KALMAR
POOLED
INVESTMENT
TRUST
- ----------
[GRAPHIC OMITTED]
KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND
ANNUAL REPORT
DECEMBER 31, 1999
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
REPORT FROM MANAGEMENT
DEAR FELLOW SHAREHOLDERS & FRIENDS:
The year 1999 was certainly one for the record books, and a good one to end the
Millennium on, as titularly all the major U.S. stock market indexes finished at
record highs. Even the Russell 2000 Index of small capitalization stocks in the
last moments of 1999 finally moved above its long-elusive high set back in April
1998 -- and marginally beat the S&P 500 for the first year since 1993. What
finally pushed the Russell into new high ground, however, was not broad-based
strength across many sectors, but a narrow powerful move in its technology
component only.
Technology stocks dominated all market indexes. This can be seen most evidently
in the NASDAQ Composite, whose giant technology representation elevated it to a
whopping 86% gain, the all time record yearly gain for any major index. Its 1999
surge was that much more stunning because it followed right on the heels of its
tech-driven 40% gain in 1998.
Highlighting the dramatic influence of the very largest market cap stocks on
investment performance over the last few years, note that the NASDAQ 100 (the
top 100 stocks by market cap from the NASDAQ) soared an even more stunning 102%
in 1999, following a huge 85% gain in 1998. This represents an unparalleled
total two year gain of 274%. While awesome, it serves to emphasize that most
everything else except "New Economy" plays, techs, and mega-caps dragged far,
far, far behind.
BIG PICTURE OUTLOOK
Supporting equity market strength, the fundamental economic backdrop remains
very positive. The exception is rising interest rates -- long term rates, for
instance, advanced from just over 5% in January 1999 to 6.5% at year end, and
even further to 6.7% today. Surprisingly strong non-inflationary U.S. growth,
reviving world economies, and solid progress toward democracy, capitalism,
globalization, and peace contributed to a remarkable decade of rising U.S.
prosperity and virtually unchallenged technological and world leadership.
Buoyant consumer spending, record employment, Federal and State budget
surpluses, personal and national confidence, rising technology-driven
productivity, and explosive early growth of the Internet: all lead to the most
rewarding five years in the history of major U.S. market indexes. Writ large,
it's hard to imagine how things could get much better, so enjoy!
At the same time, though, recognize that the challenges facing the thoughtful
investor today are far from trivial. To successfully mine the information age
opportunities presented by this fruitful environment, while guarding against the
risks of market over-enthusiasm and potential negative fundamental change
factors could be quite a tricky task.
Indeed, the most telling tug of war within the market will likely be between
gradual inflation up-creep, the risks of further increases in interest rates,
and the mania-driven valuation extremes of the technology leadership that has so
dominated this narrow market VERSUS the moderate valuation of most stocks (small
caps particularly), strong and growing corporate earnings, and the positive cash
flow and supply/demand for equities. Based on its success to date, we remain
hopeful about the ability of the Federal Reserve to engineer a soft landing slow
down and, thus, maintain the "Goldilocks economy". But we are increasingly
nervous about market risk related to the wild public and professional
speculation that is driving the technology sectors generally, and New Economy
and Internet stocks in particular.
1
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
REPORT FROM MANAGEMENT -- CONTINUED
Given that the public is involved up to its eyeballs in the raciest aspects of
this speculation (both directly and through ever more aggressively managed
mutual funds), and that the wealth effect from the rising stock market has had a
decidedly stimulative impact on the U.S. economy, we worry about the negative
rub off from a serious break in the NASDAQ. Both the overall market and, by
extension, the U.S. economy could be hurt substantially if the apparent
technology market bubble bursts. Really, except for the inflation in financial
assets (read that, the booming stock market), at this juncture it is hard to
identify other economic excesses that seem likely to cause real trouble.
RECENT MARKET BEHAVIOR AND PERFORMANCE
One can better understand the investment challenges for the year 2000 by
considering the very divided nature of the market as seen in the fourth quarter
and the year just ended.
After a two quarter stretch from April through September, during which the
market broadened (and during which Kalmar outperformed all the market benchmarks
we are normally compared to), the market returned in the fourth quarter with a
vengeance to its bifurcated, ever narrower, ever more momentumized behavior of
recent years. As such, the concluding quarter of 1999 was much like the
beginning quarter, extremely narrow and dominated by New Economy technology
stocks. Indeed, in excess of 100% of the year's Russell 2000 appreciation came
from the technology sector broadly defined, meaning that all other sectors taken
together were NET DOWN. And within technology, the great preponderance of the
appreciation came from those stocks with the biggest cap sizes, the most extreme
- -- often entirely unprecedented -valuations, and from negative-earnings "story
stocks".
