expenses ........................................................... 7,492
Other operating expenses .................................................................... 35,000
-------------
Total expenses ......................................................................... 4,669,818
-------------
Less expense reimbursements (note 4) ............................................... (60,488)
-------------
Net expenses ....................................................................... 4,609,330
-------------
Net investment loss ................................................................ (4,027,418)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ................................................... 69,150,688
Increase in unrealized appreciation on investments ............................................... 81,009,617
-------------
Net realized and unrealized gain on investments ............................................. 150,160,305
-------------
Net increase in net assets resulting from operations ................................... $ 146,132,887
=============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended
August 31, August 31,
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss ...................................................... $ (4,027,418) $ (4,041,891)
Net realized gain (loss) from investment transactions .................... 69,150,688 (1,409,378)
Increase in unrealized appreciation on investments ....................... 81,009,617 119,786,543
------------ ------------
Net increase in net assets resulting from operations ................. 146,132,887 114,335,274
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions ........................... (9,840,604) (26,811,798)
------------ ------------
Capital share transactions
Decrease in net assets resulting from capital share transactions (a) ..... (104,005,052) (171,246,000)
------------ ------------
Total increase (decrease) in net assets ...................... 32,287,231 (83,722,524)
NET ASSETS
Beginning of year ............................................................. 286,081,068 369,803,592
------------ ------------
End of year ................................................................... $318,368,299 $286,081,068
============ ============
(a) A summary of capital share activity follows:
------------------------------------------------------------------------------------------
Year ended Year ended
August 31, 2000 August 31, 1999
Shares Value Shares Value
------------------------------------------------------------------------------------------
Shares sold ............................. 1,386,502 $ 32,432,167 2,212,958 $ 34,202,677
Shares issued for reinvestment
of distributions ................... 490,846 9,630,407 1,782,993 26,370,458
------------- ------------- ------------- -------------
1,877,348 42,062,574 3,995,951 60,573,135
Shares redeemed ......................... (6,893,465) (146,067,626) (14,770,790) (231,819,135)
------------- ------------- ------------- -------------
Net decrease ....................... (5,016,117) $(104,005,052) (10,774,839) $(171,246,000)
============= ============= ============= =============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
------------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended
August 31, August 31, August 31, August 31, August 31,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ............. $ 16.81 $ 13.30 $ 22.44 $ 16.88 $ 20.70
Income (loss) from investment operations
Net investment loss ................. (0.34) (0.24) (0.24) (0.22) (0.18)
Net realized and unrealized gain (loss)
on investments ................. 10.72 4.89 (6.02) 6.84 (2.53)
------------ ------------ ------------ ------------ ------------
Total from investment operations 10.38 4.65 (6.26) 6.62 (2.71)
------------ ------------ ------------ ------------ ------------
Distributions to shareholders from
Net realized gain from investment
transactions ................... (0.67) (1.14) (2.88) (1.06) (1.11)
------------ ------------ ------------ ------------ ------------
Net asset value, end of year ................... $ 26.52 $ 16.81 $ 13.30 $ 22.44 $ 16.88
============ ============ ============ ============ ============
Total return (a) ............................... 63.18 % 36.16 % (32.12)% 41.14 % (12.81)%
============ ============ ============ ============ ============
Ratios/supplemental data
Net assets, end of year .................. $318,368,299 $286,081,068 $369,803,592 $613,488,902 $460,307,496
============ ============ ============ ============ ============
Ratio of expenses to average net assets
Before expense reimbursements
and waived fees ................ 1.42 % 1.42 % 1.40 % 1.42 % 1.42 %
After expense reimbursements
and waived fees ................ 1.40 % 1.39 % 1.40 % 1.42 % 1.42 %
Ratio of net investment loss to average net assets
Before expense reimbursements
and waived fees ................ (1.24)% (1.15)% (1.15)% (1.17)% (1.05)%
After expense reimbursements
and waived fees ................ (1.23)% (1.12)% (1.15)% (1.17)% (1.05)%
Portfolio turnover rate .................. 82.00 % 110.27 % 86.18 % 115.51 % 110.04 %
(a) Total return does not reflect payment of a sales charge See accompanying notes to financial statements
</TABLE>
<PAGE>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Chesapeake Aggressive Growth Fund (the "Fund"), formerly known as
The Chesapeake Growth Fund prior to November 1, 1997, is a diversified
series of shares of beneficial interest of the Gardner Lewis Investment
Trust (the "Trust"). The Trust is an open-end investment company which
was organized in 1992 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940, (the "Act") as
amended. The Fund began operations on January 4, 1993. The investment
objective of the Fund is to seek capital appreciation through
investments in equity securities, consisting primarily of common and
preferred stocks and securities convertible into common stocks. The
following is a summary of significant accounting policies followed by
the Fund:
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Investment companies are valued at net
asset value. Short-term investments are valued at cost which
approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $4,027,418 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decrease
undistributed net short-term capital gains.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
annually, payable on a date selected by the Trust's Trustees.
Distributions to shareholders are recorded on the ex-dividend
date. In addition, distributions may be made annually in
November out of net realized gains through October 31 of that
year. The Fund may make a supplemental distribution subsequent
to the end of its fiscal year ending August 31.
(Continued)
<PAGE>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Gardner Lewis Asset
Management (the "Advisor") provides the Fund with a continuous program
of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 1.25% of the Fund's average daily net assets.
The Fund's administrator, The Nottingham Company, (the
"Administrator"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to a fund accounting and compliance agreement with the
Trust. As compensation for its services, the Administrator received a
fee at the annual rate of 0.20% of the Fund's first $25 million of
average daily net assets, 0.15% of the next $25 million, and 0.075% of
average daily net assets over $50 million. The Administrator also
receives a monthly fee of $1,750 for accounting and recordkeeping
services. The Administrator also charges for certain expenses involved
with the daily valuation of portfolio securities.
NC Shareholder Services, LLC (the "Transfer Agent") serves as the
Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes purchases
and redemptions of Fund shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended August 31, 2000, the Distributor retained sales charges
in the amount of $951.
Certain Trustees and officers of the Trust are also officers of the
Advisor or the Administrator.
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments other than short-term investments
aggregated $263,977,620 and $380,974,215, respectively, for the year
ended August 31, 2000.
NOTE 4 - EXPENSE REDUCTIONS
The Advisor has transacted certain portfolio trades with brokers who
paid a portion of the Fund's expenses. For the year ended August 31,
2000, the Fund's expenses were reduced by $60,488 under this agreement.
(Continued)
<PAGE>
THE CHESAPEAKE AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
NOTE 5 - DISTRIBUTIONS TO SHAREHOLDERS
For federal income tax purposes, the Fund must report distributions
from net realized gain from investment transactions that represent
long-term and short-term capital gains to its shareholders. Of the
total amount of $0.67 per share distributions for the year ended August
31, 2000, $0.25 per share is classified as long-term capital gains and
$0.42 per share is classified as short-term capital gains. Shareholders
should consult a tax advisor on how to report distributions for state
and local income tax purposes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of Gardner Lewis Investment Trust And Shareholders of
The Chesapeake Aggressive Growth Fund:
We have audited the accompanying statement of assets and liabilities of The
Chesapeake Aggressive Growth Fund (the "Fund"), including the portfolio of
investments, as of August 31, 2000, and the related statements of operations for
the year then ended, the statements of changes in net assets for the years ended
August 31, 2000 and 1999, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2000, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Chesapeake Aggressive Growth Fund as of August 31, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Princeton, New Jersery
September 22, 2000
<PAGE>
________________________________________________________________________________
THE CHESAPEAKE AGGRESSIVE
GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
This Report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
________________________________________________________________________________
THE CHESAPEAKE GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
Semi-Annual Report 2000
FOR THE PERIOD ENDED AUGUST 31
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
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus. Mutual fund shares are not deposits
or obligations of, or guaranteed by, any depository institution. Shares are not
insured by the FDIC, Federal Reserve Board or any other agency, and are subject
to investment risks, including possible loss of principal amount invested.
Neither the fund nor the fund's distributor is a bank.
For more information about The Chesapeake Growth Fund, including charges and
expenses, call the fund for a free prospectus. You should read the prospectus
carefully before you invest or send money.
<PAGE>
[Letterhead]
____________________________________
THE CHESAPEAKE FUNDS
____________________________________
October 2, 2000
Dear Shareholder:
The Chesapeake Growth Fund Institutional Class closed the third quarter
with a year-to-date gain of 33.4%. This gain compares to a loss of 1.4% for the
S&P 500 and a gain of 4.2% for the Russell 2000. The fund was up 10.9% for the
third quarter. As a result of our concentration on fundamentals, avoidance of
speculative excess, and focus on companies without heavy sensitivity to things
like interest rates and energy pricing, our portfolio has benefited in a year
that has been difficult for many growth investors. The Nasdaq Composite's
decline of over 25% from its March high and its loss of almost 10% year-to-date
give some context to the difficulty investors have faced, as well as the degree
to which the market has already digested their concerns.
Although the market continues to be volatile, its volatility has
dissipated when compared to the spring. And despite the pain this volatility has
caused, it is in fact a healthy thing. The market is simply undergoing a
systematic cleansing, purging the excesses left within it. The result should be
the realignment of companies' stock prices in the context of reasonable
prospects for them. This cleansing began with the internet related space and has
now worked its way through much of the market.
Most importantly, most companies with negative cash flow and little
hope of near term profitability have now been all but abandoned by investors.
Prior darlings are on the ropes both financially and in the eyes of Wall Street.
Examples of these abound. TheGlobe, one of the hottest IPO's in history, now
trades at $0.25 per share, down from $40. Priceline now trades at $12, down from
$160, emphasizing the fact that ultimately a company's stock price reflects its
underlying business. Despite this, investors have not changed their attitudes
about the opportunities that continue to develop as a result of the tremendous
changes occurring in the global economy.
Although it sometimes becomes overly enthusiastic, the investing
community does not become enamored without reason. Opportunities relating to the
internet, telecom, and technology are just as strong today as they were before
investors got carried away with their enthusiasm for companies that might have
participated in them. Thus, it is not the opportunity that has changed, but
investors' willingness to extrapolate unrealistic rates of growth. The bottom
line is that expectations were too high and progress toward earnings too slow.
Therefore, the capital needed to execute many companies' strategies dried up and
as a result large numbers of them will perish, unable to construct the rest of
the bridge necessary to bring them profit. In their place will be those
companies whose approach has been more measured, those more soundly footed,
those with the capital, knowledge, and ability to execute.
Similar cycles of enthusiasm have occurred throughout modern economic
history. The advent of the steam locomotive in the 19th century created a rush
of investment that capitalized hundreds of marginal railroads that eventually
failed or were consolidated into their stronger competitors. Likewise, the
telephone spawned hundreds of publicly traded telephone companies, almost all of
which failed or were overtaken.
<PAGE>
Then, just as now, investors recognized profound changes that would
drive the economy in ways never before possible. Their enthusiasm eventually
overtook reason, some good capital chased poor business plans, but eventually
rational thinking returned. Most importantly though, the economy sailed through
these sentiment changes virtually untouched, and investors were able to re-focus
on those enterprises benefiting most directly from the newfound productivity and
its resultant prosperity.
Imagine a decades old telecom emerging the victor in the bandwidth war,
or an old-line retailer the victor in e-tailing. We sure can, as we can those
working in conjunction with them. Companies like these now have the opportunity
to capitalize on the misfortune of others before them, who may have had the
right idea but an inability to see it to fruition.
Wall Street represents human nature. It has an ability to fixate as
well as carry to extreme. Prior to the spring of this year the sky was the limit
for a promising company's stock price. But from spring until early summer
interest rates cast a shadow over the market, dampening investors' excitement
and in turn becoming almost all that was talked about. In fact, at that time,
most investors could have told you when the Fed would next meet. This, as we
discussed in our last letter, signaled that concerns regarding rates were
already factored into stock prices. With the focus now having changed, the
likelihood today is that an amazing number of investors have no idea that the
Fed meets on October 3rd. Why? Because the fixation is different. It has gone
from interest rates to the economic impact of higher energy prices and a much
lower Euro/Dollar exchange.
Ironically, because of the status of energy prices and the Euro, the
market is now more focused on the potential need for a rate cut than a hike, and
the word stagflation has entered the mix. As a result, governments have
intervened to support the Euro and a concerted effort is taking place to lower
energy prices. In other words, these issues have taken center stage. Therefore,
our position on them is the same as was our position on rates this summer. These
cards are on the table! Thus, investors have already been discounting these
factors into stock prices, and in many cases this discounting has gone too far.
In the last several weeks it has not only been difficult for stocks to
rise, but also there has been significant selling pressure on many we think
unaffected by current macro issues. However, coming earnings periods should
start to create distinction. As to the economy as a whole, we are less concerned
that energy and Euro related issues will become far more problematic, but if
they do, our portfolio, as always, is constructed to minimize any macroeconomic
impact on our companies' earnings.
The slowing of the market's rate of rise is a good thing. So too is
investors' renewed scrutiny of fundamentals and valuation. A more normalized
environment is a longer lasting one in which stock prices react to information
more rationally. It is one where research typically pays off and one we should
now be that much closer to.
In one final note, we would like to welcome Brian Konigsberg and Tom
Wilcox to our research staff and Kristine Woodruff to administration. Have a
pleasant holiday season!
Sincerely,
/s/ W. Whitfield Gardner /s/ John L. Lewis, IV
W. Whitfield Gardner John L. Lewis, IV
<PAGE>
_________________________________________
THE CHESAPEAKE GROWTH FUND
_________________________________________
September 30, 2000
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.
The Largest Industry Groups
--------------------------------------------------------------------------------
Business Services 2.5%
Computer Software 13.4%
Computers & Peripherals 9.9%
Electronics/Instruments 3.9%
Energy Services 8.8%
Medical Products 2.4%
Networking 5.1%
Pharmaceuticals 6.1%
Semiconductors & Related 14.3%
Telecommunications 18.6%
All Others 15.0%
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 $4 billion in growth equities for both
institutions and individuals including some of the top foundations, endowments,
and pension plans in the U.S. Gardner Lewis was founded in 1990 and employs a
staff of 34. The research team is comprised of 17.
