THE RODNEY SQUARE
STRATEGIC
FIXED-INCOME
FUND
[GRAPHIC OMITTED]
SEMI-ANNUAL REPORT
APRIL 30, 1999
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
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DEAR SHAREHOLDER:
The management of the Rodney Square Strategic Fixed-Income Fund (the "Fund")
is pleased to report to you on the Fund's activity for the six months ended
April 30, 1999.
PERFORMANCE REVIEW*
The Rodney Square Short/Intermediate Bond Portfolio had a total return of
0.51% for the six months ended April 30, 1999. This return consisted of a modest
decrease in net asset value per share from $13.38 on October 31, 1998 to $13.07
at the end of April plus distributions per share of $0.38. The Portfolio's
performance exceeded the reported return of -0.04% for the Merrill Lynch 1-10
Year U. S. Treasury Index over this six-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 paid by the Portfolio to 0.55% of it's average daily
assets.
The Rodney Square Intermediate Bond Portfolio had a total return of -0.25%
for the six-month period ended April 30, 1999. This return consisted of a
decrease in net asset value per share from $10.19 on October 31, 1998 to $9.85
at the end of April plus distributions per share of $0.31. The Portfolio's
performance exceeded the reported return of -1.07% for the Merrill Lynch U. S.
Treasury Master Index over the six-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 paid by the Portfolio to 0.55% of it's average daily assets.
The Rodney Square Municipal Income Portfolio had a total return of 1.60% for
the six months ended April 30, 1999. This return consisted of a decrease in net
asset value per share from $12.94 on October 31, 1998 to $12.81 at the end of
April plus distributions per share of $0.33. The Portfolio's performance trailed
the reported return of 1.64% for the Merrill Lynch Intermediate Municipal Index.
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 paid by the Portfolio
to 0.75% of it's average daily assets.
ECONOMIC ENVIRONMENT
During the past six months, the fixed income markets have been recovering
from the effects of the global financial crisis. At the height of the crisis,
the fixed income market had effectively split into two parts; the U. S. Treasury
market performed extraordinarily well while corporate bonds and mortgage-backed
securities suffered under the weight of credit and prepayment concerns. The
markets' recovery saw both extremes unwind with market relationships returning
to those seen last spring before the crisis erupted.
U. S. Treasury yield levels moved higher during the six month period. The
first wave of interest rate increases reflected a relaxation in the "flight to
quality" buying spree in Treasuries that accompanied the global economic crisis.
During the early part of 1999 the Federal Reserve made clear its intention to
keep interest rates steady for the
- -----------------------------
* PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN
INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY WILMINGTON TRUST
COMPANY OR ANY OTHER BANKING INSTITUTION, THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. RETURNS ARE HIGHER DUE TO THE ADVISOR'S MAINTENANCE OF THE PORTFOLIO'S
EXPENSES. SEE FINANCIAL HIGHLIGHTS ON PAGES 18, 19 AND 20.
1
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
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PRESIDENT'S MESSAGE -- CONTINUED
================================================================================
time being, which led to another round of rate increases as the expectations for
further Fed rate cuts was eliminated from the market. The six-month period ended
with 2-Year and 5-Year U. S. Treasury yields up over 80 basis points while
30-Year Treasuries rose only 43 basis points.
The rise in interest rates was offset by the returning liquidity in the
non-Treasury sectors of the market that led to significant spread contractions.
The October '98 cuts in interest rates by the Federal Reserve became the
catalyst for this recovery which continued through most of the period. Corporate
bonds, mortgage-backed securities and asset-backed securities performed better
than the Treasury market during the six months.
The municipal bond market did not experience the same kind of volatility seen
in the Treasury market. Bolstered by strong demand, the yields on municipal
bonds rose only 5 to10 basis points across the yield curve.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE SHORT/INTERMEDIATE AND INTERMEDIATE BOND PORTFOLIOS
These two Portfolios are designed with the intent to give shareholders broad
exposure to the dynamics of the bond market, a stable flow of income and
minimization of risk. The advisor attempts to accomplish this goal by applying a
disciplined and systematic investment process to actively manage a core
portfolio of investment grade notes and bonds from a wide range of taxable
market sectors. The Short/Intermediate Portfolio is invested primarily in
securities with an average life under 10 years while the Intermediate Portfolio
uses securities covering average lives up to 30 years.
Both Portfolios were invested with the intent to benefit from the strong
showing by the non-Treasury sectors of the market. During the six-month period
the two Portfolios held corporate bond positions that ranged between 35% and 40%
of the portfolio holdings. Asset-backed securities were also a significant
portion of each Portfolio, totaling roughly 19%. This enabled each Portfolio to
generate higher income returns that helped each one to outperform its relevant
Treasury index. In addition, the Portfolios benefited from the reduction in the
yield spread between these sectors and the Treasury market.
The interest rate sensitivity of the Portfolios was also reduced, which
protected the NAV from some of the erosion caused by the rising interest rate
environment. The highest yields during the period were reached in February with
the market then trading in a relatively narrow range. As the market stabilized,
the advisor reduced each Portfolio's defensive positioning by extending
maturities.
THE MUNICIPAL INCOME PORTFOLIO
The Municipal Bond Portfolio is an intermediate duration, high quality
securities 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.
While municipals had lagged Treasuries all through 1998 because of tremendous
municipal supply, this began to change late in 1998. Supply eased up and through
the first quarter of 1999 had declined nearly 20% from last year's torrid pace.
In addition, retail demand has remained steady. The tax-exempt's strong
performance in this first quarter eliminated the "attractive relative value"
that had existed for all of 1998 and left municipals back at fair value to
Treasuries.
2
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
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PRESIDENT'S MESSAGE -- CONTINUED
================================================================================
The municipal yield curve remains steep in the 5 to 12 year range. The
advisor continued to lengthen the duration of the Portfolio, moving to a more
neutral duration position of 5.22 years versus the Merrill Lynch Intermediate
Index's duration of 5.35 years. The advisor executed this strategy by selling
securities in the 3 to 5 year range, and purchasing securities in the 10 to 12
year range. In addition to increasing the maturity of the Portfolio, the advisor
increased the yield, but did not sacrifice credit quality or coupon income.
We invite your comments and questions and we thank you for your investment in
The Rodney Square Strategic Fixed-Income Fund. We look forward to reviewing our
investment outlook and strategy with you in our next report to shareholders.
