THE RODNEY SQUARE
STRATEGIC FIXED-INCOME
FUND
The Rodney Square Strategic Fixed-Income Fund (the
"Fund") consists of two separate portfolios ("Portfolios"),
The Rodney Square Diversified Income Portfolio (the
"Diversified Income Portfolio") and The Rodney Square
Municipal Income Portfolio (the "Municipal Income
Portfolio"). The Diversified Income Portfolio seeks high
total return, consistent with high current income, by
investing principally in various types of investment grade
fixed-income securities. The Municipal Income Portfolio
seeks a high level of income exempt from federal income tax
consistent with the preservation of capital.
PROSPECTUS
MARCH 1, 1997
This Prospectus sets forth information about the Fund
that you should know before investing. Please read and
retain this document for future reference. A Statement of
Additional Information (dated March 1, 1997) containing
additional information about the Fund has been filed with
the Securities and Exchange Commission and, as amended or
supplemented from time to time, is incorporated by reference
herein. A copy of the Statement of Additional Information
including the Fund's most recent Annual Report to
Shareholders may be obtained, without charge, from certain
institutions such as banks or broker-dealers that have
entered into servicing agreements ("Service Organizations")
with Rodney Square Distributors, Inc., by calling the number
below, or by writing to Rodney Square Distributors, Inc. at
the address noted on the back cover of this Prospectus.
Rodney Square Distributors, Inc. is a wholly owned
subsidiary of Wilmington Trust Company, a bank chartered in
the State of Delaware.
FOR FURTHER INFORMATION OR ASSISTANCE IN OPENING
AN ACCOUNT, PLEASE CALL:
- ------------------------------------------------------------
NATIONWIDE (800) 336-9970
- ------------------------------------------------------------
SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY, WILMINGTON TRUST COMPANY, NOR ARE THE
SHARES INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
EXPENSE TABLE
DIVERSIFIED MUNICIPAL
INCOME INCOME
PORTFOLIO PORTFOLIO
--------- ---------
SHAREHOLDER TRANSACTION COSTS*
Maximum sales load on purchases of shares
(as a percentage of public offering price) 3.50% 3.50%
----- -----
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fee (after waiver)** 0.16% 0.00%
12b-1 Fee*** 0.09% 0.12%
Other Expenses:**
Administration and Accounting Services
Expenses (after waiver) 0.23% 0.24%
Other Operating Expenses 0.27% 0.39%
----- -----
Total Other Expenses 0.50% 0.63%
Total Operating Expenses (after waiver) 0.75% 0.75%
===== =====
EXAMPLE****
You would pay the following expenses on a $1,000 investment
in each Portfolio assuming (1) 5% annual return and (2)
redemption at the end of each time period:
One year $42 $42
Three years 58 58
Five years 75 75
Ten years 125 125
* Wilmington Trust Company ("WTC"), the Fund's Investment
Adviser, and Service Organizations may charge their
clients a fee for providing administrative or other
services in connection with investments in Fund shares.
(See "Purchase of Shares" for additional information
concerning volume reductions, sales load waivers and
reduced sales load purchase plans.)
** WTC waived a portion of its advisory fee with respect
to the Diversified Income Portfolio during the fiscal
year ended October 31, 1996. Without such waiver, the
Advisory Fee and Total Operating Expenses would have
been 0.50% and 1.09%, respectively, of the Portfolio's
average daily net assets. WTC has undertaken to waive
all or a portion of its advisory fee or reimburse the
Diversified Income Portfolio monthly to the extent that
the Portfolio's operating expenses (excluding taxes,
extraordinary expenses, brokerage commissions and
interest) exceed an annual rate of 0.75% through
February, 1998. (See "Management of the Fund " for
additional information.)
WTC waived all of its advisory fee and Rodney Square
Management Corporation ("RSMC") waived a portion of its
administration and accounting services fee with respect
to the Municipal Income Portfolio during the fiscal
year ended October 31, 1996. Without such waivers, the
Advisory Fee, Administration and Accounting Services
Expenses, Total Other Expenses, and Total Operating
Expenses would have been 0.48%, 0.38%, 0.77%, and
1.37%, respectively, of the Portfolio's average daily
net assets. WTC has undertaken to waive all or a
portion of its advisory fee and RSMC has agreed to
waive a portion of its administration and accounting
services fees with respect to the Municipal Income
Portfolio, to the extent the Portfolio's operating
expenses (excluding taxes, extraordinary expenses,
brokerage commissions and interest) exceed an annual
rate of 0.75% through February, 1998. (See "Management
of the Fund" for additional information.)
*** Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge
permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
**** The assumption in the Example of a 5% annual return is
required by regulations of the Securities and Exchange
Commission applicable to all mutual funds; the assumed
5% annual return is not a prediction of, and does not
represent, either Portfolio's projected or actual
performance. In the Example, it is assumed that the
investor was subject to the maximum sales load (3.50%)
on his or her $1,000 investment.
The purpose of the preceding table is solely to aid
shareholders and prospective investors in understanding the
various expenses that investors in the Portfolios will bear
directly or indirectly.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES
INCURRED AND RETURNS MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables include selected per share data and other performance
information for each Portfolio throughout each period derived from the audited
financial statements of the Rodney Square Strategic Fixed-Income Fund. They
should be read in conjunction with the Fund's financial statements and notes
thereto appearing in the Fund's Annual Report to Shareholders for the fiscal
year ended October 31, 1996, which is included, together with the auditor's
unqualified report, as part of the Fund's Statement of Additional Information.
<TABLE>
<CAPTION>
APRIL 2, 1991
(COMMENCEMENT OF
OPERATIONS) TO
FOR THE FISCAL YEARS ENDED OCTOBER 31, OCTOBER 31,
1996 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
DIVERSIFIED INCOME PORTFOLIO
NET ASSET VALUE -- BEGINNING OF PERIOD $13.08 $12.42 $13.48 $13.20 $12.86 $12.50
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income...................... 0.78 0.83 0.71 0.76 0.83 0.48
Net realized and unrealized gain (loss) on
investments................................ (0.13) 0.66 (1.02) 0.39 0.37 0.36
------ ------ ------ ------ ------ ------
Total from investment operations.......... 0.65 1.49 (0.31) 1.15 1.20 0.84
------ ------ ------ ------ ------ ------
Distributions:
From net investment income................. (0.78) (0.83) (0.71) (0.76) (0.83) (0.48)
From net realized gain on investments...... -- -- (0.04) (0.11) (0.03) --
------ ------ ------ ------ ------ ------
Total distributions....................... (0.78) (0.83) (0.75) (0.87) (0.86) (0.48)
------ ------ ------ ------ ------ ------
NET ASSET VALUE -- END OF PERIOD........... $12.95 $13.08 $12.42 $13.48 $13.20 $12.86
====== ====== ====== ====== ====== ======
Total Return**............................. 5.18% 12.41% (2.33)% 9.00% 9.58% 6.89%
Ratios (to average net assets)/Supplemental Data:
Expenses +................................. 0.65% 0.65% 0.65% 0.65% 0.65% 0.89%*
Net investment income...................... 6.07% 6.56% 5.53% 5.65% 6.33% 6.64%*
Portfolio turnover rate.................... 85.77% 116.40% 43.77% 24.22% 27.37% 78.45%*
Net assets at end of period (000 omitted).. $31,777 $32,214 $31,721 $40,971 $30,152 $24,171
Senior Securities:
Amount of reverse repurchase agreements out-
standing at end of period (in thousands).. $0 $0 $0 $0 $0 $0
Average daily amount of reverse repurchase
agreements outstanding during the period
(in thousands)............................ $0 $0 $0 $0 $0 $162
Average daily number of shares outstanding
during the period (in thousands).......... 2,545 2,492 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 $0.00 $0.13
</TABLE>
FOR THE FISCAL YEARS ENDED
OCTOBER 31,
1996 1995 1994
------ ------ ------
MUNICIPAL INCOME PORTFOLIO
NET ASSET VALUE -- BEGINNING OF YEAR $12.49 $11.64 $12.50
------ ------ ------
Investment Operations:
Net investment income 0.55 0.54 0.49
Net realized and unrealized gain (loss)
on investments (0.03) 0.85 (0.86)
------ ------ ------
Total from investment operations 0.52 1.39 (0.37)
------ ------ ------
Distributions:
From net investment income (0.55) (0.54) (0.49)
------ ------ ------
NET ASSET VALUE -- END OF YEAR $12.46 $12.49 $11.64
====== ====== ======
TOTAL RETURN** 4.24% 12.23% (3.05)%
Ratios (to average net assets)/Supplemental Data:
Expenses++ 0.75% 0.75% 0.75%
Net investment income 4.41% 4.50% 4.13%
Portfolio turnover rate 15.91% 42.08% 21.95%
Net assets at end of year (000 omitted) $16,619 $16,570 $14,283
[FN]
* Annualized
** These results do not include the sales load. If the sales load had been
included, the returns would have been lower. The total return figure for
the Diversified Income Portfolio for the fiscal period ended October 31,
1991 has not been annualized.
+ Wilmington Trust Company ("WTC") reimbursed a portion of the Portfolio's
expenses, exclusive of advisory fees, for the fiscal period ended October
31, 1991. WTC waived a portion of its advisory fees for the fiscal years
ended October 31, 1996, 1995, 1994, 1993 and 1992, and Rodney Square
Management Corporation ("RSMC") waived a portion of its accounting services
fee for the fiscal year ended October 31, 1992 and for the fiscal period
ended October 31, 1991. If these expenses had been incurred by the
Portfolio, the annualized ratio of expenses to average daily net assets for
the fiscal years ended October 31, 1996, 1995, 1994, 1993, 1992, and for
the fiscal period ended October 31,1991, would have been 1.09%, 1.14%,
1.05%, 1.06%, 1.24% and 1.91%, respectively.
++ WTC waived its entire advisory fee and RSMC waived a portion of its
administration and accounting services fee for the fiscal years ended
October 31, 1996, 1995 and 1994. If these expenses had been incurred by
the Portfolio, the annualized ratio of expenses to average daily net assets
for the fiscal years ended October 31, 1996, 1995 and 1994, would have been
1.37%, 1.45% and 1.62%, respectively.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PORTFOLIOS
The information provided in this section is qualified in its
entirety by reference to the more detailed information elsewhere
in this Prospectus.
WHAT ARE THE PORTFOLIOS' INVESTMENT OBJECTIVES?
The Fund is an open-end, management investment company
consisting of two separate diversified portfolios, the
Diversified Income Portfolio and the Municipal Income
Portfolio (each a "Portfolio" and collectively the
"Portfolios"). The investment objectives of the Portfolios
are as follows:
DIVERSIFIED INCOME PORTFOLIO. This Portfolio seeks high
total return, consistent with high current income, by
investing principally in various types of investment grade
fixed-income securities. (See "Investment Objectives and
Policies -- Diversified Income Portfolio.")
MUNICIPAL INCOME PORTFOLIO. This Portfolio seeks a high
level of income exempt from federal income tax consistent
with the preservation of capital. (See "Investment
Objectives and Policies -- Municipal Income Portfolio.")
ARE THERE SPECIAL CONSIDERATIONS OR RISKS INVOLVED IN INVESTING
IN THE PORTFOLIOS?
The value of each Portfolio's holdings of fixed-income
securities generally varies inversely with the movement of
market interest rates. Generally, if interest rates rise,
prices of fixed-income securities fall; if interest rates
fall, prices of fixed-income securities rise. In addition,
the value of each Portfolio's holdings varies depending on
the average duration and the credit quality of the holdings
as well as general market factors. Generally, the longer the
average duration of the holdings, the more fluctuations in
value the Portfolio experiences when interest rates rise or
fall.
The Investment Adviser to the Portfolios may use options,
futures contracts and (with respect to the Diversified Income
Portfolio only) forward currency contracts to hedge against
various market risks or to enhance potential gain. The use
of options, futures contracts and forward currency contracts
may entail special risks. (See "Appendix.")
Depending on your tax bracket, your return from the
Municipal Income Portfolio may be substantially higher than
the after-tax return you would earn from comparable taxable
investments. Shareholders pay no federal income tax on tax-
exempt dividends paid by the Municipal Income Portfolio.
However, those dividends may be subject to state and local
income taxes. In addition, a portion of that Portfolio's
dividends may be a tax preference item for purposes of the
federal alternative minimum tax. Capital gain distributions
from the Municipal Income Portfolio are subject to federal
income tax, as well as state and local taxes. (See
"Dividends, Other Distributions and Taxes.")
HOW CAN YOU BENEFIT BY INVESTING IN THE PORTFOLIOS RATHER THAN BY
INVESTING DIRECTLY IN THE FIXED-INCOME SECURITIES HELD BY THOSE
PORTFOLIOS?
