KALMAR
POOLED
INVESTMENT
TRUST REPORT FROM MANAGMENT
-------------------
"Growth-with-Value"
Small Cap Fund
DEAR FELLOW SHAREHOLDERS & FRIENDS:
This brings our best wishes from the entire Kalmar team for
a Happy, Healthy and Prosperous New Year in 1998!
At this time last year, addressing our institutional
clients, we voiced our opinion that 1997 would be a positive
year for U.S. small cap stocks as they transitioned back to
market leadership and for Kalmar clients particularly, as
the dynamic fundamentals and undervaluation of Kalmar
portfolio companies combined to produce what we believed
would be sterling returns. Happily, we delivered on the
latter element of our forecast handsomely. In both absolute
and relative terms, the results were very rewarding for
Kalmar "Growth-with-Value" Small Cap Fund shareholders. This
again evidences the productivity of our "Growth-with-Value"
investment approach and hands-on original research.
Furthermore, while the shift to small cap leadership was
abruptly interrupted in fourth quarter 1997 by escalating
investor uncertainty as Asian financial turmoil spread with
a vengeance to Korea and threatened Japan, Hong Kong and
China, we remain hopeful for resumption of leadership by
small company stocks in 1998.
COMPARATIVE PERFORMANCE.
FOURTH QUARTER INCEPTION TO DATE
TOTAL RETURN 9/30/97-12/31/97 4/11/97-12/31/97
---------------- ---------------- ------------------
Kalmar Small Cap Fund -1.65% +46.35%
Russell 2000 Index -3.39% +27.86%
Lipper Small Cap Funds -5.86% +26.02%
S&P 500 Index +2.87% +29.61%
As to 1997 investment performance, we are proud and grateful
for both your Fund's fourth quarter and inception to year-
end returns, remembering that its first day of operation was
April 11, 1997. In contrast to the mildly positive fourth
quarter return of the S&P 500, which benefited from a
pronounced flight to quality and liquidity in the wake of
the Asian meltdown, your Fund did decline a modest 1.65%.
This modest decline, however, compares favorably to larger
declines experienced by the Russell 2000 and the Lipper
Small Cap Fund Indexes, which are far more appropriate
benchmarks to view your Fund against. What is more, this
performance compares even more favorably against the
substantial declines of many "aggressive growth" and
"momentum" funds in that period. Remember that a key
objective of Kalmar is to take less risk than such
investment styles, while generating superior long-term
returns.
From inception through year-end 1997, your Fund's absolute
and relative results were even more fortunate, as can be
seen above, with its eight and one-half month return
totaling 46.35%, including the 12/30/97 capital gain
distribution.
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST REPORT FROM MANAGEMENT - CONTINUED
-------------------
"Growth-with-Value"
Small Cap Fund
This very positive performance is primarily attributable to
good creative research and the strong business fundamentals
of Kalmar companies, combined with their conspicuous stock
undervaluation in early 1997. It is noteworthy that these
returns came despite very low portfolio exposure to the
financial services sector, by far the best performing
industry group in 1997, as well as the heaviest weighted in
small cap indexes. In keeping with the longer-term
orientation of our investment style, portfolio turnover
stayed characteristically low as well, at approximately 34%.
As of year-end, net assets in your Fund were $226.7 million.
YEAR-END DISTRIBUTION.
Your Fund's Trustees at year-end authorized a capital gain
distribution of $0.922 per share, consisting of a short-term
gain of $0.172 and a long-term gain of $0.75. This
distribution was paid on December 31 to shareholders of
record on December 29. In early January 1998 we mailed your
shareholder statement detailing this distribution, and Form
1099-DIV reporting this payment for tax purposes was mailed
later in the month. Because of changes in Federal capital
gains tax laws during 1997, the long-term capital gain
further breaks down into $0.087 of "mid-term gain" (i.e. 12-
18 month) taxed at 28% and $0.663 of "long-term gain" (i.e.
18 month-plus) taxed at 20%. This important information was
also included with your Form 1099-DIV.
Please do not be confused by the recognition of long-term
gains in a fund that commenced operation only eight and one-
half months ago. Recall that many existing Kalmar clients
transferred separately managed portfolios into the Fund at
start-up, in turn transferring both their cost and time
bases to the Fund. For the future it is hoped that, in
keeping with the longer-term oriented nature of our
investment style, your Fund may continue to produce a higher
proportion of long-term less-highly-taxed gains than the
many funds with rapid portfolio turnover. Another key
objective of Kalmar is to make fewer, better investment
decisions for longer holding periods and larger gains.
