the RODNEY SQUARE
STRATEGIC
FIXED-INCOME
FUND
[GRAPHIC OMITTED]
ANNUAL REPORT
JUNE 30, 1999
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The management of the Rodney Square Strategic Fixed-Income Fund (the "Fund")
is pleased to report to you on the Fund's activity for the fiscal period ended
June 30, 1999. This past spring the trustees of the fund recommended that we
take advantage of some cost saving opportunities by combining the Fund with two
other mutual fund families to form one larger fund. By doing this we can enjoy
overall lower costs and an expanded number of investment products available
through one fund family. But, more importantly we can benefit from the
investment expertise offered by two affiliates of Wilmington Trust Company --
Cramer, Rosenthal, McGlynn and Roxbury Capital Management. The reorganization is
expected to occur later this year, subject to such approvals of shareholders of
the fund and the two other mutual fund families as may be required. Due to the
change in the fiscal year end of the Fund to June 30, this report covers the
period from the last fiscal year end, October 31, 1998, to June 30, 1999.
PERFORMANCE REVIEW
The Rodney Square Short/Intermediate Bond Portfolio had a total return of
- -0.27% from November 1, 1998 to June 30, 1999. This return consisted of a
decrease in net asset value per share from $13.38 on October 31, 1998 to $12.85
at the end of June plus distributions per share of $0.50. The Portfolio's
performance exceeded the reported return of -0.53% for the Merrill Lynch 1-10
Year U. S. Treasury Index over this eight month period. The Merrill Lynch 1-10
Year U. S. Treasury Index is an unmanaged index of fixed rate coupon bearing
U.S. Treasury securities with a maturity range of 1 to 10 years. Wilmington
Trust Company, the Portfolio's advisor, has continued to assist the Portfolio's
return by limiting total expenses of the Portfolio to 0.55%.
The Rodney Square Intermediate Bond Portfolio had a total return of -1.52%
from November 1, 1998 to June 30, 1999. This return consisted of a decrease in
net asset value per share from $10.19 on October 31, 1998 to $9.63 at the end of
June plus distributions per share of $0.41. The Portfolio's performance exceeded
the reported return of -2.22% for the Merrill Lynch U. S. Treasury Master Index
over this eight month period. The Merrill Lynch U. S. Treasury Master Index is
an unmanaged index of fixed rate coupon bearing U.S. Treasury Securities with a
maturity range of 1 to 30 years. Wilmington Trust Company, the Portfolio's
advisor, has continued to assist the Portfolio's return by limiting total
expenses of the Portfolio to 0.55% its of average daily net assets.
The Rodney Square Municipal Bond Portfolio had a total return of -0.30% from
November 1, 1998 to June 30, 1999. This return consisted of a decrease in net
asset value per share from $12.94 on October 31, 1998 to $12.48 at the end of
June plus distributions per share of $0.42. The Portfolio's performance exceeded
the reported return of -.55% for the Merrill Lynch Intermediate Municipal Index
over this eight month period. The Merrill Lynch Intermediate Municipal Index is
an unmanaged weighted index including investment grade tax-exempt bonds with a
maturity range of 0 to 22 years. Wilmington Trust Company, the Portfolio's
advisor, has continued to assist the Portfolio's return by limiting total
expenses of the Portfolio to 0.75% of its average daily net assets.
ECONOMIC ENVIRONMENT
The period covered by this report coincides with one of the most severe bear
markets seen in the bond market in quite some time. At the height of the global
financial crisis last fall, interest rates had dropped to the lowest levels seen
in a generation. At the end of October 1998, the ten-year U. S. Treasury yielded
4.75%. However, with the Federal Reserve having stepped in to lower short-term
rates, the healing process was underway and bond yields headed higher as they
eliminated the "flight to safety" discount built into their yields. The
non-Treasury sectors of the market also benefited as the enormously wide yield
spreads created in the fall of '98 returned to more normal differentials.
1
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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As the new year began, many expected the international crisis to still cause
our domestic economy to slow down and lead to lower rates. However, as events
unfolded, the domestic economy refused to buckle and Fed Chairman Greenspan
confirmed this at his February Humphrey-Hawkins Testimony where he eliminated
any prospect of cutting rates further.
The second quarter however, saw the market tone sour again as our domestic
economy showed no signs of slowing down. With GDP growth in excess of 4.0% and
the April CPI figure showing a monthly increase of 0.7%, the Fed's patience wore
out and they instituted a tightening bias at their May meeting that led to a
decision to raise short term interest rates 25 basis points as the quarter
ended. Rates rose approximately 62 basis points through the intermediate part of
the curve. With the Fed showing their determination to slow the economy, the
credit sensitive sectors of the market under performed during the quarter.
Spread levels on 10 year AA industrials widened by about 15 basis points during
the quarter returning to roughly the same levels from which they started the
year.
From October of 1998 to June of 1999, the ten-year U. S. Treasury yield rose
over 100 basis points or by almost 22%. The percentage increase in yields since
the height of last year's economic crisis is similar to that seen in the bear
markets of 1994 and 1987, two of the worst bear markets we have experienced in
recent history.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE SHORT/INTERMEDIATE AND INTERMEDIATE BOND PORTFOLIOS
The Short/Intermediate Portfolio is designed to give shareholders broad
exposure to the dynamics of the 1 to 10 year term bond market with a stable flow
of income and minimization of risk. The Intermediate Bond Portfolio seeks to
accomplish the same objective but gives investors a broader exposure to the
intermediate and longer term parts of the yield curve. These goals are
accomplished by applying a disciplined and systematic investment process to
actively manage a core portfolio of investment grade notes and bonds from a wide
range of taxable market sectors.
Both Portfolios have been managed with similar investment strategies over the
past eight months. At the start of the international economic crisis last year,
the Portfolios were positioned to enhance returns through higher yielding
corporate, mortgage and asset-backed holdings. These sectors under performed
during the crisis as investors sought the safety of U. S. Treasuries over credit
sensitive parts of the market. We felt that the markets would ultimately return
to more normal conditions and adopted a patient stance to hold onto our
positions. This proved to be the proper course as the crisis abated and the
yield spreads on credit sensitive sectors tightened.
We entered the year anticipating that the Fed would remain on hold and that
led us to reduce the interest rate sensitivity of the Portfolios. The corporate
bond market was very strong during the first part of the year and allowed our
over weight positions in these sectors of the market to continue to perform very
well. We continued our defensive interest rate posture during the second quarter
of 1999 allowing us to complete the first half of the year on a strong relative
basis to our indices.
2
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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The following graph compares the Short/Intermediate Bond Portfolio, the
Merrill Lynch 1-10 Year U.S. Treasury Index ("ML 1-10 Yr.") and the Consumer
Price Index ("CPI"), since the Portfolio's commencement of operations on April
2, 1991. In 1999, the Short/Intermediate Bond Portfolio's fiscal year end
changed from December 31 to June 30. Therefore, account values have been
presented at June 30, 1999, and as of June 30 in each prior year.
SHORT/INTERMEDIATE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
Average Annual Total Return
- ---------------------------------------
1 Year 5 Year Inception
------ ------ ---------
Fund 3.4% 6.6% 6.7%
Index 4.5% 6.9% 7.1%
CPI 2.0% 2.4% 2.6%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Merrill Lynch
Short Intermediate 1-10 Year
Bond Portfolio U.S. Treasury Index Consumer Price Index
04/02/91 $10,000 $10,000 $10,000
06/30/91 10,128 10,173 10,074
06/30/92 11,364 11,474 10,385
06/30/93 12,474 12,632 10,697
06/30/94 12,405 12,617 10,963
06/30/95 13,657 13,852 11,296
06/30/96 14,248 14,529 11,607
06/30/97 15,220 15,533 11,874
06/30/98 16,508 16,846 12,073
06/30/99 17,076 17,604 12,310
- -----------------------
* PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN
INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY WILMINGTON
TRUST COMPANY ("WTC") OR ANY OTHER BANKING INSTITUTION, THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY. THE VALUES SHOWN REFLECT A HYPOTHETICAL INITIAL
INVESTMENT OF $10,000 WITH DIVIDENDS REINVESTED. RETURNS ARE HIGHER DUE TO
WTC'S MAINTENANCE OF THE PORTFOLIO'S EXPENSES. SEE FINANCIAL HIGHLIGHTS ON
PAGE 23.
The following graph compares the Intermediate Bond Portfolio and its
predecessor, the Bond Fund (a collective investment fund), with that of the
Merrill Lynch U.S. Treasury Master Index ("ML U.S. Treasury") and the Consumer
Price Index ("CPI"), since the Portfolio's commencement of operations on
December 31, 1990. The Bond Fund's performance has been adjusted to reflect the
annual deduction of fees and expenses applicable to shares of the Intermediate
Bond Portfolio (i.e., adjusted to reflect anticipated expenses, absent
investment advisory fee waivers). The Bond Fund was not registered as a mutual
fund under the Investment Act of 1940 (the "1940 Act") and therefore was not
subject to certain investment restrictions, limitations and diversification
requirements imposed by the 1940 Act and the Internal Revenue Code of 1986, as
amended. If the Bond Fund had been registered under the 1940 Act, its
performance may have been different. In 1999, the Intermediate Bond Portfolio's
fiscal year end changed from December 31 to June 30. Therefore, account values
have been presented at June 30, 1999, and as of June 30 in each prior year.
3
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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INTERMEDIATE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
Average Annual Total Return
- ------------------------------------------------
Since
1 Year 5 Year Inception 12/31/90
------ ------ ------------------
Fund 2.1% 7.1% 7.3%
Index 3.1% 7.6% 8.0%
CPI 2.0% 2.4% 2.7%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Bond Fund
(12/31/90-6/28/98)
Intermediate
Bond Portfolio Merrill Lynch Consumer
(6/29/98-6/30/99) U.S. Treasury Price Index
12/31/90 $10,000 $10,000 $10,000
06/30/91 10,231 10,501 10,235
06/30/92 11,667 11,938 10,551
06/30/93 13,174 13,485 10,868
06/30/94 12,855 13,304 11,139
06/30/95 14,450 14,908 11,478
06/30/96 14,964 15,573 11,794
06/30/97 16,028 16,718 12,065
06/30/98 17,772 18,610 12,268
06/30/99 18,142 19,178 12,508
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* PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN
INVESTMENT IN THE PORTFOLIO IS NEITHERINSURED NOR GUARANTEED BY WILMINGTON
TRUST COMPANY OR ANY OTHER BANKING INSTITUTION, THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY. THE VALUES SHOWNREFLECT A HYPOTHETICAL INITIAL INVESTMENT
OF $10,000 WITH DIVIDENDS REINVESTED. RETURNS ARE HIGHER DUE TO WTC'S
MAINTENANCE OF THE PORTFOLIO'S EXPENSES. SEE FINANCIAL HIGHLIGHTS ON PAGE 24.