Investing in the Portfolios offers two key benefits.
FIRST: Each Portfolio offers a way to keep money invested
in a professionally managed portfolio of securities and at
the same time to maintain daily liquidity. Of course, the
proceeds to you upon redemption may be more or less than the
cost of your shares. There are no minimum periods for
investment and no fees will be charged upon redemption.
SECOND: Investors in each Portfolio need not become
involved with the detailed bookkeeping and operating
procedures normally associated with direct investment in the
fixed-income securities held by the Portfolios.
WHO IS THE INVESTMENT ADVISER?
Wilmington Trust Company ("WTC") is the Investment
Adviser to the Portfolios. (See "Management of the Fund.")
WHO IS THE ADMINISTRATOR, TRANSFER AGENT AND ACCOUNTING AGENT?
Rodney Square Management Corporation ("RSMC"), a wholly
owned subsidiary of WTC, serves as Administrator and Transfer
Agent of the Portfolios and provides accounting services for
the Fund. (See "Management of the Fund.")
WHO IS THE DISTRIBUTOR?
Rodney Square Distributors, Inc. ("RSD"), another wholly
owned subsidiary of WTC, serves as the Fund's Distributor.
(See "Management of the Fund.")
HOW DO YOU PURCHASE SHARES OF THE PORTFOLIOS?
Each Portfolio is designed as an investment vehicle for
individual investors, corporations and other institutional
investors. The Municipal Income Portfolio is not, however,
appropriate for purchase by tax-exempt institutions and
individual retirement accounts and pension or profit-sharing
plans (which already provide tax-deferred income to their
participants). Shares of each Portfolio may be purchased at
their net asset value next determined after a purchase order
is received by RSMC and accepted by RSD, plus a sales load
equal to a maximum of 3.50% of the offering price, subject to
certain waivers and reductions. The minimum initial
investment is $1,000, but additional investments may be made
in any amount.
Shares of each Portfolio are offered on a continuous
basis by RSD. Shares may be purchased directly from RSD, by
clients of WTC through their trust accounts or by clients of
certain institutions such as banks or broker-dealers that
have entered into servicing agreements with RSD through their
accounts with those Service Organizations. Some Service
Organizations may receive payments from RSD which are
reimbursed by the Fund under a Plan of Distribution adopted
with respect to each Portfolio pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "1940 Act"). Shares
may also be purchased directly by wire or by mail. (See
"Purchase of Shares.")
The Fund and RSD reserve the right to reject new account
applications and to close, by redemption, an account without
a certified Social Security or other taxpayer identification
number.
Please call WTC, or your Service Organization or the
number listed below for further information about the
Portfolios or for assistance in opening an account.
NATIONWIDE (800) 336-9970
HOW DO YOU REDEEM SHARES OF THE PORTFOLIOS?
If you purchased shares of a Portfolio through an account
at WTC or a Service Organization, you may redeem all or any
of your shares in accordance with the instructions pertaining
to that account. Other shareholders may redeem any or all of
their shares by telephone or mail. There is no fee charged
upon redemption. (See "Redemption of Shares.")
HOW ARE DIVIDENDS PAID?
Income dividends for each Portfolio are declared daily
and distributed monthly and net realized capital gains, if
any, are distributed annually, after the close of the Fund's
fiscal year (October 31st). Shareholders may elect to
receive dividends and/or other distributions in cash by
checking the distribution option on the Application & New
Account Registration form at the end of this Prospectus
("Application"). (See "Dividends, Other Distributions and
Taxes.")
ARE EXCHANGE PRIVILEGES AVAILABLE?
You may exchange all or a portion of your Portfolio
shares for shares of the other Portfolio or for any of the
other funds in the Rodney Square complex, subject to certain
conditions. (See "Exchange of Shares.")
INVESTMENT OBJECTIVES AND POLICIES
DIVERSIFIED INCOME PORTFOLIO
The Diversified Income Portfolio seeks high total return,
consistent with high current income, by investing principally in
various types of investment grade fixed-income securities.
WTC expects to maintain a short to intermediate average
duration for the Diversified Income Portfolio. Duration measures
the impact of a change in interest rates on the value of the
fixed-income securities held by the Portfolio, taking into
account any possible calls or early redemptions. Under normal
market conditions, the average dollar weighted duration of
securities held by the Portfolio will fall within a range of 2 1/2
to 4 years.
Under normal market conditions, the Diversified Income
Portfolio invests at least 65% of its total assets in fixed-
income securities. The composition of the Portfolio's holdings
varies depending upon WTC's analysis of the fixed-income markets
including, but not limited to, analysis of the most attractive
segments of the yield curve, the relative value of different
sectors of the fixed-income markets and expected trends in those
markets. By maintaining a short to intermediate average
duration, WTC seeks to protect the Portfolio's principal value by
reducing fluctuations in value relative to those that may be
experienced by income funds with longer average durations,
although that strategy may reduce the level of income attained by
the Portfolio. Of course, there is no guarantee that principal
value can be protected during periods of extreme interest rate
volatility. (See "Both Portfolios -- Special Considerations or
Risks.")
Securities purchased by the Diversified Income Portfolio may
be purchased on the basis of their yield or potential capital
appreciation or both. Because WTC seeks to maintain a short to
intermediate average duration, yield usually is the more
significant component of the Portfolio's total return.
The Diversified Income Portfolio invests only in investment
grade securities which are rated, at the time of purchase, in the
top four categories by a nationally recognized statistical rating
organization such as Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's, a division of the McGraw Hill Companies,
Inc. ("S&P ") or, if not rated, are determined by WTC to be of
comparable quality. (See "Both Portfolios -- Special
Considerations or Risks" and the Statement of Additional
Information for further information regarding ratings and the
characteristics of securities rated in the top four rating
categories.)
The Portfolio may invest in: bank obligations; corporate
bonds, notes and commercial paper; convertible securities;
foreign government and private debt obligations; guaranteed
investment contracts; mortgage-backed securities; municipal
securities; participation interests; asset-backed securities;
preferred stock; supranational agency debt obligations; and
obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities ("U.S. Government obligations").
Short-term debt obligations in which the Portfolio may invest
include certificates of deposit, time deposits, bankers'
acceptances, commercial paper rated, at the time of purchase, in
the highest category by a nationally recognized statistical
rating organization, such as Moody's or S&P or, if not rated,
determined by WTC to be of comparable quality and U.S. Government
obligations. The Portfolio may also engage in the following
investment strategies: entering into repurchase agreements fully
collateralized by U.S. Government obligations and reverse
repurchase agreements; purchasing and writing or selling options,
futures contracts, options on futures contracts or forward
currency contracts; short selling; and lending portfolio
securities. (See "Appendix.")
When in WTC's judgment, economic or market conditions make
pursuing the Diversified Income Portfolio's basic investment
strategy inconsistent with the best interests of its
shareholders, WTC may temporarily use alternative strategies. In
implementing these strategies, the Portfolio may invest in longer
term fixed-income securities or short-term debt obligations such
that the Portfolio's overall average duration falls within a
range of 0 to 6 years.
MUNICIPAL INCOME PORTFOLIO
The Municipal Income Portfolio seeks a high level of income
exempt from federal income tax consistent with the preservation
of capital. As a fundamental policy, under normal market
conditions, the Municipal Income Portfolio seeks to achieve this
objective by investing at least 80% of its net assets in a
diversified portfolio of municipal securities providing interest
income that is exempt, in the opinion of counsel for the issuer,
from federal income tax.
WTC expects to maintain an intermediate average duration for
the Municipal Income Portfolio. Duration measures the impact of
a change in interest rates on the value of the fixed-income
securities held by the Portfolio, taking into account any
possible calls or early redemptions. Under normal market
conditions, the average dollar weighted duration of securities
held by the Portfolio will fall within a range of 4 to 8 years.
Under normal market conditions, the Municipal Income
Portfolio invests at least 65% of its total assets in fixed-
income securities. The composition of the Portfolio's holdings
varies depending upon WTC's analysis of the municipal securities
market including, but not limited to, analysis of the most
attractive segments of the yield curve, the relative value of
different market sectors and supply versus demand pressures. By
maintaining an intermediate average duration and maturity, WTC
seeks to protect the Portfolio's principal value by reducing the
fluctuations in value relative to those that may be experienced
by municipal funds with longer average durations and maturities,
although that strategy may limit the level of income attained by
the Portfolio as compared to income that may be attained from
securities with longer durations and maturities. (See "Both
Portfolios -- Special Considerations or Risks.")
The Municipal Income Portfolio invests only in investment
grade securities which are rated, at the time of purchase, in the
top four categories by a nationally recognized statistical rating
organization such as Moody's or S&P or, if not rated, are
determined by WTC to be of comparable quality. (See "Both
Portfolios -- Special Considerations or Risks" and the Statement
of Additional Information for further information regarding
ratings and the characteristics of securities rated in the top
four rating categories.)
Additionally, the Portfolio may invest without limit in
municipal securities issued to finance private activities, the
interest on which is a tax preference item for purposes of the
federal alternative minimum tax ("private activity securities").
The Portfolio expects to invest 100% of its net assets in
municipal securities that provide interest income that is exempt
from regular federal income tax; however, up to 20% of its net
assets may be invested in other types of fixed-income securities
that provide federally taxable income, such as U.S. Government
obligations, bank obligations or corporate bonds, under certain
market conditions. The Portfolio may also enter into repurchase
agreements and invest in investment companies that seek to
maintain a stable net asset value (money market funds).
When in WTC's judgment, economic or market conditions make
pursuing the Municipal Income Portfolio's basic investment
strategy inconsistent with the best interests of its
shareholders, WTC may temporarily use alternative defensive
strategies, primarily designed to reduce fluctuations in the
value of the Portfolio's assets. In implementing these defensive
strategies, the Portfolio may invest in short-term municipal
obligations (obligations that have maturities no longer than one
year from the time of purchase), including tax anticipation
notes, bond anticipation notes, revenue anticipation notes and
construction loan notes that are issued to meet the short-term
funding requirements of local, regional and state governments.
If short-term municipal obligations are not available, or appear
overpriced relative to other types of fixed-income securities,
the Portfolio may invest in taxable short-term debt obligations,
including certificates of deposit, time deposits, bankers'
acceptances, commercial paper rated in the highest category by a
nationally recognized statistical rating organization such as
Moody's or S&P or, if not rated, determined by WTC to be of
comparable quality, U.S. Government obligations and repurchase
agreements fully collateralized by U.S. Government obligations.
The Municipal Income Portfolio will not invest more than 25%
of its total assets in any one industry. Governmental issuers of
municipal securities are not considered part of any industry.
However, the 25% limitation does apply to municipal securities
backed by the assets and revenues of non-governmental users, such
as the private operators of educational, hospital or housing
facilities. WTC may determine that the yields available from
concentrating in obligations in a particular market sector or
political subdivision justify the risk that the performance of
the Portfolio may be adversely affected by economic, business,
political and other developments related to that market sector or
political subdivision. Under such market conditions, the
Portfolio may invest more than 25% of its assets in sectors of
the municipal securities market such as health care or housing,
or in securities relating to any one political subdivision, such
as a given state or U.S. territory, and will then be subject to
any special risks attendant on that sector or jurisdiction. At
any given point in time, the Portfolio may have more than 25% of
its assets invested in one of the three general categories of
municipal obligations -- general obligation bonds, revenue or
special obligation bonds and private activity bonds. (See
"Appendix.")
SPECIAL CONSIDERATIONS. Proposed tax legislation in recent
years has included several provisions that may affect the supply
of, and the demand for, tax-exempt municipal securities, as well
as the tax-exempt nature of interest paid on those securities.
If the availability of tax-exempt securities for investment or
the value of the Municipal Income Portfolio's holdings could be
materially affected by such changes in the law, the Trustees
would reevaluate the Portfolio's investment objective and
policies or consider the Portfolio's dissolution.
BOTH PORTFOLIOS
Both Portfolios may invest in securities with fixed, variable
or floating interest rates or in zero coupon securities. These
securities may have various buy-back features that permit the
Portfolios to recover principal by tendering the securities to
the issuer or a third party. The Portfolios may also purchase
participation interests in fixed-income securities or in pools of
fixed-income securities. Certain of the securities purchased by
the Portfolios may be considered illiquid; certain securities may
be purchased on a when-issued or delayed delivery basis. For
further information about the Portfolios' investments and
investment strategies, see the Appendix to this Prospectus and
the Statement of Additional Information.
SPECIAL CONSIDERATIONS OR RISKS. Each Portfolio's net asset
value per share will fluctuate, and an investor's redemption
proceeds may be higher or lower than the cost of the shares when
initially purchased. The value of the Portfolios' investments
may change in response to changes in interest rates and the
relative financial strength and creditworthiness of each issuer.
