THE RODNEY SQUARE
FUND
&
THE RODNEY SQUARE
TAX-EXEMPT
FUND
{GRAPHIC OMITTED}
SEMI-ANNUAL REPORT
MARCH 31, 1999
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The management of the Rodney Square Fund and the Rodney Square Tax-Exempt
Fund is pleased to report to you on the Funds' activities for the six-month
period ended March 31, 1999.
INVESTMENT RESULTS*
During the six-month period, the U.S. Government Portfolio paid dividends
totaling $0.023 per share, the Money Market Portfolio paid dividends totaling
$0.023 per share and the Rodney Square Tax-Exempt Fund paid dividends totaling
$0.013 per share. Based on the Portfolios' net asset value of $1.00 per share,
these dividends represented annualized total returns of 4.66%, 4.80% and 2.60%,
respectively.
ECONOMIC OVERVIEW
Over the past six months, the economy has continued to experience robust
growth without any obvious end in sight. The economy's resilience is due to two
factors. First, the labor market was extremely tight, featuring the lowest
jobless rate in 28 years. In this situation, businesses were loath to let go of
trained workers, while those who were let go found other employment fairly
easily. Thus, growth in real disposable income stayed solid at a 3% annual rate.
Second, the huge capital gains generated by the stock market enticed U.S.
households to outspend their sturdy income growth, with the result that personal
saving turned negative in the fall of 1998. Meanwhile, the stock market
maintained its role as the key link in a virtuous circle that has pushed capital
spending up rapidly throughout most of the decade. The market's strength has
been both a reflection of the handsome returns on investment in physical plant
and equipment and a factor in keeping the cost of capital to finance these
investments low.
Quarter after quarter, the Federal Reserve has been struggling to fit what
has been happening in the U.S. into traditional economic models. Growth is
robust, stocks are soaring, and job markets are tight--yet inflation is nowhere
to be found. Try as they might, Fed officials can't explain it using traditional
rules. Now, they have simply stopped trying. Instead of pouncing before the
first discernable sign of inflation, as Federal Reserve Chairman Greenspan did
in 1994, the Fed appears more inclined to wait.
As 1999 progresses, continued strong domestic demand and a significantly
diminished trade drag from Asia point to another stellar year of
non-inflationary growth for the U.S. economy. As such, no Fed action is
anticipated this year.
The key question is whether inflation is dead, or just slumbering. A global
recovery could be the trigger for such a resurrection. It would likely lead to
downward pressure on the dollar, as attracting foreign capital would become more
difficult for the United States. Pressure on commodity prices would increase,
and demand for U.S. goods and services would grow beyond current capacities.
However, such a scenario still seems remote at best. Global growth should remain
anemic this year. Not until the second half of 2000 is the global economy likely
to be robust enough to pose substantial risks to U.S. financial markets.
- ---------------------
* PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. AN INVESTMENT IN EITHER
FUND IS NEITHER INSURED NOR GUARANTEED BY WILMINGTON TRUST COMPANY OR ANY
OTHER BANKING INSTITUTION, THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. THERE CAN
BE NO ASSURANCE THAT EITHER FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00.
1
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE -- CONTINUED
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY
During the course of the past six-month period, Rodney Square Management
Corporation attempted to anticipate the directional changes in interest rates
and swings in market psychology, identify relative values in the money markets
and adjust the weighted average portfolio maturity to structure the portfolios
to maximize returns for shareholders.
We invite your comments and questions and we thank you for your investment
in the Funds.
Sincerely,
/S/ ROBERT J. CHRISTIAN
Robert J. Christian
President
May 20, 1999
2
<PAGE>
THE RODNEY SQUARE FUND / U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / MARCH 31, 1999 (UNAUDITED)
(Showing Percentage of Total Value of Net Assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
U.S. AGENCY OBLIGATIONS -- 70.2%
FEDERAL FARM CREDIT BANKS DISCOUNT NOTES -- 10.8%
Federal Farm Credit Banks Discount Notes, 4.88%, 04/09/99 ................... $ 2,630,000 $ 2,627,148
Federal Farm Credit Banks Discount Notes, 4.83%, 04/26/99 ................... 5,000,000 4,983,229
Federal Farm Credit Banks Discount Notes, 4.82%, 04/27/99 ................... 5,000,000 4,982,594
Federal Farm Credit Banks Discount Notes, 4.83%, 04/30/99 ................... 11,000,000 10,957,201
Federal Farm Credit Banks Discount Notes, 4.70%, 06/07/99 ................... 10,000,000 9,912,528
Federal Farm Credit Banks Discount Notes, 4.74%, 06/29/99 ................... 5,000,000 4,941,408
Federal Farm Credit Banks Discount Notes, 4.72%, 07/23/99 ................... 6,100,000 6,009,625
Federal Farm Credit Banks Discount Notes, 4.61%, 08/05/99 ................... 5,000,000 4,919,325
Federal Farm Credit Banks Discount Notes, 4.61%, 10/05/99 ................... 6,000,000 5,856,322
Federal Farm Credit Banks Discount Notes, 4.65%, 12/23/99 ................... 5,000,000 4,828,208
-----------
60,017,588
-----------
FEDERAL FARM CREDIT BANKS NOTES -- 25.1%
Federal Farm Credit Banks Notes, 4.75%, 04/01/99* ........................... 10,000,000 9,997,621
Federal Farm Credit Banks Notes, 4.81%, 04/01/99* ........................... 10,000,000 10,000,000
Federal Farm Credit Banks Notes, 5.50%, 04/01/99 ............................ 10,000,000 10,000,000
Federal Farm Credit Banks Notes, 4.76%, 04/03/99* ........................... 50,000,000 49,994,907
Federal Farm Credit Banks Notes, 4.74%, 04/17/99* ........................... 20,000,000 19,997,496
Federal Farm Credit Banks Notes, 4.71%, 04/23/99* ........................... 20,000,000 19,995,116
Federal Farm Credit Banks Notes, 4.64%, 05/03/99 ............................ 3,800,000 3,798,762
Federal Farm Credit Banks Notes, 5.50%, 08/03/99 ............................ 10,000,000 9,997,128
Federal Farm Credit Banks Notes, 5.20%, 01/14/00 ............................ 5,600,000 5,613,509
-----------
139,394,539
-----------
FEDERAL HOME LOAN BANKS DISCOUNT NOTES -- 10.6%
Federal Home Loan Banks Discount Notes, 4.57%, 04/14/99 ..................... 5,000,000 4,991,749
Federal Home Loan Banks Discount Notes, 4.75%, 04/16/99 ..................... 27,030,000 26,976,559
Federal Home Loan Banks Discount Notes, 4.80%, 06/02/99 ..................... 5,930,000 5,880,979
Federal Home Loan Banks Discount Notes, 4.75%, 06/11/99 ..................... 7,028,000 6,962,161
Federal Home Loan Banks Discount Notes, 4.80%, 06/15/99 ..................... 1,687,000 1,670,130
Federal Home Loan Banks Discount Notes, 4.71%, 08/13/99 ..................... 5,000,000 4,912,435
Federal Home Loan Banks Discount Notes, 4.73%, 09/24/99 ..................... 8,000,000 7,815,004
-----------
59,209,017
-----------
FEDERAL HOME LOAN BANKS NOTES -- 13.0%
Federal Home Loan Banks Notes, 4.76%, 04/05/99* ............................. 5,000,000 4,999,629
Federal Home Loan Banks Notes, 5.65%, 04/09/99 .............................. 8,005,000 8,005,021
