THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
PRESIDENT'S MESSAGE
- - --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The management of The Rodney Square Strategic Fixed-Income Fund (the
"Fund") is pleased to report to you on the Fund's activity for the six-month
period ended April 30, 1995.
PERFORMANCE REVIEW*
The Rodney Square Diversified Income Portfolio provided shareholders with a
5.51% return for the six-month period. This return consisted of both an
increase in the net asset value per share, to $12.68 from $12.42, plus
distributions. During the six-month period, shareholders received dividends of
$0.41 per share. The Portfolio's performance was slightly lower than the 5.57%
return reported for the Lehman Intermediate Government Corporate Index. The
Lehman Intermediate Government Corporate Index is a total return performance
benchmark consisting of U.S. Government and publicly issued corporate debt
issues rated at least investment grade with maturities from one year to ten
years. Wilmington Trust Company, the Portfolio's adviser, has continued to
assist the Portfolio in providing competitive returns by limiting the total
expenses of the Portfolio to 0.65% of average daily net assets.
The Rodney Square Municipal Income Portfolio provided shareholders with a
6.20% return for the six-month period. This return consisted of an increase in
the net asset value per share, to $12.08 from $11.64, plus distributions.
During the six-month period, shareholders received dividends of $0.27 per share.
The Portfolio's performance was lower than the 6.89% return reported for the
Lehman State General Obligation Index. The Lehman State General Obligation
Index is a total return performance benchmark for the investment grade, tax-
exempt, state bond market consisting of state bonds rated at least investment
grade issued within the last five years with at least a one year maturity.
Wilmington Trust Company, the Portfolio's adviser, has assisted the Portfolio in
providing competitive returns by limiting the total expenses of the Portfolio to
0.75% of average daily net assets.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
THE RODNEY SQUARE DIVERSIFIED INCOME PORTFOLIO
The Portfolio is designed to give shareholders broad exposure to the
dynamics of the intermediate term bond market with stable flow of income and
minimization of risk. This goal is accomplished by applying a disciplined and
systematic investment process to actively manage a core portfolio of investment
grade notes and bonds from a wide range of taxable market sectors.
The fixed-income markets rebounded smartly over the past six months,
shaking off the nervousness that characterized much of 1994. Interest rates
began to fall in November 1994 and the yield curve flattened. The two-year U.S.
Treasury Note yield declined 24 basis points from 6.82% to 6.58% while the yield
of the 30-year Treasury Bond dropped from 7.97% to 7.33%.
The Federal Reserve Board's (the "Fed") policy of raising interest rates to
slow the economic expansion served as the catalyst for this dramatic turn
around. As the economy slowed, investors began to put their cash to work and
fueled the bond market rally. The rally was sustained as money left emerging
markets for domestic markets and foreign central banks supported the weakening
U.S. dollar by purchasing more U.S. Treasury securities.
Our Portfolio started 1995 with a slightly defensive position reflecting
our concern over the uncertainties of the Fed's policy and the direction of the
economy. We gradually extended the average maturity in February and March as
evidence accumulated that the rally in the bond market may continue. Although
our defensive position caused us to lag the market during the early parts of the
rally, overall the Portfolio benefited from the compressed spreads between
Treasuries and corporate bonds. As the spreads narrowed during the rally, the
market value of the corporate securities appreciated more than the Treasuries.
During the past six months we have maintained nearly 40% of the portfolio in the
corporate sector compared to a weighting of a little over 20% for the market as
a whole. This strategy enabled us to produce a solid performance and boost the
dividend yield of the Portfolio in the last six months.
We believe that investors will focus and react to economic data in the
upcoming months. The market may continue to move higher but sustaining higher
prices will be difficult without more signs of a weakening economy. If growth
trends moderate and more investors accept the idea that the Fed is finished
raising rates, further gains could follow.
THE RODNEY SQUARE MUNICIPAL INCOME PORTFOLIO
The Rodney Square Municipal Income Portfolio is an intermediate term fund
designed to produce a high level of income which is exempt from federal income
taxes while seeking preservation of capital. The basic strategy of the
Portfolio is to identify and purchase the undervalued sectors of the municipal
market. The Portfolio will normally be fully invested with an average maturity
in the 7 to 12 year range.
After surviving nearly a year of dismal news and results, bond investors
were rewarded with strong returns during the last six months. The Fed
aggressively attacked "potential" inflation in mid-November 1994 by raising
short-term rates another 75 basis points. From that point on, the bond markets
were able to focus on economic data which consistently showed a weakening trend.
The well publicized decline of the U.S. dollar was the prime source of negative
news but even that could only temper, not stop, the bond market rally.
The municipal market was overwhelmed in November last year as mutual fund
investors rushed out of the market. This large source of secondary market
supply (funds were forced to sell bonds in order to maintain liquidity) was not
balanced with any significant buyers so municipals fell in price and became
attractive relative to taxable bonds.
From December through March, the municipal market was very strong. Mutual
funds stopped selling bonds as outflows decelerated. New issue volume dropped
significantly from 1994 levels and redemptions (calls and maturities) of
existing bonds were high. These factors combined to reverse the technicals from
very negative to very positive. As a result, municipals outperformed the
taxable bond markets each month and by March, they were at historically high
price levels relative to Treasuries.
In April, just as it seemed nothing could dampen the spirits of municipal
bond buyers, the "Tax Reform" developments in Congress cast a gloomy outlook for
the value of tax-exempt bonds. While any real reform is likely years away (1997
at the earliest), the debate will heat up this summer as both the House and
Senate look at several different proposals. With this uncertainty hanging over
the market, municipals became volatile and fell sharply in April.