Sincerely,
/S/ ROBERT J. CHRISTIAN
Robert J. Christian
President
June 21, 1999
3
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
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INVESTMENTS / APRIL 30, 1999 (UNAUDITED)
(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 -- 34.8%
BANKS -- 4.7%
Amsouth Bank of Alabama, 6.45%, 02/01/18 ....................... A1/A- $ 250,000 $ 248,437
Bank of New York Co., Inc., 8.50%, 12/15/04 .................... A2/A 400,000 447,000
BankAmerica Corp., 6.75%, 09/15/05 ............................. Aa3/A 250,000 254,375
Canadian Imperial Bank of Commerce, New York, 6.20%, 08/01/00 .. Aa3/AA- 500,000 504,442
National City Bank Cleveland, 6.50%, 05/01/03 .................. A1/A 1,200,000 1,228,500
St. George Bank, Ltd., 7.15%, 06/18/07 ......................... Baa1/A- 750,000 764,063
Union Bank Switzerland, New York, 7.25%, 07/15/06 .............. Aa2/AA 800,000 838,000
----------
4,284,817
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FINANCIAL -- 15.9%
Abbey National PLC, 6.69%, 10/17/05 ............................ Aa3/AA- 675,000 688,500
Associates Corp., NA, 8.55%, 07/15/99 .......................... Aa3/AA- 700,000 806,750
Associates Corp., NA, 6.75%, 08/01/01 .......................... Aa3/AA- 900,000 919,125
Bear Stearns Co., Inc., 6.63%, 10/01/04 ........................ A2/A 850,000 860,625
Commercial Credit Co., 8.70%, 06/15/99 ......................... Aa3/A+ 850,000 972,188
Commercial Credit Co., 6.50%, 08/01/04 ......................... Aa3/A+ 600,000 606,000
Crestar Financial Corp., 6.50%, 01/15/08 ....................... A2/A 700,000 679,875
First Chicago, 7.63%, 01/15/03 ................................. A1/A 400,000 420,500
First Union Corp., 6.82%, 08/01/06 ............................. A2/A- 200,000 212,690
Ford Motor Credit Co., 7.00%, 09/25/01 ......................... A1/A 400,000 411,000
Ford Motor Credit Co., 7.75%, 11/15/02 ......................... A1/A 300,000 316,875
General Electric Capital Corp., 8.13%, 05/15/12 ................ Aaa/AAA 250,000 288,438
General Motors Acceptance Corp., 7.00%, 08/15/01 ............... A2/A 1,650,000 1,693,313
Lehman Brothers Holdings, Inc., 6.50%, 10/01/02 ................ Baa1/A 600,000 600,000
Lehman Brothers Holdings, Inc., 7.38%, 05/15/04 ................ Baa1/A 700,000 720,125
Lehman Brothers Holdings, Inc., 6.63%, 02/05/06 ................ Baa1/A 725,000 720,469
Merrill Lynch & Co., Inc. Sr. Notes, 6.00%, 02/17/09 ........... Aa3/AA- 800,000 772,000
Morgan Stanley, Dean Witter, Discover & Co., 6.75%, 03/04/03 ... Aa3/A+ 950,000 972,563
Norwest Financial, Inc., 6.38%, 11/15/01 ....................... Aa3/A+ 750,000 760,313
Pitney Bowes Credit Corp., 6.63%, 06/01/02 ..................... Aa3/AA 800,000 819,000
USL Capital Corp., 5.79%, 01/23/01 ............................. A1/A 300,000 300,000
----------
14,540,349
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INDUSTRIAL -- 6.3%
AlliedSignal, 8.00%, 05/15/06 .................................. A2/A 500,000 538,660
Amoco Co., 6.25%, 10/15/04 ..................................... Aa1/AAA 400,000 408,000
Anheuser Busch Cos., 5.38%, 09/15/08 ........................... A1/A+ 400,000 381,500
Bausch & Lomb, Inc., 6.38%, 08/01/03 ........................... Baa2/BBB 500,000 492,500
Coca Cola Put Asset Trust, 6.00%, 03/15/01 ..................... A3/A+ 750,000 751,875
Elf Aquitane, 8.00%, 10/15/01 .................................. Aa3/AA- 300,000 315,375
Ingersoll-Rand, 6.02%, 02/15/01 ................................ A3/A- 700,000 708,533
J Seagram & Sons, 6.25%, 12/15/01 .............................. Baa3/BBB- 600,000 600,000
Nabisco, Inc., 6.00%, 02/15/01 ................................. Baa2/BBB 500,000 499,375
Nabisco, Inc., 6.13%, 02/01/03 ................................. Baa2/BBB 1,100,000 1,083,500
----------
5,779,318
NATIONAL GOVERNMENT -- 0.9%
Republic of Korea, 8.75%, 04/15/03 ............................. Baa3/BBB- 750,000 793,125
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
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INVESTMENTS (UNAUDITED) -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
----------- ---------- ----------
<S> <C> <C> <C>
TELECOMMUNICATIONS -- 4.0%
Cable & Wireless Communications, 6.63%, 03/06/05 ................ Baa1/A- $ 700,000 $ 704,375
GTE Southwest, Ser. 1993B, 6.54%, 12/01/05 ...................... A2/AA- 1,000,000 1,018,750
MCI Worldcom, Inc., 6.13%, 04/15/02 ............................. Baa2/BBB+ 400,000 401,500
Northwestern Bell Telephone Co., 9.50%, 05/01/00 ................ A2/A+ 500,000 518,125
Sprint Corp., 9.50%, 04/01/03 ................................... Baa1/A- 900,000 1,005,750
----------
3,648,500
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TRANSPORTATION -- 0.6%
Norfolk Southern Corp., 7.35%, 05/15/07 ......................... Baa1/BBB+ 500,000 530,000
----------
UTILITIES -- 2.4%
Central Illinois Public Services, 6.73%, 06/01/01 ............... Aa2/AA- 700,000 715,750
Hawaiian Electric Industry, 6.49%, 06/12/02 ..................... Baa2/BBB 550,000 552,750
Ohio Power Co., Ser. 1997A, 6.73%, 11/01/04 ..................... Baa1/A- 400,000 408,500
Oklahoma Gas & Electric, 6.50%, 07/15/04 ........................ Aa3/AA- 500,000 516,250
----------
2,193,250
----------
TOTAL CORPORATE BONDS (COST $31,782,528) .............................................. 31,769,359
----------
ASSET-BACKED SECURITIES -- 18.3%
Advanta Mortgage Loan Trust, Ser. 1996-1, Cl. A6,
6.73%, 08/25/23 .............................................. Aaa/AAA 500,000 486,902
Advanta Mortgage Loan Trust, Ser. 1993-3, Cl. A5,
5.55%, 01/25/25 .............................................. Aaa/AAA 113,113 109,201
AFC Home Equity Loan Trust, Ser. 1996-2, Cl. 1A4,
7.74%, 05/07/99 .............................................. Aaa/AAA 1,699,640 1,696,192
Contimortgage Home Equity Loan Trust, Ser. 1996-1, Cl. A6, 6.69%,
01/15/16 ..................................................... Aaa/AAA 499,996 525,762
Contimortgage Home Equity Loan Trust, Ser. 1998-2, Class A5, 6.28%,
09/15/16 ..................................................... Aaa/AAA 800,000 805,360
Crown Home Equity Loan Trust, Ser. 1996-1, Cl. A4, 7.15%,
08/25/12 ..................................................... Aaa/AAA 1,000,000 979,998
Federal National Mortgage Association Notes, Ser. 1995-W1, Cl. A6,
8.10%, 04/25/25 .............................................. NR/NR 1,500,000 1,534,861
First Plus Home Loan Trust, Ser.1996-2, Cl. A6, 7.85%, 08/20/13 . Aaa/AAA 499,851 520,518
First Sierra Equipment Contact Trust 98-1 A4, 5.63%, 08/12/04 ... Aaa/AAA 700,000 691,614
Fund America Investors Corp. II, Ser. 1993-F, Cl. A1, 5.40%,
09/25/09 ..................................................... Aaa/AAA 32,124 31,316
General Electric Capital Mortgage Services, Inc., Ser. 1996-HE2,
Cl. A5, 7.94%, 06/25/14 ...................................... Aaa/NR 1,000,000 1,023,010
Green Tree Financial Corp., Ser. 1995-2, Cl. A6, 8.30%, 05/15/26 Aaa/AAA 925,000 983,498
Green Tree Home Improvement Loan Trust, Ser. 1996-F, Cl. HEA3,
6.90%, 01/15/28 .............................................. NR/AAA 425,000 429,485
Green Tree Lease Finance, Ser. 1997-1, Cl. A3 , 6.17%, 09/20/05 . NR/AAA 918,742 921,618
IMC Home Equity Loan Trust, Ser. 1997-5, Cl. A7, 6.90%, 01/20/22 Aaa/AAA 900,000 911,550
MBNA Master Credit Card Trust, Ser. 1995-F, Cl. A, 6.60%, 01/15/03 Aaa/AAA 800,000 813,670
Oakwood Mortgage Investors, Inc., Ser. 1998-B, Cl. A2, 6.15%,
07/15/11 ..................................................... NR/AAA 900,000 885,922
Sears Credit Account Master Trust, Ser. 1995-2, Cl. A, 8.10%,
06/15/04 ..................................................... Aaa/AAA 700,000 715,645
The Money Store Home Equity Trust, Ser. 1992-D2, Cl. A3, 7.55%,
01/15/18 ..................................................... Aaa/AAA 355,256 372,789
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND/SHORT/INTERMEDIATE BOND PORTFOLIO
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INVESTMENTS (UNAUDITED) -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
----------- ---------- ----------
<S> <C> <C> <C>
The Money Store Home Equity Trust, Ser. 1996-B, Cl. A8, 7.91%,
05/15/24 ..................................................... Aaa/AAA $ 750,000 $ 772,445
UCFC Home Equity Loan, Ser. 1998-B, Cl. A2, 6.01%, 09/15/14 ..... Aaa/AAA 1,000,000 989,866
Vanderbilt Mortgage Finance, Ser. 1996-A, Cl. A3 , 6.85%, 04/07/26 Aaa/NR 500,000 502,083
----------
TOTAL ASSET-BACKED SECURITIES (COST $16,788,434) ...................................... 16,703,305
----------
MORTGAGE-BACKED SECURITIES -- 5.7%
Federal Home Loan Mortgage Corp., 2073 PJ, 6.00%, 10/15/23 ..... NR/NR 500,000 492,689
Federal Home Loan Mortgage Corp., CMO 2129, 5.75%, 09/15/11 ..... NR/NR 1,250,000 1,229,734
Federal Home Loan Mortgage Corp., Gold 15 Yr., 6.00%, 01/01/13 .. NR/NR 1,073,397 1,065,011
Federal Home Loan Mortgage Corp., Gold 5 Yr., 7.00%, 05/01/00 ... NR/NR 419,347 421,575
Federal National Mortgage Association Notes, 7 Yr Balloon, 6.00%,
01/01/06 ..................................................... NR/NR 517,382 516,574
Federal National Mortgage Association Notes, 7 Yr Balloon, 6.00%,
02/01/06 .................................................... NR/NR 230,612 230,253
Federal National Mortgage Association Notes, Ser. 1996-4, Cl. VC,
6.50%, 07/25/02 .............................................. NR/NR 278,030 278,770
Federal National Mortgage Association Notes, Ser. 1999-W5, Cl.