Federal Home Loan Banks Notes, 5.71%, 05/05/99 .............................. 5,000,000 4,999,972
Federal Home Loan Banks Notes, 5.53%, 06/10/99 .............................. 5,000,000 4,998,485
Federal Home Loan Banks Notes, 5.61%, 06/18/99 .............................. 5,000,000 5,000,154
Federal Home Loan Banks Notes, 5.51%, 07/06/99 .............................. 10,000,000 10,015,761
Federal Home Loan Banks Notes, 5.54%, 07/13/99 .............................. 5,000,000 4,999,802
Federal Home Loan Banks Notes, 4.93%, 01/19/00 .............................. 5,000,000 5,000,576
Federal Home Loan Banks Notes, 4.85%, 01/27/00 .............................. 6,000,000 5,999,197
Federal Home Loan Banks Notes, 4.98%, 02/16/00 .............................. 5,000,000 4,998,457
Federal Home Loan Banks Notes, 5.00%, 02/24/00 .............................. 8,000,000 7,990,164
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
THE RODNEY SQUARE FUND / U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------ ------------
<S> <C> <C>
Federal Home Loan Banks Notes, 5.04%, 02/25/00 .............................. $ 5,000,000 $ 4,998,915
------------
72,006,133
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION DISCOUNT NOTES -- 4.2%
Federal Home Loan Banks Discount Notes, 4.79%, 05/18/99 ..................... 7,000,000 6,956,225
Federal Home Loan Banks Discount Notes, 4.75%, 06/24/99 ..................... 10,000,000 9,889,167
Federal Home Loan Banks Discount Notes, 4.79%, 06/25/99 ..................... 7,000,000 6,920,832
------------
23,766,224
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES -- 2.7%
Federal National Mtge. Association Discount Notes, 4.78%, 06/10/99 .......... 5,000,000 4,953,528
Federal National Mtge. Association Discount Notes, 4.79%, 06/18/99 .......... 10,000,000 9,896,217
------------
14,849,745
------------
STUDENT LOAN MARKETING ASSOCIATION DISCOUNT NOTES -- 2.1%
Student Loan Marketing Association Discount Notes, 4.70%, 06/30/99 .......... 5,038,000 4,978,625
Student Loan Marketing Association Discount Notes, 4.72%, 06/30/99 .......... 5,000,000 4,941,072
Student Loan Marketing Association Discount Notes, 4.74%, 06/30/99 .......... 1,646,000 1,626,601
------------
11,546,298
------------
STUDENT LOAN MARKETING ASSOCIATION NOTES -- 1.7%
Student Loan Marketing Association Notes, 5.53%, 07/16/99 ................... 5,000,000 4,999,483
Student Loan Marketing Association Notes, 5.57%, 03/17/00 ................... 4,630,000 4,649,799
------------
9,649,282
------------
TOTAL U.S. AGENCY OBLIGATIONS
(COST $390,438,826) ............................................................... 390,438,826
------------
REPURCHASE AGREEMENTS -- 29.9%
With J.P. Morgan, Inc.: at 5.00%, dated 03/31/99, to be
repurchased at $128,017,778 on 04/01/99, collateralized
by $131,840,000 of Government National Mortgage Association
Securities with various coupons and maturities to 03/15/29 ............... 128,000,000 128,000,000
With CS First Boston, Inc.: at 5.10%, dated 03/31/99, to be
repurchased at $38,650,575 on 04/01/99, collateralized by
$40,391,888 of Federal Home Loan Mortgage Corporation
Discount Notes with various rates and maturities to 08/20/99 ............. 38,645,100 38,645,100
-----------
TOTAL REPURCHASE AGREEMENTS (COST $166,645,100) ......................................... 166,645,100
-----------
TOTAL INVESTMENTS (COST $557,083,926)(DAGGER)-- 100.1% ........................................... 557,083,926
OTHER ASSETS AND LIABILITIES , NET-- (0.1)% ...................................................... (676,380)
-----------
NET ASSETS-- 100% ................................................................................ $556,407,546
============
<FN>
* Denotes a Variable or Floating Rate Note. Variable or Floating Rate Notes are
instruments whose rates change periodically. The rates shown are the interest
rates as of March 31, 1999. The dates shown are the next dates the interest
rates on the instruments are scheduled to be reset.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
THE RODNEY SQUARE FUND / MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / MARCH 31, 1999 (UNAUDITED)
(Showing Percentage of Total Value of Net Assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
--------- ----------- ------------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT -- 26.3%
FOREIGN BANKS, FOREIGN CENTERS -- 6.2%
Bank of Nova Scotia, London, 4.95%, 06/08/99 .................... P-1, A-1+ $20,000,000 $ 20,000,186
Bank of Nova Scotia, London, 4.93%, 04/08/99 .................... P-1, A-1+ 30,000,000 30,000,161
Bayerische Hypotheken-Und Vereinsbank, London, 5.17%, 04/19/99 .. P-1, A-1+ 16,000,000 16,000,912
Bayerische Hypotheken-Und Vereinsbank, London, 4.88%, 08/03/99 .. P-1, A-1+ 25,000,000 25,000,840
Royal Bank of Canada, 5.12%, 02/18/00 ........................... P-1, A-1+ 15,000,000 14,996,163
------------
105,998,262
------------
Foreign Banks, U.S. Branches -- 14.3%
Banque Nationale de Paris San Francisco, 4.90%, 05/28/99 ........ P-1, A-1+ 25,000,000 25,000,000
Credit Agricole Indosuez, 5.73%, 04/16/99 ....................... P-1, A-1+ 9,250,000 9,249,796
Deutsche Bank, 4.93%, 04/12/99 .................................. P-1, A-1+ 10,000,000 10,000,117
Deutsche Bank, 5.69%, 06/03/99 .................................. P-1, A-1+ 20,000,000 20,017,420
Deutsche Bank, 5.60%, 08/23/99 .................................. P-1, A-1+ 10,000,000 9,997,731
National Westminster, 5.74%, 04/28/99 ........................... P-1, A-1+ 25,000,000 25,010,562
Rabobank Nederland, 5.69%, 06/30/99 ............................. P-1, A-1+ 10,000,000 9,998,583
Societe Generale, 4.80%, 04/26/99 ............................... P-1, A-1+ 25,000,000 24,916,667
Societe Generale, 5.69%, 07/16/99 ............................... P-1, A-1+ 10,000,000 9,998,331
Toronto Dominion-New York, 5.70%, 06/15/99 ...................... P-1, A-1+ 10,000,000 10,011,831
Toronto Dominion-New York, 5.06%, 02/10/00 ...................... P-1, A-1+ 15,000,000 14,995,009
Westdeutsche Landesbank, 4.95%, 04/06/99 ........................ P-1, A-1+ 20,000,000 20,000,000
Westdeutsche Landesbank, 4.91%, 05/17/99 ........................ P-1, A-1+ 20,000,000 20,000,236
Westdeutsche Landesbank, 4.90%, 08/04/99 ........................ P-1, A-1+ 25,000,000 25,000,847
Westdeutsche Landesbank, 4.92%, 08/09/99 ........................ P-1, A-1+ 10,000,000 9,998,205
------------
244,195,335
------------
U.S. BANKS, U.S. BRANCHES -- 5.8%
Lasalle National Bank, 4.93%, 06/02/99 .......................... P-1, A-1+ 25,000,000 25,000,000
Morgan Guaranty Trust Company, 5.08%, 04/09/99 .................. P-1, A-1+ 25,000,000 25,000,000
Morgan Guaranty Trust Company, 4.90%, 06/15/99 .................. P-1, A-1+ 34,000,000 33,999,557
NationsBank, 4.87%, 10/06/99 .................................... P-1, A-1+ 15,000,000 15,000,000
------------
98,999,557
------------
TOTAL CERTIFICATES OF DEPOSIT (COST $449,193,154) ..................................... 449,193,154
------------
COMMERCIAL PAPER -- 67.0%
ADVERTISTING -- 3.8%
Omnicom Finance, Inc., 4.85%, 04/16/99 .......................... P-1, A-1+ 20,000,000 19,959,583
Omnicom Finance, Inc., 4.85%, 04/20/99 .......................... P-1, A-1+ 20,000,000 19,948,806
Omnicom Finance, Inc., 4.85%, 04/22/99 .......................... P-1, A-1+ 25,000,000 24,929,271