2
During the six months, there were two instances when value analysis offered
trading opportunities. In February, there was a shortage of Texas bonds which
forced their prices upward relative to other regions. We sold two Texas bonds
and lowered our Texas exposure from double digits to approximately 6.25% of the
Portfolio. In April, we took advantage of the high municipal prices relative to
Treasuries by selling several issues and raising the cash position to a very
liquid 9% of total assets. This lowered the average maturity of the Portfolio
to a defensive position of 6.6 years.
The road ahead for municipals suggests caution as there are several factors
favoring tax-exempts and several that could negatively affect them. On the
positive side, there will continue to be record redemptions of existing bonds in
June and July. Combined with the constricted new issue supply, these technicals
suggest a supply/demand imbalance similar to the one experienced at year-end.
Offsetting these positives, redemption activities from the mutual fund industry
seemed to pick up again as we witnessed four straight weeks of outflows totaling
over $1 billion. In addition, the political debate/rhetoric regarding tax
reform will periodically send scares into the municipal market.
We invite your comments and questions and we thank you for your investment
in The Rodney Square Strategic Fixed-Income Fund. We look forward to reviewing
our investment outlook and strategy with you in our next report to shareholders.
Sincerely,
/s/ Peter J. Succoso
Peter J. Succoso
President
June 12, 1995
* PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN
INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY WILMINGTON
TRUST COMPANY OR ANY OTHER BANKING INSTITUTION, THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE TOTAL RETURNS SHOWN ABOVE DO NOT REFLECT THE EFFECT OF THE
MAXIMUM SALES LOAD OF 3.50%. RETURNS ARE HIGHER DUE TO THE ADVISER'S
MAINTENANCE OF THE FUND'S EXPENSES. SEE FINANCIAL HIGHLIGHTS ON PAGES
15-18.
3
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/DIVERSIFIED INCOME PORTFOLIO
- - --------------------------------------------------------------------------
INVESTMENTS / APRIL 30, 1995 (UNAUDITED)
(Showing Percentage of Total Value of Net Assets)
- - --------------------------------------------------------------------------------
MOODY'S
/ S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
------ ------ --------
ASSET-BACKED SECURITIES -- 12.3%
American Express Master Trust, Series
1994-1 Class A, 7.15%, 08/15/99........ Aaa/AAA $1,000,000 $ 1,000,000
EQCC Home Equity Loan Trust 1994-4 A3,
8.68%, 10/15/08........................ Aaa/AAA 700,000 721,861
Green Tree Financial Corp. 95-2 A3,
7.45%, 06/15/26........................ NR/NR 400,000 401,424
Green Tree Financial Corp. Manufactured
Housing 1995-1 A2, 7.80%, 06/15/25..... Aaa/NR 700,000 710,605
Resolution Trust Corp. Commercial
Mortgage Pass-Thru, Series 1994-C2
Class B, 8.00%, 04/25/25............... NR/AA 250,000 247,855
The Money Store Home Equity 1994-D A3,
8.35%, 05/15/14........................ Aaa/AAA 1,000,000 1,015,600
-----------
TOTAL ASSET-BACKED SECURITIES (COST $4,028,920).............. 4,097,345
-----------
CORPORATE BONDS -- 42.8%
FINANCIAL -- 22.3%
American Express Credit Corp., 8.50%,
06/15/99............................... Aa3/A+ 400,000 416,500
Bankamerica Corp., 9.20%, 05/15/03....... A3/A- 500,000 544,375
Bankers Trust - NY, 9.50%, 06/14/00...... A2/A 700,000 744,625
British Telecom Finance, Inc., 9.38%,
02/15/99............................... Aaa/AAA 550,000 588,500
Ford Motor Capital B.V. Notes, 9.38%,
01/01/98............................... A2/A 300,000 316,500
Ford Motor Credit Corp., 7.27%,
11/09/98*.............................. A2/A 500,000 496,895
General Motors Acceptance Corp., 9.45%,
05/18/95............................... Baa1/BBB+ 300,000 300,332
General Motors Acceptance Corp., 8.63%,
06/15/99............................... Baa1/BBB+ 300,000 311,250
International Lease Finance Corp.,
8.35%, 10/01/98........................ A2/A+ 400,000 412,500
KFW International Finance, 7.20%,
03/15/14............................... Aaa/AAA 400,000 371,500
Lehman Brothers Holdings, Inc., 7.63%,
08/01/98............................... A3/A 600,000 593,250
Lehman Brothers Holdings, Inc., 7.78%,
01/12/99*.............................. A3/A 300,000 298,398
Republic New York Corp., 7.75%,
05/15/09............................... A1/AA- 500,000 500,625
Salomon Brothers Inc., 5.65%, 02/10/98... A3/A- 1,300,000 1,225,250
The accompanying notes are an integral part of the financial statements.
4
Santander Financial Issuances Limited,
7.875%, 04/15/05....................... A1/A+ 300,000 297,750
-----------
7,418,250
-----------
MANUFACTURING -- 8.2%
American Home Products, 7.70%, 02/15/00.. A2/A- 1,000,000 1,012,500
Caterpillar Financial Services Corp.,
9.95%, 02/28/96........................ A3/A- 200,000 205,000
E. I. du Pont de Nemours & Co., 8.65%,
12/01/97............................... Aa2/AA 400,000 415,000
Eaton Corp., 8.00%, 08/15/06............. A2/A 650,000 678,437
Phillip Morris Companies, Inc., 8.65%,
05/18/98............................... A2/A 400,000 415,000
-----------
2,725,937
-----------
OIL, GAS & PETROLEUM -- 3.0%
British Petroleum of North America,
8.88%, 12/01/97........................ A1/AA- 200,000 208,750
Chevron Capital USA, Inc., 7.45%,
08/15/04............................... Aa2/AA 500,000 496,875
Societe Nationale Elf Aquitaine, 8.00%,
10/15/01............................... Aa3/AA 300,000 307,875
-----------
1,013,500
-----------
TELEPHONE & COMMUNICATIONS -- 3.5%
Chesapeake & Potomac Telephone Co.,
6.13%, 07/15/05........................ Aaa/AA+ 850,000 768,188
ITT Corp., 7.25%, 11/15/96............... A3/A+ 400,000 402,000
-----------
1,170,188
-----------
TRANSPORTATION -- 1.1%
Canadian National Railway Yankee, 7.00%,
03/15/04............................... A1/AA- 400,000 379,000
-----------
UTILITIES -- 4.7%
Hydro-Quebec, 9.75%, 09/29/98............ NR/A+ 650,000 693,469
Hydro-Quebec, 9.75%, 01/15/18............ A1/A+ 500,000 537,875
National Rural Utilities Cooperative
Finance Corp., 9.50%, 05/15/97......... Aa3/AA 300,000 314,625
-----------
1,545,969
-----------
TOTAL CORPORATE BONDS (COST $14,132,468)..................... 14,252,844
-----------
TIME DEPOSITS -- 3.2%
Sanwa Bank Ltd. (Grand Cayman)
(COST $1,056,908)...................... NR/NR 1,056,908 1,056,908
-----------
The accompanying notes are an integral part of the financial statements.