A4, 6.12%, 02/25/29 .......................................... NR/NR 500,000 497,055
Federal National Mortgage Association Notes, Ser.1998-W3, Cl. A2,
6.50%, 07/25/28 .............................................. NR/NR 500,000 501,879
----------
TOTAL MORTGAGE-BACKED SECURITIES (COST $5,260,836) .................................... 5,233,540
----------
U.S. AGENCY OBLIGATIONS -- 9.3%
FEDERAL HOME LOAN BANKS NOTES -- 2.4%
Federal Home Loan Bank Notes, 6.41%, 04/10/01 ............................... 300,000 305,900
Federal Home Loan Bank Notes, 5.80%, 08/24/01 ............................... 1,000,000 1,000,939
Federal Home Loan Bank Notes, 5.25%, 04/25/02 ............................... 900,000 895,587
----------
2,202,426
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION NOTES -- 1.5%
Federal Home Loan Mortgage Corp. Notes, 7.05%, 06/08/05 ..................... 500,000 504,294
Federal Home Loan Mortgage Corp. Notes, 5.95%, 01/19/06 ..................... 850,000 858,797
----------
1,363,091
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES -- 5.4%
Federal National Mortgage Association Notes, 6.41%, 02/06/02 ................ 650,000 665,712
Federal National Mortgage Association Notes, 5.78%, 02/12/03 ................ 750,000 746,416
Federal National Mortgage Association Notes, 7.00%, 06/25/07 ................ 600,000 619,323
Federal National Mortgage Association Notes, 6.56%, 12/10/07 ................ 1,100,000 1,109,000
Federal National Mortgage Association Notes, 6.16%, 07/09/08 ................ 1,275,000 1,255,587
Federal National Mortgage Association Notes, 6.00%, 09/24/08 ................ 600,000 577,480
----------
4,973,518
----------
TOTAL U.S. AGENCY OBLIGATIONS (COST $8,606,844) ....................................... 8,539,035
----------
</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
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INVESTMENTS (UNAUDITED) -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS** -- 29.1%
U.S. Treasury Notes, 5.88%, 07/31/99 ............... $ 500,000 $ 501,454
U.S. Treasury Notes, 6.88%, 03/31/00 ............... 700,000 712,114
U.S. Treasury Notes, 6.75%, 04/30/00 ............... 800,000 813,844
U.S. Treasury Notes, 6.25%, 05/31/00 ............... 300,000 304,121
U.S. Treasury Notes, 8.75%, 08/15/00 ............... 150,000 156,852
U.S. Treasury Notes, 5.50%, 12/31/00 ............... 700,000 704,572
U.S. Treasury Notes, 6.63%, 07/31/01 ............... 600,000 618,867
U.S. Treasury Notes, 6.50%, 08/31/01 ............... 3,150,000 3,243,206
U.S. Treasury Notes, 7.50%, 11/15/01 ............... 350,000 369,206
U.S. Treasury Notes, 6.13%, 12/31/01 ............... 400,000 409,447
U.S. Treasury Notes, 6.25%, 01/31/02 ............... 3,150,000 3,234,931
U.S. Treasury Notes, 6.25%, 02/28/02 ............... 1,500,000 1,541,163
U.S. Treasury Notes, 6.25%, 06/30/02 ............... 500,000 514,196
U.S. Treasury Notes, 6.00%, 07/31/02 ............... 400,000 408,928
U.S. Treasury Notes, 5.75%, 10/31/02 ............... 1,600,000 1,624,705
U.S. Treasury Notes, 5.50%, 01/31/03 ............... 1,850,000 1,864,129
U.S. Treasury Notes, 5.88%, 02/15/04 ............... 150,000 153,815
U.S. Treasury Notes, 7.25%, 05/15/04 ............... 550,000 596,983
U.S. Treasury Notes, 6.50%, 05/15/05 ............... 300,000 317,235
U.S. Treasury Notes, 6.50%, 08/15/05 ............... 700,000 741,606
U.S. Treasury Notes, 6.88%, 05/15/06 ............... 2,000,000 2,168,207
U.S. Treasury Notes, 7.00%, 07/15/06 ............... 1,500,000 1,638,655
U.S. Treasury Notes, 6.25%, 02/15/07 ............... 1,650,000 1,734,858
U.S. Treasury Notes, 6.13%, 08/15/07 ............... 500,000 522,241
U.S. Treasury Notes, 11.75%, 02/15/10 .............. 650,000 847,761
U.S. Treasury Notes, 7.25%, 05/15/16 ............... 750,000 857,373
-----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $26,511,481) ......... 26,600,469
-----------
COMMERCIAL PAPER -- 1.6%
American Express, 5.00%, 05/03/99
(COST $1,470,671) .............................. 1,470,671 1,470,671
-----------
TOTAL INVESTMENTS (COST $90,420,795)(DAGGER)-- 98.8% ................ 90,316,379
-----------
OTHER ASSETS AND LIABILITIES, NET -- 1.2% ........................... 1,079,152
-----------
NET ASSETS -- 100.0% ................................................ $91,395,531
===========
<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 Advisor.
** While not rated by Moody's or S & P, U.S. Treasury Obligations are considered
to be of the highest quality, comparable to AAA.