This can be seen in the extreme return divergence (BY FAR AND AWAY THE WIDEST
EVER) between the Russell 2000 Value and Growth indices for the Fourth Quarter
and for the Year. Valuation sensitive managers like Kalmar, who didn't abandon
their investment philosophies AND who remained diversified, couldn't win in the
fourth quarter -- or in the year for that matter. Under the circumstances, and
given the sensible lower risk parameters of our proven investment disciplines,
we did a good job.
<TABLE>
<CAPTION>
FOURTH QUARTER SIX MONTHS 1999 YEAR INCEPTION TO DATE
TOTAL RETURN 9/30/99 TO 12/31/99 6/30/99 TO 12/31/99 12/31/98 TO 12/31/99 4/11/97 TO 12/31/99
- ------------ ------------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Kalmar Small Cap Fund 12.03% 6.01% 6.01% 43.25%
Lipper Small Cap Index 18.96% 13.88% 20.17% 49.08%
Russell 2000 18.44% 10.96% 21.26% 51.28%
- ---------------------------------------------------------------------------------------------------------
Russell 2000 Value 1.53% (6.36%) (1.49%) 20.56%
Russell 2000 Growth 33.41% 26.84% 43.09% 81.22%
- ---------------------------------------------------------------------------------------------------------
S&P 500 Index 14.94% 7.75% 21.03% 101.69%
</TABLE>
To the exclusion of most other stocks, technology names went into hyperdrive in
late October, blasting through to year end. Of these, Internet and related New
Economy stocks were propelled just that much further into intergalactic outer
space. These parabolic price moves appear to be part of a classic mania-driven
sectoral blow-off, fed by unprecedented IPO speculation. Fully acknowledging the
revolutionary impact of the Internet and the exciting technologies and companies
involved, it appears that investment realism has increasingly been suspended --
as investor infatuation with New Era promise has overwhelmed common sense.
2
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
REPORT FROM MANAGEMENT -- CONTINUED
Indeed, the mantle of "investment role model" seems to have transferred from the
professional investor and security analyst to the public IPO speculator, with
the public plungers now instructing the pros. In any case, somehow an unbridled
form of "New Paradigm" Momentum investing has been legitimized! We'd be
surprised if the just dessert from this enormously risky style shift by many
investment managers doesn't come home to roost before the year 2000 ends. All
else aside, much of the hot stuff appears priced for truly unattainable future
expectations. And, the initial public offering market has gone beyond tulip bulb
crazy. In many cases there appears to be a clear disconnect between stock price
and any reasonable hope for the fundamentals.
PERFORMANCE ATTRIBUTION
Remembering that Kalmar does not invest with a rotational top-down sectoral
style or rapidly shift our sector weightings around, for the fourth quarter
versus our benchmark the Russell 2000 we were: Disadvantaged by our
under-weighting in Healthcare and our over-weighting in Energy. (Our growth
Exploration & Production company stocks suffered because of natural gas price
weakness resulting from unseasonal record warmth.) Helped by our over-weighting
in Producer Durables and by our under-weighting in Financial Services. (In a
period of rising interest rates good stock picking actually produced positive
Financial Services return versus the negative sector return.) But most
conspicuously handicapped by our avoidance of extreme valuation and negative
earnings stocks, particularly tech and Internet-related names, despite our
Technology sector weighting that was comparable to the Russell 2000. By our
reckoning, this factor accounted for well over 5% of our 7% relative shortfall
to the Russell 2000 in the quarter. In the same way, we were very handicapped in
the first quarter's highly divided, speculative market. In the intervening two
quarters when the market broadened and behaved less aberrantly, Kalmar
outperformed.
INVESTMENT STRATEGY AND PORTFOLIO MANAGEMENT
As to our investment strategy, in keeping with the robust demand outlook and
increasing technology contribution to the world economy, Kalmar continues to
raise portfolio exposure to computer and communications technologies, innovative
business equipment & services, and productivity capital goods providers, while
importantly remaining well diversified in portfolios overall AND careful about
valuation risk. In keeping with our true investment orientation which focuses on
longer term ownership of dynamic, inefficiently valued "good growing
businesses", big weighting changes were not made. Within a portfolio typically
having around seventy-five holdings, fifteen new positions were initiated in the
fourth quarter, with additions made to nine existing ones.