<PAGE>
Ten Largest Holdings
--------------------------------------------------------------------------------
1. EMC Corporation 4.3%
2. Alza Corp 3.7%
3. Ciena Corp. 3.5%
4. AES Corporation 3.5%
5. BEA Systems, Inc. 2.7%
6. Sun Microsystems, Inc. 2.5%
7. Extreme Networks, Inc. 2.2%
8. Gemstar TV Guide Int'l Inc. 2.2%
9. Power-One, Inc. 2.1%
10. SPX Corp. 2.1%
Portfolio Characteristics
--------------------------------------------------------------------------------
Overall Assets ($MM) 354
Number of Companies 75
5 Yr. Historical Earnings Growth 22%
Earnings Growth - net year 42%
P/E Ratio - next year 38
(Gardner Lewis earnings estimates)
Performance Summary
--------------------------------------------------------------------------------
Annualized
--------------------------------------------------------------------------------
Quarter 1 Year 5 Year Since
End Inception
--------------------------------------------------------------------------------
The Chesapeake Growth
Fund Institutional Shares 10.9% 90.9% 22.2% 24.9%
--------------------------------------------------------------------------------
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.
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.
Must be accompanied or preceded by a prospectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
<PAGE>
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_________________________________________
THE CHESAPEAKE GROWTH FUND
_________________________________________
PORTFOLIO OF INVESTMENTS
(unaudited)
September 30, 2000
------------------------------------------------------------ ----------------------------------------------------------
Quantity Security Market Value Quantity Security Market Value
============================================================ ==========================================================
207,600 ADC Telecommunications, Inc. 5,582,494 38,400 Moodys Corp. when issues 1,010,304
176,200 AES Corporation 12,069,700 70,300 NextCard, Inc. 639,291
32,900 ART Technology Group, Inc. 3,117,275 124,900 Nextlink Communications 4,394,919
23,100 Aether Systems, Inc. 2,437,050 84,000 Novellus Systems, Inc. 3,911,250
42,300 Agile Software Corp. 3,804,356 49,800 Nvidia Corp. 4,077,375
148,800 Alza Corp. 12,871,200 38,200 ONI Systems Corp. 3,297,137
105,200 Amkor Technology Inc. 2,748,350 15,600 PMC-Sierra, Inc. 3,357,900
31,900 Applied Micro Circuits Corp. 6,605,294 61,700 PerkinElmer, Inc. 6,439,937
205,300 Atmel Corp. 3,117,994 96,000 Polycom, Inc. 6,429,000
121,600 BEA Systems, Inc. 9,469,600 122,900 Power-One, Inc. 7,437,370
57,000 Biogen, Inc. 3,477,000 36,500 QLogic Corporation 3,212,000
57,750 Biomet, Inc. 2,021,250 76,900 Quest Software 4,776,211
124,900 Boston Scientific Corp. 2,053,044 44,100 Redback Network, Inc. 7,232,400
21,900 CacheFlow, Inc. 3,131,700 206,700 Republic Services, Inc. 2,712,937
186,800 Cadence Design Systems 4,798,425 10,900 SDL, Inc. 3,371,506
75,500 Checkfree Corp. 3,162,742 51,200 SPX Corp. 7,267,200
100,200 Ciena Corp. 12,305,812 137,000 SantaFe International 6,173,562
37,600 Comverse Technology, Inc. 4,060,800 54,800 Scientific-Atlanta, Inc. 3,486,650
48,900 Copper Mountain Inc. 1,833,750 120,200 Semtech Corp. 5,183,625
150,100 EMC Corporation 14,878,662 88,400 St. Jude Medical, Inc. 4,508,400
67,300 Extreme Networks, Inc. 7,705,850 73,100 Sun Microsystems, Inc. 8,534,425
73,400 Finisar Corp. 3,550,725 97,900 Tekelec 3,218,462
56,800 Fiserv, Inc. 3,400,900 58,200 Tektronix, Inc. 4,470,487
86,900 Gemstar TV Guide International 7,576,594 48,400 Tellabs, Inc. 2,311,100
128,400 Grant Prideco, Inc. 2,816,775 53,800 Teva Pharmaceutical - SP ADR 3,937,487
88,600 HCA - The Healthcare Company 3,289,275 67,800 TranSwitch Corp. 4,322,250
144,000 Harrah's Entertainment 3,960,000 32,300 Transkaryotic Therapies 1,390,919
579,500 Healthsouth Corp. 4,708,437 62,600 Transocean Sedco Forex, Inc. 3,669,925
145,600 Heller Financial 4,158,700 118,700 TriQuint Semiconductor 4,325,131
140,300 ITT Industries, Inc. 4,550,981 50,500 Turnstone Systems, Inc. 2,341,937
49,900 Interwoven, Inc. 5,641,819 54,000 Virata Corp. 3,570,750
34,980 JDS Uniphase, Inc. 3,312,169 44,900 Vitesse Semiconductor Corp Com 3,993,294
265,100 Jones Apparel Group, Inc. 7,025,150 146,400 Weatherford International, Inc 6,295,200
62,800 KLA-Tencor Corp. 2,586,575 242,600 WebMD Corp. 3,699,650
126,900 LSI Logic Corp. 3,711,825 80,900 Wind River Systems, Inc. 3,878,144
65,900 MRV Communications, Inc. 2,986,094 124,200 Worldcom Inc. 3,772,575
85,800 MarchFirst, Inc. 1,345,987 24,850 i2 Technologies, Inc. 4,648,503
16,300 Mercury Interactive Corp. 2,555,025
TOTAL EQUITY 345,728,596
CASH EQUIVALENT 7,974,236
TOTAL ASSETS 353,702,832
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 99.27%
Apparel Manufacturing - 1.77%
(a)Jones Apparel Group, Inc. ............................................ 265,100 $ 6,494,950
------------
Computers - 8.88%
(a)EMC Corporation ...................................................... 150,800 14,778,400
(a)Extreme Networks, Inc. ............................................... 74,800 6,961,075
(a)Sun Microsystems, Inc. ............................................... 86,300 10,954,706
------------
32,694,181
------------
Computer Hardware & Software - 0.41%
(a)Turnstone Systems, Inc. .............................................. 25,800 1,518,975
------------
Computer Software & Services - 18.67%
(a)Agile Software Corporation ........................................... 53,400 3,707,962
(a)Alteon Websystems, Inc. .............................................. 24,900 3,685,200
(a)Art Technology Group, Inc. ........................................... 35,300 3,598,394
(a)BEA Systems, Inc. .................................................... 154,300 10,502,044
(a)CNET Networks, Inc. .................................................. 36,200 1,212,700
(a)CacheFlow Inc. ....................................................... 26,600 2,909,375
(a)Cadence Design Systems, Inc. ......................................... 186,800 3,969,500
(a)CheckFree Corp. ...................................................... 75,500 3,911,844
(a)Fiserv, Inc. ......................................................... 56,800 3,077,850
(a)i2 Technologies, Inc. ................................................ 31,250 5,287,109
(a)Interwoven, Inc. ..................................................... 88,300 8,476,800
(a)MarchFirst, Inc. ..................................................... 85,800 1,662,375
(a)NVIDIA Corporation ................................................... 49,800 3,952,875
(a)ONI Systems Corp. .................................................... 3,000 285,938
(a)Quest Software, Inc. ................................................. 76,900 3,969,963
(a)Safeguard Scientifics, Inc. .......................................... 82,700 2,393,131
(a)SanDisk Corporation .................................................. 30,000 2,505,000
(a)Wind River Systems, Inc. ............................................. 88,700 3,614,525
------------
68,722,585
------------
Electrical Equipment - 3.29%
(a)Gemstar-TV Guide International, Inc. ................................. 87,300 7,878,825
(a)Power-One, Inc. ...................................................... 26,600 4,214,438
------------
12,093,263
------------
Electronics - 2.43%
(a)KLA-Tencor Corporation ............................................... 62,800 4,121,250
(a)Tektronix, Inc. ...................................................... 63,100 4,807,431
------------
8,928,681
------------
(Continued)
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Electronics - Semiconductor - 16.39%
(a)Amkor Technology, Inc. ................................................. 108,300 $ 3,695,737
(a)Applied Micro Circuits Corporation ..................................... 36,600 7,427,513
(a)Atmel Corporation ...................................................... 206,800 4,136,000
(a)LSI Logic Corporation .................................................. 126,900 4,560,469
(a)Novellus Systems, Inc. ................................................. 84,000 5,171,250
(a)PMC-Sierra, Inc. ....................................................... 15,600 3,681,600
(a)QLogic Corporation ..................................................... 47,200 5,357,200
(a)SDL, Inc. .............................................................. 18,900 7,509,206
(a)Semtech Corporation .................................................... 60,400 7,153,625
(a)TranSwitch Corporation ................................................. 67,800 4,080,713
(a)TriQuint Semiconductor, Inc. ........................................... 69,800 3,860,813
(a)Virata Corporation ..................................................... 54,000 3,712,500
------------
60,346,626
------------
Entertainment - 1.12%
(a)Harrah's Entertainment, Inc. ........................................... 145,200 4,120,050
------------
Environmental Control - 0.82%
(a)Republic Services, Inc. ................................................ 206,700 3,022,987
------------
Financial - Consumer Credit - 0.16%
(a)NextCard, Inc. ......................................................... 70,300 577,782
------------
Financial Services - 1.00%
Heller Financial, Inc. ................................................. 145,600 3,685,500
------------
Foreign - American Depository Receipts - 0.74%
(a)Infineon Technologies AG - ADR ......................................... 41,300 2,723,219
------------
Hand & Machine Tools - 1.97%
SPX Corporation ........................................................ 43,000 7,245,500
------------
Insurance - Life & Health - 0.95%
CIGNA Corporation ...................................................... 36,100 3,510,725
------------
Medical - Biotechnology - 0.38%
(a)Transkaryotic Therapies, Inc. .......................................... 32,300 1,401,012
------------
(Continued)
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Medical - Hospital Management & Services - 1.54%
(a)HEALTHSOUTH Corporation ................................................ 426,400 $ 2,611,700
(a)HCA-The Healthcare Corporation ......................................... 88,600 3,056,700
------------
5,668,400
------------
Medical Supplies - 2.12%
Biomet, Inc. ........................................................... 57,750 1,952,672
(a)Boston Scientific Corporation .......................................... 124,900 2,365,294
(a)St. Jude Medical, Inc. ................................................. 88,400 3,502,850
------------
7,820,816
------------
Oil & Gas - Equipment & Services - 4.90%
(a)Grant Prideco, Inc. .................................................... 161,400 3,792,900
Santa Fe International Corporation ..................................... 137,000 5,385,812
Transocean Sedco Forex Inc. ............................................ 63,100 3,770,225
(a)Weatherford International, Inc. ........................................ 108,700 5,102,106
------------
18,051,043
------------
Pharmaceuticals - 3.95%
(a)Alza Corporation ....................................................... 148,800 11,253,000
Teva Pharmaceutical Industries Ltd. .................................... 54,300 3,291,937
------------
14,544,937
------------
Retail - Apparel - 0.76%
(a)Abercrombie & Fitch Co. ................................................ 120,300 2,789,456
------------
Telecommunications - 10.88%
(a)CIENA Corporation ...................................................... 50,100 11,106,544
(a)Copper Mountain Networks, Inc. ......................................... 34,100 2,043,869
(a)JDS Uniphase Corporation ............................................... 50,380 6,278,607
(a)MRV Communications, Inc. ............................................... 73,000 5,625,562
(a)Polycom, Inc. .......................................................... 50,700 5,697,413
(a)Redback Networks Inc. .................................................. 44,100 6,587,438
(a)Tellabs, Inc. .......................................................... 48,400 2,719,475
------------
40,058,908
------------
Telecommunications Equipment - 11.86%
(a)ADC Telecommunications, Inc. ........................................... 207,600 8,498,625
(a)Advanced Micro Devices, Inc. ........................................... 63,800 2,400,475
(a)Aether Systems, Inc. ................................................... 19,300 2,673,050
(a)Comverse Technology, Inc. .............................................. 37,600 3,456,850
(a)Finisar Corporation .................................................... 97,200 4,507,650
(a)New Focus, Inc. ........................................................ 29,300 4,045,231
PerkinElmer, Inc. ...................................................... 65,200 5,863,925
(Continued)
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Telecommunications Equipment - (Continued)
(a)Research in Motion Limited ............................................. 41,200 $ 3,113,175
Scientific-Atlanta, Inc. ............................................... 71,200 5,549,150
(a)Tekelec ................................................................ 90,100 3,558,950
------------
43,667,081
------------
Utilities - Electric - 3.05%
The AES Corporation .................................................... 176,200 11,232,750
------------
Utilities - Telecommunications - 1.23%
(a) WorldCom, Inc. ........................................................ 124,200 4,533,300
------------
Total Common Stocks (Cost $225,093,507) ................................ 365,452,727
------------
INVESTMENT COMPANY - 0.56%
Evergreen Money Market Institutional Money
Market Fund Institutional Service Shares ............................... 2,045,330 2,045,330
(Cost $2,045,330) ------------
Total Value of Investments (Cost $227,138,837 (b)) ................................. 99.83 % $367,498,057
Other Assets Less Liabilities ...................................................... 0.17 % 642,047
------ ------------
Net Assets .................................................................. 100.00 % $368,140,104
====== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $227,999,082. Unrealized appreciation (depreciation) of investments
for federal income tax purposes is as follows:
Unrealized appreciation ................................................................. $150,745,137
Unrealized depreciation ................................................................. (11,246,162)
------------
Net unrealized appreciation ............................................. $139,498,975
============
The following acronym is used in this portfolio:
ADR - American Depositary Receipt
See accompanying notes to financial statements
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THE CHESAPEAKE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000
(Unaudited)
ASSETS
Investments, at value (cost $227,138,837) ...................................................... $ 367,498,057
Income receivable .............................................................................. 27,838
Receivable for investments sold ................................................................ 9,712,191
Receivable for fund shares sold ................................................................ 20,000
-------------
Total assets .............................................................................. 377,258,086
-------------
LIABILITIES
Accrued expenses ............................................................................... 48,321
Payable for investment purchases ............................................................... 8,615,355
Payable for fund shares sold ................................................................... 415,000
Disbursements in excess of cash on demand deposit .............................................. 39,306
-------------
Total liabilities ......................................................................... 9,117,982
-------------
NET ASSETS ............................................................................................ $ 368,140,104
=============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................ $ 115,877,149
Accumulated net investment loss ................................................................ (1,709,457)
Undistributed net realized gain on investments ................................................. 113,613,192
Net unrealized appreciation on investments ..................................................... 140,359,220
-------------
$ 368,140,104
=============
INSTITUTIONAL SHARES
Net asset value, redemption and offering price per share
($107,507,990 / 3,069,178 shares outstanding) ............................................. $35.03
=============
SERIES A INVESTOR SHARES
Net asset value, redemption and offering price per share
($44,108,747 / 1,284,975 shares outstanding) .............................................. $34.33
=============
Maximum offering price per share (100 / 97% of $34.33) ......................................... $35.39
=============
SUPER-INSTITUTIONAL SHARES
Net asset value, redemption and offering price per share
($216,523,367 / 6,137,668 shares outstanding) ............................................. $35.28
=============
See accompanying notes to financial statements
</TABLE>
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THE CHESAPEAKE GROWTH FUND
STATEMENT OF OPERATIONS
Period ended August 31, 2000
(Unaudited)
INVESTMENT LOSS
Income
Dividends ....................................................................................... $ 200,282
-----------
Expenses
Investment advisory fees (note 2) ............................................................... 1,677,468
Fund administration fees (note 2) ............................................................... 66,341
Distribution fees - Series A (note 3) ........................................................... 45,151
Distribution fees - Series C (note 3) ........................................................... 2,229
