(File Nos. 33-5501 and 811-4663)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. __)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
1) Title of each class of securities to which transaction applies:
------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
------------------------------
5) Total fee paid:
------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
<PAGE>
1) Amount Previously Paid:
------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------
3) Filing Party:
------------------------------
4) Date Filed:
------------------------------
<PAGE>
Rodney Square North
1100 North Market Street
Wilmington
Delaware
19890-001
[Logo] The
Rodney
Square
Funds
June 5, 1998
Dear Shareholder:
Enclosed please find a Notice and Proxy Statement for a Special Meeting of
Shareholders (the "Meeting") of The Rodney Square Strategic Fixed-Income Fund
(the "Fund"), which will be held at the offices of Wilmington Trust Company
("WTC"), 1100 North Market Street, 9th Floor, Wilmington, Delaware 19890-0001,
on June 25, 1998, at 10:00 a.m. eastern time. Please read the proxy materials
carefully, and execute and return the completed proxy card as soon as possible
unless you plan to vote at the Meeting.
The Meeting has been called to permit the shareholders of each of the two
series of the Fund, the Rodney Square Diversified Income Portfolio and the
Rodney Square Municipal Income Portfolio (the "Portfolios"), to vote on a new
investment advisory agreement ("New Advisory Agreement") with WTC. Under its
current investment advisory agreement ("Current Advisory Agreement") with WTC,
the Fund pays WTC a monthly advisory fee at an annual rate of 0.50% of each
Portfolio's average daily net assets. This fee also covers the provision of
custody and transfer agency services to the Portfolios. Under the New Advisory
Agreement with WTC, the investment advisory fee paid to WTC would be reduced to
an annual rate of 0.35% of each Portfolio's average daily net assets. In
addition, under the New Advisory Agreement, WTC would no longer be responsible
for paying for the provision of custody and transfer agency services. Rather,
those services would be paid for directly by the Fund.
In addition to the proposal outlined above, you are being asked to elect
the Trustees of the Fund and ratify the selection of the Fund's independent
auditors. To help the Fund avoid the substantial costs of further proxy
solicitations, please complete the enclosed proxy and return it as soon as
possible in the enclosed postage-paid envelope, even if you plan to attend the
Meeting in person.
Thank you in advance for your participation and prompt attention.
Sincerely yours,
/s/ Robert J. Christian
Robert J. Christian
President
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
RODNEY SQUARE NORTH
1100 NORTH MARKET STREET
WILMINGTON, DE 19890-0001
-------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 25, 1998
To the Shareholders:
A Special Meeting of Shareholders (the "Meeting") of The Rodney Square
Strategic Fixed-Income Fund (the "Fund") will be held at the offices of
Wilmington Trust Company, 1100 North Market Street, 9th Floor, Wilmington,
Delaware 19890-0001, on June 25, 1998, at 10:00 a.m. eastern time, for the
following purposes:
1. To elect the Trustees of the Fund;
2. To approve or disapprove a new investment advisory agreement for each
series of the Fund;
3. To ratify the selection of Ernst & Young LLP as independent auditors
of the Fund; and
4. To transact any other business as may properly come before the Meeting
or any adjournment thereof.
You are entitled to vote at the Meeting and any adjournments thereof if
you owned shares of beneficial interest in the Fund at the close of business on
May 18, 1998. If you attend the Meeting, you may vote your shares in person. If
you do not expect to attend, please complete, date, sign, and mail the enclosed
proxy card in the enclosed postage prepaid envelope.
By Order of the Board of Trustees,
Carl M. Rizzo, Secretary
June 5, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE PAID
RETURN ENVELOPE ENCLOSED, SO THAT A QUORUM WILL BE PRESENT AND A MAXIMUM NUMBER
OF SHARES MAY BE VOTED. IT IS MOST IMPORTANT AND IN YOUR INTEREST FOR YOU TO
SIGN YOUR PROXY CARD AND RETURN IT. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO
ITS USE.
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
RODNEY SQUARE NORTH
1100 NORTH MARKET STREET
WILMINGTON, DE 19890-0001
-------------------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
JUNE 25, 1998
-----------
This Proxy Statement is furnished to shareholders in connection with the
solicitation of proxies by the Board of Trustees of The Rodney Square Strategic
Fixed-Income Fund (the "Fund") for use at a Special Meeting of Shareholders (the
"Meeting") to be held on June 25, 1998 at 10:00 a.m. eastern time at the offices
of Wilmington Trust Company ("WTC"), 1100 North Market Street, 9th Floor,
Wilmington, Delaware 19890-0001 and at any adjournment thereof. Copies of this
Proxy Statement and the accompanying materials were first sent to shareholders
on or about June 5, 1998.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, the duly appointed proxies will vote your shares in favor
of the five nominees for trustee named herein; in accordance with the
recommendation of your Board of Trustees as to all other proposals described
herein; and at the discretion of the proxies on any other matter that may
properly come before the Meeting. Any person giving a proxy may revoke it at any
time prior to its use by giving written notice of such revocation to the Fund
prior to the Meeting, by delivering a subsequently dated proxy to the Fund prior
to the Meeting, or by attending and voting at the Meeting in person. Proxies
will be solicited principally by mail, but officers of the Fund or agents
appointed by the Fund may also solicit proxies by other means.
The Board of Trustees has fixed the close of business on May 18, 1998 as
the record date ("Record Date") for the determination of the shareholders
entitled to notice of and to vote at the Meeting or any adjournment thereof. As
of that date, there were approximately 2,421,341 outstanding shares of the
Rodney Square Diversified Income Portfolio (the "Diversified Income Portfolio")
and approximately 1,367,438 outstanding shares of the Rodney Square Municipal
Income Portfolio (the "Municipal Income Portfolio"), the two series of the Fund.
Each shareholder is entitled to one vote for each share held on the Record Date.
As of May 18, 1998, no shareholder other than WTC owned of record or
beneficially more than 5% of the outstanding shares of either Portfolio. As of
that date, WTC owned of record approximately 81.7% of the shares of the
Diversified Income Portfolio, of which it owned beneficially with power to vote,
2
<PAGE>
on behalf of its customer accounts, approximately 62.6% of the shares of that
Portfolio, and approximately 56.3% of the shares of the Municipal Income
Portfolio, of which it owned beneficially with power to vote, on behalf of its
customer accounts, approximately 50.9% of the shares of the Portfolio.