------------
64,837,660
------------
AUTOMOBILES -- 7.6%
BMW U.S. Capital Corp., 4.82%, 06/18/99 ......................... P-1, A-1 36,687,000 36,303,865
BMW U.S. Capital Corp., 4.83%, 06/18/99 ......................... P-1, A-1 15,485,000 15,322,949
Daimler-Chrysler North America Corp., 4.83%, 05/25/99 ........... P-1, A-1 25,000,000 24,818,875
Volkswagen of America, Inc., 4.82%, 04/22/99 .................... P-1, A-1+ 40,000,000 39,887,533
Volkswagen of America, Inc., 4.90%, 09/02/99 .................... P-1, A-1 14,250,000 13,951,304
------------
130,284,526
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
THE RODNEY SQUARE FUND / MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
----------- ------------ ------------
<S> <C> <C> <C>
BANKS -- 4.7%
Banque National de Paris, 4.84%, 05/18/99 ....................... P-1, A-1 $15,000,000 $ 14,905,315
Banque National de Paris, 4.85%, 06/16/99 ....................... P-1, A-1 15,500,000 15,341,297
Commerzbank A.G., New York, 5.14%, 09/15/99 ..................... P-1, A-1+ 50,000,000 50,036,400
------------
80,283,012
------------
CHEMICALS -- 2.3%
AKZO Nobel America, Inc., 4.80%, 04/28/99 ....................... P-1, A-1 10,000,000 9,964,037
AKZO Nobel America, Inc., 4.83%, 05/21/99 ....................... P-1, A-1 30,000,000 29,798,750
------------
39,762,787
------------
COMMUNICATION & BROADCASTING -- 0.6%
E.W. Scripps Co., 4.80%, 04/29/99 ............................... P-1, A-1 10,000,000 9,962,667
------------
FINANCIAL SERVICES -- 17.5%
Ford Motor Credit Corp., 4.80%, 04/09/99 ........................ P-1, A-1 20,000,000 19,978,667
General Electric Capital Corp., 4.81%, 04/20/99 ................. P-1, A-1+ 25,000,000 24,936,535
General Electric Capital Corp., 4.83%, 07/07/99 ................. P-1, A-1+ 40,000,000 39,479,433
HD Real Estate Funding, Inc., 4.83%, 04/05/99 ................... P-1, A-1+ 15,894,000 15,885,470
HD Real Estate Funding, Inc., 4.85%, 05/10/99 ................... P-1, A-1+ 35,000,000 34,816,104
National Rural Utilities Co-op., 4.83%, 05/07/99 ................ P-1, A-1+ 35,000,000 34,830,950
National Rural Utilities Co-op., 4.82%, 06/17/99 ................ P-1, A-1+ 15,000,000 14,845,358
Transamerica Finance Corp., 4.88%, 04/23/99 ..................... P-1, A-1 24,000,000 23,928,427
Transamerica Finance Corp., 4.81%, 04/30/99 ..................... P-1, A-1 26,500,000 26,397,320
Transamerica Finance Corp., 4.85%, 05/26/99 ..................... P-1, A-1 15,000,000 14,888,854
UBS Finance (DE) Inc., 4.80%, 07/08/99 .......................... P-1, A-1+ 50,000,000 49,346,667
------------
299,333,785
------------
INSURANCE -- 4.5%
Allianz of America Finance, 4.85%, 04/16/99 ..................... P-1, A-1+ 14,397,000 14,367,906
Allianz of America Finance, 4.82%, 05/12/99 ..................... P-1, A-1+ 19,000,000 18,895,700
Allianz of America Finance, 4.83%, 05/18/99 ..................... P-1, A-1+ 12,000,000 11,924,330
Allianz of America Finance, 4.83%, 05/21/99 ..................... P-1, A-1+ 11,735,000 11,656,278
Allianz of America Finance, 4.84%, 05/27/99 ..................... P-1, A-1+ 19,835,000 19,685,664
------------
76,529,878
------------
LEASING -- 8.0%
International Lease Finance Corp., 4.80%, 05/11/99 .............. P-1, A-1+ 5,000,000 4,973,333
International Lease Finance Corp., 4.81%, 05/11/99 .............. P-1, A-1+ 25,000,000 24,866,528
International Lease Finance Corp., 4.80%, 05/14/99 .............. P-1, A-1+ 11,000,000 10,936,933
International Lease Finance Corp., 4.83%, 06/10/99 .............. P-1, A-1+ 29,000,000 28,727,641
Vehicle Services of America, LOC, 4.88%, 06/15/99 ............... P-1, A-1+ 67,375,000 66,690,021
------------
136,194,456
------------
MEDICAL SERVICES -- 0.4%
Medical Building VII, 5.20%, 05/26/99 ........................ NR, A-1 7,500,000 7,440,417
------------
PHARMACEUTICALS PREPARATIONS -- 1.1%
Zeneca Wilmington, Inc., 4.80%, 04/20/99 ........................ P-1, A-1+ 19,000,000 18,951,867
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
THE RODNEY SQUARE FUND / MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
----------- ------------ ------------
<S> <C> <C> <C>
SECURITIES DEALERS -- 12.1%
CS First Boston International (Guernsey), Ltd., 5.05%, 04/05/99 . P-1, A-1+ $20,000,000 $ 19,988,789
CS First Boston International (Guernsey), Ltd., 4.76%, 07/09/99 . P-1, A-1+ 40,000,000 39,476,400
CS First Boston International (Guernsey), Ltd., 4.79%, 08/10/99 . P-1, A-1+ 10,000,000 9,825,697
Goldman Sachs, 4.84%, 04/23/99 .................................. P-1, A-1+ 70,000,000 69,793,169
Merrill Lynch & Co., Inc., 6.64%, 04/09/99 ...................... P-1, A-1+ 13,200,000 13,204,774
Morgan Stanley & Co. Inc., 4.82%, 05/24/99 ...................... P-1, A-1 25,000,000 24,822,597
Morgan Stanley & Co. Inc., 4.82%, 05/28/99 ...................... P-1, A-1 30,000,000 29,771,050
--------------
206,882,476
--------------
TIRE & RUBBER -- 2.6%
Michelin NA, Inc., 4.86%, 04/19/99 .............................. P-1, A-1+ 10,000,000 9,975,700
Michelin NA, Inc., 4.83%, 04/28/99 .............................. P-1, A-1+ 35,000,000 34,873,212
--------------
44,848,912
--------------
UTILITIES -- 1.8%
Georgia Power, 4.90%, 04/05/99 .................................. P-1, A-1 30,000,000 29,983,667
--------------
TOTAL COMMERCIAL PAPER (COST $1,145,296,110) .......................................... 1,145,296,110
--------------
CORPORATE NOTES -- 1.9%
BANKS -- 2.3%
Abbey National Treasury Services, 5.72%, 06/11/99 ............... P-1, A-1+ 13,000,000 12,998,305
Abbey National Treasury Services, 5.58%, 08/19/99 ............... P-1, A-1+ 10,000,000 9,997,793
Abbey National Treasury Services, 5.26%, 03/01/00 ............... P-1, A-1+ 10,000,000 9,996,027
--------------
TOTAL CORPORATE NOTES (COST $32,992,125) .............................................. 32,992,125
--------------
TAXABLE MUNICIPAL SECURITIES -- 2.0%
Oakland-Alameda City Coliseum, 5.05%, 05/06/99 .................. VMIG1, A-1+ 10,000,000 10,000,000
Oakland-Alameda City Coliseum, 5.00%, 05/19/99 .................. VMIG1, A-1+ 20,400,000 20,400,000
Waukesha Wisconsin Health Systems 5.00%, 04/01/99* .............. VMIG1, A-1+ 4,350,000 4,350,000
--------------
TOTAL TAXABLE MUNICIPAL SECURITIES (COST $34,750,000) ................................. 34,750,000
--------------
REPURCHASE AGREEMENTS -- 2.6%
With J.P. Morgan, Inc.: at 5.00%, dated 03/31/99, to be
repurchased at $44,877,832 on 04/01/99, collateralized
by $46,217,748 of Government National Mortgage Association
Securities with various coupons and maturities to 02/15/29
(Cost $44,871,600) ........................................................ 44,871,600 44,871,600
--------------
TOTAL INVESTMENTS (COST $1,707,102,989)(DAGGER)-- 99.8% ........................................ 1,707,102,989
--------------
OTHER ASSETS AND LIABILITIES , NET-- 0.2% ...................................................... 3,361,785
--------------
NET ASSETS-- 100% .............................................................................. $1,710,464,774
==============
<FN>
* Denotes a Variable or Floating Rate Note. Variable or Floating Rate Notes are
instruments whose rates change periodically. The rates shown are the interest
rates as of March 31, 1999. The dates shown are the next dates the interest
rates on the instruments are scheduled to be reset.
(DAGGER) Cost for federal income tax purposes.