INVESTMENT OUTLOOK.
As we enter 1998, the investment challenges from both big
picture and market valuation perspectives are more difficult
than this time a year ago. Despite that, we remain
optimistic about the potential for a resumption of the shift
toward small company market leadership experienced from May
through October last year. And in a general sense, we are
as confident as ever about the high value-added returns that
can be generated over time from Kalmar's discovery, hands-on
evaluation, and ownership of inefficiently priced "good
growth businesses." Brief comments follow on the major
investment issues as they appear to the Kalmar research team
at this time.
Because there has been a dramatic escalation of the Asian
financial crisis since our last shareholder letter, let's
start with its influences. Make no mistake about it, there
is a grim deflationary reality to Asia's crisis that will
act as a drag on world economic growth, contribute further
to already intense price competition, reduce corporate
revenue and profit growth for some period, and pressure
company profit margins, particularly in certain goods
producing industries. Furthermore, in our increasingly
globally interdependent world, with a key economy like Japan
critically weak, risks of the contagion spreading or of
policy mistakes should not be minimized.
At the same time though, a better European economic outlook
should provide some offset and, fortunately, the U.S.
continues to chug along in wonderful condition. Our
government budget is close to balance; the Federal Reserve
has plenty of policy maneuvering room; our banks are sound;
our companies are lean, well-financed and able to take
advantage of the weakened foreign competition; U.S. final
demand is strong; and our consumers are confident. Still,
maintenance of a healthy world economy requires more than
one big engine of growth. We can't afford to have many
others falter.
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST REPORT FROM MANAGEMENT - CONTINUED
-------------------
"Growth-with-Value"
Small Cap Fund
The unanswerable question is to what extent growth will
actually slow and how big the negative impacts on U.S.
corporate profitability will be, particularly in the context
of a stock market that has been "priced for perfection."
Analysts' bottom-up profit projections for 1998 according to
First Call, the earnings tracking service, are for S&P 500
earnings to rise 13% and Russell 2000 earnings 31%. To
Kalmar this appears to be impossibly rosy. Yet with the
interest rate outlook commensurately that much better
because of the deflationary forces we have described, plus
the probable flow of funds into equities continuing strong,
along with heated merger and acquisition activity helping
equity supply/demand, the U.S. stock market need not decline
unless profits slow sharply. In short, it appears to us that
the "Goldilocks" economic scenario can continue to support
the U.S. financial markets unless an unexpected "bad hair
day" intrudes.
Uncertainty on many fronts unquestionably has increased, so,
with market valuations in record territory, greater market
volatility is to be expected. Since the Bloody Monday
"crashette" on October 27, we've had an obvious increase in
volatility already. But interestingly, we continue to
believe that a resumption of the market leadership shift to
small stocks should develop this year. Or, if the U.S. stock
market were to get rockier, that small caps can provide
better defensive characteristics than would otherwise be
expectable.
The prime reason for believing this is the relative
improvement in earnings growth for well positioned small
U.S. companies vis a vis the declining earnings growth rates
for the largest companies that dominate the S&P 500.
Contributing to this change in relative earnings strength
will be the diminishing positives from corporate downsizing,
the negative earnings impact on multinationals from the very
strong dollar, and the greater Asian exposure of typical
large companies versus smaller predominantly U.S. focused
ones. In addition, there is the potentially more limited
ability of the large company to offset now rising wage
cost/healthcare cost pressures than for the smaller one
benefiting from special product dynamics, protected niche
markets or proprietary services.
The abrupt return of small stock underperformance since late
October does not invalidate our positive view for the
intermediate future. In such times of rising uncertainty, a
temporary flight to quality and liquidity normally will
overwhelm quite powerful small cap fundamentals. As
investors acclimatize to the evolving big picture realities,
their comfort level should improve and allow a resumption of
small stock leadership as superior small company
fundamentals evidence themselves.
Coupling this prospect with the appealing relative valuation
of small company stocks makes for a persuasive investment
case, in Kalmar's opinion. Importantly, more overvaluation
and speculation is found in the Nifty Fifty favorites that
dominate the S&P 500 than in most small growth stocks. For
example, as of year-end 1997, the forward relative
price/earnings ratio, the trailing relative price/earnings
ratio, the relative P/E to growth, and the relative
price/sales of small stocks all represent meaningful
discounts to their historic relationships. Having said this,
insightful research, selectivity and patience will be even
more important for investment success than in 1997.