We make particular note that our existing and new technology holdings are
solidly profitable "real companies", which trade at reasonable, understandable
multiples of earnings and revenues. They are innovative, strongly growing New
Economy enablers that should benefit from the Internet revolution. However, they
do not carry the seemingly irrational valuations of the pure-play Net names OR
the embryonic business model risk either. New ideas outside the broadest
technology definition, like our three new specialty retailers, were consciously
selected for strong niche business models and little e-tailing threat. Further,
many of our businesses have productive e-commerce strategies for which they are
yet to receive investor credit. That lies ahead of us. The distraction factor
3
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
REPORT FROM MANAGEMENT -- CONTINUED
coming from the boiling IPO arena and today's ultra narrow market psychology has
so far prevented such recognition. This distraction factor should not be
minimized when seeking to understand difficult comparative performance.
As to specific holdings, our best individual performers in the fourth quarter
were technology stocks, mirroring the market's focus on all things technology
related. During the quarter, eleven stocks in our portfolio appreciated more
than 50% and were all in technology related businesses. These companies include
RSA Security (e-commerce security software), Credence Systems (semiconductor
test equipment), Micros Systems (computer point-of-sale systems for the
hospitality industry), Progress Software (application development tools and
software), and Veeco Instruments (precision instrumentation for disk drive and
semiconductor production). Some of our newer positions outside of the technology
sector also made significant moves. These names include Whitehall Jewelers (up
45%), Mastec (up 41%) and Callon Petroleum (up 38%).
As indicated earlier, most stocks outside technology of one form or another did
nothing in the fourth quarter. Such narrowness is a real disadvantage to well
diversified investors like Kalmar. Acknowledging that, some of our weaker
performers in the quarter were in the energy sector, reflecting a short term
drop in natural gas prices rather than company specific issues. We believe that
the fundamental outlook for higher gas pricing remains very much on track and
that our companies are productively building their reserves. Our weakest
performer was Chirex, a contract manufacturing specialist to the pharmaceutical
industry, that through no fault of its own experienced a dramatic shortfall in
demand from Glaxo, its largest customer. Outsourcing among drug companies is
gaining momentum and we believe that the stock price action in Chirex has been
way overdone. Still, we are monitoring the company's fundamental outlook
closely.
To create capital for new ideas (as well as to monetize tax losses), we
eliminated a number of positions that no longer met our growth and profitability
criteria, or were deemed less competitive than newer candidates. Among others,
such sales included SLI, Analogic, Casey's General Stores, and Wabash National.
We sold outright several highly appreciated holdings such as Family Dollar
Stores and Whittman-Hart, and "peeled the onion" to bank partial profits on
several extended technology names that we like long term. Recent additions to
the portfolio include AnswerThink Consulting, Jack Henry & Associates, Cabletron
and Shared Medical Systems. Furon, Worthington Foods, Genesys Telecom, and
Unilab were bought away from us in takeovers. As discussed in prior
Commentaries, this once again corroborates the go-forward potential among the
many good, growing, undervalued small cap stocks we own.
In a year of moderate returns for Kalmar Fund Shareholders, by prudently
harvesting losses and replacing them with new holdings offering greater
potential return, we were able to fully offset both short and long term capital
gains. Accordingly, despite your Fund's appreciation last year, you'll be happy
to hear that there was no capital gains distribution at year end, and hence no
associated current tax liability, unless you sold shares in 1999.
KALMAR "GROWTH-WITH-VALUE" METRICS AND OUTLOOK
Briefly as to valuation metrics, Kalmar's portfolio companies have generated
25.7% past five year earnings growth versus 27.7% and 8.2% for the Russell 2000
Growth and Value, respectively. Our internal research projects at least mid-20%
future growth for our portfolio. Kalmar's trailing P/E ratio is only 24.5x
versus 77.9X for the Russell 2000 Growth (which calculation EXCLUDES its many
4
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
REPORT FROM MANAGEMENT -- CONTINUED
negative earnings companies) and 18.9x for the Russell 2000 Value. Future
earnings growth for the Russell 2000 Growth may not be any stronger than
Kalmar's and EPS growth from the Russell 2000 Value likely will remain in a low
range. Thus, in keeping with the conscious intent of our style, your Fund offers
what should prove to be a very compelling combination of "Growth-with-Value".