5
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 9.7%
Federal Home Loan Mortgage Corp., 8.60%,
01/26/00............................... NR/NR 400,000 413,640
Federal National Mortgage Association
Medium Term Notes, 5.39%, 08/05/98..... NR/NR 2,950,000 2,808,341
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $3,122,005).. 3,221,981
-----------
U.S. TREASURY OBLIGATIONS -- 30.8%
U.S. TREASURY BONDS -- 6.6%
U.S. Treasury Bonds, 11.50%, 11/15/95.. NR/NR 1,100,000 1,134,100
U.S. Treasury Bonds, 8.38%, 08/15/00... NR/NR 200,000 201,498
U.S. Treasury Bonds, 11.75%, 02/15/10.. NR/NR 650,000 856,290
-----------
2,191,888
-----------
U.S. TREASURY NOTES -- 24.2%
U.S. Treasury Notes, 8.00%, 10/15/96... NR/NR 2,900,000 2,960,552
U.S. Treasury Notes, 7.50%, 01/31/97... NR/NR 1,500,000 1,522,725
U.S. Treasury Notes, 8.75%, 08/15/00... NR/NR 925,000 999,860
U.S. Treasury Notes, 7.75%, 02/15/01... NR/NR 700,000 727,447
U.S. Treasury Notes, 6.38%, 08/15/02... NR/NR 1,900,000 1,832,683
-----------
8,043,267
-----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $10,086,774)........... 10,235,155
-----------
TOTAL INVESTMENTS (COST $32,427,075)** -- 98.8%.................... 32,864,233
OTHER ASSETS AND LIABILITIES -- NET 1.2%........................... 399,745
-----------
NET ASSETS -- 100.0%............................................... $33,263,978
===========
* Denotes a Variable Rate Note. Variable Rate Notes are instruments whose
rates change periodically. The rates shown are the interest rates as of
April 30, 1995.
** Cost for federal income tax purposes. At April 30, 1995, net unrealized
appreciation was $437,158. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $550,172 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market
value of $113,014.
The accompanying notes are an integral part of the financial statements.
6
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/MUNICIPAL INCOME PORTFOLIO
- - --------------------------------------------------------------------------
INVESTMENTS / APRIL 30, 1995 (UNAUDITED)
(Showing Percentage of Total Value of Net Assets)
- - --------------------------------------------------------------------------------
MOODY'S
/ S&P PRINCIPAL VALUE
RATING AMOUNT (NOTE 2)
------ ------ --------
MUNICIPAL BONDS -- 89.7%
ALASKA -- 2.6%
Alaska Municipal Bond Bank Authority Rfg.
Rev. Series 1993-C, 4.90%, 10/01/03.... A/A $400,000 $ 377,500
-----------
CALIFORNIA -- 15.2%
California State Veterans Bonds Series
1989, 7.00%, 04/01/03.................. Aa/AA 500,000 512,500
California State Veterans Bonds Series
AY, 6.90%, 04/01/01.................... Aa/AA 250,000 256,563
Los Angeles County, CA Public Works
Finance Authority Lease Rev.
(Project IV) MBIA, 4.60%, 12/01/02..... Aaa/AAA 350,000 331,625
Los Angeles County, CA Public Works
Finance Authority Rev. LA County
Park & Open Space District Series
1994-A, 5.63%, 10/01/03................ Aa/AA 500,000 505,000
Los Angeles, CA Dept. of Water and
Power Electric Plant Rev., 5.75%,
11/15/02............................... Aa/AA 300,000 309,750
Redevelopment Agency of San Francisco,
CA Multi-Family Housing Refunding
Rev. Series 1994, GNMA South Beach
Project, 4.75%, 09/01/02............... Aaa/NR 345,000 331,631
-----------
2,247,069
-----------
COLORADO -- 3.4%
Aurora, CO Ctfs. Participation Lease
Refunding, 5.85%, 12/01/02............. A/A 500,000 505,000
-----------
DELAWARE -- 27.5%
Bethany Beach, DE MBIA, 9.75%, 11/01/07.. Aaa/AAA 160,000 215,000
Bethany Beach, DE MBIA, 9.75%, 11/01/08.. Aaa/AAA 180,000 243,225
Delaware Health Facility Authority
Hospital Rev. Medical Center
Prerefunded 10/01/95 @ 102.00,
9.25%, 10/01/15........................ Aaa/AAA 300,000 311,250
Delaware State Economic Dev. Authority
Rev. Delmarva Power & Light, 7.30%,
09/01/15............................... Aaa/AAA 100,000 107,500
Delaware State Housing Authority Rev.
Sr. Home Mortgage Subseries 1991 B-1,
6.40%, 12/01/02........................ A1/NR 50,000 50,125
The accompanying notes are an integral part of the financial statements.
