As filed with the Securities and Exchange Commission on December 16, 1996
File Nos.: 811-7853
333-13593
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No._____ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 1 [X]
KALMAR POOLED INVESTMENT TRUST
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(Exact Name of Registrant as Specified in Charter)
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
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(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code (302) 658-7575
Ford B. Draper, Jr., President
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
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(Name and Address of Agent for Service)
Please send copies of all communications to:
Joseph V. Del Raso, Esquire
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Approximate Date of Proposed Public Offering: As soon as practical after the
effective date of this registration statement.
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Registrant has elected to register an indefinite number of shares of its
securities under this Registration Statement pursuant to Rule 24f-2 under the
Investment Company Act of 1940.
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Registrant hereby amends this Registration Statement on such dates as may be
necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section
8(a), may determine.
<PAGE>
TABLE OF CONTENTS
TO FORM N-1A
The Facing Page
1- Cross-Reference Sheet
2- Part A - Prospectus for the Kalmar "Growth-
with-Value" Small Cap Fund
- Prospectus for the Kalmar "Growth-
with-Value" Micro Cap Fund
3- Part B - Statement of Additional Information
4- Part C - Other Information
5- Signature Page
Exhibits
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 481(a))
N-1A
Item No. Caption or Location in Prospectus
Part A
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1 Cover
2 Expenses of the Fund
3 N/A
4 Prospectus Cover, Investment Objective and Policies,
Special Risk Considerations, Investment Restrictions
5 Board of Trustees, Investment Adviser, Distributor,
Distribution Agreement, Administrator, Transfer Agent,
Dividend Paying Agent and Custodian and Expenses
6 Shares of Beneficial Interest, Voting Rights and
Shareholder Meetings, Dividends, Distributions and
Taxes
7 Calculation of Net Asset Value, How to Purchase
Shares
8 How to Redeem Shares
9 N/A
PART B
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10 Cover
11 Table of Contents
12 N/A
13 Cover, Investments, Investment Restrictions
14 Officers and Trustees of the Trust
15 N/A
16 Investment Adviser, Distributor, Administrator,
Transfer Agent, Dividend Paying Agent and Custodian
17 Allocation of Portfolio Brokerage
18 N/A
19 Purchase of Shares
20 N/A
21 Distributor, Distribution Agreement and Purchase of
Shares
22 Performance
23 N/A
PART C
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Items 24 through 32 have been answered in order in Part C.
<PAGE>
KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND
A SERIES OF
KALMAR POOLED INVESTMENT TRUST
BARLEY MILL HOUSE
3701 KENNETT PIKE
GREENVILLE, DELAWARE 19807
(302) 658-7575
PROSPECTUS DATED __________, 1996
This prospectus offers shares of the Kalmar "Growth-with-Value" Small Cap Fund
(the "Fund"), which is a series of Kalmar Pooled Investment Trust (the
"Trust"), an open-end diversified management investment company commonly known
as a mutual fund. The Trust currently offers shares of both the Fund and the
Kalmar "Growth-with-Value" Micro Cap Fund, each of which has a diversified
portfolio of assets and a specific investment objective and policies. Shares
of the Kalmar "Growth-with-Value" Micro Cap Fund are offered by a separate
prospectus.
The Fund's investment objective is long-term capital appreciation. The Fund
was created to offer investors the opportunity to invest in small
capitalization stocks according to the longer-term "Growth-with-Value"
investment philosophy, and with the small cap and micro cap investing
expertise of the investment professionals of Fund's investment adviser, Kalmar
Investment Advisers (the "Adviser"). Using this investment philosophy, the
Fund will invest primarily in a diversified portfolio of common stocks of
companies with market capitalizations ranging from $50 million to $1 billion
at the time of investment which, in the Adviser's opinion, have the potential
for significant business growth and capital appreciation, and yet whose stocks
are, at the time of purchase, trading at at least reasonable to, preferably,
undervalued prices in the public trading markets. The Fund believes that its
philosophy of purchasing promising, growing companies that may also be
undervalued can result in lower risk and higher return when compared to many
other small company investment strategies. See "Investment Objectives and
Policies."
Shares of the Fund may be purchased on a no-load basis without sales or
distribution charges through the Fund's distributor or through investment
management and financial consultants or brokers, and may be purchased or
redeemed at any time. Requests to purchase or redeem shares will be processed
at the net asset value per share next determined following receipt and
acceptance of the investor's purchase order or redemption request. See "How
to Purchase Shares," "How to Redeem Shares" and "Calculation of Net Asset
Value."
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This Prospectus sets forth information about the Fund that a prospective
investor should know before investing, and should be read and retained for
future reference. More information about both the Fund and the Kalmar "Growth-
with-Value" Micro Cap Fund has been filed with the U.S. Securities and
Exchange Commission and is contained in a "Statement of Additional
Information" dated _________, 1996, as amended from time to time, which is
available upon request and without charge by writing or calling the Fund or
its distributor at the addresses and numbers set forth on the back cover of
this prospectus. The Statement of Additional Information is incorporated by
reference into this Prospectus.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<PAGE>
Kalmar "Growth-with-Value" Small Cap Fund
Table of Contents
Page
----
Prospectus Summary............................................
Fund Expenses.................................................
Adviser's Investment Performance..............................
Investment Objective and Policies.............................
Investment Philosophy....................................
Investment Policies......................................
Other Investment Practices...............................
Risks and Special Considerations..............................
Management of the Fund........................................
Board of Trustees........................................
Investment Adviser.......................................
Distributor..............................................
Administrator, Transfer Agent and Custodian..............
Expenses......................................................
Calculation of Net Asset Value................................
How to Purchase Shares........................................
Retirement Plans..............................................
How to Redeem Shares..........................................
Performance Information.......................................
General Information...........................................
Dividends, Capital Gains Distributions and Taxes..............
Shareholder Accounts..........................................
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT OBJECTIVE AND POLICIES. The objective of the Kalmar "Growth-with-
Value" Small Cap Fund is long-term capital appreciation. The Fund was created
to offer investors the opportunity to invest in small capitalization stocks
according to the longer term "Growth-with-Value" investment philosophy and
with the small cap and micro cap investing expertise of the investment
professionals of the Fund's investment adviser, Kalmar Investment Advisers
(the "Adviser"). Using this investment philosophy, the Fund will invest
primarily in a diversified portfolio of common stocks of companies with market
capitalizations ranging from $50 million to $1 billion at the time of
investment which, in the Adviser's opinion, have the potential for significant
business growth and capital appreciation, and yet whose stocks are, at the
time of purchase, trading at at least reasonable to, preferably, undervalued
prices in the public trading markets. The Fund believes that its philosophy
of purchasing promising, growing companies that may be also undervalued can
result in both lower risk and higher return when compared to many other small
company investment strategies.
The Fund utilizes the Adviser's "Growth-with-Value" investment philosophy
which purposefully seeks to INTEGRATE the best elements of creative growth
company investing, with discriminating value-seeking investment discipline,
and a longer-term intent. With its intent of owning the "good growth
businesses" underlying its stocks, the Adviser seeks to make fewer, better
investment decisions for longer holding periods and larger gains, based on in-
depth, in-house, hands-on research and company business analysis. The
resulting low relative levels of trading and portfolio turnover versus typical
"aggressive growth" or "emerging growth" investment styles can produce
meaningful transaction cost savings to benefit all Fund shareholders as well
as greater tax efficiency for taxable shareholders by producing a
preponderance of long-term, as opposed to short term, capital gains.
Importantly, the Adviser's "Growth-with-Value" philosophy and in-depth
research seek both lower risks and higher reward relative to small company
equity markets generally through its integrated strategy of investing in
solid, promising, smaller growth companies that have not yet been fully
recognized and exploited by other institutional investors and, hence, whose
stocks may be purchased at undervalued levels. See "Investment Objective and
Policies."
INVESTMENT ADVISER. Kalmar Investment Advisers serves as the investment
adviser for the Fund. Over the past fourteen years, the Adviser's portfolio
management team has managed micro cap and small cap assets in separate
accounts now totaling in excess of $600 million for a variety of clients such
as high net worth individuals and family trusts, corporations, pensions and
profit-sharing plans and other institutions such as endowments, foundations,
hospitals and other charitable institutions, all according to the same longer-
term oriented "Growth-with-Value" philosophy utilized by the Fund. Existing
clients of the Adviser will have the opportunity to transfer their assets to
the Fund on a tax-free basis in exchange for shares, and thereby avail
themselves of a pooled investment vehicle. Kalmar intends to invest assets of
its own profit-sharing plan in shares of the Fund, as do members of its
investment team and other employees. The Adviser selects investments and
supervises the assets of the Fund in accordance with the investment objective,
policies and restrictions of the Fund, subject to the supervision and
direction of the officers and Board of Trustees of the Trust. For its
services, the Adviser is paid a monthly fee at the annual rate of 1.00% of the
Fund's average daily net assets. This fee is comparable to the fees charged
by most small company equity mutual fund managers, however, it is higher than
that charged by many other mutual funds. See "Investment Adviser."
ADVISER'S INVESTMENT PERFORMANCE. Information about the performance record of
the Adviser's portfolio management team for its separately managed accounts
over the past fourteen years is provided in the section of the Prospectus
called "Adviser's Investment Performance."
HOW TO INVEST. Shares of the Fund may be purchased on a no-load basis,
without sales or distribution charges, and are sold through investor
relationships with investment management and financial consultants, brokers or
dealers, or directly by the Fund's distributor. The public offering price of
shares of the Fund is the net asset value per share of the Fund next
determined after receipt and acceptance of an order and payment satisfactory
to the Fund. The minimum initial investment is $10,000 and there is no
minimum for subsequent investments. There is no minimum initial investment
amount for investments by qualified retirement accounts. An application and
information is available by calling (800) 282-2319. See "How To Purchase
Shares."
HOW TO REDEEM SHARES. Shares may be redeemed by the Fund, or repurchased by
the Distributor, at the net asset value per share next determined after
receipt and acceptance of a redemption request in proper form by the Fund,
without the imposition of sales charges or redemption fees. See "How to
Redeem Shares."
DIVIDEND REINVESTMENT. The Fund intends to pay dividends from its net
investment income and any net realized capital gains, if any, on an annual
basis. Any dividends and distribution payments will be reinvested at net
asset value in additional full and fractional shares of the Fund, unless the
shareholder specifically elects to receive such distributions in cash. See
"Dividends, Distributions and Taxes."
RISKS AND SPECIAL CONSIDERATIONS. Prospective investors should consider the
following factors: (1) investments in small capitalization stocks involve
greater risks than investments in larger, more established companies, are more
volatile, and may suffer significant losses as well as realize substantial
gains; (2) the market for small capitalization stocks is generally less liquid
than the markets for larger stocks, which can contribute to increased price
volatility of such stocks; (3) the Fund may lend its securities which entails
a risk of loss should a borrower fail financially; (4) to the extent that the
Fund invests in foreign securities, such investment may involve political,
economic or currency risks not ordinarily associated with domestic securities;
and (5) although the Adviser's portfolio management team has extensive
investment management experience with private separately managed accounts, it
has not previously served as the adviser to a mutual fund. See "Risks and
Special Considerations."
ORGANIZATION AND MANAGEMENT OF THE FUND. The Fund is a series of Kalmar
Pooled Investment Trust (the "Trust"), which is an open-end diversified
management investment company commonly known as a mutual fund. The Trust also
offers shares of the Kalmar "Growth-with-Value" Micro Cap Fund through a
separate prospectus. The Fund's assets are held by its custodian, Wilmington
Trust Company, and the Fund's administrative, transfer agency and fund
accounting services are provided by Rodney Square Management Corporation. The
distributor of the Fund's shares is Rodney Square Distributors, Inc. See
"Management of the Fund" and "General Information."
FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES: There are no transactional expenses paid by
shareholders in connection with purchases or redemptions of the Fund's shares.
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Contingent Deferred Sales Charge None
Redemption Fees None
ESTIMATED ANNUAL OPERATING EXPENSES: These expenses, which cover the cost of
investment management, administration, distribution, marketing and shareholder
communications, are quoted as a percentage of average daily net assets of the
Fund. The expenses are factored into the Fund's share price and are not
billed directly to shareholders.
Advisory Fee (after voluntary waiver) 0.97%
12b-1 Fees None
Other Expenses 0.28%
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Total Operating Expenses 1.25%1
1 FOR THE CURRENT FISCAL YEAR, THE ADVISER HAS VOLUNTARILY AGREED TO WAIVE
ITS FEE OR ASSUME CERTAIN EXPENSES OF THE FUND SO THAT THE TOTAL ANNUAL
OPERATING COSTS OF THE FUND WILL NOT EXCEED 1.25% OF THE AVERAGE DAILY
NET ASSETS OF THE FUND. ABSENT THE ADVISER'S ACTIONS TO LIMIT THE
OPERATING EXPENSES, THE FUND WOULD PAY AN ANNUAL ADVISORY FEE OF 1.00%
AND IT IS ESTIMATED THAT THE TOTAL OPERATING EXPENSES OF THE FUND DURING
ITS FIRST FISCAL YEAR WOULD BE 1.28% ON AN ANNUALIZED BASIS.
EXAMPLE: The following example illustrates the expenses that an investor
would pay on a $1,000 investment in the Fund over various time periods
assuming a 5% annual rate of return and redemption at the end of each time
period.
One Year Three Years
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$13 $40
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES IN FUTURE YEARS MAY BE GREATER OR
LESSER THAN THOSE SHOWN. THE PURPOSE OF THE ABOVE EXPENSE TABLES AND EXAMPLE
IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE VARIOUS EXPENSES THAT AN
INVESTOR IN EITHER CLASS OF SHARES OF THE FUND WILL BEAR DIRECTLY OR
INDIRECTLY. THE FUND IS NEW AND THEREFORE THE AMOUNTS OF THE "ADVISORY FEE
(AFTER VOLUNTARY WAIVER)" AND "OTHER EXPENSES" IN THE EXPENSE TABLE AND THE
NUMBERS IN THE EXAMPLE ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL
YEAR.
ADVISER'S INVESTMENT PERFORMANCE
Set forth below is certain information relating to separate accounts managed
by the Fund's portfolio management team. These accounts are managed according
to the same investment objective and "Growth-with-Value" investment
philosophy, and are subject to substantially similar investment policies and
techniques as those used by the Fund. See "Investment Objectives and
Policies." The performance record shown below relates to the activities of
the portfolio management team with respect to its activities at Kalmar
Investments Inc. ("Kalmar"), which provides advisory services to separately
managed accounts, and is the sister company of the Adviser. See "Investment
Adviser." The results presented are not intended to predict or suggest the
return to be experienced by the Fund or the return that an individual investor
might achieve by investing in the Fund. The Fund's results may be different
from the composite of separate accounts shown due to the fact that the average
market capitalization of the companies included in the separate account
portfolios is approximately $250 million, and the Fund may purchase shares of
companies with greater market capitalizations. The Fund's results may also be
different because of, among other things, differences in fees and expenses,
and because private accounts are not subject to certain investment
limitations, diversification requirements, and other restrictions imposed by
the Investment Company Act of 1940, as amended (the "Investment Company Act")
and the Internal Revenue Code, as amended, which, if applicable, may have
adversely affected the performance of such accounts.
YEAR KALMAR RUSSELL 2000 NASDAQ COMPOSITE S & P 500
ENDING TOTAL RETURN* TOTAL RETURN TOTAL RETURN TOTAL RETURN
- ------ ------------- ------------ ---------------- ------------
12/31/84 1.46 (7.30) (11.22) 6.26
12/31/85 33.98 31.05 31.36 31.76
12/31/86 28.14 5.68 7.36 18.70
12/31/87 (1.90) (8.77) (5.26) 5.22
12/31/88 23.58 24.89 15.41 16.57
12/31/89 38.42 16.24 19.26 31.65
12/31/90 (7.58) (19.51) (17.80) (3.14)
12/31/91 65.52 46.05 56.84 30.45
12/31/92 8.87 18.41 15.45 7.62
12/31/93 27.11 19.91 14.75 10.06
12/31/94 3.08 (1.82) (3.20) 1.30
12/31/95 25.38 26.21 39.92 37.54
CUMULATIVE
TOTAL RETURN KALMAR* RUSSELL NASDAQ S & P 500
- ------------ ------- ------- ------ ---------
12 Years*
1984-1995 699.73% 252.21% 277.39% 459.58%
AVERAGE ANNUAL
TOTAL RETURN
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12 Years*
1984-1995 18.92% 11.06% 11.70% 15.43%
* The results shown above represent a composite of discretionary, fee
paying, separate accounts under management for at least six months,
reflect the reinvestment of any dividends or capital gains, and are shown
after deduction of advisory, brokerage or other expenses (excluding fees
such as custody fees which are paid separately by the investor). Certain
individual accounts that are subject to investment restrictions, tax,
income or other special considerations that constrain the investment
process are excluded from the composite figures shown above.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is long-term capital appreciation. The
investment objective of the Fund is a fundamental policy, which means that it
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities. The Fund seeks to achieve its objective
by investing primarily in a diversified portfolio of common stocks of smaller
companies which, in the Adviser's opinion, have the potential for significant
business growth and capital appreciation, and yet whose stocks are, at the
time of purchase, trading at at least reasonable to, preferably, undervalued
prices in the public trading markets. There can be no assurance that the Fund
will achieve its objective.
INVESTMENT PHILOSOPHY.
The Fund utilizes the Adviser's "Growth-with-Value" investment philosophy,
which integrates what the Adviser believes to be the best elements of creative
growth company investing, with discriminating value-seeking investment
discipline, all with a view toward longer-term ownership of the "good growth
businesses" underlying its portfolio holdings. The investment philosophy is a
primarily bottom-up, fundamentals-driven approach, with the goal of fewer,
better investment decisions, for longer holding periods and larger gains. The
Adviser views its "Growth-with-Value" philosophy as a relatively conservative
approach to small company investing, yet one which the Adviser believes can
result in both lower risk and higher rewards over the longer term when
compared to the small company equity markets generally, or to the typical high-
turnover "aggressive growth" or "emerging growth" investment styles of most
other small company investment managers. By investing with a longer-term
focus, and thereby limiting trading and portfolio turnover, the Fund seeks to
limit transaction costs and to increase tax efficiency for its shareholders.
In identifying, analyzing, selecting, and monitoring investments, the Fund's
portfolio management team utilizes an independent, hands-on, fundamental, in-
house-research-driven approach. To identify solid, well managed, rapidly
growing small capitalization companies, and qualify such companies for
investment, the Fund's portfolio managers perform fundamental research and
business analysis of a given company's publicly available financial
information, engage in extensive and on-going management contact, facility
visits, and appropriate cross checks with customers, suppliers, competitors,
etc., as well as with industry trade groups, consultants and such other
"experts" as they deem appropriate. The portfolio management team, of course,
also attempts to utilize the best information provided by Wall Street
analysts, strategists, etc., to complement its in-house research and
investment management decision making.
As a central ingredient in its investment philosophy and investment selection
process, the Fund seeks to invest in promising smaller companies which meet
its objectives for above average future business value growth, but which have
not yet been fully recognized and exploited by other institutional small
company investors. Such companies may be followed by relatively few, or
sometimes no securities analysts, and, therefore, may be inefficiently valued
and available for purchase at undervalued prices. By investing in such
companies over the longer-term, the Fund's investors can benefit both from
their vigorous potential earnings and business value growth and also from the
potential re-valuation upward of their securities as their business success
attracts larger numbers of additional investors and greater "Wall Street"
sponsorship over time.
Except as described herein, the following investment policies are not
fundamental policies of the Fund which means that the Trustees may change such
policies without the affirmative vote of a "majority of the outstanding voting
securities" of the Fund, as defined in the Investment Company Act.
INVESTMENT POLICIES.
The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 65% of its total assets in smaller companies in terms of
market capitalization, whose stock market capitalization (total market value
of outstanding shares) range from $50 million to $1 billion at the time of
investment. Small capitalization growth companies often pay no dividends and,
therefore, current income is not a factor in the selection of stocks. Capital
appreciation is likely to be the predominant component of the Fund's return.
In the event that the Adviser, through fundamental investment analysis,
identifies a company whose stock appears to be substantially overvalued in the
trading markets, the Fund may engage in short sales of the company's stock.
This process allows the Fund to realize profits if the value of a company's
stock drops as was anticipated by the Adviser.
In addition, the Fund may invest in other types of securities such as
preferred stocks, securities convertible into common stocks, as well as
certain debt securities, consistent with its long-term capital appreciation
objective. The Fund may invest up to 15% of its assets in foreign securities,
including sponsored or unsponsored American Depository Receipts ("ADRs"). The
Fund may also buy and sell options on individual securities or indices, for
purposes of achieving additional return or for hedging purposes, although at
no time will more than 5% of the Fund's assets be allocated to premiums or
margins required to establish options positions for non-hedging purposes, and
no more than 10% of the Fund's assets will be subject to obligations
underlying such options. Additional information about the Fund's investments,
policies and restrictions is provided below and in the Fund's Statement of
Additional Information.
EQUITY SECURITIES. The Fund will predominately purchase common stocks, which
represent an ownership interest in the issuer, entitle the holder to
participate in any income and/or capital gains of the issuer and generally
have voting rights. The Fund may also purchase investment grade securities
with an equity component such as convertible preferred stock, debt securities
convertible into or exchangeable for common stock and securities such as
warrants or rights that are convertible into common stock. A convertible
security is a security that may be converted either at a stated price or rate
within a specified period of time into a specified number of shares of common
or preferred stock. By investing in convertible securities, the Fund seeks to
participate in the capital appreciation of the common stock into which the
securities are convertible through the conversion feature. A warrant is a
security that gives the holder the right, but not the obligation, to subscribe
for newly created securities of the issuer or a related company at a fixed
price either at a certain date or during a set period. Rights represent a
preemptive right to purchase additional shares of stock at the time of new
issuance, before stock is offered to the general public, so that the
stockholder can retain the same percentage after the new stock offering.
The Fund's assets will be invested primarily in equity securities of small
companies, however, it may, consistent with its objective, invest a portion of
its total assets in equity securities of larger capitalization companies if
the Adviser believes that suitable small company opportunities are not
available or if such larger stocks have strong growth potential and meet the
Adviser's "Growth-with-Value" criteria and investment discipline.
Although the Adviser anticipates that the majority of the Fund's assets will
ordinarily be invested in U.S.-based companies, the Fund may invest in foreign
securities, provided such investments are consistent with the Fund's objective
and policies and meet the "Growth-with-Value" philosophy. The Fund generally
limits its foreign investing to securities of Canadian companies traded on
Canadian or U.S. exchanges or markets, or shares of foreign companies traded
as sponsored or unsponsored American Depository Receipts ("ADRs"), which are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of underlying securities issued by a foreign company. "Sponsored" ADRs are
issued jointly by the issuer of the underlying security and a depository,
whereas "unsponsored" ADRs are issued without participation of the issuer of
the deposited security.
CASH OR CASH EQUIVALENTS. Although the Fund intends to remain substantially
fully invested, the Fund may invest its assets in cash or cash equivalents,
during periods when excess cash is generated through purchases and sales of
its shares, or when the Fund desires to hold cash to maintain liquidity for
redemptions or pending investment in suitable securities. There may also be
times when economic or market conditions are such that the Adviser deems a
temporary defensive position to be appropriate, during which the Fund may
invest up to 100% of its net assets invested in the types of short-term, cash
equivalent investments described below.
The Fund may invest in short-term debt securities, including time deposits,
certificates of deposit or banker's acceptances issued by commercial banks or
savings and loan associations meeting certain qualifications. The Fund may
also purchase commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime 2
by Moody's, or, if not rated, issued by a corporation having an outstanding
unsecured debt issue rated high-grade (A or better by S&P or by Moody's); and
may invest in short term corporate obligations rated high-grade (A or better
by S&P or Moody's).
The fund may also purchase U.S. Government obligations including bills, notes,
bonds and other debt securities issued by the U.S. Treasury; and may invest in
U.S. Government agency securities issued or also guaranteed by U.S. Government
sponsored instrumentalities and federal agencies. The Fund may also invest in
repurchase agreements collateralized by the cash equivalent securities listed
above.
DEBT SECURITIES. In addition to the short-term, high quality, cash-equivalent
debt securities listed above and investment grade convertible debt (those
rated Baa or higher by S&P and BBB or higher by Moody's), the Fund is
authorized to invest up to 5% of its assets in lower-rated or "compromised"
corporate debt securities such as bonds, debentures and notes (those rated BB
or lower by S&P or Ba or lower by Moody's) and unrated securities of
comparable quality. The Fund may invest in such debt securities, sometimes
referred to as "junk bonds," when the Adviser, through fundamental research
and investment analysis, believes that the securities possess intrinsic value
in excess of the current market price, or have the potential for capital
appreciation as a result of improvement in the creditworthiness of the issuer.
The Fund may also buy such securities when the Adviser believes that the
Issuer is likely to negotiate to replace such securities with equity
securities. Lower-rated securities (including those which are in default) are
considered to be predominately speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of
the obligation and generally involve more credit risk than securities in the
high rating categories. See "Debt Securities-Risks" in the Statement of
Additional Information for further information concerning the risks of lower-
rated securities.
OPTIONS. The Fund may purchase or sell options on individual securities as
well as on indices of securities as a means of achieving additional return or
of hedging the value of the Fund's portfolio. A call option is a contract
that gives the holder of the option the right, in return for a premium paid,
to buy from the seller the security underlying the option at a specified
exercise price at any time during the term of the option or, in some cases,
only at the end of the term of the option. The seller of the call option has
the obligation upon exercise of the option to deliver the underlying security
upon payment of the exercise price. A put option is a contract that gives the
holder of the option the right, in return for a premium paid, to sell to the
seller the underlying security at a specified price. The seller of the put
option, on the other hand, has the obligation to buy the underlying security
upon exercise at the exercise price.
If the Fund has sold an option, it may terminate its obligation by effecting a
closing purchase transaction. This is accomplished by purchasing an option of
the same series as the option previously sold. There can be no assurance that
a closing purchase transaction can be effected when the Fund so desires.
The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or
decrease sufficiently to justify exercise. The seller of an option, on the
other hand, will recognize the premium as income if the option expires
unrecognized but forgoes any capital appreciation in excess of the exercise
price in the case of a call option and may be required to pay a price in
excess of current market value in the case of a put option. Options
purchased and sold other than on an exchange in private transactions also
impose on the Fund the credit risk that the counterparty will fail to honor
its obligations. The Fund will not purchase options if, as a result, its
aggregate obligations relating to outstanding options exceeds 10% of the
Fund's assets.
REPURCHASE AGREEMENTS. For purposes of cash management only, the Fund may
enter into repurchase agreements with qualified brokers, dealers, banks and
other financial institutions deemed creditworthy by the Adviser under
standards adopted by the Board of Trustees. Under repurchase agreements, the
Fund may purchase any of the cash equivalent securities described above and
simultaneously commit to resell such securities at a future date to the seller
at an agreed upon price plus interest. The seller will be required to
collateralize the agreement by transferring securities to the Fund with an
initial market value, including accrued interest, that equals or exceeds the
repurchase price, and the seller will be required to transfer additional
securities to the Fund on a daily basis to ensure that the value of the
collateral does not decrease below the repurchase price. No more than 15% of
the Fund's net assets will be invested in illiquid securities, including
repurchase agreements which have a maturity of longer than seven days. For
purposes of the diversification test for qualification as a regulated
investment company under the Internal Revenue Code, repurchase agreements are
not counted as cash, cash items or receivables, but rather as securities
issued by the counter-party to the repurchase agreements. If the seller of
the underlying security under the repurchase agreement should default on its
obligation to repurchase the underlying security, the Fund may experience
delay or difficulty in recovering its cash. To the extent that in the
meantime, the value of the security purchased had decreased, the Fund could
experience a loss. While management of the Fund acknowledges these risks, it
is expected that they can be controlled through stringent security selection
and careful monitoring procedures.
INVESTMENTS IN MUTUAL FUNDS. The Fund may invest in shares of other open and
closed-end investment companies which principally investment in securities of
the type in which the Fund invests. This approach will most likely be used
for cash management purposes. The Fund may only invest in other investment
companies within limits set by the Investment Company Act of 1940, which
currently allows the Fund to invest up to 10% of its total assets in other
investment companies, although not more than 5% of the Fund's total assets may
be invested in any one investment company and the Fund's investment in another
investment company may not represent more than 3% of the securities of any one
investment company. Investments in other investment companies will generally
involve duplication of advisory fees and other expenses. The Fund may also
acquire securities of other investment companies beyond such limits pursuant
to a merger, consolidation or reorganization.
OTHER INVESTMENT PRACTICES.