During periods of falling interest rates, the values of fixed-
income securities generally rise. Conversely, during periods of
rising interest rates, the values of those securities generally
decline.
Each Portfolio invests only in securities that are rated, at
the time of purchase, in the four highest rating categories by a
nationally recognized statistical rating organization such as
Moody's or S&P or, if not rated, are determined by WTC to be of
comparable quality. Ratings represent the rating agency's
opinion regarding the quality of the security and are not a
guarantee of quality. Not even the highest rating constitutes
assurance that the security will not fluctuate in value or that a
Portfolio will receive the anticipated yield on the security.
Moreover, ratings may change after a security is purchased.
Moody's considers securities in the fourth highest rating
category (Baa) to have speculative characteristics. Such
securities tend to have higher yields, but changes in economic
conditions or other circumstances are more likely to lead to a
weakened capacity of the issuer to make principal and interest
payments than is the case for more highly rated securities of
similar maturities. The Portfolio may acquire securities insured
by private insurance companies or supported by letters of credit
furnished by domestic or foreign banks. In those instances, WTC
monitors the financial condition of the parties whose
creditworthiness is relied upon in determining the credit quality
of the securities. A change in the rating of a security, in the
issuer's ability to make payments of interest and principal, in a
credit provider's ability to provide credit support or in the
market's perception of those factors will affect the value of the
security, and WTC will reevaluate the security to determine
whether the Portfolio should continue to hold it under the
changed conditions.
The ability of the Portfolios to buy and sell securities may
be limited at any particular time and with respect to any
particular security. The amount of information about the
financial condition of an issuer of municipal securities may not
be as extensive as information about corporations whose
securities are publicly traded. Generally, the secondary market
for municipal securities is less liquid than that for taxable
fixed-income securities. WTC closely monitors the liquidity of
securities that the Portfolios hold and, in the case of certain
securities such as restricted securities that may be sold only to
institutional investors or unrated municipal lease obligations,
makes liquidity determinations in accordance with guidelines
adopted by the Board of Trustees.
Certain securities held by each Portfolio may permit the
issuer at its option to call or redeem the securities. If an
issuer redeems securities held by a Portfolio during a period of
declining interest rates, the Portfolio may not be able to invest
the proceeds in securities providing the same investment return
as the securities redeemed. During a period of declining
interest rates, securities held by the Portfolios may have market
values that are higher than the principal amounts payable at
maturity. Although this "premium " value is amortized over the
period remaining until maturity, an investor who purchases shares
of a Portfolio during a period of declining interest rates may
face an increased risk of capital loss if the securities are
called or redeemed before maturity.
WTC may make frequent changes in the Portfolios' investments,
particularly during periods of rapidly fluctuating interest
rates. These frequent changes involve transaction costs to the
Portfolio and may result in taxable capital gains.
DERIVATIVES. Some of the Portfolios' investments may be
referred to as "derivatives," because their value depends on (or
"derives" from) the value of an underlying asset, reference rate
or index. These investments include options, futures contracts
and similar instruments that may be used in hedging and related
income strategies. There is only limited consensus as to what
constitutes a "derivative" security. However, in the view of
WTC, derivatives include "stripped" securities, specially
structured types of mortgage-backed, asset-backed and municipal
securities, such as interest only, principal only and inverse
floaters, and U.S. dollar-denominated securities whose value is
linked to foreign securities. The market value of derivative
instruments and securities sometimes is more volatile than that
of other investments, and each type of derivative may pose its
own special risks. WTC takes these risks into account in its
management of the Portfolios.
OTHER INVESTMENTS. From time to time additional types of
fixed-income securities, financial products and risk management
techniques are developed. WTC may consider use of these
securities, products and techniques by either Portfolio,
consistent with its investment objectives and policies, as well
as regulatory and tax considerations.
PORTFOLIO TURNOVER. The frequency of portfolio transactions
and a Portfolio's turnover rate will vary from year to year
depending on market conditions. The portfolio turnover rate for
the Diversified Income Portfolio for the years ended October 31,
1996 and 1995 was 85.77% and 116.40%, respectively. The portfolio
turnover rate for the Municipal Income Portfolio for the years
ended October 31, 1996 and 1995 was 15.91% and 42.08%,
respectively. The high turnover rate for the Diversified Income
Portfolio for the year ended October 31, 1995 was due in part to
the repositioning of the Portfolio in response to a dramatic
shift in market conditions as a result of changes in interest
rates.
OTHER INFORMATION. There can be no assurance that the
Portfolios will achieve their respective investment objectives.
The investment objective of each Portfolio is fundamental and may
not be changed without the affirmative vote of the holders of a
majority of the Portfolio's outstanding voting securities (as
defined in the 1940 Act). Unless otherwise noted, the investment
policies discussed above are non-fundamental and may be changed
by the Board of Trustees without shareholder approval.
Additional fundamental and non-fundamental investment policies
and limitations are described in the Appendix to this Prospectus
and in the Statement of Additional Information.
PURCHASE OF SHARES
HOW TO PURCHASE SHARES. Portfolio shares are offered on a
continuous basis by RSD. Shares may be purchased directly from
RSD, by clients of WTC through their trust accounts, or by
clients of Service Organizations through their Service
Organization accounts. WTC and Service Organizations may charge
their clients a fee for providing administrative or other
services in connection with investments in Portfolio shares. A
trust account at WTC includes any account for which the account
records are maintained on the trust system at WTC. Persons
wishing to purchase Portfolio shares through their accounts at
WTC or a Service Organization should contact that entity directly
for appropriate instructions. Other investors may purchase
Portfolio shares by mail or by wire as specified below.
BY MAIL: You may purchase shares by sending a check drawn on
a U.S. bank payable to The Rodney Square Strategic Fixed-Income
Fund, indicating the Portfolio you have selected, along with a
completed Application (included at the end of this Prospectus),
to The Rodney Square Strategic Fixed-Income Fund, c/o Rodney
Square Management Corporation, P.O. Box 8987, Wilmington, DE
19899-9752. A purchase order sent by overnight mail should be
sent to The Rodney Square Strategic Fixed-Income Fund, c/o Rodney
Square Management Corporation, Rodney Square North, 1105 North
Market Street, Wilmington, DE 19801. If a subsequent investment
is being made, the check should also indicate your Portfolio
account number. When you purchase by check, the Fund may
withhold payment on redemptions until it is reasonably satisfied
that the funds are collected (which can take up to 10 days). If
you purchase shares with a check that does not clear, your
purchase will be canceled and you will be responsible for any
losses or fees incurred in that transaction.
BY WIRE: You may purchase shares by wiring federal funds. To
advise the Fund of the wire, and if making an initial purchase,
to obtain an account number, you must telephone RSMC at (800) 336-
9970. Once you have an account number, instruct your bank to
wire federal funds to RSMC, c/o Wilmington Trust Company,
Wilmington DE--ABA #0311-0009-2, attention: The Rodney Square
Strategic Fixed-Income Fund, DDA#2610-605-2, further credit--your
account number, the desired Portfolio and your name. If you make
an initial purchase by wire, you must promptly forward a
completed Application to RSMC at the address stated above
under "By Mail."
INDIVIDUAL RETIREMENT ACCOUNTS. Shares of the Diversified
Income Portfolio may be purchased for a tax-deferred retirement
plan such as an individual retirement account ("IRA"). For an
Application for an IRA and a brochure describing the Diversified
Income Portfolio IRA, call RSMC at (800) 336-9970. WTC makes
available its services as IRA custodian for each shareholder
account that is established as an IRA. For these services, WTC
receives an annual fee of $10.00 per account, which fee is paid
directly to WTC by the IRA shareholder. If the fee is not paid
by the date due, Diversified Income Portfolio shares owned by the
IRA will be redeemed automatically for purposes of making the
payment.
AUTOMATIC INVESTMENT PLAN. Shareholders may purchase
Portfolio shares through an Automatic Investment Plan. Under the
Plan, RSMC, at regular intervals, will automatically debit a
shareholder's bank checking account in an amount of $50 or more
(subsequent to the $1,000 minimum initial investment), as
specified by the shareholder. A shareholder may elect to invest
the specified amount monthly, bimonthly, quarterly, semiannually
or annually. The purchase of Portfolio shares will be effected
at their offering price at the close of regular trading on the
New York Stock Exchange (the "Exchange") (currently 4:00 p.m.,
Eastern time) on or about the 20th day of the month. To apply
for the Automatic Investment Plan, check the appropriate box of
the Application at the end of this Prospectus, or call RSMC at
(800) 336-9970. This service is generally not available for WTC
trust account clients, since similar services are provided
through WTC. This service may also not be available for Service
Organization clients who are provided similar services by those
organizations.
ADDITIONAL PURCHASE INFORMATION. The minimum initial
investment is $1,000, but subsequent investments may be made in
any amount. WTC and Service Organizations may impose additional
minimum customer account and other requirements in addition to
this minimum initial investment requirement. The Fund and RSD
each reserves the right to reject any purchase order and may
suspend the offering of shares of either Portfolio for a period
of time.
Purchase orders received by RSMC and accepted by RSD before
the close of regular trading on the Exchange on any Business Day
of the Fund will be priced at the net asset value per share that
is determined as of the close of regular trading on the Exchange.
(See "How Net Asset Value is Determined.") Purchase orders
received by RSMC and accepted by RSD after the close of regular
trading on the Exchange will be priced as of the close of regular
trading on the Exchange on the following Business Day of the
Fund. A "Business Day" of the Fund is any day on which the
Exchange, RSMC and the Philadelphia branch office of the Federal
Reserve are open for business. The following are not Business
Days of the Fund: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and
Christmas Day.
It is the responsibility of WTC or the Service Organization
involved to transmit orders for the purchase of shares by its
customers to RSMC and to deliver required funds on a timely
basis, in accordance with the procedures previously stated.
OFFERING PRICE. Shares of each Portfolio are offered at its
net asset value next determined after a purchase order is
received by RSMC and accepted by RSD, plus a sales load which,
unless shares were purchased under one of the reduced sales load
plans described below, will vary with the size of the purchase
shown as follows:
SALES LOAD SCHEDULE
SALES LOAD AS A PERCENTAGE OF DISCOUNT TO SERVICE
NET AMOUNT ORGANIZATIONS AS A
OFFERING INVESTED (NET PERCENTAGE OF
AMOUNT OF PURCHASE PRICE ASSET VALUE) OFFERING PRICE
Up to --$ 24,999 3.50% 3.63% 3.05%
$25,000 --$ 49,999 3.00 3.09 2.60
$50,000 --$ 99,999 2.50 2.56 2.15
$100,000 --$ 249,999 2.00 2.04 1.70
$250,000 --$ 499,999 1.50 1.52 1.25
$500,000 --$ 999,999 0.50 0.50 0.40
$1,000,000 and over 0.00 0.00 0.00
REDUCED SALES LOAD PLANS. Shares may be purchased at reduced
charges through two reduced sales load plans: (1) a right of
accumulation that permits a purchase of shares of a Portfolio to
be aggregated with shares of the other Portfolio, as well as
shares of other funds in the Rodney Square complex on which the
shareholder has already paid a sales load, that are held in the
purchaser's account or in related accounts; and (2) a Letter of
Intent ("LOI") that permits a purchase of shares of a Portfolio
to be aggregated with future purchases of shares of that
Portfolio, as well as with shares of the other Portfolio and the
other Rodney Square funds that are subject to a sales load,
within a thirteen-month period.
The right of accumulation results in a reduced sales load
because the sales load imposed is based on the total dollar
amount of Portfolio shares being purchased, plus the current net
asset value of shares of the Portfolio and shares of other Rodney
Square funds on which a sales load has already been paid that are
held in the purchaser's and related accounts at the time of
purchase. Related accounts include other individual accounts,
joint accounts, spouse's accounts and accounts for children who
are under the age of 21 (but only if the purchaser serves as a
guardian, trustee or custodian for the account under the Uniform
Gifts to Minors Act or Uniform Transfers to Minors Act) and/or
living at the same residence.
The LOI program also results in a reduced sales load because
purchases of shares of the Portfolios and other Rodney Square
funds that are subject to a sales load made within a thirteen-
month period, starting with the first purchase made pursuant to
the LOI, are aggregated for purposes of calculating the sales
load applicable to each purchase. In order to qualify under an
LOI, purchases must be made in the same account; purchases made
for related accounts may not be aggregated. The minimum
investment under an LOI is $25,000. The LOI is not a binding
obligation to purchase any amount of shares, but its execution,
if fulfilled, will result in the shareholder's paying a reduced
sales load on the total anticipated amount of the purchase.