Distribution fees - Series D (note 3) ........................................................... 6,528
Custody fees .................................................................................... 8,066
Registration and filing administration fees (note 2) ............................................ 7,539
Fund accounting fees (note 2) ................................................................... 28,000
Audit fees ...................................................................................... 9,525
Legal fees ...................................................................................... 7,058
Securities pricing fees ......................................................................... 2,998
Shareholder administration fees (note 2) ........................................................ 16,667
Shareholder recordkeeping fees .................................................................. 12,000
Shareholder servicing expenses .................................................................. 6,806
Registration and filing expenses ................................................................ 12,602
Printing expenses ............................................................................... 8,570
Trustee fees and meeting expenses ............................................................... 4,537
Other operating expenses ........................................................................ 13,611
-----------
Total expenses ............................................................................ 1,935,696
-----------
Less:
Expense reimbursements (note 5) ...................................................... (21,791)
Shareholder administration fees waived - Series C (note 2) ........................... (2,083)
Shareholder administration fees waived - Series D (note 2) ........................... (2,083)
-----------
Net expenses .............................................................................. 1,909,739
-----------
Net investment loss .................................................................. (1,709,457)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions .................................................... 57,146,359
Decrease in unrealized appreciation on investments ................................................ (41,563,147)
------------
Net realized and unrealized gain on investments .............................................. 15,583,212
------------
Net increase in net assets resulting from operations ................................... $ 13,873,755
============
See accompanying notes to financial statements
</TABLE>
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THE CHESAPEAKE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
August 31, February 29,
2000 (b) 2000
------------------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN NET ASSETS
Operations
Net investment loss ...................................................... $ (1,709,457) $ (2,553,415)
Net realized gain from investment transactions ........................... 57,146,359 74,143,440
(Decrease) increase in unrealized appreciation on investments ............ (41,563,147) 143,056,554
------------ ------------
Net increase in net assets resulting from operations ................. 13,873,755 214,646,579
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions ........................... 0 (14,253,595)
------------ ------------
Capital share transactions
Decrease in net assets resulting from capital share transactions (a) ..... (49,961,463) (9,336,094)
------------ ------------
Total (decrease) increase in net assets ......................... (36,087,708) 191,056,890
NET ASSETS
Beginning of period ........................................................... 404,227,812 213,170,922
------------ ------------
End of period ................................................................. $368,140,104 $404,227,812
============ ============
(a) A summary of capital share activity follows:
------------------------------------------------------------------------------
Period ended Year ended
August 31, 2000 (b) February 29, 2000
Shares Value Shares Value
------------------------------------------------------------------------------
---------------------------------------
Institutional Shares
---------------------------------------
Shares sold ................................... 142,729 $ 4,199,494 466,088 $ 10,224,819
Shares issued for reinvestment of distributions 0 0 185,999 3,965,509
Shares redeemed ............................... (713,598) (21,027,522) (833,274) (16,268,434)
------------ ------------ ------------ ------------
Net decrease ............................. (570,869) $(16,828,028) (181,187) $ (2,078,106)
============ ============ ============ ============
---------------------------------------
Series A Shares
---------------------------------------
Shares sold ................................... 336,018 $ 8,959,087 45,720 $ 1,042,915
Shares issued for reinvestment of distributions 0 0 57,159 1,197,474
Shares redeemed ............................... (73,535) (2,243,154) (655,988) (12,362,303)
------------ ------------ ------------ ------------
Net increase (decrease) .................. 262,483 $ 6,715,933 (553,109) $(10,121,914)
============ ============ ============ ============
---------------------------------------
Series C Shares
---------------------------------------
Shares sold ................................... 3,202 $ 111,301 6,563 $ 113,580
Shares issued for reinvestment of distributions 0 0 7,682 150,104
Shares redeemed ............................... (68,159) (1,683,456) (125,773) (2,408,595)
------------ ------------ ------------ ------------
Net decrease ............................. (64,957) $ (1,572,155) (111,528) $ (2,144,911)
============ ============ ============ ============
---------------------------------------
Series D Shares
---------------------------------------
Shares sold ................................... 2,337 $ 66,451 4,386 $ 75,662
Shares issued for reinvestment of distributions 0 0 18,187 371,374
Shares redeemed ............................... (313,584) (8,343,664) (213,709) (3,787,932)
------------ ------------ ------------ ------------
Net decrease ............................ (311,247) $ (8,277,213) (191,136) $ (3,340,896)
============ ============ ============ ============
---------------------------------------
Super-Institutional Shares
---------------------------------------
Shares sold ................................... 0 $ 0 0 $ 0
Shares issued for reinvestment of distributions 0 0 389,265 8,349,733
Shares redeemed ............................... (1,034,483) (30,000,000) 0 0
------------ ------------ ------------ ------------
Net (decrease) increase .................. (1,034,483) $(30,000,000) 389,265 $ 8,349,733
============ ============ ============ ============
---------------------------------------
Fund Summary
---------------------------------------
Shares sold ................................... 484,286 $ 13,336,333 522,757 $ 11,456,976
Shares issued for reinvestment of distributions 0 0 658,292 14,034,194
Shares redeemed ............................... (2,203,359) (63,297,796) (1,828,744) (34,827,264)
------------ ------------ ------------ ------------
Net decrease ............................. (1,719,073) $(49,961,463) (647,695) $ (9,336,094)
============ ============ ============ ============
(b) Unaudited.
See accompanying notes to financial statements
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THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Institutional Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $33.08 $16.60 $17.86 $16.26 $14.45
Income (loss) from investment operations
Net investment loss ......................... (0.17) (0.21) (0.17) (0.15) (0.13)
Net realized and unrealized gain (loss)
on investments ............................ 2.12 17.92 (0.63) 4.22 1.94
-------- -------- -------- -------- --------
Total from investment operations .......... 1.95 17.71 (0.80) 4.07 1.81
-------- -------- -------- -------- --------
Distributions to shareholders from
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ....................... 0.00 (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ..................... $35.03 $33.08 $16.60 $17.86 $16.26
======== ======== ======== ======== ========
Total return (a) ................................... 5.83 %(b) 110.91 % (4.51)% 25.25 % 12.53 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) ............. $107,508 $120,416 $ 63,426 $ 92,858 $ 77,858
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.16 %(c) 1.21 % 1.22 % 1.19 % 1.23 %
After expense reimbursements and waived fees 1.15 %(c) 1.17 % 1.15 % 1.16 % 1.22 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (1.04)%(c) (1.03)% (0.87)% (0.90)% (0.85)%
After expense reimbursements and waived fees (1.03)%(c) (1.00)% (0.80)% (0.88)% (0.84)%
Portfolio turnover rate ....................... 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
</TABLE>
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THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Series A Investor Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $32.47 $16.37 $17.69 $16.18 $14.42
Income (loss) from investment operations
Net investment income loss .................. (0.19) (0.33) (0.24) (0.21) (0.18)
Net realized and unrealized gain (loss)
on investments .......................... 2.05 17.66 (0.62) 4.19 1.94
-------- -------- -------- -------- --------
Total from investment operations ........ 1.86 17.33 (0.86) 3.98 1.76
-------- -------- -------- -------- --------
Distributions to shareholders from
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ..................... (0.00) (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ...................... $34.33 $32.47 $16.37 $17.69 $16.18
======== ======== ======== ======== ========
Total return (a) .................................... 5.63 %(b) 110.07 % (4.83)% 24.80 % 12.21 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) .............. $ 44,108 $ 33,200 $ 25,797 $ 40,924 $ 39,376
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.50 %(c) 1.59 % 1.60 % 1.55 % 1.54 %
After expense reimbursements and waived fees 1.49 %(c) 1.56 % 1.53 % 1.52 % 1.53 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (1.37)%(c) (1.41)% (1.26)% (1.27)% (1.16)%
After expense reimbursements and waived fees (1.36)%(c) (1.38)% (1.18)% (1.24)% (1.15)%
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Series C Investor Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $30.06 $15.52 $17.12 $15.97 $14.34
(Loss) income from investment operations
Net investment income loss .................. (0.16) (1.14) (0.60) (0.52) (0.29)
Net realized and unrealized (loss) gain
on investments .......................... (5.46) 16.91 (0.54) 4.14 1.92
-------- -------- -------- -------- --------
Total from investment operations ........ (5.62) 15.77 (1.14) 3.62 1.63
-------- -------- -------- -------- --------
Distributions to shareholders from
Liquidation of shares (See note 1) .......... (24.44) 0.00 0.00 0.00 0.00
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ..................... (24.44) (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ...................... $0.00 $30.06 $15.52 $17.12 $15.97
======== ======== ======== ======== ========
Total return (a) .................................... (18.80)%(b) 106.03 % (6.68)% 22.95 % 11.30 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) .............. $ 0 $ 1,952 $ 2,740 $ 4,541 $ 9,192
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 4.45 %(c) 4.02 % 3.90 % 3.11 % 2.34 %
After expense reimbursements and waived fees 3.74 %(c) 3.43 % 3.45 % 3.05 % 2.33 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (4.38)%(c) (3.83)% (3.55)% (2.84)% (1.97)%
After expense reimbursements and waived fees (3.67)%(c) (3.25)% (3.11)% (2.78)% (1.96)%
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Series D Investor Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $31.59 $16.04 $17.45 $16.09 $14.41
(Loss) income from investment operations
Net investment income loss .................. (0.10) (0.44) (0.34) (0.32) (0.29)
Net realized and unrealized (loss) gain
on investments .......................... (5.75) 17.22 (0.61) 4.15 1.97
-------- -------- -------- -------- --------
Total from investment operations ........ (5.85) 16.78 (0.95) 3.83 1.68
-------- -------- -------- -------- --------
Distributions to shareholders from
Liquidation of shares (See note 1) .......... (25.74) 0.00 0.00 0.00 0.00
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ..................... (25.74) (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ...................... $0.00 $31.59 $16.04 $17.45 $16.09
======== ======== ======== ======== ========
Total return (a) .................................... (18.60)%(b) 108.89 % (5.41)% 24.06 % 11.59 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) .............. $ 0 $ 9,832 $ 8,060 $ 11,448 $10,774
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.21 %(c) 2.33 % 2.34 % 2.22 % 2.02 %
After expense reimbursements and waived fees 2.04 %(c) 2.12 % 2.14 % 2.18 % 2.01 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (2.14)%(c) (2.15)% (2.00)% (1.94)% (1.64)%
After expense reimbursements and waived fees (1.98)%(c) (1.94)% (1.79)% (1.89)% (1.63)%
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Super-Institutional Shares
------------------------------------------------------------------------------------------------------------------------------------
For the
period from
June 12, 1996
(commencement of
Period ended Year ended Year ended Year ended operations to
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $33.30 $16.68 $17.92$ $16.29 $15.53
Income (loss) from investment operations
Net investment loss ......................... (0.15) (0.18) (0.11) (0.12) (0.07)
Net realized and unrealized gain (loss)
on investments ............................ 2.13 18.03 (0.67) 4.22 0.83
-------- -------- -------- -------- --------
Total from investment operations .......... 1.98 17.85 (0.78) 4.10 0.76
-------- -------- -------- -------- --------
Distributions to shareholders from
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions 0.00 (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ....................... 0.00 (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ..................... $35.28 $33.30 $16.68 $17.92 $16.29
======== ======== ======== ======== ========
Total return (a) ................................... 5.88 %(b) 111.10 % (4.32)% 25.40 % 4.89 %(b)
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) ............. $216,524 $238,827 $113,148 $118,246 $ 94,340
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.05 %(c) 1.08 % 1.05 % 1.06 % 1.08 %(c)
After expense reimbursements and waived fees 1.04 %(c) 1.04 % 0.99 % 1.04 % 1.04 %(c)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (0.94)%(c) (0.91)% (0.71)% (0.77)% (0.75)%(c)
After expense reimbursements and waived fees (0.92)%(c) (0.87)% (0.64)% (0.75)% (0.72)%(c)
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Chesapeake Growth Fund (the "Fund"), formerly known as The
Chesapeake Fund prior to November 1, 1997, is a diversified series of
shares of beneficial interest of the Gardner Lewis Investment Trust
(the "Trust"). The Trust, an open-end investment company, was organized
on August 12, 1992 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940, (the "Act") as amended. The
investment objective of the Fund is to seek capital appreciation
through investments in equity securities of medium and large
capitalization companies, consisting primarily of common and preferred
stocks and securities convertible into common stocks. Prior to April
26, 2000, the Fund offered five classes of shares -
Super-Institutional, Institutional, Investor Series A, Investor Series
C, and Investor Series D. On that date, Investor Series C and Investor
Series D shares were liquidated. The Institutional Shares and
Super-Institutional Shares are offered to institutional investors
without a sales charge and bear no distribution and service fees. The
Investor Shares are offered with a sales charge (except for Series C
Shares) at different levels and bear distribution fees at different
levels.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures, ongoing distribution and service fees, and various expenses
that can be attributed to specific class activity. Income, expenses
(other than distribution and service fees, which are attributable to
each class of Investor Shares based upon a set percentage of its net
assets, and other expenses which can be traced to specific class
activity), and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net
assets. All classes have equal voting privileges since the Trust
shareholders vote in the aggregate, not by fund or class, except where
otherwise required by law or when the Board of Trustees determines that
the matter to be voted on affects only the interests of a particular
fund or class. The following is a summary of significant accounting
policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted on a
national market system are valued at the last quoted sales price
as of 4:00 p.m. New York time on the day of valuation. Other
securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued
at the most recent bid price. Securities for which market
quotations are not readily available, if any, are valued by using
an independent pricing service or by following procedures approved
by the Board of Trustees. Short-term investments are valued at
cost which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code applicable
to regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
Net investment income (loss) and net realized gains (losses) may
differ for financial statement and income tax purposes primarily
because of losses incurred subsequent to October 31, which are
deferred for income tax purposes. The character of distributions
made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains were
recorded by the Fund.