The presence at the Meeting, in person or by proxy, of the holders of at
least a majority of the Fund's outstanding shares as of the Record Date is
required to constitute a quorum for the purpose of transacting business at the
Meeting. In the event that a quorum is not represented at the Meeting or at any
adjournment thereof, or, even if a quorum is so represented, in the event that
sufficient votes in favor of any of the proposals set forth in the Notice of the
Meeting are not received, the persons named as proxies may propose and vote for
one or more adjournments of the Meeting and further solicitation of proxies may
be made without the necessity of further notice. The persons named as proxies
will vote in favor of any such adjournment if such proxies instruct them to vote
in favor of any of the proposals to be considered at the adjourned meeting, and
will vote against any such adjournment if such proxies instruct them to vote
against or to abstain from voting on all of the proposals to be considered at
the adjournment meetings. A shareholder vote may be taken on one or more of the
proposals prior to an adjournment if sufficient votes have been received and it
is otherwise appropriate.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining whether a quorum is present but will not be voted for or
against any proposal or for or against any adjournment to permit further
solicitation of proxies. Accordingly, abstentions and broker non-votes
effectively will be a vote against such adjournment or against any proposal
where the required vote is a percentage of the shares present or outstanding.
Abstentions and broker non-votes will not be counted, however, as votes cast for
purposes of determining whether sufficient votes have been received to approve a
proposal. Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other person entitled to vote and the broker does not have discretionary voting
authority.
A COPY OF THE FUND'S MOST RECENT ANNUAL REPORT AND SEMI-ANNUAL REPORT TO
SHAREHOLDERS WILL BE AVAILABLE TO ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN
REQUEST TO: PFPC INC., 400 BELLEVUE PARKWAY, WILMINGTON, DE 19809 OR BY PHONE,
TOLL-FREE, AT 800-336-9970.
PROPOSAL 1. TO ELECT TRUSTEES OF THE FUND
Unless you give contrary instructions on the proxy card, your proxy will be
voted FOR the election of the five nominees listed below. Each nominee has
indicated his or her willingness to serve if elected. If any of the nominees
should withdraw or otherwise become unavailable for election, the proxies will
vote for such other nominee or nominees as the Board of Trustees may recommend.
Messrs. Brucker and Quindlen have served as Trustees since the Fund's
commencement of operations. Mr. Buckner has served as a Trustee since August
3
<PAGE>
1989, Mr. Christian has served as a Trustee since May 1996. Ms. Webb is not
currently a Trustee of the Fund.
<TABLE>
<CAPTION>
Shares of the
Fund
Position with Fund, Beneficially
Business Experience Owned Directly
Nominee During The Past 5 Years or Indirectly on
(Age) and Other Directorships May 18, 1998
----- ----------------------- ------------
<S> <C> <C>
Eric Brucker Trustee, has been Dean of the School of 0
Management at the University of Michigan -
(56) Dearborn since June 1992. He was Professor of
Economics, Trenton State College from
September 1989 through June 1992. He was Vice
President for Academic Affairs, Trenton State
College from September 1989 through June
1991. From 1976 until September 1989, he was
Dean of the College of Business and Economics
and Chairman of various Committees at the
University of Delaware. He is also a member
of the Detroit Economic Club, Financial
Executive Institute and Leadership Detroit.
Fred L. Buckner Trustee, has retired as President and Chief 0
Operating Officer of Hercules Incorporated
(66) (diversified chemicals), positions he held
from March 1987 through March 1992. He also
served as a member of the Hercules
Incorporated Board of Directors from 1986
through March 1992.
Robert J. Christian* Trustee, has been Chief Investment Officer of 0
WTC since February 1996 and Director of Rodney
(49) Square Management Corporation ("RSMC") since
February 1996. He was Chairman and Director
of PNC Equity Advisors Company, and President
and Chief Investment Officer of PNC Asset
Management Group, Inc. from 1994 to 1996. He
was Chief Investment Officer of PNC Bank, N.A.
from 1992 to 1996, Director of Provident
Capital Management (investment management
services) from 1993 to 1996, and Director of
Investment Strategy PNC Bank, N.A. from 1989
to 1992. He is also a Trustee of LaSalle
University and a member of the Board of
Governors for the Pennsylvania Economy League.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Shares of the
Fund
Position with Fund, Beneficially
Business Experience Owned Directly
Nominee During The Past 5 Years or Indirectly on
(Age) and Other Directorships May 18, 1998
----- ----------------------- ------------
<S> <C> <C>
John J. Quindlen Trustee, has retired as Senior Vice 0
President-Finance of E.I. du Pont de Nemours
(66) and Company, Inc. (diversified chemicals), a
position he held from 1984 through November
1993. He also served as Chief Financial
Officer of E.I. du Pont de Nemours and
Company, Inc. from 1984 through June 1993. He
also serves as a Director of The St. Joe
Company and a Trustee of Kalmar Pooled
Investment Trust.
Nina M. Webb* Vice President of WTC since February 1996 and 0
RSMC since January 1998, and Equity Portfolio
(44) Manager at WTC since March 1987. A Chartered
Financial Analyst, she previously was employed
by the University of Delaware as Senior
Investment Analyst (1985-86), Investment
Analyst (1982-85), and Accountant (1976-82).
</TABLE>
- ---------------
* Mr. Christian and Ms. Webb are deemed to be "interested persons" of the
Fund, as defined in the Investment Company Act of 1940, as amended ("1940 Act"),
by virtue of their positions with RSMC and WTC.
Information with respect to the executive officers of the Fund is provided
below. See "Executive Officers of the Fund." To the knowledge of the Fund's
management, as of the record date, the Trustees and officers of the Fund owned,
as a group, no shares of either the Diversified Income Portfolio or the
Municipal Income Portfolio.
There were four meetings of the Board held during the Fund's fiscal year
ended October 31, 1997. Each Trustee attended all meetings. The Board has an
Audit Committee comprised of Messrs. Brucker, Buckner and Quindlen. The purpose
of the Audit Committee is to oversee the annual audit of the Fund and review the
performance of the Fund's independent accountants. During the Fund's fiscal year
ended October 31, 1997, the Audit Committee met two times. The Board has a
Nominating Committee comprised of Messrs. Brucker, Buckner and Quindlen. The
purpose of the Nominating Committee is to select nominees to the Board of
Trustees. The Nominating Committee did not meet during the fiscal year ended
October 31, 1997. The Board has a Contract Review Committee comprised of Messrs.