THE MUNICIPAL BOND PORTFOLIO
The Municipal Bond Portfolio is an intermediate duration, high quality fund
designed to produce a high level of income that is exempt from federal income
taxes while seeking preservation of capital. The basic strategy of the Portfolio
is to identify and purchase the undervalued sectors of the municipal market. The
Portfolio will normally be fully invested with an average maturity in the 5 to
10 year range.
After largely resisting the downward pull of the Treasury market in the first
quarter of 1999, municipal bond prices finally succumbed in the second quarter.
The middle range of the yield curve has seen the greatest increase in rates.
Whereas yields on bonds due in 20 years rose by about 30 basis points, those due
in 10 years rose by 50 basis points. This shift reflects the fact that insurance
companies, which typically prefer intermediate bonds, have remained on the
sidelines for much of the year. The other story in the municipal market is
supply, which is down 27% versus last year. Despite the low volume, municipal
yields remain relatively attractive to taxables due to somewhat anemic demand.
The municipal yield curve remains steep in the 5 to 12 year range. We
continued to lengthen the Portfolio, moving to a more neutral duration position
of 5.24 years versus the Merrill Lynch Intermediate Index's duration of 5.28
years. We executed this strategy by selling bonds in the 5 to 7 year range, and
purchasing bonds in the 10 to 12 year range.
4
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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In addition to increasing the maturity of the Portfolio, we increased the
yield, but did not sacrifice credit quality or coupon income.
Following is a graph that illustrates the performance of the Municipal Bond
Portfolio, the Merrill Lynch Intermediate Municipal Index ("ML Muni Index") and
the Consumer Price Index ("CPI"), since the Portfolio's commencement of
operations on November 1, 1993. In 1999, the Municipal Bond Portfolio's fiscal
year end changed from December 31 to June 30. Therefore, account values have
been presented at June 30, 1999, and as of June 30 in each prior year.
MUNICIPAL BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10.000 INVESTMENT*
Average Annual Total Return
- ---------------------------------------
1 Year 5 Year Inception
------ ------ ---------
Fund 2.2% 5.6% 4.5%
Index 2.7% 6.2% 5.0%
CPI 2.0% 2.4% 2.4%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Merrill Lynch
Municipal Bond Intermediate Consumer
Portfolio Municipal Index Price Index
10/31/93 $10,000 $10,000 $10,000
06/30/94 9,745 9,754 10,158
06/30/95 10,321 10,589 10,467
06/30/96 11,067 11,185 10,755
06/30/97 11,773 11,970 11,002
06/30/98 12,543 12,839 11,187
06/30/99 12,818 13,187 11,406
- -----------------------
* PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN
INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY WILMINGTON
TRUST COMPANY OR ANY OTHER BANKING INSTITUTION, THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY. THE VALUES SHOWN REFLECT A HYPOTHETICAL INITIAL INVESTMENT
OF $10,000 WITH DIVIDENDS REINVESTED. RETURNS ARE HIGHER DUE TO WTC'S
MAINTENANCE OF THE PORTFOLIO'S EXPENSES. SEE FINANCIAL HIGHLIGHTS ON PAGE 25.
We invite your comments and questions and thank you for your investment in
the The Rodney Square Strategic Fixed-Income Fund. We look forward to reviewing
our investment outlook and strategy with you in our next report to shareholders.
Sincerely,
/S/ROBERT J. CHRISTIAN
Robert J. Christian
August 14, 1999 President
5
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
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INVESTMENTS / JUNE 30, 1999
(Showing Percentage of Total Value of Net Assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
CORPORATE BONDS -- 34.7%
BANKS -- 4.7%
Amsouth Bank of Alabama, 6.45%, 02/01/18 ....................... . A1/A- $ 250,000 $ 237,500
Bank of New York Co., Inc., 8.50%, 12/15/04 .................... . A2/A 400,000 430,000
BankAmerica Corp., 6.75%, 09/15/05 ............................. . Aa3/A 250,000 246,875
Canadian Imperial Bank of Commerce, New York, 6.20%, 08/01/00 .. . Aa3/AA- 500,000 501,352
National City Bank Cleveland, 6.50%, 05/01/03 .................. . A1/A 1,200,000 1,206,000
St. George Bank, Ltd., 7.15%, 06/18/07 ......................... . Baa1/A- 750,000 744,375
Union Bank Switzerland, New York, 7.25%, 07/15/06 .............. . Aa2/AA 800,000 805,000
----------
4,171,102
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FINANCIAL -- 15.2%
Abbey National PLC, 6.69%, 10/17/05 .............................. Aa3/AA- 675,000 665,719
Associates Corp., NA, 8.55%, 07/15/99 ............................ Aa3/AA- 700,000 770,875
Associates Corp., NA, 6.75%, 08/01/01 ............................ Aa3/AA- 900,000 909,000
Bear Stearns Co., Inc., 6.63%, 10/01/04 .......................... A2/A 850,000 836,187
Commercial Credit Co., 8.70%, 06/15/99 ........................... Aa3/A+ 850,000 942,437
Crestar Financial Corp., 6.50%, 01/15/08 ......................... A2/A 700,000 681,625
First Chicago, 7.63%, 01/15/03 ................................... A1/A 400,000 411,500
First Union Corp., 6.82%, 08/01/06 ............................... A2/A- 200,000 202,276
Ford Motor Credit Co., 7.00%, 09/25/01 ........................... A1/A 400,000 405,500
Ford Motor Credit Co., 7.75%, 11/15/02 ........................... A1/A 300,000 310,875
General Electric Capital Corp., 8.13%, 05/15/12 .................. Aaa/AAA 250,000 275,312
General Motors Acceptance Corp., 7.00%, 08/15/01 ................. A2/A 1,650,000 1,670,625
Lehman Brothers Holdings, Inc., 6.50%, 10/01/02 .................. Baa1/A 600,000 589,500
Lehman Brothers Holdings, Inc., 7.38%, 05/15/04 .................. Baa1/A 700,000 706,125
Lehman Brothers Holdings, Inc., 6.63%, 02/05/06 .................. Baa1/A 725,000 694,188
Merrill Lynch & Co., Inc. Sr. Notes, 6.00%, 02/17/09 ............. Aa3/AA- 800,000 738,000
Morgan Stanley, Dean Witter, Discover & Co., 6.75%, 03/04/03 ..... Aa3/A+ 950,000 955,938
Norwest Financial, Inc., 6.38%, 11/15/01 ......................... Aa3/A+ 750,000 750,938
Pitney Bowes Credit Corp., 6.63%, 06/01/02 ....................... Aa3/AA 800,000 809,000
USL Capital Corp., 5.79%, 01/23/01 ............................... A1/A 300,000 297,750
----------
13,623,370
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INDUSTRIAL -- 6.4%
Allied Signal, 8.00%, 05/15/06 ................................... A2/A 500,000 525,175
Amoco Co., 6.25%, 10/15/04 ....................................... Aa1/AAA 400,000 397,500
Anheuser Busch Cos., 5.38%, 09/15/08 ............................. A1/A+ 400,000 366,500
Bausch & Lomb, Inc., 6.38%, 08/01/03 ............................. Baa2/BBB 500,000 486,250
Coca Cola Put Asset Trust, 6.00%, 03/15/01 ....................... A3/A+ 750,000 746,250
Elf Aquitane, 8.00%, 10/15/01 .................................... Aa3/AA- 300,000 311,250
Ingersoll Rand, 6.02%, 02/15/01 .................................. A3/A- 700,000 699,027
J Seagram & Sons, 6.25%, 12/15/01 ................................ Baa3/BBB- 600,000 597,000
Nabisco, Inc., 6.00%, 02/15/01 ................................... Baa2/BBB 500,000 496,250
Nabisco, Inc., 6.13%, 02/01/03 ................................... Baa2/BBB 1,100,000 1,071,125
----------
5,696,327
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
NATIONAL GOVERNMENT -- 1.5%
Korea Export - Import Bank, 7.10%, 03/15/02 ...................... Baa3/BBB- $ 600,000 $ 594,750
Republic of Korea, 8.75%, 04/15/03 ............................... Baa3/BBB- 750,000 783,750
-----------
1,378,500
-----------
TELECOMMUNICATIONS -- 3.9%
Cable & Wireless Communications, 6.63%, 03/06/05 ................. Baa1/A- 1,000,000 975,000
GTE Southwest, Ser. 1993B, 6.54%, 12/01/05 ....................... A2/AA- 1,000,000 982,500
Northwestern Bell Telephone Co., 9.50%, 05/01/00 ................. A2/A+ 500,000 513,750
United Telecom, 9.50%, 04/01/03 .................................. Baa1/BBB 900,000 986,625
-----------
3,457,875
-----------
TRANSPORTATION -- 0.6%
Norfolk Southern Corp., 7.35%, 05/15/07 .......................... Baa1/BBB+ 500,000 510,625
-----------
UTILITIES -- 2.4%
Central Illinois Public Services, 6.73%, 06/01/01 ................ Aa2/AA- 700,000 709,625
Hawaiian Electric Industry, 6.49%, 06/12/02 ...................... Baa2/BBB 550,000 545,188
Ohio Power Co., Ser. 1997A, 6.73%, 11/01/04 ...................... Baa1/A- 400,000 399,000
Oklahoma Gas & Electric, 6.50%, 07/15/04 ......................... Aa3/AA- 500,000 504,375
-----------
2,158,188
-----------
TOTAL CORPORATE BONDS (COST $31,645,637) ................................................. 30,995,987
-----------
ASSET BACKED SECURITIES -- 18.1%
Advanta Mortgage Loan Trust, Ser. 1996-1, Cl. A6, 6.73%, 08/25/23 Aaa/AAA 500,000 475,719
Advanta Mortgage Loan Trust, Ser.1993-3, Cl. A5, 5.55%, 01/25/25 . Aaa/AAA 107,371 102,163
AFC Home Equity Loan Trust, Ser. 1996-2, Cl. A4,
7.74%, 07/07/99 ............................................... Aaa/AAA 1,699,640 1,680,006
Contimortgage Home Equity Loan Trust Ser. 1998-2, Cl. A5,