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST REPORT FROM MANAGEMENT - CONTINUED
-------------------
"Growth-with-Value"
Small Cap Fund
COMMITMENT.
As critically interested fellow shareholders, the Kalmar
team pledges our continuing best efforts in 1998 to create
value for the fund through dedicated work and adherence to
the investment disciplines and thorough hands-on research in
smaller, rapidly growing, but inefficiently valued companies
that has made Kalmar's "Growth-with-Value" Small Cap style
so rewarding over the years.
Good Luck and Good Hunting to us all!
Yours sincerely,
/s/ Ford B. Draper, Jr.
Ford B. Draper, Jr.
President
January 5, 1998
KALMAR POOLED INVESTMENT TRUST - "GROWTH-WITH-VALUE" FUND
GROWTH OF $10,000
VS. THE RUSSELL 2000 INDEX AND THE LIPPER SMALL CAP FUND INDEX
TOTAL RETURN
SINCE INCEPTION*
----------------
46.35%
4/11/97 6/30/97 9/30/97 12/31/97
Kalmar Small Cap 20.40% 23.59% -1.65% 46.34%
Russell 2000 15.24% 14.85% -3.39% 27.86%
Lipper Small Cap 16.16% 15.25% -5.86% 26.02%
* The Fund commenced operations on April 11, 1997.
Please bear in mind that investing in small companies'
stocks can involve higher risk and volatility than those of
larger companies. The S&P 500 and Russell 2000 are
unmanaged stock market indices without any associated
expenses and their returns assume the reinvestment of all
dividends. The Lipper Small Cap Fund Index is an unweighted
index of mutual fund performance, which consists of the
average return of the 30 largest small cap funds. Also,
past performance is not necessarily indicative of future
results. Investment returns and principal values may
fluctuate, so that, when redeemed, shares may be worth more
or less than their original cost. Please read the
prospectus carefully before investing.
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST STATEMENT OF NET ASSETS
------------------- DECEMBER 31, 1997
"Growth-with-Value"
Small Cap Fund
MARKET
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCK - 87.9%
Basic Materials - 1.5%
Chemicals - Specialty - 0.9%
Cuno,
Inc.*.......................................... 140,500 $ 2,142,625
-----------
Paper & Forest Products - 0.6%
Caraustar Industries, Inc....................... 39,500 1,352,875
-----------
Total Basic Materials.................................... 3,495,500
-----------
Capital Goods - 15.0%
Electrical Equipment - 5.4%
American Precision Industries.................. 60,500 1,259,156
AMETEK,Inc..................................... 123,400 3,331,800
Benchmark Electronics, Inc.*................... 194,450 4,338,666
C&D Technology, Inc............................ 66,350 3,201,388
----------
12,131,010
----------
Manufacturing - Diverse - 5.7%
Applied Power, Inc. (A Shares)................. 56,000 3,864,000
Furon Co....................................... 288,000 6,012,000
Penn Engineering & Manufacturing Corp.*........ 124,100 2,978,400
Excel Technology, Inc.*........................ 2,900 32,263
----------
12,886,663
----------
Manufacturing - Special - 3.9%
Brady (W.H.) Co................................ 60,150 1,864,650
Insituform Technologies (A Shares)*............ 315,700 2,446,675
Paxar Corporation.............................. 120,000 1,781,944
Zero Corp...................................... 95,200 2,820,300
----------
8,913,569
----------
Total Capital Goods....................................... 33,931,242
----------
Consumer Cyclicals - 19.8%
Auto Parts & Equipment - 1.2%
Finishmaster, Inc.*............................ 15,100 177,425
OEA, Inc....................................... 87,500 2,532,031
----------
2,709,456
----------
Building Materials - 1.2%
Kevco,Inc.*.................................... 31,000 511,500
Shaw Group, Inc.*.............................. 101,300 2,329,900
----------
2,841,400
----------
Hardware & Tools - 0.3%
Acorn Products,
Inc.*......................................... 57,600 576,000
----------
Household Furniture & Apparel - 2.9%
Aaron Rents, Inc............................... 228,650 4,430,094
Watsco,Inc..................................... 86,300 2,130,531
----------
6,560,625
----------
Retail - Apparel -1.8%
Stage Stores, Inc.*............................ 112,300 4,197,213