Brucker, Buckner and Quindlen. The purpose of the Contract Review Committee is
to review the Fund's investment advisory, distribution and other contractual
arrangements with affiliates to the Fund. During the Fund's fiscal year ended
5
<PAGE>
October 31, 1997, the Contract Review Committee met once. The Board does not
have a Compensation Committee.
The fees and expenses of the Trustees who are not "interested persons" of
the Fund ("Independent Trustees"), as defined in the 1940 Act, are paid by the
Fund. The following table shows the fees paid during the fiscal year ended
October 31, 1997, to the Independent Trustees for their services to the Fund and
to the other mutual funds which are advised by Rodney Square Management
Corporation or WTC.
1997 TRUSTEES COMPENSATION
TOTAL COMPENSATION FROM
COMPENSATION THE RODNEY SQUARE FAMILY
INDEPENDENT TRUSTEE (1) FROM THE FUND OF FUNDS
- ----------------------- ------------- --------
Eric Brucker $3,600 $12,700
Fred L. Buckner $3,600 $12,700
John J. Quindlen $3,600 $12,700
(1) Trustees do not receive any pension or retirement benefits from the Fund.
REQUIRED VOTE. Election of each nominee as a Trustee of the Fund requires
the vote of a plurality of all the outstanding shares of the Fund present at the
Meeting in person or by proxy.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES.
PROPOSAL 2. TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT FOR
THE FUND
BACKGROUND. Under the Fund's current Advisory Agreement ("Current Advisory
Agreement"), the Fund pays WTC a single fee that covers the provision of
investment advisory, custodial and transfer agency services to the Portfolios.
At the time this fee arrangement was agreed upon, WTC and its affiliates acted
as Custodian and Transfer Agent for the Portfolios. PFPC Inc. ("PFPC") recently
became the Transfer Agent for the Portfolios following the sale in early 1998 of
RSMC's transfer agency and related businesses to PFPC. In addition, while WTC
still serves as Custodian, PNC Bank, N.A. ("PNC") recently became the
Sub-Custodian of the Portfolios' assets. WTC currently compensates PNC and PFPC
for their services out of the fee it receives from the Fund. As a result of the
changes in the transfer agency and custody arrangements, WTC has proposed that
the fees paid for custodial and transfer agency services be separated from the
fee paid to WTC for investment advisory services. Accordingly, shareholders are
being asked to approve a new Advisory Agreement ("New Advisory Agreement") that
6
<PAGE>
reflects this change in fee structure. A copy of the New Advisory Agreement is
attached as Appendix A.[1]
CURRENT FEE STRUCTURE. Under its Current Advisory Agreement with WTC, the
Fund pays WTC a monthly advisory fee at an annual rate of 0.50% of each
Portfolio's average daily net assets. The Current Advisory Agreement also
provides that the advisory fee will serve as compensation for custodial and
transfer agency services. During the fiscal year ended October 31, 1997, WTC's
advisory fees with respect to the Diversified Income Portfolio were $157,718, of
which WTC waived $148,754 in accordance with its undertaking to limit the
Portfolio's operating expenses to 0.75% of the Portfolio's average daily net
assets through February 1999. During the fiscal year ended October 31, 1997,
WTC's advisory fees with respect to the Municipal Income Portfolio were $82,587,
all of which WTC waived in accordance with its undertaking to limit the
Portfolio's operating expenses to 0.75% of the Portfolio's average daily net
assets through February 1999. During that fiscal year, the Portfolios did not
pay any brokerage commissions to any broker or dealer who is an affiliate of
WTC.
The following fee table is provided to assist investors in understanding
the various fees and expenses which currently are borne directly or indirectly
by an investment in the Portfolios under the Current Advisory Agreement.
CURRENT ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)(1)
DIVERSIFIED MUNICIPAL
INCOME INCOME
PORTFOLIO PORTFOLIO
Advisory Fee (after waivers)............. 0.21% 0.00%
Other Expenses........................... 0.54% 0.75%
---- ----
Total Operating Expenses (after waivers). 0.75% 0.75%
==== ====
- -------------------
(1) Expenses are based on each Portfolio's expenses for its fiscal year
ended October 31, 1997, adjusted to reflect its current advisory,
administration, accounting services and transfer agency fees, the termination of
its Rule 12b-1 Plan, and WTC's undertaking to waive its advisory fee or
reimburse expenses to the extent that their expenses (excluding taxes,
extraordinary expenses, brokerage commissions and interest) exceed an annual
rate of 0.75% of each Portfolio's average daily net assets through February
1999. Without waivers, the Advisory Fee for the Diversified Income Portfolio
would be 0.50% of the Portfolio's average daily net assets, and Total Operating
Expenses would be 1.04% of its average daily net assets. Without waivers, the
Advisory Fee for the Municipal income Portfolio would be 0.50% of the
Portfolio's average daily net assets and Other Expenses and Total Operating
Expenses would be 0.92% and 1.42%, respectively, of its average daily net
assets.
PROPOSED FEE STRUCTURE. Under the New Advisory Agreement with WTC, the
investment advisory fee to be paid to WTC would be reduced to an annual rate of
- ------------------------
[1] Effective June 29, 1998, the name of the Diversified Income Portfolio will
be changed to the Short/Intermediate Bond Portfolio, and the name of the
Municipal Income Portfolio will be changed to the Municipal Bond Portfolio. In
addition, the Fund will add a new series, the Intermediate Bond Portfolio, on
June 29, 1998. Schedules A and B to the New Advisory Agreement reflect these
changes.