Given three things, the unprecedented gap in valuations between tech and most
everything non-tech among small stocks, the very large valuation differential
between small and large cap stocks that should close, and the extremely narrow
nature and extraordinary Net-related speculation in the market, Kalmar's
investment approach should be a rewarding risk-adjusted prescription for
appealing future returns. Just grant us a slightly broader market to operate in,
please!
Best of luck to one and all, good wishes, and good health and prosperity in the
New Year and New Millennium.
Yours sincerely,
/S/ Ford B. Draper
Ford B. Draper, Jr., President
Kalmar Investment Advisers
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND GROWTH OF $10,000 VS. THE RUSSELL 2000
INDEX, THE RUSSELL 2000 VALUE INDEX AND THE LIPPER SMALL CAP FUND INDEX
Kalmar Small Cap Russell 2000 Russell 2000 Value Lipper Small Cap
4/11/97 $10,000 $10,000 $10,000 $10,000
12/31/97 $14,635 $12,786 $13,114 $12,602
12/31/98 $13,514 $12,460 $12,268 $12,495
12/31/99 $14,325 $15,128 $12,086 $14,908
AVERAGE ANNUAL RETURNS
1 Year Since Inception*
---------- ----------------------
Fund 6.01% 14.09%
Russell 2000 21.26% 16.40%
Russell 2000 Value (1.49)% 7.20%
Lipper Small Cap 20.17% 15.77%
* 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 RUSSELL 2000 AND RUSSELL
2000 VALUE ARE UNMANAGED STOCK MARKET INDICES WITHOUT ANY ASSOCIATED EXPENSES
AND THEIR RETURNS ASSUME THE REINVESTMENT OF ALL DIVIDENDS. THE LIPPER SMALL CAP
FUND INDEX FROM INCEPTION TO AUGUST 31, 1999 IS AN UNWEIGHTED INDEX OF MUTUAL
FUND PERFORMANCE WHICH CONSISTS OF THE AVERAGE RETURN OF THE 30 LARGEST SMALL
CAP FUNDS. SINCE AUGUST 31, 1999 THE LIPPER SMALL CAP FUND INDEX IS CALCULATED
USING A WEIGHTED AGGREGATE COMPOSITE INDEX FORMULA WHICH IS REBASED ANNUALLY.
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. DISTRIBUTED BY PROVIDENT DISTRIBUTORS,
INC.
5
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
MARKET
VALUE
SHARES (NOTE 2)
---------- ----------
COMMON STOCK -- 97.9%
BUSINESS EQUIPMENT & SERV. -- 26.2%
EQUIPMENT & SERVICES -- 21.5%
Aaron Rents, Inc.(a) ..................... 330,250 $ 5,861,937
Acxiom Corp.*(a) ......................... 164,160 3,939,840
Answerthink Consulting Group, Inc. * ..... 14,000 479,500
Armor Holdings, Inc. ..................... 173,500 2,277,187
Choicepoint, Inc.* ....................... 136,800 5,660,100
Cuno, Inc.*(a) ........................... 162,700 3,368,398
Excel Technology, Inc.*(a) ............... 157,900 2,832,331
F.Y.I., Inc.* ............................ 90,000 3,060,000
First Consulting Group* .................. 139,500 2,162,250
Insight Enterprises, Inc.*(a) ............ 86,425 3,511,016
MAXIMUS, Inc.* ........................... 92,600 3,142,612
NCO Group, Inc.* ......................... 110,200 3,319,775
RSA Security, Inc.* ...................... 30,800 2,387,000
------------
42,001,946
------------
TIMESHARING & SOFTWARE -- 4.7%
Best Software, Inc.* ..................... 55,400 1,634,300
Jack Henry & Associates, Inc. ............ 30,000 1,610,625
National Computer Systems, Inc.(a) ....... 114,800 4,319,350
RadiSys Corp.* ........................... 30,550 1,558,050
------------
9,122,325
------------
TOTAL BUSINESS EQUIPMENT & SERV. ................... 51,124,271