7
Delaware State Housing Authority Multi-
Family Mortgage Rfg. Rev., 5.80%,
07/01/95............................... A1/A+ 200,000 200,500
Delaware State Housing Authority Multi-
Family Mortgage Rfg. Rev., 6.30%,
07/01/98............................... A1/A+ 100,000 100,250
Delaware State Housing Authority Multi-
Family Mortgage Rfg. Rev. Series C,
7.25%, 01/01/07........................ A1/A 240,000 254,700
Delaware State Housing Authority Single
Family Mortgage Revenue 1993 Subseries
A-1, AMBAC, 5.05%, 07/01/05............ Aaa/AAA 315,000 298,856
Delaware State Housing Authority Single
Family Mortgage Revenue 1993 Subseries
A-1, AMBAC, 5.15%, 01/01/06............ Aaa/AAA 180,000 171,675
Delaware State Solid Waste Authority
Systems Revenue, 5.80%, 07/01/01....... A/A 500,000 513,125
Delaware State Series A, 4.80%, 03/01/05. Aa/AA+ 415,000 393,731
Delaware State Series A, 4.90%, 03/01/06. Aa/AA+ 470,000 444,150
Delaware Transportation Authority System
Jr. Lien Revenue, MBIA Prerefunded
07/01/98 @ 101.50, 7.75%, 07/01/08..... Aaa/AAA 250,000 275,000
Delaware Transportation Authority System
Revenue, Sr. Lien, 6.75%, 07/01/98..... A1/AA- 115,000 121,613
Delaware Transportation Authority System
Revenue, Sr. Lien, 5.88%, 07/01/00..... A1/AA- 350,000 362,250
-----------
4,062,950
-----------
MAINE -- 1.6%
Bangor, Maine, 4.70%, 08/01/04........... Aa/NR 245,000 230,606
-----------
MARYLAND -- 6.8%
Maryland State & Local Facility Loan
Third Series, 4.20%, 07/15/02.......... Aaa/AAA 350,000 324,187
Maryland State Department of
Transportation Consolidated Revenue,
4.30%, 09/15/04........................ Aa/AA 250,000 225,000
Washington Suburban Sanitary District,
MD, 4.38%, 06/01/03.................... Aa1/AA 500,000 459,375
-----------
1,008,562
-----------
MISSISSIPPI -- 2.6%
Medical Center Education Building Corp.,
University of Mississippi (Medical
Center Project) Series 1993, 5.40%,
12/01/05............................... NR/A- 400,000 377,500
-----------
NEVADA -- 2.5%
Nevada State Series B, 4.38%, 08/01/03... Aa/AA 400,000 363,500
-----------
The accompanying notes are an integral part of the financial statements.
8
NEW YORK -- 1.8%
New York State Dormitory Authority Rev.
Series 1994 A (Columbia University),
4.70%, 07/01/07........................ Aaa/AA+ 300,000 271,875
-----------
PENNSYLVANIA -- 2.5%
Pennsylvania Higher Education Fac.
Authority (Philadelphia College of
Osteopathic Medicine) Revenue Series
1993, Connie Lee, 5.25%, 12/01/07...... NR/AAA 150,000 141,563
Philadelphia, PA Redevolpment Authority
Home Improvement Loan Revenue, FHA,
7.38%, 06/01/03........................ A/A 40,000 40,550
State Public School Building Authority,
PA Gtd. College Rev. (Reading Area
Community College) Series 1993 B,
4.80%, 02/15/05........................ Aaa/AAA 205,000 191,675
-----------
373,788
-----------
SOUTH DAKOTA -- 1.7%
South Dakota Housing Development
Authority Homeownership Mortgage
Revenue Bonds Series 1993C, 4.95%,
05/01/02............................... Aa/AA+ 250,000 243,750
-----------
TEXAS -- 6.3%
Austin, TX, 4.75%, 09/01/09.............. Aa/AA 315,000 279,956
Irving, TX Independent School District,
PSF Gtd., 4.95%, 06/01/04.............. Aaa/AAA 350,000 335,563
Tarrant County, TX Water Control
District No. 1, Revenue FGIC, 4.75%,
03/01/06............................... Aaa/AAA 350,000 321,562
-----------
937,081
-----------
UTAH -- 3.4%
Salt Lake City, UT Municipal Building
Authority Lease Revenue Series 94A,
5.65%, 10/01/03........................ Aaa/AAA 500,000 506,875
-----------
VIRGINIA -- 6.7%
Virginia Education Loan Authority
Student Loan Program Rev. Ref. Senior
Series 1994-B, 5.15%, 03/01/04......... Aaa/NR 500,000 479,375
Virginia Housing Development Authority
Rev. Series 92C Subseries C-8 Special
Redemption, 5.80%, 07/01/04............ Aa/AA+ 500,000 505,625
-----------
985,000
-----------
The accompanying notes are an integral part of the financial statements.
9
WASHINGTON -- 3.1%
Washington State Public Power Supply
System, Rfg. Rev. (Nuclear Project #3)
Series 1993-C, 5.10%, 07/01/07......... Aa/AA 500,000 453,750
-----------
WEST VIRGINIA -- 2.0%
Oak Hill, WV Industrial Development Rfg.
Revenue (Fayette Plaza Project) Series
1991-A, 4.95%, 10/01/09................ NR/AA- 300,000 297,000
-----------
TOTAL MUNICIPAL BONDS (COST $13,619,129)..................... 13,241,806
-----------
TAX-EXEMPT MUTUAL FUNDS -- 9.0%
PNC Municipal Cash Tax-Exempt Money
Market Fund ........................... NR/NR 740,000 740,000
PNC Municipal Fund for Temporary
Investment............................. NR/NR 591,692 591,692
-----------
TOTAL TAX-EXEMPT MUTUAL FUNDS (COST $1,331,692).............. 1,331,692
-----------
TOTAL INVESTMENTS (COST $14,950,821)* -- 98.7%..................... 14,573,498
OTHER ASSETS AND LIABILITIES -- NET 1.3%........................... 191,623
-----------
NET ASSETS -- 100.0%............................................... $14,765,121
===========
* Cost for federal income tax purposes. At April 30, 1995, net unrealized
depreciation was $377,323. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $60,052 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market
value of $437,375.