SHORT SALES. If the Fund anticipates that the price of a security will
decline, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Fund may realize a
profit or loss depending upon whether the market price of the security
decreases or increases between the date of the short sale and the date on
which the Fund must replace the borrowed security. The Fund is required by
SEC rules to collateralize short positions by placing assets in a segregated
account and the Fund will not sell securities if, immediately after and as a
result of the sale, the value of all securities sold short by the Fund exceeds
10% of its total assets. The value of any one issuer in which the Fund is
short may not exceed the lesser of 2% of the Fund's net assets or 2% of the
securities of any class of the issuers' securities. The Fund's policy
regarding short sales is fundamental.
BORROWING. As a matter of fundamental policy, the Fund may borrow up to one
third of its total assets, taken at market value as a temporary measure for
extraordinary or emergency purposes to meet redemptions or to settle
securities transactions. Any borrowing will be done from a bank with the
required asset coverage of at least 300%. In the event that such asset
coverage shall at any time fall below 300%, the Fund shall, within three days
thereafter (not including Sunday or holidays) or such longer period as the SEC
may prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. The Fund will not pledge more than 10% of its net assets, or issue
senior securities as defined in the Investment Company Act, except for notes
to banks.
LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio, with a value not exceeding one-third of its
total assets, to banks, brokers and other financial institutions and receive
collateral in cash, a letter of credit issued by a bank or securities issued
or guaranteed by the U.S. Government which will be maintained at all times in
an amount equal to at least 100% of the current market value of the loaned
securities. The lending of securities is a common practice in the securities
industry. The Fund engages in security loan arrangements with the primary
objective of increasing the Fund's income either through investing the cash
collateral in money market mutual funds, short-term interest bearing
obligations or by receiving a loan premium from the borrower. Under the
securities loan agreement, the Fund continues to be entitled to all dividends
or interest on any loaned securities. As with any extension of credit, there
are risks of delay in recovery and loss of rights in the collateral should the
borrower of the security fail financially. The Fund's policy regarding
lending of portfolio securities is fundamental.
During the period of such a loan, the Fund receives the income on both the
loaned securities and the collateral and thereby increases its yield. In the
event that the borrower defaults on its obligation to return borrowed
securities because of insolvency or otherwise, the Fund could experience
delays and costs in gaining access to the collateral and could suffer a loss
to the extent the value of the collateral falls below the market value of the
borrowed securities.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest up to 15% of its net
assets in securities which may be considered illiquid, by virtue of the
absence of a readily available market, legal or contractual restrictions on
resale, longer maturities, or other factors limiting the market ability of the
security. Generally, an illiquid security is any security that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the security. This
policy does not limit the acquisition of (i) restricted securities eligible
for resale to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933 or (ii) commercial paper issued pursuant to Section
4(2) of the Securities Act of 1933, that are determined to be liquid in
accordance with guidelines established by the Board of Trustees of the Trust.
While maintaining oversight, the Board of Trustees has delegated the day-to-
day function of determining liquidity to the Adviser.
RISKS AND SPECIAL CONSIDERATIONS
SMALL CAPITALIZATION SECURITIES. Investments in common stocks in general are
subject to market, economic and business risks that will cause their price to
fluctuate over time. Therefore, an investment in the Fund may be more
suitable for long-term investors who can bear the risk of these fluctuations.
Additionally, securities of companies with smaller revenues and
capitalizations may offer greater opportunity for capital appreciation than
larger companies, but investment in such companies present greater risks than
securities of larger, more established companies. Indeed, historically, small
capitalization stocks have been more volatile in price than larger
capitalization stocks. Among the reasons for the greater price volatility of
these securities are the lower degree of liquidity in the markets for such
stocks, and the potentially greater sensitivity of such small companies to
changes in or failure of management, and in many other changes in competitive,
business, industry and economic conditions, including risks associated with
limited product lines, markets, management depth, or financial resources.
Besides exhibiting greater volatility, micro and small company stocks may, to
a degree, fluctuate independently of larger company stocks. Micro and small
company stocks may decline in price as large company stocks rise, or rise in
price as large company stocks decline. Investors should therefore expect that
the value of the Fund's shares will be more volatile than the shares of a fund
that invests in larger capitalization stocks. Additionally, while the markets
in securities of such companies have grown rapidly in recent years, such
securities may trade less frequently and in smaller volume than more widely
held securities. The values of these securities may fluctuate more sharply
than those of other securities, and a Fund may experience some difficulty in
establishing or closing out positions in these securities at prevailing market
prices. There may be less publicly available information about the issuers of
these securities or less market interest in such securities than in the case
of larger companies, and it may take a longer period of time for the prices of
such securities to reflect the full value of their issuers' underlying
earnings potential or assets. The Fund should not be considered suitable for
investors who are unable or unwilling to assume the risks of loss inherent in
such a program, nor should investment in the Fund be considered a balanced or
complete investment program.
FOREIGN INVESTMENT. Investments in foreign securities may involve risks not
ordinarily associated with investments in domestic securities. These risks
may include legal, political or economic developments such as fluctuations in
currency rates, imposition of withholding taxes or exchange controls or other
governmental restrictions or political or policy changes. In addition, with
respect to certain countries, there is the possibility of expropriation of
assets, confiscatory taxation, or political or social unrest that could
adversely affect the value of foreign securities. There may be less publicly
available information about foreign companies than about U.S. companies, and
foreign companies may not be subject to accounting, auditing and financial
reporting standards that are as uniform as those applicable to U.S. companies.
The Fund will attempt to limit risks associated with foreign investing by
investing primarily in securities of stable, developed countries such as
Canada.
INVESTMENT ADVISER. The Adviser has not previously served as the investment
adviser for a mutual fund, and therefore, historical information about the
performance of a mutual fund managed by the Adviser is not available.
However, the performance record of the Adviser's portfolio management team for
its separately managed accounts over the past fourteen years is provided in
the section of the Prospectus called "Adviser's Investment Performance."
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Board of Trustees of the Trust consists of five individuals, two of whom
are not "interested persons" of the Trust as defined in the Investment Company
Act. The members of the Trust's Board of Trustees are fiduciaries for the
Fund's shareholders and, in this regard, are governed by the laws of the State
of Delaware. The Trustees establish policy for the operation of the Fund, and
appoint the officers who conduct the daily business of the Fund. The
following is a list of the Trustees and a brief statement of their principal
occupations:
FORD B. DRAPER, JR.* Chairman, President and Treasurer
of the Trust; Founder, President,
Director and Chief Investment
Officer of Kalmar Investments
since 1982 and Kalmar Investment
Advisers since inception.
- -------------------
* "Interested person" of the Fund, as that term is defined in the
Investment Company Act.
WENDELL FENTON* President of the law firm of
Richards, Layton and Finger
(joined 1971).
JOHN J. QUINDLEN Trustee of The Rodney Square Fund
and Kiewit Mutual Fund; Senior
Vice President and Chief
Financial Officer of E.I. Dupont
de Nemours & Co. from 1954
through 1993 (retired).
DAVID M. REESE, JR.* Portfolio manager/research
analyst for Kalmar Investments
Inc. from 1982 through March,
1996.
DAVID D. WAKEFIELD Executive Secretary, Longwood
Foundation and Welfare
Foundation, 1992 to present;
Executive Secretary, J.P. Morgan
Delaware from 1989 to 1992.
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* "Interested person" of the Fund as that term is defined in the Investment
Company Act.
INVESTMENT ADVISER
Kalmar Investment Advisers, located at 3701 Kennett Pike, Greenville, Delaware
19807 (previously defined as the "Adviser") serves as the investment adviser
for the Fund pursuant to an investment advisory agreement dated [____________,
1996] (the "Advisory Agreement"). The Advisory Agreement initially will be in
effect for two years, and may be renewed each year thereafter, provided its
continuance is approved annually by the Board of Trustees, including a
majority of the Trustees who are not "interested persons" of the Fund as
defined in the Investment Company Act.
The Adviser manages the investments of the Fund in accordance with the Fund's
stated investment objective, philosophy and policies and subject to its
limitations or restrictions. Subject to the supervision of the Board of
Trustees, the Adviser makes the Fund's day-to-day investment decisions,
selects brokers and dealers to execute portfolio transactions and generally
manages the Fund's investments. In selecting brokers, the Adviser seeks to
obtain the best net results for the Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), size
of order, difficulty of execution and operational facilities of the firm
involved and the firm's risk in positioning a block of securities. While the
Adviser generally seeks favorable and competitive commission rates, the Fund
does not necessarily pay the lowest commission or spread available. In
addition, consistent with rules established by the National Association of
Securities Dealers, Inc., the Fund may consider sales of shares of the Fund as
a factor in the selection of brokers or dealers to execute portfolio
transactions for the Fund.
Because of its longer-term investment philosophy, the Fund does not intend to
engage in frequent trading tactics which could result in high turnover, less
favorable tax consequences (i.e., a high proportion of short-term capital
gains relative to long term capital gains) or increased trading and brokerage
expenses paid by the Fund. The Fund anticipates that its annual portfolio
turnover rate should not exceed 50% under normal conditions, although it is
impossible to predict portfolio turnover rates. The Adviser will buy or sell
portfolio securities without regard to holding period if, in its judgment,
such transactions are advisable in light of opportunities in particular
stocks, or a change in circumstances for any particular company or companies,
or in general market, economic or financial conditions.
The Adviser, which is registered as an investment adviser under the Investment
Advisers Act of 1940, is presently wholly-owned by its founder, Ford B.
Draper, Jr. The Adviser utilizes a team approach in managing the Fund's
portfolio. Mr. Draper, as chief investment officer, leads and supervises the
portfolio management team. Other key members of the Adviser's portfolio
management team include Dana F. Walker, C.F.A., a portfolio manager/research
analyst who joined Kalmar in 1986 after serving as an analyst for Delfi
Management, Inc., adviser to the Sigma Funds, and Gregory A. Hartley, C.F.A.,
a portfolio manager/research analyst who joined Kalmar in 1993 after serving
as senior analyst and investment committee member for Ashford Capital
Management, Inc., an investment management and consulting firm.
The Adviser is the "sister" company to Kalmar Investments Inc. ("Kalmar"), a
registered investment adviser founded by Mr. Draper in 1982, which has been
providing investment advice to and managing the assets of private accounts
since its inception according to the same investment objective and "Growth-
with-Value" philosophy used by the Fund. Mr. Draper organized the Adviser as
a Delaware business trust on November 6, 1996 for the sole purpose of
functioning as the adviser to each of the series of the Trust. The ownership
and management of the Adviser is identical to that of Kalmar, and the same
portfolio management team approach used in managing the assets of the Fund is
used to manage the assets of Kalmar's private accounts. Kalmar presently
manages approximately $600 million primarily in micro capitalization and small
capitalization stocks in separately managed accounts for clients such as high
net worth individuals and family trusts, corporations, pensions and profit-
sharing plans and institutions such as endowments, foundations, hospitals and
charitable institutions. Kalmar intends to invest assets of its own profit-
sharing plan in shares of the Fund, as do members of its investment team and
other employees.
For its services, the Adviser is paid a monthly fee at the annual rate of
1.00% of the Fund's average daily net assets. This fee is comparable to the
fees charged by most small company equity mutual fund managers, however, it is
higher than that paid by many other mutual funds for investment advisory
services. During the Fund's first fiscal year, the Adviser has voluntarily
agreed to limit its fees or assume certain expenses of the Fund to keep the
total annual operating costs of the Fund within specified limits, see "Fund
Expenses."
DISTRIBUTOR
Rodney Square Distributors, Inc. ("RSD"), a subsidiary of Wilmington Trust
Company located at 1105 North Market Street, Wilmington, DE 19890, has been
engaged to distribute the Fund's shares pursuant to a distribution agreement
dated [_____________, 1996] (the "Distribution Agreement"). Under the
Distribution Agreement, RSD directly or through its affiliates, provides
distribution and underwriting services, investor support and certain
administrative services.
ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
Rodney Square Management Corporation ("Rodney Square"), a subsidiary of
Wilmington Trust Company located at Rodney Square North, 1100 N. Market
Street, Wilmington, DE 19890 serves as the Fund's Administrator, Transfer
Agent and Dividend Paying Agent and also provides accounting services to the
Fund pursuant to separate Administration, Transfer Agency and Accounting
Services Agreements with the Trust, each dated [_____________, 1996.]
As Administrator, Rodney Square supplies office facilities, non-investment
related statistical and research data, stationery and office supplies,
executive and administrative services, internal auditing and regulatory
compliance services. Rodney Square also assists in the preparation of reports
to shareholders, prepares proxy statements, updates prospectuses and makes
filings with the U.S. Securities and Exchange Commission (the "SEC") and state
securities authorities. Rodney Square performs certain budgeting and
financial reporting and compliance monitoring activities. For the services
provided as Administrator, Rodney Square receives annual fees equal to 0.15%
of the average annual net assets of the Trust for the first $50 million in
assets and 0.10% for assets in excess of $50 million, subject to certain
minimum amounts. Rodney Square has also agreed to waive specified portions of
its fees during the Fund's first year of operations, provided the Adviser
would have otherwise been required to waive its fees under the voluntary
waiver described under "Fund Expenses." Rodney Square also serves as the
Transfer Agent and Dividend Paying Agent of the Fund as well as the Accounting
Agent to the Fund. As Transfer Agent and Dividend Paying Agent, Rodney Square
is responsible for administering the issuance, transfer and redemption or
repurchase of shares, as well as the payment of distributions and dividends.
As Accounting Agent, Rodney Square determines the Fund's net asset value per
share and provides accounting services to the Fund.
The custodian for the Fund is Wilmington Trust Company ("WTC"), Rodney Square
North, 1100 N. Market Street, Wilmington, DE 19890-0001.
EXPENSES
Except as indicated above, the Fund is responsible for the payment of the pro
rata portions of the Trust's expenses attributable to the Fund, as
distinguished from any other series of the Trust, other than those borne by
the Adviser, and such expenses may include, but are not limited to: (a)
management fees; (b) the charges and expenses of the Fund's legal counsel and
independent auditors; (c) brokers' commissions, mark-ups and mark-downs and
any issue or transfer taxes chargeable to the Fund in connection with its
securities transactions; (d) all taxes and corporate fees payable by the Fund
to governmental agencies; (e) the fees of any trade association of which the
Trust or Fund is a member; (f) the cost of certificates, if any, representing
shares of the Fund; (g) amortization and reimbursements of the organization
expenses of the Trust or Fund and the fees and expenses involved in
registering and maintaining registration of the Trust and its shares with the
SEC, and the preparation and printing of the Trust's registration statements
and prospectuses for such purposes; (h) allocable communications expenses with
respect to investor services and all expenses of shareholders and trustees'
meetings and of preparing, printing and mailing prospectuses and reports to
shareholders; (i) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business; and (j) compensation for employees of the Trust.
CALCULATION OF NET ASSET VALUE
Rodney Square determines the net asset value per share ("net asset value") of
the Fund as of the close of regular trading on each day that the New York
Stock Exchange is open for unrestricted trading from Monday through Friday
(generally 4:00 p.m.) and on which there is a purchase or redemption of the
Fund's shares. The net asset value is determined by dividing the value of the
Fund's securities, plus any cash and other assets, less all liabilities, by
the number of shares outstanding. Expenses and fees of the Fund, including
management, distribution and shareholder servicing fees, are accrued daily and
taken into account for the purpose of determining the net asset value.
Fund securities listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last
quoted sales price on the security's principal exchange on that day. Listed
securities not traded on an exchange that day will be valued at the mean
between the last bid and asked price on that day, if any. Unlisted securities
which are quoted on the National Association of Securities Dealers National
Market System for which there are sales of such securities on such day, shall
be valued at the last sale price reported on such system the day the security
is valued. If there are no such sales on such day, the value shall be the
mean between the closing asked price and closing bid price. Securities for
which market quotations are not readily available and all other assets will be
valued at their respective fair value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value,
the Fund or its service providers may employ an independent pricing service.
Money market securities with less than sixty days remaining to maturity when
acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount from cost versus par value
at maturity. If the Fund acquires a money market security with more than
sixty days remaining to its maturity, it will be valued at current market
value until the 60th day prior to maturity, and will then be valued on an
amortized cost basis based upon the value on such date unless the Trustees
determine during such 60-day period that this amortized cost value does not
represent fair market value.
Each share of the Fund will bear, pro-rata, all of the common expenses of the
Fund. The net asset values of all outstanding shares of the Fund will be
computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Fund represented by the value of such
shares. All income earned and expenses incurred by the Fund will be borne on
a pro-rata basis by each outstanding share, based on each share's percentage
in the Fund represented by the value of such shares.
HOW TO PURCHASE SHARES
Shares of the Fund are offered on a no-load basis, without the imposition of
any sales or distribution fees through investment management and financial
consultants, brokers or dealers, or directly through the Fund's distributor.
Shares of the Kalmar "Growth-with-Value" Micro Cap Fund series of the Trust
(the "Micro Cap Fund") may be purchased in a similar manner, and such shares
are offered through a separate prospectus. The Fund's shares are offered at
the net asset value per share next determined after the receipt and acceptance
of a purchase order and payment in proper form by the Fund. Information on
how to invest in the Fund is presented below, and any requests for
applications, additional information or questions may be directed to Rodney
Square at (800) 282-2319.
MINIMUM INVESTMENT. The minimum initial investment for the Fund is $10,000,
with no subsequent minimum investments. There is no minimum investment
requirement for qualified retirement accounts.
PURCHASE PRICE. Purchase orders for shares of the Fund which are received in
proper form and accepted by the Fund prior to the close of regular trading
hours on the New York Stock Exchange (currently 4:00 p.m. Eastern time) on any
day that the Fund calculates its net asset value per share, are priced
according to the respective net asset value determined on that day. Purchase
orders received in proper form and accepted by the Fund after the close of the
Exchange on a particular day are priced as of the time the respective net
asset value per share is next determined.
IN-KIND PURCHASES. At the discretion of the Fund, investors may be permitted
to purchase Fund shares by transferring securities to the Fund that: (i) meet
the Fund's investment objective and policies; (ii) are acquired by the Fund
for investment and not for retail purposes; (iii) are liquid securities which
are not restricted as to transfer either by law or liquidity of market; (iv)
have a value which is readily ascertainable (and not established only by
evaluation procedures) as evidenced by a listing on the American Stock
Exchange, the NYSE, or NASDAQ; and (v) at the discretion of the Fund, the
value of any such security (except U.S. Government Securities) being exchanged
together with other securities of the same issuer owned by the Fund will not
exceed 5% of the net assets of the Fund immediately after the transactions.
Securities transferred to the Fund will be valued in accordance with the same
procedures used to determine the Fund's net asset value. All dividends,
interests, subscription, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. Investors who are permitted to
transfer such securities will be required to recognize all gains or losses on
such transfers, and pay taxes thereon, if applicable, measured by the
difference between the fair market value of the securities and the investors'
bases therein.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL. Shareholders may purchase shares by sending a check drawn
on a U.S. bank payable to the Kalmar "Growth-with-Value" Small Cap Fund, along
with a completed shareholder application, to Kalmar Pooled Investment Trust,
c/o Rodney Square Management Corporation, P.O. Box 8987, Wilmington, DE 19899-
9752. A shareholder application sent by overnight mail should be sent to
Kalmar Pooled Investment Trust, c/o Rodney Square Management Corporation, 1105
N. Market St., 3rd Floor, Wilmington, DE 19890. If a subsequent investment is
being made, investors should use the purchase stub and return envelope from
the most recent account statement and the check should also indicate the
investor's Fund account number.
PURCHASES BY WIRE. To purchase shares by wiring federal funds, Rodney Square
must first be notified by calling (800) 282-2319 to request an account number
and furnish the Fund with a tax identification number. Following notification
to Rodney Square, federal funds and registration instructions should be wired
through the Federal Reserve System to:
RODNEY SQUARE MANAGEMENT CORPORATION
C/O WILMINGTON TRUST COMPANY
WILMINGTON, DE
DDA #2731-2705
ABA #0311 000 92
ATTENTION: KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND
FURTHER CREDIT [SHAREHOLDER NAME AND ACCOUNT NUMBER]
For initial purchases by wire, a completed application with signature(s) of
investor(s) must promptly be filed with Rodney Square at one of the addresses
stated above under "Purchases By Mail." Investors should be aware that some
banks may impose a wire service fee.
AUTOMATIC INVESTMENT PLAN. Shareholders may purchase Fund shares through an
Automatic Investment Plan. The Plan provides a convenient method by which
investors may have monies deducted directly from their checking, savings or
bank money market accounts for investment in the Fund. Under the Plan, Rodney
Square, at regular intervals, will automatically debit a shareholder's bank
checking account in an amount of $1,000 or more (subsequent to the $10,000
minimum initial investment), as specified by the shareholder. A shareholder
may elect to invest the specified amount monthly, bimonthly, quarterly, semi-
annually or annually. The purchase of Fund shares will be effected at the net
asset value at the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m. Eastern time) on or about the 20th day of the month. To
obtain an Application for the Automatic Investment Plan, check the appropriate
box of the Application accompanying this Prospectus or call Rodney Square at
(800) 282-2319.
EXCHANGE PRIVILEGE. Shareholders of the Fund may exchange all or a portion of
their shares of the Fund for shares of the Micro Cap Fund, and shareholders of
the Micro Cap Fund may similarly exchange into the Fund, provided the Fund is
authorized to sell its shares in the state where the purchaser is located. A
purchase or redemption of shares through an exchange will be effected at the
net asset value per share next determined after receipt and acceptance by the
Fund of the request.
To obtain a Prospectus of the Micro Cap Fund, or to obtain more information
about exchanges or place exchange orders contact Rodney Square at (800) 282-
2319. The Fund reserves the right to terminate or modify the exchange offer
described here and will give shareholders sixty days notice of such
termination or modification as required by the SEC.
RETIREMENT PLANS
Shares of the Fund are available for use in all types of tax-deferred
retirement plans such as IRA's, employer-sponsored defined contribution plans
(including 401(k) plans) and tax-sheltered custodial accounts described in
Section 403(b)(7) of the Internal Revenue Code. Qualified investors benefit
from the tax-free compounding of income dividends and capital gains
distributions. Application forms and brochures describing investments in the
Fund for retirement plans can be obtained from Rodney Square by calling (800)
282-2319. The following is a description of the types of retirement plans for
which the Fund's shares may be used for investment:
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS"). Individuals, who are not active
participants (and, when a joint return is filed, who do not have a spouse who
is an active participant) in an employer maintained retirement plan are
eligible to contribute on a deductible basis to an IRA account. The IRA
deduction is also available for individual taxpayers and married couples with
adjusted gross incomes not in excess of certain specified limits. All
individuals who have earned income may make nondeductible IRA contributions to
the extent that they are not eligible for a deductible contribution. Income
earned by an IRA account will continue to be tax-deferred. A special IRA
program is available for employers under which the employers may establish IRA
accounts for their employees in lieu of establishing tax qualified retirement
plans. Known as SEP-IRA's (Simplified Employee Pension-IRA), they free the
employer of many of the recordkeeping requirements of establishing and
maintaining a tax qualified retirement plan trust.
If you are entitled to receive a distribution from a qualified retirement
plan, you may rollover all or part of that distribution into the Fund's IRA.
Your rollover contribution is not subject to the limits on annual IRA
contributions. You can continue to defer Federal income taxes on your
contribution and on any income that is earned on that contribution.
WTC makes available its services as an IRA Custodian for each shareholder
account that is established as an IRA. For these services, WTC receives an
annual fee of $10.00 per account, which fee is paid directly to WTC by the IRA
shareholder. If the fee is not paid by the date due, shares of the Fund owned
by the shareholder in the IRA account will be redeemed automatically for
purposes of making the payment.
401(K) PLANS AND OTHER DEFINED CONTRIBUTION PLANS. The Fund's shares may be
used for investment in defined contribution plans by both self-employed
individuals (sole proprietorships and partnerships) and corporations who wish
to use shares of the Fund as a funding medium for a retirement plan qualified
under the Internal Revenue Code. Such plans typically allow investors to make
annual deductible contributions, which may be matched by their employers up to
certain percentages based on the investor's pre-contribution earned income.
403(B)(7) RETIREMENT PLANS. The Fund's shares are also available for use by
schools, hospitals, and certain other tax-exempt organizations or associations
who wish to use shares of the Fund as a funding medium for a retirement plan
for their employees. Contributions are made to the 403(b)(7) Plan as a
reduction to the employee's regular compensation. Such contributions, to the
extent they do not exceed applicable limitations (including a generally
applicable limitation of $9,500 per year), are excludable from the gross
income of the employee for Federal Income tax purposes.
HOW TO REDEEM SHARES
Shareholders may redeem all or a portion of their shares without charge on any
day that the Fund calculates its net asset value. See "Calculation of Net
Asset Value." Except as noted below, redemption requests received and
accepted by Rodney Square prior to the close of regular trading hours on the
Exchange on any business day that the Fund calculates its per share net asset
value are effective at the net asset value per share determined that day.
Redemption requests received and accepted by Rodney Square after the close of
the Exchange are effective as of the time the net asset value per share is
next determined. Redemption proceeds are normally sent on the next business
day following receipt and acceptance by the Fund of the redemption request
but, in any event, redemption proceeds are sent within seven business days of
receipt and acceptance of the request, or earlier if required under applicable
law. Redemption requests should be accompanied by the Fund's name and the
shareholder's account number. Corporations, other organizations, trusts,
fiduciaries and other institutional investors may be required to furnish
certain additional documentation to authorize redemptions.
Delivery of the proceeds of a redemption of shares purchased and paid for by
check shortly before the receipt of the request may be delayed until the Fund
determines that the Custodian has completed collection of the purchase check
which may take up to 10 days. Also, redemption requests for accounts for
which purchases were made by wire may be delayed until the Fund receives a
completed application for the account. The Board of Trustees may suspend the
right of redemption or postpone the date of payment during any period when (a)
trading on the New York Stock Exchange is restricted as determined by the SEC
or such Exchange is closed for other than weekends and holidays, (b) the SEC
has by order permitted such suspension, or (c) an emergency, as defined by
rules of the SEC, exists during which time the sale of Fund shares or
valuation of securities held by the Fund are not reasonably practicable.
IN-KIND REDEMPTION. The Fund will satisfy redemption requests in cash to the
fullest extent feasible, so long as such payments would not, in the opinion of
the Adviser or the Board of Trustees, result in the necessity of the Fund
selling assets under disadvantageous conditions and to the detriment of the
remaining shareholders of the Fund. Pursuant to the Fund's Agreement and
Declaration of Trust, payment for shares redeemed may be made either in cash
or in-kind, or partly in cash and partly in-kind. Any portfolio securities
paid or distributed in-kind would be valued as described under "Calculation of
Net Asset Value." In the event that an in-kind distribution is made, a
shareholder may incur additional expenses, such as the payment of brokerage
commissions, on the sale or other disposition of the securities received from
the Fund. In-kind payments need not constitute a cross-section of the Fund's
portfolio. Where a shareholder has requested redemption of all or a part of
the shareholder's investment, and where the Fund completes such redemption in-
kind, the Fund will not recognize gain or loss for federal tax purposes, on
the securities used to complete the redemption but the shareholder will
recognize gain or loss equal to the difference between the fair market value
of the securities received and the shareholder's basis in the Fund shares
redeemed.
Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL. A written redemption request must (i) identify the Fund
and the shareholder's account number, (ii) state the number of shares to be
redeemed, and (iii) be signed by each registered owner exactly as the shares
are registered. A redemption request for an amount in excess of $25,000, or
for any amount if for payment other than to the shareholder of record, or if
the proceeds are to be sent elsewhere than the address of record, must be
accompanied by a guarantee of their signature by an "eligible guarantor
institution" as defined in Rule 17Ad-15 under the Securities Exchange Act of
1934. Eligible guarantor institutions include banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing
signatures must be a member of a clearing corporation or maintain net capital
of at least $100,000. Credit unions must be authorized to issue signature
guarantees. Signature guarantees will be accepted from any eligible guarantor
institution which participates in a signature guarantee program. A signature
and a signature guarantee are required for each person in whose name the
account is registered.
Written redemption instructions should be submitted to Kalmar Pooled
Investment Trust, c/o Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19899-9752. A redemption order sent by overnight mail should
be sent to Kalmar Pooled Investment Trust, c/o Rodney Square Management
Corporation, P.O. Box 8987, 1105 N. Market Street, 3rd Floor, Wilmington, DE
19890.
REDEMPTION BY TELEPHONE. Shareholders who have so indicated on the
Application, or have subsequently arranged in writing to do so, may redeem
shares by instructing the Transfer Agent by telephone.
Neither the Fund nor any of its service contractors will be liable for any
loss or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions
are genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, the number of
shares to be redeemed and certain other information necessary to identify the
shareholder.
During times of drastic economic or market changes, the telephone redemption
privilege may be difficult to implement. In the event that shareholders are
unable to reach Rodney Square by telephone, you may make a redemption request
by mail. The Fund or Rodney Square reserves the right to refuse a wire or
telephone redemption if it is believed advisable to do so. Procedures for
redeeming Fund shares by wire or telephone may be modified or terminated at
any time by the Fund.