Distributions which exceed net investment income and net realized
gains for financial reporting purposes but not for tax purposes,
if any, are shown as distributions in excess of net investment
income and net realized gains in the accompanying statements.
(Continued)
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
C. Investment Transactions - Investment transactions are recorded on
the trade date. Realized gains and losses are determined using the
specific identification cost method. Interest income is recorded
daily on an accrual basis. Dividend income is recorded on the
ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
annually, generally payable on a date selected by the Trust's
Trustees. Distributions to shareholders are recorded on the
ex-dividend date. In addition, distributions may be made annually
in November out of net realized gains through October 31 of that
year. The Fund may make a supplemental distribution subsequent to
the end of its fiscal year.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in
the financial statements. Actual results could differ from those
estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Gardner Lewis Asset
Management (the "Advisor") provides the Fund with a continuous program
of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 1.00% of the Fund's average daily net assets.
The Fund's administrator, The Nottingham Company, (the
"Administrator"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to a fund accounting and compliance agreement with the
Trust. As compensation for its services, the Administrator receives a
fee at the annual rate of 0.075% of the average daily net assets for
the Institutional Shares and for Series A, and had received a fee
through the date of liquidation of Series C and Series D Investor
Shares and receives a fee at the annual rate of 0.015% of the average
daily net assets for the Super-institutional Shares. The Administrator
also receives a monthly fee of $1,750 for the Institutional Shares and
for Series A, and had received a fee through the date of liquidation of
Series C and Series D Investor Shares for accounting and recordkeeping
services. The contract with the Administrator provides that the
aggregate fees for the aforementioned administration, accounting and
recordkeeping services shall not be less than $3,000 per month. The
Administrator receives a fee of $12,500 per year for shareholder
administration costs for the Institutional Shares and for Series A, and
had received a fee through the date of liquidation of Series C and
Series D Investor shares. The Administrator also charges the Fund for
certain expenses involved with the daily valuation of portfolio
securities. For the period ended August 31, 2000, the Administrator has
waived a portion of its fee related to shareholder administration costs
for Series C and Series D Investor shares.
NC Shareholder Services, LLC (the "Transfer Agent") has been retained
by the Administrator to serve as the Fund's transfer, dividend paying,
and shareholder servicing agent. The Transfer Agent maintains the
records of each shareholder's account, answers shareholder inquiries
concerning accounts, processes purchases and redemptions of Fund
shares, acts as dividend and distribution disbursing agent, and
performs other shareholder servicing functions.
(Continued)
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made. For the
period ended August 31, 2000, the Distributor retained sales charges in
the amount of $248.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Act, adopted a
distribution plan with respect to all Investor Shares pursuant to Rule
12b-1 of the Act (the "Plan"). Rule 12b-1 regulates the manner in which
a regulated investment company may assume costs of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.25%, 0.75% and 0.50% per annum of the average daily net assets
of Series A, Series C and Series D Investor Shares, respectively, for
each year elapsed subsequent to adoption of the Plan, for payment to
the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel or other expenses reasonably
intended to result in sales of Investor Shares of the Fund or support
servicing of shareholder accounts.
The Fund incurred $45,151, $2,229 and $6,528, net of waived fees, in
distribution and service fees under the Plan with respect to Series A,
Series C and Series D Investor Shares, respectively, for the period
ended August 31, 2000.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments other than short-term investments
aggregated $196,842,491 and $246,621,740, respectively, for the period
ended August 31, 2000.
NOTE 5 - EXPENSE REDUCTIONS
The Advisor has transacted certain portfolio trades with brokers who
paid a portion of the Fund's expenses. For the period ended August 31,
2000, the Fund's expenses were reduced by $21,791 under this
arrangement.
<PAGE>
________________________________________________________________________________
THE CHESAPEAKE GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
This Report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
________________________________________________________________________________
THE CHESAPEAKE GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
Semi-Annual Report 2000
FOR THE PERIOD ENDED AUGUST 31
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
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus. Mutual fund shares are not deposits
or obligations of, or guaranteed by, any depository institution. Shares are not
insured by the FDIC, Federal Reserve Board or any other agency, and are subject
to investment risks, including possible loss of principal amount invested.
Neither the fund nor the fund's distributor is a bank.
For more information about The Chesapeake Growth Fund, including charges and
expenses, call the fund for a free prospectus. You should read the prospectus
carefully before you invest or send money.
<PAGE>
[Letterhead]
____________________________________
THE CHESAPEAKE FUNDS
____________________________________
October 2, 2000
Dear Shareholder:
The Chesapeake Growth Fund Series A closed the third quarter with a
year-to-date gain of 33.0%. This gain compares to a loss of 1.4% for the S&P 500
and a gain of 4.2% for the Russell 2000. The fund was up 10.8% for the third
quarter. As a result of our concentration on fundamentals, avoidance of
speculative excess, and focus on companies without heavy sensitivity to things
like interest rates and energy pricing, our portfolio has benefited in a year
that has been difficult for many growth investors. The Nasdaq Composite's
decline of over 25% from its March high and its loss of almost 10% year-to-date
give some context to the difficulty investors have faced, as well as the degree
to which the market has already digested their concerns.
Although the market continues to be volatile, its volatility has
dissipated when compared to the spring. And despite the pain this volatility has
caused, it is in fact a healthy thing. The market is simply undergoing a
systematic cleansing, purging the excesses left within it. The result should be
the realignment of companies' stock prices in the context of reasonable
prospects for them. This cleansing began with the internet related space and has
now worked its way through much of the market.
Most importantly, most companies with negative cash flow and little
hope of near term profitability have now been all but abandoned by investors.
Prior darlings are on the ropes both financially and in the eyes of Wall Street.
Examples of these abound. TheGlobe, one of the hottest IPO's in history, now
trades at $0.25 per share, down from $40. Priceline now trades at $12, down from
$160, emphasizing the fact that ultimately a company's stock price reflects its
underlying business. Despite this, investors have not changed their attitudes
about the opportunities that continue to develop as a result of the tremendous
changes occurring in the global economy.
Although it sometimes becomes overly enthusiastic, the investing
community does not become enamored without reason. Opportunities relating to the
internet, telecom, and technology are just as strong today as they were before
investors got carried away with their enthusiasm for companies that might have
participated in them. Thus, it is not the opportunity that has changed, but
investors' willingness to extrapolate unrealistic rates of growth. The bottom
line is that expectations were too high and progress toward earnings too slow.
Therefore, the capital needed to execute many companies' strategies dried up and
as a result large numbers of them will perish, unable to construct the rest of
the bridge necessary to bring them profit. In their place will be those
companies whose approach has been more measured, those more soundly footed,
those with the capital, knowledge, and ability to execute.
Similar cycles of enthusiasm have occurred throughout modern economic
history. The advent of the steam locomotive in the 19th century created a rush
of investment that capitalized hundreds of marginal railroads that eventually
failed or were consolidated into their stronger competitors. Likewise, the
telephone spawned hundreds of publicly traded telephone companies, almost all of
which failed or were overtaken.
<PAGE>
Then, just as now, investors recognized profound changes that would
drive the economy in ways never before possible. Their enthusiasm eventually
overtook reason, some good capital chased poor business plans, but eventually
rational thinking returned. Most importantly though, the economy sailed through
these sentiment changes virtually untouched, and investors were able to re-focus
on those enterprises benefiting most directly from the newfound productivity and
its resultant prosperity.
Imagine a decades old telecom emerging the victor in the bandwidth war,
or an old-line retailer the victor in e-tailing. We sure can, as we can those
working in conjunction with them. Companies like these now have the opportunity
to capitalize on the misfortune of others before them, who may have had the
right idea but an inability to see it to fruition.
Wall Street represents human nature. It has an ability to fixate as
well as carry to extreme. Prior to the spring of this year the sky was the limit
for a promising company's stock price. But from spring until early summer
interest rates cast a shadow over the market, dampening investors' excitement
and in turn becoming almost all that was talked about. In fact, at that time,
most investors could have told you when the Fed would next meet. This, as we
discussed in our last letter, signaled that concerns regarding rates were
already factored into stock prices. With the focus now having changed, the
likelihood today is that an amazing number of investors have no idea that the
Fed meets on October 3rd. Why? Because the fixation is different. It has gone
from interest rates to the economic impact of higher energy prices and a much
lower Euro/Dollar exchange.
Ironically, because of the status of energy prices and the Euro, the
market is now more focused on the potential need for a rate cut than a hike, and
the word stagflation has entered the mix. As a result, governments have
intervened to support the Euro and a concerted effort is taking place to lower
energy prices. In other words, these issues have taken center stage. Therefore,
our position on them is the same as was our position on rates this summer. These
cards are on the table! Thus, investors have already been discounting these
factors into stock prices, and in many cases this discounting has gone too far.
In the last several weeks it has not only been difficult for stocks to
rise, but also there has been significant selling pressure on many we think
unaffected by current macro issues. However, coming earnings periods should
start to create distinction. As to the economy as a whole, we are less concerned
that energy and Euro related issues will become far more problematic, but if
they do, our portfolio, as always, is constructed to minimize any macroeconomic
impact on our companies' earnings.
The slowing of the market's rate of rise is a good thing. So too is
investors' renewed scrutiny of fundamentals and valuation. A more normalized
environment is a longer lasting one in which stock prices react to information
more rationally. It is one where research typically pays off and one we should
now be that much closer to.
In one final note, we would like to welcome Brian Konigsberg and Tom
Wilcox to our research staff and Kristine Woodruff to administration. Have a
pleasant holiday season!
Sincerely,
/s/ W. Whitfield Gardner /s/ John L. Lewis, IV
W. Whitfield Gardner John L. Lewis, IV
<PAGE>
_________________________________________
THE CHESAPEAKE GROWTH FUND
_________________________________________
September 30, 2000
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.
The Largest Industry Groups
--------------------------------------------------------------------------------
Business Services 2.5%
Computer Software 13.4%
Computers & Peripherals 9.9%
Electronics/Instruments 3.9%
Energy Services 8.8%
Medical Products 2.4%
Networking 5.1%
Pharmaceuticals 6.1%
Semiconductors & Related 14.3%
Telecommunications 18.6%
All Others 15.0%
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 $4 billion in growth equities for both
institutions and individuals including some of the top foundations, endowments,
and pension plans in the U.S. Gardner Lewis was founded in 1990 and employs a
staff of 34. The research team is comprised of 17.
<PAGE>
Ten Largest Holdings
--------------------------------------------------------------------------------
1. EMC Corporation 4.3%
2. Alza Corp 3.7%
3. Ciena Corp. 3.5%
4. AES Corporation 3.5%
5. BEA Systems, Inc. 2.7%
6. Sun Microsystems, Inc. 2.5%
7. Extreme Networks, Inc. 2.2%
8. Gemstar TV Guide Int'l Inc. 2.2%
9. Power-One, Inc. 2.1%
10. SPX Corp. 2.1%
Portfolio Characteristics
--------------------------------------------------------------------------------
Overall Assets ($MM) 354
Number of Companies 75
5 Yr. Historical Earnings Growth 22%
Earnings Growth - net year 42%
P/E Ratio - next year 38
(Gardner Lewis earnings estimates)
Performance Summary
--------------------------------------------------------------------------------
Annualized
--------------------------------------------------------------------------------
The Chesapeake Quarter 1 Year 5 Year Since
Growth Fund Series A End Inception
--------------------------------------------------------------------------------
Without the sales
load deduction 10.8% 90.1% 21.8% 24.6%
--------------------------------------------------------------------------------
Net of the maximum
sales load^1 7.4% 84.4% 21.0% 24.0%
--------------------------------------------------------------------------------
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.
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.