The accompanying notes are an integral part of the financial statements.
10
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1995 (Unaudited)
DIVERSIFIED MUNICIPAL
INCOME INCOME
PORTFOLIO PORTFOLIO
----------- -----------
ASSETS:
Investments in securities, at market (identified
cost $32,427,075 and $14,950,821,
respectively) (Note 2)......................... $32,864,233 $14,573,498
Receivable for Fund shares sold..................... 99,336 --
Interest receivable................................. 557,836 201,468
Deferred organization costs (Note 2)................ 17,576 61,263
Other assets........................................ 1,156 541
----------- -----------
Total assets................................... 33,540,137 14,836,770
----------- -----------
LIABILITIES:
Dividends payable................................... 184,506 54,395
Payable for Fund shares redeemed.................... 72,461 --
Accrued expenses (Note 4)........................... 19,192 17,254
----------- -----------
Total liabilities.............................. 276,159 71,649
----------- -----------
NET ASSETS, at market value......................... $33,263,978 $14,765,121
=========== ===========
NET ASSETS CONSIST OF:
Shares of beneficial interest....................... $ 26,241 $ 12,219
Additional paid-in capital.......................... 33,580,252 15,185,966
Net unrealized appreciation (depreciation) of
investments.................................... 437,158 (377,323)
Accumulated net realized loss....................... (779,673) (55,741)
----------- -----------
NET ASSETS, for 2,624,076 and 1,221,948 shares
outstanding, respectively...................... $33,263,978 $14,765,121
=========== ===========
NET ASSET VALUE and redemption price per share
($33,263,978 / 2,624,076 and $14,765,121 /
1,221,948 outstanding shares of beneficial
interest, $0.01 par value, respectively)....... $12.68 $12.08
====== ======
Maximum offering price per share (100/96.5 of
$12.68 and 100/96.5 of $12.08, respectively)... $13.14 $12.52
====== ======
The accompanying notes are an integral part of the financial statements.
11
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- - --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six-Month Period Ended April 30, 1995 (Unaudited)
DIVERSIFIED MUNICIPAL
INCOME INCOME
PORTFOLIO PORTFOLIO
----------- -----------
INTEREST INCOME..................................... $ 1,167,816 $ 385,236
----------- -----------
EXPENSES:
Advisory fee (Note 4).......................... 79,592 35,535
Administration fee (Note 4).................... 12,735 5,686
Accounting fee (Note 4)........................ 24,795 24,795
Distribution expenses (Note 4)................. 14,082 11,550
Trustees' fees and expenses (Note 4)........... 2,319 2,289
Amortization of organizational expenses (Note 2) 9,492 8,903
Registration fees.............................. 8,687 8,386
Reports to shareholders........................ 3,907 1,439
Legal.......................................... 4,847 2,785
Audit.......................................... 12,359 5,721
Other.......................................... 3,368 2,707
----------- -----------
Total expenses before fee waiver............... 176,183 109,796
Advisory fee waived (Note 4)................... (72,713) (35,535)
Administration fee waived (Note 4)............. -- (5,686)
Accounting fee waived (Note 4)................. -- (15,272)
----------- -----------
Total expenses, net............................ 103,470 53,303
----------- -----------
Net investment income.......................... 1,064,346 331,933
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions... (693,956) (50,198)
Net unrealized appreciation of investments
during the period......................... 1,355,062 581,804
----------- -----------
Net gain on investments....................... 661,106 531,606
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,725,452 $ 863,539
=========== ===========
The accompanying notes are an integral part of the financial statements.
12
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- - --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DIVERSIFIED MUNICIPAL
INCOME INCOME
PORTFOLIO PORTFOLIO
----------- -----------
For the Six-Month Period Ended April 30, 1995
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.......................... $ 1,064,346 $ 331,933
Net realized loss on investment transactions... (693,956) (50,198)
Net unrealized appreciation of investments
during the period......................... 1,355,062 581,804
----------- -----------
Net increase in net assets resulting from operations 1,725,452 863,539
----------- -----------
Distributions to shareholders from:
Net investment income ($0.41 and $0.27 per
share, respectively)...................... (1,064,346) (331,933)
----------- -----------
Increase (decrease) in net assets from Fund share
transactions (Note 5).......................... 881,632 (49,897)
----------- -----------
Total increase in net assets................... 1,542,738 481,709
NET ASSETS:
Beginning of period............................ 31,721,240 14,283,412
----------- -----------
End of period.................................. $33,263,978 $14,765,121
=========== ===========
For the Fiscal Year Ended October 31, 1994
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.......................... $ 2,111,389 $ 526,072
Net realized loss on investment transactions (85,509) (5,543)
Excess of book value over market value of
securities distributed upon redemption
of shares................................. (117,315) --
Net unrealized depreciation of investments
during the year........................... (2,833,319) (959,127)
----------- -----------
Net decrease in net assets resulting from
operations................................ (924,754) (438,598)
----------- -----------
Distributions to shareholders from:
Net investment income ($0.71 and $0.49 per
share, respectively)...................... (2,111,389) (526,072)
The accompanying notes are an integral part of the financial statements.