6.28%, 09/15/16 ............................................... Aaa/AAA 800,000 792,248
Contimortgage Home Equity Loan Trust, Ser. 1996-1, Cl. A6,
6.69%, 01/15/16 ............................................... Aaa/AAA 499,996 518,805
Crown Home Equity Loan Trust, Ser. 1996-1, Cl. A4,
7.15%, 08/25/12 ............................................... Aaa/AAA 1,000,000 962,411
Federal National Mortgage Association Notes, Ser. 1995-W1, Cl. A6,
8.10%, 04/25/25 ............................................... 1,371,502 1,399,366
First Plus Home Loan Trust, Ser. 1996-2, Cl. A6, 7.85%, 08/20/13 . Aaa/AAA 499,851 511,727
First Sierra Equipment Contact Trust, Ser. 1998-1, Cl. A4,
5.63%, 08/12/04 ............................................... Aaa/AAA 700,000 684,292
Fund America Investors Corp. II, Ser. 1993-F, Cl. A1,
5.40%, 09/25/09 ............................................... Aaa/AAA 30,303 29,209
General Electric Capital Mortgage Services, Inc., Ser. 1996-HE2,
Cl. A5, 7.94%, 06/25/14 ....................................... Aaa/NR 1,000,000 1,002,652
Green Tree Financial Corp., Ser. 1995-2, Cl. A6, 8.30%, 05/15/26 . Aaa/AAA 925,000 973,294
Green Tree Home Improvement Loan Trust, Ser. 1996-F, Cl. HEA3,
6.90%, 01/15/28 ............................................... NR/AAA 425,000 428,241
Green Tree Lease Finance, Ser. 1997-1, Cl. A3, 6.17%, 09/20/05 ... NR/AAA 808,318 806,709
IMC Home Equity Loan Trust, Ser. 1997-5, Cl. A7, 6.90%, 01/20/22 . Aaa/AAA 900,000 899,028
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
MBNA Master Credit Card Trust, Ser. 1995-F, Cl. A,
6.60%, 01/15/03 ................................................ Aaa/AAA $ 800,000 $ 807,200
Oakwood Mortgage Investors, Inc., Ser. 1998-B, Cl. A2,
6.15%, 07/15/11 ................................................ NR/AAA 900,000 900,057
Sears Credit Account Master Trust, Ser. 1995-2, Cl. A,
8.10%, 06/15/04 ................................................ Aaa/AAA 633,333 645,100
The Money Store Home Equity Trust, Ser. 1992-D2, Cl. A3,
7.55%, 01/15/18 ................................................ Aaa/AAA 332,483 345,725
The Money Store Home Equity Trust, Ser. 1996-B, Cl. A8,
7.91%, 05/15/24 ................................................ Aaa/AAA 750,000 759,255
UCFC Home Equity Loan, Ser. 1998-B, Cl. A2, 6.01%, 09/15/14 ....... Aaa/AAA 1,000,000 980,343
Vanderbilt Mortgage Finance, Ser. 1996-A, Cl. A3, 6.85%, 04/07/26 Aaa/NR 500,000 497,321
-----------
TOTAL ASSET BACKED SECURITIES (COST $16,439,112) ......................................... 16,200,871
-----------
MORTGAGE-BACKED SECURITIES** -- 5.6%
Federal Home Loan Mortgage Corp., 2073 PJ, 6.00%, 10/15/23 ................... 500,000 482,510
Federal Home Loan Mortgage Corp., CMO 2129, 5.75%, 09/15/11 .................. 1,250,000 1,206,529
Federal Home Loan Mortgage Corp., Gold 15 Yr., 6.00%, 01/01/13 ............... 1,048,117 1,011,761
Federal Home Loan Mortgage Corp., Gold 5 Yr., 7.00%, 05/01/00 ................ 326,652 328,183
Federal National Mortgage Association Notes, 7 Yr Balloon,
6.00%, 01/01/06 ........................................................... 516,426 502,224
Federal National Mortgage Association Notes, 7 Yr Balloon,
6.00%, 02/01/06 ........................................................... 230,144 223,816
Federal National Mortgage Association Notes, Ser. 1996-4, Cl. VC,
6.50%, 07/25/02 ........................................................... 265,037 263,609
Federal National Mortgage Association Notes, Ser. 1999-W5, Cl. A4,
6.12%, 02/25/29 ........................................................... 500,000 485,680
Federal National Mortgage Association Notes, Ser. 1998-W3, Cl. A2,
6.50%, 07/25/28 ........................................................... 500,000 500,816
-----------
TOTAL MORTGAGE-BACKED SECURITIES (COST $5,127,756) ....................................... 5,005,128
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS**-- 10.2%
FEDERAL HOME LOAN BANK NOTES -- 2.4%
Federal Home Loan Bank Notes, 6.41%, 04/10/01 ................................ 300,000 302,936
Federal Home Loan Bank Notes, 5.80%, 08/24/01 ................................ 1,000,000 997,327
Federal Home Loan Bank Notes, 5.25%, 04/25/02 ................................ 900,000 883,801
-----------
2,184,064
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION NOTES -- 1.5%
Federal Home Loan Mortgage Corp. Notes, 7.05%, 06/08/05 ...................... 500,000 500,814
Federal Home Loan Mortgage Corp. Notes, 5.95%, 01/19/06 ...................... 850,000 829,758
-----------
1,330,572
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------ ------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES -- 6.3%
Federal National Mortgage Association Notes, 6.41%, 02/06/02 ................. $ 650,000 $ 657,206
Federal National Mortgage Association Notes, 5.78%, 02/12/03 ................. 750,000 736,799
Federal National Mortgage Association Notes, 5.75%, 06/15/05 ................. 800,000 785,773
Federal National Mortgage Association Notes, 7.00%, 06/25/07 ................. 600,000 606,384
Federal National Mortgage Association Notes, 6.56%, 12/10/07 ................. 1,100,000 1,085,268
Federal National Mortgage Association Notes, 6.16%, 07/09/08 ................. 1,275,000 1,219,785
Federal National Mortgage Association Notes, 6.00%, 09/24/08 ................. 600,000 558,471
-----------
5,649,686
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $9,378,829) ............................... 9,164,322
-----------
U.S. TREASURY OBLIGATIONS** -- 29.4%
U.S. Treasury Notes, 5.88%, 07/31/99 ......................................... 500,000 500,459
U.S. Treasury Notes, 6.88%, 03/31/00 ......................................... 700,000 708,630
U.S. Treasury Notes, 6.75%, 04/30/00 ......................................... 800,000 809,627
U.S. Treasury Notes, 6.25%, 05/31/00 ......................................... 300,000 302,523
U.S. Treasury Notes, 8.75%, 08/15/00 ......................................... 150,000 155,494
U.S. Treasury Notes, 5.50%, 12/31/00 ......................................... 700,000 700,495
U.S. Treasury Notes, 6.63%, 07/31/01 ......................................... 600,000 611,660
U.S. Treasury Notes, 6.50%, 08/31/01 ......................................... 3,150,000 3,204,835
U.S. Treasury Notes, 7.50%, 11/15/01 ......................................... 350,000 364,154
U.S. Treasury Notes, 6.13%, 12/31/01 ......................................... 400,000 404,275
U.S. Treasury Notes, 6.25%, 01/31/02 ......................................... 1,000,000 1,013,934
U.S. Treasury Notes, 6.25%, 02/28/02 ......................................... 1,500,000 1,520,362
U.S. Treasury Notes, 6.25%, 06/30/02 ......................................... 500,000 507,341
U.S. Treasury Notes, 6.00%, 07/31/02 ......................................... 400,000 403,326
U.S. Treasury Notes, 5.75%, 10/31/02 ......................................... 1,600,000 1,600,813
U.S. Treasury Notes, 5.75%, 11/30/02 ......................................... 1,500,000 1,499,455
U.S. Treasury Notes, 5.50%, 01/31/03 ......................................... 1,850,000 1,833,938
U.S. Treasury Notes, 5.88%, 02/15/04 ......................................... 150,000 150,465
U.S. Treasury Notes, 7.25%, 05/15/04 ......................................... 550,000 582,076
U.S. Treasury Notes, 6.50%, 05/15/05 ......................................... 300,000 308,459
U.S. Treasury Notes, 6.88%, 05/15/06 ......................................... 2,000,000 2,105,118
U.S. Treasury Notes, 7.00%, 07/15/06 ......................................... 1,500,000 1,588,506
U.S. Treasury Notes, 6.25%, 02/15/07 ......................................... 1,650,000 1,680,831
U.S. Treasury Notes, 6.13%, 08/15/07 ......................................... 1,250,000 1,263,039
U.S. Treasury Notes, 5.63%, 05/15/08 ......................................... 800,000 783,326
U.S. Treasury Notes, 11.75%, 02/15/10 ........................................ 650,000 822,134
U.S. Treasury Notes, 7.25%, 05/15/16 ......................................... 750,000 824,480
-----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $26,618,130) ....................................... 26,249,755
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------ ------------
<S> <C> <C>
COMMERCIAL PAPER -- 1.5%
Associates First Capital Corp., 5.71%, 07/01/99
(COST $1,336,531) ......................................................... $1,336,531 $ 1,336,531
-----------
TOTAL INVESTMENTS (COST $90,545,995)(DAGGER)-- 99.5% .............................. 88,952,594
OTHER ASSETS AND LIABILITIES, NET-- 0.5% .......................................... 429,906
-----------
NET ASSETS -- 100.0% .............................................................. $89,382,500
===========
<FN>
* Although certain securities are not rated (NR) by either Moody's or S&P, they
have been determined to be of comparable quality to investment grade
securities by the Portfolio Adviser. The ratings shown are unaudited.
** While no ratings are shown for U.S. Government Agency Obligations and U.S.
Treasury Obligations, they are considered to be of the highest quality,
comparable to Moody's AAA rating and S&P's Aaa rating.