----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST STATEMENT OF NET ASSETS - CONTINUED
------------------- DECEMBER 31, 1997
"Growth-with-Value"
Small Cap Fund
MARKET
VALUE
SHARES (NOTE 2)
------ --------
Retail - Computer & Electronics - 0.3%
Pomeroy Computer Resources, Inc.*............... 32,650 $ 579,538
Retail - Department Stores - 1.8%
Family Dollar Stores, Inc....................... 143,250 4,199,016
Retail - Specialty - 4.2%
Casey's General Stores, Inc..................... 135,350 3,434,506
Keystone Automotive Industries, Inc............. 144,700 3,436,625
Party City Corp.*............................... 82,800 2,670,300
----------
9,541,431
==========
Services - Advertising & Marketing - 0.1%
National Media Corp.*............................ 59,800 194,350
----------
Sercvices - Commercial & Consumer - 5.3%
Cort Business Services Corp.*.................... 105,600 4,204,200
DeVRY,Inc.*...................................... 97,700 3,114,188
Renters Choice,Inc.*............................. 226,400 4,641,200
----------
11,959,588
----------
Textiles - Home Furnishings - 0.7%
Interface, Inc................................... 52,600 1,525,400
----------
Total Consumer Cyclicals......................... 44,884,017
----------
Consumer Staples - 8.5%
Broadcast Media - 0.4%
Blonder Tongue Laboratories, Inc.*............... 58,400 828,550
----------
Distributions - Food & Health - 5.1%
JP Foodservice, Inc.*............................ 130,300 4,812,956
Patterson Dental Co.*............................ 91,100 4,122,275
Performance Food Group Co.*...................... 112,800 2,679,000
----------
11,614,231
----------
Household Products - 1.2%
Lesco,Inc....................................... 126,675 2,644,341
----------
Restaurants - 1.2%
Consolidated Products, Inc.*.................... 163,735 2,681,161
----------
Specialty Printing - 0.6%
Cadmus Communications Corp...................... 74,200 1,521,100
----------
Total Consumer Staples.................................... 19,289,383
----------
Energy - 4.5%
Oil & Gas - Drilling & Equipment - 3.5%
Dawson Production Services, Inc.*............... 85,900 1,492,513
EVI,Inc......................................... 57,400 2,970,450
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST STATEMENT OF NET ASSETS - CONTINUED
------------------- DECEMBER 31, 1997
"Growth-with-Value"
Small Cap Fund
MARKET
VALUE
SHARES (NOTE 2)
------ -------
Oil & Gas - Drilling & Equipment - continued
J. Ray McDermott,S.A.*........................ 41,630 $1,790,090
Superior Energy Services, Inc.*............... 159,450 1,614,431
----------
7,867,484
----------
Oil - Exploration & Production -1.0%
Brigham Exploration Co.*...................... 72,300 1,057,387
Patina Gas & Oil Corp.*....................... 167,800 1,289,962
----------
2,347,349
----------
Total Energy............................................... 10,214,833
----------
Financial - 2.8%
Consumer Finance -1.8%
AmeriCredit Corp.*............................ 150,300 4,161,431
----------
Insurance - Life & Health - 1.0%
Provident American Corp.*..................... 140,000 332,500
Penn Treaty American Corp.*................... 59,575 1,891,506
----------
2,224,006
----------
Total Financial.......................................... 6,385,437
----------
Healthcare - 11.0%
Biotechnology - 1.0%
Life Technologies, Inc.......................... 72,100 2,397,325
----------
Healthcare - Diverse - 1.9%
Sola International, Inc.*....................... 136,200 4,426,500
----------
Healthcare - Drugs Major - 0.4%
Chirex, Inc..................................... 48,400 853,050
----------
Healthcare - Managed Care - 3.5%
Healthplan Services Corp.*...................... 192,100 4,034,100
Phycor, Inc.*................................... 87,737 2,368,899
PMR Corp.*...................................... 72,600 1,452,000
----------
7,854,999
----------
Healthcare - Medical Products & Supplies - 3.3%
ATL Ultrasound, Inc.............................. 55,300 2,543,800
Dentsply International, Inc...................... 74,200 2,263,100
Lifeline Systems, Inc.*......................... 34,700 871,838
Suburban Ostomy Supply Company,Inc.*............. 145,800 1,694,925
----------
7,373,663
----------
Healthcare - Specialized Services -0.9%