REDEMPTIONS BY WIRE. Redemption proceeds may be wired to a predesignated bank
account at any commercial bank in the United States if the amount is $1,000 or
more. The receiving bank may charge a fee for this service. Amounts redeemed
by wire are normally wired on the next business day after receipt and
acceptance of redemption instructions (if received before the close of regular
trading on the Exchange), but in no event later than five days following such
receipt and acceptance.
INVOLUNTARY REDEMPTION. The Fund reserves the right to redeem an investor's
account where the account is inactive and is worth less than the minimum
initial investment when the account was established, currently $10,000. [In
calculating the minimum amount necessary to avoid involuntary redemption, the
Fund will include amounts held in both the Fund and the Micro Cap Fund
together.] The Fund will advise the shareholder of its intention to redeem
the account in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares
in any amount necessary to bring the account back to the appropriate minimum
amount, and the Fund will not redeem any account that is worth less than the
appropriate minimum amount solely on account of a market decline.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own shares with a value of
$10,000 or more may participate in the Systematic Withdrawal Plan. Under the
Plan, shareholders may automatically redeem a portion of their Fund shares
monthly, bimonthly, quarterly, semiannually or annually. The minimum
withdrawal available is $100. The redemption of Fund shares will be effected
at their net asset value at the close of the NYSE on or about the 25th day of
the month at the frequency selected by the shareholder. If you expect to
purchase additional Fund shares, it may not be to your advantage to
participate in the Systematic Withdrawal Plan because contemporary purchases
and redemption may result in adverse tax consequences. For further details
about this service, see the Application or call the Transfer Agent at (800)
282-2319.
ADDITIONAL REDEMPTION INFORMATION. Redemption proceeds may be mailed or
electronically transferred to your bank or, for amounts of $5,000 or less,
mailed to your Fund account address of record if the address has been
established for a minimum of 60 days. In order to authorize the Fund to mail
redemption proceeds to your Fund account address of record, complete the
appropriate section of the shareholder application or include your Fund
account address of record when you submit written instructions. You may
change the account which you have designated to receive amounts redeemed at
any time. Any request to change the account designated to receive redemption
proceeds should be accompanied by a guarantee of the shareholder's signature
by an eligible guarantor institution. Further documentation will be required
to change the designated account when shares are held by a corporation, other
organization, trust, fiduciary or other institutional investor. For more
information on redemption services, contact Rodney Square.
PERFORMANCE INFORMATION
Advertisements, sales literature and communications to shareholders may
contain measures of the Fund's performance, including various expressions of
total return, current yield or current distribution rate. They may also cite
statistics relating to volatility and risk and compare such measures to those
of other funds. The Fund's total return may be calculated on an annualized
and aggregate basis for various periods as will be stated in the
advertisement. Average annual return reflects the average percentage change
per year in value of an investment in the Fund. Aggregate total return
reflects the total percentage change over the stated period.
The Fund may compare its investment performance to other mutual funds, or
groups of mutual funds, with similar or dissimilar investment objectives and
policies that are tracked or ranked by independent services such as Lipper
Analytical Services, Inc. or Morningstar, Inc. or other financial or industry
publications that monitor the performance of mutual funds, investment managers
and the like. The Fund may also compare its performance to unmanaged stock
indices such as the Russell 2000 Small Capitalization Index or the S&P 500 or
quote performance information or information relating to fund management,
investment philosophy or investment techniques, that is published in financial
and business publications including Money Magazine, Forbes, Barron's or The
Wall Street Journal, etc. Further information about the sources for
comparative performance and other information that may be utilized by the
Fund, and information about the Fund's calculation of performance figures, is
contained in the Fund's Statement of Additional Information.
All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based
on many factors, including market conditions, the composition of the
investments in the Fund, and the Fund's operating expenses. Investment
performance also often reflects the risk associated with the Fund's investment
objective and policies. In addition, averages are generally unmanaged, and
items included in the calculations of such averages may not be identical to
the formula used by the Fund to calculate its performance. These factors
should be considered when comparing the Fund to other mutual funds and other
investment vehicles.
GENERAL INFORMATION
SHARES OF BENEFICIAL INTEREST AND VOTING RIGHTS. The Trust was organized as a
Delaware business trust on November 6, 1996. The Trust's Agreement and
Declaration of Trust permits the trustees to issue an unlimited number of
shares of beneficial interest in various series or classes (subseries) with a
par value of $0.01 per share. Each series, in effect, represents a separate
mutual fund with its own investment objective and policies. The Board of
Trustees has the power to designate additional series or classes of shares of
beneficial interest and to classify or reclassify any unissued shares with
respect to such series or classes.
The Trust's Agreement and Declaration of Trust gives shareholders the right to
vote: (i) for the election or removal of trustees; (ii) with respect to
additional matters relating to the Trust as required by the Investment Company
Act; and (iii) on such other matters as the trustees consider necessary or
desirable. The shares of the Fund each have one vote and, when issued, will
be fully paid and non-assessable and within each series or class, have no
preference as to conversion, exchange, dividends, retirement or other
features. The shares of the Trust which the trustees may, from time to time,
establish, shall have no preemptive rights. The shares of the Trust have non-
cumulative voting rights, which means that the holders of more than 50% of the
shares voting for the election of trustees can elect 100% of the trustees if
they choose to do so. A shareholder is entitled to one vote for each full
share held (and a fractional vote for each fractional share held), then
standing in their name on the books of the Trust. On any matter submitted to
a vote of shareholders, all shares of the Trust then issued and outstanding
and entitled to vote on a matter shall vote without differentiation between
separate series on a one-vote-per share basis. If a matter to be voted on
does not affect the interests of all series of the Trust, then only the
shareholders of the affected series shall be entitled to vote on the matter.
SHAREHOLDER MEETINGS. Pursuant to the Trust's Agreement and Declaration of
Trust, the Trust does not intend to hold shareholder meetings except when
required to elect trustees, or with respect to additional matters relating to
the Trust as required under the Investment Company Act.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Fund intends to declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from its investments. The Fund will distribute net realized capital gains, if
any, once with respect to each year. Expenses of the Fund, including the
advisory fee, are accrued each day. Reinvestments of dividends and
distributions in additional shares of the Fund will be made at the net asset
value determined on the ex date of the dividend or distribution unless the
shareholder has elected in writing to receive dividends or distributions in
cash. An election may be changed by notifying Rodney Square in writing thirty
days prior to record date. Shareholders may call Rodney Square for more
information. All shares of the Fund will share proportionately in the
investment income and expenses of the Fund.
The Fund intends to qualify annually to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). As such, the Fund will not be subject to federal income tax,
or to any excise tax, to the extent its earnings are distributed as provided
in the Code and by satisfying certain other requirements relating to the
sources of its income and diversification of its assets.
Dividends from net investment income or net short-term capital gains will be
taxable to shareholders as ordinary income, whether received in cash or in
additional shares. For corporate investors in the Fund, dividends from net
investment income will generally qualify in part for the 70% corporate
dividends-received deduction. However, the portion of the dividends so
qualified depends on the aggregate qualifying dividend income received by the
Fund from domestic (U.S.) sources.
Distributions paid by the Fund from long-term capital gains, whether received
in cash or in additional shares, are taxable to investors as long-term capital
gains, regardless of the length of time an investor has owned shares in the
Fund. The Fund does not seek to realize any particular amount of capital
gains during a year; rather, realized gains are a byproduct of management
activities. Consequently, capital gains distributions may be expected to vary
considerably from year to year. Also, if purchases of shares in a Fund are
made shortly before the record date for a capital gains distribution or a
dividend, a portion of the investment will be returned as a taxable
distribution.
Dividends which are declared in October, November or December to shareholders
of record in such a month but which, for operational reasons, may not be paid
to the shareholder until the following January, will be treated for tax
purposes as if paid by the Fund and received by the shareholder on December 31
of the calendar year in which they are declared.
A sale or redemption of shares of the Fund is a taxable event and may result
in a capital gain or loss to shareholders subject to tax. Any loss incurred
on sale or exchange of a Fund's shares held for six months or less will be
treated as a long-term capital loss to the extent of any capital gain
dividends received with respect to such shares.
Investors should also be aware that, if the Fund has unrealized gains at the
time they purchase shares in the Fund, part of their purchase price may be
returned to them in the form of a capital gain distribution when and if such
gains are later realized by the Fund. Moreover, on commencement of the Fund,
existing clients of Adviser will have the opportunity to transfer their assets
to the Fund on a tax-free basis; any gain inherent in such assets at the time
of contribution will carryover to the Fund.
In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. It is recommended that shareholders consult their tax
advisers regarding specific questions as to federal, state, local or foreign
taxes. Each year, the Fund will mail you information on the tax status of the
Fund's dividends and distributions made to you.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your account registration form your proper
taxpayer identification number and by certifying that you are not subject to
backup withholding.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the
Fund. Additional information on tax matters relating to the Fund and to its
shareholders is included in the Statement of Additional Information.
SHAREHOLDER ACCOUNTS
Rodney Square, as Transfer Agent, maintains for each shareholder an account
expressed in terms of full and fractional shares of the Fund rounded to the
nearest 1/1000th of a share. In the interest of economy and convenience, the
Fund does not issue share certificates. Each shareholder is sent a statement
at least quarterly showing all purchases in or redemption from the
shareholder's account. The statement also sets forth the balance of shares
held in the shareholder's account.
<PAGE>
KALMAR POOLED INVESTMENT TRUST
KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND
- ------------------------------------------------------------------------------
SHAREHOLDER APPLICATION
- ------------------------------------------------------------------------------
Send Completed Application to:
KALMAR POOLED INVESTMENT TRUST
C/O RODNEY SQUARE MANAGEMENT CORPORATION
P.O. BOX 8987
WILMINGTON, DE 19899-9752
- ------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION - PLEASE PRINT
__ INDIVIDUAL OR JOINT ACCOUNT
- ------------------------------------------------------------------------------
First name Middle initial Last name Social security number (SSN)
- ------------------------------------------------------------------------------
Joint owner(s) (Joint ownership means "joint tenants with rights of
survivorship" unless otherwise specified.)
- ------------------------------------------------------------------------------
__ GIFT/TRANSFER TO A MINOR
- ------------------------------------------------------------------------------
Name of custodian (one only) Serving as Custodian for Minor's name (one only)
- -------------------------------------------------
State (minor's or custodian's state of residence)
- -------------------------------------------------
Uniform Gift/Transfer to Minors Act
- -------------------------------------------------
Minor's social security number
__ TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY
- -------------------------------------------------
If corporation, resolution required from Board of Directors
- -------------------------------------------------
Taxpayer identification number (TIN)
- -------------------------------------------------
Name of each trustee (if any)
- -------------------------------------------------
Date of trust document (must be completed for trust registration)
- ------------------------------------------------------------------------------
2. ADDRESS
- ------------------------------------------------------------------------------
Street Address Daytime Phone (including Area Code)
(P.O. Box acceptable if street address is given)
- ------------------------------------------------------------------------------
City State Zip code Evening Phone (including Area Code)
I am a citizen of: __ U.S. __ __________________________________________
- ------------------------------------------------------------------------------
3. INITIAL INVESTMENT - MINIMUM $10,000
Enclosed is a check payable to the Kalmar "Growth-with-Value" Small Cap Fund
for $_________
__ By Federal Funds wire:
- ------------------------------------------------------------------------------
Name of Bank Wire Amount ($) Wire Date
- ------------------------------------------------------------------------------
4. AUTOMATIC INVESTMENT PLAN
For information regarding the AUTOMATIC INVESTMENT PLAN see "Automatic
Investment Plan" (page 19) of the prospectus.
__ Check if you would like the Automatic Investment Plan application sent to
you.
- ------------------------------------------------------------------------------
5. DISTRIBUTIONS
All dividends and distributions will be automatically reinvested in additional
shares at net asset value unless otherwise indicated by checking the
appropriate box(es) under Optional Shareholder Privileges - Reinvestment
Options (Section 7 B).
- ------------------------------------------------------------------------------
6. SIGNATURE AND TAX CERTIFICATIONS
I have received and read the Prospectus for the Kalmar "Growth-with-Value
Small Cap Fund and agree to its terms; I am of legal age. I understand that
investment in these shares involves investment risks, including possible loss
of principal. If a corporate customer, I certify that appropriate corporate
resolutions authorizing investment in Kalmar "Growth-with-Value Small Cap Fund
have been duly adopted.
I certify under penalties of perjury that the Social Security number or
taxpayer identification number shown above is correct. Unless the box below
is checked, I certify under penalties of perjury that I am not subject to
backup withholding because the Internal Revenue Service (a) has not notified
me that I am as a result of failure to report all interest or dividends, or
(b) has notified me that I am no longer subject to backup withholding. The
certifications in this paragraph are required from all nonexempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemption proceeds under the federal income tax law.
__ Check here if you are subject to backup withholding.
- ------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------
Signature Date
Check one: __ Owner __ Trustee __ Custodian __ Other________
- ------------------------------------------------------------------------------
7. OPTIONAL SHAREHOLDER PRIVILEGES
A. TELEPHONE REDEMPTION AUTHORIZATION
I/We hereby authorize the use of cash transfers to effect redemptions of
shares from my/our account according to telephone instructions from any one of
the authorized signers listed in Section 7 C and to send the proceeds to
(CHECK ONE OR MORE OF THE FOLLOWING):
__ My address of record as indicated in Section 2 (must be $50,000 or less
and address must be established for a minimum of 60 days)
__ My bank as designated below
__ Wire proceeds to my bank via the Federal Funds Wire System (minimum
$1,000) as designated below
__ All of the above
- ------------------------------------------------------------------------------
Bank Name Bank Routing Transit #
- ------------------------------------------------------------------------------
Bank Account # (Checking/Savings) Account Holder
- ------------------------------------------------------------------------------
Bank Address: Street City State Zip
PLEASE ATTACH A VOIDED CHECK OF THE BANK ACCOUNT DESIGNATED ABOVE.
- ------------------------------------------------------------------
Telephone redemption by wire can be used only with financial institutions that
are participants in the Federal Reserve Bank Wire System. If the financial
institution you designate is not a Federal Reserve participant, telephone
redemption proceeds will be mailed to the named financial institution. In
either case, it may take a day or two, upon receipt for your financial
institution to credit your bank account with the proceeds, depending on its
internal crediting procedures.
- ------------------------------------------------------------------------------
B. OTHER REINVESTMENT OPTIONS - CHECK ONLY IF APPLICABLE
__ Do NOT reinvest my dividends __ Do NOT reinvest my capital gains
- ------------------------------------------------------------------------------
C. AUTHORIZATIONS
By electing the telephone redemption option, I appoint Rodney Square
Management Corporation ("RSMC"), my agent to redeem shares of the Kalmar
"Growth-with-Value" Small Cap Fund when so instructed by telephone. This power
will continue if I am disabled or incapacitated. I understand that a request
for telephone redemption may be made by anyone, but the proceeds will be sent
only to the account address of record or to the bank listed above. Redemption
requests for proceeds in excess of $50,000 must be made in writing. By signing
below, I agree on behalf of myself, my assigns, and successors, not to hold
RSMC and any of its affiliates, or the Kalmar "Growth-with-Value" Small Cap
Fund responsible for acting under the powers I have given RSMC. I also agree
that all account and registration information I have given will remain the
same unless I instruct RSMC otherwise in a written form, including a signature
guarantee. If I want to terminate this agreement, I will give RSMC at least
ten days notice in writing. If RSMC or the Kalmar "Growth-with-Value" Small
Cap Fund want to terminate this agreement, they will give me at least ten days
notice in writing.
ALL OWNERS ON THE ACCOUNT MUST SIGN BELOW AND OBTAIN SIGNATURE GUARANTEE(S).
- ------------------------------------------------------------------------------
Signature of Invidual Owner Signature of Joint Owner
- ------------------------------------------------------------------------------
Signature of Corporate Officer, Trustee or Other - PLEASE INCLUDE TITLE
You must have your signature(s) guaranteed by an eligible institution
acceptable to the Fund's transfer agent, such as a bank, broker/dealer,
government securities dealer, credit union, national securities exchange,
registered securities association, clearing agency or savings association. A
Notary Public is not an acceptable guarantor.
SIGNATURE GUARANTEE(S) (stamp)
<PAGE>
INVESTMENT ADVISER
Kalmar Investment Advisers
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
UNDERWRITER
Rodney Square Distributors, Inc.
1105 N. Market Street
Wilmington, DE 19890
SHAREHOLDER SERVICES
Rodney Square Management Corporation
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
KALMAR "GROWTH-WITH-VALUE" MICRO CAP FUND
A SERIES OF
KALMAR POOLED INVESTMENT TRUST
BARLEY MILL HOUSE
3701 KENNETT PIKE
GREENVILLE, DELAWARE 19807
(302) 658-7575
PROSPECTUS DATED __________________, 1996
This prospectus offers shares of the Kalmar "Growth-with-Value" Micro Cap Fund
(the "Fund"), which is a series of Kalmar Pooled Investment Trust (the
"Trust"), an open-end diversified management investment company commonly known
as a mutual fund. The Trust currently offers shares of both the Fund and the
Kalmar "Growth-with-Value" Small Cap Fund, each of which has a diversified
portfolio of assets and a specific investment objective and policies. Shares
of the Kalmar "Growth-with-Value" Small Cap Fund are offered by a separate
prospectus.
The Fund's investment objective is long-term capital appreciation. The Fund
was created to offer investors the opportunity to invest in micro
capitalization stocks according to the longer-term "Growth-with-Value"
investment philosophy, and with the micro cap and small cap investing
expertise of the investment professionals of the Fund's investment adviser,
Kalmar Investment Advisers (the "Adviser"). Using this investment philosophy,
the Fund seeks to achieve its objective by investing primarily in a
diversified portfolio of common stocks of small or emerging growth companies
(so-called "micro cap" companies) with market capitalizations under $250
million at the time of investment which, in the Advisers' opinion, have the
potential for significant business growth and capital appreciation, and yet
whose stocks are, at the time of purchase, trading at at least reasonable to,
preferably, undervalued prices in the public trading markets. The Fund
believes that its philosophy of purchasing promising, growing companies that
may also be undervalued can result in lower risk and higher return when
compared to many other micro cap investment strategies. See "Investment
Objectives and Policies."
Shares of the Fund may be purchased on a no-load basis without sales or
distribution charges through the Fund's distributor or through investment
management and financial consultants or brokers, and may be purchased or
redeemed at any time. Requests to purchase or redeem shares will be processed
at the net asset value per share next determined following receipt and
acceptance of the investor's purchase order or redemption request. See "How
to Purchase Shares," "How to Redeem Shares" and "Calculation of Net Asset
Value."
- ------------------------------------------------------------------------------
This Prospectus sets forth information about the Fund that a prospective
investor should know before investing, and should be read and retained for
future reference. More information about both the Fund and the Kalmar "Growth-
with-Value" Small Cap Fund has been filed with the U.S. Securities and
Exchange Commission and is contained in a "Statement of Additional
Information" dated _________, 1996, as amended from time to time, which is
available upon request and without charge by writing or calling the Fund or
its distributor at the addresses and numbers set forth on the back cover of
this prospectus. The Statement of Additional Information is incorporated by
reference into this Prospectus.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<PAGE>
Kalmar "Growth-With Value" Micro Cap Fund
Table of Contents
Page
----
Prospectus Summary............................................
Fund Expenses.................................................
Investment Objective and Policies.............................
Investment Philosophy....................................
Investment Policies......................................
Other Investment Practices...............................
Risks and Special Considerations..............................
Management of the Fund........................................
Board of Trustees........................................
Investment Adviser.......................................
Distributor..............................................
Administrator, Transfer Agent and Custodian..............
Expenses......................................................
Calculation of Net Asset Value................................
How to Purchase Shares........................................
Retirement Plans..............................................
How to Redeem Shares..........................................
Performance Information.......................................
General Information...........................................
Dividends, Capital Gains Distributions and Taxes..............
Shareholder Accounts..........................................
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT OBJECTIVE AND POLICIES. The objective of the Kalmar "Growth-with-
Value" Micro Cap Fund is long-term capital appreciation. The Fund was created
to offer investors the opportunity to invest in micro capitalization stocks
according to the longer-term "Growth-with-Value" investment philosophy and
with the micro cap and small cap investing expertise of the investment
professionals of the Fund's investment adviser, Kalmar Investment Advisers
(the "Adviser"). Using this investment philosophy, the Fund seeks to achieve
its objective by investing primarily in a diversified portfolio of common
stocks of small, emerging growth companies with market capitalizations under
$250 million at the time of investment which, in the Adviser's opinion, have
the potential for significant business growth and capital appreciation, and
yet whose stocks are, at the time of purchase, trading at at least reasonable
to, preferably, undervalued prices in the public trading markets. The Fund
believes that its philosophy of purchasing promising, growing companies that
may be also undervalued can result in both lower risk and higher return when
compared to many other small company investment strategies.
The Fund utilizes the Adviser's "Growth-with-Value" investment philosophy
which purposefully seeks to integrate the best elements of creative growth
company investing, with discriminating value-seeking investment discipline,
and a longer-term intent. With its intent of owning the "good growth
businesses" underlying its stocks, the Adviser seeks to make fewer, better
investment decisions for longer holding periods and larger gains, based on in-
depth, in-house, hands-on research and company business analysis. The
resulting low relative levels of trading and portfolio turnover versus typical
"aggressive growth" or "emerging growth" investment styles can produce
meaningful transaction cost savings to benefit all fund shareholders as well
as greater tax efficiency for taxable shareholders by producing a
preponderance of longer term as opposed to short term, capital gains.
Importantly, the Adviser's "Growth-with-Value" philosophy and in-depth
research seek both lower risks and higher reward relative to micro cap equity
markets generally through its integrated strategy of investing in promising,
small or emerging growth companies that have not yet been fully recognized and
exploited by other institutional investors and, hence, whose stocks may be
purchased at undervalued levels. See "Investment Objective and Policies."
INVESTMENT ADVISER. Kalmar Investment Advisers (previously defined as the
"Adviser") serves as the investment adviser for the Fund. Over the past
fourteen years, the Adviser's portfolio management team has managed micro cap
and small cap assets in separate accounts now totaling in excess of $600
million for a variety of clients such as high net worth individuals and family
trusts, corporations, pensions and profit-sharing plans and other institutions
such as endowments, foundations, hospitals and other charitable institutions,
all according to the same longer-term oriented "Growth-with-Value" philosophy
utilized by the Fund. Existing clients of the Adviser will have the
opportunity to transfer their assets to the Fund on a tax-free basis in
exchange for shares, and thereby avail themselves of a pooled investment
vehicle. Kalmar intends to invest assets of its own profit-sharing plan in
shares of the Fund, as do members of its investment team and other employees.
The Adviser selects investments and supervises the assets of the Fund in
accordance with the investment objective, policies and restrictions of the
Fund, subject to the supervision and direction of the officers and Board of
Trustees of the Trust. For its services, the Adviser is paid a monthly fee at
the annual rate of 1.00% of the Fund's average daily net assets. This fee is
comparable to the fees charged by most micro cap equity mutual fund managers,
however it is higher than that charged by many other mutual funds. See
"Investment Adviser."
ADVISER'S INVESTMENT PERFORMANCE. Information about the performance record of
the Adviser's portfolio management team for its separately managed accounts
over the past fourteen years is provided in the section of the Prospectus
called "Adviser's Investment Performance."
HOW TO INVEST. Shares of the Fund may be purchased on a no-load basis,
without sales or distribution charges, and are sold through investor
relationships with investment management and financial consultants, brokers or
dealers, or directly by the Fund's distributor. The public offering price of
shares of the Fund is the net asset value per share of the Fund next
determined after receipt and acceptance of an order and payment satisfactory
to the Fund. The minimum initial investment is $10,000 and there is no
minimum for subsequent investments. There is no minimum investment amount for
investments by qualified retirement accounts. An application and information
is available by calling (800) 282-2319. See "How To Purchase Shares."
HOW TO REDEEM SHARES. Shares may be redeemed by the Fund, or repurchased by
the Distributor, at the net asset value per share next determined after
receipt and acceptance of a redemption request in proper form by the Fund,
without the imposition of sales charges or redemption fees. See "How to
Redeem Shares."
DIVIDEND REINVESTMENT. The Fund intends to pay dividends from its net
investment income and any net realized capital gains, if any, on an annual
basis. Any dividends and distribution payments will be reinvested at net
asset value in additional full and fractional shares of the Fund, unless the
shareholder specifically elects to receive such distributions in cash. See
"Dividends, Distributions and Taxes."
RISKS AND SPECIAL CONSIDERATIONS. Prospective investors should consider the
following factors: (1) investments in very small, development stage or
emerging growth company stocks, so-called "micro cap" stocks, involve greater
risks than investments in securities of larger, more established companies,
are more volatile, and may suffer significant losses as well as realize
substantial gains; (2) the market for micro cap stocks is less liquid than
markets for larger stocks, which increases the volatility of micro cap stocks,
and may result in substantial price decreases in a falling market; (3) the
Fund may lend its securities which entails a risk of loss should a borrower
fail financially; (4) to the extent that the Fund invests in foreign
securities, such investment may involve political, economic or currency risks
not ordinarily associated with domestic securities; and (5) although the
Adviser's portfolio management team has extensive investment management
experience with private separately managed accounts, it has not previously
served as the adviser to a mutual fund. See "Risks and Special
Considerations."
ORGANIZATION AND MANAGEMENT OF THE FUND. The Fund is a series of Kalmar
Pooled Investment Trust (the "Trust"), which is an open-end diversified
management investment company commonly known as a mutual fund. The Trust also
offers shares of the Kalmar "Growth-with-Value" Small Cap Fund through a
separate prospectus. The Fund's assets are held by its custodian, Wilmington
Trust Company, and the Fund's administrative, transfer agency and fund
accounting services are provided by Rodney Square Management Corporation. The
distributor of the Fund's shares is Rodney Square Distributors, Inc. See
"Management of the Fund" and "General Information."
FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES: These are no transactional expenses paid by
shareholders in connection with purchases or redemptions of the Fund's shares.
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Contingent Deferred Sales Charge None
Redemption Fees None
ESTIMATED ANNUAL OPERATING EXPENSES: These expenses, which cover the cost of
investment management, administration, distribution, marketing and shareholder
communications, are quoted as a percentage of average daily net assets of the
Fund. The expenses are factored into the Fund's share price and are not
billed directly to shareholders.
Advisory Fee (after voluntary waiver) 0.50%
12b-1 Fees None
Other Expenses 0.75%
- -------------- -----
Total Operating Expenses 1.25%1
1 FOR THE CURRENT FISCAL YEAR, THE ADVISER HAS VOLUNTARILY AGREED TO WAIVE
ITS FEE OR ASSUME CERTAIN EXPENSES OF THE FUND SO THAT THE TOTAL ANNUAL
OPERATING COSTS OF THE FUND WILL NOT EXCEED 1.25% OF THE AVERAGE DAILY
NET ASSETS OF THE FUND. ABSENT THE ADVISER'S ACTIONS TO LIMIT THE
OPERATING EXPENSES, THE FUND WOULD PAY AN ANNUAL ADVISORY FEE OF 1.00%
AND IT IS ESTIMATED THAT THE TOTAL OPERATING EXPENSES OF THE FUND DURING
ITS FIRST FISCAL YEAR WOULD BE 1.75% ON AN ANNUALIZED BASIS.
EXAMPLE: The following example illustrates the expenses that an investor
would pay on a $1,000 investment in the Fund over various time periods
assuming a 5% annual rate of return and redemption at the end of each time
period.
One Year Three Years
-------- -----------
$13 $40
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES IN FUTURE YEARS MAY BE GREATER OR
LESSER THAN THOSE SHOWN. THE PURPOSE OF THE ABOVE EXPENSE TABLES AND EXAMPLE
IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE VARIOUS EXPENSES THAT AN
INVESTOR IN EITHER CLASS OF SHARES OF THE FUND WILL BEAR DIRECTLY OR
INDIRECTLY. THE FUND IS NEW AND THEREFORE THE AMOUNTS OF THE "ADVISORY FEE
(AFTER VOLUNTARY WAIVER)" AND "OTHER EXPENSES" IN THE EXPENSE TABLE AND THE
NUMBERS IN THE EXAMPLE ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL
YEAR.