13
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- - --------------------------------------------------------------------------------
Net capital gains ($0.04 and $0.00 per share,
respectively)............................. (111,135) --
----------- -----------
Total distributions to shareholders................. (2,222,524) (526,072)
----------- -----------
Increase (decrease) in net assets from Fund share
transactions (Note 5).......................... (6,102,223) 15,248,069
----------- -----------
Total increase (decrease) in net assets........ (9,249,501) 14,283,399
NET ASSETS:
Beginning of year.............................. 40,970,741 13
----------- -----------
End of year.................................... $31,721,240 $14,283,412
=========== ===========
The accompanying notes are an integral part of the financial statements.
14
THE RODNEY SQUARE STRATEGIC FIXED-INCOME 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.
FOR THE PERIOD
FOR THE SIX-MONTH APRIL 2, 1991
PERIOD ENDED FOR THE FISCAL (COMMENCEMENT
APRIL 30, YEARS ENDED OCTOBER 31, OF OPERATIONS)
1995 -------------------------- TO OCTOBER 31,
(UNAUDITED) 1994 1993 1992 1991
----------- ---- ---- ---- ----
DIVERSIFIED INCOME PORTFOLIO
NET ASSET VALUE - BEGINNING
OF PERIOD............. $12.42 $13.48 $13.20 $12.86 $12.50
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income... 0.41 0.71 0.76 0.83 0.48
Net realized and
unrealized gain (loss)
on investments........ 0.26 (1.02) 0.39 0.37 0.36
------ ------ ------ ------ ------
Total from investment
operations........ 0.67 (0.31) 1.15 1.20 0.84
------ ------ ------ ------ ------
DISTRIBUTIONS:
From net investment
income................ (0.41) (0.71) (0.76) (0.83) (0.48)
From net realized gain
on investments........ -- (0.04) (0.11) (0.03) --
------ ------ ------ ------ ------
Total distributions. (0.41) (0.75) (0.87) (0.86) (0.48)
------ ------ ------ ------ ------
NET ASSET VALUE - END OF
PERIOD.................. $12.68 $12.42 $13.48 $13.20 $12.86
====== ====== ====== ====== ======
TOTAL RETURN 1 ........... 5.51% (2.33)% 9.00% 9.58% 6.89%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses 2 ............. 0.65%* 0.65% 0.65% 0.65% 0.89%*
Net investment income... 6.69%* 5.53% 5.65% 6.33% 6.64%*
Portfolio turnover rate...146.58%* 43.77% 24.22% 27.37% 78.45%*
Net assets at end of
period (000 omitted).... 33,264 $31,721 $40,971 $30,152 $24,171
15
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- - --------------------------------------------------------------------------------
FOR THE PERIOD
FOR THE SIX-MONTH APRIL 2, 1991
PERIOD ENDED FOR THE FISCAL (COMMENCEMENT
APRIL 30, YEARS ENDED OCTOBER 31, OF OPERATIONS)
1995 -------------------------- TO OCTOBER 31,
(UNAUDITED) 1994 1993 1992 1991
----------- ---- ---- ---- ----
DIVERSIFIED INCOME PORTFOLIO -- CONTINUED
SENIOR SECURITIES:
Amount of reverse
repurchase agreements
outstanding at end of
period (in thousands)... $ 0 $ 0 $ 0 $ 0 $ 0
Average daily amount of
reverse repurchase
agreements outstanding
during the period (in
thousands).............. $ 0 $ 0 $ 0 $ 0 $162
Average daily number of
shares outstanding during
the period (in thousands) $2,578 $2,960 $2,660 $2,109 $1,279
Average daily amount of
reverse repurchase
agreements per share
during the period....... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.13
16
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- - --------------------------------------------------------------------------------
FOR THE SIX-MONTH
PERIOD ENDED FOR THE FISCAL
APRIL 30, 1995 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1994
--------------- ----------------
MUNICIPAL INCOME PORTFOLIO
NET ASSET VALUE - BEGINNING OF PERIOD.... $11.64 $12.50
------ ------
INVESTMENT OPERATIONS:
Net investment income.................. 0.27 0.49
Net realized and unrealized gain (loss)
on investments....................... 0.44 (0.86)
------ ------
Total from investment operations... 0.71 (0.37)
------ ------
DISTRIBUTIONS:
From net investment income............. (0.27) (0.49)
------ ------
NET ASSET VALUE - END OF PERIOD.......... $12.08 $11.64
====== ======
TOTAL RETURN 1 .......................... 6.20% (3.05)%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses 3 ............................ 0.75%* 0.75%
Net investment income.................. 4.67%* 4.13%
Portfolio turnover rate.................. 3.55%* 21.95%
Net assets at end of period (000 omitted) $14,765 $14,283
- - --------------------------
1 These results do not include the sales load. If the sales load had been
included, the returns would have been lower. The total returns for both
Portfolios for the six-month period ended April 30, 1995 and the
Diversified Income Portfolio for the fiscal period ended October 31, 1991
have not been annualized.
2 Wilmington Trust Company ("WTC") reimbursed a portion of the Portfolio's
expenses, exclusive of advisory fees, amounting to $0.032 per share for the
fiscal period ended October 31, 1991. WTC waived a portion of its fees
amounting to $0.028, $0.051 and $0.056 per share for the six-month period
ended April 30, 1995 and for the fiscal years ended October 31, 1994 and
October 31, 1993, respectively. WTC and Rodney Square Management
Corporation ("RSMC") waived a portion of their fees amounting to $0.078 and
$0.036 per share for the fiscal year ended October 31, 1992 and for the
fiscal period ended October 31, 1991, respectively. If these expenses,
including the advisory and accounting fees waived, had been incurred by the
17
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- - --------------------------------------------------------------------------------
Portfolio, the annualized ratio of expenses to average daily net assets for
the six-month period ended April 30, 1995, for the fiscal years ended
October 31, 1994, 1993 and 1992, and for the fiscal period ended October
31, 1991, would have been 1.11%, 1.05%, 1.06%, 1.24% and 1.91%,
respectively.