The LOI is included as part of the Application at the end of
this Prospectus. Investors should submit a completed LOI to The
Rodney Square Strategic Fixed-Income Fund, c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19899-9752.
A purchase not originally made pursuant to an LOI may be included
under an LOI executed within 90 days of that purchase, if the
purchaser informs RSMC in writing of this intent within the 90-
day period. This prior purchase will count toward fulfillment of
the LOI; however, the sales load on any previous purchase will
not be adjusted downward.
If the total amount of shares purchased does not equal the
amount stated in the LOI by the end of the eleventh month, the
investor will be notified in writing by RSMC of the amount
purchased to date, the amount required to complete the LOI and
the expiration date. Also, at this time the investor will be
notified of the actions to be taken by RSMC if the LOI expires
unfulfilled. Shares having a value equal to 5% of the total
amount to be purchased over the thirteen-month period will be
held in escrow during that period. If the total amount of shares
purchased by the expiration date does not equal the amount stated
in the LOI, RSMC will reduce the shares held in escrow by the
difference between the sales load on the shares purchased at the
reduced rate and the sales load applicable to the shares actually
purchased, and the balance of the shares then will be released
from the escrow.
SALES LOAD WAIVERS. Shares of each Portfolio may be
purchased at net asset value by "those entitled to a Sales Load
Waiver" which is defined as those employees, retirees and their
immediate family (spouses and children under 21 years of age),
officers and trustees/directors of the Fund or of WTC and its
affiliates, any account at WTC for which account records are
maintained on WTC's trust system, employees of Service
Organizations, and clients or classes of clients of Service
Organizations which have entered into a special Service
Organization agreement with RSD, the terms of which provide that
no sales load will be charged on purchases by such clients.
Portfolio shares may also be purchased at net asset value by
reinvesting dividends and other distributions.
SHAREHOLDER ACCOUNTS
RSMC, as Transfer Agent, maintains for each shareholder an
account expressed in terms of full and fractional shares of each
Portfolio rounded to the nearest 1/1000th of a share.
In the interest of economy and convenience, the Fund does not
issue share certificates. Each shareholder is sent a statement
at least quarterly showing all purchases in or redemptions from
the shareholder's account. The statement also sets forth the
balance of shares held in the account by Portfolio.
Due to the relatively high cost of maintaining small
shareholder accounts, the Fund reserves the right to close any
account with a current value of less than $500 by redeeming all
shares in the account and transferring the proceeds to the
shareholder. Shareholders will be notified if their account
value is less than $500 and will be allowed 60 days in which to
increase their account balance to $500 or more before the account
is closed. Reductions in value that result solely from market
activity will not trigger an involuntary redemption.
REDEMPTION OF SHARES
Shareholders may redeem their shares by mail or by telephone
as described below. If you purchased your shares through an
account at WTC or a Service Organization, you may redeem all or
part of your shares in accordance with the instructions
pertaining to that account. Corporations, other organizations,
trusts, fiduciaries and other institutional investors may be
required to furnish certain additional documentation to authorize
redemptions. Redemption requests should be accompanied by the
Fund's name, the Portfolio's name and your Portfolio account
number.
BY MAIL: Shareholders redeeming their shares by mail should
submit written instructions with a guarantee of their signature
by an institution acceptable to the Fund's Transfer Agent, such
as a bank, broker, dealer, municipal securities dealer,
government securities dealer, credit union, national securities
exchange, registered securities association, clearing agency, or
savings association ("eligible institution"), to: The Rodney
Square Strategic Fixed-Income Fund, c/o Rodney Square Management
Corporation, P.O. Box 8987, Wilmington, DE 19899-9752. A
redemption order sent by overnight mail should be sent to The
Rodney Square Strategic Fixed-Income Fund, c/o Rodney Square
Management Corporation, Rodney Square North, 1105 North Market
Street, Wilmington, DE 19801. The redemption order should
indicate the Fund's name, the Portfolio's name, the Portfolio
account number, the number of shares or dollar amount you wish to
redeem and the name of the person in whose name the account is
registered. A signature and a signature guarantee are required
for each person in whose name the account is registered.
BY TELEPHONE: Shareholders who prefer to redeem their shares
by telephone may elect to apply in writing for telephone
redemption privileges by completing an Application for Telephone
Redemptions (included at the end of this Prospectus) which
describes the telephone redemption procedures in more detail
and requires certain information that will be used to identify
the shareholder. When redeeming by telephone, you must indicate
your name, the Fund's name, the Portfolio's name, the Portfolio
account number, the number of shares or dollar amount you wish to
redeem and certain other information necessary to identify you
as the shareholder. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine,
and if such procedures are followed, will not be liable for any
losses due to unauthorized or fraudulent telephone transactions.
During times of drastic economic or market changes, the telephone
redemption privilege may be difficult to implement. In the event
that you are unable to reach RSMC by telephone, you may make a
redemption request by mail.
ADDITIONAL REDEMPTION INFORMATION. You may redeem all or any
part of the value of your account on any Business Day of the
Fund. Redemptions are effected at the net asset value next
calculated after RSMC has received your redemption request.
(See "How Net Asset Value Is Determined.") The Fund imposes no
fee when shares are redeemed. It is the responsibility of WTC or
the Service Organization to transmit redemption orders and credit
their customers' accounts with redemption proceeds on a timely
basis.
Redemption checks are mailed on the next Business Day of the
Fund following acceptance of redemption instructions but in no
event later than 7 days following such receipt and acceptance.
Amounts redeemed by wire are normally wired on the next Business
Day of the Fund after receipt and acceptance of redemption
instructions (if received by RSMC before the close of regular
trading on the Exchange), but in no event later than 7 days
following such receipt and acceptance. If the shares to be
redeemed represent an investment made by check, the Fund reserves
the right not to make the redemption proceeds available until it
has reasonable grounds to believe that the check has been
collected (which could take up to 10 days).
Redemption proceeds may be wired to your predesignated bank
account in any commercial bank in the United States if the amount
is $1,000 or more. The receiving bank may charge a fee for this
service. Alternatively, proceeds may be mailed to your bank or,
for amounts of $10,000 or less, mailed to your Portfolio account
address of record if the address has been established for a
minimum of 60 days. In order to authorize the Fund to mail
redemption proceeds to your Portfolio account address of record,
complete the appropriate section of the Application for Telephone
Redemptions or include your Portfolio account address of record
when you submit written instructions. You may change the account
which you have designated to receive amounts redeemed at any
time. Any request to change the account designated to receive
redemption proceeds should be accompanied by a guarantee of the
shareholder's signature by an eligible institution. A signature
and a signature guarantee are required for each person in whose
name the account is registered. Further documentation will be
required to change the designated account when shares are held by
a corporation, other organization, trust, fiduciary or other
institutional investor.
For more information on redemptions, contact RSMC or, if your
shares are held in an account with WTC or a Service Organization,
contact WTC or the Service Organization.
REINSTATEMENT PRIVILEGE. Shareholders who have redeemed
shares of a Portfolio have a one-time privilege to reinstate
their account without a sales load up to the dollar amount
redeemed by purchasing shares of that Portfolio within 30 days of
the redemption. Shareholders must indicate in writing that they
are exercising this privilege and provide evidence of the
redemption date and the amount of redemption proceeds. The
reinstatement will be made at the net asset value per share next
computed after the notice of reinstatement and check are
received. The amount of a purchase under this reinstatement
privilege cannot exceed the amount of the redemption proceeds.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own shares of a
Portfolio with a value of $10,000 or more may participate in the
Systematic Withdrawal Plan. For an Application for the
Systematic Withdrawal Plan, check the appropriate box of the
Application at the end of this Prospectus or call RSMC at (800)
336-9970. Under the Plan, shareholders may automatically redeem
a portion of their Portfolio shares monthly, bimonthly,
quarterly, semiannually or annually. The minimum withdrawal
available is $100. The redemption of Portfolio shares will be
effected at their net asset value at the close of the Exchange on
or about the 25th day of the month. If you expect to purchase
additional Portfolio shares, it may not be to your advantage to
participate in the Systematic Withdrawal Plan because
contemporaneous purchases and redemptions may result in adverse
tax consequences and may cause you to pay a sales load on amounts
withdrawn shortly thereafter. This service is generally not
available for WTC trust account clients, since similar services
are provided through WTC. This service may also not be available
for Service Organization clients who are provided similar
services by those organizations.
EXCHANGE OF SHARES
EXCHANGES AMONG THE RODNEY SQUARE FUNDS. You may exchange
all or a portion of your shares in a Portfolio for shares of the
other Portfolio or any of the other funds in the Rodney Square
complex that currently offer their shares to investors. These
other Rodney Square funds are:
THE RODNEY SQUARE FUND, each portfolio of which seeks a high
level of current income consistent with the preservation of
capital and liquidity by investing in money market instruments
pursuant to its investment practices. Its portfolios are:
U.S. GOVERNMENT PORTFOLIO, which invests in U.S.
Government obligations and repurchase agreements involving
such obligations.
MONEY MARKET PORTFOLIO, which invests in U.S. dollar-
denominated obligations of major banks, prime commercial
paper and corporate obligations, U.S. Government obligations,
high quality municipal securities and repurchase agreements
involving U.S. Government obligations.
THE RODNEY SQUARE TAX-EXEMPT FUND, which seeks as high a
level of interest income, exempt from federal income tax, as is
consistent with a portfolio of high quality, short-term municipal
obligations, selected on the basis of liquidity and stability of
principal.
THE RODNEY SQUARE MULTI-MANAGER FUND, which uses multiple
portfolio advisers to manage the Growth Portfolio of assets and
seeks superior long-term capital appreciation by investing in
securities of companies which are judged to possess strong growth
characteristics.
A redemption of shares through an exchange will be effected
at the net asset value per share next determined after receipt by
RSMC of the request, and a purchase of shares through an exchange
will be effected at the net asset value per share determined at
that time or as next determined thereafter, plus the applicable
sales load, if any. The net asset values per share of the Rodney
Square Fund portfolios and the Tax-Exempt Fund are determined at
12 noon, Eastern time, on each Business Day. The net asset
values per share of the Portfolios and the Growth Portfolio are
determined at the close of regular trading on the Exchange
(currently 4:00 p.m., Eastern time), on each Business Day.
A sales load will apply to exchanges into a Portfolio from
either of the Rodney Square Fund portfolios or the Tax-Exempt
Fund, except that no sales load will be charged if the exchanged
shares were acquired by a previous exchange and are shares on
which you paid a sales load or which represent reinvested
dividends and other distributions of such shares. In addition,
shares of the Rodney Square Fund portfolios or the Tax-Exempt
Fund may be exchanged for shares of the Portfolios without a
sales load by those entitled to a Sales Load Waiver. A sales
load will not apply to other exchanges into the Portfolios or
from the Portfolios. Shares of either Portfolio must be held at
least 90 days before they can be exchanged for shares of the
Growth Portfolio without an additional sales load, unless the
shares to be exchanged represent reinvested dividends and other
distributions or you are eligible for a Sales Load Waiver.
Exchange transactions will be subject to the minimum initial
investment and other requirements of the fund into which the
exchange is made. An exchange may not be made if the exchange
would leave a balance in a shareholder's Portfolio account of
less than $500.
To obtain prospectuses of the other Rodney Square funds
contact RSD. To obtain more information about exchanges, or to
place exchange orders, contact RSMC, or, if your shares are held
in a trust account with WTC or in an account with a Service
Organization, contact WTC or the Service Organization. The Fund,
on behalf of the Portfolios, reserves the right to terminate or
modify the exchange offer described here and will give
shareholders 60 days' notice of such termination or modification
when required by Securities and Exchange Commission ("SEC")
rules. This exchange offer is valid only in those jurisdictions
where the sale of the Rodney Square fund shares to be acquired
through such exchange may be legally made.
HOW NET ASSET VALUE IS DETERMINED
RSMC determines the net asset value per share of each
Portfolio as of the close of regular trading on the Exchange
(currently 4:00 p.m., Eastern time) on each Business Day of the
Fund. The net asset value per share of each Portfolio is
calculated by dividing the total current market value of all of a
Portfolio's assets, less all its liabilities, by the total number
of the Portfolio's shares outstanding.
The Portfolios value their assets based on their current
market prices when market quotations are readily available.
Current market prices are generally not readily available for
municipal securities; current market prices may also be
unavailable for other types of fixed-income securities held by
the Portfolios. To determine the value of those securities, RSMC
may use a pricing service that takes into account not only
developments related to the specific securities, but also
transactions in comparable securities. The value of fixed-income
securities maturing within 60 days of the valuation date may be
determined by valuing those securities at amortized cost.