Must be accompanied or preceded by a prospectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
_________________________________________
THE CHESAPEAKE GROWTH FUND
_________________________________________
PORTFOLIO OF INVESTMENTS
(unaudited)
September 30, 2000
------------------------------------------------------------ ----------------------------------------------------------
Quantity Security Market Value Quantity Security Market Value
============================================================ ==========================================================
207,600 ADC Telecommunications, Inc. 5,582,494 38,400 Moodys Corp. when issues 1,010,304
176,200 AES Corporation 12,069,700 70,300 NextCard, Inc. 639,291
32,900 ART Technology Group, Inc. 3,117,275 124,900 Nextlink Communications 4,394,919
23,100 Aether Systems, Inc. 2,437,050 84,000 Novellus Systems, Inc. 3,911,250
42,300 Agile Software Corp. 3,804,356 49,800 Nvidia Corp. 4,077,375
148,800 Alza Corp. 12,871,200 38,200 ONI Systems Corp. 3,297,137
105,200 Amkor Technology Inc. 2,748,350 15,600 PMC-Sierra, Inc. 3,357,900
31,900 Applied Micro Circuits Corp. 6,605,294 61,700 PerkinElmer, Inc. 6,439,937
205,300 Atmel Corp. 3,117,994 96,000 Polycom, Inc. 6,429,000
121,600 BEA Systems, Inc. 9,469,600 122,900 Power-One, Inc. 7,437,370
57,000 Biogen, Inc. 3,477,000 36,500 QLogic Corporation 3,212,000
57,750 Biomet, Inc. 2,021,250 76,900 Quest Software 4,776,211
124,900 Boston Scientific Corp. 2,053,044 44,100 Redback Network, Inc. 7,232,400
21,900 CacheFlow, Inc. 3,131,700 206,700 Republic Services, Inc. 2,712,937
186,800 Cadence Design Systems 4,798,425 10,900 SDL, Inc. 3,371,506
75,500 Checkfree Corp. 3,162,742 51,200 SPX Corp. 7,267,200
100,200 Ciena Corp. 12,305,812 137,000 SantaFe International 6,173,562
37,600 Comverse Technology, Inc. 4,060,800 54,800 Scientific-Atlanta, Inc. 3,486,650
48,900 Copper Mountain Inc. 1,833,750 120,200 Semtech Corp. 5,183,625
150,100 EMC Corporation 14,878,662 88,400 St. Jude Medical, Inc. 4,508,400
67,300 Extreme Networks, Inc. 7,705,850 73,100 Sun Microsystems, Inc. 8,534,425
73,400 Finisar Corp. 3,550,725 97,900 Tekelec 3,218,462
56,800 Fiserv, Inc. 3,400,900 58,200 Tektronix, Inc. 4,470,487
86,900 Gemstar TV Guide International 7,576,594 48,400 Tellabs, Inc. 2,311,100
128,400 Grant Prideco, Inc. 2,816,775 53,800 Teva Pharmaceutical - SP ADR 3,937,487
88,600 HCA - The Healthcare Company 3,289,275 67,800 TranSwitch Corp. 4,322,250
144,000 Harrah's Entertainment 3,960,000 32,300 Transkaryotic Therapies 1,390,919
579,500 Healthsouth Corp. 4,708,437 62,600 Transocean Sedco Forex, Inc. 3,669,925
145,600 Heller Financial 4,158,700 118,700 TriQuint Semiconductor 4,325,131
140,300 ITT Industries, Inc. 4,550,981 50,500 Turnstone Systems, Inc. 2,341,937
49,900 Interwoven, Inc. 5,641,819 54,000 Virata Corp. 3,570,750
34,980 JDS Uniphase, Inc. 3,312,169 44,900 Vitesse Semiconductor Corp Com 3,993,294
265,100 Jones Apparel Group, Inc. 7,025,150 146,400 Weatherford International, Inc 6,295,200
62,800 KLA-Tencor Corp. 2,586,575 242,600 WebMD Corp. 3,699,650
126,900 LSI Logic Corp. 3,711,825 80,900 Wind River Systems, Inc. 3,878,144
65,900 MRV Communications, Inc. 2,986,094 124,200 Worldcom Inc. 3,772,575
85,800 MarchFirst, Inc. 1,345,987 24,850 i2 Technologies, Inc. 4,648,503
16,300 Mercury Interactive Corp. 2,555,025
TOTAL EQUITY 345,728,596
CASH EQUIVALENT 7,974,236
TOTAL ASSETS 353,702,832
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 99.27%
Apparel Manufacturing - 1.77%
(a)Jones Apparel Group, Inc. ............................................ 265,100 $ 6,494,950
------------
Computers - 8.88%
(a)EMC Corporation ...................................................... 150,800 14,778,400
(a)Extreme Networks, Inc. ............................................... 74,800 6,961,075
(a)Sun Microsystems, Inc. ............................................... 86,300 10,954,706
------------
32,694,181
------------
Computer Hardware & Software - 0.41%
(a)Turnstone Systems, Inc. .............................................. 25,800 1,518,975
------------
Computer Software & Services - 18.67%
(a)Agile Software Corporation ........................................... 53,400 3,707,962
(a)Alteon Websystems, Inc. .............................................. 24,900 3,685,200
(a)Art Technology Group, Inc. ........................................... 35,300 3,598,394
(a)BEA Systems, Inc. .................................................... 154,300 10,502,044
(a)CNET Networks, Inc. .................................................. 36,200 1,212,700
(a)CacheFlow Inc. ....................................................... 26,600 2,909,375
(a)Cadence Design Systems, Inc. ......................................... 186,800 3,969,500
(a)CheckFree Corp. ...................................................... 75,500 3,911,844
(a)Fiserv, Inc. ......................................................... 56,800 3,077,850
(a)i2 Technologies, Inc. ................................................ 31,250 5,287,109
(a)Interwoven, Inc. ..................................................... 88,300 8,476,800
(a)MarchFirst, Inc. ..................................................... 85,800 1,662,375
(a)NVIDIA Corporation ................................................... 49,800 3,952,875
(a)ONI Systems Corp. .................................................... 3,000 285,938
(a)Quest Software, Inc. ................................................. 76,900 3,969,963
(a)Safeguard Scientifics, Inc. .......................................... 82,700 2,393,131
(a)SanDisk Corporation .................................................. 30,000 2,505,000
(a)Wind River Systems, Inc. ............................................. 88,700 3,614,525
------------
68,722,585
------------
Electrical Equipment - 3.29%
(a)Gemstar-TV Guide International, Inc. ................................. 87,300 7,878,825
(a)Power-One, Inc. ...................................................... 26,600 4,214,438
------------
12,093,263
------------
Electronics - 2.43%
(a)KLA-Tencor Corporation ............................................... 62,800 4,121,250
(a)Tektronix, Inc. ...................................................... 63,100 4,807,431
------------
8,928,681
------------
(Continued)
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Electronics - Semiconductor - 16.39%
(a)Amkor Technology, Inc. ................................................. 108,300 $ 3,695,737
(a)Applied Micro Circuits Corporation ..................................... 36,600 7,427,513
(a)Atmel Corporation ...................................................... 206,800 4,136,000
(a)LSI Logic Corporation .................................................. 126,900 4,560,469
(a)Novellus Systems, Inc. ................................................. 84,000 5,171,250
(a)PMC-Sierra, Inc. ....................................................... 15,600 3,681,600
(a)QLogic Corporation ..................................................... 47,200 5,357,200
(a)SDL, Inc. .............................................................. 18,900 7,509,206
(a)Semtech Corporation .................................................... 60,400 7,153,625
(a)TranSwitch Corporation ................................................. 67,800 4,080,713
(a)TriQuint Semiconductor, Inc. ........................................... 69,800 3,860,813
(a)Virata Corporation ..................................................... 54,000 3,712,500
------------
60,346,626
------------
Entertainment - 1.12%
(a)Harrah's Entertainment, Inc. ........................................... 145,200 4,120,050
------------
Environmental Control - 0.82%
(a)Republic Services, Inc. ................................................ 206,700 3,022,987
------------
Financial - Consumer Credit - 0.16%
(a)NextCard, Inc. ......................................................... 70,300 577,782
------------
Financial Services - 1.00%
Heller Financial, Inc. ................................................. 145,600 3,685,500
------------
Foreign - American Depository Receipts - 0.74%
(a)Infineon Technologies AG - ADR ......................................... 41,300 2,723,219
------------
Hand & Machine Tools - 1.97%
SPX Corporation ........................................................ 43,000 7,245,500
------------
Insurance - Life & Health - 0.95%
CIGNA Corporation ...................................................... 36,100 3,510,725
------------
Medical - Biotechnology - 0.38%
(a)Transkaryotic Therapies, Inc. .......................................... 32,300 1,401,012
------------
(Continued)
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Medical - Hospital Management & Services - 1.54%
(a)HEALTHSOUTH Corporation ................................................ 426,400 $ 2,611,700
(a)HCA-The Healthcare Corporation ......................................... 88,600 3,056,700
------------
5,668,400
------------
Medical Supplies - 2.12%
Biomet, Inc. ........................................................... 57,750 1,952,672
(a)Boston Scientific Corporation .......................................... 124,900 2,365,294
(a)St. Jude Medical, Inc. ................................................. 88,400 3,502,850
------------
7,820,816
------------
Oil & Gas - Equipment & Services - 4.90%
(a)Grant Prideco, Inc. .................................................... 161,400 3,792,900
Santa Fe International Corporation ..................................... 137,000 5,385,812
Transocean Sedco Forex Inc. ............................................ 63,100 3,770,225
(a)Weatherford International, Inc. ........................................ 108,700 5,102,106
------------
18,051,043
------------
Pharmaceuticals - 3.95%
(a)Alza Corporation ....................................................... 148,800 11,253,000
Teva Pharmaceutical Industries Ltd. .................................... 54,300 3,291,937
------------
14,544,937
------------
Retail - Apparel - 0.76%
(a)Abercrombie & Fitch Co. ................................................ 120,300 2,789,456
------------
Telecommunications - 10.88%
(a)CIENA Corporation ...................................................... 50,100 11,106,544
(a)Copper Mountain Networks, Inc. ......................................... 34,100 2,043,869
(a)JDS Uniphase Corporation ............................................... 50,380 6,278,607
(a)MRV Communications, Inc. ............................................... 73,000 5,625,562
(a)Polycom, Inc. .......................................................... 50,700 5,697,413
(a)Redback Networks Inc. .................................................. 44,100 6,587,438
(a)Tellabs, Inc. .......................................................... 48,400 2,719,475
------------
40,058,908
------------
Telecommunications Equipment - 11.86%
(a)ADC Telecommunications, Inc. ........................................... 207,600 8,498,625
(a)Advanced Micro Devices, Inc. ........................................... 63,800 2,400,475
(a)Aether Systems, Inc. ................................................... 19,300 2,673,050
(a)Comverse Technology, Inc. .............................................. 37,600 3,456,850
(a)Finisar Corporation .................................................... 97,200 4,507,650
(a)New Focus, Inc. ........................................................ 29,300 4,045,231
PerkinElmer, Inc. ...................................................... 65,200 5,863,925
(Continued)
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THE CHESAPEAKE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Telecommunications Equipment - (Continued)
(a)Research in Motion Limited ............................................. 41,200 $ 3,113,175
Scientific-Atlanta, Inc. ............................................... 71,200 5,549,150
(a)Tekelec ................................................................ 90,100 3,558,950
------------
43,667,081
------------
Utilities - Electric - 3.05%
The AES Corporation .................................................... 176,200 11,232,750
------------
Utilities - Telecommunications - 1.23%
(a) WorldCom, Inc. ........................................................ 124,200 4,533,300
------------
Total Common Stocks (Cost $225,093,507) ................................ 365,452,727
------------
INVESTMENT COMPANY - 0.56%
Evergreen Money Market Institutional Money
Market Fund Institutional Service Shares ............................... 2,045,330 2,045,330
(Cost $2,045,330) ------------
Total Value of Investments (Cost $227,138,837 (b)) ................................. 99.83 % $367,498,057
Other Assets Less Liabilities ...................................................... 0.17 % 642,047
------ ------------
Net Assets .................................................................. 100.00 % $368,140,104
====== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $227,999,082. Unrealized appreciation (depreciation) of investments
for federal income tax purposes is as follows:
Unrealized appreciation ................................................................. $150,745,137
Unrealized depreciation ................................................................. (11,246,162)
------------
Net unrealized appreciation ............................................. $139,498,975
============
The following acronym is used in this portfolio:
ADR - American Depositary Receipt
See accompanying notes to financial statements
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THE CHESAPEAKE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000
(Unaudited)
ASSETS
Investments, at value (cost $227,138,837) ...................................................... $ 367,498,057
Income receivable .............................................................................. 27,838
Receivable for investments sold ................................................................ 9,712,191
Receivable for fund shares sold ................................................................ 20,000
-------------
Total assets .............................................................................. 377,258,086
-------------
LIABILITIES
Accrued expenses ............................................................................... 48,321
Payable for investment purchases ............................................................... 8,615,355
Payable for fund shares sold ................................................................... 415,000
Disbursements in excess of cash on demand deposit .............................................. 39,306
-------------
Total liabilities ......................................................................... 9,117,982
-------------
NET ASSETS ............................................................................................ $ 368,140,104
=============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................ $ 115,877,149
Accumulated net investment loss ................................................................ (1,709,457)
Undistributed net realized gain on investments ................................................. 113,613,192
Net unrealized appreciation on investments ..................................................... 140,359,220
-------------
$ 368,140,104
=============
INSTITUTIONAL SHARES
Net asset value, redemption and offering price per share
($107,507,990 / 3,069,178 shares outstanding) ............................................. $35.03
=============
SERIES A INVESTOR SHARES
Net asset value, redemption and offering price per share
($44,108,747 / 1,284,975 shares outstanding) .............................................. $34.33
=============
Maximum offering price per share (100 / 97% of $34.33) ......................................... $35.39
=============
SUPER-INSTITUTIONAL SHARES
Net asset value, redemption and offering price per share
($216,523,367 / 6,137,668 shares outstanding) ............................................. $35.28
=============
See accompanying notes to financial statements
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THE CHESAPEAKE GROWTH FUND
STATEMENT OF OPERATIONS
Period ended August 31, 2000
(Unaudited)
INVESTMENT LOSS
Income
Dividends ....................................................................................... $ 200,282
-----------
Expenses
Investment advisory fees (note 2) ............................................................... 1,677,468
Fund administration fees (note 2) ............................................................... 66,341
Distribution fees - Series A (note 3) ........................................................... 45,151
Distribution fees - Series C (note 3) ........................................................... 2,229
Distribution fees - Series D (note 3) ........................................................... 6,528
Custody fees .................................................................................... 8,066
Registration and filing administration fees (note 2) ............................................ 7,539
Fund accounting fees (note 2) ................................................................... 28,000
Audit fees ...................................................................................... 9,525
Legal fees ...................................................................................... 7,058
Securities pricing fees ......................................................................... 2,998
Shareholder administration fees (note 2) ........................................................ 16,667
Shareholder recordkeeping fees .................................................................. 12,000