Renal Care Group, Inc.*......................... 65,400 2,092,800
----------
Total Healthcare......................................... 24,998,337
----------
SEE ACCOMPANYINGNOTES TO FINANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST STATEMENT OF NET ASSETS - CONTINUED
------------------- DECEMBER 31, 1997
"Growth-with-Value"
Small Cap Fund
MARKET
VALUE
SHARES (NOTE 2)
------ -------
Technology - 23.0%
Communications - Equipment - 1.8%
Allen Telecom, Inc.......................... 126,600 $2,334,188
Norstan, Inc.*.............................. 77,500 1,840,625
----------
4,174,813
----------
Computer Hardware - 0.3%
Par Technology Corp.*....................... 30,000 271,875
Prophet 21, Inc.*........................... 39,500 414,750
----------
686,625
----------
Computer Software Services - 13.1%
American Management Systems, Inc.*.......... 80,700 1,573,650
Caere Corp.*................................ 152,700 1,317,037
Computer Horizons Corp.*.................... 115,571 5,200,695
Clarify,Inc.*............................... 30,000 348,750
Insight Enterprises, Inc.*.................. 79,900 2,936,325
Interlink Computer Sciences, Inc.*.......... 39,900 147,131
INTERSOLV, Inc.............................. 210,700 4,266,675
Mercury Interactive Corp.*.................. 32,300 864,025
Natural Microsystems Corp.*................. 79,900 3,715,350
Platinum Technology, Inc.................... 41,300 1,166,725
Systems & Computer Technology Corp.*....... 164,805 8,178,448
----------
29,714,811
----------
Electronics - Defense -1.2%
Electromagnetic Sciences Inc.*.............. 137,900 2,792,475
----------
Electronics - Distribution - 0.6%
Kent Electronics Corp.*...................... 53,300 1,339,162
----------
Electronics - Instruments - 2.1%
Analogic Corp................................ 94,200 3,579,600
Richardson Electronics, Ltd.................. 98,500 1,095,812
----------
4,675,412
----------
Electronics - Miscellaneous Components - 2.1%
Integrated Circuit Systems, Inc.*............ 55,300 1,576,050
Optek Technology, Inc.*...................... 47,100 939,056
Rogers Corp.*................................ 53,600 2,190,900
----------
4,706,006
----------
Photography & Imaging - 0.1%
Raster Graphics, Inc.......................... 40,800 188,700
----------
Services - Computer Systems - 1.7%
Keane,Inc.*................................... 92,800 3,770,000
----------
Total Technology.............................. 52,048,004
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST STATEMENT OF NET ASSETS - CONTINUED
------------------- DECEMBER 31, 1997
"Growth-with-Value"
Small Cap Fund
MARKET
VALUE
SHARES (NOTE 2)
------ -------
Transportation -1.8%
Air Freight -0.8%
Airnet Systems, Inc. *......................... 83,000 $1,784,500
----------
Trucking - 1.0%
Gulfmark Offshore,Inc.*......................... 17,600 580,800
Simon Transportation Services,Inc.*............. 67,200 1,612,800
----------
2,193,600
----------
Total Transportation..................................... 3,978,100
----------
Total Common Stock (Cost $156,897,527)................... 199,224,853
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 12.1%
Par
(000)
-----
Federal Home Loan Banks Discount Note, 4.75%,
01/02/98(Cost $27,429,380).....................$27,433 27,429,380
-----------
TOTAL INVESTMENTS (COST $184,326,907)+ -100.0%.............. 226,654,233
OTHER ASSETS AND LIABILITIES, NET -0.0%..................... 52,224
-----------
NET ASSETS -100.0%.......................................... $226,706,457
============
Net Asset Value, offering and redemption price per share
($226,706,457/16,553,638 outstanding shares of beneficial
interest, $0.01 par value)................................. $13.70
======
Net Assets Consisted Of:
Shares of beneficial interest............................... $ 165,536
Additional paid in capital.................................. 184,371,524
Distribution in excess of net realized gain on investments (157,929)
Net unrealized appreciation on investments.................. 42,327,326
------------
Net assets for 16,553,638 shares outstanding................ $226,706,457
============
* Non- income producing security.
+ The cost for Federal income tax purposes was $161,186,336.