ADVISER'S INVESTMENT PERFORMANCE
Set forth below is certain information relating to separate accounts managed
by the Fund's portfolio management team. These accounts are managed according
to the same investment objective and "Growth-with-Value" investment
philosophy, and are subject to substantially similar investment policies and
techniques as those used by the Fund. See "Investment Objectives and
Policies." The performance record shown below relates to the activities of
the portfolio management team with respect to its activities at Kalmar
Investments Inc. ("Kalmar"), which provides advisory services to separately
managed accounts, and is the sister company of the Adviser. See "Investment
Adviser." The results presented are not intended to predict or suggest the
return to be experienced by the Fund or the return that an individual investor
might achieve by investing in the Fund. The Fund's results may be different
from the composite of separate accounts shown due to the fact that the average
market capitalization of the companies included in the separate account
portfolios was approximately $250 million, while the Fund will generally only
purchase shares of companies with market capitalizations below $250 million.
The Fund's results may also be different because of, among other things,
differences in fees and expenses, and because private accounts are not subject
to certain investment limitations, diversification requirements, and other
restrictions imposed by the Investment Company Act of 1940, as amended (the
"Investment Company Act") and the Internal Revenue Code, as amended, which, if
applicable, may have adversely affected the performance of such accounts.
YEAR KALMAR RUSSELL 2000 NASDAQ COMPOSITE S & P 500
ENDING TOTAL RETURN* TOTAL RETURN TOTAL RETURN TOTAL RETURN
- ------ ------------- ------------ ---------------- ------------
12/31/84 1.46 (7.30) (11.22) 6.26
12/31/85 33.98 31.05 31.36 31.76
12/31/86 28.14 5.68 7.36 18.70
12/31/87 (1.90) (8.77) (5.26) 5.22
12/31/88 23.58 24.89 15.41 16.57
12/31/89 38.42 16.24 19.26 31.65
12/31/90 (7.58) (19.51) (17.80) (3.14)
12/31/91 65.52 46.05 56.84 30.45
12/31/92 8.87 18.41 15.45 7.62
12/31/93 27.11 19.91 14.75 10.06
12/31/94 3.08 (1.82) (3.20) 1.30
12/31/95 25.38 26.21 39.92 37.54
CUMULATIVE
TOTAL RETURN KALMAR* RUSSELL NASDAQ S & P 500
- ------------ ------- ------- ------ ---------
1984-1995 699.73% 252.21% 277.39% 459.58%
AVERAGE ANNUAL
TOTAL RETURN
- --------------
12 Years*
1984-1995 18.92% 11.06% 11.70% 15.43%
* The results shown above represent a composite of discretionary, fee
paying, separate accounts under management for at least six months,
reflect the reinvestment of any dividends or capital gains, and are shown
after deduction of advisory, brokerage or other expenses (excluding fees
such as custody fees which are paid separately by the investor). Certain
individual accounts that are subject to investment restrictions, tax,
income or other special considerations that constrain the investment
process are excluded from the composite figures shown above
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is long-term capital appreciation. The
investment objective of the Fund is a fundamental policy, which means that it
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities. The Fund seeks to achieve its objective
by investing primarily in a diversified portfolio of common stocks of small,
emerging growth companies with market capitalizations or total revenues under
$250 million at the time of investment which, in the Adviser's opinion, have
the potential for significant business growth and capital appreciation, and
yet whose stocks are, at the time of purchase, trading at at least reasonable
to, preferably, undervalued prices in the public trading markets. There can
be no assurance that the Fund will achieve its objective.
INVESTMENT PHILOSOPHY.
The Fund utilizes the Adviser's "Growth-with-Value" investment philosophy,
which integrates what the Adviser believes to be the best elements of creative
growth company investing, with discriminating value-seeking investment
discipline, all with a view toward longer-term ownership of the "good growth
businesses" underlying its portfolio holdings. The investment philosophy is a
primarily bottom-up, fundamentals-driven approach, with the goal of fewer,
better investment decisions, for longer holding periods and larger gains. The
Adviser views its "Growth-with-Value" philosophy as a relatively conservative
approach to micro cap investing, yet one which the Adviser believes can result
in both lower risk and higher rewards over the longer term when compared to
the micro cap equity markets generally, or to the high-turnover "aggressive
growth" or "emerging growth" investment styles of most other micro cap
investment managers. By investing with a longer-term focus, and thereby
limiting trading and portfolio turnover, the Fund seeks to limit transaction
costs and to increase tax efficiency for its shareholders.
In identifying, analyzing, selecting, and monitoring investments, the Fund's
portfolio management team utilizes an independent, hands-on, fundamental, in-
house-research-driven approach. To identify solid, well managed, rapidly
growing micro cap companies, and qualify such companies for investment, the
Fund's portfolio managers perform fundamental research and business analysis
of a given company's publicly available financial information, engage in
extensive and on-going management contact, facility visits, and appropriate
cross checks with customers, suppliers, competitors, etc., as well as with
industry trade groups, consultants and such other "experts" as they deem
appropriate. The portfolio management team, of course, also attempts to
utilize the best information provided by Wall Street analysts, strategists,
etc., to complement its in-house research and investment management decision
making.
As a central ingredient in its investment philosophy and investment selection
process, the Fund seeks to invest in promising companies which meet its
objectives for above average future business value growth, but which have not
yet been fully recognized and exploited by other institutional micro cap
investors. Such companies may be followed by relatively few, or sometimes no
securities analysts, and their securities, therefore, may be inefficiently
valued and available for purchase at undervalued prices. By investing in such
companies over the longer-term, the Fund's investors can benefit both from
their vigorous potential earnings and business value growth and also from the
potential re-valuation upward of their securities as their business success
attracts larger numbers of additional investors and greater "Wall Street"
sponsorship over time.
Except as described herein, the following investment policies are not
fundamental policies of the Fund, which means that the Trustees may change
such policies without the affirmative vote of a "majority of the outstanding
voting securities" of the Fund, as defined in the Investment Company Act.
INVESTMENT POLICIES.
The Fund seeks to achieve its objective by investing, under normal market
conditions, at least 65% of its total assets in companies whose stock market
capitalization (total market value of outstanding shares) is under $250
million at the time of investment. Such companies often pay no dividends and,
therefore, current income is not a factor in the selection of stocks. Capital
appreciation is likely to be the predominant component of the Fund's return.
In the event that the Adviser, through fundamental research and investment
analysis, identifies a company whose stock appears to be substantially
overvalued in the trading markets, the Fund may engage in short sales of the
company's stock. This process allows the Fund to realize profits if the value
of a company's stock drops as anticipated by the Adviser.
In addition, the Fund may invest in other types of securities such as
securities convertible into common stocks, as well as certain debt securities,
consistent with its long-term capital appreciation objective. The Fund may
invest up to 15% of its assets in foreign securities, including sponsored or
unsponsored American Depository Receipts ("ADRs"). The Fund may also buy and
sell options on individual securities or indices, for purposes of achieving
additional return or for hedging purposes, although at no time will more than
5% of the Fund's assets be allocated to premiums or margin required to
establish options positions for non-hedging purposes, and no more than 10% of
the Fund's assets will be subject to obligations underlying such options.
Additional information about the Fund's investments, policies and restrictions
is provided below and in the Fund's Statement of Additional Information.
EQUITY SECURITIES. The Fund will predominantly purchase common stocks, which
represent an ownership interest in the issuer, entitle the holder to
participate in any income and/or capital gains of the issuer and generally
have voting rights. The Fund may also purchase investment grade securities
with an equity component such as convertible preferred stock, debt securities
convertible into or exchangeable for common stock and securities such as
warrants or rights that are convertible into common stock. A convertible
security is a security that may be converted either at a stated price or rate
within a specified period of time into a specified number of shares of common
or preferred stock. By investing in convertible securities, the Fund seeks to
participate in the capital appreciation of the common stock into which the
securities are convertible through the conversion feature. A warrant is a
security that gives the holder the right, but not the obligation, to subscribe
for newly created securities of the issuer or a related company at a fixed
price either at a certain date or during a set period. Rights represent a
preemptive right to purchase additional shares of stock at the time of new
issuance, before stock is offered to the general public, so that the
stockholder can retain the same percentage after the new stock offering.
The Fund's assets will be invested primarily in equity securities of small, so-
called "micro cap" companies, however, it may, consistent with its objective,
invest a portion of its total assets in equity securities of larger
capitalization companies if the Adviser believes that suitable micro cap
company opportunities are not available or if such larger stocks have strong
growth potential and meet the Adviser's "Growth-with-Value" criteria and
investment discipline.
Although the Adviser anticipates that the majority of the Fund's assets will
ordinarily be invested in U.S.-based companies, the Fund may invest in foreign
securities, provided such investments are consistent with the Fund's objective
and policies and meet the "Growth-with-Value" philosophy. The Fund generally
limits its foreign investing to securities of Canadian companies traded on
Canadian or U.S. exchanges or markets, or shares of foreign companies traded
as sponsored or unsponsored American Depository Receipts ("ADRs"), which are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of underlying securities issued by a foreign company. "Sponsored" ADRs are
issued jointly by the issuer of the underlying security and a depository,
whereas "unsponsored" ADRs are issued without participation of the issuer of
the deposited security.
CASH OR CASH EQUIVALENTS. Although the Fund intends to remain substantially
fully invested, the Fund may invest its assets in cash or cash equivalents,
during periods when excess cash is generated through purchases and sales of
its shares, or when the Fund desires to hold cash to maintain liquidity for
redemptions or pending investment in suitable securities. There may also be
times when economic or market conditions are such that the Adviser deems a
temporary defensive position to be appropriate, during which the Fund may
invest up to 100% of its net assets in the types of short-term, cash
equivalent investments described below.
The Fund may invest in short-term debt securities, including time deposits,
certificates of deposit or banker's acceptances issued by commercial banks or
savings and loan associations meeting certain qualifications. The Fund may
also purchase commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2
by Moody's, or, if not rated, issued by a corporation having an outstanding
unsecured debt issue rated A or better by S&P or by Moody's; and may invest in
short term corporate obligations rated A or better by S&P or Moody's.
The fund may also purchase U.S. Government obligations including bills, notes,
bonds and other debt securities issued by the U.S. Treasury; and may invest in
U.S. Government agency securities issued or guaranteed by U.S. Government
sponsored instrumentalities and federal agencies. The Fund may also invest in
repurchase agreements collateralized by the cash equivalent securities listed
above.
DEBT SECURITIES. In addition to short-term, high quality, cash-equivalent
debt securities listed above and investment grade convertible debt (those
rated Baa or higher by S&P and BBB or high by Moody's), the Fund is authorized
to invest up to 5% of its assets in lower-rated or "compromised" corporate
debt securities such as bonds, debentures and notes (those rated BB or lower
by S&P or Ba or lower by Moody's) and unrated securities of comparable
quality. The Fund may invest in such debt securities, sometimes referred to
as "junk bonds," when the Adviser, through fundamental research and investment
analysis, believes that the securities possess intrinsic value in excess of
the current market price, or have the potential for capital appreciation as a
result of improvement in the creditworthiness of the issuer. The Fund may
also buy such securities when the Adviser believes that the Issuer is likely
to negotiate to replace such securities with equity securities. Lower-rated
securities (including those which are in default) are considered to be
predominately speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally involve more credit risk than securities in the high rating
categories. See "Debt Securities-Risks" in the Statement of Additional
Information for further information concerning the risks of lower-rated
securities.
OPTIONS. The Fund may purchase or sell options on individual securities as
well as on indices of securities as a means of achieving additional return or
of hedging the value of the Fund's portfolio. A call option is a contract
that gives the holder of the option the right, in return for a premium paid,
to buy from the seller the security underlying the option at a specified
exercise price at any time during the term of the option or, in some cases,
only at the end of the term of the option. The seller of the call option has
the obligation upon exercise of the option to deliver the underlying security
upon payment of the exercise price. A put option is a contract that gives the
holder of the option the right, in return for a premium paid, to sell to the
seller the underlying security at a specified price. The seller of the put
option, on the other hand, has the obligation to buy the underlying security
upon exercise at the exercise price.
If the Fund has sold an option, it may terminate its obligation by effecting a
closing purchase transaction. This is accomplished by purchasing an option of
the same series as the option previously sold. There can be no assurance that
a closing purchase transaction can be effected when the Fund so desires.
The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or
decrease sufficiently to justify exercise. The seller of an option, on the
other hand, will recognize the premium as income if the option expires
unrecognized but forgoes any capital appreciation in excess of the exercise
price in the case of a call option and may be required to pay a price in
excess of current market value in the case of a put option. Options
purchased and sold other than on an exchange in private transactions also
impose on the Fund the credit risk that the counterparty will fail to honor
its obligations. The Fund will not purchase options if, as a result, its
aggregate obligations relating to outstanding options exceeds 10% of the
Fund's assets.
REPURCHASE AGREEMENTS. For purposes of cash management only, the Fund may
enter into repurchase agreements with qualified brokers, dealers, banks and
other financial institutions deemed creditworthy by the Adviser under
standards adopted by the Board of Trustees. Under repurchase agreements, the
Fund may purchase any of the cash equivalent securities described above and
simultaneously commit to resell such securities at a future date to the seller
at an agreed upon price plus interest. The seller will be required to
collateralize the agreement by transferring securities to the Fund with an
initial market value, including accrued interest, that equals or exceeds the
purchase price and the seller will be required to transfer additional
securities to the Fund on a daily basis to ensure that the value of the
collateral does not decrease below the repurchase price. No more than 15% of
the Fund's net assets will be invested in illiquid securities, including
repurchase agreements which have a maturity of longer than seven days. For
purposes of the diversification test for qualification as a regulated
investment company under the Internal Revenue Code, repurchase agreements are
not counted as cash, cash items or receivables, but rather as securities
issued by the counter-party to the repurchase agreements. If the seller of
the underlying security under the repurchase agreement should default on its
obligation to repurchase the underlying security, the Fund may experience
delay or difficulty in recovering its cash. To the extent that in the
meantime, the value of the security purchased had decreased, the Fund could
experience a loss. While management of the Fund acknowledges these risks, it
is expected that they can be controlled through stringent security selection
and careful monitoring procedures.
INVESTMENTS IN MUTUAL FUNDS. The Fund may invest in shares of other open and
closed-end investment companies which principally investment in securities of
the type in which the Fund invests. This approach will most likely be used
for cash management purposes. The Fund may only invest in other investment
companies within limits set by the Investment Company Act of 1940, which
currently allows the Fund to invest up to 10% of its total assets in other
investment companies, although not more than 5% of the Fund's total assets may
be invested in any one investment company and the Fund's investment in another
investment company may not represent more than 3% of the securities of any one
investment company. Investments in other investment companies will generally
involve duplication of advisory fees and other expenses. The Fund may also
acquire securities of other investment companies beyond such limits pursuant
to a merger, consolidation or reorganization.
OTHER INVESTMENT PRACTICES.
SHORT SALES. If the Fund anticipates that the price of a security will
decline, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Fund may realize a
profit or loss depending upon whether the market price of the security
decreases or increases between the date of the short sale and the date on
which the Fund must replace the borrowed security. Short selling is a
technique that may be considered speculative and involves risk beyond the
initial capital necessary to secure each transaction. The Fund is required by
SEC rules to collateralize its short positions by placing assets in a
segregated account and the Fund will not sell securities short if, immediately
after and as a result of the sale, the value of all securities sold short by
the Fund exceeds 10% of its total assets. The value of any one issuer in
which the Fund is short may not exceed the lesser of 2% of the Fund's net
assets or 2% of the securities of any class of the issuers' securities. The
Fund's policy regarding short sales is fundamental.
BORROWING. As a matter of fundamental policy, the Fund may borrow up to one
third of its total assets, taken at market value as a temporary measure for
extraordinary or emergency purposes to meet redemptions or to settle
securities transactions. Any borrowing will be done from a bank with the
required asset coverage of at least 300%. In the event that such asset
coverage shall at any time fall below 300%, the Fund shall, within three days
thereafter (not including Sunday or holidays) or such longer period as the SEC
may prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. The Fund will not pledge more than 10% of its net assets, or issue
senior securities as defined in the Investment Company Act, except for notes
to banks.
LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio, with a value not exceeding one-third of its
total assets, to banks, brokers and other financial institutions and receive
collateral in cash, a letter of credit issued by a bank or securities issued
or guaranteed by the U.S. Government which will be maintained at all times in
an amount equal to at least 100% of the current market value of the loaned
securities. The lending of securities is a common practice in the securities
industry. The Fund engages in security loan arrangements with the primary
objective of increasing the Fund's income either through investing the cash
collateral in money market mutual funds, short-term interest bearing
obligations or by receiving a loan premium from the borrower. Under the
securities loan agreement, the Fund continues to be entitled to all dividends
or interest on any loaned securities. As with any extension of credit, there
are risks of delay in recovery and loss of rights in the collateral should the
borrower of the security fail financially. The Fund's policy regarding
lending of portfolio securities is fundamental.
During the period of such a loan, the Fund receives the income on both the
loaned securities and the collateral and thereby increases its yield. In the
event that the borrower defaults on its obligation to return borrowed
securities because of insolvency or otherwise, the Fund could experience
delays and costs in gaining access to the collateral and could suffer a loss
to the extent the value of the collateral falls below the market value of the
borrowed securities.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest up to 15% of its net
assets in securities which may be considered illiquid by virtue of the absence
of a readily available market, legal or contractual restrictions on resale,
longer maturities, or other factors limiting the market ability of the
security. Generally, an illiquid security is any security that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the security. This
policy does not limit the acquisition of (i) restricted securities eligible
for resale to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933 or (ii) commercial paper issued pursuant to Section
4(2) of the Securities Act of 1933, that are determined to be liquid in
accordance with guidelines established by the Board of Trustees of the Trust.
While maintaining oversight, the Board of Trustees has delegated the day-to-
day function of determining liquidity to the Adviser.
RISKS AND SPECIAL CONSIDERATIONS
MICRO CAP COMPANIES. Investments in common stocks in general are subject to
market, economic and business risks that will cause their price to fluctuate
over time. Therefore, an investment in the Fund may be more suitable for long-
term investors who can bear the risk of these fluctuations. Additionally, the
Fund will invest in relatively small, new or unseasoned companies which may be
in their early stages of development, or small companies positioned in new and
emerging industries where the opportunity for rapid growth is expected to be
above average. Securities of such companies may offer greater opportunity for
capital appreciation than larger companies, but investments in such companies
present greater risks than securities of larger, more established companies.
The companies in which the Fund will generally invest may have relatively
small revenues, limited or very focused product lines, and may have a small
share of the market for their products or services or a very large share of an
emerging market. Small or development stage companies may lack depth of
management, they may be unable to internally generate funds necessary for
growth or potential development or to generate such funds through external
financing on favorable terms, or they may be developing or marketing new
products or services for which markets are not yet established and may never
become well established. Due to these and other factors, such companies may
suffer significant losses as well as realize substantial growth and
profitability, and investments in such companies will be volatile and are
therefore speculative. Historically, micro capitalization stocks have been
more volatile in price than larger capitalization stocks. Among the reasons
for the greater price volatility of these securities are the lower degree of
liquidity in the markets for such stocks, and the potentially greater
sensitivity of such small companies to changes in or failure of management and
in many other changes in competitive, business, industry and economic
conditions. Besides exhibiting greater volatility, micro and small company
stocks may, to a degree, fluctuate independently of larger company stocks.
Micro and small company stocks may decline in price as large company stocks
rise, or rise in price as large company stocks decline. Investors should
therefore expect that the value of the Fund's shares will be more volatile
than the shares of a fund that invests in larger capitalization stocks.
Additionally, while the markets in securities of such companies have grown
rapidly in recent years, such securities may trade less frequently and in
smaller volume than more widely held securities. The values of these
securities may fluctuate more sharply than those of other securities, and a
Fund may experience some difficulty in establishing or closing out positions
in theses securities at prevailing market prices. There may be less publicly
available information about the issuers of these securities or less market
interest in such securities than in the case of larger companies, and it may
take a longer period of time for the prices of such securities to reflect the
full value of their issuers' underlying earnings potential or assets. The
Fund should not be considered suitable for investors who are unable or
unwilling to assume the risks of loss inherent in such a program, nor should
investment in the Fund be considered a balanced or complete investment
program.
FOREIGN INVESTMENT. Investments in foreign securities may involve risks not
ordinarily associated with investments in domestic securities. These risks
may include legal, political or economic developments such as fluctuations in
currency rates, imposition of withholding taxes or exchange controls or other
governmental restrictions or political or policy changes. In addition, with
respect to certain countries, there is the possibility of expropriation of
assets, confiscatory taxation, or political or social unrest that could
adversely affect the value of foreign securities.
There may be less publicly available information about foreign companies than
about U.S. companies, and foreign companies may not be subject to accounting,
auditing and financial reporting standards that are as uniform as those
applicable to U.S. companies. The Fund will attempt to limit risks associated
with foreign investing by investing primarily in securities of stable,
developed countries such as Canada.
INVESTMENT ADVISER. The Adviser has not previously served as the investment
adviser for a mutual fund, and therefore, historical information about the
performance of a mutual fund managed by the Adviser is not available.
However, the performance record of the Adviser's portfolio management team for
its separately managed accounts over the past fourteen years is provided in
the section of the Prospectus called "Adviser's Investment Performance."
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Board of Trustees of the Trust consists of five individuals, two of whom
are not "interested persons" of the Trust as defined in the Investment Company
Act. The members of the Trust's Board of Trustees are fiduciaries for the
Fund's shareholders and, in this regard, are governed by the laws of the State
of Delaware. The Trustees establish policy for the operation of the Fund, and
appoint the officers who conduct the daily business of the Fund. The
following is a list of the Trustees and a brief statement of their principal
occupations:
FORD B. DRAPER, JR.* Chairman, President and Treasurer
of the Trust; Founder, President,
Director and Chief Investment
Officer of Kalmar Investments
since 1982 and Kalmar Investment
Advisers since inception.
WENDELL FENTON* President of the law firm of
Richards, Layton and Finger
(joined 1971).
JOHN J. QUINDLEN Trustee of The Rodney Square Fund
and Kiewit Mutual Fund; Senior
Vice President and Chief
Financial Officer of E.I. Dupont
de Nemours & Co. from 1954
through 1993 (retired).
DAVID M. REESE, JR.* Portfolio manager/research
analyst for Kalmar Investments
Inc. from 1982 through March,
1996.
DAVID D. WAKEFIELD Executive Secretary, Longwood
Foundation and Welfare
Foundation, 1992 to present;
Executive Secretary, J.P. Morgan
Delaware from 1989 to 1992.
- -----------------
* "Interested person" of the Fund as that term is defined in the Investment
Company Act.
INVESTMENT ADVISER
Kalmar Investment Advisers, located at 3701 Kennett Pike, Greenville, Delaware
19807 (previously defined as the "Adviser") serves as the investment adviser
for the Fund pursuant to an investment advisory agreement dated [____________,
1996] (the "Advisory Agreement"). The Advisory Agreement initially will be in
effect for two years, and may be renewed each year thereafter, provided its
continuance is approved annually by the Board of Trustees, including a
majority of the Trustees who are not "interested persons" of the Fund as
defined in the Investment Company Act.
The Adviser manages the investments of the Fund in accordance with the Fund's
stated investment objective, philosophy and policies and subject to its
limitations or restrictions. Subject to the supervision of the Board of
Trustees, the Adviser makes the Fund's day-to-day investment decisions,
selects brokers and dealers to execute portfolio transactions and generally
manages the Fund's investments. In selecting brokers, the Adviser seeks to
obtain the best net results for the Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), size
of order, difficulty of execution and operational facilities of the firm
involved and the firm's risk in positioning a block of securities. While the
Adviser generally seeks favorable and competitive commission rates, the Fund
does not necessarily pay the lowest commission or spread available. In
addition, consistent with rules established by the National Association of
Securities Dealers, Inc., the Fund may consider sales of shares of the Fund as
a factor in the selection of brokers or dealers to execute portfolio
transactions for the Fund.
Because of its longer-term investment philosophy, the Fund does not intend to
engage in frequent trading tactics which could result in high turnover, less
favorable tax consequences (i.e., a high proportion of short-term capital
gains relative to long-term capital gains) or increased trading and brokerage
expenses paid by the Fund. The Fund anticipates that its annual portfolio
turnover rate should not exceed 50% under normal conditions, although it is
impossible to predict portfolio turnover rates. The Adviser will buy or sell
portfolio securities without regard to holding period if, in its judgment,
such transactions are advisable in light of opportunities in particular
stocks, or a change in circumstances for any particular company or companies,
or in general market, economic or financial conditions.
The Adviser, which is registered as an investment adviser under the Investment
Advisers Act of 1940, is presently wholly-owned by its founder, Ford B.
Draper, Jr. The Adviser utilizes a team approach in managing the Fund's
portfolio. Mr. Draper, as chief investment officer, leads and supervises the
portfolio management team. Other key members of the Adviser's portfolio
management team include Dana F. Walker, C.F.A., a portfolio manager/research
analyst who joined Kalmar in 1986 after serving as an analyst for Delfi
Management, Inc., adviser to the Sigma Funds, and Gregory A. Hartley, C.F.A.,
a portfolio manager/research analyst who joined Kalmar in 1993 after serving
as senior analyst and investment committee member for Ashford Capital
Management, Inc., an investment management and consulting firm.
The Adviser is the "sister" company to Kalmar Investments Inc. ("Kalmar"), a
registered investment adviser founded by Mr. Draper in 1982 which has been
providing investment advice to and managing the assets of private accounts
since its inception according to the same investment objective and "Growth-
with-Value" philosophy used by the Fund. Mr. Draper organized the Adviser as
a Delaware business trust on November 6, 1996 for the sole purpose of
functioning as the adviser to each of the series of the Trust. The ownership
and management of the Adviser is identical to that of Kalmar, and the same
portfolio management team approach used in managing the assets of the Fund is
used to manage the assets of Kalmar's private accounts. Kalmar presently
manages approximately $600 million primarily in micro and small capitalization
stocks in separately managed accounts for clients such as high net worth
individuals and family trusts, corporations, pensions and profit-sharing plans
and institutions such as endowments, foundations, hospitals and charitable
institutions. Kalmar intends to invest assets of its own profit-sharing plan
in shares of the Fund, as do members of its investment team and other
employees.
For its services, the Adviser is paid a monthly fee at the annual rate of
1.00% of the Fund's average daily net assets. This fee is comparable to the
fee charged by most micro cap equity mutual fund managers, however, it is
higher than that paid by many other mutual funds for investment advisory
services. During the Fund's first fiscal year, the Adviser has voluntarily
agreed to limit its fees or assume certain expenses of the Fund to keep the
total annual operating costs of the Fund's classes within specified limits,
see "Fund Expenses."
DISTRIBUTOR
Rodney Square Distributors, Inc. ("RSD"), a subsidiary of Wilmington Trust
Company located at 1105 North Market Street, Wilmington, DE 19890, has been
engaged to distribute the Fund's shares pursuant to a distribution agreement
dated [_____________, 1996] (the "Distribution Agreement"). Under the
Distribution Agreement, RSD directly or through its affiliates, provides
distribution and underwriting services, investor support and certain
administrative services.
ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
Rodney Square Management Corporation ("Rodney Square"), a subsidiary of
Wilmington Trust Company located at Rodney Square North, 1100 N. Market
Street, Wilmington, DE 19890 serves as the Fund's Administrator, Transfer
Agent and Dividend Paying Agent and also provides accounting services to the
Fund pursuant to separate Administration, Transfer Agency and Accounting
Services Agreements with the Trust, each [dated _____________, 1996.]
As Administrator, Rodney Square supplies office facilities, non-investment
related statistical and research data, stationery and office supplies,
executive and administrative services, internal auditing and regulatory
compliance services. Rodney Square also assists in the preparation of reports
to shareholders, prepares proxy statements, updates prospectuses and makes
filings with the U.S. Securities and Exchange Commission (the "SEC") and state
securities authorities. Rodney Square performs certain budgeting and
financial reporting and compliance monitoring activities. For the services
provided as Administrator, Rodney Square receives annual fees equal to 0.15%
of the average annual net assets of the Trust for the first $50 million in
assets and 0.10% for assets in excess of $50 million, subject to certain
minimum amounts. Rodney Square has also agreed to waive specified portions of
its fees during the Fund's first year of operations, provided the Adviser
would have otherwise been required to waive its fees under the voluntary
waiver described under "Fund Expenses." Rodney Square also serves as the
Transfer Agent and Dividend Paying Agent of the Fund as well as the Accounting
Agent to the Fund. As Transfer Agent and Dividend Paying Agent, Rodney Square
is responsible for administering the issuance, transfer and redemption or
repurchase of shares, as well as the payment of distributions and dividends.
As Accounting Agent, Rodney Square determines the Fund's net asset value per
share and provides accounting services to the Fund.
The custodian for the Fund is Wilmington Trust Company ("WTC"), Rodney Square
North, 1100 N. Market Street, Wilmington, DE 19890-0001.