(DAGGER) The cost for federal income tax purposes. At June 30, 1999, net
unrealized depreciation was $1,593,401. This consisted of aggregate gross
unrealized appreciation for all securities, in which there was an excess of
market value over tax cost of $143,573, and aggregate gross unrealized
depreciation for all securities, in which there was an excess of tax cost
over market value of $1,736,974.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / JUNE 30, 1999
(Showing Percentage of Total Value of Net Assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
CORPORATE BONDS -- 38.8%
BANKS -- 5.1%
Amsouth Bank of Alabama, 6.45%, 02/01/18 ........................ A1/A- $ 200,000 $ 190,000
Citicorp, 7.25%, 10/15/11 ....................................... A1/A+ 1,000,000 1,007,500
J.P. Morgan & Co., 6.25%, 02/15/11 .............................. A2/AA- 1,000,000 918,750
St. George Bank, Ltd., 7.15%, 06/18/07 .......................... Baa1/A- 400,000 397,000
Swiss Bank Corp., New York, 7.00%, 10/15/15 ..................... Aa2/AA 1,000,000 965,000
Union Bank Switzerland, New York, 7.25%, 07/15/06 ............... Aa2/AA 600,000 603,750
Wachovia Corp., 6.25%, 08/04/08 ................................. A1/A+ 400,000 384,000
-----------
4,466,000
-----------
FINANCIAL -- 14.9%
Abbey National PLC, 6.69%, 10/17/05 ............................. Aa3/AA- 1,100,000 1,084,875
Ameritech Capital Funding, 6.45%, 01/15/18 ...................... Aa3/AA+ 1,700,000 1,568,250
Associates Corp., NA, 5.75%, 11/01/03 ........................... Aa3/AA- 500,000 483,750
Associates Corp., NA, 7.75%, 02/15/05 ........................... Aa3/AA- 1,000,000 1,042,500
Bear Stearns Co., Inc., 6.63%, 10/01/04 ......................... A2/A 400,000 393,500
CIT Group Holdings, Inc., 6.38%, 08/01/02 ....................... Aa3/A+ 500,000 498,750
Commercial Credit Co., 8.70%, 06/15/09 .......................... Aa3/A+ 1,200,000 1,330,500
Crestar Financial Corp., 6.50%, 01/15/08 ........................ A2/A 500,000 486,875
First Union Corp., 6.82%, 08/01/06 .............................. A2/A- 651,000 658,408
General Electric Capital Corp., 8.13%, 05/15/12 ................. Aaa/AAA 700,000 770,875
General Motors Acceptance Corp., 7.00%, 08/15/01 ................ A2/A 500,000 506,250
Lehman Brothers Holdings, Inc., 6.50%, 10/01/02 ................. Baa1/A 900,000 884,250
Lehman Brothers Holdings, Inc., 7.38%, 05/15/04 ................. Baa1/A 750,000 756,562
Lehman Brothers Holdings, Inc., 6.63%, 02/05/06 ................. Baa1/A 500,000 478,750
Merrill Lynch & Co., 6.38%, 07/18/00 ............................ Aa3/AA- 900,000 907,917
Monsanto Co. Debentures Series 144A, 6.60%, 12/01/28 ............ A2/A 700,000 623,875
Morgan Stanley, Dean Witter, Discover & Co., 6.75%, 03/04/03 .... Aa3/A+ 500,000 503,125
-----------
12,979,012
-----------
GOVERNMENT, NATIONAL -- 1.5%
Korea Export - Import Bank, 7.10%, 03/15/02 ..................... Baa3/BBB- 550,000 545,187
Republic of Korea Global Bonds, 8.75%, 04/15/03 ................ Baa3/BBB- 750,000 783,750
-----------
1,328,937
-----------
INDUSTRIAL -- 10.7%
AKZO Nobel, Inc., 6.00%, 11/15/03 ............................... A2/A 600,000 582,000
Amoco Co., 6.25%, 10/15/04 ...................................... Aa1/AA+ 500,000 496,875
Bausch & Lomb, Inc., 6.38%, 08/01/03 ............................ Baa2/BBB 700,000 680,750
Coca Cola Put Asset Trust, 6.00%, 03/15/01 ...................... A3/A+ 1,500,000 1,492,500
Elf Aquitane, 8.00%, 10/15/01 ................................... Aa3/AA- 600,000 622,500
Eli Lilly, 8.13%, 12/01/01 ...................................... Aa3/AA 600,000 626,250
Harvard University, 8.13%, 04/15/07 ............................. Aaa/AAA 500,000 541,250
Hertz Corp., 6.00%, 02/01/01 .................................... A3/A- 1,100,000 1,095,875
Ingersoll-Rand, 6.02%, 02/15/28 ................................. A3/A- 500,000 499,305
International Business Machines Corp., 6.50%, 01/15/28 .......... A1/A+ 500,000 461,875
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT/SHARES (NOTE 2)
--------------- ------------- ------------
<S> <C> <C> <C>
Nabisco, Inc., 6.13%, 02/01/03 .................................. Baa2/BBB $ 700,000 $ 681,625
Walt Disney Co. Notes, 5.62%, 12/01/08 .......................... A2/A 1,000,000 927,500
Conoco, Inc., 6.95%, 04/15/29 ................................... A3/A- 650,000 609,375
-----------
9,317,680
-----------
TELECOMMUNICATIONS -- 2.7%
AT&T Corp., 6.50%, 03/15/29 ..................................... A1/AA- 450,000 406,125
GTE Southwest, Ser. 1993-B, 6.54%, 12/01/05 ..................... A2/AA- 500,000 491,250
MCI Worldcom, Inc., 6.50%, 04/15/10 ............................. A3/A- 400,000 383,000
Sprint Corp., 9.50%, 04/01/03 ................................... Baa1/BBB+ 1,000,000 1,096,250
-----------
2,376,625
-----------
TRANSPORTATION -- 1.3%
Norfolk Southern Corp., 7.35%, 05/15/07 ......................... Baa1/BBB+ 1,100,000 1,123,375
-----------
UTILITIES -- 2.6%
Hawaiian Electric Industry, 6.49%, 06/12/02 ..................... Baa2/BBB 1,000,000 991,250
Oklahoma Gas & Electric, 6.50%, 07/15/04 ........................ Aa3/AA- 1,250,000 1,260,938
-----------
2,252,188
-----------
TOTAL CORPORATE BANDS (COST $34,322,144) ................................................. 33,843,817
-----------
PREFERRED STOCK -- 0.6%
ABN AMRO Cap Funding, Ser. B, 7.50%
(COST $500,000) ............................................. 20,000 490,000
-----------
ASSET-BACKED SECURITIES -- 19.1%
Advanta Mortgage Loan Trust, Ser. 1993-3, Cl. A5, 5.55%, 01/25/25 Aaa/AAA 214,742 204,327
AFC Home Equity Loan Trust, Ser. 1993-1, Cl. A, 5.90%, 05/20/08 . Aaa/AAA 639,052 629,235
AFC Home Equity Loan Trust, Ser. 1996-2, Cl. A4,
7.74%, 09/25/27 .............................................. Aaa/AAA 999,788 988,239
Crown Home Equity Loan Trust, Ser. 1996-1, Cl. A4,
7.15%, 08/25/12 .............................................. Aaa/AAA 1,400,000 1,347,375
Federal National Mortgage Association Notes, Ser. 1995-W1, Cl. A6,
8.10%, 04/25/25 .............................................. NR/NR 1,371,502 1,399,366
First Plus Home Loan Trust, Ser. 1996-2, Cl. A6, 7.85%, 08/20/13 Aaa/AAA 999,703 1,023,454
General Electric Capital Mortgage Services, Inc., Ser. 1997-HE4,
Cl. A3, 6.59%, 12/25/12 ...................................... Aaa/NR 750,000 748,673
Green Tree Financial Corp., Ser. 1995-2, Cl. A6, 8.30%, 05/15/26 Aaa/AAA 400,000 420,884
Green Tree Home Improvement Loan Trust, Ser. 1996-C, Cl. HEA4,
7.80%, 06/15/26 .............................................. NR/AAA 2,000,000 2,036,287
Green Tree Lease Finance, Ser. 1997-1, Cl. A4, 6.27%, 09/20/05 .. NR/AAA 750,000 746,550
IMC Home Equity Loan Trust, Ser. 1997-5, Cl. A7, 6.90%, 01/20/22 Aaa/AAA 500,000 499,460
MBNA Master Credit Card Trust, Ser. 1995-F, Cl. A, 6.60%, 01/15/03 Aaa/AAA 500,000 504,500
Oakwood Mortgage Investors, Inc., Ser. 1998-B, Cl. A2,
6.15%, 07/15/11 .............................................. NR/AAA 700,000 700,044
The Money Store Home Equity Trust, Ser. 1992-D2, Cl. A3,
7.55%, 01/15/18 .............................................. Aaa/AAA 579,164 602,231
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
The Money Store Home Equity Trust, Ser. 1995-A, Cl. A5,
8.40%, 02/15/24 ................................................ Aaa/AAA $ 800,000 $ 829,353
The Money Store Home Equity Trust, Ser. 1996-B, Cl. A8,
7.91%, 05/15/24 ................................................ Aaa/AAA 2,000,000 2,024,679
UCFC Home Equity Loan Trust, Ser. 1998-B, Cl. A2, 6.01%, 09/15/14 . Aaa/AAA 1,000,000 980,343
Vanderbilt Mortgage Finance, Ser. 1996-A, Cl. A3, 6.85%, 04/07/26 . Aaa/NR 1,000,000 994,643
-----------
TOTAL ASSET-BACKED SECURITIES (COST $16,868,148) ......................................... 16,679,643
-----------
MORTGAGE-BACKED SECURITIES** -- 1.8%
Federal Home Loan Mortgage Corp. Notes, 2073 PJ (Pac),
6.00%, 10/15/23 ........................................................... 300,000 289,506
Federal Home Loan Mortgage Corp. Notes, CMO 2129 PE,
5.75%, 09/15/11 ........................................................... 400,000 386,089
Federal Home Loan Mortgage Corp. Notes, Gold 15 Yr.,
6.00%, 01/01/13 ........................................................... 698,744 674,507
Federal Home Loan Mortgage Corp. Notes, Gold 5 Yr.,
7.00%, 05/01/00 ........................................................... 204,157 205,115
-----------
TOTAL MORTGAGE-BACKED SECURITIES (COST $1,593,079) ....................................... 1,555,217
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS** -- 6.2%
FEDERAL HOME LOAN BANK NOTES -- 1.8%
Federal Home Loan Bank Notes, 5.80%, 08/24/01 ................................ 1,000,000 997,327
Federal Home Loan Bank Notes, 5.30%, 10/29/02 ................................ 600,000 584,832
-----------
1,582,159
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION NOTES -- 1.5%
Federal Home Loan Mortgage Corp. Notes, 7.05%, 06/08/05 ...................... 1,000,000 1,001,629
Federal Home Loan Mortgage Corp. Notes, 5.95%, 01/19/06 ...................... 350,000 341,665
-----------
1,343,294
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES -- 2.2%
Federal National Mortgage Association Notes, 6.41%, 02/06/02 ................. 600,000 606,651
Federal National Mortgage Association Notes, 5.78%, 02/12/03 ................. 300,000 294,720
Federal National Mortgage Association Notes, 6.56%, 12/10/07 ................. 500,000 493,304
Federal National Mortgage Association Notes, 6.16%, 07/09/08 ................. 500,000 478,347
-----------
1,873,022
-----------
GENERAL SERVICE ADMINISTRATION NOTES -- 0.7%
General Service Administration Notes, 6.27%, 05/15/20 ........................ 600,000 571,272
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $5,480,683) ..................................................................... 5,369,747
-----------
U.S. TREASURY OBLIGATIONS**-- 29.9%
U.S. Treasury Bonds -- 19.6%
U.S. Treasury Bonds, 9.25%, 02/15/16 ......................................... 1,250,000 1,627,184
U.S. Treasury Bonds, 7.25%, 05/15/16 ......................................... 1,450,000 1,593,995
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------ ------------
<S> <C> <C>
U.S. Treasury Bonds, 7.50%, 11/15/16 ......................................... $3,450,000 $ 3,884,809
U.S. Treasury Bonds, 8.75%, 05/15/17 ......................................... 500,000 630,521
U.S. Treasury Bonds, 8.88%, 02/15/19 ......................................... 2,000,000 2,573,941
U.S. Treasury Bonds, 8.00%, 11/15/21 ......................................... 1,250,000 1,503,870
U.S. Treasury Bonds, 7.25%, 08/15/22 ......................................... 1,500,000 1,679,087
U.S. Treasury Bonds, 7.13%, 02/15/23 ......................................... 850,000 941,698
U.S. Treasury Bonds, 6.00%, 02/15/26 ......................................... 1,000,000 974,646
U.S. Treasury Bonds, 6.75%, 08/15/26 ......................................... 700,000 748,773
U.S. Treasury Bonds, 6.50%, 11/15/26 ......................................... 500,000 518,609
U.S. Treasury Bonds, 6.38%, 08/15/27 ......................................... 500,000 511,892
-----------
17,189,025
-----------
U.S. TREASURY NOTES -- 10.3%
U.S. Treasury Notes, 5.50%, 12/31/00 ......................................... 500,000 500,354
U.S. Treasury Notes, 6.50%, 08/31/01 ......................................... 250,000 254,352
U.S. Treasury Notes, 6.13%, 12/31/01 ......................................... 500,000 505,343
U.S. Treasury Notes, 6.25%, 01/31/02 ......................................... 450,000 456,270
U.S. Treasury Notes, 6.25%, 02/28/02 ......................................... 550,000 557,466
U.S. Treasury Notes, 6.63%, 03/31/02 ......................................... 250,000 255,778
U.S. Treasury Notes, 5.75%, 10/31/02 ......................................... 400,000 400,203
U.S. Treasury Notes, 5.88%, 02/15/04 ......................................... 400,000 401,240
U.S. Treasury Notes, 7.25%, 08/15/04 ......................................... 500,000 530,020
U.S. Treasury Notes, 6.50%, 05/15/05 ......................................... 3,100,000 3,187,414
U.S. Treasury Notes, 5.88%, 11/15/05 ......................................... 1,400,000 1,395,700
U.S. Treasury Notes, 6.25%, 02/15/07 ......................................... 500,000 509,343
-----------
8,953,483
-----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $25,414,114) ....................................... 26,142,508
-----------
COMMERCIAL PAPER -- 2.7%
Associates 1st Cap. Corp., 5.71%, 07/01/99
(COST $2,393,306) ......................................................... 2,393,306 2,393,306
-----------
TOTAL INVESTMENTS (COST $86,571,474)(DAGGER)-- 99.1% .............................................. 86,474,238
OTHER ASSETS AND LIABILITIES, NET-- 0.9% .......................................................... 822,988
-----------
NET ASSETS -- 100.0% .............................................................................. $87,297,226
===========
<FN>
* Although certain securities are not rated (NR) by either Moody's or S&P, they
have been determined to be of comparable quality to investment grade
securities by the Portfolio Adviser. The ratings shown are unaudited.