7
<PAGE>
0.35% of each Portfolio's average daily net assets. Under the New Advisory
Agreement, the advisory fees for the past fiscal year would have been $110,263
before waivers with respect to the Diversified Income Portfolio and $57,811
before waivers with respect to the Municipal Income Portfolio. If the New
Advisory Agreement is approved, however, the Fund would also pay WTC an annual
fee for custody services equal to the amount derived from the following
schedule: 0.015% of the first $2 billion of the Fund's average daily net assets;
0.0125% of the next $1 billion of the Fund's average daily net assets; and
0.010% of the Fund's average daily net assets in excess of $3 billion, subject
to a minimum monthly fee of $1,000 per Portfolio, plus $7.50 per purchase, sale
or maturity of each portfolio security. The estimated annual fees for custody
services under the proposed new arrangements would be $15,453 for the
Diversified Income Portfolio and $13,653 for the Municipal Income Portfolio. In
addition, for transfer agency services under the proposed new arrangements, the
Fund would pay PFPC a minimum annual base fee of $18,000 for each Portfolio, as
well as account fees, transaction charges, and out of pocket expenses. WTC has
undertaken to waive its advisory fee or reimburse expenses to the extent that
the Portfolios' expenses (excluding taxes, extraordinary expenses, brokerage
commissions and interest) exceed an annual rate of 0.55%, with respect to the
Diversified Income Portfolio, and 0.75%, with respect to the Municipal Income
Portfolio, of each Portfolio's average daily net assets through February 1999.
The following fee table is provided to assist investors in understanding
the various fees and expenses which may be borne directly or indirectly by an
investment in the Portfolios under the New Advisory Agreement.
PROPOSED ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE
DAILY NET ASSETS)(1)
DIVERSIFIED MUNICIPAL
INCOME INCOME
PORTFOLIO PORTFOLIO
Advisory Fee (after waivers) 0.00% 0.00%
Other Expenses (after reimbursements) 0.55% 0.75%
----- -----
Total Fund Operating Expenses(after waivers 0.55% 0.75%
and reimbursements) ===== =====
- -------------------
(1) Expenses are based on each Portfolio's expenses for its fiscal year
ended October 31, 1997, adjusted to reflect its advisory, custody and transfer
agency fees if the New Advisory Agreement is approved, its current
administration and accounting services fees, the termination of its Rule 12b-1
Plan, and WTC's undertaking to waive its advisory fee or reimburse expenses to
the extent that their expenses (excluding taxes, extraordinary expenses,
brokerage commissions and interest) exceed an annual rate of 0.55%, with respect
to the Diversified Income Portfolio, and 0.75%, with respect to the Municipal
Income Portfolio, of each Portfolio's average daily net assets through February
1999. Without waivers, the Advisory Fee for the Diversified Income Portfolio
would be 0.35% of the Portfolio's average daily net assets and Other Expenses,
and Total Operating Expenses would be 0.59% and 0.94%, respectively, of its
average daily net assets. Without waivers and reimbursements, the Advisory Fee
for the Municipal Income Portfolio would be 0.35% of the Portfolio's average
daily net assets and Other Expenses and Total Operating Expenses would be 0.97%
and 1.32%, respectively, of its average daily net assets.
COMPARISON OF CURRENT AND NEW ADVISORY AGREEMENTS. Under the New Advisory
Agreement, WTC agrees to act as investment adviser of the Fund and agrees: (1)
to direct the investments of the Portfolio, subject to and in accordance with
8
<PAGE>
the Portfolio's investment objective, policies and limitations; (2) to purchase
and sell securities and other investments of the Portfolio; (3) to furnish for
the use of the Fund office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Fund; (4) to pay the salaries
of all personnel of the Fund or WTC performing services relating to research,
statistical and investment activities; and (5) to make available and provide
such information as the Fund or its administrator may reasonably request for use
in the preparation of its registration statement, reports and other documents
required by any applicable federal, foreign or state statutes or regulations.
WTC may also purchase and sell portfolio securities to and from dealers who
provide the Portfolio with research services. Portfolio transactions, however,
will not be directed by WTC to dealers solely on the basis of research services
provided. The Current Advisory Agreement contains similar provisions.
The New Advisory Agreement further provides that, in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
obligations or duties hereunder on the part of WTC, WTC shall not be subject to
liability to the Fund or to any shareholder of the Fund or its portfolios for
any act or omission in the course of, or connected with, rendering services
thereunder or for any losses that may be sustained in the purchase, holding or
sale of any security or the making of any investment for or on behalf of the
Fund. The Current Advisory Agreement contains a similar provision.
The sole material difference between the Current and New Advisory
Agreement relates to the above-described change in the fee structure. This
change would result in each Portfolio paying separate fees for transfer agency
and custody services. In addition, this change would result in WTC's fee being
reduced for each Portfolio from 0.50% of a Portfolio's average daily net assets
to 0.35% of a Portfolio's average daily net assets.
If approved by the Shareholders of a Portfolio, the New Advisory Agreement
will become effective with respect to that Portfolio shortly following the date
of approval and will remain in effect for an initial two-year term. Thereafter,
the New Advisory Agreement will continue in effect with respect to that
Portfolio if it is approved at least annually by a vote of the shareholders of
the Portfolio or by the Board. The New Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act). The
Current Advisory Agreement contains similar provisions. The last annual
reapproval of the Current Advisory Agreement by the Board occurred on November
17, 1997. The Current Advisory Agreement was approved by the initial shareholder
of the Municipal Income Portfolio prior to the commencement of the Portfolio's
operations on November 1, 1997 and by the initial shareholder of the Diversified
Income Portfolio on March 25, 1991.
WILMINGTON TRUST COMPANY. WTC, the Fund's investment adviser, is a
state-chartered bank organized as a Delaware corporation in 1903. WTC is a
wholly owned subsidiary of Wilmington Trust Corporation, a publicly held bank
holding company, which is located at 1100 North Market Street, Wilmington,
Delaware 19890-0001. WTC is Delaware's largest full-service bank and, with more
than $75 billion in trust, custody and investment management assets, WTC ranks
among the nation's leading money management firms. As of December 31, 1997, the
9
<PAGE>
trust department of WTC had $38.4 million in discretionary assets under
management. WTC is engaged in a variety of investment advisory activities,
including the management of collective investment pools, and has nearly a
century of experience managing the personal investments of high net-worth
individuals. WTC currently serves as investment adviser to three mutual funds,
the Municipal Income Portfolio, the Diversified Income Portfolio and the Large
Cap Growth Equity Portfolio, and manages over $53 billion for various other
institutional clients. The principal offices of WTC are located at 1100 North
Market Street, Wilmington, Delaware 19890-0001.
The names, addresses and principal occupations of the principal executive
officer and directors of WTC are set forth under "Additional Information" below.