(DAGGER) The cost for federal income tax purpose. At April 30, 1999, net
unrealized depreciation was $104,416. This consisted of aggregate gross
unrealized appreciation for all securities, in which there was an excess of
market value over tax cost of $473,939, and aggregate gross unrealized
depreciation for all securities, in which there was an excess of tax cost
over market value of $578,355.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / APRIL 30, 1999 (UNAUDITED)
(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 -- 38.5%
BANKS -- 5.1%
Amsouth Bank of Alabama, 6.45%, 02/01/18 ....................... A1/A- $ 200,000 $ 198,750
Citicorp, 7.25%, 10/15/11 ...................................... A1/A+ 1,000,000 1,052,500
J.P. Morgan & Co., 6.25%, 02/15/11 ............................. A2/AA- 1,000,000 957,500
St. George Bank, Ltd., 7.15%, 06/18/07 ......................... Baa1/A- 400,000 407,500
Swiss Bank Corp., New York, 7.00%, 10/15/15 .................... Aa2/AA 1,000,000 997,500
Union Bank Switzerland, New York, 7.25%, 07/15/06 .............. Aa2/AA 600,000 628,500
Wachovia Corp., 6.25%, 08/04/08 ................................ A1/AA+ 400,000 397,500
----------
4,639,750
----------
FINANCIAL -- 15.6%
Abbey National PLC, 6.69%, 10/17/05 ............................ Aa3/AA- 1,100,000 1,122,000
Ameritech Capital Funding, 6.45%, 01/15/18 ..................... Aa3/AA+ 1,700,000 1,653,250
Associates Corp., NA, 5.75%, 11/01/03 .......................... Aa3/AA- 500,000 493,750
Associates Corp., NA, 7.75%, 02/15/05 .......................... Aa3/AA- 1,000,000 1,073,750
Bear Stearns Co., Inc., 6.63%, 10/01/04 ........................ A2/A 400,000 405,000
CIT Group Holdings, Inc., 6.38%, 08/01/02 ...................... Aa3/A+ 500,000 506,875
Commercial Credit Co., 8.70%, 06/15/99 ......................... Aa3/A+ 1,200,000 1,372,500
Commercial Credit Co., 6.50%, 08/01/04 ......................... A1/A+ 700,000 707,000
Crestar Financial Corp., 6.50%, 01/15/08 ....................... A2/A 500,000 485,625
First Union Corp., 6.82%, 08/01/06 ............................. A2/A- 651,000 692,306
General Electric Capital Corp., 8.13%, 05/15/12 ................ Aaa/AAA 700,000 807,625
General Motors Acceptance Corp., 7.00%, 08/15/01 ............... A2/A 500,000 513,125
Lehman Brothers Holdings, Inc., 6.50%, 10/01/02 ................ Baa1/A 900,000 900,000
Lehman Brothers Holdings, Inc., 7.38%, 05/15/04 ................ Baa1/A 750,000 771,563
Lehman Brothers Holdings, Inc., 6.63%, 02/05/06 ................ Baa1/A 500,000 496,875
Merrill Lynch & Co., 6.38%, 07/18/00 ........................... Aa3/AA- 900,000 908,690
Monsanto Co. Debentures Series 144A, 6.60%, 12/01/28 ........... A2/A 700,000 665,875
Morgan Stanley, Dean Witter, Discover & Co., 6.75%, 03/04/03 ... Aa3/A+ 500,000 511,875
----------
14,087,684
----------
GOVERNMENT, NATIONAL -- 0.9%
Republic of Korea Global Bonds, 8.75%, 04/15/03 ................ Baa3/BBB- 750,000 793,125
----------
INDUSTRIAL -- 9.9%
AKZO Nobel, Inc., 6.00%, 11/15/03 .............................. A2/A 600,000 594,000
Amoco Co., 6.25%, 10/15/04 ..................................... Aa1/AAA 500,000 510,000
Bausch & Lomb, Inc., 6.38%, 08/01/03 ........................... Baa2/BBB 700,000 689,500
Coca Cola Put Asset Trust, 6.00%, 03/15/01 ..................... A3/A+ 1,500,000 1,503,750
Elf Aquitane, 8.00%, 10/15/01 .................................. Aa3/AA 600,000 630,750
Eli Lilly, 8.13%, 12/01/01 ..................................... Aa3/AA 600,000 634,500
Harvard University, 8.13%, 04/15/07 ............................ Aaa/AAA 500,000 555,000
Hertz Corp., 6.00%, 02/01/01 ................................... A3/BBB+ 1,100,000 1,100,000
Ingersoll-Rand, 6.02%, 02/15/28 ................................ A3/A- 500,000 506,095
International Business Machines Corp., 6.50%, 01/15/28 ......... A1/A+ 500,000 486,250
Nabisco, Inc., 6.13%, 02/01/03 ................................. Baa2/BBB 700,000 689,500
Walt Disney Co. Notes, 5.62%, 12/01/08 ......................... A2/A 1,000,000 960,000
----------
8,859,345
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT/SHARES (NOTE 2)
----------- ------------- ----------
<S> <C> <C> <C>
TELECOMMUNICATIONS -- 3.1%
AT&T Corp., 6.50%, 03/15/29 .................................... A1/AA- $ 450,000 $ 430,875
Cable & Wireless Communications, 6.75%, 03/06/08 ............... Baa1/A- 300,000 301,875
GTE Southwest, Ser. 1993-B, 6.54%, 12/01/05 .................... A2/AA- 500,000 509,375
MCI Worldcom, Inc., 6.50%, 04/15/10 ............................ Baa2/BBB+ 400,000 399,000
Sprint Corp., 9.50%, 04/01/03 .................................. Baa1/BBB 1,000,000 1,117,500
----------
2,758,625
----------
TRANSPORTATION -- 1.3%
Norfolk Southern Corp., 7.35%, 05/15/07 ........................ Baa1/BBB+ 1,100,000 1,166,000
----------
UTILITIES -- 2.6%
Hawaiian Electric Industry, 6.49%, 06/12/02 .................... Baa2/BBB 1,000,000 1,005,000
Oklahoma Gas & Electric, 6.50%, 07/15/04 ....................... Aa3/AA- 1,250,000 1,290,625
----------
2,295,625
----------
TOTAL CORPORATE BONDS (COST $34,183,377) .............................................. 34,600,154
----------
PREFERRED STOCK -- 0.6%
ABN AMRO Cap Funding, Ser. B, 7.50%
(COST $500,000) ........................................................ 20,000 506,250
----------
ASSET-BACKED SECURITIES -- 19.0%
Advanta Mortgage Loan Trust, Ser. 1993-3, Cl. A5, 5.55%, 01/25/25 Aaa/AAA 226,226 218,402
AFC Home Equity Loan Trust, Ser. 1993-1, Cl. A, 5.90%, 05/20/08 . Aaa/AAA 700,352 696,263
AFC Home Equity Loan Trust, Ser. 1996-2, Cl. 1A4, 7.74%, 09/25/27 Aaa/AAA 999,788 997,760
Crown Home Equity Loan Trust, Ser. 1996-1, Cl. A4, 7.15%, 08/25/12 Aaa/AAA 1,400,000 1,371,998
Federal National Mortgage Association Notes, Ser. 1995-W1, Cl. A6,
8.10%, 04/25/25 ............................................. NR/NR 1,500,000 1,534,861
First Plus Home Loan Trust, Ser. 1996-2, Cl. A6, 7.85%, 08/20/13 Aaa/AAA 999,703 1,041,036
General Electric Capital Mortgage Services, Inc.,
Ser. 1997-HE4, Cl. A3, 6.59%, 12/25/12 ....................... Aaa/NR 750,000 752,085
Green Tree Financial Corp., Ser. 1995-2, Cl. A6, 8.30%, 05/15/26 Aaa/AAA 400,000 425,297
Green Tree Home Improvement Loan Trust, Ser. 1996-C, Cl. HEA4,
7.80%, 06/15/26 .............................................. NR/AAA 2,000,000 2,055,333
Green Tree Lease Finance, Ser. 1997-1, Cl. A4 , 6.27%, 09/20/05 NR/AAA 750,000 754,890
IMC Home Equity Loan Trust, Ser. 1997-5, Cl. A7, 6.90%, 01/20/22 Aaa/AAA 500,000 506,416
MBNA Master Credit Card Trust, Ser. 1995-F, Cl. A, 6.60%, 01/15/03 Aaa/AAA 500,000 508,544
Oakwood Mortgage Investors, Inc., Ser. 1998-B, Cl. A2,
6.15%, 07/15/11 .............................................. NR/AAA 700,000 689,050
The Money Store Home Equity Trust, Ser. 1992-D2, Cl. A3, 7.55%,
01/15/18 ..................................................... Aaa/AAA 618,835 649,374
The Money Store Home Equity Trust, Ser. 1995-A, Cl. 5, 8.40%,
02/15/24 ..................................................... Aaa/AAA 800,000 824,606