LOC -- Letter of Credit.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENTS / MARCH 31, 1999 (UNAUDITED)
(Showing Percentage of Total Value of Net Assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
------------ ----------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- 99.9%
ALABAMA -- 2.8%
Alabama Housing Fin. Auth. Multi-Family Housing (Rime Village
Hoover Proj.), FNMA Gtd., Ser. 1996-A , 3.00%, 04/07/99* ..... N/R, A-1+ $ 4,200,000 $ 4,200,000
Chatom, AL Ind. Dev. Board Poll. Cntrl. Rev. Bonds (Alabama
Electric Proj.) GTD. by National Rural Utilities CFC,
2.90%, 06/25/99 .............................................. VMIG-1, A-1+ 9,400,000 9,400,000
------------
13,600,000
------------
ARIZONA -- 4.6%
Maricopa County, AZ Transportation Board Excise Tax
Subordinated Lien Rev. Bonds AMBAC Insured, 5.50%, 07/01/99 .. Aaa, AAA 2,000,000 2,012,269
Salt River, AZ., Agric. Imp. and Power Dist. TECP,
2.80%, 06/10/99 .............................................. P-1, A-1+ 10,900,000 10,900,000
Salt River, AZ., Agric. Imp. and Power Dist. TECP,
2.90%, 06/14/99 .............................................. P-1, A-1+ 9,500,000 9,500,000
------------
22,412,269
------------
COLORADO -- 0.3%
Pitkin County, CO Ind. Dev. Rev. Bonds (Aspen Skiing Co. Proj.),
LOC First National Bank Chicago, 3.10%, 04/01/99 .......... N/R, A-1+ 1,300,000 1,300,000
------------
DISTRICT OF COLUMBIA -- 2.5%
Dist. of Columbia (American Univ. Proj.), AMBAC Insured/SBPA
Chase Manhattan Bank, Ser. 1985-A, 3.00%, 04/07/99* .......... VMIG-1, N/R 10,000,000 10,000,000
Dist. of Columbia (American Univ. Proj.), AMBAC Insured/SBPA
Chase Manhattan Bank, Ser. 1986-A, 3.00%, 04/07/99* .......... VMIG-1, N/R 2,440,000 2,440,000
------------
12,440,000
------------
FLORIDA -- 3.4%
Jacksonville, FL Poll. Cntrl. Rev. Bonds TECP (Florida Power
and Light Proj.) Ser. 1994, 2.85%, 06/11/99 .................. P-1, A-1+ 7,000,000 7,000,000
Dade County, FL (Florida Power & Light Company Proj.) Ser.
1993, 3.25%, 04/01/99* ....................................... VMIG-1, A-1+ 7,850,000 7,850,000
Orange County, FL Housing Fin. Auth. Multi-Family Housing Ref.
Rev. Bonds (Post Fountains at Lee Vista Proj.),
FNMA Gtd., 3.00%, 04/07/99* .................................. N/R, A-1+ 1,900,000 1,900,000
------------
16,750,000
------------
GEORGIA -- 13.5%
Atlanta, GA Downtown Dev. Auth. Rev. Bonds (CARE Proj.),
LOC SunTrust Bank, Ser. 1993, 3.10%, 04/01/99* ............... VMIG-1, N/R 2,300,000 2,300,000
Burke County, GA Dev. Auth. Poll. Cntrl. Rev. Bonds (Georgia
Power Co., Plant Vogtle Proj.), 3.15%, 04/01/99* .............VMIG-1, A-1+ 9,700,000 9,700,000
Clayton County, GA Hosp. Auth. Rev. Bonds (Southern Regional
Medical Center Proj.), LOC SunTrust Bank,
Ser. 1995, 3.10%, 04/07/99* .................................. Aal, N/R 3,875,000 3,875,000
Columbus, GA Housing Auth. Rev. Bonds (Columbus State Univ.
Foundation Inc. Proj.), LOC SunTrust Bank, Ser. 1997,
3.10%, 04/07/99* ............................................. Aa3, N/R 1,300,000 1,300,000
Columbus, GA Housing Auth. Rev. Bonds (St. Francis Hospital,
Inc. Proj.), Ser. 1997, 3.10%, 04/07/99* ..................... Aa3, N/R 1,700,000 1,700,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
Dekalb County, GA Hosp. Auth. Rev. Ant. Cert. (Dekalb Medical
Center Proj.), LOC Sun Trust Bank, Ser. 1993-B, 3.10%, 04/07/99* VMIG-1, N/R $3,700,000 $ 3,700,000
Floyd County, GA Dev. Auth. Envir. Imp. Rev. Bonds (Georgia
Kraft Co. Proj.), LOC Banque Nationale de Paris, 3.20%, 04/01/99* P-1, N/R 4,675,000 4,675,000
Floyd County, GA Dev. Auth. Envir. Imp. Rev. Bonds (Georgia Power
Co. Plant Hammond Proj.), Ser. 1996, 3.15%, 04/01/99* .......... VMIG-1, A-1 2,900,000 2,900,000
Floyd County, GA Dev. Auth. Rev. Bonds (Berry College, Inc. Proj.),
LOC SunTrust Bank, Ser. 1999, 3.10%, 04/07/99* .................. Aa3, N/R 3,500,000 3,500,000
Fulton County, GA Dev. Auth. Rev. Bonds (Arthritis Foundation, Inc.
Proj.), LOC SunTrust Bank, Ser. 1996, 3.10%, 04/07/99* .......... Aa3, N/R 1,000,000 1,000,000
Fulton County, GA Dev. Auth. Rev. Bonds (The Alfred and Adele
Davis Academy Proj.), LOC SunTrust Bank, Ser. 1996,
3.10%, 04/07/99* ................................................ Aa3, N/R 2,000,000 2,000,000
Gwinnett County, GA Housing Auth. Multi-family Housing (Post
Corners Proj.), FNMA Gtd., Ser. 1996, 3.00%, 04/07/99* .......... N/R, A-1+ 5,560,000 5,560,000
Hapeville, Georgia Ind. Dev. Rev. Bonds (Hapeville Hotel Ltd. Proj.),
LOC Deutsche Bank, 3.30%, 04/01/99* ............................. P-1, N/R 13,300,000 13,300,000
Heard County, GA Poll. Cntrl. Rev. Bonds (Georgia Power Co. Plant
Wansley Proj.), Ser. 1996, 3.15%, 04/01/99* ..................... VMIG-1, A-1 1,800,000 1,800,000
Monroe County, GA Poll. Cntrl. Rev. Bonds (Georgia Power Co. Proj.),
Ser. 1997, 3.15%, 04/01/99* ..................................... VMIG-1, A-1 2,000,000 2,000,000
Rockdale County, GA Health Fac. Auth. Rev. Bonds (Georgia Hosp.
Proj.), LOC SunTrust Bank, Ser. 1994, 3.10%, 04/07/99* .......... VMIG-1, N/R 2,825,000 2,825,000
Smyrna Housing Auth. Multi-Family Housing Rev. Bonds (F and M
Villages Proj.) Ser. 1997, FNMA Gtd., 3.00%, 04/07/99* .......... N/R, A-1+ 4,300,000 4,300,000
-----------
66,435,000
-----------
IDAHO -- 0.5%
Nez Perce Cnty., ID Poll. Cntrl. Rev. Bonds (Potlatch Corp. Proj.)
LOC Credit Suisse First Boston, 3.10%, 04/01/99* .............. N/R, A-1+ 1,500,000 1,500,000
Nez Perce Cnty., ID Poll. Cntrl. Rev. Bonds (Potlatch Corp. Proj.)
LOC Credit Suisse First Boston, 3.05%, 04/07/99* .............. N/R, A-1+ 1,000,000 1,000,000
-----------
2,500,000
-----------
Illinois -- 14.2%
Illinois Dev. Fin. Auth. Poll. Cntrl. Rev. Bonds (Illinois Power Co.
Proj.) LOC Canadian Imperial Bank, 3.00%, 08/26/99 ............ P-1, A-1+ 5,000,000 5,000,000
Illinois Dev. Fin. Auth. Rev. Bonds (Chicago Symphony Proj.) LOC
Bank of America, Ser. 1996, 2.90%, 04/07/99* .................. VMIG-1, A-1+ 5,200,000 5,200,000
Illinois Dev. Fin. Auth. Rev. Bonds (Goodman Theatre Proj.), Ser.
1999, 2.95%, 04/07/99* ........................................ N/R, A-1+ 5,500,000 5,500,000
Illinois Dev. Fin. Auth. Rev. Bonds (Museum of Contemporary Arts
Proj.) Ser. 1994, 2.95%, 04/07/99* ............................ VMIG-1, A-1+ 4,000,000 4,000,000
Illinois Dev. Fin. Auth. Rev. Bonds (Osteopathic Assoc. Proj.)