Shareholder servicing expenses .................................................................. 6,806
Registration and filing expenses ................................................................ 12,602
Printing expenses ............................................................................... 8,570
Trustee fees and meeting expenses ............................................................... 4,537
Other operating expenses ........................................................................ 13,611
-----------
Total expenses ............................................................................ 1,935,696
-----------
Less:
Expense reimbursements (note 5) ...................................................... (21,791)
Shareholder administration fees waived - Series C (note 2) ........................... (2,083)
Shareholder administration fees waived - Series D (note 2) ........................... (2,083)
-----------
Net expenses .............................................................................. 1,909,739
-----------
Net investment loss .................................................................. (1,709,457)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions .................................................... 57,146,359
Decrease in unrealized appreciation on investments ................................................ (41,563,147)
------------
Net realized and unrealized gain on investments .............................................. 15,583,212
------------
Net increase in net assets resulting from operations ................................... $ 13,873,755
============
See accompanying notes to financial statements
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THE CHESAPEAKE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
August 31, February 29,
2000 (b) 2000
------------------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN NET ASSETS
Operations
Net investment loss ...................................................... $ (1,709,457) $ (2,553,415)
Net realized gain from investment transactions ........................... 57,146,359 74,143,440
(Decrease) increase in unrealized appreciation on investments ............ (41,563,147) 143,056,554
------------ ------------
Net increase in net assets resulting from operations ................. 13,873,755 214,646,579
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions ........................... 0 (14,253,595)
------------ ------------
Capital share transactions
Decrease in net assets resulting from capital share transactions (a) ..... (49,961,463) (9,336,094)
------------ ------------
Total (decrease) increase in net assets ......................... (36,087,708) 191,056,890
NET ASSETS
Beginning of period ........................................................... 404,227,812 213,170,922
------------ ------------
End of period ................................................................. $368,140,104 $404,227,812
============ ============
(a) A summary of capital share activity follows:
------------------------------------------------------------------------------
Period ended Year ended
August 31, 2000 (b) February 29, 2000
Shares Value Shares Value
------------------------------------------------------------------------------
---------------------------------------
Institutional Shares
---------------------------------------
Shares sold ................................... 142,729 $ 4,199,494 466,088 $ 10,224,819
Shares issued for reinvestment of distributions 0 0 185,999 3,965,509
Shares redeemed ............................... (713,598) (21,027,522) (833,274) (16,268,434)
------------ ------------ ------------ ------------
Net decrease ............................. (570,869) $(16,828,028) (181,187) $ (2,078,106)
============ ============ ============ ============
---------------------------------------
Series A Shares
---------------------------------------
Shares sold ................................... 336,018 $ 8,959,087 45,720 $ 1,042,915
Shares issued for reinvestment of distributions 0 0 57,159 1,197,474
Shares redeemed ............................... (73,535) (2,243,154) (655,988) (12,362,303)
------------ ------------ ------------ ------------
Net increase (decrease) .................. 262,483 $ 6,715,933 (553,109) $(10,121,914)
============ ============ ============ ============
---------------------------------------
Series C Shares
---------------------------------------
Shares sold ................................... 3,202 $ 111,301 6,563 $ 113,580
Shares issued for reinvestment of distributions 0 0 7,682 150,104
Shares redeemed ............................... (68,159) (1,683,456) (125,773) (2,408,595)
------------ ------------ ------------ ------------
Net decrease ............................. (64,957) $ (1,572,155) (111,528) $ (2,144,911)
============ ============ ============ ============
---------------------------------------
Series D Shares
---------------------------------------
Shares sold ................................... 2,337 $ 66,451 4,386 $ 75,662
Shares issued for reinvestment of distributions 0 0 18,187 371,374
Shares redeemed ............................... (313,584) (8,343,664) (213,709) (3,787,932)
------------ ------------ ------------ ------------
Net decrease ............................ (311,247) $ (8,277,213) (191,136) $ (3,340,896)
============ ============ ============ ============
---------------------------------------
Super-Institutional Shares
---------------------------------------
Shares sold ................................... 0 $ 0 0 $ 0
Shares issued for reinvestment of distributions 0 0 389,265 8,349,733
Shares redeemed ............................... (1,034,483) (30,000,000) 0 0
------------ ------------ ------------ ------------
Net (decrease) increase .................. (1,034,483) $(30,000,000) 389,265 $ 8,349,733
============ ============ ============ ============
---------------------------------------
Fund Summary
---------------------------------------
Shares sold ................................... 484,286 $ 13,336,333 522,757 $ 11,456,976
Shares issued for reinvestment of distributions 0 0 658,292 14,034,194
Shares redeemed ............................... (2,203,359) (63,297,796) (1,828,744) (34,827,264)
------------ ------------ ------------ ------------
Net decrease ............................. (1,719,073) $(49,961,463) (647,695) $ (9,336,094)
============ ============ ============ ============
(b) Unaudited.
See accompanying notes to financial statements
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THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Institutional Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $33.08 $16.60 $17.86 $16.26 $14.45
Income (loss) from investment operations
Net investment loss ......................... (0.17) (0.21) (0.17) (0.15) (0.13)
Net realized and unrealized gain (loss)
on investments ............................ 2.12 17.92 (0.63) 4.22 1.94
-------- -------- -------- -------- --------
Total from investment operations .......... 1.95 17.71 (0.80) 4.07 1.81
-------- -------- -------- -------- --------
Distributions to shareholders from
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ....................... 0.00 (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ..................... $35.03 $33.08 $16.60 $17.86 $16.26
======== ======== ======== ======== ========
Total return (a) ................................... 5.83 %(b) 110.91 % (4.51)% 25.25 % 12.53 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) ............. $107,508 $120,416 $ 63,426 $ 92,858 $ 77,858
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.16 %(c) 1.21 % 1.22 % 1.19 % 1.23 %
After expense reimbursements and waived fees 1.15 %(c) 1.17 % 1.15 % 1.16 % 1.22 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (1.04)%(c) (1.03)% (0.87)% (0.90)% (0.85)%
After expense reimbursements and waived fees (1.03)%(c) (1.00)% (0.80)% (0.88)% (0.84)%
Portfolio turnover rate ....................... 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
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THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Series A Investor Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $32.47 $16.37 $17.69 $16.18 $14.42
Income (loss) from investment operations
Net investment income loss .................. (0.19) (0.33) (0.24) (0.21) (0.18)
Net realized and unrealized gain (loss)
on investments .......................... 2.05 17.66 (0.62) 4.19 1.94
-------- -------- -------- -------- --------
Total from investment operations ........ 1.86 17.33 (0.86) 3.98 1.76
-------- -------- -------- -------- --------
Distributions to shareholders from
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ..................... (0.00) (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ...................... $34.33 $32.47 $16.37 $17.69 $16.18
======== ======== ======== ======== ========
Total return (a) .................................... 5.63 %(b) 110.07 % (4.83)% 24.80 % 12.21 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) .............. $ 44,108 $ 33,200 $ 25,797 $ 40,924 $ 39,376
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.50 %(c) 1.59 % 1.60 % 1.55 % 1.54 %
After expense reimbursements and waived fees 1.49 %(c) 1.56 % 1.53 % 1.52 % 1.53 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (1.37)%(c) (1.41)% (1.26)% (1.27)% (1.16)%
After expense reimbursements and waived fees (1.36)%(c) (1.38)% (1.18)% (1.24)% (1.15)%
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Series C Investor Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $30.06 $15.52 $17.12 $15.97 $14.34
(Loss) income from investment operations
Net investment income loss .................. (0.16) (1.14) (0.60) (0.52) (0.29)
Net realized and unrealized (loss) gain
on investments .......................... (5.46) 16.91 (0.54) 4.14 1.92
-------- -------- -------- -------- --------
Total from investment operations ........ (5.62) 15.77 (1.14) 3.62 1.63
-------- -------- -------- -------- --------
Distributions to shareholders from
Liquidation of shares (See note 1) .......... (24.44) 0.00 0.00 0.00 0.00
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ..................... (24.44) (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ...................... $0.00 $30.06 $15.52 $17.12 $15.97
======== ======== ======== ======== ========
Total return (a) .................................... (18.80)%(b) 106.03 % (6.68)% 22.95 % 11.30 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) .............. $ 0 $ 1,952 $ 2,740 $ 4,541 $ 9,192
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 4.45 %(c) 4.02 % 3.90 % 3.11 % 2.34 %
After expense reimbursements and waived fees 3.74 %(c) 3.43 % 3.45 % 3.05 % 2.33 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (4.38)%(c) (3.83)% (3.55)% (2.84)% (1.97)%
After expense reimbursements and waived fees (3.67)%(c) (3.25)% (3.11)% (2.78)% (1.96)%
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Series D Investor Shares
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $31.59 $16.04 $17.45 $16.09 $14.41
(Loss) income from investment operations
Net investment income loss .................. (0.10) (0.44) (0.34) (0.32) (0.29)
Net realized and unrealized (loss) gain
on investments .......................... (5.75) 17.22 (0.61) 4.15 1.97
-------- -------- -------- -------- --------
Total from investment operations ........ (5.85) 16.78 (0.95) 3.83 1.68
-------- -------- -------- -------- --------
Distributions to shareholders from
Liquidation of shares (See note 1) .......... (25.74) 0.00 0.00 0.00 0.00
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions (0.00) (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ..................... (25.74) (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ...................... $0.00 $31.59 $16.04 $17.45 $16.09
======== ======== ======== ======== ========
Total return (a) .................................... (18.60)%(b) 108.89 % (5.41)% 24.06 % 11.59 %
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) .............. $ 0 $ 9,832 $ 8,060 $ 11,448 $10,774
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.21 %(c) 2.33 % 2.34 % 2.22 % 2.02 %
After expense reimbursements and waived fees 2.04 %(c) 2.12 % 2.14 % 2.18 % 2.01 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (2.14)%(c) (2.15)% (2.00)% (1.94)% (1.64)%
After expense reimbursements and waived fees (1.98)%(c) (1.94)% (1.79)% (1.89)% (1.63)%
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
Super-Institutional Shares
------------------------------------------------------------------------------------------------------------------------------------
For the
period from
June 12, 1996
(commencement of
Period ended Year ended Year ended Year ended operations to
August 31, February 29, February 28, February 28, February 28,
2000 (d) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $33.30 $16.68 $17.92$ $16.29 $15.53
Income (loss) from investment operations
Net investment loss ......................... (0.15) (0.18) (0.11) (0.12) (0.07)
Net realized and unrealized gain (loss)
on investments ............................ 2.13 18.03 (0.67) 4.22 0.83
-------- -------- -------- -------- --------
Total from investment operations .......... 1.98 17.85 (0.78) 4.10 0.76
-------- -------- -------- -------- --------
Distributions to shareholders from
Tax return of capital ....................... 0.00 0.00 0.00 (0.53) 0.00
Distribution in excess of net realized gains 0.00 0.00 (0.03) 0.00 0.00
Net realized gain from investment transactions 0.00 (1.23) (0.43) (1.94) 0.00
-------- -------- -------- -------- --------
Total distributions ....................... 0.00 (1.23) (0.46) (2.47) 0.00
-------- -------- -------- -------- --------
Net asset value, end of period ..................... $35.28 $33.30 $16.68 $17.92 $16.29
======== ======== ======== ======== ========
Total return (a) ................................... 5.88 %(b) 111.10 % (4.32)% 25.40 % 4.89 %(b)
======== ======== ======== ======== ========
Ratios/supplemental data
Net assets, end of period (000's) ............. $216,524 $238,827 $113,148 $118,246 $ 94,340
======== ======== ======== ======== ========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.05 %(c) 1.08 % 1.05 % 1.06 % 1.08 %(c)
After expense reimbursements and waived fees 1.04 %(c) 1.04 % 0.99 % 1.04 % 1.04 %(c)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (0.94)%(c) (0.91)% (0.71)% (0.77)% (0.75)%(c)
After expense reimbursements and waived fees (0.92)%(c) (0.87)% (0.64)% (0.75)% (0.72)%(c)
Portfolio turnover rate ........................ 58.08 % 165.92 % 121.48 % 105.60 % 126.44 %
(a) Total return does not reflect payment of a sales charge.
(b) Aggregate return. Not annualized.
(c) Annualized.
(d) Unaudited.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Chesapeake Growth Fund (the "Fund"), formerly known as The
Chesapeake Fund prior to November 1, 1997, is a diversified series of
shares of beneficial interest of the Gardner Lewis Investment Trust
(the "Trust"). The Trust, an open-end investment company, was organized
on August 12, 1992 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940, (the "Act") as amended. The
investment objective of the Fund is to seek capital appreciation
through investments in equity securities of medium and large
capitalization companies, consisting primarily of common and preferred
stocks and securities convertible into common stocks. Prior to April
26, 2000, the Fund offered five classes of shares -
Super-Institutional, Institutional, Investor Series A, Investor Series
C, and Investor Series D. On that date, Investor Series C and Investor
Series D shares were liquidated. The Institutional Shares and
Super-Institutional Shares are offered to institutional investors
without a sales charge and bear no distribution and service fees. The
Investor Shares are offered with a sales charge (except for Series C
Shares) at different levels and bear distribution fees at different
levels.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures, ongoing distribution and service fees, and various expenses
that can be attributed to specific class activity. Income, expenses
(other than distribution and service fees, which are attributable to
each class of Investor Shares based upon a set percentage of its net
assets, and other expenses which can be traced to specific class
activity), and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net
assets. All classes have equal voting privileges since the Trust
shareholders vote in the aggregate, not by fund or class, except where
otherwise required by law or when the Board of Trustees determines that
the matter to be voted on affects only the interests of a particular
fund or class. The following is a summary of significant accounting
policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted on a
national market system are valued at the last quoted sales price
as of 4:00 p.m. New York time on the day of valuation. Other
securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued
at the most recent bid price. Securities for which market
quotations are not readily available, if any, are valued by using
an independent pricing service or by following procedures approved
by the Board of Trustees. Short-term investments are valued at
cost which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code applicable
to regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
Net investment income (loss) and net realized gains (losses) may
differ for financial statement and income tax purposes primarily
because of losses incurred subsequent to October 31, which are
deferred for income tax purposes. The character of distributions
made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains were
recorded by the Fund.