TRUSTEE CONSIDERATION. In approving the proposed New Advisory Agreement,
the Trustees analyzed the factors they deemed relevant. In particular, the
Trustees compared the current fee arrangement to the proposed arrangement
whereby investment advisory, custody and transfer agency services would be
covered by separate fees. In doing so, the Trustees considered WTC's undertaking
to waive its advisory fee or reimburse expenses to the extent that expenses
exceed an annual rate of 0.55% with respect to the Diversified Income Portfolio
and 0.75% with respect to the Municipal Income Portfolio, of each Portfolio's
average daily net assets through February 1999. In addition, the Trustees
considered the other terms of the New Advisory Agreement. After consideration of
these and other factors, the Trustees, including a majority of the Independent
Trustees, approved the proposed New Advisory Agreement and recommended that it
be submitted to shareholders for approval.
REQUIRED VOTE. Approval of Proposal 2 on behalf of a Portfolio requires
the affirmative vote of a "majority of the outstanding voting securities" of
that Portfolio, which for this purpose means the affirmative vote of the lesser
of (1) 67% or more of the shares of the Portfolio present at the Meeting or
represented by Proxy if more than 50% of the outstanding shares of the Portfolio
are so present or represented or (2) more than 50% of the outstanding shares of
the Portfolio. Approval of Proposal 2 with respect to one Portfolio is not
contingent upon approval by the other Portfolio.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
10
<PAGE>
PROPOSAL 3. TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS OF THE FUND
The Trustees, including the Independent Trustees, unanimously selected the
firm of Ernst & Young LLP as the Fund's independent auditors to audit the books
and the accounts of the Fund for the fiscal year ending October 31, 1998. The
professional services that are expected to be rendered by Ernst & Young LLP
include the issuance of an opinion on the financial statements of the Fund and
an opinion on other reports filed with the Securities and Exchange Commission.
Ernst & Young LLP has advised the Fund that it has no material direct or
indirect ownership interest in the Fund. Representatives of Ernst & Young LLP
are not expected to be present at the Meeting, but have been afforded the
opportunity to make a statement if they so desire and will be available should
any matter arise requiring their presence.
REQUIRED VOTE. Ratification of the selection of Ernst & Young LLP as
independent auditors for the Fund requires the affirmative vote of a majority of
the shares of the Fund present at the Meeting in person or by proxy.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3.
OTHER BUSINESS
The Trustees know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matter in accordance with the judgment of the persons
therein designated.
ADDITIONAL INFORMATION
The Fund will incur expenses in connection with preparing and mailing the
enclosed form of proxy and accompanying Notice and Proxy Statement. The Fund
will also reimburse banks, brokers and others for their reasonable expenses in
forwarding proxy solicitation material to the beneficial owners of the shares of
the Fund. Broker dealer firms holding Fund shares in "street name" for the
benefit of their customers and clients will request the instructions of such
customers and clients on how to vote their shares on the proposals before the
Meeting. The Fund will include shares held of record by broker dealers as to
which such authority has been granted in its tabulation of the total number of
votes present for purposes of determining whether the necessary quorum of
shareholders exists.
EXECUTIVE OFFICERS OF THE FUND. The executive officers of the Fund, other
than those who also serve as Trustees, are:
Nina M. Webb - Vice President. See biographical information under Proposal 1
above.
11
<PAGE>
John J. Kelley - Treasurer, has been with PFPC since January 1998. From 1995 to
January 1998 he was a Vice President of RSMC and was an Assistant Vice President
of RSMC from 1989 to 1994.
Carl M. Rizzo, Esquire - Secretary, was appointed Vice President of RSMC in
July, 1996. From 1995 to 1996 he was Assistant General Counsel of Aid
Association for Lutherans (a fraternal benefit association); from 1994 to 1995
Senior Associate Counsel of United Services Automobile Association (an insurance
and financial services firm); and from 1987 to 1994 Special Counsel or
Attorney-Adviser with a federal government agency.
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF WTC. The Directors and
Principal Executive Officer of WTC are:
Name Address
- ---- -------
Mr. Robert H. Bolling, Jr. 1100 North Market Street
Wilmington, DE 19890
Mrs. Carolyn S. Burger 1100 North Market Street
Wilmington, DE 19890
Mr. Ted T. Cecala, Jr. 1100 North Market Street
Wilmington, DE 19890
Mr. Richard R. Collins 1100 North Market Street
Wilmington, DE 19890
Charles S. Crompton, Jr., Esquire 1100 North Market Street
Wilmington, DE 19890
H. Steward Dunn, Jr., Esquire 1100 North Market Street
Wilmington, DE 19890
Mr. Edward B. du Pont 1100 North Market Street
Wilmington, DE 19890
Mr. R. Keith Elliott 1100 North Market Street
Wilmington, DE 19890
Dr. Robert C. Forney 1100 North Market Street
Wilmington, DE 19890
Mr. Robert V. A. Harra, Jr. 1100 North Market Street
Wilmington, DE 19890
12
<PAGE>
Andrew B. Kirkpatrick, Jr., 1100 North Market Street
Esquire Wilmington, DE 19890
Mr. Rex L. Mears 1100 North Market Street
Wilmington, DE 19890
Mr. Hugh E. Miller 1100 North Market Street
Wilmington, DE 19890
Mr. Stacey J. Mobley 1100 North Market Street
Wilmington, DE 19890
Mr. Leonard W. Quill 1100 North Market Street
Wilmington, DE 19890
Dr. David P. Roselle 1100 North Market Street
Wilmington, DE 19890
Thomas P. Sweeney, Esquire 1100 North Market Street
Wilmington, DE 19890
Mr. Bernard J. Taylor, III 1100 North Market Street
Wilmington, DE 19890
Mrs. Mary Jornlin Theisen 1100 North Market Street
Wilmington, DE 19890
Mr. Robert W. Tunnell, Jr. 1100 North Market Street
Wilmington, DE 19890
SHAREHOLDER PROPOSALS
The Fund does not hold annual shareholder meetings. Accordingly, no
anticipated date of the next shareholder meeting can be provided at this time.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholder meeting or to propose persons to be considered by the
Fund's Nominating Committee as nominees for Trustees should send their written
request or proposal to the Secretary of the Fund.
All shareholders are urged to mark, date, sign and return the Proxy Cards
in the enclosed envelope, which requires no postage if mailed in the United
States.