LOC Harris Trust & Savings Bk., 3.05%, 04/1/99* ............... N/R, A-1+ 1,500,000 1,500,000
Illinois Educ. Fac. Auth. Rev. Bonds (Depaul Univ. Proj.), LOC
Northern Trust Co., Ser. 1992, 2.95%, 04/07/99* ............... VMIG-1, A-1+ 13,200,000 13,200,000
Illinois Educ. Fac. Auth. Rev. Bonds (Northwestern University Proj.)
Ser. 1988, 3.00%, 04/01/99* ................................... VMIG-1, A-1+ 1,800,000 1,800,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
------------ ----------- ------------
<S> <C> <C> <C>
Illinois Health Fac. Auth. Rev. Bonds (Central DuPage Hosp. Assoc.
Proj.), LOC Rabobank Nederland, Ser. 1990, 3.10%, 04/01/99* ... VMIG-1, N/R $ 2,360,000 $ 2,360,000
Illinois Health Fac. Auth. Rev. Bonds (Children's Memorial Hospital
Proj.) Ser. B, 2.95%, 04/07/99* ............................... VMIG-1, A-1+ 3,800,000 3,800,000
Illinois Health Fac. Auth. Rev. Bonds (Gottlieb Health Resources Inc.
Proj.), LOC Harris Trust & Savings Bank, 2.95%, 04/07/99* ..... VMIG-1, N/R 8,800,000 8,800,000
Illinois Health Fac. Auth. Rev. Bonds (Ingalls Memorial Hospital
Proj.) LOC LaSalle National Bank, Series 1985C,
2.95%, 04/07/99* .............................................. VMIG-1, N/R 600,000 600,000
Illinois Health Fac. Auth. Rev. Bonds (Northwestern Memorial
Hospital Proj.) Ser. 1995, 3.10%, 04/01/99* ................... VMIG-1, A-1+ 1,100,000 1,100,000
Illinois Health Fac. Auth. Rev. Bonds TECP (The Univ. of
Chicago Proj.), 2.95%, 05/03/99 ............................... VMIG-1, A-1+ 12,000,000 12,000,000
Oak Forest, IL Dev. Rev. Bonds (Homewood Pool-South Suburban
Mayors & Managers Assoc. Proj.), LOC First National
Bank Chicago, 2.95%, 04/07/99* ................................ VMIG-1, N/R 5,000,000 5,000,000
-----------
69,860,000
-----------
INDIANA -- 5.0%
Indiana Educ. Auth. Rev. Bonds (St. Mary of the Woods College
Proj.) LOC NBD Bank, 2.95%, 04/07/99* ......................... N/R, A-1+ 1,500,000 1,500,000
Indiana Health Fac. Fin. Auth. Rev. Bonds (Cap. Access Designated
Pool Proj.) LOC Comerica Bank, Ser. 1992, 2.95%, 04/01/99* .... VMIG-1, N/R 1,000,000 1,000,000
Indiana Health Fac. Fin. Auth. Rev. Bonds (Cap. Access Designated
Pool Proj.) LOC Comerica Bank, Ser. 1991, 2.95%, 04/07/99* .... VMIG-1, N/R 3,000,000 3,000,000
Indiana Health Fac. Fin. Auth. Rev. Bonds (Cap. Access Designated
Pool Proj.) LOC Comerica Bank, Ser. 1997, 2.95%, 04/07/99* .... VMIG-1, N/R 2,550,000 2,550,000
South Bend, IN Redev. Auth. Rev. Bonds (College Football Hall of
Fame Proj.), LOC Landesbank Hessen-Thuringen Girozentrale,
Ser. 1994, 2.95%, 04/07/99* ................................... VMIG-1, A-1+ 11,250,000 11,250,000
Sullivan, IN Poll. Cntrl. Rev. Bonds (Hoosier Energy Rural Electric
Proj.) Gtd. by National Rural Utilities CFC, 3.05%, 08/13/99 .. P-1, A-1+ 5,000,000 5,000,000
-----------
24,300,000
-----------
KENTUCKY -- 2.0%
Kentucky Asset/Liability General Fund Commission Gen. Fund
Rev. Bonds, Ser. A, 2.90%, 08/12/99 ........................... VMIG-1, N/R 10,000,000 10,000,000
-----------
LOUISIANA -- 4.0%
Ascension Parish Poll. Cntrl. Rev. Bonds (Shell Oil Proj.), Ser. 1993,
3.10%, 04/01/99* .............................................. VMIG-1, A-1+ 3,000,000 3,000,000
Plaquemines Port Harbor and Terminal Dist. Fac. Rev. Bonds TECP
(Electro-Coal Transfer Proj.), Ser. A, 3.05%, 04/09/99* ....... P-1, A-1+ 16,700,000 16,700,000
-----------
19,700,000
-----------
MARYLAND -- 2.0%
Baltimore County, MD Metropolitan Dist. TECP, Ser. 1995,
3.05%, 06/08/99 ............................................... P-1, A-1+ 10,000,000 10,000,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
------------ ---------- -----------
<S> <C> <C> <C>
MICHIGAN -- 2.6%
Farmington Hills Hosp. Fin. Auth. Rev. Bonds (Botsford Gen.
Hospital Proj.), LOC Comerica Bank, Ser. B, 3.15%, 04/01/99* . VMIG-1, A-1 $3,800,000 $ 3,800,000
Michigan Strategic Fund Poll. Cntrl. Rev. Bonds (Detroit Edison
Co. Proj.), LOC Barclay's Bank of New York, Ser. 1995-CC,
3.10%, 04/01/99* ............................................. P-1, A-1+ 2,500,000 2,500,000
Michigan Strategic Fund Poll. Cntrl. Rev. Bonds (Dow Chemical
Co. Proj.), Ser. 1986, 2.80%, 05/14/99 ....................... P-1, N/R 4,000,000 4,000,000
Monroe County, MI Poll. Cntrl. Rev. Bonds (Detroit Edison
Co. Proj.), LOC Barclay's Bank, Ser. 1992-CC, 3.10%, 04/01/99* P-1, N/R 2,500,000 2,500,000
-----------
12,800,000
-----------
MINNESOTA -- 4.0%
Becker, MN Poll. Cntrl. Rev. Bonds TECP (Northern States
Power Proj.) Ser. 1992A, 2.75%, 05/13/99 .....................VMIG-1, A-1+ 10,400,000 10,400,000
Rochester, MN Health Care Fac. Rev. Bonds TECP (Mayo Foundation
Proj.), Ser. 1988E, 3.15%, 08/16/99 .......................... N/R, A-1+ 9,410,000 9,410,000
-----------
19,810,000
-----------
MISSISSIPPI -- 1.4%
Claiborne County Poll. Cntrl. Rev. Bonds (Southern Mississippi
Electric Power Assoc. Proj.) Gtd. by National Rural Utilities
CFC, Ser. 1985G-2, 2.90%, 06/24/99 ........................... P-1, A-1+ 6,075,000 6,075,000
Jackson County Port Facility (Chevron USA Inc. Proj.) Ser.
1993, 3.15%, 04/01/99* ....................................... P-1, N/R 800,000 800,000
-----------
6,875,000
-----------
NEW YORK -- 4.1%
Long Island, NY Power Authority Electrical System Subordinated
Rev. Bonds, LOC ABN - AMRO Bank & Morgan Gty. Trust Co.