EXPENSES
Except as indicated above, the Fund is responsible for the payment of the pro
rata portions of the Trust's expenses attributable to the Fund, as
distinguished from any other series of the Trust, other than those borne by
the Adviser, and such expenses may include, but are not limited to: (a)
management fees; (b) the charges and expenses of the Fund's legal counsel and
independent auditors; (c) brokers' commissions, mark-ups and mark-downs and
any issue or transfer taxes chargeable to the Fund in connection with its
securities transactions; (d) all taxes and corporate fees payable by the Fund
to governmental agencies; (e) the fees of any trade association of which the
Trust or Fund is a member; (f) the cost of certificates, if any, representing
shares of the Fund; (g) amortization and reimbursements of the organization
expenses of the Trust or Fund and the fees and expenses involved in
registering and maintaining registration of the Trust and its shares with the
SEC, and the preparation and printing of the Trust's registration statements
and prospectuses for such purposes; (h) allocable communications expenses with
respect to investor services and all expenses of shareholders and trustees'
meetings and of preparing, printing and mailing prospectuses and reports to
shareholders; (i) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business; and (j) compensation for employees of the Trust.
CALCULATION OF NET ASSET VALUE
Rodney Square determines the net asset value per share ("net asset value") of
the Fund as of the close of regular trading on each day that the New York
Stock Exchange is open for unrestricted trading from Monday through Friday
(generally 4:00 p.m.) and on which there is a purchase or redemption of the
Fund's shares. The net asset value is determined by dividing the value of the
Fund's securities, plus any cash and other assets, less all liabilities, by
the number of shares outstanding. Expenses and fees of the Fund, including
management, distribution and shareholder servicing fees, are accrued daily and
taken into account for the purpose of determining the net asset value.
Fund securities listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last
quoted sales price on the security's principal exchange on that day. Listed
securities not traded on an exchange that day will be valued at the mean
between the last bid and asked price on that day, if any. Unlisted securities
which are quoted on the National Association of Securities Dealers National
Market System for which there are sales of such securities on such day, shall
be valued at the last sale price reported on such system the day the security
is valued. If there are no such sales on such day, the value shall be the
mean between the closing asked price and closing bid price. Securities for
which market quotations are not readily available and all other assets will be
valued at their respective fair value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value,
the Fund or its service providers may employ an independent pricing service.
Money market securities with less than sixty days remaining to maturity when
acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount from cost versus par value
at maturity. If the Fund acquires a money market security with more than
sixty days remaining to its maturity, it will be valued at current market
value until the 60th day prior to maturity, and will then be valued on an
amortized cost basis based upon the value on such date unless the Trustees
determine during such 60-day period that this amortized cost value does not
represent fair market value.
Each share of the Fund will bear, pro-rata, all of the common expenses of the
Fund. The net asset values of all outstanding shares of the Fund will be
computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Fund represented by the value of such
shares. All income earned and expenses incurred by the Fund will be borne on
a pro-rata basis by each outstanding share, based on each share's percentage
in the Fund represented by the value of such shares.
HOW TO PURCHASE SHARES
Shares of the Fund are offered on a no-load basis, without the imposition of
any sales or distribution fees through investment management and financial
consultants, brokers or dealers, or directly through the Fund's distributor.
Shares of the Kalmar "Growth-with-Value" Small Cap Fund series of the Trust
(the "Small Cap Fund") may be purchased in a similar manner, and such shares
are offered through a separate prospectus. The Fund's shares are offered at
the net asset value per share next determined after the receipt and acceptance
of a purchase order and payment in proper form by the Fund. Information on
how to invest in the Fund is presented below, and any requests for
applications, additional information or questions may be directed to Rodney
Square at (800) 282-2319.
MINIMUM INVESTMENT. The minimum initial investment for the Fund is $10,000,
with no subsequent minimum investments. There is no minimum investment
requirement for qualified retirement accounts.
PURCHASE PRICE. Purchase orders for shares of the Fund which are received in
proper form and accepted by the Fund prior to the close of regular trading
hours on the New York Stock Exchange (currently 4:00 p.m. Eastern time) on any
day that the Fund calculates its net asset value per share, are priced
according to the respective net asset value determined on that day. Purchase
orders received in proper form and accepted by the Fund after the close of the
Exchange on a particular day are priced as of the time the respective net
asset value per share is next determined.
IN-KIND PURCHASES. At the discretion of the Fund, investors may be permitted
to purchase Fund shares by transferring securities to the Fund that: (i) meet
the Fund's investment objective and policies; (ii) are acquired by the Fund
for investment and not for retail purposes; (iii) are liquid securities which
are not restricted as to transfer either by law or liquidity of market; (iv)
have a value which is readily ascertainable (and not established only by
evaluation procedures) as evidenced by a listing on the American Stock
Exchange, the NYSE, or NASDAQ; and (v) at the discretion of the Fund, the
value of any such security (except U.S. Government Securities) being exchanged
together with other securities of the same issuer owned by the Fund will not
exceed 5% of the net assets of the Fund immediately after the transactions.
Securities transferred to the Fund will be valued in accordance with the same
procedures used to determine the Fund's net asset value. All dividends,
interests, subscription, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. Investors who are permitted to
transfer such securities will be required to recognize all gains or losses on
such transfers, and pay taxes thereon, if applicable, measured by the
difference between the fair market value of the securities and the investors'
bases therein.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL. Shareholders may purchase shares by sending a check drawn
on a U.S. bank payable to the Kalmar "Growth-with-Value" Micro Cap Fund, along
with a completed shareholder application, to Kalmar Pooled Investment Trust,
c/o Rodney Square Management Corporation, P.O. Box 8987, Wilmington, DE 19899-
9752. A shareholder application sent by overnight mail should be sent to
Kalmar Pooled Investment Trust, c/o Rodney Square Management Corporation, 1105
N. Market St., 3rd Floor, Wilmington, DE 19890. If a subsequent investment is
being made, investors should use the purchase stub and return envelope from
the most recent account statement and the check should also indicate the
investor's Fund account number.
PURCHASES BY WIRE. To purchase shares by wiring federal funds, Rodney Square
must first be notified by calling (800) 282-2319 to request an account number
and furnish the Fund with a tax identification number. Following notification
to Rodney Square, federal funds and registration instructions should be wired
through the Federal Reserve System to:
RODNEY SQUARE MANAGEMENT CORPORATION
C/O WILMINGTON TRUST COMPANY
WILMINGTON, DE
ABA #0311 000 92
DDA #2731-2705
ATTENTION: KALMAR "GROWTH-WITH-VALUE" MICRO CAP FUND
FURTHER CREDIT [SHAREHOLDER NAME AND ACCOUNT NUMBER]
For initial purchases by wire, a completed application with signature(s) of
investor(s) must promptly be filed with Rodney Square at one of the addresses
stated above under "Purchases By Mail." Investors should be aware that some
banks may impose a wire service fee.
AUTOMATIC INVESTMENT PLAN. Shareholders may purchase Fund shares through an
Automatic Investment Plan. The Plan provides a convenient method by which
investors may have monies deducted directly from their checking, savings or
bank money market accounts for investment in the Fund. Under the Plan, Rodney
Square, at regular intervals, will automatically debit a shareholder's bank
checking account in an amount of $1,000 or more (subsequent to the $10,000
minimum initial investment), as specified by the shareholder. A shareholder
may elect to invest the specified amount monthly, bimonthly, quarterly, semi-
annually or annually. The purchase of Fund shares will be effected at the net
asset value at the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m. Eastern time) on or about the 20th day of the month. To
obtain an Application for the Automatic Investment Plan, check the appropriate
box of the Application accompanying this Prospectus or call Rodney Square at
(800) 282-2319.
EXCHANGE PRIVILEGE. Shareholders of the Fund may exchange all or a portion of
their shares of the Fund for shares of the Small Cap Fund, and shareholders of
the Small Cap Fund may similarly exchange into the Fund, provided the Fund is
authorized to sell its shares in the state where the purchaser is located. A
purchase or redemption of shares through an exchange will be effected at the
net asset value per share next determined after receipt and acceptance by the
Fund of the request.
To obtain a Prospectus of the Small Cap Fund, or to obtain more information
about exchanges or place exchange orders contact Rodney Square at (800) 282-
2319. The Fund reserves the right to terminate or modify the exchange offer
described here and will give shareholders sixty days notice of such
termination or modification as required by the SEC.
RETIREMENT PLANS
Shares of the Fund are available for use in all types of tax-deferred
retirement plans such as IRA's, employer-sponsored defined contribution plans
(including 401(k) plans) and tax-sheltered custodial accounts described in
Section 403(b)(7) of the Internal Revenue Code. Qualified investors benefit
from the tax-free compounding of income dividends and capital gains
distributions. Application forms and brochures describing investments in the
Fund for retirement plans can be obtained from Rodney Square by calling (800)
282-2319. The following is a description of the types of retirement plans for
which the Fund's shares may be used for investment:
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS"). Individuals, who are not active
participants (and, when a joint return is filed, who do not have a spouse who
is an active participant) in an employer maintained retirement plan are
eligible to contribute on a deductible basis to an IRA account. The IRA
deduction is also available for individual taxpayers and married couples with
adjusted gross incomes not in excess of certain specified limits. All
individuals who have earned income may make nondeductible IRA contributions to
the extent that they are not eligible for a deductible contribution. Income
earned by an IRA account will continue to be tax-deferred. A special IRA
program is available for employers under which the employers may establish IRA
accounts for their employees in lieu of establishing tax qualified retirement
plans. Known as SEP-IRA's (Simplified Employee Pension-IRA), they free the
employer of many of the recordkeeping requirements of establishing and
maintaining a tax qualified retirement plan trust.
If you are entitled to receive a distribution from a qualified retirement
plan, you may rollover all or part of that distribution into the Fund's IRA.
Your rollover contribution is not subject to the limits on annual IRA
contributions. You can continue to defer Federal income taxes on your
contribution and on any income that is earned on that contribution.
WTC makes available its services as an IRA Custodian for each shareholder
account that is established as an IRA. For these services, WTC receives an
annual fee of $10.00 per account, which fee is paid directly to WTC by the IRA
shareholder. If the fee is not paid by the date due, shares of the Fund owned
by the shareholder in the IRA account will be redeemed automatically for
purposes of making the payment.
401(K) PLANS AND OTHER DEFINED CONTRIBUTION PLANS. The Fund's shares may be
used for investment in defined contribution plans by both self-employed
individuals (sole proprietorships and partnerships) and corporations who wish
to use shares of the Fund as a funding medium for a retirement plan qualified
under the Internal Revenue Code. Such plans typically allow investors to make
annual deductible contributions, which may be matched by their employers up to
certain percentages based on the investor's pre-contribution earned income.
403(B)(7) RETIREMENT PLANS. The Fund's shares are also available for use by
schools, hospitals, and certain other tax-exempt organizations or associations
who wish to use shares of the Fund as a funding medium for a retirement plan
for their employees. Contributions are made to the 403(b)(7) Plan as a
reduction to the employee's regular compensation. Such contributions, to the
extent they do not exceed applicable limitations (including a generally
applicable limitation of $9,500 per year), are excludable from the gross
income of the employee for Federal Income tax purposes.
HOW TO REDEEM SHARES
Shareholders may redeem all or a portion of their shares without charge on any
day that the Fund calculates its net asset value. See "Calculation of Net
Asset Value." Except as noted below, redemption requests received and
accepted by Rodney Square prior to the close of regular trading hours on the
Exchange on any business day that the Fund calculates its per share net asset
value are effective at the net asset value per share determined that day.
Redemption requests received and accepted by Rodney Square after the close of
the Exchange are effective as of the time the net asset value per share is
next determined. Redemption proceeds are normally sent on the next business
day following receipt and acceptance by the Fund of the redemption request
but, in any event, redemption proceeds are sent within seven business days of
receipt and acceptance of the request, or earlier if required under applicable
law. Redemption requests should be accompanied by the Fund's name and the
shareholder's account number. Corporations, other organizations, trusts,
fiduciaries and other institutional investors may be required to furnish
certain additional documentation to authorize redemptions.
Delivery of the proceeds of a redemption of shares purchased and paid for by
check shortly before the receipt of the request may be delayed until the Fund
determines that the Custodian has completed collection of the purchase check
which may take up to 10 days. Also, redemption requests for accounts for
which purchases were made by wire may be delayed until the Fund receives a
completed application for the account. The Board of Trustees may suspend the
right of redemption or postpone the date of payment during any period when (a)
trading on the New York Stock Exchange is restricted as determined by the SEC
or such Exchange is closed for other than weekends and holidays, (b) the SEC
has by order permitted such suspension, or (c) an emergency, as defined by
rules of the SEC, exists during which time the sale of Fund shares or
valuation of securities held by the Fund are not reasonably practicable.
IN-KIND REDEMPTION. The Fund will satisfy redemption requests in cash to the
fullest extent feasible, so long as such payments would not, in the opinion of
the Adviser or the Board of Trustees, result in the necessity of the Fund
selling assets under disadvantageous conditions and to the detriment of the
remaining shareholders of the Fund. Pursuant to the Fund's Agreement and
Declaration of Trust, payment for shares redeemed may be made either in cash
or in-kind, or partly in cash and partly in-kind. Any portfolio securities
paid or distributed in-kind would be valued as described under "Calculation of
Net Asset Value." In the event that an in-kind distribution is made, a
shareholder may incur additional expenses, such as the payment of brokerage
commissions, on the sale or other disposition of the securities received from
the Fund. In-kind payments need not constitute a cross-section of the Fund's
portfolio. Where a shareholder has requested redemption of all or a part of
the shareholder's investment, and where the Fund completes such redemption in-
kind, the Fund will not recognize gain or loss for federal tax purposes, on
the securities used to complete the redemption but the shareholder will
recognize gain or loss equal to the difference between the fair market value
of the securities received and the shareholder's basis in the Fund shares
redeemed.
Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL. A written redemption request must (i) identify the Fund
and the shareholder's account number, (ii) state the number of shares to be
redeemed, and (iii) be signed by each registered owner exactly as the shares
are registered. A redemption request for an amount in excess of $25,000, or
for any amount if for payment other than to the shareholder of record, or if
the proceeds are to be sent elsewhere than the address of record, must be
accompanied by a guarantee of their signature by an "eligible guarantor
institution" as defined in Rule 17Ad-15 under the Securities Exchange Act of
1934. Eligible guarantor institutions include banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing
signatures must be a member of a clearing corporation or maintain net capital
of at least $100,000. Credit unions must be authorized to issue signature
guarantees. Signature guarantees will be accepted from any eligible guarantor
institution which participates in a signature guarantee program. A signature
and a signature guarantee are required for each person in whose name the
account is registered.
Written redemption instructions should be submitted to Kalmar Pooled
Investment Trust, c/o Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19899-9752. A redemption order sent by overnight mail should
be sent to Kalmar Pooled Investment Trust, c/o Rodney Square Management
Corporation, P.O. Box 8987, 1105 N. Market Street, 3rd Floor, Wilmington, DE
19890.
REDEMPTION BY TELEPHONE. Shareholders who prefer to redeem their shares by
telephone must elect to do so by completing the telephone redemption section
of the shareholder application which describes the telephone redemption
procedures in more detail and requires certain information that will be used
to identify the shareholder when a telephone redemption request is made.
Neither the Fund nor any of its service contractors will be liable for any
loss or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions
are genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, the number of
shares to be redeemed and certain other information necessary to identify the
shareholder.
During times of drastic economic or market changes, the telephone redemption
privilege may be difficult to implement. In the event that shareholders are
unable to reach Rodney Square by telephone, you may make a redemption request
by mail. The Fund or Rodney Square reserves the right to refuse a wire or
telephone redemption if it is believed advisable to do so. Procedures for
redeeming Fund shares by wire or telephone may be modified or terminated at
any time by the Fund.
REDEMPTIONS BY WIRE. Redemption proceeds may be wired to a predesignated bank
account at any commercial bank in the United States if the amount is $1,000 or
more. The receiving bank may charge a fee for this service. Amounts redeemed
by wire are normally wired on the next business day after receipt and
acceptance of redemption instructions (if received before the close of regular
trading on the Exchange), but in no event later than five days following such
receipt and acceptance.
INVOLUNTARY REDEMPTION. The Fund reserves the right to redeem an investor's
account where the account is inactive and is worth less than the minimum
initial investment when the account was established, currently $10,000. [In
calculating the minimum amount necessary to avoid involuntary redemption, the
Fund will include amounts held in both the Fund and the Small Cap Fund
together.] The Fund will advise the shareholder of its intention to redeem
the account in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares
in any amount necessary to bring the account back to the appropriate minimum
amount, and the Fund will not redeem any account that is worth less than the
appropriate minimum amount solely on account of a market decline.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own shares with a value of
$10,000 or more may participate in the Systematic Withdrawal Plan. Under the
Plan, shareholders may automatically redeem a portion of their Fund shares
monthly, bimonthly, quarterly, semiannually or annually. The minimum
withdrawal available is $100. The redemption of Fund shares will be effected
at their net asset value at the close of the NYSE on or about the 25th day of
the month at the frequency selected by the shareholder. If you expect to
purchase additional Fund shares, it may not be to your advantage to
participate in the Systematic Withdrawal Plan because contemporary purchases
and redemption may result in adverse tax consequences. For further details
about this service, see the Application or call the Transfer Agent at (800)
282-2319.
ADDITIONAL REDEMPTION INFORMATION. Redemption proceeds may be mailed or
electronically transferred to your bank or, for amounts of $25,000 or less,
mailed to your Fund account address of record if the address has been
established for a minimum of 60 days. In order to authorize the Fund to mail
redemption proceeds to your Fund account address of record, complete the
appropriate section of the shareholder application or include your Fund
account address of record when you submit written instructions. You may
change the account which you have designated to receive amounts redeemed at
any time. Any request to change the account designated to receive redemption
proceeds should be accompanied by a guarantee of the shareholder's signature
by an eligible guarantor institution. Further documentation will be required
to change the designated account when shares are held by a corporation, other
organization, trust, fiduciary or other institutional investor. For more
information on redemption services, contact Rodney Square.
PERFORMANCE INFORMATION
Advertisements, sales literature and communications to shareholders may
contain measures of the Fund's performance, including various expressions of
total return, current yield or current distribution rate. They may also cite
statistics relating to volatility and risk and compare such measures to those
of other funds. The Fund's total return may be calculated on an annualized
and aggregate basis for various periods as will be stated in the
advertisement. Average annual return reflects the average percentage change
per year in value of an investment in the Fund. Aggregate total return
reflects the total percentage change over the stated period.
The Fund may compare its investment performance to other mutual funds, or
groups of mutual funds, with similar or dissimilar investment objectives and
policies that are tracked or ranked by independent services such as Lipper
Analytical Services, Inc. or Morningstar, Inc. or other financial or industry
publications that monitor the performance of mutual funds, investment
managers, and the like. The Fund may also compare its performance to
unmanaged stock indices such as the Russell 2000 Small Capitalization Index or
the S&P 500, or quote performance information or information relating to fund
management, investment philosophy or investment techniques, that is published
in financial and business publications including Money Magazine, Forbes,
Barron's or The Wall Street Journal, etc. Further information about the
sources for comparative performance and other information that may be utilized
by the Fund, and information about the Fund's calculation of performance
figures, is contained in the Fund's Statement of Additional Information.
All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based
on many factors, including market conditions, the composition of the
investments in the Fund, and the Fund's operating expenses. Investment
performance also often reflects the risk associated with the Fund's investment
objective and policies. In addition, averages are generally unmanaged, and
items included in the calculations of such averages may not be identical to
the formula used by the Fund to calculate its performance. These factors
should be considered when comparing the Fund to other mutual funds and other
investment vehicles.
GENERAL INFORMATION
SHARES OF BENEFICIAL INTEREST AND VOTING RIGHTS. The Trust was organized as a
Delaware business trust on November 6, 1996. The Trust's Agreement and
Declaration of Trust permits the trustees to issue an unlimited number of
shares of beneficial interest in various series or classes (subseries) with a
par value of $0.01 per share. Each series, in effect, represents a separate
mutual fund with its own investment objective and policies. The Board of
Trustees has the power to designate additional series or classes of shares of
beneficial interest and to classify or reclassify any unissued shares with
respect to such series or classes.
The Trust's Agreement and Declaration of Trust gives shareholders the right to
vote: (i) for the election or removal of trustees; (ii) with respect to
additional matters relating to the Trust as required by the Investment Company
Act; and (iii) on such other matters as the trustees consider necessary or
desirable. The shares of the Fund each have one vote and, when issued, will
be fully paid and non-assessable and within each series or class, have no
preference as to conversion, exchange, dividends, retirement or other
features. The shares of the Trust which the trustees may, from time to time,
establish, shall have no preemptive rights. The shares of the Trust have non-
cumulative voting rights, which means that the holders of more than 50% of the
shares voting for the election of trustees can elect 100% of the trustees if
they choose to do so. A shareholder is entitled to one vote for each full
share held (and a fractional vote for each fractional share held), then
standing in their name on the books of the Trust. On any matter submitted to
a vote of shareholders, all shares of the Trust then issued and outstanding
and entitled to vote on a matter shall vote without differentiation between
separate series on a one-vote-per share basis. If a matter to be voted on
does not affect the interests of all series of the Trust, then only the
shareholders of the affected series shall be entitled to vote on the matter.
SHAREHOLDER MEETINGS. Pursuant to the Trust's Agreement and Declaration of
Trust, the Trust does not intend to hold shareholder meetings except when
required to elect trustees, or with respect to additional matters relating to
the Trust as required under the Investment Company Act.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Fund intends to declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from its investments. The Fund will distribute net realized capital gains, if
any, once with respect to each year. Expenses of the Fund, including the
advisory fee, are accrued each day. Reinvestments of dividends and
distributions in additional shares of the Fund will be made at the net asset
value determined on the ex date of the dividend or distribution unless the
shareholder has elected in writing to receive dividends or distributions in
cash. An election may be changed by notifying Rodney Square in writing thirty
days prior to record date. Shareholders may call Rodney Square for more
information. All shares of the Fund will share proportionately in the
investment income and expenses of the Fund.
The Fund intends to qualify annually to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). As such, the Fund will not be subject to federal income tax,
or to any excise tax, to the extent its earnings are distributed as provided
in the Code and by satisfying certain other requirements relating to the
sources of its income and diversification of its assets.
Dividends from net investment income or net short-term capital gains will be
taxable to shareholders as ordinary income, whether received in cash or in
additional shares. For corporate investors in the Fund, dividends from net
investment income will generally qualify in part for the 70% corporate
dividends-received deduction. However, the portion of the dividends so
qualified depends on the aggregate qualifying dividend income received by the
Fund from domestic (U.S.) sources.
Distributions paid by the Fund from long-term capital gains, whether received
in cash or in additional shares, are taxable to investors as long-term capital
gains, regardless of the length of time an investor has owned shares in the
Fund. The Fund does not seek to realize any particular amount of capital
gains during a year; rather, realized gains are a byproduct of management
activities. Consequently, capital gains distributions may be expected to vary
considerably from year to year. Also, if purchases of shares in a Fund are
made shortly before the record date for a capital gains distribution or a
dividend, a portion of the investment will be returned as a taxable
distribution.
Dividends which are declared in October, November or December to shareholders
of record in such a month but which, for operational reasons, may not be paid
to the shareholder until the following January, will be treated for tax
purposes as if paid by the Fund and received by the shareholder on December 31
of the calendar year in which they are declared.
A sale or redemption of shares of the Fund is a taxable event and may result
in a capital gain or loss to shareholders subject to tax. Any loss incurred
on sale or exchange of a Fund's shares held for six months or less will be
treated as a long-term capital loss to the extent of any capital gain
dividends received with respect to such shares.
Investors should also be aware that, if the Fund has unrealized gains at the
time they purchase shares in the Fund, part of their purchase price may be
returned to them in the form of a capital gain distribution when and if such
gains are later realized by the Fund. Moreover, on commencement of the Fund,
existing clients of Adviser will have the opportunity to transfer their assets
to the Fund on a tax-free basis; any gain inherent in such assets at the time
of contribution will carryover to the Fund.
In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. It is recommended that shareholders consult their tax
advisers regarding specific questions as to federal, state, local or foreign
taxes. Each year, the Fund will mail you information on the tax status of the
Fund's dividends and distributions made to you.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your account registration form your proper
taxpayer identification number and by certifying that you are not subject to
backup withholding.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the
Fund. Additional information on tax matters relating to the Fund and to its
shareholders is included in the Statement of Additional Information.
SHAREHOLDER ACCOUNTS
Rodney Square, as Transfer Agent, maintains for each shareholder an account
expressed in terms of full and fractional shares of the Fund rounded to the
nearest 1/1000th of a share. In the interest of economy and convenience, the
Fund does not issue share certificates. Each shareholder is sent a statement
at least quarterly showing all purchases in or redemption from the
shareholder's account. The statement also sets forth the balance of shares
held in the shareholder's account.
<PAGE>
KALMAR POOLED INVESTMENT TRUST
KALMAR "GROWTH-WITH-VALUE" MICRO CAP FUND
- ------------------------------------------------------------------------------
SHAREHOLDER APPLICATION
- ------------------------------------------------------------------------------
Send Completed Application to:
KALMAR POOLED INVESTMENT TRUST
C/O RODNEY SQUARE MANAGEMENT CORPORATION
P.O. BOX 8987
WILMINGTON, DE 19899-9752
- ------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION - PLEASE PRINT
__ INDIVIDUAL OR JOINT ACCOUNT
- ------------------------------------------------------------------------------
First name Middle initial Last name Social security number (SSN)
- ------------------------------------------------------------------------------
Joint owner(s) (Joint ownership means "joint tenants with rights of
survivorship" unless otherwise specified.)
- ------------------------------------------------------------------------------
__ GIFT/TRANSFER TO A MINOR
- ------------------------------------------------------------------------------
Name of custodian (one only) Serving as Custodian for Minor's name (one only)
- -------------------------------------------------
State (minor's or custodian's state of residence)
- -------------------------------------------------
Uniform Gift/Transfer to Minors Act
- -------------------------------------------------
Minor's social security number
__ TRUST, CORPORATION, PARTNERSHIP OR OTHER ENTITY
- -------------------------------------------------
If corporation, resolution required from Board of Directors
- -------------------------------------------------
Taxpayer identification number (TIN)
- -------------------------------------------------
Name of each trustee (if any)
- -------------------------------------------------
Date of trust document (must be completed for trust registration)
- ------------------------------------------------------------------------------
2. ADDRESS
- ------------------------------------------------------------------------------
Street Address Daytime Phone (including Area Code)
(P.O. Box acceptable if street address is given)
- ------------------------------------------------------------------------------
City State Zip code Evening Phone (including Area Code)
I am a citizen of: __ U.S. __ __________________________________________
- ------------------------------------------------------------------------------
3. INITIAL INVESTMENT - MINIMUM $10,000
Enclosed is a check payable to the Kalmar "Growth-with-Value" Micro Cap Fund
for $_________
__ By Federal Funds wire:
- ------------------------------------------------------------------------------
Name of Bank Wire Amount ($) Wire Date
- ------------------------------------------------------------------------------
4. AUTOMATIC INVESTMENT PLAN
For information regarding the AUTOMATIC INVESTMENT PLAN see "Automatic
Investment Plan" (page 19) of the prospectus.
__ Check if you would like the Automatic Investment Plan application sent to
you.
- ------------------------------------------------------------------------------
5. DISTRIBUTIONS
All dividends and distributions will be automatically reinvested in additional
shares at net asset value unless otherwise indicated by checking the
appropriate box(es) under Optional Shareholder Privileges - Reinvestment
Options (Section 7 B).
- ------------------------------------------------------------------------------
6. SIGNATURE AND TAX CERTIFICATIONS
I have received and read the Prospectus for the Kalmar "Growth-with-Value
Micro Cap Fund and agree to its terms; I am of legal age. I understand that
investment in these shares involves investment risks, including possible loss
of principal. If a corporate customer, I certify that appropriate corporate
resolutions authorizing investment in Kalmar "Growth-with-Value Micro Cap Fund
have been duly adopted.
I certify under penalties of perjury that the Social Security number or
taxpayer identification number shown above is correct. Unless the box below
is checked, I certify under penalties of perjury that I am not subject to
backup withholding because the Internal Revenue Service (a) has not notified
me that I am as a result of failure to report all interest or dividends, or
(b) has notified me that I am no longer subject to backup withholding. The
certifications in this paragraph are required from all nonexempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemption proceeds under the federal income tax law.