Securities that do not have a readily available current market
value are valued in good faith under the direction of the Board
of Trustees of the Fund.
The assets held by the Diversified Income Portfolio which are
denominated in foreign currencies are valued daily in U.S.
dollars at the foreign currency exchange rates that are
prevailing at the time that RSMC determines the daily net asset
value per share. That Portfolio does not, however, convert its
foreign currency-denominated assets into U.S. dollars on a daily
basis.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
DIVIDENDS AND OTHER DISTRIBUTIONS. The net investment income
earned by each Portfolio is declared as a dividend daily and paid
to its shareholders ordinarily on the first Business Day of the
following month, but in no event later than 7 days after the end
of the month in which the dividends are declared. Net investment
income of a Portfolio is determined immediately prior to the
determination of its net asset value per share on each Business
Day (see "How Net Asset Value Is Determined ") and consists of
interest accrued and original issue discount (and, in the case of
the Municipal Income Portfolio, if it so elects, market discount
on tax-exempt securities) earned on its investments less
amortization of any premium and accrued expenses. A dividend is
payable to shareholders of a Portfolio who redeem, but not to
shareholders who purchase, shares of the Portfolio on the day the
dividend is declared. Dividends paid by a Portfolio are
automatically reinvested in additional shares of the Portfolio on
the payment date at their current net asset value per share,
unless the shareholder elects on the Application to receive
dividends or other distributions, or both, in cash, in the form
of a check.
Each Portfolio makes annual distributions of realized net
short-term capital gain and net capital gain (the excess of net
long-term capital gain over net short-term capital loss), if any,
and the Diversified Income Portfolio annually distributes net
realized gains from foreign currency transactions, if any, after
the end of the fiscal year in which the gain was realized by the
Portfolio. Distributions by a Portfolio of these gains are
automatically reinvested in additional shares of the Portfolio on
the payment date at their current net asset value per share,
unless the shareholder elects on the Application to receive
dividends or other distributions, or both, in cash, in the form
of a check.
FEDERAL TAX. Each Portfolio intends to continue to qualify
for treatment as a regulated investment company under the
Internal Revenue Code of 1986, as amended, so that it will be
relieved of federal income tax on that part of its investment
company taxable income (generally consisting of taxable net
investment income, net short-term capital gain and, in the case
of the Diversified Income Portfolio, net realized gains from
certain foreign currency transactions, if any) and net capital
gain that is distributed to its shareholders. While both
Portfolios may invest in securities the interest on which is
subject to federal income tax and securities the interest on
which is exempt from that tax, under normal conditions the
Diversified Income Portfolio will invest primarily in taxable
securities and the Municipal Income Portfolio will invest
primarily in tax-exempt securities.
Distributions by the Municipal Income Portfolio of the excess
of interest income on tax-exempt securities over certain amounts
disallowed as deductions, as designated by the Portfolio ("exempt-
interest dividends"), may be treated by its shareholders as
interest excludable from gross income. However, exempt-interest
dividends are included in a shareholder's "modified adjusted
gross income" for purposes of determining whether any portion of
the shareholder's Social Security or railroad retirement benefits
are subject to federal income tax. A portion of the exempt-
interest dividends paid by that Portfolio may be a tax preference
item for purposes of the federal alternative minimum tax.
Dividends from each Portfolio's investment company taxable income
(whether paid in cash or reinvested in additional shares)
generally are taxable to its shareholders as ordinary income.
Distributions of a Portfolio's net capital gain (whether paid in
cash or reinvested in additional shares), when designated as such
by the Portfolio, are taxable to its shareholders as long-term
capital gains, regardless of the length of time they have held
their shares. Early in each calendar year, each Portfolio
notifies its shareholders of the amount and federal tax status of
dividends and capital gain distributions paid (or deemed paid) by
the Portfolio during the preceding year.
Interest on indebtedness incurred or continued by a
shareholder to purchase or carry Municipal Income Portfolio
shares will not be deductible to the extent that Portfolio's
distributions consist of exempt-interest dividends.
Each Portfolio is required to withhold 31% of all taxable
dividends, capital gain distributions and redemption proceeds
payable to any individuals and certain other noncorporate
shareholders who do not provide the Portfolio with a certified
taxpayer identification number. Each Portfolio also is required
to withhold 31% of all taxable dividends and capital gain
distributions payable to those shareholders who otherwise are
subject to backup withholding. In connection with this
withholding requirement, unless an investor has indicated that he
or she is subject to backup withholding, the investor must
certify on the Application that the Social Security or other
taxpayer identification number provided thereon is correct and
that the investor is not otherwise subject to backup withholding.
A redemption of Portfolio shares may result in taxable gain
or loss to the redeeming shareholder, depending on whether the
redemption proceeds are more or less than the shareholder's
adjusted basis for the redeemed shares (which normally includes
any sales load paid). Similar tax consequences generally will
result from an exchange of shares of one Portfolio for shares of
the other Portfolio or for shares of another fund in the Rodney
Square complex. (See "Exchange of Shares.") Special rules
apply, however, when a shareholder (1) disposes of shares of a
Portfolio through a redemption or exchange within 90 days after
purchase thereof and (2) subsequently acquires shares of the same
Portfolio, the other Portfolio or any Rodney Square fund on which
a sales load normally is imposed ("load fund") without paying any
sales load because of the reinstatement privilege (see
"Redemption of Shares") or the exchange privilege. In these
cases, any gain on the disposition of the original Portfolio
shares will be increased, or loss thereon decreased, by the
amount of the sales load paid when the shares were acquired; and
that amount will increase the adjusted basis of the load fund
shares subsequently acquired. Moreover, if Portfolio shares are
purchased within 30 days of redeeming other shares of that
Portfolio at a loss (whether pursuant to the reinstatement
privilege or otherwise), that loss will not be deductible to the
extent of the amount reinvested, and an adjustment in that amount
will be made to the shareholder's basis for the newly purchased
shares. If a shareholder holds shares in a Portfolio for six
months or less, and sells any of those shares at a loss, the loss
is reduced by the amount of exempt-interest dividends received by
the shareholder with respect to those shares, and the remaining
loss is treated as a long-term, rather than a short-term, capital
loss to the extent of capital gain distributions received on
those shares.
STATE AND LOCAL TAXES. The exemption of certain interest
income for federal income tax purposes does not necessarily mean
that such income is exempt under the income or other tax laws of
any state or local taxing authorities. Shareholders may be
exempt from state and local taxes on distributions of interest
income derived from obligations of the state and/or
municipalities of the state in which they are resident, but
generally are taxed on income derived from obligations of other
jurisdictions. Early each calendar year, the Municipal Income
Portfolio notifies its shareholders of the portion of their tax-
exempt income attributable to each state for the preceding year.
The foregoing is only a summary of some of the important
income tax considerations generally affecting the Portfolios and
their shareholders; a further discussion appears in the Statement
of Additional Information. In addition to these considerations,
which are applicable to any investment in the Portfolios, there
may be other federal, state or local tax considerations
applicable to a particular investor. Prospective investors are
therefore urged to consult their tax advisers with respect to the
effects of an investment on their own tax situations.
PERFORMANCE INFORMATION
All performance information advertised by each Portfolio is
based on historical performance of the Portfolio, shows the
performance of a hypothetical investment and is not intended to
indicate future performance. Unlike some bank deposits or other
investments which pay a fixed yield for a stated period of time,
a Portfolio's yield and net asset value will vary depending upon,
among other things, changes in market conditions and the level of
the Portfolio's operating expenses. The Fund's annual report to
shareholders contains information with respect to the performance
of each Portfolio. The annual report is available upon request
and free of charge.
YIELD. From time to time, quotations of each Portfolio's
"yield" may be included in advertisements, sales literature or
shareholder reports. Quotations of the Municipal Income
Portfolio's "tax-equivalent yield" may also be included in
advertisements, sales literature or shareholder reports. These
quotations, as calculated in accordance with regulations of the
SEC, reflect deduction of the maximum 3.50% sales load and may
differ from a Portfolio's net investment income, as calculated
for financial reporting purposes. The yields quoted are
historical and not a prediction of future yields.
The yield of a Portfolio refers to the net investment income
generated by the Portfolio over a specified thirty-day (one
month) period. This income is then annualized. That is, the
amount of income generated by the Portfolio during that thirty-
day period is assumed to be generated during each month over a 12-
month period and is shown as a percentage. The effective yield
is expressed similarly, but, when annualized, the income earned
by an investment in the Portfolio is assumed to be reinvested.
The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.
The Municipal Income Portfolio's tax-equivalent yield is
calculated by determining the yield that would have to be
achieved on a fully taxable investment to produce the after-tax
equivalent of that Portfolio's yield, assuming certain tax
brackets for a Portfolio shareholder. That formula is:
The
Portfolio's Yield The Shareholder's
------------------------ = Tax-Equivalent Yield
100% - The Shareholder's
Tax Bracket
For example, if the shareholder is in the 39.6% tax bracket
and can earn a tax-exempt yield of 5.0%, the tax-equivalent yield
would be 8.28%:
5.0%
------------------------ = 8.28%
100% - 39.6%
TOTAL RETURN. From time to time, quotations of each
Portfolio's average annual total return ("Standardized Return")
may be included in advertisements, sales literature or
shareholder reports. Standardized Return will show percentage
rates reflecting the average annual change in the value of an
assumed initial investment of $1,000, net of the Portfolio's
maximum 3.50% sales load, assuming the investment has been held
for periods of one year, five years and ten years, as of a stated
ending date. If the Portfolio has not been in operation for
those time periods, the life of the Portfolio will be used where
applicable. Standardized Return assumes that all dividends and
other distributions were reinvested in additional shares of the
Portfolio.
In addition, each Portfolio may advertise other total return
performance data ("Non-Standardized Return"). Non-Standardized
Return shows a percentage rate of return encompassing all
elements of return (i.e., income and capital appreciation or
depreciation); it assumes reinvestment of all dividends and other
distributions. Non-Standardized Return may be quoted for the
same or different periods as those for which Standardized Return
is quoted and may or may not reflect the maximum 3.50% sales
load; where not included, the inclusion of the sales load would
reduce the Non-Standardized Return.
Non-Standardized Return may consist of a cumulative
percentage rate of return, an average annual percentage rate of
return, actual year-by-year rates or any combination thereof.
Cumulative total return represents the cumulative change in value
of an investment in a Portfolio for various periods. To
illustrate the components of overall performance, the cumulative
and average annual returns of a Portfolio may be separated into
income results and capital gain or loss. The total return of a
Portfolio is increased to the extent that either WTC or RSMC has
waived all or a portion of its fees or reimbursed all or a
portion of the Portfolio's expenses.
Past performance is no guarantee of future performance.
MANAGEMENT OF THE FUND
The Fund's Board of Trustees supervises the management,
activities and affairs of the Fund and has approved contracts
with various financial organizations to provide, among other
services, day-to-day management required by the Portfolios and
their shareholders.
INVESTMENT ADVISER. WTC, a wholly owned subsidiary of
Wilmington Trust Corporation, a publicly held bank holding
company, is the Investment Adviser of the Portfolios. Under an
Advisory Agreement with the Fund, dated April 1, 1991, WTC,
subject to the supervision of the Board of Trustees, directs the
investments of the Diversified Income Portfolio in accordance
with its investment objective, policies and limitations. Under
an Advisory Agreement with the Fund, dated November 1, 1993, WTC,
subject to the supervision of the Board of Trustees, directs the
investments of the Municipal Income Portfolio in accordance with
its investment objective, policies and limitations. (These
Agreements are collectively referred to as the "Advisory
Agreements.")
Under the Advisory Agreements, each Portfolio pays a monthly
advisory fee to WTC at the annual rate of 0.50% of the average
daily net assets of the Portfolio. WTC has agreed to waive its
fee or reimburse each Portfolio monthly to the extent that
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, 1998.
In addition to serving as Investment Adviser for the
Portfolios, WTC is engaged in a variety of investment advisory
activities, including the management of collective investment
pools. Eric K. Cheung, Vice President and Manager of the Fixed
Income Management Division and Clayton M. Albright, III, Vice
President of the Fixed Income Management Division of the
Investment Management Department of WTC, are primarily
responsible for the day-to-day management of the Diversified
Income Portfolio. From 1978 until 1986, Mr. Cheung was the
Portfolio Manager for fixed-income assets of the Meritor
Financial Group. In 1986, Mr. Cheung joined WTC. In 1991, he
became the Division Manager for all fixed-income products. Mr.