** While no ratings are shown for U.S. Government Agency Obligations and U.S.
Treasury Obligations, they are considered to be of the highest quality,
comparable to Moody's AAA rating and S&P's Aaa rating.
(DAGGER) The cost for federal income tax purposes. At June 30, 1999, net
unrealized depreciation was $97,236. This consisted of aggregate gross
unrealized appreciation for all securities, in which there was an excess of
market value over tax cost of $1,631,527, and aggregate gross unrealized
depreciation for all securities, in which there was an excess of tax cost
over market value of $1,728,763.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / MUNICIPAL BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / JUNE 30, 1999
(Showing Percentage of Total Value of Net Assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- 97.2%
ALASKA -- 5.3%
Alaska Municipal Bond Bank Auth. Ref. Bonds, Ser. 1994C,
4.90%, 10/01/03 ................................................ A2/A $400,000 $ 408,000
Seward, AK Rev. Bonds (Alaska Sealife Center Proj.),
6.50%, 10/01/01 ................................................ NR/NR 460,000 464,600
-----------
872,600
-----------
COLORADO -- 3.1%
Aurora, CO Cert. of Participation Lease Ref. Rev. Bonds.,
5.85%, 12/01/02 ................................................ A/A 500,000 520,000
-----------
DELAWARE -- 16.7%
Bethany Beach, DE Gen. Oblig. Rev. Bonds, 9.75%, 11/01/07 ......... Aaa/AAA 160,000 213,000
Bethany Beach, DE Gen. Oblig. Rev. Bonds, 9.75%, 11/01/08 ......... Aaa/AAA 180,000 244,575
Delaware Gen. Oblig. Rev. Bonds, 4.30%, 03/01/10 .................. Aa1/AA+ 500,000 470,000
Delaware State Economic Dev. Auth. Rev. Bonds (Delmarva Power
& Light), 7.30%, 09/01/15 ...................................... Aaa/AAA 100,000 103,406
Delaware State Economic Dev. Auth. Rev. Bonds (Osteopathic Hosp.
Assoc.), Ser. 1993A, 6.00%, 01/01/03 ........................... Aaa/NR 405,000 414,619
Delaware State Housing Auth. Multi-family Mtge. Ref. Rev. Bonds,
Ser. 1992C, 7.25%, 01/01/07 .................................... A1/A 190,000 201,162
Delaware State Housing Auth. Multi-family Mtge. Ref. Rev. Bonds,
Ser. 1992D, 6.35%, 07/01/03 .................................... A1/NR 100,000 103,750
Delaware State Housing Auth. Single Family Mtge. Rev. Bonds
Ser. 1993A-1, 5.05%, 07/01/05 .................................. Aaa/AAA 285,000 285,712
Delaware State Housing Auth. Single Family Mtge. Rev. Bonds
Ser. 1993A-1, 5.15%, 01/01/06 .................................. Aaa/AAA 160,000 161,000
Delaware State Housing Auth. Sr. Home Mtge. Rev. Bonds,
Ser. 1991A, 7.00%, 06/01/00 .................................... Aa3/NR 25,000 25,225
Delaware State Housing Auth. Sr. Home Mtge. Rev. Bonds,
Ser. 1991B-1, 6.40%, 12/01/02 .................................. Aa3/NR 30,000 30,825
Delaware State Solid Waste Auth. Rev. Bonds, 5.80%, 07/01/01 ...... A2/A 500,000 513,750
-----------
2,767,024
-----------
HAWAII -- 4.5%
Hawaii State Gen. Oblig. Rev. Bonds, Ser. 1992BW, 6.20%, 03/01/05 . A1/A+ 700,000 752,500
-----------
MARYLAND -- 2.9%
Anne Arundel County MD G.O. Refunding Water and Sewer
Series 99, 4.20%, 03/15/07 ..................................... Aa1/AA+ 500,000 478,125
-----------
MASSACHUSETTS -- 5.1%
Massachusetts Bay Trans. Auth. Ser 98-B, 5.13%, 03/01/12 .......... Aa3/AA- 500,000 497,500
Massachusetts Fed. Highway Grant Ant. Notes Ser. 98B,
5.13%, 12/15/14 ................................................ Aa3/NR 350,000 343,437
-----------
840,937
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / MUNICIPAL BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
MISSISSIPPI -- 2.4%
Medical Center Educ. Bldg. Corp. Rev. Bonds (Univ. of Mississippi
Medical Center Proj.), Ser. 1993, 5.40%, 12/01/05 .............. NR/A $400,000 $ 407,000
-----------
NEW JERSEY -- 3.1%
New Jersey Economic Dev. Auth. School Rev. Bonds (Blair Academy
Proj.), Ser. 1995B, 6.00%, 09/01/07 ............................ A3/NR 500,000 507,500
-----------
PENNSYLVANIA -- 24.3%
Allentown, PA Gtd. Water Improv. Rev. Bonds, 5.65%, 07/15/10 ...... Aaa/AAA 525,000 553,219
Chester County, PA Ind. Dev. Auth. Wastewater Treatment Rev. Bonds
(Orleans Corp. Proj.), 7.00%, 11/01/06 ......................... NR/NR 605,000 595,925
Cumberland Valley, PA School District Gen. Oblig. Rev. Bonds,
Ser. 1993A, 5.35%, 09/01/07 .................................... Aaa/AAA 500,000 510,000
Harrisburg, PA Office & Parking Rev. Auth. Bonds (Capital Assoc.
Proj.), Ser. 1998A, 5.50%, 05/01/05 ............................ NR/NR 500,000 493,750
New Morgan PA Muni Auth Subordinated Office Rev Ser 1999 B,
5.38%, 06/01/03 ................................................ NR/NR 210,000 208,687
Pennsylvania State Higher Educ. Fac. Auth. Rev. Bonds (Philadelphia
College of Osteopathic Medicine), 5.25%, 12/01/07 .............. NR/AAA 150,000 153,187
Pennsylvania State Higher Educ. Fac. Auth. Rev. Bonds, Ser. 1992A,
6.63%, 08/15/09 ................................................ Aaa/AAA 120,000 128,850
Philadelphia, PA Hospitals & Higher Educ. Fac. Auth. Rev. Bonds
(Jefferson Health Systems) Ser. 1997A, 5.50%, 05/15/05 ......... A1/AA- 500,000 516,250
Philadelphia, PA Redev. Auth. Home Improv. Loan Rev. Bonds,
Ser. 1986A, 7.38%, 06/01/03 .................................... A1/A+ 5,000 5,050
Westmoreland County, PA Ind. Dev. Auth. Rev. Bonds (Landfill Gas
Recycling- Lanchester Energy Partners), Ser. 1998B,
6.80%, 01/01/05 ................................................ NR/NR 500,000 493,750
York County, PA Ind. Dev. Auth. Personal Care Fac. Rev. Bonds,
9.50%, 10/01/19 ................................................ NR/NR 330,000 380,738
-----------
4,039,406
-----------
TEXAS -- 12.3%
Austin, TX Gen. Oblig. Rev. Bonds, 4.75%, 09/01/09 ................ Aa2/AA 315,000 307,519
Carrollton, TX Fmrs Brh Indpt. School Dist. Psf, 4.40%, 02/15/10 .. Aaa/AAA 250,000 235,313
Coppell, TX Indpt. School Dist., 0.00%, 08/15/07 .................. NR/AAA 500,000 334,375
Georgetown, TX Utility System Ref. Rev. Bonds, Ser. 1998A,
4.80%, 08/15/11 ................................................ Aaa/AAA 650,000 629,688
Klein, TX Isd Ref., 4.45%, 08/01/11 ............................... Aaa/AAA 275,000 256,781
University of Texas Ref. Rev. Bonds, Ser. 1992A, 6.25%, 07/01/13 .. Aaa/AAA 275,000 288,063
-----------
2,051,739
-----------
UTAH -- 3.1%
Salt Lake County, UT Municipal Bldg. Auth. Lease Rev. Bonds,
Ser. 1994A, 5.65%, 10/01/03 .................................... Aaa/AAA 500,000 523,750
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / MUNICIPAL BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
---------------- ------------ ------------
<S> <C> <C> <C>
VIRGINIA -- 6.1%
Virginia State Housing Dev. Auth. Commonwealth Mtge. Rev. Bonds,
Ser. 1992C-8, 5.80%, 07/01/04 ................................... Aa1/AA+ $ 500,000 $ 516,875
Virginia State Public Bldg. Auth. Ref. Rev. Bonds, Ser. 1996A,
5.00%, 08/01/12 ................................................. Aa/AA 500,000 494,375
-----------
1,011,250
-----------
WASHINGTON -- 5.3%
Clark County, WA Public Utility Dist. No. 1 Generating System Rev.