__ Check here if you are subject to backup withholding.
- ------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------
Signature Date
Check one: __ Owner __ Trustee __ Custodian __ Other________
- ------------------------------------------------------------------------------
7. OPTIONAL SHAREHOLDER PRIVILEGES
A. TELEPHONE REDEMPTION AUTHORIZATION
I/We hereby authorize the use of cash transfers to effect redemptions of
shares from my/our account according to telephone instructions from any one of
the authorized signers listed in Section 7 C and to send the proceeds to
(CHECK ONE OR MORE OF THE FOLLOWING):
__ My address of record as indicated in Section 2 (must be $50,000 or less
and address must be established for a minimum of 60 days)
__ My bank as designated below
__ Wire proceeds to my bank via the Federal Funds Wire System (minimum
$1,000) as designated below
__ All of the above
- ------------------------------------------------------------------------------
Bank Name Bank Routing Transit #
- ------------------------------------------------------------------------------
Bank Account # (Checking/Savings) Account Holder
- ------------------------------------------------------------------------------
Bank Address: Street City State Zip
PLEASE ATTACH A VOIDED CHECK OF THE BANK ACCOUNT DESIGNATED ABOVE.
- ------------------------------------------------------------------
Telephone redemption by wire can be used only with financial institutions that
are participants in the Federal Reserve Bank Wire System. If the financial
institution you designate is not a Federal Reserve participant, telephone
redemption proceeds will be mailed to the named financial institution. In
either case, it may take a day or two, upon receipt for your financial
institution to credit your bank account with the proceeds, depending on its
internal crediting procedures.
- ------------------------------------------------------------------------------
B. OTHER REINVESTMENT OPTIONS - CHECK ONLY IF APPLICABLE
__ Do NOT reinvest my dividends __ Do NOT reinvest my capital gains
- ------------------------------------------------------------------------------
C. AUTHORIZATIONS
By electing the telephone redemption option, I appoint Rodney Square
Management Corporation ("RSMC"), my agent to redeem shares of the Kalmar
"Growth-with-Value" Micro Cap Fund when so instructed by telephone. This power
will continue if I am disabled or incapacitated. I understand that a request
for telephone redemption may be made by anyone, but the proceeds will be sent
only to the account address of record or to the bank listed above. Redemption
requests for proceeds in excess of $50,000 must be made in writing. By signing
below, I agree on behalf of myself, my assigns, and successors, not to hold
RSMC and any of its affiliates, or the Kalmar "Growth-with-Value" Micro Cap
Fund responsible for acting under the powers I have given RSMC. I also agree
that all account and registration information I have given will remain the
same unless I instruct RSMC otherwise in a written form, including a signature
guarantee. If I want to terminate this agreement, I will give RSMC at least
ten days notice in writing. If RSMC or the Kalmar "Growth-with-Value" Micro
Cap Fund want to terminate this agreement, they will give me at least ten days
notice in writing.
ALL OWNERS ON THE ACCOUNT MUST SIGN BELOW AND OBTAIN SIGNATURE GUARANTEE(S).
- ------------------------------------------------------------------------------
Signature of Invidual Owner Signature of Joint Owner
- ------------------------------------------------------------------------------
Signature of Corporate Officer, Trustee or Other - PLEASE INCLUDE TITLE
You must have your signature(s) guaranteed by an eligible institution
acceptable to the Fund's transfer agent, such as a bank, broker/dealer,
government securities dealer, credit union, national securities exchange,
registered securities association, clearing agency or savings association. A
Notary Public is not an acceptable guarantor.
SIGNATURE GUARANTEE(S) (stamp)
<PAGE>
INVESTMENT ADVISER
Kalmar Investment Advisers
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
UNDERWRITER
Rodney Square Distributors, Inc.
1105 N. Market Street
Wilmington, DE 19890
SHAREHOLDER SERVICES
Rodney Square Management Corporation
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND
KALMAR "GROWTH-WITH-VALUE" MICRO CAP FUND
EACH A SERIES OF
KALMAR POOLED INVESTMENT TRUST
3701 Kennett Pike, Greenville, Delaware 19807
STATEMENT OF ADDITIONAL INFORMATION [DATED ____________ ___, 1996]
Kalmar Pooled Investment Trust (the "Trust") currently offers two separate
series of shares, each with its own investment objective and policies.
Information concerning the Kalmar "Growth-with-Value" Small Cap Fund (the
"Small Cap Fund") and Kalmar "Growth-with-Value" Micro Cap Fund (the "Micro
Cap Fund") (collectively, the "Funds") is included in separate prospectuses,
each dated [_____________, 1996.] No investment in shares should be made
without first reading the applicable prospectus. A copy of each prospectus
may be obtained without charge at the addresses and telephone numbers listed
below.
INVESTMENT ADVISER: UNDERWRITER:
KALMAR INVESTMENT ADVISERS RODNEY SQUARE DISTRIBUTORS, INC.
3701 Kennett Pike 1105 N. Market Street
Greenville, DE 19807 Wilmington, DE 19890
(302) 658-7575 (800) 282-2319
- ------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ IN CONNECTION WITH THE CURRENT PROSPECTUS OF THE PARTICULAR FUND DATED
________ ___, 1996. INVESTORS SHOULD RETAIN THIS STATEMENT OF ADDITIONAL
INFORMATION FOR FUTURE REFERENCE.
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
Kalmar Pooled Investment Trust................................
Investments...................................................
Investment Restrictions.......................................
Portfolio Brokerage and Turnover..............................
Management....................................................
Purchases.....................................................
Redemptions...................................................
Taxation......................................................
General Information...........................................
Performance...................................................
Financial Statements..........................................
Appendix......................................................
<PAGE>
KALMAR POOLED INVESTMENT TRUST
Kalmar Pooled Investment Trust (the "Trust"), 3701 Kennett Pike, Greenville,
Delaware 19807, is an open-end diversified, management investment company
which currently offers shares of two series representing separate portfolios
of investments, the Kalmar "Growth-with-Value" Small Cap Fund (the "Small Cap
Fund") and the Kalmar "Growth-with-Value" Micro Cap Fund (the "Micro Cap
Fund") (each individually, a "Fund" and collectively, the "Funds."). Shares
of both Funds are offered and sold on a no-load basis, without the imposition
of sales or distribution charges.
INVESTMENTS
Each Fund seeks to achieve its objective by following the philosophy outlined
in its prospectus and by making investments selected in accordance with its
investment policies and restrictions. The Funds will vary their investment
strategies as described in each Fund's prospectus to achieve their objectives.
This Statement of Additional Information contains further information
concerning the techniques and operations employed by the Fund's investment
adviser, Kalmar Investment Advisers (the "Adviser") in managing each Fund, the
securities in which the Fund's will invest, and the policies they will follow,
and should be read in conjunction with the "Investment Objectives and
Policies" section of the prospectus of each Fund.
CONVERTIBLE SECURITIES
Traditional convertible securities include corporate bonds, notes and
preferred stocks that may be converted into or exchanged for common stock, and
other securities that also provide an opportunity for equity participation.
These securities are generally convertible either at a stated price or a
stated rate (that is, for a specific number of shares of common stock or other
security). As with other fixed income securities, the price of a convertible
security to some extent varies inversely with interest rates. While providing
a fixed-income stream (generally higher in yield than the income derivable
from a common stock but lower than that afforded by a non-convertible debt
security), a convertible security also affords the investor an opportunity,
through its conversion feature, to participate in the capital appreciation of
the common stock into which it is convertible. As the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis and so may not experience market value declines
to the same extent as the underlying common stock. When the market price of
the underlying common stock increases, the price of a convertible security
tends to rise as a reflection of the value of the underlying common stock. To
obtain such a higher yield, the Funds may be required to pay for a convertible
security an amount in excess of the value of the underlying common stock.
Common stock acquired by the Funds upon conversion of a convertible security
will generally be held for so long as the Adviser anticipates such stock will
provide the Funds with opportunities which are consistent with the Funds'
investment objectives and policies.
WARRANTS
The Funds may invest in warrants, in addition to warrants acquired in units or
attached to securities. A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified amount of the
issuer's capital stock at a set price for a specified period of time.
WHEN ISSUED, DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS
The Funds may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis in excess
of customary settlement periods for the type of security involved. In some
cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of the
commitment, with payment and delivery taking place in the future, generally a
month or more after the date of the commitment. While the Funds will only
enter into a forward commitment with the intention of actually acquiring the
security, the Funds may sell the security before the settlement date if it is
deemed advisable.
Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to the Funds prior to the
settlement date. The Funds will segregate with its Custodian (as hereinafter
defined) cash or liquid high-grade debt securities in an aggregate amount at
least equal to the amount of its outstanding forward commitments.
AMERICAN DEPOSITORY RECEIPTS
The Funds may make foreign investments through the purchase and sale of
sponsored or unsponsored American Depository Receipts ("ADRs"). ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. The Funds
may purchase ADRs whether they are "sponsored" or "unsponsored". "Sponsored"
ADRs are issued jointly by the issuer of the underlying security and a
depository, whereas "unsponsored" ADRs are issued without participation of the
issuer of the deposited security. Holders of unsponsored ADRs generally bear
all the costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR. ADRs may
result in a withholding tax by the foreign country of source which will have
the effect of reducing the income distributable to shareholders.
SHORT SALES
The Fund is authorized to engage in short sales of stocks which the Adviser
believes are substantially overvalued. Whenever the Fund effects a short
sale, it will set aside in segregated accounts cash, U.S. government
securities, high grade debt instruments or other liquid securities equal to
the difference between (a) the market value of the securities sold short and
(b) any cash or securities required to be deposited as collateral with the
broker in connection with the short sale (but not including the proceeds of
the short sale). Until the Fund replaces the security it borrowed to make the
short sale, it must maintain daily the segregated account at such a level that
(a) the amount deposited in it plus the amount deposited with the broker as
collateral will equal the current market value of the securities sold short.
No more than 10% of the value of the Fund's total net assets will be, when
added together, (a) deposited as collateral for the obligation to replace
securities borrowed to effect short sales, and (b) allocated to segregated
accounts in connection with short sales. The Fund's ability to make short
sales may be limited by a requirement applicable to "regulated investment
companies" under Subchapter M of the Internal Revenue Code that no more than
30% of the Fund's gross income in any year may be the result of gains from the
sale of property held for less than three months.
DEBT SECURITIES-RISKS
The Funds are also authorized to invest in debt securities, which may include
bonds, debentures, or notes (and cash equivalent debt securities as described
below). The Funds may invest their assets in debt securities pending
investment in suitable equity securities or if the Adviser believes such
securities have the potential for capital appreciation as a result of
improvement in the creditworthiness of the issuer. The receipt of income from
such debt securities is incidental to the Funds' investment objective of
capital appreciation.
The Fund may invest up to 5% of its net assets, at the time of investment, in
lower rated, fixed-income securities and unrated securities of comparable
quality, commonly referred to as "junk bonds." The market value of lower-
rated, fixed-income securities tends to reflect individual developments
affecting the issuer to a greater extent than the market value of higher rated
securities, which react primarily to fluctuations in the general level of
interest rates. Lower rated securities also tend to be more sensitive to
economic conditions than higher rated securities. These lower rated fixed-
income securities are considered by the rating agencies, on balance, to be
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
and will generally involve more credit risk than securities in the higher
rating categories. Even bonds rated BBB by Standard & Poor's Corporation
("S&P") or Baa by Moody's Investors Service ("Moody's"), ratings which are
considered investment grade, possess some speculative characteristics.
Issuers of high yielding, fixed-income securities are often highly leveraged
and may not have more traditional methods of financing available to them.
Therefore, the risk associated with acquiring the securities of such issuers
is generally greater than is the case with higher rated securities. For
example, during an economic downturn or a sustained period of rising interest
rates, highly leveraged issuers of high yielding securities may experience
financial stress. During these periods, such issuers may not have sufficient
cash flow to meet their interest payment obligations. The issuer's ability to
service its debt obligations may also be adversely affected by specific
developments affecting the issuer, the issuer's inability to meet specific
projected business forecasts, or the unavailability of additional financing.
The risk of loss due to default by the issuer may be significantly greater for
the holders of high yielding securities because such securities are generally
unsecured and are often subordinated to other creditors of the issuer. The
Fund may retain an issue that has defaulted because such issue may present an
opportunity for subsequent price recovery.
High yielding, fixed-income securities frequently have call or buy-back
features which permit an issuer to call or repurchase the securities from the
Fund. Although such securities are typically not callable for a period from
three to five years after their issuance, if a call were exercised by the
issuer during periods of declining interest rates, the Fund would likely have
to replace such called securities with lower yielding securities, thus
decreasing the net investment income to the Fund and dividends to
shareholders. The premature disposition of a high yielding security due to a
call or buy-back feature, the deterioration of the issuer's creditworthiness,
or a default may also make it more difficult for the Fund to manage the timing
of its receipt of income, which may have tax implications.
The Fund may have difficulty disposing of certain high yielding securities
because there may be a thin trading market for a particular security at any
given time. The market for lower rated, fixed-income securities generally
tends to be concentrated among a smaller number of dealers than is the case
for securities which trade in a broader secondary retail market. Generally,
purchasers of these securities are predominantly dealers and other
institutional buyers, rather than individuals. To the extent the secondary
trading market for a particular high yielding, fixed-income security does
exist, it is generally not as liquid as the secondary market for higher rated
securities. Reduced liquidity in the secondary market may have an adverse
impact on market price and the Fund's ability to dispose of particular issues,
when necessary, to meet the Fund's liquidity needs or in response to a
specific economic event, such as a deterioration in the creditworthiness of
the issuer. Reduced liquidity in the secondary market for certain securities
may also make it more difficult for the Fund to obtain market quotations based
on actual trades for purposes of valuing the Fund's portfolio. Current values
for these high yield issues are obtained from pricing services and/or a
limited number of dealers and may be based upon factors other than actual
sales.
For a description of debt security ratings, please refer to the "Appendix" in
the Statement of Additional Information.
LOANS OF PORTFOLIO SECURITIES.
Each Fund may lend its investment securities to approved borrowers who need to
borrow securities in order to complete certain transactions, such as covering
short sales, avoiding failures to deliver securities or completing arbitrage
operations. By lending its investment securities, a Fund attempts to increase
its income through the receipt of interest on the loan. Any gain or loss in
the market price of the securities loaned that might occur during the term of
the loan would be for the account of the Fund. Each Fund may lend its
investment securities to qualified brokers, dealers, domestic and foreign
banks or other financial institutions, so long as the terms, the structure and
the aggregate amount of such loans are not inconsistent with the Investment
Company Act of 1940, as amended, (the "1940 Act") or the Rules and Regulations
or interpretations of the Securities and Exchange Commission (the "SEC")
thereunder, which currently require that: (a) the borrower pledge and maintain
with a Fund collateral consisting of cash, an irrevocable letter of credit
issued by a bank or securities issued or guaranteed by the United States
Government having a value at all times not less than 100% of the value of the
securities loaned; (b) the borrower add to such collateral whenever the price
of the securities loaned rises (i.e., the borrower "marks to the market" on a
daily basis); (c) the loan be made subject to termination by a Fund at any
time; and (d) the Fund receives reasonable interest on the loan (which may
include the Fund investing any cash collateral in interest bearing short-term
investments). All relevant facts and circumstances, including the
creditworthiness of the broker, dealer or institution, will be considered in
making decisions with respect to the lending of securities, subject to review
by the Board of Trustees.
At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities
so long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees. In addition, voting rights may pass
with the loaned securities, but if a material event occurs affecting an
investment on a loan, the loan must be called and the securities voted.
WRITING COVERED CALL OPTIONS
The general reason for writing call options is to attempt to realize income.
By writing covered call options, each Fund gives up the opportunity, while the
option is in effect, to profit from any price increase in the underlying
security above the option exercise price. In addition, each Fund's ability to
sell the underlying security will be limited while the option is in effect
unless the Fund effects a closing purchase transaction. A closing purchase
transaction cancels out the Fund's position as the writer of an option by
means of offsetting purchase of an identical option prior to the expiration of
the option it has written. Covered call options serve as a partial hedge
against the price of the underlying security declining. Each Fund writes only
covered options, which means that so long as a Fund is obligated as the writer
of the option it will, through its custodian, have deposited the underlying
security of the option or, if there is a commitment to purchase the security,
a segregated cash reserve of cash, cash equivalents, U.S. Government
securities or other high grade liquid debt securities denominated in U.S.
dollars or non-U.S. currencies with a securities depository with a value equal
to or greater than the exercise price of the underlying securities. By
writing a put, a Fund will be obligated to purchase the underlying security at
a price that may be higher than the market value of that security at the time
of exercise for as long as the option is outstanding. Each Fund may engage in
closing transactions in order to terminate put options that it has written.
PURCHASING OPTIONS
A put option may be purchased to partially limit the risks of the value of an
underlying security or the value of a commitment to purchase that security for
forward delivery. The amount of any appreciation in the value of the
underlying security will be partially offset by the amount of the premium paid
for the put option and any related transaction costs. Prior to its
expiration, a put option may be sold in a closing sale transaction and profit
or loss from a sale will depend on whether the amount received is more or less
than the premium paid for the put option plus the related transaction costs.
A closing sale transaction cancels out a Fund's position as purchaser of an
option by means of an offsetting sale of an identical option prior to the
expiration of the option it has purchased. In certain circumstances, a Fund
may purchase call options on securities held in its investment portfolio on
which it has written call options or on securities which it intends to
purchase.
ILLIQUID AND RESTRICTED SECURITIES.
Each Fund may invest up to 15% of its net assets in illiquid or restricted
securities. Certain restricted securities eligible for resale to qualified
institutional purchasers pursuant to Rule 144A under the Securities Act of
1933 or commercial paper issued pursuant to Section 4(2) of the Securities Act
of 1933 may be treated as liquid securities for purposes of the 15%
limitation, under guidelines adopted by the board of Trustees of the Trust.
While maintaining oversight and review, the Board of trustees has delegated to
the Adviser to day-to-day functions of determining whether or not individual
securities are liquid for purposes of the Fund's 15% limitation on illiquid
investments (or for other purposes, such as the maintenance of liquid
collateral for securities positions). The Board of Trustees of the Trust has
instructed the Adviser to consider the following factors in determining the
liquidity of a security purchased under Rule 144A or commercial paper issued
pursuant to section 4(2); (i) the frequency of trades and trading volume for
the security; (ii) whether at least three dealers are willing to purchase or
sell the security and the number of potential purchasers; (iii) whether at
least two dealers are making a market in the security; and (iv) the nature of
the security and the nature of the marketplace trades (e.g., the time needed
to dispose of the security, the method of soliciting offers and the mechanics
of transfer). Although having delegated the day-to-day functions, the Board
of Trustees will continue to monitor and will periodically review the
Adviser's selection of Rule 144A securities as well as the Adviser's
determinations as to their liquidity.
If the Adviser determines that a security which was previously determined to
be liquid, is no longer liquid and, as a result, the Fund's holdings of
illiquid securities exceed the Fund's 15% limit on investment in such
securities, the Adviser will determine what action shall be taken to ensure
that the Fund continues to adhere to such limitation including disposing of
illiquid assets which may include such securities.
INVESTMENT RESTRICTIONS
The Funds have adopted the investment restrictions set forth below, some of
which (as indicated), are fundamental policies of each Fund and cannot be
changed without the approval of a majority of the outstanding voting
securities. As provided in the 1940 Act, a "vote of a majority of the
outstanding voting securities" means the affirmative vote of the lesser of:
(i) more than 50% of the outstanding shares; or (ii) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. As a matter of fundamental
policy, each Fund may not:
1. As to 75% of its total assets, invest more than 5% of the total
assets of such Fund in the securities of any one issuer, other than
cash or cash items, or obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or other investment
companies.
2. As to 75% of its total assets, purchase more than 10% of the
voting securities, or any class of securities, of any single issuer.
For purposes of this restriction, all outstanding fixed income
securities of an issuer are considered as one class.
3. Invest more than 25% of its total assets (taken at market value
at the time of each investment) in the securities of issuers in any
particular industry, except for temporary defensive purposes. This
limitation shall not apply to obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities; investments
in certificates of deposit and banker's acceptances will not be
considered investments in the banking industry; utility companies
will be divided according to their services; financial service
companies will be classified according to the end users of their
services; and asset-backed securities will be classified according
to the underlying assets securing such securities.
4. Invest in real estate or interests in real estate, however,
this will not prevent a Fund from investing in securities secured by
real estate or interests therein, or in publicly-held real estate
investment trusts or marketable securities of companies which may
represent indirect interests in real estate.
5. Purchase or sell commodities or commodity contracts, except
that the Funds may purchase or sell stock index options, stock index
futures, financial futures and related options on such futures.
6. Issue senior securities, except that a Fund may borrow money in
accordance with investment limitation 9, purchase securities on a
when-issued, delayed settlement or forward delivery basis, sell
securities short and enter into reverse repurchase agreements.
7. Purchase any securities on margin, except that the Fund may
obtain such short-term credit as may be necessary for the clearance
of purchases and sales of portfolio securities. The payment by the
Fund of initial or variation margin in connection with options
transactions, if applicable, shall not be considered the purchase of
a security on margin.
8. Make loans of money or property, except through: (i) the
purchase of debt instruments consistent with its investment
objective and policies; (ii) investment in repurchase agreements; or
(iii) loans of portfolio securities in a manner consistent with a
Fund's investment objective and policies and the provisions of the
Investment Company Act and regulations and SEC positions thereunder.
9. Borrow amounts in excess of 33 1/3% of its total assets, taken
at market value, and then only from banks (i) as a temporary measure
for extraordinary or emergency purposes such as the redemption of
Fund shares or (ii) in connection with reverse repurchase
agreements. Utilization of borrowings may exaggerate increases or
decreases in an investment company's net asset value. However, the
Fund will not purchase securities while borrowings exceed 5% of its
total assets, except to honor prior commitments and to exercise
subscription rights when outstanding borrowings have been obtained
exclusively for settlements of other securities transactions.
10. Mortgage, pledge, hypothecate or otherwise encumber its assets,
except in amounts up to 33 1/3% of its total assets, but only to
secure borrowings authorized in the preceding restriction or to
collateralize securities trading practices described in the
prospectuses and Statement of Additional Information for the Funds.
11. Underwrite securities of other issuers except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933,
as amended, in selling portfolio securities.
The policies set forth below are non-fundamental policies of each Fund and may
be amended without the approval of the shareholders of the respective Funds.
Each Fund will not:
1. Purchase securities of other investment companies, except to
the extent permitted under the 1940 Act or in connection with a
merger, consolidation, acquisition or reorganization, or in
accordance with any exemptive order granted by the SEC.
2. Make investments in securities for the purpose of exercising
control over or management of the issuer.
3. Invest more than 5% of its total assets in securities of
issuers having a record, together with predecessors, of less than
three years of continuous operation, except for certain real estate
investment trusts.
4. Purchase or sell interests in oil, gas or other mineral
exploration or development programs or leases, rights or royalty
contracts or exploration or development programs, except that the
Fund may invest in securities of companies which invest in or
sponsor such programs.
5. Invest in warrants if, at the time of acquisition, its
investment in warrants, valued at the lower of cost or market value,
would exceed 5% of the Fund's net assets; included within such
limitation, but not to exceed 2% of the Fund's net assets, are
warrants which are not listed on the New York or American Stock
Exchanges. For purposes of this policy, warrants acquired by the
Fund in units or attached to securities may be deemed to be without
value;
PORTFOLIO BROKERAGE AND TURNOVER
The Adviser, when effecting the purchases and sales of portfolio securities
for the account of a Fund, will seek execution of trades either: (i) at the
most favorable and competitive rate of commission charged by any broker,
dealer or member of an exchange; or (ii) at a higher rate of commission
charges if reasonable in relation to brokerage and research services provided
to the Funds or the Adviser by such member, broker, or dealer when viewed in
terms of either a particular transaction or the Adviser's overall
responsibilities to the Trust. Such services may include, but are not limited
to, any one or more of the following: information as to the availability of
securities for purchase or sale, statistical or factual information, or
opinions pertaining to investments. The Adviser may use research and services
provided to it by brokers and dealers in servicing all its clients, and not
all such services will be used by the Adviser in connection with the Funds.
While it is the policy of each Fund generally not to engage in frequent
trading and turnover tactics for short-term gains, the Adviser will effect
portfolio transactions without regard to holding period if, in its judgment,
such transactions are advisable in light of a change in circumstances of a
particular company or within a particular industry or in general market,
economic or financial conditions. While the Funds anticipate that their
annual portfolio turnover rate should not exceed 50% under normal conditions,
it is impossible to predict portfolio turnover rates. The portfolio turnover
rate is calculated by dividing the lesser of a Fund's annual sales or
purchases of portfolio securities (exclusive of purchases or sales of
securities whose maturities at the time of acquisition were one year or less)
by the monthly average value of the securities in the portfolio during the
year. High portfolio turnover would involve additional transaction costs
(such as brokerage commissions) which are borne by a Fund, or adverse tax
effects. (See "Dividends, Distributions and Taxes" in the Prospectus). Each
Fund is subject to the Federal income tax requirement that less than 30% of a
Fund's gross income must be derived from gains from the sale or other
disposition of securities held for less than three months.
MANAGEMENT
INVESTMENT ADVISER AND ADVISORY AGREEMENT
Kalmar Investment Advisers (previously defined as the "Adviser") serves as the
investment adviser for both Funds. The Adviser was organized as a Delaware
business trust on November 6, 1996 for the sole purpose of serving as the
investment adviser for the series of the Trust. The Adviser is the sister
company to Kalmar Investments Inc., a Delaware corporation which has been
providing investment advisory services to individual accounts since its
inception in 1981. Both Kalmar and the Adviser are registered as investment
advisers under the Investment Advisers Act of 1940, and are wholly-owned by
Ford B. Draper, Jr. The investment personnel who comprise the portfolio
management team at Kalmar and the Adviser are identical.
The Trust has entered into separate investment advisory agreements on behalf
of each Fund with the Adviser (the "Advisory Agreements"), for the provision
of investment advisory services to the Funds, subject to the supervision and
direction of the Board of Trustees. Pursuant to the Advisory Agreements, each
Fund is obligated to pay the Adviser a monthly fee equal to an annual rate of
1.00% of the respective Fund's average daily net assets. During the Fund's
first fiscal year, the Adviser has voluntarily agreed to limit its advisory
fees or to assume certain expenses of the Fund so that the Fund's total
operating costs do not exceed 1.25% on an annualized basis. The Adviser may
terminate this arrangement at any time.
The Advisory Agreements are each dated [____________, 1996,] and are effective
for an initial period of two years. The Agreements may be renewed after their
initial term only so long as such renewal and continuance are specifically
approved at least annually by the Board of Trustees or by vote of a majority
of the outstanding voting securities the respective Fund, and only if the
terms of the renewal thereof have been approved by the vote of a majority of
the Trustees who are not parties thereto or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreements will terminate automatically in the event
of their assignment.
General expenses of the Trust (such as costs of maintaining corporate
existence, legal fees, insurances, etc.) will be allocated among the Funds in
proportion to their relative net assets. Expenses which relate exclusively to
a particular Fund, such as certain registration or notice filing fees,
brokerage commissions and other portfolio expenses, will be borne directly by
that Fund.
TRUSTEES AND OFFICERS
The Trustees and principal executive officers of the Trust and their principal
occupations for the past five years are listed below:
POSITION AND OFFICE PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE WITH THE TRUST DURING THE PAST FIVE YEARS
- ---------------- --- ------------------- --------------------------
Ford B. Draper, Jr.* [__] Chairman, President President and Director,
3701 Kennett Pike and Treasurer Kalmar Investments Inc.
Greenville, DE 19807 since 1982; President,
Kalmar Investment Advisers
since inception
Wendell Fenton [__] Trustee President of the law firm of
Richards, Layton & Finger
(joined 1971).
John J. Quindlen Trustee Trustee of The Rodney Square
Fund and Kiewit Mutual Fund;
Senior Vice President and
Chief Financial Officer of
E.I. Dupont de Nemours & Co.
from 1954 through 1993
(retired).
David D. Wakefield [__] Trustee Executive Secretary,
Longwood Foundation and
Welfare Foundation, 1992 to
present; Executive
Secretary, J.P. Morgan
Delaware from 1989 to 1992.
David M. Reese, Jr.* [__] Trustee Semi-retired; previously,
3701 Kennett Pike portfolio manager, research
Greenville, DE 19807 analyst for Kalmar
Investments, Inc. from 1982
through March, 1996.
Lee B. Davis [__] Secretary; Secretary and Compliance
3701 Kennett Pike Compliance Officer Officer, Kalmar Investments
Greenville, DE 19807 Inc. since [____] and
Kalmar Investment Advisers
since inception.
- --------------------
* Trustees who are "interested persons" as defined in the Investment
Company Act of 1940.
The officers conduct and supervise the daily business operations of the Trust,
while the trustees, in addition to the functions set forth under "Investment
Adviser" and "Distributor" review such actions and decide on general policy.
Compensation to officers and Trustees of the Trust who are affiliated with the
Adviser is paid by the Adviser, and not by the Trust.