At December 31, 1997, net unrealized appreciation was $65,467,897,
aggregate gross unrealized appreciation in which there was an excess
of market value over tax cost of $69,136,518, and aggregate gross
unrealized depreciation for all securities in which there was an
excess of tax cost over market value of $3,668,621.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST STATEMENT OF OPERATIONS
-------------------
"Growth-with-Value"
Small Cap Fund
FOR THE PERIOD
APRIL 11, 1997+
THROUGH
DECEMBER 31, 1997
-----------------
INVESTMENT INCOME
Dividends........................... $ 296,829
Interest............................ 569,325
----------
Total Investment Income............ 866,154
----------
EXPENSES
Advisory fee....................... 1,175,911
Accounting fee...................... 52,358
Administration fee.................. 135,814
Transfer agent fee.................. 12,619
Custodian fee....................... 24,065
Audit............................... 10,890
Legal............................... 18,440
Shareholder Reports................. 21,552
Registration fee.................... 61,150
Trustees' fees and expenses......... 11,700
Amortization of organizational expense 4,211
Miscellaneous....................... 12,528
---------
Total expenses before fee waivers . 1,541,238
---------
Administration fee waived (Note 4) (54,651)
Accounting fee waived (Note 4)... (21,562)
---------
Total Fee waived................ (76,213)
---------
Total Expenses, Net............. 1,465,025
---------
NET INVESTMENT LOSS.................. (598,871)
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment
transactions....................... 8,860,431
Change in net unrealized appreciation
on investments.................... 42,327,326
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS......................... 51,187,757
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS..................... $50,588,886
===========
+ COMMENCEMENT OF OPERATIONS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST STATEMENT OF CHANGES IN NET ASSETS
-------------------
"Growth-with-Value"
Small Cap Fund
FOR THE PERIOD
APRIL 11, 1997+
THROUGH
DECEMBER 31, 1997
-----------------
OPERATIONS
Net investment loss........................... $ (598,871)
Net realized gain on investment transactions.. 8,860,431
Change in net unrealized appreciation on
investments.................................. 42,327,326
-----------
Net increase in net assets resulting from
operations................................. 50,588,886
-----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments.............. (8,860,431)
Distribution in excess of net realized gain on
investments.................................. (5,367,704)
-----------
Total Distributions......................... (14,228,135)
-----------
SHARE TRANSACTIONS (A):
Receipt from shares sold...................... 45,578,705
Receipt from securities transferred in-kind... 136,516,678
Shares reinvested............................. 12,948,955
Shares redeemed............................... (4,748,632)
-----------
Net increase in net assets from Fund share
transactions............................... 190,295,706
-----------
TOTAL INCREASE IN NET ASSETS................... 226,656,457
NET ASSETS:
Beginning of period........................... 50,000
------------
End of period................................. $226,706,457
============
(A) TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST WERE:
Shares sold.................................. 3,696,217
Shares issued in exchange for securities
transferred in- kind........................ 12,234,389
Shares reinvested............................ 957,763
Shares redeemed.............................. (339,731)
-----------
Net increase in shares..................... 16,548,638
Shares outstanding - Beginning balance....... 5,000
-----------
Shares outstanding - Ending balance.......... 16,553,638
===========
+ COMMENCECMENT OF OPERATIONS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST FINANCIAL HIGHLIGHTS
-------------------
"Growth-with-Value"
Small Cap Fund
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
FOR THE PERIOD
APRIL 11, 1997+
THROUGH
DECEMBER 31, 1997
------------------
Net asset value at beginning of period... $ 10.00
========
INVESTMENT OPERATIONS
Net investment loss...................... (0.04)
Net realized and unrealized gain on
investments............................. 4.66
--------
Total from investment operations....... 4.62
--------
DISTRIBUTIONS:
From net realized gain on investments.... (0.57)
In excess of net realized gain on
investments............................. (0.35)
--------
Total distributions..................... (0.92)
--------
Net asset value at end of period.......... $ 13.70
========
Total return............................... 46.35%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses++................................ 1.25%*
Net investment loss....................... (0.51)%*
Portfolio turnover rate.................... 34.39%
Average commission rate paid1.............. $0.0544
Net assets at end of period (000 omitted).. $226,706
*Annualized.
+Commencement of Operations.
++Rodney Square Management Corporation waived a portion of
its administration and accounting fees for the period.
If these expenses had been incurred by the Fund, the
annualized ratio of expenses to average daily net assets
for the period would have been 1.32%.
1Computed by dividing the total amount of brokerage
commissions paid by the total shares of investment
securities purchased and sold during the period for
which commissions were charged.