3 WTC waived its entire advisory fee for the six-month period ended April 30,
1995 and for the fiscal year ended October 31, 1994, amounting to $0.029
and $0.059 per share, respectively. In addition, RSMC waived a portion of
its fees for administration and accounting services amounting to $0.005 and
$0.013 per share, respectively for the six-month period ended April 30,
1995 and $0.010 and $0.037 per share, respectively for the fiscal year
ended October 31, 1994. If these expenses had been incurred by the
Portfolio, the annualized ratio of expenses to average daily net assets for
the six-month period ended April 30, 1995 and for the fiscal year ended
October 31, 1994, would have been 1.54% and 1.62%, respectively.
* Annualized
18
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- - --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND. The Rodney Square Strategic Fixed-Income Fund
(the "Fund") is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end management investment
company established as a Massachusetts business trust. The Declaration of
Trust, dated May 7, 1986, as last amended and restated on February 15,
1993, permits the Trustees to establish separate series (or "Portfolios"),
each of which may issue separate classes of shares. The authorized shares
of beneficial interest of the Fund are currently divided into two
Portfolios, the Diversified Income Portfolio and the Municipal Income
Portfolio (each, a "Portfolio" and collectively, the "Portfolios"). Each
Portfolio currently consists of a single class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of the Fund:
SECURITY VALUATION. Each Portfolio's securities, except short-term
investments with remaining maturities of 60 days or less, are valued at
their market value as determined by their most recent bid prices in the
principal market in which these securities are normally traded, or when
stock exchange valuations are used, at the last quoted sale price on the
date of valuation. Short-term investments with remaining maturities of 60
days or less are valued at amortized cost, which approximates market value,
unless the Fund'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.
FEDERAL INCOME TAXES. Each Portfolio is treated as a separate entity and
intends to qualify as a "regulated investment company" under Subchapter M
of the Internal Revenue Code of 1986 and to distribute all of its taxable
and tax-exempt income to its shareholders. Therefore, no federal income
tax provision is required.
INTEREST INCOME AND DIVIDENDS TO SHAREHOLDERS. Interest income is accrued
as earned. Dividends from net investment income consist of accrued
interest and earned discount (including both original issue and market
discount) less amortization of premium and accrued expenses. Dividends to
shareholders of each Portfolio are declared daily from net investment
income and paid to shareholders monthly. Distributions of net capital
gains realized by each Portfolio will be made annually in December.
DEFERRED ORGANIZATION COSTS. Costs incurred by the Portfolios in
connection with the initial registration and public offering of shares have
been deferred and are being amortized on a straight-line basis over a five-
year period beginning on the date that each Portfolio commenced operations.
OTHER. Investment security transactions are accounted for on a trade date
basis. Each Portfolio uses the specific identification method for
determining realized gain and loss on investments for both financial and
federal income tax reporting purposes.
19
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- - --------------------------------------------------------------------------------
3. INVESTMENT SECURITIES. During the six-month period ended April 30, 1995,
purchases and sales of investment securities (excluding short-term
investments) aggregated as follows:
DIVERSIFIED MUNICIPAL
INCOME INCOME
----------- ---------
Purchases $23,232,065 $ 240,000
Sales 22,104,469 1,142,455
With respect to the Diversified Income Portfolio, for the fiscal year ended
October 31, 1994, portfolio securities with a market value of $5,548,278
(cost basis $5,665,593) were distributed in payment of a shareholder
redemption. The unrealized depreciation of such securities was
reclassified to paid-in capital.
4. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES. The Fund, on behalf
of each Portfolio, employs Wilmington Trust Company ("WTC"), a wholly owned
subsidiary of Wilmington Trust Corporation, a publicly held bank holding
company, to furnish investment advisory and other services to the Fund.
Under WTC's Advisory Contract with the Fund, WTC acts as Investment Adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the Fund's Portfolios in accordance with each Portfolio's
investment objective, policies and limitations. For its services under the
Advisory Contract, the Fund pays WTC a monthly fee at the annual rate of
0.50% of the average daily net assets of each Portfolio of the Fund,
excluding those assets invested in any money market mutual fund. WTC has
agreed to waive its advisory fee or reimburse each Portfolio monthly to the
extent that operating expenses of the Portfolio (excluding taxes,
extraordinary expenses, brokerage commissions and interest) exceed an
annual rate of 0.75% of the Portfolio's average daily net assets through
February 1996. For the six-month period ended April 30, 1995, with respect
to the Diversified Income Portfolio, WTC further voluntarily agreed to
waive its fee or reimburse the Portfolio monthly to the extent that
operating expenses of the Portfolio (excluding taxes, extraordinary
expenses, brokerage commissions, and interest) exceed an annual rate of
0.65% of average daily net assets. These undertakings may be amended or
rescinded at any time in the future.
The following table summarizes the advisory fees for the six-month period
ended April 30, 1995:
GROSS ADVISORY ADVISORY
FEE FEE WAIVER
-------------- ----------
Diversified Income Portfolio $79,592 $72,713
Municipal Income Portfolio 35,535 35,535
WTC also serves as Custodian of the assets of the Fund and does not receive
any separate fees from the Fund for the performance of this service. Each
Portfolio of the Fund reimburses WTC for its related out-of-pocket
20
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- - --------------------------------------------------------------------------------
expenses, if any, incurred in connection with the performance of this
service.
Rodney Square Management Corporation ("RSMC"), a wholly owned subsidiary of
WTC, serves as Administrator, Transfer Agent and Dividend Paying Agent to
the Fund under separate Administration and Transfer Agent Agreements with
the Fund, each dated December 31, 1992. As Administrator, RSMC is
responsible for services such as financial reporting, compliance monitoring
and corporate management. For the services provided, RSMC receives a
monthly administration fee from the Fund at an annual rate of 0.08% of each
Portfolio's average daily net assets. The administration fee paid to RSMC
by the Diversified Income Portfolio for the six-month period ended April
30, 1995 amounted to $12,735. RSMC waived its administration fee for the
Municipal Income Portfolio for the six-month period ended April 30, 1995
amounting to $5,686.