Information relating to the compensation to be paid to the Trustees of the
Trust is set forth below:
Pension or
Estimated Retirement Total Com-
Aggregate Benefits Estimated pensation
Compensation Accrued as Annual From Trust
From Trust Part Benefits and Fund
Name and (Current Fiscal of Trust Upon Complex Paid
Position Year)1 Expenses Retirement to Trustees
- -------- --------------- ---------- ------------ -----------
Ford B. Draper, Jr. $0 N/A N/A $0
Wendell Fenton $0 N/A N/A $0
John J. Quindlen $5000 N/A N/A $5000
David M. Reese, Jr. $5000 N/A N/A $5000
David D. Wakefield $5000 N/A N/A $5000
1 THE TRUSTEES WHO ARE "INTERESTED PERSONS" OF THE TRUST AS DEFINED IN THE
INVESTMENT COMPANY ACT RECEIVE NO COMPENSATION FROM THE TRUST. FOR THEIR
SERVICE AS TRUSTEES, THE "NON-INTERESTED" TRUSTEES RECEIVE $2,500 IN
ANNUAL FEES PER FUND PER TRUST MEETING ATTENDED, AS WELL AS REIMBURSEMENT
FOR OUT-OF-POCKET EXPENSES IN CONNECTION WITH TRAVEL AND ATTENDANCE AT
BOARD MEETINGS. THE TRUST HAS NOT COMPLETED A FULL FISCAL YEAR OF
OPERATIONS AND, AS OF THE DATE OF THIS STATEMENT OF ADDITIONAL
INFORMATION, ONE MEETING OF THE BOARD OF TRUSTEES WAS HELD IN THE PRIOR
FISCAL YEAR AT WHICH ALL OF THE TRUSTEES WERE PRESENT. THE AMOUNT IN
COLUMN 2 REPRESENTS THE ESTIMATED AGGREGATE COMPENSATION TO BE PAID TO
EACH TRUSTEE FROM THE TRUST FOR THE CURRENT FISCAL YEAR. IT IS EXPECTED
THAT THE TRUST WILL HOLD FOUR TRUSTEE MEETINGS PER YEAR.
The Trust has an Audit Committee which has the responsibility, among other
things, to (i) recommend the selection of the Trust's independent auditors;
(ii) review and approve the scope of the independent auditors' audit activity;
(iii) review the financial statements which are the subject of the independent
public auditors' certifications; and (iv) review with such independent public
auditors the adequacy of the Funds' basic accounting system and the
effectiveness of the Funds' internal accounting controls. There is no
separate Nominating or Investment Committee. Items pertaining to these
Committees are submitted to the full Board of Trustees.
The Trust has not adopted a pension plan or any other plan that would afford
benefits to its Trustees.
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTING AGENT.
Rodney Square Management Corporation ("Rodney Square"), located at Rodney
Square North, 1100 N. Market Street, Wilmington, DE 19801-0001, provides
certain administrative services to the Trust pursuant to an Administration
Agreement. [Under the Administration Agreement, the Administrator: (1)
coordinates with the Custodian and Transfer Agent and monitors the services
they provide to the Funds; (2) coordinates and monitors any other third
parties furnishing services to the Funds; (3) provides the Funds with
necessary office space, telephones and other communications facilities and
personnel competent to perform administrative and clerical functions; (4)
supervises the maintenance by third parties of such books and records of the
Funds as may be required by applicable federal or state law; (5) prepare and,
after approval by the Funds, arranges for the filing of such registration
statements and other documents with the Securities and Exchange Commission and
other federal and state regulatory authorities as may be required by
applicable law; (8) reviews and submits to the officers of the Trust, for
their approval, invoices or other requests for payment of the Funds' expenses
and instructs the Custodian to issue check in payment thereof; and (9) takes
such other action with respect to the Trust or the Funds as may be necessary
in the opinion of Rodney Square to perform its duties under the Agreement.]
As compensation for services performed under the Administration Agreement,
Rodney Square receives a fee payable monthly at an annual rate (as described
in each Fund's Prospectus) multiplied by the average daily net assets of the
Trust.
The Administration Agreement became effective as of _____________, 1996 for an
initial period of three years, and will remain in effect from year to year
thereafter, provided such continuance is approved at least annually by a vote
of the Trustees of the Trust. The Administration Agreement is also terminable
without payment of any penalty with respect to either Fund: (i) by the Trust
on sixty (60) days' written notice to Rodney Square; or (ii) by Rodney Square
on six (6) months' written notice to the Trust. The Administration Agreement
may also be terminable by the Trust or Rodney Square for cause.
DISTRIBUTOR
Rodney Square Distributors, Inc. ("RSD") serves as the principal underwriter
and distributor of each Fund's shares pursuant to a Distribution Agreement
with the Trust. Under the terms of the Distribution Agreement, RSD agrees to
use all reasonable efforts as agent to secure purchasers for the various
series of the Trust. RSD also assists the Trust in the production and
distribution of advertising, marketing and sales literature materials, and
review such materials for compliance with applicable regulations.
The Distribution Agreement provides that RSD, in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under the
agreement, will not be liable to the Trust or its shareholders for losses
arising in connection with the sale of Fund shares.
Each Fund shall continue to bear the expense of all filing or registration
fees incurred in connection with the registration of shares under state
securities laws.
The Distribution Agreement became effective as of ___________ __, 1996, and
will remain in effect for a period of two years. Thereafter, the Distribution
Agreement continues in effect from year to year as long as its continuance is
approved at least annually by a majority of the Trustees, including a majority
of the Trustees who are not parties to the Distribution Agreement or
interested persons of any such party (the "Independent Trustees") and
terminates automatically in the event of its assignment. The Distribution
Agreement is also terminable without payment of any penalty with respect to
either Fund: (i) by such Fund (by vote of a majority of the Independent
Trustees or by vote of a majority of the outstanding voting securities of the
Fund) on sixty (60) days' written notice to RSD; or (ii) by RSD on sixty (60)
days' written notice to the Fund.
PURCHASES
Shares of the Funds are sold at the net asset value next determined after the
receipt and acceptance of a purchase application in proper form by Rodney
Square. The minimum initial investment for each Fund is $10,000 and there is
no subsequent investment minimums. There is no minimum investment amount for
investments by qualified retirement plans.
TAX-DEFERRED RETIREMENT PLANS
All types of tax-deferred retirement plans such as IRAs, employer-sponsored
defined contribution plans (including 401(k) plans) and tax-sheltered
custodial accounts described in Section 403(b)(7) of the Internal Revenue Code
of 1986, as amended are available to shareholders of the Funds. Qualified
investors benefit from the tax-free compounding of income dividends and
capital gains distributions.
INDIVIDUAL RETIREMENT ACCOUNTS (IRA)
Individuals, who are not active participants (and, when a joint return is
filed, who do not have a spouse who is an active participant) in an employer
maintained retirement plan are eligible to contribute on a deductible basis to
an IRA account. The IRA deduction is also retained for individual taxpayers
and married couples with adjusted gross incomes not in excess of certain
specified limits. All individuals who have earned income may make
nondeductible IRA contributions to the extent that they are not eligible for a
deductible contribution. Income earned by an IRA account will continue to be
tax deferred. A special IRA program is available for employers under which
the employers may establish IRA accounts for their employees in lieu of
establishing tax-qualified retirement plans. Known as SEP-IRAs (Simplified
Employee Pension-IRA), they free the employer of many of the recordkeeping
requirements of establishing and maintaining a tax-qualified retirement plan
trust.
If you are entitled to receive a distribution from a qualified retirement
plan, you may rollover all or part of that distribution into a Fund's IRA.
Your rollover contribution is not subject to the limits on annual IRA
contributions. You can continue to defer Federal income taxes on your
contribution and on any income that is earned on that contribution.
DEFINED CONTRIBUTION PLANS
Profit sharing plans and money purchase plans (the "Defined Contribution
Plans") are for use by both self-employed individuals (sole proprietorships
and partnerships) and corporations who wish to use shares of the Funds as a
funding medium for a retirement plan qualified under the Internal Revenue
Code.
Annual deductible contributions to the Defined Contribution Plans generally
may be made on behalf of each participant in a total amount of up to the
lesser of 20% of a self-employed participant's pre-contribution earned income
(after reducing the earned income by the self-employed's deduction for 1/2 of
his or her self-employment tax) (25% of a non-self-employed participant's
wages) or $30,000. Unless the employer chooses to take Social Security
contributions into account, the same percentage of earned income (or wages)
must be contributed on behalf of each participant in the Defined Contribution
Plans. Earned income and wages are limited for this purpose to $150,000 for
1994 indexed for cost of living adjustments in subsequent years.
403(B)(7) RETIREMENT PLANS
A 403(b)(7) Plan is for use by schools, hospitals, and certain other tax-
exempt organizations or associations who wish to use shares of the Funds as a
funding medium for a retirement plan for their employees. Contributions are
made to the 403(b)(7) Plan as a reduction to the employee's regular
compensation. Such contributions, to the extent they do not exceed applicable
limitations (including a generally applicable limitation of $9,500 per year),
are excludable from the gross income of the employee for Federal Income tax
purposes. Assets withdrawn from the 403(b)(7) Plan are subject to Federal
Income tax and to the additional 10% tax discussed above under "Defined
Contribution Plans."
In all these Plans, distributions of net investment income and capital gains
will be automatically reinvested.
REDEMPTIONS
Under normal circumstances, you may redeem your shares at any time without a
fee. The redemption price will be based upon the net asset value per share
next determined after receipt of the redemption request, provided it has been
submitted in the manner described in the Prospectus of each Fund. See "How to
Redeem Shares" in the Prospectus. The redemption price may be more or less
than your cost, depending upon the net asset value per share at the time of
redemption.
Payment for shares tendered for redemption is made by check within seven days
after receipt and acceptance of your redemption request by Rodney Square,
except that each Fund reserves the right to suspend the right of redemption,
or to postpone the date of payment upon redemption beyond seven days, (i) for
any period during which the New York Stock Exchange is restricted, (ii) for
any period during which an emergency exists as determined by the Securities
and Exchange Commission as a result of which disposal of securities owned by a
given Fund is not reasonably predictable or it is not reasonably practicable
for such Fund fairly to determine the value of its net assets, or (iii) for
such other periods as the Securities and Exchange Commission may by order
permit for the protection of Fund shareholders.
TAXATION
Each Fund intends to qualify each year as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
In order to so qualify, a Fund must, among other things (i) derive at least
90% of its gross income from dividends, interest, payments with respect to
certain securities loans, gains from the sale of securities or foreign
currencies, or other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (ii) derive less than 30%
of its gross income from the sale or other disposition of stock or securities
or certain futures and options thereon held for less than three months ("short-
short gains"); (iii) distribute at least 90% of its dividends, interest and
certain other taxable income each year; and (iv) at the end of each fiscal
quarter maintain at least 50% of the value of its total assets in cash,
government securities, securities of other regulated investment companies, and
other securities of issuers which represent, with respect to each issuer, no
more than 5% of the value of a fund's total assets and 10% of the outstanding
voting securities of such issuer, and with no more than 25% of its assets
invested in the securities (other than those of the government or other
regulated investment companies) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar or related
trades and businesses.
To the extent a Fund qualifies for treatment as a regulated investment
company, it will not be subject to federal income tax on income and net
capital gains paid to shareholders in the form of dividends or capital gains
distributions. The Funds have elected to be treated as regulated investment
companies under Subchapter M of the Code and each intends to qualify as such
for each future fiscal year. The Directors reserve the right not to maintain
the qualification of the Fund as a regulated investment company if they
determine such course of action to be beneficial to you. In such case, the
Fund will be subject to federal, and possibly state, corporate taxes on its
taxable income and gains, and distributions to you will be taxable as ordinary
dividend income to the extent of the Fund's available earnings and profits.
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made during the year.
An excise tax at the rate of 4% will be imposed on the excess, if any, of a
Fund's "required distributions" over actual distributions in any calendar
year. Generally, the "required distribution" is 98% of a fund's ordinary
income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 plus undistributed
amounts from prior years. The Funds intend to make distributions sufficient
to avoid imposition of the excise tax. Distributions declared by the Funds
during October, November or December to shareholders of record during such
month and paid by January 31 of the following year will be taxable to
shareholders in the calendar year in which they are declared, rather than the
calendar year in which they are received.
Each Fund will provide an information return to shareholders describing the
federal tax status of the dividends paid by the Fund during the preceding year
within 60 days after the end of each year as required by present tax law.
Individual shareholders will receive Form 1099-DIV and Form 1099-B as required
by present tax law during January of each year. If the Fund makes a
distribution after the close of its fiscal which is attributable to income or
gains earned in such earlier fiscal year, then the Fund shall send a notice to
its shareholders describing the amount and character of such distribution
within 60 days after the close of the year in which the distribution is made.
Shareholders should consult their tax advisors concerning the state or local
taxation of such dividends, and the federal, state and local taxation of
capital gains distributions.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and regulations. The Code and regulations are subject to change by
legislative or administrative action at any time, and retroactively.
Dividends and distributions also may be subject to state and local taxes.
GENERAL INFORMATION
AUDITS AND REPORTS
The accounts of the Trust are audited each year by Coopers & Lybrand L.L.P.,
independent certified public accountants. Shareholders receive semi-annual
and annual reports of the Trust including the annual audited financial
statements and a list of securities owned.
PERFORMANCE
Current yield and total return may be quoted in advertisements, shareholder
reports or other communications to shareholders. Yield is the ratio of income
per share derived from a Fund's investments to a current maximum offering
price expressed in terms of percent. The yield is quoted on the basis of
earnings after expenses have been deducted. Total return is the total of all
income and capital gains paid to shareholders, assuming reinvestment of all
distributions, plus (or minus) the change in the value of the original
investment, expressed as a percentage of the purchase price. Occasionally, a
Fund may include its distribution rate in advertisements. The distribution
rate is the amount of distributions per share made by a Fund over a 12-month
period divided by the current maximum offering price.
The Securities and Exchange Commission rules require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by a Fund be accompanied by certain
standardized performance information computed as required by the Commission.
Current yield and total return quotations used by a Fund are based on the
standardized methods of computing performance mandated by the Securities and
Exchange Commission. An explanation of those and other methods used by a Fund
to compute or express performance follows.
CURRENT YIELD
As indicated below, current yield is determined by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period and analyzing the result. Expenses
accrued for the period include any fees charged to all shareholders during the
30-day base period. According to the Securities and Exchange Commission
formula:
6
Yield = 2 [(a-b +1) - 1]
---
cd
where
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
TOTAL RETURN
As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by
the average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period less any fees charged to all shareholder accounts and
analyzing the result. The calculation assumes the maximum sales load is
deducted from the initial $1,000 purchase order and that all dividends and
distributions are reinvested at the public offering price on the reinvestment
dates during the period. The quotation assumes the account was completely
redeemed at the end of each one, five and ten-year period and assumes the
deduction of all applicable charges and fees. According to the Securities and
Exchange Commission formula:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10-year
periods, determined at the end of the 1, 5 or
10-year periods (or fractional portion thereof).
Regardless of the method used, past performance is not necessarily indicative
of future results, but is an indication of the return to shareholders only for
the limited historical period used.
COMPARISONS AND ADVERTISEMENTS
To help investors better evaluate how an investment in a Fund might satisfy
their investment objective; advertisements, sales literature and other
shareholder communications regarding a Fund may discuss yield or total return
for such Fund as reported by various financial publications. Advertisements,
sales literature and shareholder communications may also compare yield or
total return to yield or total return as reported by other investments,
indices, and averages. The following publications, indices, and averages may
be used:
Barron's Investor's Daily
Business Week Lipper Mutual Fund Performance Analysis
CDA Investment Technologies, Inc. Lipper Mutual Fund Indices
Changing Times, The Kiplinger Magazine Money
Consumer Digest Morningstar, Inc.
Financial World Mutual Fund Values
Forbes Nasdaq Indexes
Fortune
Investment Company Data, Inc.
Personal Investor
Personal Investing News
Russell 2000 Index
Russell 2000 Value and Growth Indexes
S&P 500 Composite Stock Price Index
S&P SmallCap 600 Index
S&P MidCap 400 Index
S&P/Barra Growth & Value Indexes
Success
The New York Times
U.S. News and World Report
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Wilshire Medium & Small Cap Indexes
A Fund may also from time to time along with performance advertisements,
present its investments, as of a current date, in the form of the "Schedule of
Investments" included in the Semi-Annual and Annual Reports to the
shareholders of the Trust.
<PAGE>
FINANCIAL STATEMENTS
KALMAR POOLED INVESTMENT TRUST
Statements of Assets and Liabilities
as of December 13, 1996
Kalmar Small Cap Kalmar Micro Cap
Growth-with-Value Fund Growth-with-Value Fund
---------------------- ----------------------
Assets:
Cash $ 50,000 $ 50,000
Deferred Organizational
Costs 29,000 29,000
Total Assets 79,000 79,000
Liabilities:
Accrued Expenses 29,000 29,000
Net Assets $ 50,000 $ 50,000
========= =========
Net Asset Value, Redemption and
Offering Price Per Share
(5,000 and 5,000 outstanding
shares of beneficialinterest,
$0.001 par value per share,
unlimited authorization,
respectively) $10.00 $10.00
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
KALMAR POOLED INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 13, 1996
1. ORGANIZATION:
Kalmar Pooled Investment Trust (the "Trust") was organized on September
30, 1996 as a Delaware business trust. The Trust is registered under the
Investment Company Act of 1940, as amended, as an open-end diversified,
management investment company consisting of shares of two series -
Kalmar Small Cap Growth-with-Value Fund (the "Small Cap Fund") and Kalmar
Micro Cap Growth-with-Value Fund (the "Micro Cap Fund"). The Trust has
not commenced operations except those related to organizational matters
and the sale of 5,000 Small Cap Fund shares of beneficial interest and
5,000 Micro Cap Fund shares of beneficial interest (collectively, the
"initial shares") to Kalmar Investment Advisers (the "Adviser") on
December 13, 1996.
2. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES:
Organizational costs have been capitalized by the Trust and are being
amortized over sixty months commencing with operations. In the event any
of the initial shares of the Trust are redeemed by any holder thereof
during the period that the Trust is amortizing organizational costs, the
redemption proceeds payable to the holder thereof by the Trust will be
reduced by the unamortized organizational costs in the same ratio as the
number of initial shares being redeemed bears to the number of initial
shares outstanding at the time of redemption.
Certain trustees and officers of the Trust are also officers of the
Trust's Adviser. Such trustees and officers are paid no fees by the
Trust for serving as trustees or officers of the Trust.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of the Kalmar Pooled Investment Trust:
We have audited the accompanying Statement of Assets and Liabilities of Kalmar
Pooled Investment Trust (the "Trust") as of December 13, 1996. This financial
statement is the responsibility of the Trust's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of Kalmar Pooled Investment
Trust as of December 13, 1996 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 16, 1996
<PAGE>
APPENDIX
Description of Corporate Bond Ratings
Moody's
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-
edged." Interest payments are protected by large or exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large, fluctuation of protective elements may be of
greater amplitude, or there may be other elements present which make the long-
term risks appear somewhat larger.
A - Bonds rated A possess many favorable investment attributes and are
considered upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered medium grade obligations. They are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba - Bonds rated Ba are judged to have predominantly speculative elements and
their future cannot be considered well assured. Often the protection of
interest and principal payments is very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond ratings. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; modifier 2 indicates a mid-range ranking; and modifier 3 indicates
that the issue ranks in the lower end of its generic rating category.
S&P
AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and, in the majority of instances,
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
BB, B, CCC, CC - Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligations.
BB indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
<PAGE>
INVESTMENT ADVISER
Kalmar Investment Advisers
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
UNDERWRITER
Rodney Square Distributors, Inc.
1105 N. Market Street
Wilmington, DE 19890
SHAREHOLDER SERVICES
Rodney Square Management Corporation
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
To be filed by amendment.
See "Financial Statements" in Part B of this Registration Statement
(b) Exhibits:
(1) Agreement and Declaration of Trust of Kalmar Pooled
Investment Trust (the "Registrant") dated September 12,
1996 --- filed 10/7/96.
(2) By-laws of the Registrant -- filed 10/7/96.
(3) Voting Trust Agreement --- Not Applicable.
(4) Specimen copy of each security to be issued by the
Registrant --- Not Applicable.
(5) Investment Advisory Agreements ---
(a) "Form of" Investment Advisory Agreement
between the Registrant on behalf of the Kalmar "Growth-
with-Value" Small Cap Fund series (the "Small Cap Fund")
and Kalmar Investment Advisers -- filed 10/7/96.
(b) "Form of" Investment Advisory Agreement
between Registrant and on behalf of the Kalmar "Growth-
with-Value" Micro Cap Fund series (the "Micro Cap Fund")
and Kalmar Investment Advisers -- filed 10/7/96.
(6) Distribution Agreements ---
(a) "Form of" Distribution Agreement between
the Registrant and Rodney Square Distributors, Inc. on
behalf of the Small Cap and Micro Cap Funds -- filed
10/7/96.
(b) Dealer/Selling Agreements of the Registrant
--- Not applicable.
(7) Bonus, profit-sharing and pension contracts of the
Registrant --- Not Applicable.
(8) Custody Agreements ---
(a) Custody Agreement between the Registrant
and Wilmington Trust Company filed herewith.
(b) Special Custody Agreement --- Not
applicable.
(9) Other Material Contracts ---
(a) "Form of" Accounting Services Agreement
between the Registrant and Rodney Square Management
Corporation -- filed 10/7/96.
(b) "Form of" Administration Agreement between
the Registrant and Rodney Square Management Corporation --
filed 10/7/96.
(c) "Form of" Transfer Agency Agreement between
the Registrant and Rodney Square Management Corporation --
filed 10/7/96.
(10) Opinion and Consent of Counsel as to the legality of
the securities to be issued -- filed herewith.
(11) Consent of Independent Auditors -- filed herewith.
(12) Other Financial Statements --- Not Applicable.
(13) Investment Letter --- filed herewith.
(14) Model Plans --- Not Applicable.
(15) 12b-1 Plans --- Not Applicable.
(16) Schedule for Computation of Performance Quotation ---
Not Applicable.
(17) Financial Data Schedule --- Not Applicable.
(18) Multiple Class Plan --- Not Applicable.
(19) Powers-of-Attorney -- filed herewith.
ITEM 25. Persons Controlled or Under Common Control With the Registrant.
None.
ITEM 26. Number of Holders of Securities:
The number of record holders of securities of the Registrant as of the
effective date of this registration statement is as follows:
(1) (2)
Title of Class Number of Record Holders
-------------- ------------------------
Shares of beneficial
interest, par value $0.01
Small Cap Fund 1
Micro Cap Fund 1
ITEM 27. INDEMNIFICATION.
Under the terms of the Delaware Business Trust Act and the Registrant's
Agreement and Declaration of Trust and By-Laws, no officer or trustee of
the Fund shall have any liability to the Trust or its shareholders,
except to the extent such limitation of liability is precluded by
Delaware law, the Agreement and Declaration of Trust, or the By-Laws.
Subject to the standards and restrictions set forth in the Trust's
Agreement and Declaration of Trust, the Delaware Business Trust Act,
section 3817, permits a business trust to indemnify and hold harmless any
trustee, beneficial owner, or other person from and against any and all
claims and demands whatsoever. Section 3803 protects a trustee, when
acting in such capacity, from personal liability to any person other than
the business trust or a beneficial owner for any act, omission, or
obligation of the business trust or any trustee thereof, except as
otherwise provided in the Agreement and Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees shall
not be responsible or liable in any event for any neglect or wrong-doing
of any officer, agent, employee, Manager or Principal Underwriter of the
Fund, nor shall any Trustee be responsible for the act or omission of any
other Trustee. Subject to the provisions of the By-Laws, the Trust, out
of its assets, may indemnify and hold harmless each and every Trustee and
officer of the Trust from and against any and all claims, demands, costs,
losses, expenses, and damages whatsoever arising out of or related to
such Trustees' performance of his or her duties as a Trustee or officer
of the Trust; provided that nothing in the Declaration of Trust shall
indemnify, hold harmless or protect any Trustee or officer from or
against any liability to the Trust or any Shareholder to which he or she
would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
The By-Laws provide indemnification for each Trustee and officer who was
or is a party or is threatened to be made a party to any proceeding, by
reason of service in such capacity, to the fullest extent, if it is
determined that Trustee or officer acted in good faith and reasonably
believed: (a) in the case of conduct in his official capacity as an agent
of the Trust, that his conduct was in the Trust's best interests; (b) in
all other cases, that his conduct was at least not opposed to the Trust's
best interests; and (c) in the case of a criminal proceeding, that he had
no reasonable cause to believe the conduct of that person was unlawful.
However, there shall be no right to indemnification for any liability
arising by reason of willful misfeasance, bad faith, gross negligence, or
the reckless disregard of the duties involved in the conduct of the
Trustee's or officer's office with the Trust. Further, no
indemnification shall be made:
(a) In respect of any proceeding as to which any Trustee or officer
shall have been adjudged to be liable on the basis that personal
benefit was improperly received by him, whether or not the benefit
resulted from an action taken in the person's official capacity; or
(b) In respect of any proceeding as to which any Trustee or officer
shall have been adjudged to be liable in the performance of that
person's duty to the Trust, unless and only to the extent that the
court in which that action was brought shall determine upon
application that in view of all the relevant circumstances of the
case, that person is fairly and reasonably entitled to indemnity for
the expenses which the court shall determine; however, in such case,
indemnification with respect to any proceeding by or in the right of
the Trust or in which liability shall have been adjudged by reason
of the disabling conduct set forth in the preceding paragraph shall
be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing of a
proceeding, with or without court approval, or of expenses incurred
in defending a proceeding which is settled or otherwise disposed of
without court approval, unless the required court approval set forth
in the By-Laws is obtained.
In any event, the Trust shall indemnify each officer and Trustee against
expenses actually and reasonably incurred in connection with the
successful defense of any proceeding to which each such officer or
Trustee is a party by reason of service in such capacity, provided that
the Board of Trustees, including a majority who are disinterested, non-
party trustees, also determines that such officer or Trustee was not
liable by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of his or her duties of office. The Trust shall
advance to each officer and Trustee who is made a party to a proceeding
by reason of service in such capacity the expenses incurred by such
person in connection therewith, if: (a) the officer or Trustee affirms
in writing that his good faith belief that he has met the standard of
conduct necessary for indemnification, and gives a written undertaking to
repay the amount of advance if it is ultimately determined that he has
not met those requirements; and (b) a determination that the facts then
known to those making the determination would not preclude
indemnification.
The Trustees and officers of the Trust are entitled and empowered under
the Declaration of Trust and By-Laws, to the fullest extent permitted by
law, to purchase errors and omissions liability insurance with assets of
the Trust, whether or not the Trust would have the power to indemnify him
against such liability under the Declaration of Trust or By-Laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers, the underwriter or
control persons of the Registrant pursuant to the foregoing provisions,
the Registrant has been informed that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
KALMAR INVESTMENT ADVISERS:
--------------------------
The sole business activity of Kalmar Investment Advisers, Barley Mill
House, 3701 Kennett Pike, Greenville, Delaware 19807 (the "Adviser") is
to serve as investment adviser to each series of the Registrant.
Information as to the ownership and officers of the Adviser is included
in its Form ADV, File No. 801-_____, which is on file with the U.S.
Securities and Exchange Commission under the Investment Advisers Act of
1940. Such Form ADV is incorporated by reference herein.
ITEM 29. PRINCIPAL UNDERWRITER.
(a) Rodney Square Distributors, Inc. ("RSD"), the principal
underwriter and distributor for the Registrant's securities,
currently acts as distributor for the following entities:
The Rodney Square Fund
The Rodney Square Multi-Manager Fund
The Rodney Square Tax-Exempt Fund
The Rodney Square Strategic Fixed-Income Fund
Heitman Real Estate Fund, Institutional Class
Kiewit Mutual Fund
1838 Investment Advisors Funds
The Olstein Funds
The HomeState Group
(b) The table below sets forth certain information as to the
Distributor's Directors, officers and Control Persons:
POSITION(S) AND OFFICE(S) POSITION(S)
NAME AND PRINCIPAL WITH RODNEY SQUARE AND OFFICE(S)
BUSINESS ADDRESS DISTRIBUTORS, INC. WITH REGISTRANT
- ------------------ ------------------------- ---------------
Jeffrey O. Stroble President, Secretary,
1105 North Market Street Treasurer & Director None
Wilmington, DE 19890
Martin L. Klopping Director None
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Cornelius G. Curran Vice President None
1105 North Market Street
Wilmington, DE 19890
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Each account, book or other document required to be maintained by Section
31(a) of the 1940 Act and the Rules (17 CFR 270-31a-1 to 31a-3)
promulgated thereunder, is maintained by the Registrant at 1300 Market
Street, Wilmington, DE 19801, except for those maintained by the
Registrant's administrator, transfer agent, dividend paying agent and
accounting services agent, Rodney Square Management Corporation, at
Rodney Square North, 1100 North Market Street, Wilmington, DE 19890.