of NY, 3.15%, 04/01/99* ......................................VMIG-1, A-1+ 11,000,000 11,000,000
Nassau Cnty, NY Ind. Dev. Rev. Bonds (Manhasset Assoc. Proj.),
3.00%, 04/01/99* ............................................. VMIG-1, N/R 4,000,000 4,000,000
City of New York, NY Gen. Oblig. LOC Morgan Gty. Trust Co. of NY,
Ser. 1996, 3.15%, 04/20/99 ................................... P-1, A-1+ 4,900,000 4,900,000
-----------
19,900,000
-----------
NORTH CAROLINA -- 1.7%
Carteret County, NC Ind. Fac. & Poll. Cntrl. Fin. Auth. (Texas
Gulf Proj.), LOC Banque Nationale de Paris, Ser. 1985, 3.13%,
04/01/99* .................................................... Aa3, N/R 5,000,000 5,000,000
North Carolina Eastern Muni. Power System Rev. Bonds TECP,
LOC Morgan Guaranty Trust Co of New York & United Bank
of Switzerland, Ser. 1988-B, 2.85%, 04/06/99 ................. N/R, A-1+ 3,400,000 3,400,000
-----------
8,400,000
-----------
OHIO -- 2.3%
Ohio State Water Dev. Auth. Poll. Cntrl. Rev. Bonds (Cleveland
Electric Illuminating Proj.), Ser. 1988A FGICInsured,
2.90%, 06/09/99 ..............................................VMIG-1, A-1+ 6,250,000 6,250,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
----------- ----------- ------------
<S> <C> <C> <C>
Ohio State Water Dev. Auth. Poll. Cntrl. Rev. Bonds (Duquense
Light Co. Proj.), Ser. 1994A LOC First National Bk. of Chicago,
2.90%, 04/15/99 ................................................ VMIG-1, A-1+ $ 5,000,000 $ 5,000,000
-----------
11,250,000
-----------
PENNSYLVANIA -- 3.4%
Pennsylvania Higher Educ. Fac. Auth. Rev. Bonds (Univ. of
Pennsylvania Health Svcs. Proj.), Ser. 1994-B, 3.20%, 04/07/99* VMIG-1, A-1+ 16,500,000 16,500,000
-----------
SOUTH CAROLINA -- 2.8%
Piedmont Muni. Power Agency South Carolina Rev. Bonds,
MBIA Insured/SBPA Credit Suisse First Boston,
Ser. 1997-B, 2.95%, 04/07/99* .................................. VMIG-1, A-1+ 1,500,000 1,500,000
South Carolina State Pub. Serv. Auth. TECP, 2.80%, 04/07/99 ....... P-1, A-1+ 10,000,000 10,000,000
South Carolina State Pub. Serv. Auth. TECP, 2.75%, 05/13/99 ....... P-1, A-1+ 2,410,000 2,410,000
-----------
13,910,000
-----------
TENNESSEE -- 4.0%
Chattanooga-Hamilton County, TN Ref. Rev. Bonds
(Erlanger Medical Center), LOC Morgan Guaranty Trust Co.
of New York, Ser. 1987, 3.10%, 04/01/99* ....................... N/R, A-1+ 11,400,000 11,400,000
Clarksville, TN Public Bldg. Auth. Rev. Bonds (Tennessee
Municipal Bond Fund Proj.), LOC Nationsbank,
Ser. 1984, 3.00%, 04/01/99* .................................... N/R, N/R 4,100,000 4,100,000
Clarksville, TN Public Bldg. Auth. Rev. Bonds (Tennessee
Municipal Bond Fund Proj.), LOC Nationsbank, Ser. 1995,
3.00%, 04/01/99* ............................................... N/R, A-1+ 1,850,000 1,850,000
Metropolitan Government Nashville and Davidson County
Health and Educ. Fac. Board Rev. Bonds (Vanderbilt University
Proj,) Ser. 1985 A, 3.10%, 01/15/00 ............................ VMIG-1, A-1+ 2,150,000 2,150,000
-----------
19,500,000
-----------
TEXAS -- 11.9%
Angelina & Neches River Auth. Ind. Dev. Solid Waste Disposal
(TEEC, Inc., Temple-Inland Proj.), LOC Credit Suisse First
Boston, Ser. 1984-B, 3.20%, 04/01/99* .......................... P-1, N/R 2,600,000 2,600,000
Angelina & Neches River Auth. Ind. Dev. Solid Waste Disposal
(TEEC, Inc., Temple-Inland Proj.), LOC Credit Suisse First
Boston, Ser. 1984-C, 3.20%, 04/01/99* .......................... P-1, N/R 2,600,000 2,600,000
Angelina & Neches River Auth. Ind. Dev. Solid Waste Disposal
(TEEC, Inc., Temple-Inland Proj.), LOC Credit Suisse First
Boston, Ser. D, 3.20%, 04/01/99* ............................... P-1, N/R 4,200,000 4,200,000
Angelina & Neches River Auth. Ind. Dev. Solid Waste Disposal
(TEEC, Inc., Temple-Inland Proj.), LOC Credit Suisse First
Boston, Ser. E, 3.20%, 04/01/99* ............................... P-1, N/R 1,000,000 1,000,000
City of Austin, TX TECP (Travis and Williamson Counties
Combined Utility Services Proj.), Ser. A, 2.90%, 06/11/99 ...... P-1, A-1+ 7,215,000 7,215,000
Bexar County, TX Health Fac. Dev. Corp. Rev. Bonds (Air
Force Village II Proj.), LOC Rabobank Nederland, Ser.
1985-B, 3.00%, 04/01/99* ....................................... N/R, A-1+ 9,200,000 9,200,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
----------- --------- -----------
<S> <C> <C> <C>
Harris County, TX Health Fac. Dev. Corp. Hosp. Rev. Bonds
(Methodist Hosp. Proj.), Ser. 1994, 3.10%, 04/01/99* ........... N/R, A-1+ $ 7,000,000 $ 7,000,000
City of Houston Gen. Oblig., TECP Ser. A, 2.90%, 05/12/99 ......... P-1, A-1+ 1,800,000 1,800,000
City of Houston Gen. Oblig., TECP Ser. C, 3.05%, 08/18/99 ......... P-1, A-1+ 9,300,000 9,300,000
City of San Antonio Electric and Gas System TECP, 3.00%, 04/08/99 . N/R, A-1+ 10,000,000 10,000,000
Texas Water Dev. Board, LOC Canadian Imperial Bank,
Ser. 1992-A, 3.10%, 04/01/99* .................................. VMIG-1, A-1+ 3,400,000 3,400,000
------------
58,315,000
------------
WASHINGTON -- 2.0%
King County, WA Sewer Revenue Anticipation TECP,
2.85%, 05/12/99 ................................................ P-1, A-1 10,000,000 10,000,000
------------
WISCONSIN -- 2.1%
State of Wisconsin Gen. Oblig. TECP, Ser. 1997, 3.15%, 07/22/99 ... P-1, A-1+ 10,232,000 10,232,000
------------
WYOMING -- 2.8%
Gillette, WY Poll. Cntrl. Rev. Bonds TECP (Pacificorp
Proj.), Ser. 1988, 3.15%, 06/18/99 ............................. P-1, A-1+ 8,500,000 8,500,000
Green River, WY Poll. Cntrl. Rev. Bonds (Texas Gulf, Inc. Proj.),
LOC Societe Generale, Ser. 1984, 3.25%, 04/01/99* ............. Aa3, N/R 2,000,000 2,000,000
Lincoln County, WY Poll. Cntrl. Rev. Bonds TECP (Pacificorp
Proj.), LOC United Bank of Switzerland, Ser. 1997,
3.00%, 04/07/99 ................................................ VMIG-1, A-1+ 3,450,000 3,450,000
------------
13,950,000
------------
TOTAL MUNICIPAL BONDS (COST $490,739,269) .................................................. 490,739,269
------------
TOTAL INVESTMENTS (COST $490,739,269)(DAGGER)-- 99.9% ............................................... 490,739,269
OTHER ASSETS AND LIABILITIES, NET-- 0.1% ............................................................ 459,379
------------
NET ASSETS-- 100% ................................................................................... $491,198,648
============
<FN>
* Denotes a Variable or Floating Rate Note. Variable or Floating Rate
Notes are instruments whose rates change periodically. The rates shown
are the interest rates as of March 31, 1999. The dates shown are the
next dates the interest rates on the instruments are scheduled to be
reset.
(DAGGER) Cost for federal income tax purposes.
LOC -- Letter of Credit.
SBPA -- Stand-by Bond Purchase Agreement.