The Fund does not pay RSMC any separate fees for its services as Transfer
Agent and Dividend Paying Agent for the Portfolios, as WTC assumes the cost
of providing these services to the Portfolios. Each Portfolio reimburses
RSMC for its related out-of-pocket expenses, if any, incurred in connection
with the performance of these services.
Pursuant to a Distribution Agreement with the Fund dated December 31, 1992,
Rodney Square Distributors, Inc. ("RSD"), a wholly owned subsidiary of WTC,
manages the Fund's distribution efforts and provides assistance and
expertise in developing marketing plans and materials. The Fund's Board of
Trustees has adopted distribution plans (the "12b-1 Plan") pursuant to Rule
12b-1 under the 1940 Act to allow the Fund to reimburse RSD for certain
distribution activities and to allow WTC to incur certain expenses, the
payment of which may be considered to constitute indirect payment by the
Fund of distribution expenses. The Trustees have authorized a payment of
up to 0.25% of each Portfolio's average daily net assets annually to
reimburse RSD for such expenses. For the six-month period ended April 30,
1995, such expenses amounted to $14,082 for the Diversified Income
Portfolio and $11,550 for the Municipal Income Portfolio.
RSMC determines the net asset value per share of each Portfolio and
provides accounting services to the Fund pursuant to an Accounting Services
Agreement with the Fund on behalf of each Portfolio. For its services,
RSMC receives an annual fee of $50,000 per Portfolio, plus an amount equal
to 0.02% of that portion of each Portfolio's average daily net assets in
excess of $100 million. For the six-month period ended April 30, 1995,
RSMC's fees for accounting services amounted to $24,795 per Portfolio.
RSMC waived $15,272 of the accounting services fee with respect to the
Municipal Income Portfolio.
The salaries and fees of all officers of the Fund, the Trustees who are
"interested persons" of the Fund, WTC, RSMC, RSD, or their affiliates, and
all personnel of the Fund, WTC, RSMC or RSD performing services related to
research, statistical and investment activities are paid by WTC, RSMC, RSD
or their affiliates. The fees and expenses of the "non-interested"
21
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- - ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- - --------------------------------------------------------------------------------
Trustees amounted to $2,319 for the Diversified Income Portfolio and $2,289
for the Municipal Income Portfolio for the six-month period ended April 30,
1995.
5. FUND SHARES. At April 30, 1995, there were an unlimited number of shares
of beneficial interest of $0.01 par value authorized. The following table
summarizes the activity in shares of each Portfolio:
DIVERSIFIED INCOME PORTFOLIO
FOR THE SIX-MONTH PERIOD
ENDED APRIL 30, 1995 FOR THE FISCAL YEAR
(UNAUDITED) ENDED OCTOBER 31,1994
-------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares sold.............. 170,787 $2,140,275 478,409 $6,218,321
Shares issued to share-
holders in reinvest-
ment of distributions 31,005 385,778 53,774 696,871
Shares redeemed.......... (131,702) (1,644,421)(1,017,549) (13,017,415)
------- ---------- ---------- ----------
Net increase (decrease).. 70,090 $ 881,632 (485,366) $(6,102,223)
========== ===========
Shares outstanding:
Beginning of period. 2,553,986 3,039,352
--------- ----------
End of period....... 2,624,076 2,553,986
========= =========
MUNICIPAL INCOME PORTFOLIO
FOR THE SIX-MONTH PERIOD
ENDED APRIL 30, 1995 FOR THE FISCAL YEAR
(UNAUDITED) ENDED OCTOBER 31,1994
-------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares sold.............. 55,487 655,867 1,411,286 $17,449,149
Shares issued to share-
holders in reinvest-
ment of distributions 23,444 275,590 31,909 385,335
Shares redeemed.......... (83,853) (981,354) (216,326) (2,586,415)
------- ---------- --------- ----------
Net increase (decrease).. (4,922) $ (49,897) 1,226,869 $15,248,069
========== ===========
Shares outstanding:
Beginning of period. 1,226,870 1
--------- ---------
End of period....... 1,221,948 1,226,870
========= =========
22
TRUSTEES
Eric Brucker
Fred L. Buckner
Martin L. Klopping
John J. Quindlen
Peter J. Succoso the RODNEY SQUARE
--------------------
STRATEGIC
OFFICERS
Peter J. Succoso, PRESIDENT FIXED-INCOME
Joseph M. Fahey, Jr., VICE PRESIDENT
Robert C. Hancock, VICE PRESIDENT & TREASURER FUND
Marilyn Talman, Esq., SECRETARY
Leah M. Anderson, ASSISTANT SECRETARY
Diane D. Marky, ASSISTANT SECRETARY
Connie L. Meyers, ASSISTANT SECRETARY
John J. Kelley, ASSISTANT TREASURER
----------------------------------------
ADMINISTRATOR AND TRANSFER AGENT
Rodney Square Management Corporation [Graphic] Ceasar
----------------------------------------- Rodney upon his
galloping horse
INVESTMENT ADVISER AND CUSTODIAN facing right,
Wilmington Trust Company reverse image on
---------------------------- dark background
DISTRIBUTOR
Rodney Square Distributors, Inc.
------------------------------------
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
------------------------------
INDEPENDENT AUDITORS
Ernst & Young LLP SEMIANNUAL REPORT
---------------------
APRIL 30, 1995
THIS REPORT IS SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE
FUND. THE REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN
THE FUND UNLESS PRECEDED OR ACCOMPANIED
BY AN EFFECTIVE PROSPECTUS.