Bonds, 6.00%, 01/01/06 .......................................... Aaa/AAA 350,000 374,500
Washington State Public Power Supply System Ref. Rev. Bonds
(Nuclear Proj. No. 3), Ser. 1993C, 5.10%, 07/01/07 .............. Aa1/AA- 500,000 505,625
-----------
880,125
-----------
WISCONSIN -- 3.0%
Appleton, WI Area School Dist. Gen. Oblig. Rev. Bonds,
5.00%, 04/01/11 ................................................. Aa2/NR 505,000 496,794
-----------
TOTAL MUNICIPAL BONDS (COST $16,123,841) ................................................. 16,148,750
-----------
TAX-EXEMPT MUTUAL FUNDS -- 3.6%
Provident Municipal Tax-Exempt Cash Money Market Fund,
(COST $594,561) ........................................................... 594,561 594,561
-----------
TOTAL INVESTMENTS (COST $16,718,402)(DAGGER)--100.8% .............................................. 16,743,311
OTHER ASSETS AND LIABILITIES, NET-- (0.8%) ........................................................ (131,053)
-----------
NET ASSETS -- 100.0% ............................................................................... $16,612,258
===========
<FN>
* Although certain securities are not rated (NR) by either Moody's or S&P, they
have been determined to be of comparable quality to investment grade
securities by the Portfolio Adviser. The ratings shown are unaudited.
(DAGGER) The cost for federal income tax purposes. At June 30, 1999, net
unrealized appreciation was $24,909. This consisted of aggregate gross
unrealized appreciation for all securities, in which there was an excess of
market value over tax cost of $209,222, and aggregate gross unrealized
depreciation for all securities, in which there was an excess of tax cost
over market value of $184,313.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1999
<TABLE>
<CAPTION>
SHORT/
INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at market (identified cost $90,545,995,
$86,571,474 and $16,718,402, respectively) ......................... $88,952,594 $86,474,238 $16,743,311
Receivables:
Interest ........................................................... 1,256,634 1,199,289 283,450
Fund shares purchased .............................................. 9,668 10,376 --
Other assets ....................................................... 22 53,425 8
----------- ----------- -----------
Total assets ....................................................... 90,218,918 87,737,328 17,026,769
----------- ----------- -----------
LIABILITIES:
Due to Adviser ....................................................... 16,783 15,625 4,549
Payables:
Dividends to shareholders .......................................... 410,397 424,420 43,488
Fund shares redeemed ............................................... 392,165 57 3,000
Investment securities purchased .................................... -- -- 335,425
Other accrued expenses ............................................... 17,073 -- 28,049
----------- ----------- -----------
Total liabilities .................................................. 836,418 440,102 414,511
----------- ----------- -----------
NET ASSETS, at market value .......................................... $89,382,500 $87,297,226 $16,612,258
=========== =========== ===========
NET ASSETS CONSIST OF:
Paid-in capital ...................................................... $90,760,602 $87,210,781 $16,540,925
Accumulated net realized gain ........................................ 215,299 183,681 46,424
Net unrealized appreciation (depreciation) of investments ............ (1,593,401) (97,236) 24,909
----------- ----------- -----------
NET ASSETS ........................................................... $89,382,500 $87,297,226 $16,612,258
=========== =========== ===========
Shares of beneficial interest outstanding ............................ 6,955,099 9,068,595 1,331,462
----------- ----------- -----------
NET ASSET VALUE, offering and redemption price per share ............. $12.85 $9.63 $12.48
====== ===== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Period November 1, 1998 through June 30, 1999
<TABLE>
<CAPTION>
SHORT/
INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------
<S> <C> <C> <C>
INTEREST INCOME ...................................................... $3,725,605 $3,818,094 $ 588,619
----------- ----------- -----------
EXPENSES:
Advisory fee ...................................................... 216,468 213,629 40,884
Administration and accounting fee ................................. 61,848 61,037 11,682
Custodian fee ..................................................... 12,747 12,988 9,154
Transfer agent fee ................................................ 23,786 18,549 5,343
Trustees' fees and expenses ....................................... 2,751 2,441 2,660
Amortization of organizational expenses ........................... -- 8,179 --
Registration fees ................................................. 23,826 37,005 9,320
Report to shareholders ............................................ 10,294 10,311 1,494
Professional fees ................................................. 53,512 35,245 18,684
Other ............................................................. 6,647 6,757 5,643
----------- ----------- -----------
Total expenses before fee waivers .............................. 411,879 406,141 104,864
Advisory fee waived ............................................ (71,715) (70,392) (17,255)
----------- ----------- -----------
Total expenses, net ......................................... 340,164 335,749 87,609
----------- ----------- -----------
Net investment income ............................................. 3,385,441 3,482,345 501,010
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments .................................. 215,456 183,813 46,411
Net change in unrealized appreciation (depreciation) of
investments .................................................... (3,800,658) (5,092,145) (584,480)
----------- ----------- -----------
Net loss on investments ........................................... (3,585,202) (4,908,332) (538,069)
----------- ----------- -----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................. $ (199,761) $(1,425,987) $ (37,059)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Fiscal Year Ended October 31, 1998
<TABLE>
<CAPTION>
SHORT/
INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------
<S> <C> <C> <C>
INTEREST INCOME ...................................................... $ 3,238,195 $ 1,968,957 $ 892,753
----------- ----------- -----------
EXPENSES:
Advisory fee ...................................................... 213,079 110,511 78,528
Administration and accounting fees ................................ 62,979 31,575 29,241
Custodian fee ..................................................... 5,902 7,001 4,711
Transfer agent fee ................................................ 7,962 7,970 4,270
Distribution expenses ............................................. 5,812 -- 4,443
Trustees' fees and expenses ....................................... 6,183 868 6,170
Amortization of organizational expenses ........................... -- 4,251 15,997
Registration fees ................................................. 22,041 9,627 18,457
Report to shareholders ............................................ 11,217 5,900 5,336
Professional fees ................................................. 78,247 26,172 33,333
Other ............................................................. 19,471 3,623 14,374
----------- ----------- -----------
Total expenses before fee waivers .............................. 432,893 207,498 214,860
Advisory fee waived ............................................ (126,281) (33,746) (72,466)
Administration fee waived ...................................... -- -- (3,518)
Accounting fee waived .......................................... -- -- (7,494)
----------- ----------- -----------
Total expenses, net ......................................... 306,612 173,752 131,382
----------- ----------- -----------
Net investment income ............................................. 2,931,583 1,795,205 761,371
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments .................................. 253,210 324,405 118,413
Net change in unrealized appreciation (depreciation) of
investments .................................................... 1,588,123 1,426,841 152,437
----------- ----------- -----------
Net gain on investments ........................................... 1,841,333 1,751,246 270,850
----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................. $ 4,772,916 $ 3,546,451 $ 1,032,221
=========== =========== ===========
<FN>
(DAGGER) For the period June 29, 1998 (commencement of operations) through
October 31, 1998 for the Intermediate Bond Portfolio.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT/
INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------
<S> <C> <C> <C>
FOR THE PERIOD NOVEMBER 1, 1998 THROUGH JUNE 30, 1999
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income ............................................. $ 3,385,441 $3,482,345 $ 501,010
Net realized gain on investments .................................. 215,456 183,813 46,411
Net change in unrealized appreciation (depreciation) of investments (3,800,658) (5,092,145) (584,480)
---------- ---------- -----------
Net decrease in net assets resulting from operations .............. (199,761) (1,425,987) (37,059)
---------- ---------- -----------
Dividends to shareholders from:
Net investment income ............................................. (3,385,441) (3,482,345) (501,010)
Net realized gain on investments .................................. (137,401) (324,537) (86,704)
----------- ----------- -----------
Total distributions ............................................ (3,522,842) (3,806,882) (587,714)
----------- ----------- -----------
Decrease in net assets from Fund share transactions (Note 5) ......... (1,492,269) (471,408) (342,356)
----------- ----------- -----------
Total decrease in net assets ...................................... (5,214,872) (5,704,277) (967,129)
NET ASSETS:
Beginning of period ............................................... 94,597,372 93,001,503 17,579,387
----------- ----------- -----------
End of period ..................................................... $89,382,500 $87,297,226 $16,612,258
=========== =========== ===========
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998(DAGGER)
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................................. $2,931,583 $1,795,205 $ 761,371
Net realized gain on investments .................................. 253,210 324,405 118,413
Net change in unrealized appreciation (depreciation) of investments 1,588,123 1,426,841 152,437
----------- ----------- -----------
Net increase in net assets resulting from operations .............. 4,772,916 3,546,451 1,032,221
----------- ----------- -----------
Dividends to shareholders from:
Net investment income ............................................. (2,931,583) (1,795,205) (761,371)
----------- ----------- -----------
Increase (decrease) in net assets from Fund share transactions (Note 5) 61,300,279 91,250,257 (137,719)
----------- ----------- -----------
Total increase in net assets ...................................... 63,141,612 93,001,503 133,131
NET ASSETS:
Beginning of year ................................................. 31,455,760 -- 17,446,256
----------- ----------- -----------
End of year ....................................................... $94,597,372 $93,001,503 $17,579,387
=========== =========== ===========
<FN>
(DAGGER) For the period June 29, 1998 (commencement of operations) through
October 31, 1998 for the Intermediate Bond Portfolio.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT/
INTERMEDIATE MUNICIPAL
BOND BOND
PORTFOLIO PORTFOLIO
----------- -----------
<S> <C> <C>
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income ............................................. $ 1,885,318 $ 749,888
Net realized gain (loss) on investments transactions .............. (16,511) 40,118
Net change in unrealized appreciation (depreciation) of investments 307,032 340,102
----------- -----------
Net increase in net assets resulting from operations .............. 2,175,839 1,130,108
----------- -----------
Dividends to shareholders from:
Net investment income ............................................. (1,885,318) (749,888)
----------- -----------
Increase (decrease) in net assets from Fund share transactions (Note 5) (611,832) 447,444
----------- -----------
Total increase (decrease) in net assets .......................... (321,311) 827,664
NET ASSETS:
Beginning of year ................................................. 31,777,071 16,618,592
----------- -----------
End of year ....................................................... $31,455,760 $17,446,256
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following tables include selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements. They should be read in conjunction with the financial statements and
notes thereto.