------------
CAPITAL GOODS -- 19.0%
CAPITAL EQUIPMENT -- 4.7%
Applied Power, Inc. (A Shares)(a) ........ 158,395 5,821,016
Shaw Group, Inc.* ........................ 134,300 3,399,469
------------
9,220,485
------------
CONSTRUCTION MATERIALS -- 7.8%
Insituform Technologies (A Shares)(a) .... 453,500 12,811,375
Trex Company, Inc.* ...................... 88,600 2,370,050
------------
15,181,425
------------
ELECTRICAL EQUIPMENT -- 5.0%
C & D Technology, Inc. ................... 86,400 3,672,000
Richardson Electronics, Ltd.(a) .......... 128,800 966,000
Technitrol, Inc. ......................... 82,600 3,675,700
Vicor Corp.* ............................. 32,700 1,324,350
------------
9,638,050
------------
METAL FABRICATION -- 1.5%
Penn Engineering & Manufacturing Corp.(a) 128,800 2,982,525
------------
TOTAL CAPITAL GOODS................................. 37,022,485
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
SCHEDULE OF INVESTMENTS -- CONTINUED
DECEMBER 31, 1999
MARKET
VALUE
SHARES (NOTE 2)
---------- ----------
CONSUMER DURABLES -- 1.0%
HOUSEHOLD - MAJOR APPLIANCES -- 1.0%
Watsco, Inc.(a) .......................... 176,200 $ 2,037,312
------------
TOTAL CONSUMER DURABLES............................. 2,037,312
------------
CONSUMER NON-DURABLES -- 3.1%
APPAREL -- 0.8%
Pacific Sunwear of California*(a) ........ 50,850 1,636,734
------------
FOOD & RELATED -- 2.3%
Performance Food Group Co.*(a) ........... 119,000 2,900,625
US Foodservice, Inc.*(a) ................. 93,600 1,567,800
------------
4,468,425
------------
TOTAL CONSUMER NON-DURABLES......................... 6,105,159
------------
CONSUMER SERVICES -- 1.7%
LEISURE TIME INDUSTRY -- 1.7%
Lesco, Inc.(a) ........................... 89,775 1,526,175
SCP Pool Corp.* .......................... 67,700 1,755,969
------------
TOTAL CONSUMER SERVICES............................. 3,282,144
------------
ENERGY -- 5.4%
PETROLEUM - DOMESTIC -- 4.2%
Basin Exploration Inc.*(a) ............... 42,500 749,063
Callon Petroleum Corp.* .................. 36,100 534,731
Devon Energy Corp.* ...................... 57,400 1,887,025
Evergreen Resources, Inc.*(a) ............ 149,200 2,946,700
Stone Energy Corp.*(a) ................... 57,600 2,052,000
------------
8,169,519
------------
PETROLEUM - SERVICES -- 1.2%
Weatherford International*(a) ............ 60,500 2,416,219
------------
TOTAL ENERGY........................................ 10,585,738
------------
FINANCIAL SERVICES -- 4.9%
BANKS -- 1.1%
Doral Financial Corp.(a) ................. 181,200 2,231,025
------------
FINANCE COMPANIES -- 3.8%
AmeriCredit Corp.*(a) .................... 401,200 7,422,200
------------
TOTAL FINANCIAL SERVICES............................ 9,653,225
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
SCHEDULE OF INVESTMENTS -- CONTINUED
DECEMBER 31, 1999
MARKET
VALUE
SHARES (NOTE 2)
---------- ----------
HEALTHCARE -- 3.9%
HEALTHCARE - GENERAL -- 2.0%
Dentsply International, Inc.(a) .......... 100,600 $ 2,376,675
Renal Care Group, Inc.*(a) ............... 62,275 1,455,678
------------
3,832,353
------------
HOSPITAL SUPPLY & MGMT -- 1.9%
Shared Medical Systems Corp. ............. 27,000 1,375,313
Veterinary Centers of America, Inc.*(a) .. 186,400 2,399,900
------------
3,775,213
------------