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / INTERMEDIATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
----------- ---------- ----------
<S> <C> <C> <C>
The Money Store Home Equity Trust, Ser. 1996-B, Cl. A8,
7.91%, 05/15/24 .............................................. Aaa/AAA $ 2,000,000 $ 2,059,854
UCFC Home Equity Loan Trust, Ser. 1998-B, Cl. A2,
6.01%, 09/15/14 .............................................. Aaa/AAA 1,000,000 989,866
Vanderbilt Mortgage Finance, Ser. 1996-A, Cl. A3,
6.85%, 04/07/26 .............................................. Aaa/NR 1,000,000 1,004,166
----------
TOTAL ASSET-BACKED SECURITIES (COST $17,115,049) ...................................... 17,079,801
----------
MORTGAGE-BACKED SECURITIES -- 1.9%
Federal Home Loan Mortgage Corp. Notes, 2073 PJ (Pac),
6.00%, 10/15/23 .............................................. NR/NR 300,000 295,613
Federal Home Loan Mortgage Corp. Notes, CMO 2129 PE,
5.75%, 09/15/11 .............................................. NR/NR 400,000 393,515
Federal Home Loan Mortgage Corp. Notes, Gold 15 Yr.,
6.00%, 01/01/13 .............................................. NR/NR 715,598 710,007
Federal Home Loan Mortgage Corp. Notes, Gold 5 Yr.,
7.00%, 05/01/00 .............................................. NR/NR 262,092 263,484
----------
TOTAL MORTGAGE-BACKED SECURITIES (COST $1,667,663) .................................... 1,662,619
----------
U.S. AGENCY OBLIGATIONS -- 6.1%
FEDERAL HOME LOAN BANK NOTES -- 1.8%
Federal Home Loan Bank Notes, 5.80%, 08/24/01 ................... Aaa/NR 1,000,000 1,000,939
Federal Home Loan Bank Notes, 5.30%, 10/29/02 ................... Aaa/NR 600,000 590,682
----------
1,591,621
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION NOTES -- 1.5%
Federal Home Loan Mortgage Corp. Notes, 7.05%, 06/08/05 ......... Aaa/NR 1,000,000 1,008,589
Federal Home Loan Mortgage Corp. Notes, 5.95%, 01/19/06 ......... Aaa/NR 350,000 353,622
----------
1,362,211
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES -- 2.1%
Federal National Mortgage Association Notes, 6.41%, 02/06/02 .... Aaa/NR 600,000 614,504
Federal National Mortgage Association Notes, 5.78%, 02/12/03 .... Aaa/NR 300,000 298,566
Federal National Mortgage Association Notes, 6.56%, 12/10/07 .... Aaa/NR 500,000 504,091
Federal National Mortgage Association Notes, 6.16%, 07/09/08 .... Aaa/NR 500,000 492,387
----------
1,909,548
----------
GENERAL SERVICE ADMINISTRATION NOTES -- 0.7%
General Service Administration Notes, 6.27%, 05/15/20 ........... Aaa/NR 600,000 602,202
----------
TOTAL U.S. AGENCY OBLIGATIONS (COST $5,481,766) ....................................... 5,465,582
----------
</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 (UNAUDITED) -- CONTINUED
================================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
U.S. TREASURY OBLIGATIONS** -- 29.9%
U.S. TREASURY BONDS -- 19.1%
U.S. Treasury Bonds, 9.25%, 02/15/16 .......... $1,250,000 $ 1,691,343
U.S. Treasury Bonds, 7.25%, 05/15/16 .......... 1,650,000 1,886,221
U.S. Treasury Bonds, 7.50%, 11/15/16 .......... 3,450,000 4,041,587
U.S. Treasury Bonds, 8.75%, 05/15/17 .......... 500,000 655,216
U.S. Treasury Bonds, 8.88%, 02/15/19 .......... 2,000,000 2,679,161
U.S. Treasury Bonds, 8.00%, 11/15/21 .......... 1,250,000 1,568,571
U.S. Treasury Bonds, 7.25%, 08/15/22 .......... 1,500,000 1,745,028
U.S. Treasury Bonds, 7.13%, 02/15/23 .......... 50,000 57,529
U.S. Treasury Bonds, 6.00%, 02/15/26 .......... 1,000,000 1,013,995
U.S. Treasury Bonds, 6.75%, 08/15/26 .......... 700,000 779,688
U.S. Treasury Bonds, 6.50%, 11/15/26 .......... 500,000 540,262
U.S. Treasury Bonds, 6.38%, 08/15/27 .......... 500,000 533,550
-----------
17,192,151
-----------
U.S. TREASURY NOTES -- 10.8%
U.S. Treasury Notes, 5.50%, 12/31/00 .......... 500,000 503,266
U.S. Treasury Notes, 6.50%, 08/31/01 .......... 250,000 257,397
U.S. Treasury Notes, 6.13%, 12/31/01 .......... 1,000,000 1,023,618
U.S. Treasury Notes, 6.25%, 01/31/02 .......... 450,000 462,133
U.S. Treasury Notes, 6.25%, 02/28/02 .......... 550,000 565,093
U.S. Treasury Notes, 6.63%, 03/31/02 .......... 250,000 259,559
U.S. Treasury Notes, 5.75%, 10/31/02 .......... 400,000 406,176
U.S. Treasury Notes, 5.88%, 02/15/04 .......... 400,000 410,173
U.S. Treasury Notes, 7.25%, 08/15/04 .......... 500,000 544,077
U.S. Treasury Notes, 6.50%, 05/15/05 .......... 3,100,000 3,278,100
U.S. Treasury Notes, 5.88%, 11/15/05 .......... 1,400,000 1,438,387
U.S. Treasury Notes, 6.25%, 02/15/07 .......... 500,000 525,715
----------
9,673,694
----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $25,256,698) .... 26,865,845
----------
COMMERCIAL PAPER -- 2.2%
American Express, 5.00%, 05/03/99
(COST $2,005,074) ............................ 2,005,074 2,005,074
-----------
TOTAL INVESTMENTS (COST $86,209,627)(DAGGER) -- 98.2% .......... 88,185,325
OTHER ASSETS AND LIABILITIES -- 1.8% ........................... 1,636,878
-----------
NET ASSETS -- 100.0% ........................................... $89,822,203
===========
* 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 Advisor.
** While not rated by Moody's or S & P, U.S. Treasury Obligations are considered
to be of the highest quality, comparable to AAA.
(DAGGER) The cost for federal income tax purposes. At April 30, 1999, net
unrealized appreciation was $1,975,698. This consisted of aggregate gross
unrealized appreciation for all securities, in which there was an excess of
market value over tax cost of $2,583,211, and aggregate gross unrealized
depreciation for all securities, in which there was an excess of tax cost
over market value of $607,513.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / MUNICIPAL BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / APRIL 30, 1999 (UNAUDITED)
(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 -- 96.7%
ALASKA -- 5.1%
Alaska Municipal Bond Bank Auth. Ref. Bonds, Ser. 1994C,
4.90%, 10/01/03 ............................................... A2/A $400,000 $ 418,500
Seward, AK Rev. Bonds, (Alaska Sealife Center Proj.)
6.50%, 10/01/01 ............................................... NR/NR 460,000 467,475
----------
885,975
----------
CALIFORNIA -- 2.4%
California Semitropic Improv. Dist. Water. Storage Dist. Ref.
Rev. Bonds,, 4.85%, 06/01/11 .................................. Aaa/AAA 410,000 421,275
----------
COLORADO -- 3.0%
Aurora, CO Cert. of Participation Lease Ref. Rev. Bonds.,
5.85%, 12/01/02 ............................................... A/A 500,000 530,000
----------
DELAWARE -- 18.0%
Bethany Beach, DE Gen. Oblig. Rev. Bonds, 9.75%, 11/01/07 ........ Aaa/AAA 160,000 221,200
Bethany Beach, DE Gen. Oblig. Rev. Bonds, 9.75%, 11/01/08 ........ Aaa/AAA 180,000 254,475
Delaware Gen. Oblig. Rev. Bonds, 4.30%, 03/01/10 ................. Aa1/AA+ 500,000 494,375
Delaware State Economic Dev. Auth. Rev. Bonds (Delmarva Power
& Light), 7.30%, 09/01/15 ..................................... Aaa/AAA 100,000 104,035
Delaware State Economic Dev. Auth. Rev. Bonds (Osteopathic Hosp.