13
<PAGE>
By Order of the Board of Trustees,
Carl M. Rizzo
Secretary
Dated: June 5, 1998
14
<PAGE>
APPENDIX A
PROPOSED
INVESTMENT
ADVISORY AGREEMENT
between
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
and
WILMINGTON TRUST COMPANY
AGREEMENT made this ____ day of June, 1998, by and between The Rodney
Square Strategic Fixed-Income Fund, a Massachusetts business trust (hereinafter
called the "Fund"), and Wilmington Trust Company, a corporation organized under
the laws of the State of Delaware (hereinafter called the
"Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act") as an open-end management investment company, and offers
for sale distinct series of shares of beneficial interest ("Series") each
corresponding to a distinct portfolio; and
WHEREAS, the Fund desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser on behalf of one or
more Series of the Fund, and to have that investment adviser provide or perform
for the Series various research, statistical and investment services; and
WHEREAS, the Adviser is willing to furnish such services to the Fund with
respect to each of the Series listed on Schedule A to this Agreement (the
"Portfolio" or "Portfolios") on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties as follows:
1. EMPLOYMENT OF THE ADVISER. The Fund hereby employs the Adviser to
invest and reinvest the assets of the Portfolio in the manner set forth in
Section 2 of this Agreement subject to the direction of the Trustees and the
officers of the Fund, for the period, in the manner, and on the terms set forth
hereinafter. The Adviser hereby accepts such employment and agrees during such
period to render the services and to assume the obligations herein set forth.
The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
<PAGE>
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY, THE ADVISER. The Adviser
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. INVESTMENT ADVISORY SERVICES.
(i) The Adviser shall direct the investments of each
Portfolio, subject to and in accordance with the Portfolio's investment
objective, policies and limitations as provided in its Prospectus and Statement
of Additional Information ("the Prospectus") and other governing instruments, as
amended from time to time, and any other directions and policies which the
Trustees may issue to the Adviser from time to time.
(ii) The Adviser is authorized, in its discretion and without
prior consultation with the Fund, to purchase and sell securities and other
investments of each Portfolio.
B. CORPORATE MANAGEMENT SERVICES.
(i) The Adviser shall furnish for the use of the Fund office
space and all necessary office facilities, equipment and personnel for servicing
the investments of the Fund.
(ii) The Adviser shall pay the salaries of all personnel of
the Fund or the Adviser performing services relating to research, statistical
and investment activities.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF
REGISTRATION STATEMENT, AMENDMENTS AND OTHER MATERIALS. The Adviser will make
available and provide such information as the Fund or its administrator may
reasonably request for use in the preparation of its registration statement,
reports and other documents required by any applicable federal, foreign or state
statutes or regulations.
D. CODE OF ETHICS. The Adviser will adopt a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and Section
204A of the Investment Advisers Act of 1940 and will provide the Fund and its
administrator with a copy of the code of ethics and evidence of its adoption.
Within forty-five (45) days of the end of the last calendar quarter of each year
while this Agreement is in effect, an executive officer of the Adviser shall
certify to the Trustees that the Adviser has complied with the requirements of
Rule 17j-1 and Section 204A during the previous year and that there has been no
violation of the Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Fund or its administrator, the Adviser shall permit the
Fund or its administrator to examine the reports required to be made to the
Adviser by Rule 17j-l(c)(l).
E. DISQUALIFICATION. The Adviser shall immediately notify the
Trustees of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section 9
of the 1940 Act or any other applicable statute or regulation.
<PAGE>
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make its
officers and employees available to the Trustees and officers of the Fund for
consultation and discussion regarding the management of each Portfolio and its
investment activities.
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE.
A. The Adviser, subject to the control and direction of the
Trustees, shall have authority and discretion to select brokers and dealers to
execute portfolio transactions for each Portfolio, and for the selection of the
markets on or in which the transactions will be executed.
B. In acting pursuant to Section 3A, the Adviser will place orders
through such brokers or dealers in conformity with the policies with respect to
portfolio transactions set forth in the Fund's registration statement.
C. It is understood that neither the Fund nor the Adviser will adopt
a formula for allocation of a Portfolio's brokerage.
D. It is understood that the Adviser may, to the extent permitted by
applicable laws and regulations, aggregate securities to be sold or purchased
for any Portfolio and for other clients in order to obtain the most favorable
price and efficient execution. In that event, allocation of the securities
purchased or sold, as well as expenses incurred in the transaction, will be made
by the Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to its other clients.
E. It is understood that the Adviser may, in its discretion, use
brokers who provide a Portfolio with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Portfolio, and the
Adviser may pay to those brokers in return for brokerage and research services a
higher commission than may be charged by other brokers, subject to the Adviser
determining in good faith that such commission is reasonable in terms either of
the particular transaction or of the overall responsibility of the Adviser to
the Portfolio and its other clients and that the total commissions paid by such
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long term.
F. The Adviser shall provide such reports as the Trustees may
reasonably request with respect to each Portfolio's total brokerage and
portfolio transaction activities and the manner in which that business was
allocated.
4. DELEGATION OF ADVISER'S OBLIGATIONS AND SERVICES. With respect to any
or all Portfolios, the Adviser may enter into one or more contracts
("Sub-Advisory Contract") with a sub-adviser in which the Adviser delegates to
such sub-adviser any or all of its obligations or services specified in Section
2 of this Agreement, provided that each Sub-Advisory Agreement imposes on the
sub-adviser bound thereby all the duties and conditions the Adviser is subject
<PAGE>
to under this Agreement, and further provided that each Sub-Advisory Agreement
meets all requirements of the 1940 Act and rules thereunder.
5. EXPENSES OF THE FUND. It is understood that the Fund will pay all its
expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Fund shall include, without limitation:
A. fees payable for administrative services;
B. fees payable for accounting services;
C. the cost of obtaining quotations for calculating the value of
the assets of each Portfolio;
D. interest and taxes;
E. brokerage commissions, dealer spreads and other costs in
connection with the purchase or sale of securities;
F. compensation and expenses of its Trustees other than those who
are "interested persons" of the Fund within the meaning of the
1940 Act;
G. legal and audit expenses;
H. fees and expenses related to the registration and
qualification of the Fund and its shares for distribution
under state and federal securities laws;
I. expenses of typesetting. printing and mailing reports,
notices and proxy material to shareholders of the Fund:
J. all other expenses incidental to holding meetings of the
Fund's shareholders, including proxy solicitations therefor:
K. premiums for fidelity bond and other insurance coverage;
L. the Fund's association membership dues;
M. expenses of typesetting for printing Prospectuses;
N. expenses of printing and distributing Prospectuses to
existing shareholders;
O. out-of-pocket expenses incurred in connection with the
provision of custodial and transfer agency services;
<PAGE>
P. service fees payable by each Portfolio to the Distributor for
providing personal services to the shareholders of each
Portfolio and for maintaining shareholder accounts for those
shareholders;
Q. distribution fees; and
R. such non-recurring expenses as may arise, including costs
arising from threatened actions, actions, suits and
proceedings to which the Fund is a party and the legal
obligation which the Fund may have to indemnify its Trustees
and officers with respect thereto.