TOTAL HEALTHCARE.................................... 7,607,566
------------
RAW MATERIALS -- 4.4%
CHEMICALS - SPECIALTY -- 4.4%
Chirex, Inc.*(a) ......................... 65,700 960,863
Rogers Corp.*(a) ......................... 105,600 4,039,200
Spartech Corp.(a) ........................ 112,000 3,612,000
------------
8,612,063
------------
TOTAL RAW MATERIALS................................. 8,612,063
------------
RETAIL -- 3.4%
RESTAURANTS -- 1.2%
Consolidated Products, Inc.*(a) .......... 227,026 2,298,635
------------
RETAIL - SPECIALTY STORES -- 2.2%
David's Bridal, Inc.* .................... 109,600 1,226,150
Whitehall Jewellers, Inc.* ............... 83,300 3,071,688
------------
4,297,838
------------
TOTAL RETAIL........................................ 6,596,473
------------
TECHNOLOGY -- 24.9%
COMMUNICATIONS EQUIPMENT -- 8.0%
C-Cube Microsystems, Inc.*(a) ............ 66,700 4,152,075
Cabletron Systems, Inc.* ................. 106,000 2,756,000
Inter-Tel, Inc.(a) ....................... 100,500 2,512,500
Mastec, Inc.* ............................ 29,200 1,299,400
Polycom, Inc. * .......................... 25,900 1,649,506
Tekelec * ................................ 94,200 2,119,500
Tollgrade Communications, Inc.*(a) ....... 31,100 1,072,950
------------
15,561,931
------------
COMPUTERS - PERIPHERALS -- 10.8%
Apex Inc.* ............................... 68,400 2,205,900
AXENT Technologies, Inc.* ................ 42,000 882,000
Benchmark Electronics, Inc.*(a) .......... 138,950 3,187,166
Keane, Inc.* ............................. 60,000 1,905,000
Landmark Systems Corp.*(a) ............... 125,400 1,308,863
Progress Software Corp. * ................ 97,600 5,538,800
SPSS, Inc.*(a) ........................... 79,100 1,997,275
Systems & Computer Technology Corp.*(a) .. 255,410 4,150,413
------------
21,175,417
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
SCHEDULE OF INVESTMENTS -- CONTINUED
DECEMBER 31, 1999
MARKET
VALUE
SHARES (NOTE 2)
---------- ----------
ELECTRONIC COMPONENTS -- 0.4%
ATMI, Inc.*(a) ........................... 25,050 $ 828,216
------------
ELECTRONIC INSTRUMENTS -- 5.7%
Artesyn Technologies, Inc.* .............. 84,600 1,776,600
Credence Systems Corp.*(a) ............... 25,100 2,171,150
MICROS Systems, Inc.* .................... 47,300 3,500,200
Veeco Instruments, Inc.*(a) .............. 77,400 3,623,287
------------
11,071,237
------------
TOTAL TECHNOLOGY.................................... 48,636,801
------------
TOTAL COMMON STOCK
(Cost $141,825,724) .............................. 191,263,237
------------
MONEY MARKET FUNDS -- 2.0%
Sansom Street Fund - Money Market
Portfolio .............................. 1,901,759 1,901,759
Temp Cash Fund - Dollar Series ........... 1,901,760 1,901,760
------------
TOTAL MONEY MARKET FUNDS
(Cost $3,803,519) ...................... 3,803,519
------------
TOTAL INVESTMENTS
(Cost $145,629,243)(DAGGER)-- 99.9% ....................... 195,066,756
OTHER ASSETS AND LIABILITIES, NET-- 0.1% .................... 223,469
------------
NET ASSETS-- 100.0% ......................................... $195,290,225
============
* Non-income producing security.
(a) Denotes a portion of the shares of the security were acquired through a
transfer-in-kind exchange (See Note 2-Transfers-in-kind).