Albright has been with WTC since 1976. In 1987, he joined the
fixed-income division and since that time has specialized in the
management of intermediate term/long term fixed-income
portfolios. Robert F. Collins, CFA, Vice President of Credit
Research and Municipal Trading within the Fixed Income Management
Division of the Investment Management Department of WTC, is
primarily responsible for the day-to-day management of the
Municipal Income Portfolio. Mr. Collins has been a municipal
bond portfolio manager and credit analyst for WTC for more than
10 years.
ADMINISTRATOR, TRANSFER AGENT AND DIVIDEND PAYING AGENT.
RSMC serves as Administrator, Transfer Agent and Dividend Paying
Agent for the Portfolios. As Administrator, RSMC supplies office
facilities, non-investment related statistical and research data,
stationery and office supplies, executive and administrative
services, internal auditing and regulatory compliance services.
RSMC assists in the preparation of reports to shareholders,
prepares proxy statements, updates prospectuses and makes filings
with the SEC and state securities authorities. RSMC also
performs certain budgeting, financial reporting and compliance
monitoring activities. For the services provided as
administrator, RSMC receives a monthly administration fee from
each Portfolio at an annual rate of 0.08% of the Portfolio's
average daily net assets. 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 and their
shareholders. Any related out-of-pocket expenses reasonably
incurred in the provision of transfer agent services to a
Portfolio are borne by that Portfolio.
CUSTODIAN. WTC serves as Custodian of the Fund. The Fund
does not pay WTC any separate fees for its services as Custodian,
as WTC assumes the cost of providing these services to the
Portfolios. Any related out-of-pocket expenses reasonably
incurred in the provision of custodial services to a Portfolio
are borne by that Portfolio.
ACCOUNTING SERVICES. RSMC determines the net asset value per
share of each Portfolio and provides accounting services to the
Portfolios pursuant to an Accounting Services Agreement with the
Fund. For providing these services, RSMC receives an annual fee
of $50,000 per Portfolio from the Fund plus an amount equal to
0.02% of the average daily net assets of each Portfolio in excess
of $100 million.
DISTRIBUTION AGREEMENT AND RULE 12B-1 PLAN. Pursuant to a
Distribution Agreement with the Fund, RSD manages the Fund's
distribution efforts and provides assistance and expertise in
developing marketing plans and materials for the Portfolios,
enters into agreements with broker-dealers to sell shares of the
Portfolios and, directly or through its affiliates, provides
shareholder support services.
Under a Plan of Distribution adopted with respect to each
Portfolio pursuant to Rule 12b-1 under the 1940 Act (the "12b-1
Plans"), the Portfolios may reimburse RSD for distribution
expenses incurred in connection with the distribution efforts
described above. The 12b-1 Plans provide that RSD may be
reimbursed for amounts paid and expenses incurred for
distribution activities encompassed by Rule 12b-1, such as public
relations services, telephone services, sales presentations,
media charges, preparation, printing and mailing advertising and
sales literature, data processing necessary to support a
distribution effort, printing and mailing prospectuses, and
distribution and shareholder servicing activities of broker-
dealers and other financial institutions. The Board of Trustees
has limited the amount that RSD can receive under the 12b-1 Plans
to 0.25% of each Portfolio's average daily net assets on an
annualized basis. If an increase in this limitation is requested
by RSD and authorized by the Board at some future date,
shareholders of the affected Portfolio will be notified of that
increase. It is not anticipated, however, that such an increase
will be requested.
The 12b-1 Plan for the Municipal Income Portfolio also
provides that in the event that RSD is not fully reimbursed for
its distribution expenses during any month due to limitations set
by the Trustees, the unpaid portion may be carried forward for
possible reimbursement into successive months and fiscal years to
give RSD the ability to recoup at some point in time any major
capital outlay on behalf of that Portfolio. Under the 12b-1
Plan, RSD may charge the Municipal Income Portfolio interest or
finance charges on unreimbursed distribution expenses that have
been carried forward from prior fiscal years, but only with
express authorization by the Board of Trustees. RSD does not
currently intend to request such authorization. If interest
charges are requested by RSD and authorized by the Board at some
future time, the shareholders of the Municipal Income Portfolio
will be advised of those charges.
BANKING LAWS. Banking laws prohibit deposit-taking
institutions and certain of their affiliates from underwriting or
distributing securities. WTC believes, and counsel to WTC has
advised the Fund, that WTC and its affiliates may perform the
services contemplated by their respective agreements with the
Fund without violation of applicable banking laws or regulations.
If WTC or its affiliates were prohibited from performing these
services, it is expected that the Board of Trustees would
consider entering into agreements with other entities. If a bank
were prohibited from acting as a Service Organization, its
shareholder clients would be expected to be permitted to remain
Portfolio shareholders and alternative means for servicing such
shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
State securities laws may require banks and financial
institutions involved in distribution to register as dealers,
even if this is not required by federal law.
DESCRIPTION OF THE FUND
The Fund is a diversified open-end investment company
established on May 7, 1986 as a Massachusetts business trust
under Massachusetts law by a Declaration of Trust.
The authorized shares of beneficial interest in the Fund are
currently divided into two series or portfolios, the Diversified
Income Portfolio and the Municipal Income Portfolio. The Trustees
are empowered by the Declaration of Trust and the Bylaws to
establish additional series and classes of shares, although they
have no present intention of doing so.
The Fund's capital consists of an unlimited number of shares
of beneficial interest. Shares of the Portfolios entitle their
holders to one vote per share and fractional votes for fractional
shares held. Separate votes are taken by each Portfolio on
matters affecting that Portfolio. Shares have noncumulative
voting rights, do not have preemptive or subscription rights and
are transferable.
As of November 30, 1996, WTC owned by virtue of shared or
sole voting or investment power on behalf of its underlying
customer accounts 69.4% of the shares of the Diversified Income
Portfolio and 16.0% of the shares of the Municipal Income
Portfolio, and may be deemed to be a controlling person of the
Fund under the 1940 Act.
The Fund does not hold annual meetings of shareholders.
There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less
than a majority of the Trustees holding office have been elected
by shareholders, at which time the Trustees then in office will
call a shareholders' meeting for the election of Trustees. Under
the 1940 Act, shareholders of record owning no less than two-
thirds of the outstanding shares of the Fund may remove a Trustee
by vote cast in person or by proxy at a meeting called for that
purpose. The Trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of
removal of any Trustee when requested in writing to do so by the
shareholders of record owning not less than 10% of the Fund's
outstanding shares.
Because the Portfolios use a combined Prospectus and
Statement of Additional Information, it is possible that a
Portfolio might become liable for a misstatement with respect to
the other Portfolio in those documents. The Trustees of the Fund
have considered this in approving the use of a combined
Prospectus and Statement of Additional Information.
<PAGE>
APPENDIX
The following paragraphs contain a brief description of the
securities in which the Portfolios may invest and the strategies
in which they may engage consistent with their investment
objectives and policies.
SECURITIES THAT MAY BE PURCHASED BY THE DIVERSIFIED INCOME
PORTFOLIO AND THE MUNICIPAL INCOME PORTFOLIO
ASSET-BACKED SECURITIES. The Portfolios may purchase
interests in pools of obligations, such as credit card or
automobile loan receivables, purchase contracts and financing
leases. Such securities are also known as "asset-backed
securities," and the holders thereof may be entitled to receive a
fixed rate of interest, a variable rate that is periodically
reset to reflect the current market rate or an auction rate that
is periodically reset at auction.
Asset-backed securities typically are supported by some form
of credit enhancement, such as cash collateral, subordinated
tranches, a letter of credit, surety bond or limited guaranty.
Credit enhancements do not provide protection against changes in
the market value of the security. If the credit enhancement is
exhausted or withdrawn, security holders may experience losses or
delays in payment if required payments of principal and interest
are not made with respect to the underlying obligations. Except
in very limited circumstances, there is no recourse against the
vendors or lessors that originated the underlying obligations.
Asset-backed securities are likely to involve unscheduled
prepayments of principal that may affect yield to maturity,
result in losses and may be reinvested at higher or lower
interest rates than the original investment. The yield to
maturity of asset-backed securities that represent residual
interests in payments of principal or interest on fixed-income
obligations is particularly sensitive to prepayments.
The value of asset-backed securities may change because of
changes in the market's perception of the creditworthiness of the
servicing agent for the pool of underlying obligations, the
originator of those obligations or the financial institution
providing credit enhancement.
BANK OBLIGATIONS. The Portfolios may invest in U.S. dollar-
denominated obligations of major banks, including certificates of
deposit, time deposits and bankers' acceptances of U.S. banks and
their branches located outside of the United States, of U.S.
branches of foreign banks and of wholly-owned banking
subsidiaries of such foreign banks located in the United States,
provided that the bank has assets of at least $5 billion at the
date of investment.
Obligations of foreign branches of U.S. banks and U.S.
branches or wholly-owned subsidiaries of foreign banks may be
general obligations of the parent bank, of the issuing branch or
subsidiary, or both, or may be limited by the terms of a specific
obligation or by governmental regulation. Because such
obligations are issued by foreign entities, they are subject to
the risks of foreign investing discussed below in connection with
the Diversified Income Portfolio's investments in foreign debt
obligations.
CORPORATE BONDS, NOTES AND COMMERCIAL PAPER. Each Portfolio
may invest in corporate bonds, notes and commercial paper. These
obligations generally represent indebtedness of the issuer and
may be subordinated to other outstanding indebtedness of the
issuer. Commercial paper consists of short-term unsecured
promissory notes issued by corporations in order to finance their
current operations.
FIXED-INCOME SECURITIES WITH BUY-BACK FEATURES. Fixed-income
securities purchased by the Portfolios may have various buy-back
features that permit the Portfolios to recover principal upon
tendering the securities to the issuer or a third party. For
example, a Portfolio may enter into a stand-by commitment
permitting the Portfolio to resell fixed-income securities back
to the original seller at a specified price. The Portfolios may
also purchase long-term fixed-rate bonds that may be tendered at
specified intervals to a bank or other financial institution for
their face value. Demand instruments permit the Portfolios to
demand from the issuer payment of principal plus accrued interest
upon a specified number of days' notice. These buy-back features
are often supported by letters of credit or other guarantees
obtained by the issuers or financial intermediaries. However,
without credit enhancements, if there is a default or significant
downgrading of a bond or, in the case of a municipal bond, a loss
of its tax-exempt status, the buy-back feature may terminate
automatically and the risk to the Portfolio holding the bond will
be that of holding a long-term security.
ILLIQUID SECURITIES. Certain of the Portfolios' assets may
be considered illiquid, including restricted securities that can
only be resold in a registered public offering, over-the-counter
options and repurchase agreements or time deposits maturing in
more than 7 days. No more than 15% of a Portfolio's net assets
may be invested in these and other illiquid securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are
securities representing interests in a pool of mortgages secured
by real property. There are three basic types of mortgage-backed
securities: (1) those issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, such as Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA") and Federal Home Loan Mortgage Corporation
("FHLMC"); (2) those issued by private issuers and collateralized
by securities issued or guaranteed by the U.S. Government; and
(3) those issued by private issuers and collateralized by
mortgage loans or other mortgage-backed securities without a
government guarantee but usually with some form of private credit
enhancement. The value of all mortgage-backed securities will
vary with the creditworthiness of the issuer, the level and type
of collateralization and interest rates. In addition, the
mortgage-backed securities market in general may be adversely
affected by changes in governmental regulation or tax policies.
The yield characteristics of mortgage-backed securities
differ from those of traditional debt securities. Among the
major differences are that interest and principal payments are
made more frequently, usually monthly, and that principal may be
prepaid at any time. The rates of such prepayments can be
expected to accelerate as interest rates decline. To the extent
the Portfolios purchase these securities at a premium or
discount, prepayment rates will affect yield to maturity.
Prepayments also can result in losses on securities purchased at
a premium to the extent of the premium. In addition, prepayments
usually can be expected to be reinvested at lower interest rates
than the original investment. Derivative mortgage-backed
securities, such as stripped mortgage-backed securities or
residual interests, generally are more sensitive to changes in
interest rates, and the market for such securities is less liquid
than the market for traditional debt securities and mortgage-
backed securities. Interest only and principal only mortgage-
backed securities backed by fixed-rate mortgages and issued by an
agency or instrumentality of the U.S. Government may be
determined to be liquid by WTC pursuant to guidelines approved by
the Fund's Board of Trustees.
MUNICIPAL SECURITIES. The municipal securities in which the
Portfolios may invest include general obligation, revenue or
special obligation, industrial development and private activity
municipal bonds. General obligation bonds are secured by an
issuer's pledge of its full faith, credit and unlimited taxing
power for the payment of principal and interest. Revenue or
special obligation bonds are payable only from the revenues
derived from a particular facility or class of facility or
project or, in some cases, from the proceeds of a special excise
or other tax. Similarly, resource recovery bonds are issued to
build facilities such as solid waste incinerators or waste-to-
energy; the revenue stream from those bonds is secured by fees or
rents paid by municipalities for use of the facilities and depend
upon whether the municipalities appropriate funds for these usage
fees. The term "municipal securities" also includes municipal
lease obligations, such as leases, installment purchase contracts
and conditional sales contracts, and certificates of
participation therein. Municipal lease obligations are issued by
state and local governments and authorities to purchase land or
various types of equipment or facilities and may be subject to
annual budget appropriations.