SEE ACCOMPANYING NOTES TO FIANCIAL STATEMENTS
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST NOTES TO THE FINANCIAL STATEMENTS
-------------------
"Growth-with-Value"
Small Cap Fund
1. DESCRIPTION OF THE FUND. The Kalmar "Growth-
With-Value" Small Cap Fund (the "Fund") is the first
series of Kalmar Pooled Investment Trust (the "Trust"), a
Delaware business trust organized on November 6, 1996.
The Fund is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end
diversified management investment company. The investment
objective of the Fund is long-term capital appreciation.
The Fund commenced investment operations on April 11,
1997.
2.SIGNIFICANT ACCOUNTING POLICIES. The following is a
summary of the significant accounting policies of the
Fund:
SECURITY VALUATION. The Fund's securities, except short-
term investments with remaining maturities of 60 days or
less, are valued at their market value as determined by
their last sale price in the principal market in which
these securities are normally traded. Lacking any sales,
the security will be valued at the mean between the
closing bid and ask price. Short-term investments with
remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value, unless
the Trust's Board of Trustees determines that this does
not represent fair value. The value of all other
securities is determined in good faith under the
direction of the Board of Trustees. There were no
securities valued by the Board of Trustees on December
31, 1997.
FEDERAL INCOME TAXES. The Fund intends to qualify for
treatment as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 and to
distribute all of its taxable income to its shareholders.
Therefore, no federal income tax provision has been
provided.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions of net
investment income and net realized gains will be made
annually. Additional distributions may be made to the
extent necessary to avoid the payment of a 4% excise tax.
The amounts of dividends from net investment income and
of distributions from net realized gains are determined
in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles.
These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are
reclassified within the composition of net assets based
on their Federal tax-basis treatment; temporary
differences do not require reclassification. At December
31, 1997, net investment loss of $598,871 and
distribution in excess of net realized gain of $5,808,646
were reclassified to capital. Dividends and
distributions to shareholders which exceed net investment
income and net realized gains for financial reporting
purposes but not for tax purposes are reported as
dividends in excess of net investment income or
distributions in excess of net realized gains. To the
extent they exceed net investment income and net realized
gains for tax purposes, they are reported as
distributions of capital.
DEFERRED ORGANIZATION COSTS. Costs incurred by the Fund
in connection with its organization have been deferred
and are being amortized using the straight-line method
over a five-year period beginning on the date that the
Fund commenced operations. In the event that any of the
initial shares of the Fund are redeemed during the
amortization period by any holder thereof, the redemption
proceeds will be reduced by any unamortized organization
expenses in the same proportion as the number of initial
shares being redeemed bears to the number of initial
shares outstanding at the time of such redemption.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL
STATEMENTS. The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
-------------------
"Growth-with-Value"
Small Cap Fund
TRANSFERS IN-KIND. Upon commencement of the Fund's
investment operations, a number of separately managed
accounts managed by Kalmar Investment Advisers,
transferred appreciated securities in exchange for Fund
shares. For purposes of generally accepted accounting
principles, the book cost of any securities transferred
in-kind to the Fund is equal to the market value of such
securities on their respective dates of contribution to
the Fund. For tax purposes, the cost of any securities
transferred in-kind to the Fund is equal to the cost of
such securities to the contributing party on the date of
contribution. The result is a difference between book
cost and tax cost to the Fund.
OTHER. Investment security transactions are accounted
for on a trade date basis. The Fund uses the specific
identification method for determining realized gain or
loss on investments for both financial and federal income
tax reporting purposes. Dividend income and distributions
to shareholders are recorded on the ex-dividend date.
Interest income is recorded on an accrual basis.
3. PURCHASES AND SALES OF INVESTMENT SECURITIES. During
the period ended December 31, 1997, purchases and sales
of investment securities (excluding short-term
investments) aggregated as follows:
Purchases................ $195,274,492*
Sales ................... 47,237,397
* Includes securities transferred in-kind
4. INVESTMENT ADVISORY FEE AND OTHER SERVICES. The Fund
employs Kalmar Investment Advisers as its investment
adviser (the "Adviser"). Pursuant to an Investment
Advisory agreement with the Trust on behalf of the Fund,
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. During the current
fiscal year, the Adviser has voluntarily agreed to waive
its fees 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.
For the period ended December 31, 1997, the Fund incurred
Advisory fees of $1,175,911 of which no fees were waived.