Distributions which exceed net investment income and net realized
gains for financial reporting purposes but not for tax purposes,
if any, are shown as distributions in excess of net investment
income and net realized gains in the accompanying statements.
(Continued)
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
C. Investment Transactions - Investment transactions are recorded on
the trade date. Realized gains and losses are determined using the
specific identification cost method. Interest income is recorded
daily on an accrual basis. Dividend income is recorded on the
ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
annually, generally payable on a date selected by the Trust's
Trustees. Distributions to shareholders are recorded on the
ex-dividend date. In addition, distributions may be made annually
in November out of net realized gains through October 31 of that
year. The Fund may make a supplemental distribution subsequent to
the end of its fiscal year.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in
the financial statements. Actual results could differ from those
estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Gardner Lewis Asset
Management (the "Advisor") provides the Fund with a continuous program
of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 1.00% of the Fund's average daily net assets.
The Fund's administrator, The Nottingham Company, (the
"Administrator"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to a fund accounting and compliance agreement with the
Trust. As compensation for its services, the Administrator receives a
fee at the annual rate of 0.075% of the average daily net assets for
the Institutional Shares and for Series A, and had received a fee
through the date of liquidation of Series C and Series D Investor
Shares and receives a fee at the annual rate of 0.015% of the average
daily net assets for the Super-institutional Shares. The Administrator
also receives a monthly fee of $1,750 for the Institutional Shares and
for Series A, and had received a fee through the date of liquidation of
Series C and Series D Investor Shares for accounting and recordkeeping
services. The contract with the Administrator provides that the
aggregate fees for the aforementioned administration, accounting and
recordkeeping services shall not be less than $3,000 per month. The
Administrator receives a fee of $12,500 per year for shareholder
administration costs for the Institutional Shares and for Series A, and
had received a fee through the date of liquidation of Series C and
Series D Investor shares. The Administrator also charges the Fund for
certain expenses involved with the daily valuation of portfolio
securities. For the period ended August 31, 2000, the Administrator has
waived a portion of its fee related to shareholder administration costs
for Series C and Series D Investor shares.
NC Shareholder Services, LLC (the "Transfer Agent") has been retained
by the Administrator to serve as the Fund's transfer, dividend paying,
and shareholder servicing agent. The Transfer Agent maintains the
records of each shareholder's account, answers shareholder inquiries
concerning accounts, processes purchases and redemptions of Fund
shares, acts as dividend and distribution disbursing agent, and
performs other shareholder servicing functions.
(Continued)
<PAGE>
THE CHESAPEAKE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made. For the
period ended August 31, 2000, the Distributor retained sales charges in
the amount of $248.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Act, adopted a
distribution plan with respect to all Investor Shares pursuant to Rule
12b-1 of the Act (the "Plan"). Rule 12b-1 regulates the manner in which
a regulated investment company may assume costs of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.25%, 0.75% and 0.50% per annum of the average daily net assets
of Series A, Series C and Series D Investor Shares, respectively, for
each year elapsed subsequent to adoption of the Plan, for payment to
the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel or other expenses reasonably
intended to result in sales of Investor Shares of the Fund or support
servicing of shareholder accounts.
The Fund incurred $45,151, $2,229 and $6,528, net of waived fees, in
distribution and service fees under the Plan with respect to Series A,
Series C and Series D Investor Shares, respectively, for the period
ended August 31, 2000.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments other than short-term investments
aggregated $196,842,491 and $246,621,740, respectively, for the period
ended August 31, 2000.
NOTE 5 - EXPENSE REDUCTIONS
The Advisor has transacted certain portfolio trades with brokers who
paid a portion of the Fund's expenses. For the period ended August 31,
2000, the Fund's expenses were reduced by $21,791 under this
arrangement.
<PAGE>
________________________________________________________________________________
THE CHESAPEAKE GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
This Report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
________________________________________________________________________________
THE CHESAPEAKE CORE GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
Semi-Annual Report 2000
FOR THE PERIOD ENDED AUGUST 31
INVESTMENT ADVISOR
Gardner Lewis Asset Management
285 Wilmington-West Chester Pike
Chadds Ford, Pennsylvania 19317
THE CHESAPEAKE CORE GROWTH FUND
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-430-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus. Mutual fund shares are not deposits
or obligations of, or guaranteed by, any depository institution. Shares are not
insured by the FDIC, Federal Reserve Board or any other agency, and are subject
to investment risks, including possible loss of principal amount invested.
Neither the fund nor the fund's distributor is a bank.
For more information about The Chesapeake Core Growth Fund, including charges
and expenses, call the fund for a free prospectus. You should read the
prospectus carefully before you invest or send money.
<PAGE>
[Letterhead]
_____________________________________
THE CHESAPEAKE FUNDS
_____________________________________
October 2, 2000
Dear Shareholder:
The Chesapeake Core Growth Fund closes the third quarter with a
year-to-date gain of 24.9%. This gain compares to a loss of 1.4% for the S&P 500
and comes on the back of a 6.5% gain in the third quarter. As a result of our
concentration on fundamentals, avoidance of speculative excess, and focus on
companies without heavy sensitivity to things like interest rates and energy
pricing, our portfolio has benefited in a year that has been difficult for many
investors.
Although the market continues to be volatile, its volatility has
dissipated when compared to the spring. And despite the pain this volatility has
caused, it is in fact a healthy thing. The market is simply undergoing a
systematic cleansing, purging the excesses left within it. The result should be
the realignment of companies' stock prices in the context of reasonable
prospects for them. This cleansing began with the internet related space and has
now worked its way through much of the market.
Most importantly, most companies with negative cash flow and little
hope of near term profitability have now been all but abandoned by investors.
Prior darlings are on the ropes both financially and in the eyes of Wall Street.
Examples of these abound. TheGlobe, one of the hottest IPO's in history, now
trades at $0.25 per share, down from $40. Priceline now trades at $12, down from
$160, emphasizing the fact that ultimately a company's stock price reflects its
underlying business. Despite this, investors have not changed their attitudes
about the opportunities that continue to develop as a result of the tremendous
changes occurring in the global economy.
Although it sometimes becomes overly enthusiastic, the investing
community does not become enamored without reason. Opportunities relating to the
internet, telecom, and technology are just as strong today as they were before
investors got carried away with their enthusiasm for companies that might have
participated in them. Thus, it is not the opportunity that has changed, but
investors' willingness to extrapolate unrealistic rates of growth. The bottom
line is that expectations were too high and progress toward earnings too slow.
Therefore, the capital needed to execute many companies' strategies dried up and
as a result large numbers of them will perish, unable to construct the rest of
the bridge necessary to bring them profit. In their place will be those
companies whose approach has been more measured, those more soundly footed,
those with the capital, knowledge, and ability to execute.
Similar cycles of enthusiasm have occurred throughout modern economic
history. The advent of the steam locomotive in the 19th century created a rush
of investment that capitalized hundreds of marginal railroads that eventually
failed or were consolidated into their stronger competitors. Likewise, the
telephone spawned hundreds of publicly traded telephone companies, almost all of
which failed or were overtaken. Then, just as now, investors recognized profound
changes that would drive the economy in ways never before possible. Their
enthusiasm eventually overtook reason, some good capital chased poor business
plans, but eventually rational thinking returned. Most importantly though, the
economy sailed through these sentiment changes virtually untouched, and
investors were able to re-focus on those enterprises benefiting most directly
from the newfound productivity and its resultant prosperity.
<PAGE>
Imagine a decades old telecom emerging the victor in the bandwidth war,
or an old-line retailer the victor in e-tailing. We sure can, as we can those
working in conjunction with them. Companies like these now have the opportunity
to capitalize on the misfortune of others before them, who may have had the
right idea but an inability to see it to fruition.
Wall Street represents human nature. It has an ability to fixate as
well as carry to extreme. Prior to the spring of this year the sky was the limit
for a promising company's stock price. But from spring until early summer
interest rates cast a shadow over the market, dampening investors' excitement
and in turn becoming almost all that was talked about. In fact, at that time,
most investors could have told you when the Fed would next meet. This, as we
discussed in our last letter, signaled that concerns regarding rates were
already factored into stock prices. With the focus now having changed, the
likelihood today is that an amazing number of investors have no idea that the
Fed meets on October 3rd. Why? Because the fixation is different. It has gone
from interest rates to the economic impact of higher energy prices and a much
lower Euro/Dollar exchange.
Ironically, because of the status of energy prices and the Euro, the
market is now more focused on the potential need for a rate cut than a hike, and
the word stagflation has entered the mix. As a result, governments have
intervened to support the Euro and a concerted effort is taking place to lower
energy prices. In other words, these issues have taken center stage. Therefore,
our position on them is the same as was our position on rates this summer. These
cards are on the table! Thus, investors have already been discounting these
factors into stock prices, and in many cases this discounting has gone too far.
In the last several weeks it has not only been difficult for stocks to
rise, but also there has been significant selling pressure on many we think
unaffected by current macro issues. However, coming earnings periods should
start to create distinction. As to the economy as a whole, we are less concerned
that energy and Euro related issues will become far more problematic, but if
they do, our portfolio, as always, is constructed to minimize any macroeconomic
impact on our companies' earnings.
The slowing of the market's rate of rise is a good thing. So too is
investors' renewed scrutiny of fundamentals and valuation. A more normalized
environment is a longer lasting one in which stock prices react to information
more rationally. It is one where research typically pays off and one we should
now be that much closer to.
In one final note, we would like to welcome Brian Konigsberg and Tom
Wilcox to our research staff and Kristine Woodruff to administration. Have a
pleasant holiday season!
Sincerely,
/s/ W. Whitfield Gardner
W. Whitfield Gardner
<PAGE>
_______________________________________________
THE CHESAPEAKE CORE GROWTH FUND
_______________________________________________
September 30, 2000
Investment Strategy
--------------------------------------------------------------------------------
The Chesapeake Core Growth Fund seeks capital appreciation through investments
in large capitalization growth equities. The cornerstone of the fund's intensive
in-house fundamental analysis is 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.
The Largest Industry Groups
--------------------------------------------------------------------------------
Computer Software 6.9%
Computers & Peripherals 8.5%
Consumer Products & Services 3.2%
Electronics/Instruments 3.4%
Energy Services 11.2%
Financial Services 10.7%
Networking 3.9%
Pharmaceuticals 10.0%
Semiconductors & Related 7.9%
Telecommunications 16.9%
All Others 17.5%
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 $4 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 34. The research team is comprised of 17.
<PAGE>
Ten Largest Holdings
--------------------------------------------------------------------------------
1. EMC Corporation 6.4%
2. Ciena Corp 3.4%
3. Starwood Hotels & Resorts 3.2%
4. BEA Systems, Inc. 2.8%
5. Enron Corporation 2.8%
6. AES Corporation 2.8%
7. Boeing Co. 2.8%
8. Citigroup, Inc. 2.6%
9. Amgen 2.6%
10. Alza Corp. 2.6%
Portfolio Characteristics
--------------------------------------------------------------------------------
Number of Companies 50
5 Yr. Historical Earnings Growth 16%
Earnings Growth - net year 26%
P/E Ratio - next year 22
(Gardner Lewis earnings estimates)
Performance Summary
--------------------------------------------------------------------------------
Annualized
--------------------------------------------------------------------------------
Quarter Since
End 1 Year Inception
--------------------------------------------------------------------------------
The Chesapeake
Core Growth Fund 6.5% 70.0% 32.6%
--------------------------------------------------------------------------------
The inception date of the Fund was September 29, 1997. 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.
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.
Must be accompanied or preceeded by a propsectus.