Industrial development bonds ("IDB's") and private activity
bonds ("PAB's") finance various privately operated facilities,
such as airport or pollution control facilities. These
obligations are included within the term "municipal securities"
if the interest paid thereon is exempt from federal income tax in
the opinion of the bond issuer's counsel. IDB's and PAB's are in
most cases revenue bonds and thus are not payable from the
unrestricted revenues of the issuer. The credit quality of IDB's
and PAB's is usually directly related to the credit standing of
the user of the facilities being financed. The interest on these
bonds issued after August 15, 1986, generally is an item of tax
preference for purposes of the federal alternative minimum tax.
PARTICIPATION INTERESTS. The Portfolios may purchase
participation interests in fixed-income securities that have been
issued by banks or other financial institutions. Participation
interests give the holders differing interests in the underlying
securities, depending upon the type or class of certificate
purchased. For example, coupon strip certificates give the
holder the right to receive a specific portion of interest
payments on the underlying securities; principal strip
certificates give the holder the right to receive principal
payments and the portion of interest not payable to coupon strip
certificate holders. Holders of certificates of participation in
interest payments may be entitled to receive a fixed rate of
interest, a variable rate that is periodically reset to reflect
the current market rate or an auction rate that is periodically
reset at auction.
More complex participation interests involve special risk
considerations. Since these instruments have only recently been
developed, there can be no assurance that any market will develop
or be maintained for the instruments. Generally, the fixed-
income securities that are deposited in trust for the holders of
these interests are the sole source of payments on the interests;
holders cannot look to the sponsor or trustee of the trust or to
the issuers of the securities held in trust or to any of their
affiliates for payment. Nevertheless, participation interests
may be backed by credit enhancements such as letters of credit,
insurance policies, surety bonds or liquidity facilities to
provide full or partial coverage for certain defaults and losses
relating to the underlying securities or to provide liquidity
support for participation interests that give holders the right
to demand payment of principal upon a specified number of days'
notice.
REPURCHASE AGREEMENTS. The Portfolios may invest in
repurchase agreements fully collateralized by U.S. Government
obligations. A repurchase agreement is a transaction in which a
Portfolio purchases a security and simultaneously commits to
resell that security to the seller at an agreed upon market rate
of interest that is unrelated to the coupon rate or maturity of
the purchased security. While it does not currently appear
possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of
the underlying securities, as well as delay and costs to the
Portfolio in connection with bankruptcy proceedings), it is the
policy of the Portfolios to limit repurchase transactions to
those banks and primary dealers in U.S. Government obligations
whose creditworthiness has been reviewed and found satisfactory
by WTC.
U.S. GOVERNMENT OBLIGATIONS. Each Portfolio may purchase
obligations issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities ("U.S. Government
obligations"), including direct obligations of the U.S.
Government (such as Treasury bills, notes and bonds) and
obligations issued by U.S. Government agencies and
instrumentalities. Agencies and instrumentalities include
executive departments of the U.S. Government or independent
federal organizations supervised by Congress. Although not all
obligations of agencies and instrumentalities are direct
obligations of the U.S. Treasury, payment of the interest and
principal on these obligations is generally backed directly or
indirectly by the U.S. Government. This support can range from
obligations supported by the full faith and credit of the United
States (for example, U.S. Treasury securities or GNMA securities)
to obligations that are supported solely or primarily by the
creditworthiness of the issuer (for example, securities issued by
FNMA, FHLMC and the Tennessee Valley Authority). In the case of
obligations not backed by the full faith and credit of the United
States, the Portfolios must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for
ultimate repayment and may not be able to assert a claim against
the United States itself in the event the agency or
instrumentality does not meet its commitments.
VARIABLE AND FLOATING RATE SECURITIES. The Portfolios'
investments may include fixed, variable or floating rate
securities. Variable or floating rate securities bear interest
at rates subject to periodic adjustment or provide for periodic
recovery of principal on demand. Under certain conditions, these
securities may be considered to have remaining maturities equal
to the time remaining until the next interest rate adjustment
date or the date on which principal can be recovered on demand.
The variable rate securities in which the Portfolios invest
may pay interest at rates that vary inversely to changes in
market interest rates. These securities, referred to as "inverse
floating obligations" or "residual interest bonds" provide
opportunities for higher yields but are subject to greater
fluctuations in market value.
WHEN-ISSUED SECURITIES. Each Portfolio may purchase
securities on a "when-issued" basis for delivery to the Portfolio
later than the normal settlement date for such securities, at a
stated price and yield. The Portfolio generally does not pay for
such securities or start earning interest on them until they are
received. However, when a Portfolio purchases securities on a
when-issued basis, it immediately assumes the risks of ownership,
including the risk of price fluctuation. Failure by the issuer
to deliver a security purchased on a when-issued basis may result
in a loss or a missed opportunity to make an alternative
investment.
ZERO COUPON SECURITIES. The Portfolios may invest in zero
coupon securities of governmental or private issuers. Such
securities generally pay no interest to their holders prior to
maturity. Accordingly, such securities are usually issued and
traded at a deep discount from their face or par value and are
subject to greater fluctuations in market value in response to
changing interest rates than are debt obligations of comparable
maturities and credit quality that make current distributions of
interest in cash.
SECURITIES THAT MAY BE PURCHASED BY THE DIVERSIFIED INCOME
PORTFOLIO
CONVERTIBLE SECURITIES. The Diversified Income Portfolio may
invest in convertible bonds or notes or preferred stock that may
be converted into or exchanged for a prescribed amount of common
stock of the same or a different issuer within a particular
period of time at a specified price or formula. The issuer may
have the right to call the securities before the conversion
feature is exercised.
FOREIGN DEBT OBLIGATIONS. The Diversified Income Portfolio
may invest in obligations of foreign issuers, including foreign
governments, payable in U.S. dollars and issued in the United
States (Yankee bonds). The Portfolio may invest up to 10% of its
total assets, at the time of purchase, in obligations of foreign
and U.S. issuers payable in U.S. dollars and issued outside the
United States (Eurobonds) and other non-U.S. dollar-denominated
fixed-income securities of foreign issuers, including those
issued by foreign governments. The Portfolio's investments in
foreign fixed-income securities may involve risks in addition to
those normally associated with investments in domestic
securities, including the possible imposition of exchange control
regulations or currency restrictions, which would prevent cash
being brought back to the United States; less publicly available
information with respect to issuers of securities; less extensive
regulation of foreign brokers, the securities markets and issuers
of securities; lack of uniform accounting standards; a generally
lower degree of liquidity than that available in the U.S.
markets; and the possible imposition of foreign taxes, including
taxes that may be confiscatory. Other risks of foreign
investment include non-negotiable brokerage commissions, lower
trading volume and greater volatility, possible delays in
settlement, the difficulty of enforcing obligations in foreign
countries, and possible political or social instability in
foreign countries. Further, to the extent that the Diversified
Income Portfolio invests in securities denominated in foreign
currencies, the Portfolio will be subject to fluctuations in
foreign currency exchange rates and costs incurred in conversions
between currencies.
OBLIGATIONS ISSUED BY SUPRANATIONAL AGENCIES. The
Diversified Income Portfolio may invest in the obligations of
supranational agencies, such as the International Bank for
Reconstruction and Development (the World Bank). Such
obligations may be denominated in U.S. dollars or other
currencies. Supranational agencies rely on funds from
participating countries, often including the United States, from
which they must request funds. Such requests may not always be
honored. Moreover, the securities of supranational agencies,
depending on where and how they are issued, may be subject to
some of the risks discussed above with respect to foreign debt
obligations.
PREFERRED STOCKS. The Diversified Income Portfolio may
invest in dividend-paying preferred stocks of U.S. and foreign
issuers that, in the judgment of WTC, have substantial potential
for income production. Such equity securities involve greater
risk of loss of income than debt securities because the issuers
are not obligated to pay dividends. In addition, equity
securities are subordinate to debt securities and are more
subject to changes in economic and industry conditions and to
changes in the financial condition of the issuers.
REVERSE REPURCHASE AGREEMENTS. The Diversified Income
Portfolio may enter into reverse repurchase agreements to sell
portfolio securities to securities dealers or banks subject to
the Portfolio's agreement to repurchase the securities at an
agreed-upon date and price reflecting a market rate of interest.
The value of the securities subject to a reverse repurchase
agreement may decline below the repurchase price. The Portfolio
may also encounter delays in recovering the securities and even
loss of rights in the securities should the opposite party fail
financially. Reverse repurchase agreements, together with other
borrowing by the Portfolio, are limited to one-third of the
Portfolio's assets. The Portfolio will maintain with the Fund's
custodian in a segregated account cash or liquid securities,
marked to market daily, in an amount at least equal to the
Portfolio's obligations under reverse repurchase agreements that
are outstanding.
INVESTMENT STRATEGIES THAT MAY BE USED BY THE DIVERSIFIED INCOME
PORTFOLIO
LENDING OF PORTFOLIO SECURITIES. The Diversified Income
Portfolio may lend securities to increase investment income
through interest on the loan. All loan agreements will require
that the loans be fully collateralized by cash, U.S. Government
obligations or any combination of cash and such securities,
marked to market value daily. The Portfolio continues to receive
interest on the securities lent or an equivalent fee from the
borrower, while simultaneously earning income on the investment
of the collateral. The Portfolio retains authority to terminate
a loan at any time and retains voting, subscription, dividend and
other rights when it is in the Portfolio's best interests to do
so. If the borrower of the securities fails financially, there
may be a delay in receiving additional collateral, a delay in
recovering the securities or even loss of the collateral.
However, loans are only made to borrowers that are deemed by WTC
to be of good standing and when, in the judgment of WTC, the
income that can be earned justifies the attendant risks. The
aggregate value of outstanding securities loans in the
Portfolio's holdings may not exceed one-third of its total
assets.
HEDGING STRATEGIES. The Diversified Income Portfolio may
engage in options and futures strategies to hedge various market
risks (such as interest rates and broad or specific market
movements) or to enhance potential gain. The Diversified Income
Portfolio may also purchase or sell forward currency contracts in
an attempt to manage the Portfolio's foreign currency exposure.
The Portfolio may enter into forward currency contracts to set
the rate at which currency exchanges will be made for specific
contemplated transactions. The Portfolio may also enter into
forward currency contracts in amounts approximating the value of
one or more portfolio positions to fix the U.S. dollar value of
those positions. Use of options, futures and forward currency
contracts by the Diversified Income Portfolio is limited by
market conditions, regulatory limitations and other tax
considerations.
The use of forward currency contracts, options and futures
involves certain investment risks and transaction costs. These
risks include: dependence on WTC's and the sub-advisers' ability
to predict movements in the prices of individual securities,
fluctuations in the general securities markets and movements in
interest rates and currency markets; imperfect correlation
between movements in the price of currency, options, futures
contracts or related options and movements in the price of the
currency or security hedged or used for cover; the fact that
skills and techniques needed to trade options, futures contracts
and related options or to use forward currency contracts are
different from those needed to select the securities in which the
Fund invests; lack of assurance that a liquid secondary market
will exist for any particular option, futures contract or related
option at any particular time; and the possible need to defer
closing out certain forward currency contracts, options, futures
contracts and related options in order to continue to qualify for
the beneficial tax treatment afforded regulated investment
companies under the Internal Revenue Code of 1986, as amended.
(See "Taxes" in the Statement of Additional Information.)
SHORT SALES AGAINST THE BOX. The Diversified Income
Portfolio may engage in a short sale against the box as a hedge
when WTC believes that the price of a security held by the
Portfolio may decline or for tax planning purposes to defer
recognition of gain or loss for tax purposes. In an ordinary or
uncovered short sale, the seller does not own the securities
sold, and must subsequently purchase an equivalent amount of
securities in the market to complete or cover the transaction.
In a "short sale against the box," however, the seller already
owns securities equivalent to the securities sold short, and it
is these securities which are held by the broker ("against the
box") to cover the transaction. The broker borrows the
securities that are actually sold from a third party. Since the
seller already owns the securities sold and does not need to
purchase equivalent securities in the market, the sale entails no
possibility of market gain or risk of market loss other than the
gain or loss that would be realized by an ordinary sale of the
securities.