ITEM 31. MANAGEMENT SERVICES.
There are no management related service contracts not discussed in Part A
or Part B.
ITEM 32. UNDERTAKINGS.
(a) Inapplicable.
(b) The Registrant hereby undertakes to file a post-effective
amendment, using reasonably current financial statements which need
not be certified, within four to six months from the commencement of
investment operations.
(c) The Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
(d) The Registrant hereby undertakes, if requested to do so by the
holders of at least 10% of the Registrant's outstanding shares, to
call a meeting of shareholders for the purpose of voting upon the
question of removal of a trustee or trustees and to assist in
communication with other shareholders, as directed by Section 16(c)
of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilmington, and state of Delaware on the 13th day
of December, 1996.
Kalmar Pooled Investment Trust
By:/S/ Ford B. Draper, Jr.
-----------------------
Ford B. Draper, Jr.
Chairman, President and Treasurer
Pursuant to the requirement of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
Signature Title Date
- --------- ----- ----
Ford B. Draper
- ------------------- Chairman, President December 13, 1996
Ford B. Draper, Jr. and Treasurer
Wendell Fenton*
- ------------------- Trustee December 13, 1996
Wendell Fenton
- ------------------- Trustee -------------------
John J. Quindlen
David M. Reese, Jr.*
- ------------------- Trustee December 13, 1996
David M. Reese, Jr.
David D. Wakefield*
- ------------------- Trustee December 13, 1996
David D. Wakefield
*By:/S/ Ford B. Draper, Jr.
- ---------------------------
Ford B. Draper, Jr., Attorney-in-Fact
(Pursuant to Power of Attorney
filed herewith)
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit No.
------- -----------
Custody Agreement Ex-99.B8
Opinion and Consent of Counsel Ex-99.B10a
Opinion and Consent of Independent Auditors Ex-99.B11
Investment Letter Ex-99.B13
Power of Attorney Ex-99.B19
Exhibit 8
CUSTODY AGREEMENT
This Agreement is made as of the 5th day of December, 1996, between,
Kalmar Pooled Investment Trust, a business trust organized under the laws of
Delaware (the "Trust"), having its principal place of business in Wilmington,
Delaware, and Wilmington Trust Company, a Delaware corporation (the
"Custodian"), having its principal place of business in Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company and offers for public sale one or more distinct series of shares of
beneficial interest (each series, a "Fund" and collectively, the "Funds"), par
value $_________ per share, each Fund corresponding to a distinct portfolio;
WHEREAS, each share of beneficial interest (collectively, "Shares") of a
Fund represents an undivided interest in the assets of that Fund, subject to
the liabilities of that Fund, as more fully described in the Declaration of
Trust pursuant to which the Trust is created and governed;
WHEREAS, the Trust desires to employ the Custodian to provide custody
services; and
WHEREAS, the Custodian is willing to furnish custody services to the
Trust on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound, the parties agree as
follows:
I. EMPLOYMENT OF CUSTODIAN; PROPERTY OF THE TRUST TO BE HELD BY THE
CUSTODIAN
The Trust hereby employs the Custodian as the custodian of its assets.
The Trust agrees to deliver to the Custodian substantially all securities and
cash owned by it on behalf of the Fund(s) from time to time, and substantially
all income, principal, capital distributions or other payments received by it
with respect to such securities, and the cash consideration received for the
issuance and sale of Shares of the Trust from time to time. The Custodian
will not be responsible for any property of the Trust not delivered to the
Custodian.
II. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE TRUST HELD BY THE
CUSTODIAN
A. HOLDING SECURITIES
The Custodian will hold, earmark and physically segregate for the account
of each Fund all non-cash property, including all securities owned by the
Trust on behalf of the Fund(s), other than securities maintained pursuant to
Article II, Section J hereof in a clearing agency which acts as a securities
depository or in an authorized book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein as a ``Securities
System.''
B. DELIVERY OF SECURITIES
The Custodian will deliver securities held by the Custodian or in a
Securities System account only upon receipt of proper instructions, which may
be continuing instructions, and only in the following cases:
1. Upon sale of such securities for the account of each Fund and
receipt of payment therefor;
2. Upon receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust with
respect to any Fund;
3. In the case of a sale effected through a Securities System, in
accordance with the provisions of Article II, Section J hereof;
4. To the depository agent in connection with tenders or other
similar offers for securities of each Fund;
5. To the issuer thereof, or its agent, when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6. To the issuer thereof, or its agent, for registration or re-
registration pursuant to the provisions of Article II, Section C
hereof; or for exchange for a different number of certificates or
other evidence representing the same aggregate face amount or number
of units; provided that, in any such case, the new securities are to
be delivered to the Custodian;
7. To the broker selling such securities for examination in
accordance with the ``street delivery'' custom; provided that the
Custodian will maintain procedures to ensure prompt return to the
Custodian by the broker in the event the broker elects not to accept
such securities;
8. For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
9. In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
10. For delivery in connection with any loans of securities made by
the Trust on behalf of any Fund, but only against receipt of
adequate collateral, as agreed upon from time to time by the
Custodian and the Trust, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities;
11. For delivery as security in connection with any borrowing by
the Trust on behalf of any Fund requiring a pledge of assets by the
Trust on behalf of that Fund against receipt of amounts borrowed;
12. Upon receipt of instructions from the transfer agent for the
Trust (the "Transfer Agent") for delivery to the Transfer Agent or
to holders of Shares in connection with distributions in kind in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
13. For any other proper corporate purposes, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Board of Trustees signed by an officer of the
Trust and certified by the Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purposes to be
proper corporate purposes, and naming the persons to whom delivery
of such securities will be made.
C. REGISTRATION OF SECURITIES
Securities held by the Custodian (other than bearer securities) will be
registered in the name of the Trust on behalf of the Fund(s), or in the name
of any nominee of the Trust, the Custodian or any Securities System, or in the
name or nominee name of any agent or sub-custodian appointed pursuant to
Article II, Section I hereof, provided that the Custodian will maintain a
mechanism for identifying all securities belonging to each Fund, wherever held
or registered. All securities accepted by the Custodian on behalf of the
Trust for the Fund(s) hereunder will be in ``street name'' or other good
delivery form.
D. BANK ACCOUNTS
If requested by the Trust, the Custodian will open and maintain a
separate bank account or accounts in the name of the Trust, subject only to
draft or order by the Custodian acting pursuant to the terms of this
Agreement, and will hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Fund(s), other than cash maintained by the Trust in a bank account established
and used in accordance with Rule 17f-3 under the 1940 Act.
E. PAYMENT FOR SHARES
The Custodian will receive from the distributor of the Shares of the
Fund(s) or from the Transfer Agent and deposit into each Fund's custody
account payments received for Shares of such Fund issued or sold from time to
time by the Trust. The Custodian will provide timely notification to the
Trust and the Transfer Agent of any receipt by it of cash payments for Shares
of the Fund(s).
F. COLLECTION OF INCOME AND OTHER PAYMENTS
The Custodian will collect on a timely basis all income and other
payments with respect to securities held hereunder to which the Trust and each
of the Fund(s) will be entitled by law or pursuant to custom in the securities
business, and will credit such income and other payments, as collected, to
each Fund's custody account.
G. PAYMENT OF TRUST MONEYS
Upon receipt of proper instructions, which may be continuing
instructions, the Custodian will pay out moneys of the Trust on behalf of the
Fund(s) in the following cases only:
1. Upon the purchase of securities for the account of each Fund,
but only (a) against the delivery of such securities to the
Custodian (or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the 1940 Act
to act as a custodian and has been designated by the Trust or by
the Custodian as its agent for this purpose); (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Article II, Section J hereof or; (c) in
the case of repurchase agreements entered into between the Trust on
behalf of the Fund and the Custodian, or another bank, (i) against
delivery of securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve Bank
with such securities and with an indication on the books of the
Custodian that such securities are held for the benefit of the Fund,
and (ii) against delivery of the receipt evidencing purchase by the
Trust on behalf of the Fund of securities owned by the Custodian or
other bank along with written evidence of the agreement by the
Custodian or other bank to repurchase such securities from the Trust
on behalf of the Fund;
2. In connection with conversion, exchange or surrender of
securities owned by the Trust on behalf of any Fund as set forth in
Article II, Section B hereof;
3. For the redemption or repurchase of Shares as set forth in
Article II, Section H hereof;
4. For the payment of any expense or liability incurred by the
Trust with respect to the Fund(s), including, but not limited to,
the following payments for the account of the Fund(s): interest,
dividend disbursements, taxes, trade association dues, advisory,
administration, accounting, transfer agent and legal fees, and
operating expenses allocated to the Trust or the Fund(s) whether or
not such expenses are to be in whole or part capitalized or treated
as deferred expenses;
5. For the payment of any dividend declared on behalf of the
Fund(s) pursuant to the governing documents of the Trust; and
6. For any other proper corporate purposes, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Board of Trustees of the Trust signed by an
officer of the Trust and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper corporate purpose, and naming the person or persons
to whom such payment is to be made.
H. PAYMENTS FOR REPURCHASE OR REDEMPTIONS OF SHARES OF THE FUND(S)
From such funds as may be available, the Custodian will, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares of the Fund(s) who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to a commercial bank
designated by the redeeming shareholders.
I. APPOINTMENT OF AGENTS
The Custodian may at any time in its discretion appoint, but only in
accordance with an applicable vote by the Board of Trustees of the Trust, any
bank or trust company, which is qualified under the 1940 Act to act as a
custodian, as its agent or sub-custodian to carry out such of the provisions
of this Article II as the Custodian may from time to time direct; provided
that the appointment of any such agent or sub-custodian will not relieve the
Custodian of any of its responsibilities or liabilities hereunder. The
Custodian is hereby authorized to deposit, arrange for deposit and/or maintain
foreign securities owned by the Trust on behalf of the Fund(s) with the
Custodian's agent Bankers Trust Company or with the subcustodians or agents of
the Custodian's agent.
J. DEPOSIT OF TRUST ASSETS IN SECURITIES SYSTEMS
The Custodian may deposit and/or maintain securities owned by the Trust
on behalf of the Fund(s) in a clearing agency registered with the Securities
and Exchange Commission (the "SEC") under Section 17A of the Securities
Exchange Act of 1934, which acts as a securities depository, or in the book-
entry system authorized by the U.S. Department of the Treasury and certain
federal agencies (collectively referred to herein as a ``Securities System'')
in accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
1. The Custodian may keep securities owned by the Trust on behalf
of the Fund(s) in a Securities System provided that such securities
are represented in an account ("Account") of the Custodian in the
Securities System which will not include any assets of the Custodian
other than assets held as a fiduciary, custodian, or otherwise for
customers;
2. The records of the Custodian with respect to securities owned
by the Trust on behalf of the Fund(s) which are maintained in a
Securities System will identify by book-entry those securities
belonging to the Fund(s);
3. The Custodian will pay for securities purchased for the account
of the Fund(s) upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Fund(s). The
Custodian will transfer securities sold for the account of the
Fund(s) upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund(s).
The Custodian will furnish the Trust a monthly account statement
showing confirmation of each transfer to or from the account of the
Fund(s) and each day's transactions in the Securities System for the
account of the Fund(s);
4. The book-entry system of the Federal Reserve System authorized
by the U.S. Department of the Treasury and the Depository Trust
Company, a clearing agency registered with the SEC, each are hereby
specifically approved as a Securities System, provided that any
changes in these arrangements shall be subject to the approval of
the Board of Trustees of the Trust; and
5. The Custodian will be liable to the Trust on behalf of any Fund
for any direct loss or damage to the Trust on behalf of any Fund
resulting from use of the Securities System to the extent caused by
the gross negligence, misfeasance or misconduct of the Custodian or
any of its agents or of any of its or their employees. In no event
will the Custodian be liable for any indirect, special,
consequential or punitive damages.
K. SEGREGATED ACCOUNTS FOR FUTURES COMMISSION MERCHANTS
The Custodian may enter into separate custodial agreements with various
Futures Commission Merchants ("FCM's") which the Trust uses (each an "FCM
agreement"), pursuant to which the Trust's margin deposits made on behalf of
the Fund(s) in certain transactions involving futures contracts and options on
futures contracts will be held by the Custodian in accounts (each an "FCM
account") subject to the disposition by the FCM involved in such contracts in
accordance with the customer contract between FCM and the Trust ("FCM
contract"), SEC rules governing such segregated accounts, Commodities Futures
Trading Commission ("CFTC") rules and the rules of applicable securities or
commodities exchanges. Such custodial agreements will only be entered into
upon receipt of written instructions from the Trust which state that (a) an
agreement between the FCM and the Trust has been entered into, and (b) the
Trust is in compliance with all the rules and regulations of the CFTC.
Transfers of initial margin will be made into an FCM account only upon written
instructions; transfers of premium and variation margin may be made into an
FCM account pursuant to oral instructions. Transfers of funds from an FCM
account to the FCM for which the Custodian holds such an account may only
occur upon certification by the FCM to the Custodian that pursuant to the FCM
agreement and the FCM contract, all conditions precedent to its right to give
the Custodian such instructions have been satisfied.
L. OWNERSHIP CERTIFICATES FOR TAX PURPOSES
The Custodian will execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with receipt
of income or other payments with respect to securities of the Fund(s) held by
it and in connection with transfers of securities of the Fund(s).
M. PROXIES
The Custodian will cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in the
name of the Trust on behalf of the Fund(s) or a nominee of the Trust, all
proxies, without indication of the manner in which such proxies are to be
voted, and will promptly deliver to the Trust's investment advisor for the
Fund(s) (the "Advisor") such proxies, all proxy soliciting materials and all
notices relating to such securities.
N. COMMUNICATIONS RELATING TO SECURITIES OF THE FUND(S)
The Custodian will transmit promptly to the Advisor of that Fund all
written information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection therewith)
received by the Custodian from issuers of the securities being held for the
Fund(s). With respect to tender or exchange offers, the Custodian will
transmit promptly to the Advisor all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or its agents) making the tender or exchange offer. If
the Advisor desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Advisor will notify the Custodian
at least five business days prior to the date on which the Custodian is to
take such action.
O. PROPER INSTRUCTIONS
``Proper Instructions'' as used herein mean a writing signed or initialed
by one or more person or persons in such manner as the Board of Trustees will
have authorized from time to time. Each writing will set forth the
transaction involved, including a specific statement of the purpose for which
such action is requested. Oral instructions will be considered proper
instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Trust will cause all oral instructions to be confirmed promptly
in writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Trust
accompanied by a detailed description of procedures approved by the Board of
Trustees, proper instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the assets of the Trust.
P. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may, in its discretion, without express authority from the
Trust:
1. make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties
under this Agreement, provided that all such payments will be
accounted for to the Trust;
2. surrender securities in temporary form for securities in
definitive form;
3. endorse for collection, in the name of the Trust on behalf of
the Fund(s), checks, drafts and other negotiable instruments; and
4. in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer
and other dealings with the securities and property of the Trust,
except as otherwise directed by the Trust or the Board of Trustees
of the Trust.
Q. EVIDENCE OF AUTHORITY
The Custodian will be protected in acting upon any instruction, notice,
request, consent, certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed by or on behalf of the
Trust. The Custodian may receive and accept a certified copy of a vote of the
Board of Trustees of the Trust as conclusive evidence (a) of the authority of
any person to act in accordance with such vote, or (b) of any determination or
of any action by the Board of Trustees as described in such vote, and such
vote may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
III. DUTIES OF CUSTODIAN WITH RESPECT TO BOOKS OF ACCOUNT
The Custodian will cooperate with and supply to the entity or entities
appointed to keep the books of account of the Trust such information in the
possession of the Custodian as is reasonably necessary to the maintenance of
the books of account of the Trust.
IV. RECORDS
The Custodian will create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet
the obligations of the Trust under the 1940 Act, including, without
limitation, Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such
records will be property of the Trust and will at all times during the regular
business hours of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Trust and employees and agents of the
SEC. The Custodian will, upon request, provide the Trust with a tabulation of
securities held by the Custodian on behalf of the Fund(s), and will, upon
request, and for such compensation as will be agreed upon between the Trust
and the Custodian, include certificate numbers in such tabulations.
V. OPINION OF TRUST'S INDEPENDENT ACCOUNTANT
The Custodian will take all reasonable action, as the Trust may from time
to time request, to obtain from year to year favorable opinions from the
Trust's independent accountants with respect to its activities hereunder in
connection with the preparation of the Trust's Form N-1A, Form N-SAR or other
annual or semiannual reports to the SEC and with respect to any other
requirements of the SEC.
VI. REPORTS TO TRUST BY AUDITORS
The Custodian will provide the Trust, at such times as the Trust may
reasonably request, with reports by its internal or independent auditors on
the accounting system, internal accounting controls and procedures for
safeguarding securities, including reports available on securities deposited
and/or maintained in a Securities System, relating to the services provided by
the Custodian under this Agreement. Such reports will be of sufficient scope
and in sufficient detail as may reasonably be required by the Trust to provide
reasonable assurance that any material inadequacies would be disclosed, will
state in detail material inadequacies disclosed by such examination, and if
there are no such inadequacies, will so state.
VII. COMPENSATION OF CUSTODIAN
For the normal services the Custodian provides under this Custody Agreement,
the Custodian will be entitled to reasonable compensation as agreed to between
the Trust and the Custodian from time to time. Until agreed otherwise, the
compensation will be as set forth on Schedule A attached hereto and made part
hereof, as such Schedule may be amended from time to time. The fee set forth
in Schedule A hereto is subject to an annual review and adjustment process.
In the event the Custodian provides any extraordinary services hereunder, it
will be entitled to additional reasonable compensation.
VIII. Responsibility of Custodian/Indemnification
So long as and to the extent that it has exercised reasonable care, the
Custodian will not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and will be held harmless in acting upon any
notice, request, consent, certificate or other instrument reasonably believed
by it to be genuine and to be signed by the proper party or parties.
The Custodian will be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Trust) on all matters, and will be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian will exercise reasonable care in carrying out the provisions of
this Agreement and shall be without liability for any action taken or omitted
by it in good faith and without negligence. The Trust will indemnify the
Custodian and hold it harmless from and against all claims, liabilities, and
expenses (including attorneys' fees) which the Custodian may suffer or incur
on account of being Custodian hereunder, except to the extent such claims,
liabilities and expenses are caused by the Custodian's own gross negligence or
bad faith. Notwithstanding the foregoing, nothing contained in this paragraph
is intended to nor will it be construed to modify the standards of care and
responsibility set forth in Article II, Section I hereof with respect to sub-
custodians and in Article II, Section J(5) hereof with respect to the
Securities System.
If the Trust requires the Custodian to take any action, which involves the
payment of money or which may, in the reasonable opinion of the Custodian,
result in liability or expense to the Custodian or its nominee, the Trust, as
a prerequisite to requiring the Custodian to take such action, will provide
indemnity to the Custodian in an amount and form satisfactory to it.
IX. EFFECTIVE PERIOD; TERMINATION; AMENDMENT
This Agreement will become effective as of the date hereof and remain
effective until terminated as provided herein. This Agreement may be amended
at any time only by written instrument signed by both parties. This Agreement
may be terminated at any time on ninety (90) days' written notice by either
party; provided that the Trust will not amend or terminate the Agreement in
contravention of any applicable federal or state regulations, or any provision
of the governing documents of the Trust, and further provided, that the Trust
may at any time by action of its Board of Trustees immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by the applicable federal regulator or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of
competent jurisdiction. Upon termination of this Agreement, the Trust will
pay to the Custodian any fees incurred as a result of the termination transfer
of assets, and reimburse the Custodian for all costs, expenses and
disbursements that are due as of the date of such termination.
X. SUCCESSOR CUSTODIAN
If a successor custodian is appointed by the Board of Trustees of the Trust,
the Custodian will, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities and other assets of the Trust then held by it hereunder. The
Custodian will also deliver to such successor custodian copies of such books
and records relating to the Trust as the Trust and Custodian may mutually
agree.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees will have been delivered to
the Custodian on or before the date when such termination will become
effective, then the Custodian will have the right to deliver to a bank or
trust company of its own selection, doing business in the state in which
either the principal place of business of the Trust or the Custodian is
located and having an aggregate capital, surplus, and undivided profits of not
less than $25,000,000, all securities, funds and other properties held by the
Custodian under this Agreement. Thereafter, such bank or trust company will
be the successor of the Custodian under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of vote referred to, or of
the Board of Trustees to appoint a successor custodian, the Custodian will be
entitled to fair compensation for its services during such period as the
Custodian and retain possession of such securities, funds and other properties
and the provisions of this Agreement relating to the duties and obligations of
the Custodian will remain in full force and effect.
XI. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and the
Trust may from time to time agree on such provisions interpretive of, or in
addition to, the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions will be in writing signed by both parties, provided that
no such interpretive or additional provisions will contravene any applicable
federal or state regulations or any provision of the governing documents of
the Trust. No interpretive or additional provisions made as provided in the
preceding sentence will be deemed to be an amendment of this Agreement.
XII. DELAWARE LAW TO APPLY
This Agreement will be deemed to be a contract made in Delaware and governed
by Delaware law. If any provision of this Agreement will be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement will not be affected thereby. This Agreement will be binding and
will inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on behalf by its duly authorized representative and
its seal to be hereunder affixed as of the date first written above.
[SEAL] KALMAR POOLED INVESTMENT TRUST
By:/S/ LEE B. DAVIS
-------------------------
Lee B. Davis, Secretary/Assistant Treasurer
[SEAL] WILMINGTON TRUST COMPANY
By:/S/ LARIO M. MARINI
-------------------------
Lario M. Marini, Vice President
<PAGE>
SCHEDULE A
KALMAR POOLED INVESTMENT TRUST
FEE SCHEDULE
For the services Custodian provides under this Custody Agreement, the
Trust, on behalf of the Fund(s) listed below, agrees to pay to the Custodian a
fee, payable monthly, expressed as follows:
NAME OF FUND(S) FEE SCHEDULE
- --------------- ------------
Small Cap An annual fee per Fund based upon the average daily net
asset value as follows:
Micro-Cap
.002 on the first $50 million
.0015 on the next $50 million and
.0012 on the assets in excess of $100 million,
subject to a minimum fee of $300 per month (per Fund),
plus, $15 per purchase, sale or maturity of a Fund
security, except those requiring physical delivery, which
will be charged at $50 per purchase, sale or maturity,
plus, $7 for each incoming wire of funds and $12 for each
outgoing wire of funds,
plus any out-of-pocket expenses.
Exhibit 10a
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
(215) 564-8000
December 13, 1996
Direct Dial: (215) 564-8047
Kalmar Pooled Investment Trust
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
Re: KALMAR POOLED INVESTMENT TRUST
Ladies and Gentlemen:
We have examined the Agreement and Declaration of Trust and By-Laws of
Kalmar Pooled Investment Trust (the "Trust"), a business trust organized under
Delaware law, all as amended to date, as well as the organizational
resolutions adopted by the Board of Trustees of the Trust and other
proceedings of the Trust that we deem material. We have also examined the
Notification of Registration and the Registration Statements filed under the
Investment Company Act of 1940 ("Investment Company Act") and the Securities
Act of 1933 ("Securities Act"), all as amended to date, as well as other items
we deem material to this opinion.
The Trust is authorized by its Agreement and Declaration of Trust to
issue an unlimited number of shares of beneficial interest of a par value of
$0.01. The Agreement and Declaration of Trust authorizes the Board of
Trustees to divide the shares into separate series and to divide the series
into separate classes of shares, and the Board has designated two series of
shares--the Kalmar "Growth-with-Value" Small Cap Fund and the Kalmar "Growth-
with-Value" Micro Cap Fund.
The Trust has filed with the U.S. Securities and Exchange Commission
("Commission"), a Registration Statement under the Securities Act to register
an indefinite number of shares of each series of the Trust pursuant to the
provisions of Rule 24f-2 under the Investment Company Act. You have further
advised us that each year hereafter the Trust will timely file a Notice
pursuant to Rule 24f-2 perfecting the registration of the shares sold by the
Trust during each fiscal year during which such election to register an
indefinite number of shares remains in effect.
You have also informed us that the shares of the Trust will be sold in
accordance with the Trust's usual method of distributing its registered
shares, under which prospectuses are made available for delivery to offerees
and purchasers of such shares in accordance with Section 5(b) of the
Securities Act.
Based upon the foregoing information and examination, it is our opinion
that the Trust is a valid and subsisting business trust under the laws of the
State of Delaware, and that the election to register an indefinite number of
shares of the Trust is proper, and such shares of the Trust when issued for
the consideration set by the Board of Trustees pursuant to the Agreement and
Declaration of Trust, and subject to compliance with Rule 24f-2, will be
legally outstanding, fully-paid, and non-assessable shares of beneficial
interest in the Trust, and the holders of such shares will have all the rights
provided for with respect to such holding by the Agreement and Declaration of
Trust and the laws of the State of Delaware.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Trust's registration statement under the Securities Act, and to
any reference to us in such registration statement as legal counsel who have
passed upon the legality of the offering of the Trust's shares of beneficial
interest. We also consent to the filing of this opinion with the securities
regulatory agencies of any states or other jurisdictions in which shares of
the Trust are offered for sale.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
By:/s/ Joseph V. Del Raso
-----------------------
Joseph V. Del Raso,
a partner
JDR/cdj
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion of our report dated December 16, 1996 on our audit
of the Statement of Assets and Liabilities of Kalmar Pooled Investment Trust
as of December 13, 1996 with respect to this Pre-Effective Amendment No. 1 to
the Registration Statement (No. 333-13593)under the Securities Act of 1933 on
Form N-1A. We also consent to the reference to our firm under the heading
"General Information-Audits and Reports" in the Statement of Additional
Information.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 16, 1996
Exhibit 13
December 10, 1996
Kalmar Pooled Investment Trust
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
Gentlemen:
We propose to acquire 10,000 shares of beneficial interest ("Shares") of
Kalmar Pooled Investment Trust (the "Trust") at a purchase price of $10 per
share for a total of $100,000. More specifically, we will acquire 5,000
shares of each of the Kalmar "Growth-with-Value" Small Cap Fund series of the
Trust and the Kalmar "Growth-with-Value" Micro Cap Fund series of the Trust.
We will purchase the Shares in a private offering prior to the effectiveness
of the Trust's registration statement on Form N-1A which was filed by the
Trust under the Securities Act of 1933, as amended. The Shares are being
purchased pursuant to Section 14 of the Investment Company Act of 1940, as
amended to serve as the seed money for the Trust prior to the commencement of
the public offering of its shares.
In connection with such purchase, we understand that: (i) we, the
purchaser, intend to acquire the Shares for our own account as the sole
beneficial owner thereof and have no present intention of redeeming or
reselling the Shares so acquired; and (ii) in the event any of the initial
10,000 Shares are redeemed during the first five years, the Trust may charge
against our redemption proceeds a pro rata portion of any unamortized
organizational expenses which would be borne by such Shares during the balance
of the initial five-year period were they not to be redeemed.
We consent to the filing of this Investment Letter as an exhibit to the
Trust's registration statement on Form N-1A.
Sincerely,
Kalmar Investment Advisers
/s/ Ford B. Draper, Jr.
----------------------
Ford B. Draper, Jr.
Chairman and President
Exhibit 19
POWER OF ATTORNEY
The undersigned Officers and Trustees of Kalmar Pooled Investment Trust
(the "Trust") hereby appoint Ford B. Draper, Jr., as attorney-in-fact and
agent, in all capacities, to execute, and to file any of the documents
referred to below relating to the Notification of Registration on Form N-8A
registering the Trust as an investment company under the Investment Company
Act of 1940, as amended, (the "Act") and the Trust's Registration Statement on
Form N-1A under the Act and under the Securities Act of 1933, including any
and all amendments thereto, covering the registration of the Trust as an
investment company and the sale of shares of the series of the Trust,
including all exhibits and any and all documents required to be filed with
respect thereto with any regulatory authority, including applications for
exemptive order rulings. Each of the undersigned grants to the said attorney
full authority to do every act necessary to be done in order to effectuate the
same as fully, to all intents and purposes, as he could do if personally
present, thereby ratifying all that said attorneys-in-fact and agents may
lawfully do or cause to be done by virtue hereof.
The undersigned officers and Trustees hereby execute this Power of
Attorney as of this 6th day of November, 1996.
Name Title
- ---- -----
/s/ Ford B. Draper, Jr.
- ------------------- Chairman, President,
Ford B. Draper, Jr. and Treasurer
/s/ Wendell Fenton
- -------------------
Wendell Fenton Trustee
- ------------------- Trustee
John J. Quindlen
/s/ David M. Reese, Jr.
- ------------------- Trustee
David M. Reese, Jr.
/s/ David D. Wakefield
- ------------------- Trustee
David D. Wakefield