6. COMPENSATION OF THE ADVISER. For the services and facilities to be
furnished hereunder, the Adviser shall receive an advisory fee equivalent to the
annual rate listed along with each Portfolio's name in Schedule B attached
hereto. This advisory fee shall be payable monthly as soon as practicable after
the last day of each month based on the average of the daily values placed on
the net assets of the Fund as determined at the close of business on each day
throughout the month, with each Portfolio to contribute pro-rata to the payment
to the Adviser on the basis of its net assets. The assets of each Portfolio will
be valued separately as of the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time) on each business day throughout the
month or, if the Fund lawfully determines the value of the net assets of any
Portfolio as of some other time on each business day, as of such time with
respect to that Portfolio. If the Fund determines the value of the net assets of
any Portfolio more than once on any business day, the last such determination on
that day shall be deemed to be the sole determination on that day. The value of
net assets shall be determined pursuant to the applicable provisions of the
Fund's Declaration of Trust, its By-Laws and the 1940 Act. If, pursuant to such
provisions, the determination of the net asset value of any Portfolio of the
Fund is suspended for any particular business day, then the value of the net
assets of that Portfolio on that day shall be deemed to be the value of its net
assets as determined on the preceding business day. If the determination of the
net asset value of any Portfolio has been suspended for more than one month, the
Adviser's compensation payable at the end of that month shall be computed on the
basis of the value of the net assets of the Portfolio as last determined
(whether during or prior to such month).
7. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. The services of the Adviser to the Fund are not to be deemed
exclusive, the Adviser being free to render services to others and engage in
other activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner, with
the Adviser's ability to meet all of its obligations with respect to rendering
services to the Fund hereunder.
B. The Fund acknowledges that the Adviser or one or more of its
"affiliated persons" may have investment responsibilities or render investment
advise to or perform other investment advisory services for other individuals or
entities and that the Adviser, its "affiliated persons" or any of its or their
directors, officers, agents or employees may buy, sell or trade in securities
<PAGE>
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of paragraph 3, the Fund agrees that the Adviser or its "affiliated
persons" may give advice or exercise investment responsibility and take such
other action with respect to Affiliated Accounts which may differ from the
advice given or the timing or nature of action with respect to the Portfolios of
the Fund, provided that the Adviser acts in good faith. The Fund acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which one or more Portfolios may have an interest. The Adviser shall have no
obligation to recommend for any Portfolio a position in any investment which an
Affiliated Account may acquire, and the Fund shall have no first refusal,
co-investment or other rights in respect of any such investment, either for its
Portfolios or otherwise.
C. Subject to and in accordance with the Declaration of Trust and
By-Laws of the Fund as currently in effect and the 1940 Act and the rules
thereunder, it is understood that Trustees, officers and agents of the Fund and
shareholders of the Fund are or may be interested in the Adviser or its
"affiliated persons" as directors, officers, agents or shareholders of the
Adviser or its "affiliated persons"; that directors, officers, agents and
shareholders of the Adviser or its "affiliated persons" are or may be interested
in the Fund as trustees, officers, agents, shareholders or otherwise; that the
Adviser or its "affiliated persons" may be interested in the Fund as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Declaration of Trust, By-Laws and the 1940 Act and the rules
thereunder.
8. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of willful misfeasance,
bad faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Fund or to any shareholder of the Fund or its Portfolios for
any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security or the making of any investment for or on behalf of the
Fund.
B. No provision of this Agreement shall be construed to protect any
Trustee or officer of the Fund, or the Adviser, from liability in violation of
Sections 17(h), 17(i), 36(a) or 36(b) of the 1940 Act.
9. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first written above and shall remain in force for a period of two years from
such date, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees,
including the vote of a majority of the Trustees who are not "interested
persons" of the Fund, cast in person at a meeting called for the purpose of
voting on such approval, or by vote of a majority of the outstanding voting
securities. The aforesaid provision shall be construed in a manner consistent
with the 1940 Act and the rules and regulations thereunder.
<PAGE>
10. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in event of such
assignment. The Adviser shall notify the Fund in writing in advance of any
proposed change of "control" to enable the Fund to take the steps necessary to
enter into a new advisory agreement.
11. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Fund, which amendment is subject
to the approval of the Trustees of the Fund and, where required by the 1940 Act,
the shareholders of any affected Portfolio in the manner required by the 1940
Act and the rules thereunder.
12. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any penalty
by the Fund with respect to any Portfolio (by vote of the
Board of Trustees of the Fund or by "vote of a majority of the
outstanding voting securities") on sixty (60) days' written
notice to the Adviser;
B. shall immediately terminate in the event of its
"assignment"; and
C. may be terminated with respect to any Portfolio by the Adviser
on sixty (60) days' written notice to the Fund.
13. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," 'control," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the 1940 Act
and the rules and regulations thereunder, subject to any applicable orders of
exemption issued by the Securities and Exchange Commission.
14. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
15. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
16. SHAREHOLDER LIABILITY. The Adviser is hereby expressly put on notice
of the limitation of shareholder liability as set forth in the Declaration of
Trust of the Fund and agrees that obligations assumed by the Fund pursuant to
this Agreement shall be limited in all cases to the Fund and its assets, and if
the liability relates to one or more Portfolios, the obligations hereunder shall
be limited to the respective assets of such Portfolio or Portfolios. The Adviser
further agrees that it shall not seek satisfaction of any such obligation from
the shareholders or any individual shareholder of the Portfolios of the Fund,
nor from the Trustees or any individual Trustee of the Fund.
<PAGE>
17. GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
IN WITNESS WHEREOF the parties have caused this instrument to be signed on
their behalf by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date first written above.