<PAGE>
THE RODNEY SQUARE
STRATEGIC FIXED-INCOME FUND
APPLICATION & NEW ACCOUNT REGISTRATION
____________________________________________________________________________
INSTRUCTIONS: RETURN THIS COMPLETED FORM TO:
FOR WIRING INSTRUCTIONS OR FOR THE RODNEY SQUARE STRATEGIC
ASSISTANCE IN COMPLETING THIS FIXED-INCOME FUND
FORM CALL (800) 336-9970 C/O RODNEY SQUARE MANAGEMENT CORP.
P.O. Box 8987
WILMINGTON, DE 19899-9752
____________________________________________________________________________
PORTFOLIO SELECTION ($1,000 MINIMUM)
__ DIVERSIFIED INCOME PORTFOLIO $___________
__ MUNICIPAL INCOME PORTFOLIO $___________
TOTAL AMOUNT TO BE INVESTED $___________
____By check. (Make payable to "The Rodney Square Stategic Fixed-Income Fund")
____By wire. Call 1-800-336-9970 for Instructions.
____Bank from which funds will be wired _____________________
wire date _____________________
______________________________________________________________________________
ACCOUNT REGISTRATION - JOINT TENANTS USE LINES 1 AND 2; CUSTODIAN FOR A MINOR,
USE LINES 1 AND 3; CORPORATION, TRUST OR OTHER ORGANIZATION OR ANY FIDUCIARY
CAPACITY, USE LINE 4.
1.Individual__________________________________________________________________
First Name MI Last Name Customer Tax ID No.*
2.Joint Tenancy**
__________________________________________________________________
First Name MI Last Name Customer Tax ID No.*
3.Gifts to Minors***
_______________________ _______________ under the __________
Minor's Name Customer Tax ID No.* State
4.Other Registration
_____________________________________ _____________________
Customer Tax ID No.*
5.If Trust, Date of Trust Instrument:_________________________________________
6._______________________________________
Your Occupation
7.___________________________________ _______________________________________
Employer's Name Employer's Address
*Customer Tax Identification No.: (a) for an individual, joint tenants, or
a custodial account under the Uniform Gifts/Transfers to Minors Act, supply
the Social Security number of the registered account owner who is to be taxed;
(b) for a trust, a corporation, a partnership, an organization, a fiduciary,
etc., supply the Employer Identification number of the legal entity or or-
ganization that will report income and/or gains.
** "Joint Tennants with Rights of Survivorship" unless otherwise specified.
*** Regulated by the state's Uniform Gift/Transfers to Minors Act.
______________________________________________________________________________
ADDRESS OF RECORD
______________________________________________________________________________
Street
______________________________________________________________________________
3/96 City State Zip Code
<PAGE>
______________________________________________________________________________
DISTRIBUTION OPTIONS - IF THESE BOXES ARE NOT CHECKED, ALL DISTRIBUTIONS WILL
BE INVESTED IN ADDITIONAL SHARES.
Pay Cash for:
Income Dividends Other
DIVERSIFIED INCOME PORTFOLIO ___ ___
MUNICIPAL INCOME PORTFOLIO ___ ___
______________________________________________________________________________
CHECK ANY OF THE FOLLOWING IF YOU WOULD LIKE ADDITIONAL INFORMATION ABOUT
A PARTICULAR PLAN OR SERVICE SENT TO YOU.
___AUTOMATIC INVESTMENT PLAN ___SYSTEMATIC WITHDRAWAL PLAN ___CHECK REDEMPTIONS
(Check redemptions services are generally not available for clients of
WTC through their trust or corporate cash management accounts; this service
may also not be available for clients of Service Organizations.)
______________________________________________________________________________
RIGHTS OF ACCUMULATION (SEE PROSPECTUS) -- INDICATE ANY RELATED ACCOUNT(S) IN
FUNDS OR PORTFOLIOS IN THE RODNEY SQUARE COMPLEX WHICH WOULD QUALIFY FOR A
REDUCED SALES LOAD AS OUTLINED UNDER "PURCHASE OF SHARES-REDUCED SALES LOAD
PLANS" IN THE PROSPECTUS.
_____________________ ____________ ____________________ ___________________
Fund/Portfolio Name Account No. Registered Owner Relationship
_____________________ ____________ ____________________ ___________________
Fund/Portfolio Name Account No. Registered Owner Relationship
______________________________________________________________________________
LETTER OF INTENT
I agree to the Letter of Intent provisions set forth below. I am not obligated
but intend to invest an aggregate amount of at least:
__ $25,000 __ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Under the terms described under "PURCHASE OF SHARES-Reduced Sales Load Plans"
in the Prospectus, over a thirteen-month period beginning __________________.
I hereby irrevocably constitute and appoint RSMC as my agent and attorney to
surrender for redemption any or all escrowed shares with full power of
substitution in the premises.
I understand that this letter is not effective until it is accepted by RSMC.
____________________________________ ____________________________________
Authorized Signature Authorized Signature
______________________________________________________________________________
SALES LOAD WAIVERS -- PLEASE INDICATE IN THE SPACE PROVIDED THE NATURE OF YOUR
ELIGIBILITY FOR A WAIVER OF SALES LOADS. (SEE "PURCHASE OF SHARES-SALES LOAD
WAIVERS" IN THE PROSPECTUS.)
Nature of Affiliation ______________________________________________________
____________________________________________________________________________
<PAGE>
CERTIFICATIONS AND SIGNATURE(S) - PLEASE SIGN EXACTLY AS REGISTERED UNDER
"ACCOUNT REGISTRATION."
I have received and read the Prospectus for The Rodney Strategic Fixed-
Income Fund and agree to its terms; I am of legal age. I understand that the
shares offered by this Prospectus are not deposits of, or guaranteed by,
Wilmington Trust Company, nor are the shares insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency. I
further understand that investment in these shares involves investment risks,
including possible loss of principal. If a corporate customer, I certify that
appropriate corporate resolutions authorizing investment in The Rodney Square
Strategic Fixed-Income Fund been duly adopted.
I certify under penalties of perjury that the Social Security number or
taxpayer identification number shown above is correct. Unless the box below is
checked, I certify under penalties of perjury that I am not subject to backup
withholding because the Internal Revenue Service (a) has not notified me that
I am as a result of failure to report all interest or dividends, or (b) has
notified me that I am no longer subject to backup withholding. The
certifications in this paragraph are required from all nonexempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemption proceeds under the federal income tax law.
____Check here if you are subject to backup withholding.
Signature___________________________________________ Date____________
Signature___________________________________________ Date____________
Joint Owner/Trustee
Check one: __ Owner __ Trustee __ Custodian __ Other _____________________
______________________________________________________________________________
IDENTIFICATION OF SERVICE ORGANIZATION
We authorize Rodney Square Management Corporation ("RSMC"), and Rodney
Square Distributors, Inc. ("RSD") in the case of transactions by telephone, to
act as our agents in connection with transactions authorized by this order
form.
Service Organization Name and Code____________________________________________
Branch Address and Code_______________________________________________________
Representative or Other Employee Code_________________________________________
Authorized Signature of Service Organization___________Telephone (___)________
<PAGE>
THE RODNEY SQUARE
STRATEGIC FIXED-INCOME FUND
APPLICATION for TELEPHONE REDEMPTION OPTION
______________________________________________________________________________
Telephone redemption permits redemption of fund shares by telephone, with
proceeds directed only to the fund account address of record or to the bank
account designated below. For investments by check, telephone redemption is
available only after these shares have been on the Fund's books for 10 days.
This form is to be used to add or change the telephone redemption option on
your Rodney Square Strategic Fixed-Income Fund account(s).
______________________________________________________________________________
ACCOUNT INFORMATION
Portfolio Name(s):_______________________________________________________
Fund Account Number(s):__________________________________________________
(Please provide if you are a current account holder:)
Registered in the Name(s) of:_______________________________________________
_______________________________________________
Registered Address:_________________________________________________________
_________________________________________________________
NOTE: If this form is not submitted together with the application, a coporate
resolution must be included for accounts registered to other than an individ-
ual, a fiduciary or partnership.
______________________________________________________________________________
REDEMPTION INSTRUCTIONS
___Add ___Change
Check one or more.
___Mail proceeds to my fund account address of record (must be $10,000 or
less and address must be established for a minimum of 60 days)
___Mail proceeds to my bank
___Wire proceeds to my bank (minimum $1,000)
___All of the above
Telephone redemption by wire can be used only with financial institutions that
are participants in the Federal Reserve Bank Wire System. If the financial
institution you designate is not a Federal Reserve participant, telephone
redemption proceeds will be mailed to the named financial institution. In
either case, it may take a day or two, upon receipt for your financial
institution to credit your bank account with the proceeds, depending on its
internal crediting procedures.
______________________________________________________________________________
3/96
<PAGE>
BANK INFORMATION
PLEASE COMPLETE THE FOLLOWING INFORMATION ONLY IF PROCEEDS MAILED/WIRED TO YOUR
BANK WAS SELECTED. A VOIDED BANK CHECK MUST BE ATTACHED TO THIS APPLICATION.
Name of Bank________________________________________________________________
Bank Routing Transit #______________________________________________________
Bank Address________________________________________________________________
City/State/Zip______________________________________________________________
Bank________________________________________________________________________
Account Number______________________________________________________________
Name(s) on Bank Account_____________________________________________________
______________________________________________________________________________
AUTHORIZATIONS
By electing the telephone redemption option, I appoint Rodney Square
Management Corporation ("RSMC") my agent to redeem shares of any designated
Rodney Square fund when so instructed by telephone. This power will
continue if I am disabled or incapacitated. By granting this power, I
understand that RSMC may be contacted, on my apparent behalf, by imposters.
In view of this risk, I futher understand and agree that RSMC plans to
follow reasonable procedures to confirm that instructions communicated by
telephone are genuine. Such procedures shall include sending proceeds of
telephone redemption requests only to my account address of record, or to
the bank listed above. Proceeds in excess of $10,000 will be sent only to
my predesignated bank. By signing below, I agree on behalf of myself,
my successors and assigns, not to hold RSMC, any of its affiliates, or any
Rodney Square fund responsible for acting under the powers I have given
RSMC, provided the aforementioned precautionary procedures are duly followed.
I also agree that all account and registration information I have given will
remain the same unless I instruct RSMC otherwise in writing, accompanied by
a signature guarantee. If I want to terminate this agreement, I will give
RSMC at least ten days notice in writing. If RSMC or other Rodney Square
funds want to terminate this agreement, they will give me at least ten days
notice in writing.
All owners on the account must sign below and obtain signature guarantee(s).
_____________________________________ ___________________________________
Signature of Individual Owner Signature of Joint Owner (if any)
______________________________________________________________________________
Signature of Corporate Officer, Trustee or other _ please include your title
You must have a signature(s) guaranteed by an eligible institution acceptable
to the Fund's transfer agent, such as a bank, broker/dealer, government securi-
ties dealer, credit union, national securities exchange, registered securities
association, clearing agency or savings association. A Notary Public is not an
acceptable guarantor.
SIGNATURE GUARANTEE(S) (stamp)
<PAGE>
[Outside cover - divided into three sections]
[Left Section]
TRUSTEES
Eric Brucker
Fred L. Buckner
Robert J. Christian
Martin L. Klopping
John J. Quindlen
- -------------------
OFFICERS
Martin L. Klopping, President
Joseph M. Fahey, Jr., Vice President
Robert C. Hancock, Vice President & Treasurer
Carl M. Rizzo, Esq., Secretary
Diane D. Marky, Assistant Secretary
Connie L. Meyers, Assistant Secretary
John J. Kelley, Assistant Treasurer
- ---------------------------------------------
ADMINISTRATOR AND
TRANSFER AGENT
Rodney Square Management Corporation
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
- -------------------------------------
INVESTMENT ADVISER AND
CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
- -------------------------
DISTRIBUTOR
Rodney Square Distributors, Inc.
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
- --------------------------------
RS10
[Middle Section]
the RODNEY SQUARE
STRATEGIC
FIXED-INCOME
FUND
[GRAPHIC] RSMC Logo
PROSPECTUS
MARCH 1, 1997
[Right Section]
TABLE OF CONTENTS
PAGE
Expense Table.................................... 2
Financial Highlights............................. 4
Questions and Answers About the Portfolio........ 6
Investment Objectives and Policies............... 8
Purchase of Shares............................... 12
Shareholder Accounts............................. 15
Redemption of Shares............................. 15
Exchange of Shares............................... 17
How Net Asset Value is Determined................ 18
Dividends, Other Distributions and Taxes......... 19
Performance Information.......................... 21
Management of the Fund........................... 22
Description of the Fund.......................... 24
Appendix......................................... 25
Application & New Account Registration........... 31