Rodney Square Management Corporation ("Rodney Square"), a
wholly owned subsidiary of Wilmington Trust Company
("WTC"), which is wholly owned by Wilmington Trust
Corporation, a publicly held bank holding company, serves
as Administrator to the Fund pursuant to an
Administration Agreement with the Trust on behalf of the
Fund. As Administrator, Rodney Square is responsible for
services such as budgeting, maintaining federal
registration of the Fund's shares, financial reporting,
compliance monitoring and corporate management. For the
services provided, Rodney Square receives a monthly
administration fee at an annual rate based upon the
average daily net assets of the Fund of 0.15% of average
daily net assets up to $50 million and 0.10% of average
daily net assets over $50 million. Rodney Square has
agreed to waive a portion of its administration fees.
The Administration Fee earned by Rodney Square for the
period ended December 31, 1997 amounted to $135,814, of
which $54,651 has been waived.
Rodney Square also serves as Transfer and Dividend Paying
Agent of the Fund pursuant to a Transfer Agency Agreement
with the Trust on behalf of the Fund. WTC serves as
Custodian of the assets of the Fund pursuant to a Custody
Agreement with the Trust.
Rodney Square determines the net asset value per share of
the Fund and provides accounting services to the Fund
pursuant to an Accounting Services Agreement with the
Trust. For the accounting services
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
-------------------
"Growth-with-Value"
Small Cap Fund
provided, Rodney
Square receives an annual fee of $45,000, plus an amount
based on the average daily net assets of the Fund as
follows: 0.03% of average daily net assets over $50
million up to $100 million and 0.02% of average daily net
assets over $100 million. Rodney Square has agreed to
waive a portion of its accounting services fees. For the
period ended December 31, 1997, Rodney Square earned
accounting services fees amounting to $52,358, of which
$21,562 was waived.
Certain Trustees and officers of the Trust are also
officers of the Adviser. Such Trustees and officers are
paid no fees by the Trust for serving as Trustees or
officers of the Trust.
5. SUBSEQUENT EVENT. Rodney Square has entered into an
agreement with PFPC Inc. ("PFPC"), an indirect wholly
owned subsidiary of PNC Bank Corp., pursuant to which
PFPC will acquire the fund accounting, administration and
transfer agent business of Rodney Square. Effective
January 5, 1998, the services previously provided to the
Fund by Rodney Square will be provided by PFPC.
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST REPORT OF INDEPENDENT ACCOUNTANTS
-------------------
"Growth-with-Value"
Small Cap Fund
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND:
We have audited the accompanying statement of net assets
of Kalmar "Growth-With-Value" Small Cap Fund, a series of
Kalmar Pooled Investment Trust, as of December 31, 1997,
and the related statement of operations, changes in net
assets and financial highlights for the period April 11,
1997 (commencement of operations) to December 31, 1997.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our 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 statements and
financial highlights are free of material misstatement.
An audit includes examining, on a text basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
investments owned as of December 31, 1997, by
correspondence with the custodians and brokers. 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 statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of the Kalmar
"Growth-With-Value" Small Cap Fund as of December 31,
1997 and the results of its operations, changes in net
assets, and financial highlights for the period April 11,
1997 (commencement of operations) to December 31, 1997,
in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 23, 1998
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST TAX INFORMATION
------------------- (UNAUDITED)
"Growth-with-Value"
Small Cap Fund
By now shareholders to whom year-end tax reporting is
required by the IRS should have received their Form 1099-
DIV from the Fund.
The Kalmar "Growth-with-Value" Small Cap Fund paid
distributions of $0.17205 per share from net short-term
capital gains and $0.75032 per share from net long-term
capital gains during the period ended December 31, 1997.
Pursuant to Section 852 of the Internal Revenue Code, the
Fund designated $11,574,156 as capital gain distributions
for the period ended December 31, 1997. Of this total
capital gain dividend amount, the Fund made a 28 Percent
Rate Gain distribution of $1,337,972 and a 20 Percent
Rate Gain distribution of $10,236,184.
<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
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
Philadlephia, PA 19103-7098
AUDITORS
Coopers & LyBrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
[FRONT COVER]
KALMAR
POOLED
INVESTMENT
TRUST
- -------------------
"GROWTH-WITH-VALUE"
SMALL CAP FUND
[logo]
"KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND
ANNUAL REPORT
DECEMBER 31, 1997
<PAGE>
[BACK COVER]
Kalmar Investment Advisers
Barley Mill House
3701 Kennett Pike
Greenville, DE 19807
(PHONE) 302-658-7575
(FAX) 302-658-7513
<PAGE>