(DAGGER) The cost for Federal income tax purposes was $140,256,428. At December
31, 1999, net unrealized appreciation was $54,810,328. This consisted of
aggregate gross unrealized appreciation in which there was an excess of
market value over tax cost of $58,410,366, and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $3,600,038.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS:
Investments in securities, at market value
(Cost $145,629,243).......................................... $195,066,756
Receivable for:
Dividends and interest....................................... 47,818
Investment securities sold................................... 1,655,630
Other assets.................................................... 22,818
------------
Total Assets................................................. 196,793,022
------------
LIABILITIES:
Payables for:
Investment securities purchased.............................. 788,038
Capital shares redeemed......................................... 495,720
Due to Adviser.................................................. 165,226
Accrued expenses................................................ 53,813
------------
Total Liabilities............................................ 1,502,797
------------
NET ASSETS...................................................... $195,290,225
============
NET ASSETS CONSISTED OF:
Shares of beneficial interest................................... $ 145,578
Additional paid-in capital...................................... 147,013,371
Accumulated net realized loss on investments.................... (1,306,237)
Net unrealized appreciation on investments...................... 49,437,513
------------
NET ASSETS FOR 14,557,781 SHARES OUTSTANDING.................... $195,290,225
============
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER SHARE
($195,290,225/14,557,781 outstanding shares of beneficial
interest, $0.01 par value)................................... $13.41
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
STATEMENT OF OPERATIONS
FOR THE FISCAL
YEAR ENDED
DECEMBER 31, 1999
------------------
INVESTMENT INCOME:
Dividends.....................................................$ 576,403
Interest...................................................... 396,518
------------
Total Income.................................................. 972,921
------------
EXPENSES:
Advisory fee.................................................. 2,056,012
Accounting fee (Note 4)....................................... 81,121
Administration fee (Note 4)................................... 230,601
Transfer agent fee............................................ 38,629
Custodian fee................................................. 24,641
Audit......................................................... 20,550
Legal......................................................... 27,657
Shareholder reports........................................... 26,178
Registration fee.............................................. 19,353
Trustee's fees................................................ 15,501
Amortization of organizational expense........................ 5,800
Miscellaneous................................................. 22,577
------------
Total expenses............................................. 2,568,620
NET INVESTMENT LOSS.............................................. (1,595,699)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions.................. (10,898,308)
Net change in unrealized appreciation of investments.......... 20,242,609
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................. 9,344,301
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............$ 7,748,602
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------ -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss........................................ $ (1,595,699) $ (1,253,233)
Net realized loss on investment transactions............... (10,898,308) (8,108,156)
Change in net unrealized appreciation (depreciation)
on investments.......................................... 20,242,609 (13,132,422)
------------ ------------
Net increase (decrease) in net assets resulting
from operations...................................... 7,748,602 (22,493,811)
------------ ------------
SHARE TRANSACTIONS (a):
Receipt from shares sold................................... 11,587,727 52,930,125
Receipt from securities transferred in-kind................ 439,086 12,088,879
Shares redeemed............................................ (62,024,827) (31,692,013)
------------ ------------
Net increase (decrease) in net assets from Fund
share transactions................................... (49,998,014) 33,326,991
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS....................... (42,249,412) 10,833,180
NET ASSETS:
Beginning of period........................................ 237,539,637 226,706,457
------------ ------------
End of period.............................................. $195,290,225 $237,539,637
============ ============
(a) TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST WERE:
Shares sold................................................ 958,049 3,922,701
Shares issued in exchange for securities transferred
in kind (Note 2)........................................ 40,431 851,608
Shares redeemed............................................ (5,215,705) (2,552,941)
------------ ------------
Net increase (decrease) in shares.......................... (4,217,225) 2,221,368
Shares outstanding - Beginning balance..................... 18,775,006 16,553,638
------------ ------------
Shares outstanding - Ending balance........................ 14,557,781 18,775,006
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FISCAL FOR THE FISCAL APRIL 11, 1997(DAGGER)
YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- ----------------- ---------------------
<S> <C> <C> <C>
Net asset value at beginning of period........... $12.65 $13.70 $10.00
====== ====== ======
INVESTMENT OPERATIONS
Net investment income............................ (0.11) (0.07) (0.04)
Net realized and unrealized gain (loss) on
investments................................... 0.87 (0.98) 4.66
------ ------ ------
Total from investment operations........... 0.76 (1.05) 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................. $13.41 $12.65 $13.70
====== ====== ======
Total return..................................... 6.01% (7.66)% 46.35%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses...................................... 1.25% 1.24% 1.25%*(DOUBLE DAGGER)
Net investment income......................... (0.78)% (0.52)% (0.51)%*(DOUBLE DAGGER)
Portfolio turnover rate.......................... 52.49% 27.41% 34.39%
Net assets at end of period (000 omitted)........ $195,290 $237,540 $226,706
<FN>
* Annualized.
(DAGGER) Commencement of Operations.
(DOUBLE DAGGER) Rodney Square Management Corporation, the Fund's prior
administrator and accounting agent, waived a portion of its administration
and accounting fees for the period ended December 31, 1997. If these
expenses had been incurred by the Fund, the annualized ratio of expenses to
average daily net assets for the period ended December 31, 1997 would have
been 1.32%.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
NOTES TO FINANCIAL STATEMENTS
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 September 30, 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 such securities valued by the Board of Trustees on December 31, 1999.