TECP -- Tax-Exempt Commercial Paper and multi-modal bonds in commercial paper
mode.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999 (UNAUDITED)
RODNEY SQUARE RODNEY SQUARE
FUND -- FUND -- RODNEY SQUARE
U.S. GOVERNMENT MONEY MARKET TAX-EXEMPT
PORTFOLIO PORTFOLIO FUND
--------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments in securities (including repurchase agreements of
$166,645,100, $44,871,600 and $0, respectively), at value
(amortized cost $557,083,926, $1,707,102,989 and $490,739,269,
respectively) ............................................... $557,083,926 $1,707,102,989 $490,739,269
Interest receivable ............................................ 1,826,372 10,795,149 1,729,189
Other assets ................................................... 196 1,271 9,685
--------------------------------------------
Total assets ................................................ 558,910,494 1,717,899,409 492,478,143
--------------------------------------------
LIABILITIES:
Dividends payable .............................................. 2,223,091 6,654,876 1,018,568
Accrued management fee ......................................... 236,373 674,493 199,075
Other accrued expenses ......................................... 43,484 105,266 61,852
--------------------------------------------
Total Liabilities ........................................... 2,502,948 7,434,635 1,279,495
--------------------------------------------
NET ASSETS ..................................................... $556,407,546 $1,710,464,774 $491,198,648
============================================
NET ASSETS CONSIST OF:
Capital paid in ................................................ $556,406,240 $1,710,490,997 $491,200,308
Accumulated realized gain (loss) on investments - net .......... 1,306 (26,223) (1,660)
--------------------------------------------
NET ASSETS, for 556,406,240, 1,710,490,997 and 491,206,991
shares outstanding, respectively ............................ $556,407,546 $1,710,464,774 $491,198,648
============================================
NET ASSET VALUE, offering and redemption price per share ....... $1.00 1 $1.00 2 $1.00 3
============================================
<FN>
1 $556,407,546 / 556,406,240 outstanding shares of beneficial interest, no par value
2 $1,710,464,774 / 1,710,490,997 outstanding shares of beneficial interest, no par value
3 $491,198,648 / 491,206,991 outstanding shares of beneficial interest, no par value
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1999 (UNAUDITED)
RODNEY SQUARE RODNEY SQUARE
FUND -- FUND -- RODNEY SQUARE
U.S. GOVERNMENT MONEY MARKET TAX-EXEMPT
PORTFOLIO PORTFOLIO FUND
---------------- ------------- -------------
<S> <C> <C> <C>
INTEREST INCOME ................................................. $17,536,235 $45,001,570 $6,892,047
-------------------------------------------
EXPENSES:
Management fee .................................................. 1,609,106 3,906,135 1,044,341
Accounting fee .................................................. 83,432 187,363 59,399
Distribution expenses ........................................... 34,118 180,496 14,637
Trustees' fees and expenses ..................................... 5,973 5,251 5,984
Registration fees ............................................... 84,707 119,169 42,005
Report to shareholders .......................................... 5,976 12,380 5,637
Legal ........................................................... 18,333 33,658 23,355
Audit ........................................................... 6,786 19,875 15,188
Other ........................................................... 19,863 55,456 15,100
-------------------------------------------
Total expenses ............................................... 1,868,294 4,519,783 1,225,646
-------------------------------------------
Net investment income ........................................ 15,667,941 40,481,787 5,666,401
-------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS-- NET ....................... (1,203) 3,764 --
-------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $15,666,738 $40,485,551 $5,666,401
===========================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
RODNEY SQUARE RODNEY SQUARE
FUND -- FUND -- RODNEY SQUARE
U.S. GOVERNMENT MONEY MARKET TAX-EXEMPT
PORTFOLIO PORTFOLIO FUND
--------------- ------------- ---------------
<S> <C> <C> <C>
For the Six-Month Period Ended March 31, 1999 (Unaudited)
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income ........................................ $ 15,667,941 $ 40,481,787 $ 5,666,401
Net realized gain (loss) on investments ...................... (1,203) 3,764 --
----------------------------------------------
Net increase in net assets resulting from operations ......... 15,666,738 40,485,551 5,666,401
----------------------------------------------
Dividends to shareholders from net investment income ............ (15,667,941) (40,481,787) (5,666,401)
----------------------------------------------
Share transactions at net asset value of $1.00 per share:
Proceeds from sale of shares ................................. 1,016,456,227 2,073,267,636 358,349,787
Shares issued to shareholders in reinvestment of dividends
from net investment income ................................ 216,510 3,446,446 136,428
Cost of shares redeemed ...................................... (1,262,416,824) (2,068,987,046) (259,897,205)
----------------------------------------------
Net increase (decrease) in net assets and shares resulting from
share transactions ........................................ (245,744,087) 7,727,036 98,589,010
----------------------------------------------
Total increase (decrease) in net assets ...................... (245,745,290) 7,730,800 98,589,010
NET ASSETS:
Beginning of period .......................................... 802,152,836 1,702,733,974 392,609,638
----------------------------------------------
End of period ................................................ $ 556,407,546 $1,710,464,774 $491,198,648
==============================================
For the Fiscal Year Ended September 30, 1998
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income ........................................ $ 29,005,713 $ 70,421,875 $ 10,319,079
Net realized gain (loss) on investments ...................... 296 (1,150) --
----------------------------------------------
Net increase in net assets resulting from operations ......... 29,006,009 70,420,725 10,319,079
----------------------------------------------
Dividends to shareholders from net investment income ............ (29,005,713) (70,421,875) (10,319,079)
----------------------------------------------
Share transactions at net asset value of $1.00 per share:
Proceeds from sale of shares ................................. 4,463,845,267 7,518,930,203 1,662,576,975
Shares issued to shareholders in reinvestment of dividends
from net investment income ................................ 526,772 6,501,608 297,532
Cost of shares redeemed ...................................... (4,040,694,000) (7,013,967,395) (1,551,128,833)
----------------------------------------------
Net increase in net assets and shares resulting from
share transactions ........................................ 423,678,039 511,464,416 111,745,674
----------------------------------------------
Total increase in net assets ................................. 423,678,335 511,463,266 111,745,674
NET ASSETS:
Beginning of period .......................................... 378,474,501 1,191,270,708 280,863,964
----------------------------------------------
End of period ................................................ $ 802,152,836 $1,702,733,974 $ 392,609,638
==============================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following tables include selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements. They should be read in conjunction with the financial statements and
notes thereto.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
---------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED
MARCH 31, 1999
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RODNEY SQUARE FUND -- U.S. GOVERNMENT PORTFOLIO
For a Share Outstanding Through Each Period:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------------------------------------------------------------
Investment Operations:
Net investment income ............................ 0.023 0.051 0.050 0.050 0.052 0.033
------------------------------------------------------------------
Distributions:
From net investment income ....................... (0.023) (0.051) (0.050) (0.050) (0.052) (0.033)
------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
==================================================================
TOTAL RETURN ........................................ 4.66%* 5.19% 5.07% 5.08% 5.37% 3.32%
RATIOS (TO AVERAGE NET ASSETS)/ SUPPLEMENTAL DATA:
Expenses ......................................... 0.55%* 0.54% 0.55% 0.55% 0.55% 0.53%
Net investment income ............................ 4.58%* 5.06% 4.96% 4.97% 5.25% 3.27%
Net assets, end of period (000 omitted) ............. $556,408 $802,153 $378,472 $341,426 $306,096 $336,766
</TABLE>
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
PERIOD ENDED -------------------------------------------------
MARCH 31, 1999
(UNAUDITED) 1998 1997 1996 1995 1994
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RODNEY SQUARE FUND -- MONEY MARKET PORTFOLIO
For a Share Outstanding Through Each Period:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------------
Net investment income ............................ 0.023 0.051 0.051 0.050 0.054 0.033
--------------------------------------------------------------------
Distributions:
From net investment income ....................... (0.023) (0.051) (0.051) (0.050) (0.054) (0.033)
--------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================
TOTAL RETURN ........................................ 4.80%* 5.26% 5.17% 5.17% 5.50% 3.37%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses ......................................... 0.52%* 0.53% 0.54% 0.53% 0.54% 0.53%
Net investment income ............................ 4.70%* 5.13% 5.06% 5.03% 5.37% 3.33%
Net assets, end of period (000 omitted) ............. $1,710,465 $1,702,734 $1,191,271 $980,856 $751,125 $606,835
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
PERIOD ENDED --------------------------------------------------
MARCH 31, 1999
(Unaudited) 1998 1997 1996 1995 1994
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RODNEY SQUARE TAX-EXEMPT FUND
For a Share Outstanding Through Each Period:
NET ASSET VALUE, BEGINNING OF PERIOD ............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------------------------------------------------------------
Net investment income ......................... 0.013 0.031 0.030 0.031 0.033 0.021
-------------------------------------------------------------------
Distributions:
From net investment income .................... (0.013) (0.031) (0.030) (0.031) (0.033) (0.021)
-------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===================================================================
TOTAL RETURN ..................................... 2.60%* 3.11% 3.09% 3.11% 3.36% 2.17%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses ...................................... 0.55%* 0.55% 0.57% 0.56% 0.54% 0.54%
Net investment income ......................... 2.55%* 3.05% 3.05% 3.08% 3.29% 2.13%
Net assets, end of period (000 omitted) .......... $491,199 $392,610 $280,864 $237,185 $318,213 $338,565
<FN>
* Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (UNAUDITED)
- --------------------------------------------------------------------------------
1. DESCRIPTION AND SHARES OF THE FUNDS. The Rodney Square Fund and the Rodney
Square Tax-Exempt Fund (each a "Fund" and collectively, the "Funds") are
diversified, open-end management investment companies established as
Massachusetts business trusts by Declarations of Trust on February 16, 1982
and August 1, 1985, respectively, and registered with the U.S. Securities
and Exchange Commission (the "SEC") under the Investment Company Act of
1940, as amended (the "1940 Act"). Each Declaration of Trust permits the
Trustees of each Fund to create additional series or portfolios, each of
which may issue additional classes of shares. Currently, the Rodney Square
Fund consists of two series or portfolios, the U.S. Government Portfolio and
the Money Market Portfolio (each a "Portfolio"). The Rodney Square
Tax-Exempt Fund consists of one series or portfolio (also a "Portfolio" and,
together with the U.S. Government Portfolio and the Money Market Portfolio,
the "Portfolios"). Each Portfolio consists of a single class of shares.