Assoc.) Ser. 1993A, 6.00%, 01/01/03 ........................... Aaa/NR 405,000 422,719
Delaware State Gen. Oblig. Rev. Bonds, Ser.1997A, 5.00%, 01/01/04 Aa1/AA+ 255,000 267,112
Delaware State Housing Auth. Multi-family Mtge. Ref. Rev. Bonds,
Ser. 1992C, 7.25%, 01/01/07 ................................... A1/A 190,000 203,537
Delaware State Housing Auth. Multi-family Mtge. Ref. Rev. Bonds,
Ser. 1992D, 6.35%, 07/01/03 ................................... A1/NR 100,000 105,125
Delaware State Housing Auth. Single Family Mtge. Rev. Bonds,
Ser. 1993A-1, 5.05%, 07/01/05 ................................. Aaa/AAA 285,000 291,412
Delaware State Housing Auth. Single Family Mtge. Rev. Bonds,
Ser. 1993A-1, 5.15%, 01/01/06 ................................. Aaa/AAA 160,000 164,400
Delaware State Housing Auth. Sr. Home Mtge. Rev. Bonds,
Ser. 1991A, 7.00%, 06/01/00 ................................... Aa3/NR 25,000 25,316
Delaware State Housing Auth. Sr. Home Mtge. Rev. Bonds,
Ser. 1991B-1, 6.40%, 12/01/02 ................................. Aa3/NR 35,000 36,356
Delaware State Solid Waste Auth. Rev. Bonds, 5.80%, 07/01/01 ..... A2/A 500,000 520,625
----------
3,110,687
----------
HAWAII -- 4.5%
Hawaii State Gen. Oblig. Rev. Bonds, Ser. 1992BW, 6.20%, 03/01/05 A1/A+ 700,000 773,500
----------
MARYLAND -- 2.9%
Anne Arundel County MD G.O. Refunding Water and Sewer
Ser. 99, 4.20%, 03/15/07 ...................................... Aa1/AA+ 500,000 495,000
----------
MASSACHUSETTS -- 5.1%
Massachusetts Bay Trans. Auth. Ser 98-B, 5.13%, 03/01/12 ......... Aa3/AA- 500,000 518,750
Massachusetts Fed. Highway Grant Ant. Notes Ser. 98B,
5.13%, 12/15/14 ............................................... Aa3/AAA 350,000 359,187
----------
877,937
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / MUNICIPAL BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- 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 $ 418,500
----------
NEW JERSEY -- 3.0%
New Jersey Economic Dev. Auth. School Rev. Bonds (Blair
Academy Proj.), Ser. 1995B, 6.00%, 09/01/07 ................... A3/NR 500,000 511,875
----------
PENNSYLVANIA -- 22.7%
Allentown, PA Gtd. Water Improv. Rev. Bonds, 5.65%, 07/15/10 ..... Aaa/AAA 525,000 577,500
Chester County, PA Ind. Dev. Auth. Wastewater Treatment
Rev. Bonds (Orleans Corp. Proj.), 7.00%, 11/01/06 ............. NR/NR 605,000 605,000
Cumberland Valley, PA School District Gen. Oblig. Rev. Bonds,
Ser. 1993A, 5.35%, 09/01/07 ................................... Aaa/AAA 500,000 520,625
Harrisburg, PA Office & Parking Rev. Auth. Bonds (Capital Assoc.
Proj.), Ser. 1998A, 5.50%, 05/01/05 ........................... NR/NR 500,000 500,000
Pennsylvania State Higher Educ. Fac. Auth. Rev. Bonds (Philadelphia
College of Osteopathic Medicine), 5.25%, 12/01/07 ............. NR/AAA 150,000 158,063
Pennsylvania State Higher Educ. Fac. Auth. Rev. Bonds,
Ser. 1992A, 6.63%, 08/15/09 ................................... Aaa/AAA 120,000 131,400
Philadelphia, PA Hospitals & Higher Educ. Fac. Auth. Rev. Bonds
(Jefferson Health Systems) Ser. 1997A, 5.50%, 05/15/05 ........ A1/AA- 500,000 532,500
Philadelphia, PA Redev. Auth. Home Improv. Loan Rev. Bonds,
Ser. 1986A, 7.38%, 06/01/03 ................................... A1/A+ 15,000 15,151
Westmoreland County, PA Ind. Dev. Auth. Rev. Bonds (Landfill Gas
Recycling- Lanchester Energy Partners), Ser. 1998B,
6.80%, 01/01/05 ............................................... NR/NR 500,000 500,000
York County, PA Ind. Dev. Auth. Personal Care Fac.
Rev. Bonds, 9.50%, 10/01/19 ................................... NR/NR 330,000 389,813
----------
3,930,052
----------
TEXAS -- 10.3%
Austin, TX Gen. Oblig. Rev. Bonds, 4.75%, 09/01/09 ............... Aa2/AA 315,000 318,150
Carrollton, TX Fmrs Brh Indpt. School Dist. Psf, 4.40%, 02/15/10 . Aaa/AAA 250,000 246,250
Georgetown, TX Utility System Ref. Rev. Bonds, Ser. 1998A,
4.80%, 08/15/11 ............................................... Aaa/AAA 650,000 657,313
Klein, TX Isd Ref., 4.45%, 08/01/11 .............................. Aaa/AAA 275,000 269,156
University of Texas Ref. Rev. Bonds, Ser. 1992A, 6.25%, 07/01/13 . Aaa/AAA 275,000 293,219
----------
1,784,088
-----------
UTAH -- 3.0%
Salt Lake County, UT Municipal Bldg. Auth. Lease Rev. Bonds,
Ser. 1994A, 5.65%, 10/01/03 ................................... Aaa/AAA 500,000 535,000
----------
VIRGINIA -- 6.0%
Virginia State Housing Dev. Auth. Commonwealth Mtge. Rev. Bonds,
Ser. 1992C-8, 5.80%, 07/01/04 ................................. Aa1/AA+ 500,000 523,750
Virginia State Public Bldg. Auth. Ref. Rev. Bonds,
Ser. 1996A, 5.00%, 08/01/12 ................................... Aa/AA 500,000 510,625
----------
1,034,375
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND / MUNICIPAL BOND PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
MOODY'S/S&P PRINCIPAL VALUE
RATINGS* AMOUNT (NOTE 2)
----------- ---------- ----------
<S> <C> <C> <C>
WASHINGTON -- 5.3%
Clark County, WA Public Utility Dist. No. 1 Generating System
Rev. Bonds, 6.00%, 01/01/06 ................................. Aaa/AAA $350,000 $ 385,438
Washington State Public Power Supply System Ref. Rev. Bonds
(Nuclear Proj. No. 3), Ser. 1993C, 5.10%, 07/01/07 .......... Aa1/AA- 500,000 523,125
-----------
908,563
-----------
WISCONSIN -- 3.0%
Appleton, WI Area School Dist. Gen. Oblig. Rev. Bonds,
5.00%, 04/01/11 ............................................. Aa2/NR 505,000 520,150
-----------
TOTAL MUNICIPAL BONDS (COST $16,269,023) .............................................. 16,736,977
-----------
TAX-EXEMPT MUTUAL FUNDS -- 2.3%
Provident Municipal Tax-Exempt Cash Money Market Fund
(COST $402,310) ........................................................ 402,309 402,310
-----------
TOTAL INVESTMENTS (COST $16,671,333)(DAGGER) -- 99.0% .......................................... 17,139,287
-----------
OTHER ASSETS AND LIABILITIES, NET -- 1.0% ...................................................... 166,313
-----------
NET ASSETS -- 100.0% ........................................................................... $17,305,600
===========
<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 Advisor.