FEDERAL INCOME TAXES. The Fund intends to continue to qualify for treatment as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"), 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 any net investment income and
any 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, 1999, a
net investment loss of $1,595,699 and a $11,343,032 book realized capital loss
was reclassified into paid in capital. The $11,343,032 book realized capital
loss reclassified into paid in capital was due to a permanent difference between
the tax realized capital gain of $444,724 and book realized capital loss of
$10,898,308. This permanent difference was the result of securities being sold
that had a permanent book and tax cost basis difference, which was caused by
transfers in-kind (see "transfers in-kind"). The Fund has capital loss
carryforwards of $1,199,555 and $39,155, which expire on December 31, 2006 and
December 31, 2007, respectively, available to offset future capital gains.
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.
14
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
NOTES TO FINANCIAL STATEMENTS
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.
TRANSFERS IN-KIND. During the fiscal year ended December 31, 1999, certain
shareholders transferred securities in exchange for Fund shares. These exchanges
were conducted on a taxable basis, whereby for both generally accepted
accounting principles and tax purposes the cost of the 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. Upon the Fund's commencement of
investment operations, a number of separately managed accounts managed by Kalmar
Investment Advisers, transferred appreciated securities in exchange for Fund
shares. These exchanges were conducted on a tax free basis, whereby 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 those securities transferred in-kind to the Fund is equal to the
historical cost of those securities to the contributing party. The result is a
permanent difference between book cost and tax cost to the Fund. This permanent
book/tax difference will cause a difference in book realized capital gains and
losses and tax realized capital gains and losses. These differences will be
reclassified into paid in capital.
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 fiscal year ended
December 31, 1999, purchases and sales of investment securities (excluding
short-term investments) aggregated as follows:
Purchases .................................. $103,875,755*
Sales ...................................... 137,576,588
* Includes securities transferred in-kind of $439,086
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.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp., a
multi-bank holding company, serves as administrator to the Fund. As
Administrator, PFPC is responsible for services such as budgeting, maintaining
federal registration of the Fund's shares, financial reporting, compliance
monitoring and corporate management.
15
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
PFPC 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.
PFPC serves as transfer agent and dividend disbursing agent of the Fund pursuant
to a Transfer Agency Agreement with the Trust on behalf of the Fund.
PFPC Trust Company serves as Custodian of the assets of the Fund pursuant to a
Custody Agreement with the Trust.
Certain Trustees and officers of the Trust are also officers of the Adviser.
Such Trustees and officers are not paid any fees by the Trust for serving as
Trustees or officers of the Trust.
16
<PAGE>
KALMAR
POOLED
INVESTMENT
TRUST
----------
"Growth-with-Value"
Small Cap Fund
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF KALMAR "GROWTH-WITH-VALUE" SMALL CAP FUND:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Kalmar "Growth-With-Value" Small
Cap Fund, a series of Kalmar Pooled Investment Trust (The "Fund") at December
31, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
January 21, 2000
17
<PAGE>
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<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
INVESTMENT ADVISER
KALMAR INVESTMENT ADVISERS
BARLEY MILL HOUSE
3701 KENNETT PIKE
WILMINGTON, DE 19807
(WEBSITE)WWW.KALMARINVESTMENTS.COM
UNDERWRITER
PROVIDENT DISTRIBUTORS, INC.
FOUR FALLS CORPORATE CENTER, 6TH FLOOR
WEST CONSHOHOCKEN, PA 19428-2961
SHAREHOLDER SERVICES
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
CUSTODIAN
PFPC TRUST COMPANY
200 STEVENS DRIVE
LESTER, PA 19113
LEGAL COUNSEL
PEPPER HAMILTON LLP
3000 TWO LOGAN SQUARE
18TH & ARCH STREETS
PHILADELPHIA, PA 19103-2799
AUDITORS
PRICEWATERHOUSECOOPERS LLP
2400 ELEVEN PENN CENTER
PHILADELPHIA, PA 19103
<PAGE>
KALMAR POOLED INVESTMENT TRUST
BARLEY MILL HOUSE
3701 KENNETT PIKE
WILMINGTON, DE 19807
(PHONE) 302-658-7575
(FAX) 302-658-7513
(WEBSITE)WWW.KALMARINVESTMENTS.COM
KL06 - 12/99