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE FISCAL YEARS ENDED OCTOBER 31,
NOVEMBER 1, 1998 --------------------------------------------------
THROUGH
JUNE 30, 1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SHORT/INTERMEDIATE BOND PORTFOLIO
NET ASSET VALUE-- BEGINNING OF PERIOD ......... $13.38 $13.07 $12.95 $13.08 $12.42 $13.48
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income ...................... 0.48 0.76 0.77 0.78 0.83 0.71
Net realized and unrealized gain (loss) on
investments ............................. (0.51) 0.31 0.12 (0.13) 0.66 (1.02)
------ ------ ------ ------ ------ ------
Total from investment operations ........ (0.03) 1.07 0.89 0.65 1.49 (0.31)
------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
From net investment income ................. (0.48) (0.76) (0.77) (0.78) (0.83) (0.71)
From net realized gain on investments ...... (0.02) -- -- -- -- (0.04)
------ ------ ------ ------ ------ ------
Total distributions ..................... (0.50) (0.76) (0.77) (0.78) (0.83) (0.75)
------ ------ ------ ------ ------ ------
NET ASSET VALUE-- END OF PERIOD ............... $12.85 $13.38 $13.07 $12.95 $13.08 $12.42
====== ====== ====== ====== ====== ======
TOTAL RETURN .................................. (0.27)%** 8.40% 7.13% 5.18% 12.41% (2.33)%
RATIOS (TO AVERAGE NET ASSETS)/ SUPPLEMENTAL DATA:
Expenses (net of fee waivers) .............. 0.55%* 0.59% 0.65% 0.65% 0.65% 0.65%
Expenses (excluding fee waivers) ........... 0.67%* 0.83% 1.12% 1.09% 1.14% 1.05%
Net investment income ...................... 5.47%* 5.64% 5.98% 6.07% 6.56% 5.53%
Portfolio turnover rate ....................... 29.71% 40.66% 83.54% 85.77% 116.40% 43.77%
Net assets, end of period (000s omitted) ...... $89,383 $94,597 $31,456 $31,777 $32,214 $31,721
<FN>
* Annualized.
** Not annualized.
1 Effective June 29, 1998, Wilmington Trust Company ("WTC") elected to waive a
portion of its advisory fee or reimburse expenses to the extent that the
Portfolio's expenses (excluding taxes, extraordinary expenses, brokerage
commissions and interest) exceed an annual rate of 0.55% of the Portfolio's
average daily net assets. Prior to June 29, 1998, WTC had elected to waive a
portion of its advisory fee of reimburse expenses to the extent that the
Portfolio's expenses (excluding taxes, extraordinary expenses, brokerage
commissions and interest) exceeded an annual rate of 0.65% of the Portfolio's
average daily net assets.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 1, 1998 JUNE 29, 1998(DAGGER)
THROUGH THROUGH
JUNE 30, 1999 OCTOBER 31, 1998
---------------- ---------------------
<S> <C> <C>
INTERMEDIATE BOND PORTFOLIO
NET ASSET VALUE-- BEGINNING OF PERIOD .................................... $10.19 $10.00
------ ------
INVESTMENT OPERATIONS:
Net investment income ................................................. 0.38 0.20
Net realized and unrealized gain on
investments ........................................................ (0.53) 0.19
------ ------
Total from investment operations ................................... (0.15) 0.39
------ ------
DISTRIBUTIONS:
From net investment income ............................................ (0.38) (0.20)
From net realized gain on investments ................................. (0.03) --
------ ------
Total distributions ................................................ (0.41) (0.20)
------ ------
NET ASSET VALUE-- END OF PERIOD .......................................... $ 9.63 $10.19
====== ======
TOTAL RETURN ............................................................. (1.52%)** 3.89%**
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 1 (net of fee waivers) ....................................... 0.55%* 0.55%*
Expenses (excluding fee waivers) ...................................... 0.67%* 0.66%*
Net investment income ................................................. 5.71%* 5.69%*
Portfolio turnover rate .................................................. 18.23% 17.66%
Net assets at end of period (000 omitted) ................................ $87,297 $93,002
<FN>
(DAGGER) Commencement of operations.
* Annualized.
** Not annualized.
1 The expense ratios reflects WTC's election to waive a portion of its advisory
fee or reimburse expenses to the extent that the Portfolio's expenses
(excluding taxes, extraordinary expenses, brokerage commissions and interest)
exceed an annual rate of 0.55% of the Portfolio's average daily net assets
through February 1999.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE FISCAL YEARS ENDED OCTOBER 31,
NOVEMBER 1, 1998 -----------------------------------------------
THROUGH
JUNE 30, 1999 1998 1997 1996 1995 1994
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BOND PORTFOLIO
NET ASSET VALUE-- BEGINNING OF PERIOD ......... $ 12.94 $ 12.74 $ 12.46 $ 12.49 $ 11.64 $ 12.50
------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Net investment income ...................... 0.36 0.56 0.55 0.55 0.54 0.49
Net realized and unrealized gain (loss) on
investments ............................. (0.40) 0.20 0.28 (0.03) 0.85 (0.86)
------- ------- ------- ------- ------- -------
Total from investment operations ........ (0.04) 0.76 0.83 0.52 1.39 (0.37)
------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
From net investment income ................. (0.36) (0.56) (0.55) (0.55) (0.54) (0.49)
From net realized gain on investments ...... (0.06) -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distribution ...................... (0.42) (0.56) (0.55) (0.55) (0.54) (0.49)
------- ------- ------- ------- ------- -------
NET ASSET VALUE-- END OF PERIOD ............... $12.48 $12.94 $12.74 $12.46 $12.49 $11.64
======= ======= ======= ======= ======= =======
TOTAL RETURN (0.30)%** 6.07% 6.85% 4.24% 12.23% (3.05)%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 1 (net of fee waivers) ............ 0.75%* 0.75% 0.75% 0.75% 0.75% 0.75%
Expenses (excluding fee waivers) ........... 0.90%* 1.23% 1.52% 1.37% 1.45% 1.62%
Net investment income ...................... 4.29%* 4.35% 4.42% 4.41% 4.50% 4.13%
Portfolio turnover rate ....................... 19.13% 43.72% 28.56% 15.91% 42.08% 21.95%
Net assets at end of period (000 omitted) ..... $16,612 $17,579 $17,446 $16,619 $16,570 $14,283
<FN>
* Annualized.
** Not annualized.
1 The expense ratios reflect WTC's election to waive a portion of its advisory
fee or reimburse expenses to the extent that the Portfolio's expenses
(excluding taxes, extraordinary expenses, brokerage commissions and interest)
exceed an annual rate of 0.75% of the Portfolio's average daily net assets.
In addition, Rodney Square Management Corporation waived a portion of its
administration and accounting services fees for the fiscal years ended
October 31, 1998, 1997, 1996, 1995, and 1994.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND. The Rodney Square Strategic Fixed-Income Fund (the
"Fund") is a diversified, open-end management investment company established
as a Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Declaration of Trust
permits the Trustees to create additional series or portfolios, each of which
may issue additional classes of shares. Currently, the Fund consists of three
series or portfolios, the Short/Intermediate Bond Portfolio, the Intermediate
Bond Portfolio and the Municipal Bond Portfolio (each, a "Portfolio" and
collectively, the "Portfolios"). Each Portfolio consists of a single class of
shares.
The investment objective of the Short/Intermediate Bond Portfolio is to seek
high total return, consistent with high current income, by investing
principally in various types of investment grade fixed-income securities with
an average dollar-weighted duration, under normal market conditions, of 2-1/2
to 4 years. The investment objective of the Intermediate Bond Portfolio is to
seek high total return, consistent with high current income, by investing
principally in various types of investment grade fixed-income securities with
an average dollar-weighted duration, under normal market conditions, of 5 to
7 years. The investment objective of the Municipal Bond Portfolio is to seek
a high level of income exempt from federal income tax, consistent with the
preservation of capital by investing principally in municipal securities
providing interest income that is exempt from federal income tax with an
average dollar-weighted duration, under normal market conditions, of 4 to 8
years.
Effective June 30, 1999, the Fund changed its fiscal year end from October 31
to June 30 for financialreporting and federal income tax purposes.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of the Fund:
SECURITY VALUATION. The Portfolios value their assets based on 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, the
Portfolios 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.
FEDERAL INCOME TAXES. Each Portfolio is treated as a separate entity and
intends to continue to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, and to
distribute all of its taxable and tax-exempt income to its shareholders.
Therefore, no federal income tax provision has been made in the financial
statements.
26
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
INTEREST INCOME AND DIVIDENDS TO SHAREHOLDERS. Interest income is accrued as
earned. Dividends from net investment income consist of accrued interest and
earned discount (including both original issue and market discount) less
amortization of premium and accrued expenses. Dividends to shareholders of
each Portfolio are declared daily from net investment income and paid to
shareholders monthly. Each Portfolio will distribute net realized gains on
investments, if any, annually in December.
DEFERRED ORGANIZATION COSTS. Costs incurred by the Intermediate Bond
Portfolio in connection with its initial registration and public offering of
shares have been deferred and are being amortized on a straight-line basis
over a five-year period beginning on the date the Portfolio commenced
operations.
OTHER. Investment security transactions are accounted for on a trade date
basis. Each Portfolio uses the specific identification method for determining
realized gain and loss on investments for both financial and federal income
tax reporting purposes.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
3. INVESTMENT SECURITIES. During the period November 1, 1998 through June 30,
1999, purchases and sales of investment securities (excluding short-term
investments) aggregated as follows:
SHORT/INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND PORTFOLIO BOND PORTFOLIOBOND PORTFOLIO
------------------ ------------------ ----------
Purchases ....... $26,803,297 $16,209,114 $3,293,099
Sales ........... $26,950,075 $16,429,692 $3,758,999
4. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES. Wilmington Trust Company
("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, WTC, subject to the
supervision of the Board of Trustees, directs the investments of each
Portfolio in accordance with its investment objective, policies and
limitations. Under the Advisory Agreement, each Portfolio pays a monthly
advisory fee to WTC at the annual rate of 0.35% of the average daily net
assets of the Portfolio. WTC has agreed to waive its advisory fee or
reimburse each Portfolio monthly to the extent that operating expenses of the
Portfolio (excluding taxes, extraordinary expenses, brokerage commissions and
interest) exceed an annual rate of 0.55%, 0.55% and 0.75% of the
Short/Intermediate Bond Portfolio's, the Intermediate Bond Portfolio's and
the Municipal Bond Portfolio's average daily net assets, respectively.
27
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
Prior to June 29, 1998, the Short/Intermediate Bond Portfolio and the
Municipal Bond Portfolio each paid WTC a monthly fee at the annual rate of
0.50% of each Portfolio's average daily net assets, excluding those assets
invested in any money market mutual fund. WTC had agreed to waive its
advisory fee or reimburse the Municipal Bond Portfolio monthly to the extent
that operating expenses of the Portfolio (excluding taxes, extroadinary
expenses, brokerage commissions and interest) exceeded an annual rate of
0.75% of the Portfolio's average daily net assets. With respect to the
Short/Intermediate Bond Portfolio, WTC had voluntarily agreed to waive its
fee or reimburse the Portfolio monthly to the extent that operating expenses
of the Portfolio (excluding taxes, extraordinary expenses, brokerage
commissions, and interest) exceeded an annual rate of 0.65% of average daily
net assets.