Capital Investment Group, Inc., Distributor
Raleigh, NC (800)525-3863
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
___________________________________________
THE CHESAPEAKE CORE GROWTH FUND
___________________________________________
PORTFOLIO OF INVESTMENTS
(unaudited)
September 30, 2000
-------------------------------------------------------------- ---------------------------------------------------------
Quantity Security Market Value Quantity Security Market Value
============================================================== =========================================================
11,600 ADC Telecommunications, Inc. 311,931 4,250 Intel Corp. 176,641
7,200 AES Corporation 493,200 1,800 JDS Uniphase, Inc. 170,437
9,500 AT&T 279,062 10,300 Jones Apparel Group, Inc. 272,950
17,300 Albertson's Inc. 363,300 6,000 KLA-Tencor Corp. 247,125
5,300 Alza Corp. 458,450 2,500 Lehman Bros Holdings 369,375
6,600 Amgen 460,866 9,100 Motorola, Inc. 257,075
3,300 Applied Materials 195,731 7,400 Nabors Industries, Inc. 387,760
6,450 BEA Systems, Inc. 502,294 4,900 Novellus Systems, Inc. 228,156
5,300 Banc One Corp. 204,712 2,200 ONI Systems Corp. 189,887
5,165 BankAmerica Corp. 270,517 9,900 Pfizer, Inc. 444,881
7,400 Boeing Co. 466,200 7,232 Pharmacia Corp. 435,276
9,800 Boston Scientific Corp. 161,087 5,800 Phillips Petro. 363,950
3,500 CVS Corporation 162,094 4,100 Power-One, Inc. 248,114
5,700 Chase Manhattan Bank 263,269 1,100 SDL, Inc. 340,244
5,000 Ciena Corp. 614,062 2,600 SPX Corp. 369,037
6,000 Cisco Systems 331,500 3,400 Siebel Systems 378,462
8,467 Citigroup Inc. 457,728 7,850 Solectron Corporation 362,081
9,600 Clorox Company 379,800 18,400 Starwood Hotels & Resorts 575,000
1,100 Corning, Inc. 326,700 3,280 Sun Microsystems, Inc. 382,940
11,580 EMC Corporation 1,147,867 1,700 Sycamore Networks, Inc. 183,600
5,700 Enron Corporation 499,462 7,400 Tyco Industries, Inc. 383,875
3,300 Extreme Networks, Inc. 377,850 8,200 Verizon Communications 397,187
10,400 HCA - The Healthcare Company 386,100 6,350 Weatherford International, Inc 273,050
12,200 Heller Financial 348,462 7,722 Worldcom Inc. 234,556
6,600 Infineon Technologies ADS 313,500 1,950 i2 Technologies, Inc. 364,772
TOTAL EQUITY 17,812,180
CASH EQUIVALENT 202,099
TOTAL ASSETS 18,014,279
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 100.05%
Aerospace & Defense - 2.15%
The Boeing Company ...................................................... 7,400 $ 396,825
-----------
Apparel Manufacturing - 1.18%
(a) Jones Apparel Group, Inc. ............................................... 8,900 218,050
-----------
Chemicals - 1.88%
The Clorox Company ...................................................... 9,600 347,400
-----------
Computers - 8.39%
EMC Corporation ......................................................... 11,580 1,134,840
(a) Sun Microsystems, Inc. .................................................. 3,280 416,355
-----------
1,551,195
-----------
Computer Software & Services - 9.82%
(a) BEA Systems, Inc. ....................................................... 6,450 439,003
Computer Associates International, Inc. ................................. 5,100 161,925
(a) Infineon Technologies AG - ADR .......................................... 3,600 237,375
(a) i2 Technologies, Inc. ................................................... 1,950 329,916
(a) Oracle Corporation ...................................................... 3,450 313,734
(a) Siebel Systems, Inc. .................................................... 1,700 334,900
-----------
1,816,853
-----------
Electrical Equipment - 1.11%
(a) Power-One, Inc. ......................................................... 1,300 205,969
-----------
Electronics - 2.73%
(a) KLA-Tencor Corporation .................................................. 3,200 210,000
(a) Solectron Corporation ................................................... 6,500 294,531
-----------
504,531
-----------
Electronics - Semiconductor - 8.13%
(a) Applied Materials, Inc. ................................................. 3,300 284,831
Intel Corporation ....................................................... 3,400 254,575
Micron Technology ....................................................... 2,800 229,075
(a) Novellus Systems, Inc. .................................................. 4,200 258,563
(a) SDL, Inc. ............................................................... 1,200 476,775
-----------
1,503,819
-----------
Financial - Banks, Money Center - 6.90%
Banc One Corporation .................................................... 5,300 186,825
Bank of America Corporation ............................................. 5,165 276,650
Citigroup Inc. .......................................................... 8,467 494,771
The Chase Manhattan Corporation ......................................... 5,700 318,486
-----------
1,276,732
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Securities Broker - 2.04%
Lehman Brothers Holdings, Inc. .......................................... 2,600 $ 376,838
-----------
Hotels & Entertainment - 1.94%
Starwood Hotels & Resorts Worldwide, Inc. ............................... 11,200 358,400
-----------
Insurance - Multiline - 2.55%
CIGNA Corporation ....................................................... 4,850 471,662
-----------
Medical - Biotechnology - 2.70%
(a) Amgen, Inc. ............................................................. 6,600 500,363
-----------
Medical - Hospital Management & Service - 1.94%
Columbia/HCA Healthcare Corporation ..................................... 10,400 358,800
-----------
Medical - Supplies - 1.00%
(a) Boston Scientific Corporation ........................................... 9,800 185,588
-----------
Miscellaneous - Manufacturing - 2.28%
Tyco International Ltd. ................................................. 7,400 421,800
-----------
Oil & Gas - Domestic - 4.57%
Enron Corp. ............................................................. 5,700 483,787
The Williams Companies, Inc. ............................................ 7,850 361,591
-----------
845,378
-----------
Oil & Gas - Equipment & Services - 3.11%
(a) Nabors Industries, Inc. ................................................. 7,400 351,963
(a) Weatherford International, Inc. ......................................... 4,750 222,953
-----------
574,916
-----------
Oil & Gas - International - 1.94%
Phillips Petroleum Company .............................................. 5,800 358,875
-----------
Pharmaceuticals - 6.77%
(a) Alza Corporation ........................................................ 5,300 400,812
Pfizer, Inc. ............................................................ 9,900 428,175
Pharmacia Corporation ................................................... 7,232 423,524
-----------
1,252,511
-----------
Retail - Drug Stores - 0.70%
CVS Corporation ......................................................... 3,500 129,938
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Retail - Grocery - 0.94%
Albertson's, Inc. ........................................................ 8,100 $ 174,150
-----------
Telecommunications Equipment - 17.66%
(a) ADC Telecommunications, Inc. ............................................. 11,600 474,875
(a) CIENA Corporation ........................................................ 2,800 620,725
(a) Cisco Systems, Inc. ...................................................... 6,000 411,000
Corning Incorporated ..................................................... 1,100 360,525
(a) JDS Uniphase Corporation ................................................. 3,100 386,337
(a) Nokia Oyj - ADR .......................................................... 11,100 498,113
Nortel Networks Corporation .............................................. 4,300 350,719
(a) Sycamore Networks, Inc. .................................................. 1,200 164,400
-----------
3,266,694
-----------
Transportation - Air - 1.68%
(a) FedEx Corporation ........................................................ 7,700 310,695
-----------
Utilities - Electric - 2.48%
(a) The AES Corporation ...................................................... 7,200 459,000
-----------
Utilities - Telecommunications - 3.46%
(a) MCI WorldCom, Inc. ....................................................... 7,722 281,853
Verizon Communications ................................................... 8,200 357,725
-----------
639,578
-----------
Total Common Stocks (Cost $12,982,467) ..................................................... 18,506,560
-----------
INVESTMENT COMPANIES - 0.37%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Shares ......................................... 15,413 15,413
Evergreen Money Market Treasury Institutional Treasury
Money Market Fund Institutional Shares ................................... 52,827 52,827
-----------
Total Investment Companies (Cost $68,240) .................................................. 68,240
-----------
Total Value of Investments (Cost $13,050,707 (b)) ................................... 100.42 % $18,574,800
Liabilities In Excess of Other Assets ............................................... (0.42)% (76,993)
------ -----------
Net Assets .................................................................... 100.00 % $18,497,807
====== ===========
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
PORTFOLIO OF INVESTMENTS
August 31, 2000
(Unaudited)
(a) Non-income producing investment.
(b) Aggregate cost for financial reporting and federal income tax purposes is the same. Unrealized appreciation
(depreciation) of investments for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation .................................................................... $ 5,940,633
Unrealized depreciation .................................................................... (416,540)
-----------
Net unrealized appreciation .................................................... $ 5,524,093
===========
The following acronym is used in this portfolio:
ADR - American Depository Receipt
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000
(Unaudited)
ASSETS
Investments, at value (cost $13,050,707) ........................................................ $ 18,574,800
Cash ............................................................................................ 584
Income receivable ............................................................................... 10,281
Receivable for investments sold ................................................................. 668,950
------------
Total assets ............................................................................... 19,254,615
------------
LIABILITIES
Accrued expenses ................................................................................ 9,204
Payable for investment purchases ................................................................ 747,604
------------
Total liabilities .......................................................................... 756,808
------------
NET ASSETS
(applicable to 818,068 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ......................................... $ 18,497,807
============
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($18,497,807 / 818,068 shares) .................................................................. $ 22.61
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 11,150,577
Accumulated net operating loss .................................................................. (55,434)
Undistributed net realized gain on investments .................................................. 1,878,571
Net unrealized appreciation on investments ...................................................... 5,524,093
------------
$ 18,497,807
============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
STATEMENT OF OPERATIONS
Period ended August 31, 2000
(Unaudited)
NET INVESTMENT LOSS
Income
Dividends ..................................................................................... $ 42,988
-----------
Expenses
Investment advisory fees (note 2) ............................................................. 72,928
Fund administration fees (note 2) ............................................................. 5,470
Custody fees .................................................................................. 2,516
Registration and filing administration fees (note 2) .......................................... 1,513
Fund accounting fees (note 2) ................................................................. 10,500
Audit fees .................................................................................... 7,471
Legal fees .................................................................................... 3,025
Securities pricing fees ....................................................................... 1,871
Shareholder servicing fees .................................................................... 6,250
Shareholder recordkeeping fees ................................................................ 4,500
Shareholder servicing expenses ................................................................ 1,714
Registration and filing expenses .............................................................. 2,924
Printing expenses ............................................................................. 2,017
Trustee fees and meeting expenses ............................................................. 3,529
Other operating expenses ...................................................................... 1,497
-----------
Total expenses ........................................................................... 127,725
-----------
Less:
Expense reimbursements (note 4) ...................................................... (6,509)
Investment advisory fees waived (note 2) ............................................. (22,794)
-----------
Net expenses ............................................................................. 98,422
-----------
Net investment loss .................................................................. (55,434)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 1,238,244
Increase in unrealized appreciation on investments ................................................. 1,441,803
-----------
Net realized and unrealized gain on investments ............................................... 2,680,047
-----------
Net increase in net assets resulting from operations ..................................... $ 2,624,613
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
August 31, February 29,
2000 (b) 2000
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss .............................................................. $ (55,434) $ (39,655)
Net realized gain from investment transactions ................................... 1,238,244 1,466,680
Increase in unrealized appreciation on investments ............................... 1,441,803 3,065,717
----------- -----------
Net increase in net assets resulting from operations ......................... 2,624,613 4,492,742
----------- -----------
Distributions to shareholders from
Net realized gain from investment transactions ................................... 0 (744,241)
----------- -----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ............. 4,331,300 1,743,880
----------- -----------
Total increase in net assets ......................................... 6,955,913 5,492,381
NET ASSETS
Beginning of period ................................................................... 11,541,894 6,049,513
----------- -----------
End of period ......................................................................... $18,497,807 $11,541,894
=========== ===========
(a) A summary of capital share activity follows:
------------------------------------------------------------------------------------
Period ended Year ended
August 31, 2000 (b) February 29, 2000
Shares Value Shares Value
------------------------------------------------------------------------------------
Shares sold ................................... 223,858 $ 4,331,300 71,242 $ 1,034,336
Shares issued for reinvestment of distributions 0 0 48,484 744,241
----------- ----------- ----------- -----------
223,858 4,331,300 119,726 1,778,577
Shares redeemed ............................... 0 0 (2,420) (34,697)
----------- ----------- ----------- -----------
Net increase ............................. 223,858 $ 4,331,300 117,306 $ 1,743,880
=========== =========== =========== ===========
(b) Unaudited.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE CHESAPEAKE CORE GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Period ended
August 31, February 29, February 28, February 28,
2000 (a) 2000 1999 1998 (b)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................... $ 19.42 $ 12.68 $ 10.72 $ 10.00
Income from investment operations
Net investment loss .......................... (0.07) (0.07) (0.07) (0.01)
Net realized and unrealized gain on investments 3.26 8.18 2.03 0.75
----------- ----------- ----------- -----------
Total from investment operations ......... 3.19 8.11 1.96 0.74
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.02)
Net realized gain from investment transactions 0.00 (1.37) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions ...................... 0.00 (1.37) 0.00 (0.02)
----------- ----------- ----------- -----------
Net asset value, end of period ......................... $ 22.61 $ 19.42 $ 12.68 $ 10.72
=========== =========== =========== ===========
Total return ........................................... 16.43 % 66.64 % 18.27 % 7.49 %
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $18,497,807 $11,541,894 $ 6,049,513 $ 6,048,268
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.75 %(c) 2.25 % 2.73 % 3.19 %(c)
After expense reimbursements and waived fees 1.35 %(c) 1.15 % 1.39 % 1.24 %(c)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (1.17)%(c) (1.59)% (1.89)% (2.19)%(c)
After expense reimbursements and waived fees (0.75)%(c) (0.49)% (0.55)% (0.24)%(c)
Portfolio turnover rate .......................... 80.51 % 130.44 % 174.44 % 29.83 %
(a) Unaudited.
(b) For the period from September 29, 1997 (Commencement of operations) to February 28, 1998.
(c) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE CHESAPEAKE CORE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Chesapeake Core Growth Fund (the "Fund") is a diversified series of
shares of beneficial interest of the Gardner Lewis Investment Trust
(the "Trust"). The Trust is an open-end investment company which was
organized in 1992 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940, (the "Act"), as amended. The
Fund began operations on September 29, 1997. The investment objective
of the Fund is to seek capital appreciation through investments in
equity securities, consisting primarily of common and preferred stocks
and securities convertible into common stocks. The following is a
summary of significant accounting policies followed by the Fund:
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since the Fund intends to distribute
substantially all taxable income to shareholders. It is the
policy of the Fund to comply with the provisions of the
Internal Revenue Code applicable to regulated investment
companies and to make sufficient distributions of taxable
income to relieve it from all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
annually on a date selected by the Trust's Trustees.
Distributions to shareholders are recorded on the ex-dividend
date. In addition, distributions may be made annually in
November out of net realized gains through October 31 of that
year. The Fund may make a supplemental distribution subsequent
to the end of its fiscal year ending February 28.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
(Continued)
<PAGE>
THE CHESAPEAKE CORE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
(Unaudited)
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Gardner Lewis Asset
Management (the "Advisor") provides the Fund with a continuous program
of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 1.00% of the Fund's average daily net assets.
The Advisor intends to voluntarily waive all or a portion of its fee.
There can be no assurance that the foregoing voluntary fee waiver will
continue. The Advisor has voluntarily waived its fee amounting to
$22,794 ($0.03 per share) for the period ended August 31, 2000.
The Fund's administrator, The Nottingham Company, (the
"Administrator"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to a fund accounting and compliance agreement with the
Trust. As compensation for its services, the Administrator receives a
fee at the annual rate of 0.075% of the Fund's average daily net
assets. The Administrator also receives a monthly fee of $1,750 for
accounting and recordkeeping services. The Administrator also charges
for certain expenses involved with the daily valuation of portfolio
securities.
NC Shareholder Services, LLC (the "Transfer Agent") serves as the
Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes purchases
and redemptions of Fund shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions.
Certain Trustees and officers of the Trust are also officers of the
Advisor or the Administrator.
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments other than short-term investments
aggregated $12,606,072 and $8,278,084, respectively, for the period
ended August 31, 2000.
NOTE 4 - EXPENSE REDUCTION
The Advisor has transacted certain portfolio trades with brokers who
paid a portion of the Fund's expenses. For the period ended August 31,
2000, the Fund's expenses were reduced by $6,509 under this agreement.
<PAGE>
________________________________________________________________________________
THE CHESAPEAKE CORE GROWTH FUND
________________________________________________________________________________
a series of the Gardner Lewis Investment Trust
This report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