(DAGGER) The cost for federal income tax purposes. At April 30, 1999, net
unrealized appreciation was $467,954. This consisted of aggregate gross
unrealized appreciation for all securities, in which there was an excess of
market value over tax cost of $476,888, and aggregate gross unrealized
depreciation for all securities, in which there was an excess of tax cost
over market value of $8,934.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT/
INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at market (identified cost $90,420,795,
$86,209,627 and $16,671,333, respectively) .................... $90,316,379 $88,185,325 $17,139,287
Receivables:
Interest ...................................................... 1,240,705 1,311,337 256,014
Fund shares purchased ......................................... 138,371 114,500 --
Investment securities sold .................................... 1,097,537 598,656 --
Other assets ..................................................... 31 51,703 14
----------- ----------- -----------
Total assets .................................................. 92,793,023 90,261,521 17,395,315
----------- ----------- -----------
LIABILITIES:
Due to Adviser ................................................... 20,471 7,360 2,773
Payables:
Dividends to shareholders ..................................... 413,493 423,178 62,049
Fund shares redeemed .......................................... 139,872 1,000 101
Investment securities purchased ............................... 805,216 -- --
Other accrued expenses ........................................... 18,440 7,780 24,792
----------- ----------- -----------
Total liabilities ............................................. 1,397,492 439,318 89,715
----------- ----------- -----------
NET ASSETS, at market value ...................................... $91,395,531 $89,822,203 $17,305,600
=========== =========== ===========
NET ASSETS CONSIST OF:
Additional paid-in capital ....................................... $91,199,082 $87,564,089 $16,776,846
Shares of beneficial interest .................................... 69,939 91,147 13,511
Accumulated net realized gain .................................... 230,926 191,269 47,289
Net unrealized appreciation of investments .. .................... (104,416) 1,975,698 467,954
----------- ----------- -----------
NET ASSETS, for 6,993,893, 9,114,681, and 1,351,128
shares outstanding, respectively . ............................ $91,395,531 $89,822,203 $17,305,600
=========== =========== ===========
NET ASSET VALUE, offering and redemption price per share
($91,395,531 (DIVIDE) 6,993,893, $89,822,203 (DIVIDE) 9,114,681,
and $17,305,600 (DIVIDE) 1,351,128 outstanding shares of
beneficial interest, $0.01 par value, respectively) ........... $13.07 $9.85 $12.81
====== ===== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS - CONTINUED
================================================================================
STATEMENTS OF OPERATIONS
For the Six-Month Period Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT/
INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------
<S> <C> <C> <C>
INTEREST INCOME ................................................... $ 2,812,687 $ 2,876,243 $ 443,645
----------- ----------- -----------
EXPENSES:
Advisory fee ................................................... 163,938 162,078 30,965
Accounting fee ................................................. 46,840 46,308 8,847
Custodian fee .................................................. 9,425 10,388 6,722
Transfer agent fee ............................................. 17,376 12,474 4,850
Trustees' fees and expenses .................................... 1,969 1,614 1,876
Amortization of organizational expenses ........................ -- 6,105 --
Registration fees .............................................. 19,336 29,626 7,252
Report to shareholders ......................................... 5,827 7,188 444
Professional fees .............................................. 45,862 26,877 16,040
Other .......................................................... 3,592 5,250 3,957
----------- ----------- -----------
Total expenses before fee waivers ........................... 314,165 307,908 80,953
Advisory fee waived ......................................... (56,548) (53,168) (14,600)
----------- ----------- -----------
Total expenses, net ...................................... 257,617 254,740 66,353
----------- ----------- -----------
Net investment income .......................................... 2,555,070 2,621,503 377,292
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions ................... 231,083 191,401 47,276
Net change in unrealized appreciation (depreciation)
of investments .............................................. (2,311,673) (3,019,211) (141,426)
----------- ----------- -----------
Net loss on investments ........................................ (2,080,590) (2,827,810) (94,150)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ... $ 474,480 $ (206,307) $ 283,142
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<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 SIX-MONTH PERIOD ENDED APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income .......................................... $ 2,555,070 $ 2,621,503 $ 377,292
Net realized gain on investments transactions .................. 231,083 191,401 47,276
Net change in unrealized appreciation (depreciation)
of investments .............................................. (2,311,673) (3,019,211) (141,426)
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations 474,480 (206,307) 283,142
----------- ----------- -----------
Dividends to shareholders from:
Net investment income .......................................... (2,555,070) (2,621,503) (377,292)
Net realized gain on investments ............................... (137,401) (324,537) (86,704)
----------- ----------- -----------
(2,692,471) (2,946,040) (463,996)
----------- ----------- -----------
Decrease in net assets from Fund share transactions (Note 5) ...... (983,850) (26,953) (92,933)
----------- ----------- -----------
Total decrease in net assets ................................... (3,201,841) (3,179,300) (273,787)
Net Assets:
Beginning of period ............................................ 94,597,372 93,001,503 17,579,387
----------- ----------- -----------
End of period .................................................. $91,395,531 $89,822,203 $17,305,600
=========== =========== ===========
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 transactions .................. 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.
17
<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
SIX-MONTH FOR THE FISCAL YEARS ENDED OCTOBER 31,
PERIOD ENDED ----------------------------------------------
APRIL 30, 1999
(UNAUDITED) 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 .......................... 0.36 0.76 0.77 0.78 0.83 0.71
Net realized and unrealized gain (loss) on
investments ................................. (0.29) 0.31 0.12 (0.13) 0.66 (1.02)
------ ------ ------ ------ ------ ------
Total from investment operations ............ 0.07 1.07 0.89 0.65 1.49 (0.31)
------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
From net investment income ..................... (0.36) (0.76) (0.77) (0.78) (0.83) (0.71)
From net realized gain on investments .......... (0.02) -- -- -- -- (0.04)
------ ------ ------ ------ ------ ------
Total distributions ......................... (0.38) (0.76) (0.77) (0.78) (0.83) (0.75)
------ ------ ------ ------ ------ ------
NET ASSET VALUE -- END OF PERIOD .................. $13.07 $13.38 $13.07 $12.95 $13.08 $12.42
====== ====== ====== ====== ====== ======
TOTAL RETURN ..................................... 0.51% 8.40% 7.13% 5.18% 12.41% (2.33)%
RATIOS (TO AVERAGE NET ASSETS)/ SUPPLEMENTAL DATA:
Expenses 1 ..................................... 0.55%* 0.59% 0.65% 0.65% 0.65% 0.65%
Net investment income .......................... 5.66%* 5.64% 5.98% 6.07% 6.56% 5.53%
Portfolio turnover rate ........................... 24.23% 40.66% 83.54% 85.77% 116.40% 43.77%
Net assets, end of period (000s omitted) .......... $91,396 $94,597 $31,456 $31,777 $32,214 $31,721
<FN>
* 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 or 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. Without waivers or reimbursement, the annualized
ratio of expenses to average daily net assets for the six-month period ended
April 30, 1999 and for the fiscal years ended October 31, 1998, 1997, 1996,
1995 and 1994, would have been 0.67%, 0.83%, 1.12%, 1.09%, 1.14% and 1.05%,
respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - CONTINUED
================================================================================
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH FOR THE PERIOD
PERIOD ENDED JUNE 29, 1998(DAGGER)
APRIL 30, 1999 THROUGH
(UNAUDITED) OCTOBER 31, 1998
-------------- --------------------
<S> <C> <C>
INTERMEDIATE BOND PORTFOLIO
NET ASSET VALUE -- BEGINNING OF PERIOD .......... $10.19 $10.00
------ ------
INVESTMENT OPERATIONS:
Net investment income ........................ 0.28 0.20
Net realized and unrealized gain (loss) on
investments ............................... (0.31) 0.19
------ ------
Total from investment operations .......... (0.03) 0.39
------ ------
DISTRIBUTIONS:
From net investment income ................... (0.28) (0.20)
From net realized gain on investments ........ (0.03) --
------ ------
Total distributions ....................... (0.31) (0.20)
------ ------
NET ASSET VALUE -- END OF PERIOD ................ $ 9.85 $10.19
====== ======
TOTAL RETURN .................................... (0.25%) 3.89%1
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 2 ................................... 0.55%* 0.55%*
Net investment income ........................ 5.66%* 5.69%*
Portfolio turnover rate ......................... 15.69% 17.66%1
Net assets at end of period (000 omitted) ....... $89,822 $93,002
<FN>
(DAGGER) Commencement of operations.