WTC also serves as custodian of the assets of the Fund and receives a fee
from the Fund for this service. WTC has entered into a Sub-Custodian Services
Agreement with PFPC Trust Company ("PFPC Trust") whereby PFPC Trust serves as
Sub-Custodian of the assets of the Fund. WTC (not the Fund) pays PFPC Trust
for sub-custodial services.
The Fund has entered into an Administration and Accounting Services Agreement
with PFPC Inc. ("PFPC"), whereby PFPC performs certain administrative and
accounting services for the Portfolios including preparing shareholder
reports, assisting WTC in compliance monitoring activities and determining
the net asset value per share of each Portfolio. For services provided under
the Agreement, the Fund pays PFPC an annual fee equal to the amount derived
from the following schedule: 0.10% of each Portfolio's first $1 billion of
average daily net assets; 0.075% of each Portfolio's next $500 million of
average daily net assets; 0.050% of each Portfolio's next $500 million of
average daily net assets; and 0.035% of each Portfolio's average daily net
assets in excess of $2 billion. In addition, any related out-of-pocket
expenses incurred by PFPC in the provision of services to a Portfolio are
borne by that Portfolio.
PFPC also serves as transfer agent, dividend disbursing agent and shareholder
servicing agent to the Fund pursuant to a separate Transfer Agency Services
Agreement. The Fund pays PFPC an annual fee of 0.03% of each Portfolio's
average net assets plus transaction charges and out-of-pocket expenses for
these services.
Prior to February 2, 1998, Rodney Square Management Corporation ("RSMC"), a
wholly owned subsidiary of WTC, served as accounting agent, administrator,
transfer agent and dividend disbursing agent to the Fund. For accounting
services provided, RSMCreceived an annual fee of $50,000 per Portfolio, plus
an amount equal to 0.02% of that portion of each Portfolio's average daily
net assets in excess of $100 million. For administration services provided,
RSMC received a monthly administration fee from the Fund at an annual rate of
0.08% of each Portfolio's average daily net assets. The Fund did not pay RSMC
any separate fees for its services as transfer agent and dividend disbursing
agent for the Portfolios, as WTC assumed the cost of providing these services
to the Portfolios.
Pursuant to a Distribution Agreement with the Fund dated January 1, 1999,
Provident Distributors, Inc. manages the Fund's distribution efforts and
provides assistance and expertise in developing marketing plans and
materials. Prior to January 1, 1999, Rodney Square Distributors, Inc.
("RSD"), a wholly owned subsidiary of WTC, served as distributor pursuant to
a distribution agreement with the Fund. Effective January 26, 1998, the
Fund's Rule 12b-1 plans were terminated. Prior to January 26, 1998, the
Fund's Board of Trustees had authorized, pursuant to Rule 12b-1 plans of
distribution, a payment of up to 0.25% of each Portfolio's average daily net
assets annually to reimburse the distributor for expenses incurred in
connection with distribution activities.
28
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
5. FUND SHARES. At June 30, 1999, there were an unlimited number of shares of
beneficial interest of $0.01 par value authorized. The following table
summarizes the activity in shares of each Portfolio:
<TABLE>
<CAPTION>
SHORT/INTERMEDIATE BOND PORTFOLIO
FOR THE PERIOD NOVEMBER 1, 1998 FOR THE FISCAL YEAR FOR THE FISCAL YEAR
THROUGH JUNE 30, 1999 ENDED OCTOBER 31, 1998 ENDED OCTOBER 31, 1997
------------------------------- -------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................... 469,441 $ 6,171,879 900,342 $11,872,722 141,848 $ 1,841,272
Shares issued in exchange
for securities transferred
in kind (Note 6) ........... -- -- 4,027,047 52,875,813 -- --
Shares issued to
shareholders
in reinvestment
of distributions ........... 215,989 2,846,631 114,701 1,518,469 58,648 755,881
Shares redeemed ............... (802,515) (10,510,779) (375,850) (4,966,725) (248,332) (3,208,985)
--------- ------------- --------- ----------- --------- -----------
Net increase (decrease) ....... (117,085) $ (1,492,269) 4,666,240 $61,300,279 (47,836) $ (611,832)
========= ============= ========= =========== ========= ===========
Shares outstanding:
Beginning of period ........... 7,072,184 2,405,944 2,453,780
--------- --------- ---------
End of period ................. 6,955,099 7,072,184 2,405,944
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND PORTFOLIO
FOR THE PERIOD NOVEMBER 1, 1998 FOR THE PERIOD JUNE 29, 1998(DAGGER)
THROUGH JUNE 30, 1999 THROUGH OCTOBER 31, 1998
------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold ................................. 860,384 $ 8,596,927 407,960 $ 4,121,185
Shares issued in exchange for securities
transferred in kind (Note 6) ............. -- -- 8,921,710 89,217,926
Shares issued to shareholders in
reinvestment of distributions ............ 335,086 3,358,545 131,441 1,338,735
Shares redeemed ............................. (1,252,157) (12,426,880) (335,829) (3,427,589)
--------- ------------ --------- -----------
Net increase (decrease) ..................... (56,687) $ (471,408) 9,125,282 $91,250,257
============ ===========
Shares outstanding:
Beginning of period ...................... 9,125,282 0
--------- ---------
End of period ............................ 9,068,595 9,125,282
========= =========
<FN>
(DAGGER) Commencement of operations
</FN>
</TABLE>
29
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BOND PORTFOLIO
FOR THE PERIOD NOVEMBER 1, 1998 FOR THE FISCAL YEAR FOR THE FISCAL YEAR
THROUGH JUNE 30, 1999 ENDED OCTOBER 31, 1998 ENDED OCTOBER 31, 1997
------------------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................. 45,897 $ 592,544 70,718 $ 907,714 98,185 $ 1,235,603
Shares issued to
shareholders in
reinvestment of
distributions ............ 37,617 483,448 45,302 580,748 45,831 575,223
Shares redeemed ............. (110,706) (1,418,348) (126,618) (1,626,181) (108,773) (1,363,382)
---------- ------------ --------- ----------- --------- -----------
Net decrease ................ (27,192) $ (342,356) (10,598) $ (137,719) 35,243 $ 447,444
============ =========== ===========
Shares outstanding:
Beginning of period ......... 1,358,654 1,369,252 1,334,009
---------- --------- ---------
End of period ............... 1,331,462 1,358,654 1,369,252
========== ========= =========
</TABLE>
6. TRANSFERS IN-KIND AND COMMENCEMENT OF NEW PORTFOLIO. Effective June 29, 1998,
the Wilmington Trust Intermediate Bond Fund ("Intermediate Bond Fund") and
the Wilmington Trust Strategic Bond Fund ("Strategic Bond Fund"), each a
Wilmington Trust Collective Investment Fund ("WTCIF"), transferred all of
their net assets, including their securities, to the Short/Intermediate Bond
Portfolio and the Intermediate Bond Portfolio, respectively. The shareholders
of the WTCIFs received shares of the respective Portfolios based on the net
assets transferred divided by the net asset value of the respective
Portfolio.
Thetransfer was conducted on a taxable basis with respect to the WTCIF
Intermediate Bond Fund, whereby any unrealized appreciation or depreciation
on the securities on the date of transfer was recognized by the WTCIF
Intermediate Bond Fund and the Short/Intermediate BondPortfolio's basis in
the securities reflected their market value as of the date of transfer.
The transfer of securities was conducted on a tax-free basis with respect to
the WTCIF Strategic Bond Fund, whereby any unrealized appreciation or
depreciation on the securities on the date of transfer was not treated as a
taxable event by the WTCIF Strategic Bond Fund and the Intermediate Bond
Portfolio's basis in the securities reflected their historical cost basis as
of the date of transfer.
30
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
The following table summarized the aforementioned transactions:
<TABLE>
<CAPTION>
THE WILMINGTON TRUST COLLECTIVE INVESTMENT FUNDS
NET
NET ASSETS UNREALIZED
SHARES AT AT APPRECIATION
6/29/98 6/29/98 AT 6/29/98
------------ ------------- -------------
<S> <C> <C> <C>
Intermediate Bond Fund ......................... 368,365 $52,875,813 $ 901,407
Strategic Bond Fund ............................ 4,809,547 89,217,926 3,568,067
</TABLE>
<TABLE>
<CAPTION>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
COMBINED
SHARES NET ASSETS NAV
ISSUED IN AFTER PER
EXCHANGE EXCHANGE SHARE
------------ ------------- -------------
<S> <C> <C> <C>
Short/Intermediate Bond Portfolio .............. 4,027,047 $84,571,146 $13.13
Intermediate Bond Portfolio .................... 8,921,710 89,217,926 10.00
</TABLE>
31
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Trustees of The Rodney Square Strategic Fixed-Income
Fund:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Rodney Square Strategic Fixed-Income Fund
(comprised of the Short/Intermediate Bond, Intermediate Bond and Municipal Bond
Portfolios) (the "Fund") as of June 30, 1999, and the related statements of
operations, the statements of changes in net assets and the financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1999, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Rodney Square Strategic
Fixed-Income Fund at June 30, 1999, and the results of their operations, the
changes in their net assets, and their financial highlights for each of the
periods indicated therein, in conformity with generally accepted accounting
principles.
/S/ERNST & YOUNG L.L.P.
Philadelphia, Pennsylvania
August 3, 1999
32
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- ---------------------------------------------
NOTICE TO SHAREHOLDERS (UNAUDITED)
- --------------------------------------------------------------------------------
TAX INFORMATION
Pursuant to Section 852 of the InternalRevenue Code of 1986, as amended, the
Municipal Bond Portfolio designates $581,298 as tax-exempt dividends.
In January 2000, shareholders of the Fund will receive Federal income tax
information on all distributions paid to their accounts in the calendar year
1999, including any distributions paid between June 30, 1999 and December 31,
1999.
33
<PAGE>
[This Page Intentionally Left Blank.]
<PAGE>
[This Page Intentionally Left Blank.]
<PAGE>
TRUSTEES
Eric Brucker
Fred L. Buckner
Robert J. Christian
John J. Quindlen
-------------------
OFFICERS
Robert J. Christian, PRESIDENT
Eric K. Cheung, VICE PRESIDENT
Pat Colletti, VICE PRESIDENT & TREASURER
Gary M. Gardner, SECRETARY
Mary Jane Maloney, ASSISTANT SECRETARY
----------------------------------------
INVESTMENT ADVISER
AND CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
-------------------------
ADMINISTRATOR,
TRANSFER AGENT AND
ACCOUNTING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
--------------------
LEGAL COUNSEL
Pepper Hamilton LLP
-------------------
INDEPENDENT AUDITORS
Ernst & Young LLP
--------------------
DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Ctr.
6th Floor
West Conshohocken, PA 19428-2961
--------------------------------
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF
THE FUND. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
RS03 6/99