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of each Fund:
SECURITY VALUATION. Each Fund values securities utilizing the amortized cost
valuation method which is permitted by Rule 2a-7 under the 1940 Act provided
that each Fund complies with certain conditions. This method involves
valuing a portfolio security initially at its cost and thereafter adjusting
for amortization of premium or accretion of discount to maturity.
FEDERAL INCOME TAXES. Each Portfolio is treated as a separate entity for
federal income tax purposes and each Portfolio intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and to distribute all of its taxable and
tax-exempt income to its shareholders. Therefore, no federal income tax
provision has been made. At September 30, 1998, the U.S. Government
Portfolio, the Money Market Portfolio and the Rodney Square Tax-Exempt Fund
had a net tax basis capital loss carryforward available to offset future
capital gains of approximately $6,000, $41,000 and $2,000, respectively,
which will expire as follows:
CAPITAL LOSS EXPIRATION
CARRYFORWARD DATE
------------ ----------
U.S. Government Portfolio ......... $ 6,000 09/30/03
Money Market Portfolio ............ $25,000 09/30/02
Money Market Portfolio ............ $15,000 09/30/05
Money Market Portfolio ............ $ 1,000 09/30/06
Rodney Square Tax-Exempt Fund ..... $ 2,000 09/30/02
INTEREST INCOME AND DIVIDENDS TO SHAREHOLDERS. Interest income is accrued as
earned. Dividends to shareholders of each Portfolio are declared daily from
net investment income, which consist of accrued interest and discount earned
(including original issue discount), less amortization of premium and the
accrued expenses applicable to the dividend period. For the Rodney Square
Tax-Exempt Fund only, the tax-exempt portion of each dividend is determined
uniformly, based on the ratio of the Fund's tax-exempt and taxable income,
if any, for the entire fiscal year.
19
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)-- CONTINUED
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Rodney Square Fund, through its custodian,
receives delivery of the underlying securities, the market value of which at
the time of purchase is required to be in an amount at least equal to 101%
of the resale price. Rodney Square Management Corporation ("RSMC"), the Fund
Manager, is responsible for determining that the amount of these underlying
securities is maintained at a level such that their market value is at all
times equal to 101% of the resale price. In the event of default of the
obligation to repurchase, the Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation.
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.
OTHER. Investment security transactions are accounted for on a trade date
basis. The Funds use the specific identification method for determining
realized gain and loss on investments for both financial and federal income
tax reporting purposes. Obligations of agencies and instrumentalities of the
U.S. Government are not direct obligations of the U.S. Treasury and, thus,
may or may not be backed by the "full faith and credit" of the United
States. Payment of interest and principal on these obligations, although
generally backed directly or indirectly by the U.S. Government, may be
backed solely by the issuing instrumentality.
The Money Market Portfolio invests in short-term, unsecured debt instruments
of corporate issuers. The ability of a corporate issuer to meet its
obligations may be affected by economic developments in a specific industry
or region. The Money Market Portfolio's investments in certificates of
deposit, commercial paper, corporate notes and time deposits of domestic and
foreign banks represented in the aggregate approximately 32.9% of its total
investments on March 31, 1999.
Approximately 71.2% of the investments by the Rodney Square Tax-Exempt Fund
on March 31, 1999 were insured by private issuers that guarantee payments of
principal and interest in the event of default or were backed by letters of
credit issued by domestic and foreign banks or financial institutions.
3. MANAGEMENT FEE AND OHER TRANSACTIONS WITH AFFILIATES. The Funds employ RSMC,
a wholly owned subsidiary of Wilmington Trust Company ("WTC"), to serve as
Fund Manager to each of the Funds pursuant to separate management agreements
each dated August 9, 1991, as amended (the "Management Agreements"). Under
the Management Agreements, RSMC, subject to the supervision of the Funds'
Boards of Trustees, directs the investments of the Portfolios in accordance
with each Portfolio's investment objective, policies and limitations. Also
under the Management Agreements, RSMC is responsible for administrative
services such as compliance monitoring and corporate management. For its
services, the Funds pay RSMC a monthly fee at the annual rate of 0.47% of
each Portfolio's first $1 billion of average daily net assets; 0.43% of each
Portfolio's next $500 million of average daily net assets; 0.40% of each
Portfolio's next $500 million of average daily net assets; and 0.37% of each
Portfolio's average daily net assets in excess of $2 billion.
20
<PAGE>
THE RODNEY SQUARE FUND & THE RODNEY SQUARE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
PFPC Inc. ("PFPC") determines the net asset value per share and provides
all Fund accounting services pursuant to a separate Accounting Services
Agreement with each Fund. For accounting services, each Fund pays PFPC an
annual amount of $50,000 per Portfolio, plus an annual amount equal to
0.02% of each Portfolio's average daily net assets in excess of $100
million. For the six-month period ended March 31, 1999, PFPC's fees for
accounting services amounted to $83,432 for the U.S. Government Portfolio,
$187,363 for the Money Market Portfolio and $59,399 for the Rodney Square
Tax-Exempt Fund.
WTC serves as custodian of the assets of the Funds and is paid for its
provision of this service by RSMC out of its management fee. The Funds
reimburse WTC for its related out-of-pocket expenses, if any, incurred in
connection with the performance of these services. Effective February 2,
1998, WTC entered into a Sub-Custodian Services Agreement with PFPC Trust
Company ("PFPC Trust"), whereby PFPC Trust serves as Sub-Custodian of the
Funds' assets. The Funds do not pay PFPC Trust any fees for custodial
services, as RSMC pays for the provision of these services out of its
management fee.
PFPC serves as transfer agent and dividend disbursing agent for each Fund.
RSMC pays PFPC for the provision of these services out of its management
fee. Any related out-of-pocket expenses reasonably incurred by PFPC or its
agents for the provision of such services are reimbursed by the Fund.
Pursuant to a Distribution Agreement with each Fund dated January 1, 1999,
Provident Distributors, Inc. ("PDI") manages the Funds' distribution
efforts and provides assistance and expertise in developing marketing plans
and materials. The Funds' Board of Trustees have adopted, and shareholders
have approved, distribution plans pursuant to Rule 12b-1 under the 1940 Act
(the "12b-1 Plans"), to allow each Fund to reimburse PDI for certain
expenses incurred in connection with distribution activities. The Trustees
have authorized a payment of up to 0.20% of each Portfolio's average daily
net assets annually to reimburse PDI for such expenses.
21
<PAGE>
[This Page Intentionally Left Blank.]
<PAGE>
TRUSTEES
Eric Brucker
Fred L. Buckner
Robert J. Christian
John J. Quindlen
----------------------------------
OFFICERS
Robert J. Christian, PRESIDENT
Joseph M. Fahey, Jr., VICE PRESIDENT
Pat Colletti, VICE PRESIDENT & TREASURER
Gary M. Gardner, SECRETARY
Mary Jane Maloney, ASSISTANT SECRETARY
---------------------------------------
FUND MANAGER
Rodney Square Management Corporation
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
-------------------------------------
SUB-ADMINISTRATOR,
TRANSFER AGENT AND
ACCOUNTING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
--------------------------------
CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
-------------------------------
DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Ctr.
6th Floor
West Conshohocken, PA 19428-2961
----------------------------------
LEGAL COUNSEL
Pepper Hamilton LLP
---------------------
INDEPENDENT AUDITORS
Ernst & Young LLP
--------------------
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF
THE FUNDS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
RS02 3/99