* Annualized.
1 Unannualized.
2 The expense ratio 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.
Without waivers or reimbursement, the annualized ratio of expenses to average
daily net assets for the six-month period ended April 30, 1999 and for the
period June 29, 1998 through October 31, 1998 would have been 0.67% and
0.66%, respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - CONTINUED
================================================================================
<TABLE>
<CAPTION>
FOR THE FOR THE FISCAL YEARS ENDED OCTOBER 31,
SIX-MONTH -------------------------------------------------
PERIOD ENDED
APRIL 30, 1999
(UNAUDITED) 1998 1997 1996 1995 1994
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL INCOME PORTFOLIO
NET ASSET VALUE -- BEGINNING OF PERIOD .......... $12.94 $12.74 $12.46 $12.49 $11.64 $12.50
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income ........................ 0.27 0.56 0.55 0.55 0.54 0.49
Net realized and unrealized gain (loss) on
investments ............................... (0.07) 0.20 0.28 (0.03) 0.85 (0.86)
------ ------ ------ ------ ------ ------
Total from investment operations .......... 0.20 0.76 0.83 0.52 1.39 (0.37)
------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
From net investment income ................... (0.27) (0.56) (0.55) (0.55) (0.54) (0.49)
From net realized gain on investments ........ (0.06) -- -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions .......................... (0.33) (0.56) (0.55) (0.55) (0.54) (0.49)
------ ------ ------ ------ ------ ------
NET ASSET VALUE -- END OF PERIOD ................ $12.81 $12.94 $12.74 $12.46 $12.49 $11.64
====== ====== ====== ====== ====== ======
TOTAL RETURN .................................... 1.60% 6.07% 6.85% 4.24% 12.23% (3.05)%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses1 .................................... 0.75%* 0.75% 0.75% 0.75% 0.75% 0.75%
Net investment income ........................ 4.26%* 4.35% 4.42% 4.41% 4.50% 4.13%
Portfolio turnover rate ......................... 15.77% 43.72% 28.56% 15.91% 42.08% 21.95%
Net assets at end of period (000 omitted) ....... $17,306 $17,579 $17,446 $16,619 $16,570 $14,283
<FN>
* 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, the Portfolio's accounting and administration agent waived a
portion of its fees for the fiscal years ended October 31, 1998, 1997, 1996,
1995, and 1994. Without waivers or reimbursements, the annualized ratio of
expenses to average daily net assets for the six-month period ended April 30,
1999 and for the fiscal years ended October 31, 1998, 1997, 1996, 1995 and
1994, would have been 0.92%, 1.23%, 1.52%, 1.37%, 1.45% and 1.62%,
respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (UNAUDITED)
================================================================================
1. DESCRIPTION OF THE FUND. The Rodney Square Strategic Fixed-Income Fund (the
"Fund") is a diversified, open-end management investment company established
as a Massachusetts business trust by Declaration of Trust on May 7, 1986, as
last amended and restated on February 15, 1993, and registered with the U.S.
Securities and Exchange Commission (the "SEC") 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.
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 their current
market prices when market quotations are readily available. Current market
prices are generally not readily available for municipal securities; current
market prices may also be unavailable for other types of fixed-income
securities held by the Portfolios. To determine the value of those
securities, 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.
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.
21
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
================================================================================
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
OTHER. Investment security transactions are accounted for on a trade date
basis. Each Portfolio uses the specific identification method for determining
realized gain and loss on investments for both financial and federal income
tax reporting purposes.
3. INVESTMENT SECURITIES. During the six-month period ended April 30, 1999,
purchases and sales of investment securities (excluding short-term
investments) aggregated as follows:
SHORT/INTERMEDIATE INTERMEDIATE MUNICIPAL
BOND PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO
------------------ -------------- --------------
Purchases ..... $22,073,892 $14,151,245 $2,747,674
Sales ......... $22,563,876 $14,643,812 $3,077,536
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.
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 waived its advisory fee or
reimbursed the Short/Intermediate Bond 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 the
Portfolio's average daily net assets. With respect to the Municipal Bond
Portfolio, WTC waived its fee or reimbursed the Portfolio monthly to the
extent that operating expenses of the Portfolio (excluding taxes,
extraordinary expenses, brokerage commissions, and interest) exceeded an
anual rate of 0.75% 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.
22
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
================================================================================
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, RSMC received 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.
23
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
================================================================================
5. FUND SHARES. At April 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:
SHORT/INTERMEDIATE BOND PORTFOLIO
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD FOR THE FISCAL YEAR
ENDED APRIL 30, 1999 ENDED OCTOBER 31, 1998
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold ..................................... 387,257 $ 5,115,805 900,342 $11,872,722
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 ................ 165,012 2,184,495 114,701 1,518,469
Shares redeemed ................................. (630,560) (8,284,150) (375,850) (4,966,725)
--------- ----------- --------- -----------
Net increase (decrease) ......................... (78,291) $ (983,850) 4,666,240 $61,300,279
=========== ===========
Shares outstanding:
Beginning of period .......................... 7,072,184 2,405,944
--------- ---------
End of period ................................ 6,993,893 7,072,184
========= =========
</TABLE>
INTERMEDIATE BOND PORTFOLIO
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD FOR THE PERIOD JUNE 29, 1998 (DAGGER)
ENDED APRIL 30, 1999 THROUGH OCTOBER 31, 1998
--------------------------- ----------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold ..................................... 713,836 $ 7,183,986 407,960 $ 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 ................ 250,602 2,532,417 131,441 1,338,735
Shares redeemed ................................. (975,039) (9,743,356) (335,829) (3,427,589)
-------- ---------- --------- -----------
Net increase (decrease) ......................... (10,601) $ (26,953) 9,125,282 $91,250,257
========== ===========
Shares outstanding:
Beginning of period .......................... 9,125,282 0
--------- ---------
End of period ................................ 9,114,681 9,125,282
========= =========
(DAGGER) Commencement of operations
</TABLE>
24
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
================================================================================
MUNICIPAL BOND PORTFOLIO
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD FOR THE FISCAL YEAR
ENDED APRIL 30, 1999 ENDED OCTOBER 31, 1998
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold ..................................... 45,402 $ 586,335 70,718 $ 907,714
Shares issued to shareholders in
reinvestment of distributions ................ 28,566 368,343 45,302 580,748
Shares redeemed ................................. (81,494) (1,047,611) (126,618) (1,626,181)
--------- ---------- --------- ----------
Net decrease .................................... (7,526) $ (92,933) (10,598) $ (137,719)
========== ==========
Shares outstanding:
Beginning of period .......................... 1,358,654 1,369,252
--------- ---------
End of period ................................ 1,351,128 1,358,654
========= =========
</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.
The transfer 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 Bond Portfolio'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.
25
<PAGE>
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
================================================================================
The following table summarized the aforementioned transactions:
THE WILMINGTON TRUST COLLECTIVE INVESTMENT FUNDS
<TABLE>
<CAPTION>
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
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND
COMBINED
SHARES NET ASSETS NAV
ISSUED IN AFTER PER
EXCHANGE EXCHANGE SHARE
--------- ----------- -----
Short/Intermediate Bond Portfolio ................. 4,027,047 $84,571,146 $13.13
Intermediate Bond Portfolio ....................... 8,921,710 89,217,926 10.00
</TABLE>
26
<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
-------------------------
DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Ctr.
6th Floor
West Conshohocken, PA 19428-2961
--------------------------------
ADMINISTRATOR,
TRANSFER AGENT AND
ACCOUNTING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
--------------------
LEGAL COUNSEL
Pepper Hamilton LLP
-------------------
INDEPENDENT AUDITORS
Ernst & Young LLP
--------------------
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 4/99