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
(SEAL) By:
Name:
Title:
WILMINGTON TRUST COMPANY
(SEAL) By:
Name:
Title:
<PAGE>
SCHEDULE A
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
PORTFOLIO LISTING
Short/Intermediate Bond Portfolio
Intermediate Bond Portfolio
Municipal Bond Portfolio
<PAGE>
SCHEDULE B
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
FEE SCHEDULE
Portfolio % of average
--------- Daily Net Assets
----------------
Short/Intermediate Bond Portfolio 0.35%
Intermediate Bond Portfolio 0.35%
Municipal Bond Portfolio 0.35%
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
RODNEY SQUARE DIVERSIFIED INCOME PORTFOLIO
PROXY FOR MEETING OF SHAREHOLDERS
June 25, 1998
KNOWN ALL MEN BY THESE PRESENTS that the undersigned shareholder(s) of The
Rodney Square Strategic Fixed-Income Fund (the "Fund") hereby appoints Carl M.
Rizzo, Esq. and Diane Drake, Esq. or any one of them true and lawful attorneys,
with power of substitution of each, to vote all shares which the undersigned is
entitled to vote, at the Special Meeting of Shareholders to be held on June 25,
1998 and at any adjournment thereof ("Meeting").
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. The attorneys named
will vote the shares represented by this proxy in accordance with the choices
made on this card. IF NO CHOICE IS INDICATED AS TO ANY ITEM, THIS PROXY WILL BE
VOTED AFFIRMATIVELY ON THESE MATTERS.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Meeting.
1. To elect Eric Brucker, Fred L. Buckner, Robert J. Christian, John J.
Quindlen, and Nina M. Webb as Trustees of the Fund.
FOR / / AGAINST / / ABSTAIN / /
All nominees listed above (except as marked to the contrary below)
- -----------------------------
(INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write the name(s) on the line provided above.)
2. To approve a new investment advisory agreement for the Portfolio.
FOR / / AGAINST / / ABSTAIN / /
(Over)
<PAGE>
3. To ratify the selection of Ernst & Young LLP as the Fund's independent
certified public accountants.
FOR / / AGAINST / / ABSTAIN / /
4. To transact any other business as may properly come before the Meeting or
any adjournment thereof.
Date: , 1998
------------------
------------------
Please sign exactly as your name or names appear hereon.
If shares are held jointly, either holder may sign.
Corporate proxies should be signed by an authorized
officer.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE TO
THE FUND.
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
RODNEY SQUARE MUNICIPAL INCOME PORTFOLIO
PROXY FOR MEETING OF SHAREHOLDERS
June 25, 1998
KNOWN ALL MEN BY THESE PRESENTS that the undersigned shareholder(s) of The
Rodney Square Strategic Fixed-Income Fund (the "Fund") hereby appoints Carl M.
Rizzo, Esq. and Diane Drake, Esq. or any one of them true and lawful attorneys,
with power of substitution of each, to vote all shares which the undersigned is
entitled to vote, at the Special Meeting of Shareholders to be held on June 25,
1998 and at any adjournment thereof ("Meeting").
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. The attorneys named
will vote the shares represented by this proxy in accordance with the choices
made on this card. IF NO CHOICE IS INDICATED AS TO ANY ITEM, THIS PROXY WILL BE
VOTED AFFIRMATIVELY ON THESE MATTERS.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Meeting.
1. To elect Eric Brucker, Fred L. Buckner, Robert J. Christian, John J.
Quindlen, and Nina M. Webb as Trustees of the Fund.
FOR / / AGAINST / / ABSTAIN / /
All nominees listed above (except as marked to the contrary below)
- -----------------------------
(INSTRUCTION: To withhold authority to vote for any individual nominee(s)
write the name(s) on the line provided above.)
2. To approve a new investment advisory agreement for the Portfolio.
FOR / / AGAINST / / ABSTAIN / /
(Over)
<PAGE>
3. To ratify the selection of Ernst & Young LLP as the Fund's independent
certified public accountants.
FOR / / AGAINST / / ABSTAIN / /
4. To transact any other business as may properly come before the Meeting or
any adjournment thereof.
Date: , 1998
------------------
------------------
Please sign exactly as your name or names appear hereon.
If shares are held jointly, either holder may sign.
Corporate proxies should be signed by an authorized
officer.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE TO
THE FUND.
<PAGE>
THE RODNEY SQUARE
STRATEGIC FIXED-INCOME FUND
Supplement to Proxy Statement dated June 5, 1998
Special Meeting of Shareholders
June 25, 1998
The paragraph headed "PROPOSED FEE STRUCTURE" on pages 6-7 of the Proxy
Statement should be replaced with the following paragraph:
Under the New Advisory Agreement with WTC, the investment
advisory fee to be paid to WTC would be reduced to an annual rate of
0.35% of each Portfolio's average daily net assets. Under the New
Advisory Agreement, the advisory fees for the past fiscal year would
have been $110,263 before waivers with respect to the Diversified
Income Portfolio and $57,811 before waivers with respect to the
Municipal Income Portfolio. If the New Advisory Agreement is approved,
however, the Fund would also pay WTC an annual fee for custody
services equal to the amount derived from the following schedule:
0.015% of the first $2 billion of the Fund's average daily net assets;
0.0125% of the next $1 billion of the Fund's average daily net assets;
and 0.010% of the Fund's average daily net assets in excess of $3
billion, subject to a minimum monthly fee of $1,000 per Portfolio,
plus $7.50 per purchase, sale or maturity of each portfolio security.
The estimated annual fees for custody services under the proposed new
arrangements would be $15,500 for the Diversified Income Portfolio and
$13,750 for the Municipal Income Portfolio. In addition, for transfer
agency services under the proposed new arrangements, the Fund would
pay PFPC an estimated minimum annual base fee of approximately $26,000
for the Diversified Income Portfolio and approximately $5,250 for the
Municipal Income Portfolio, as well as transaction charges and out of
pocket expenses. WTC has undertaken to waive its advisory fee or
reimburse expenses to the extent that the Portfolios' expenses
(excluding taxes, extraordinary expenses, brokerage commissions and
interest) exceed an annual rate of 0.55%, with respect to the
Diversified Income Portfolio, and 0.75%, with respect to the Municipal
Income Portfolio, of each Portfolio's average daily net assets through
February 1999.
