[GRAPHIC] Ceasar Rodney upon his gallopping horse
facing right, reverse image on dark background
THE RODNEY SQUARE
MULTI-MANAGER FUND
The Rodney Square Multi-Manager Fund (the "Fund")
consists of two separate portfolios, the Growth Portfolio
and the Growth and Income Portfolio (each, a "Portfolio" and
collectively, the "Portfolios"). The Growth Portfolio seeks
superior long-term capital appreciation by investing in
securities of companies which are judged by its portfolio
advisers to possess strong growth characteristics. The
Growth and Income Portfolio seeks superior long-term total
return through a combination of capital appreciation and
income by investing in securities with attractive growth or
valuation characteristics or relatively high income yields.
Shares of the Growth and Income Portfolio are currently not
being offered for investment.
Both Portfolios are supervised by Rodney Square
Management Corporation ("RSMC" or the "Manager"), and are
ordinarily managed by at least two different portfolio
advisers having separate investment approaches. The goals
of this multiple adviser technique are (1) to reduce the
volatility of each Portfolio's net asset value through
multiple investment approaches and (2) to achieve long-term
performance that is superior to that which is likely to be
achieved by any one portfolio adviser. There can be no
assurance that either Portfolio will achieve its investment
objective or that the expected advantages of the multiple
adviser technique will be realized.
PROSPECTUS
MAY 1, 1996
This Prospectus sets forth concisely information about
the Fund that you should know before investing. Please read
and retain this document for future reference. A Statement
of Additional Information, dated May 1, 1996, containing
additional information about the Fund has been filed with
the Securities and Exchange Commission and, as amended or
supplemented from time to time, is incorporated by reference
herein. A copy of the Statement of Additional Information
and the Fund's most recent Annual Report to Shareholders may
be obtained, without charge, from certain institutions such
as banks or broker-dealers that have entered into servicing
agreements ("Service Organizations") with Rodney Square
Distributors, Inc., by calling the number below, or by
writing to Rodney Square Distributors, Inc. at the address
noted on the back cover of this Prospectus. Rodney Square
Distributors, Inc. is a wholly owned subsidiary of
Wilmington Trust Company, a bank chartered in the state of
Delaware.
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FOR FURTHER INFORMATION OR ASSISTANCE IN OPENING
AN ACCOUNT, PLEASE CALL:
- NATIONWIDE ..................(800) 336-9970
- ------------------------------------------------------------
<PAGE>
Shares of the Portfolios are not deposits or obligations of,
or guaranteed by, Wilmington Trust Company, nor are the
shares insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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EXPENSE TABLE
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GROWTH GROWTH AND INCOME
PORTFOLIO PORTFOLIO
--------- -----------------
SHAREHOLDER TRANSACTION COSTS*
Maximum sales load on purchases of shares
(as a percentage of public offering price) 4.00% 4.00%
ANNUAL PORTFOLIO OPERATING EXPENSES** ===== =====
(as a percentage of average net assets)
Management Fee ............................. 1.00% 1.00%
12b-1 Fee*** ............................... 0.03% 0.09%
Other Expenses (after reimbursement) ....... 0.40% 0.41%**
Total Portfolio Operating Expenses ----- -----
(after reimbursement) ................. 1.43% 1.50%**
EXAMPLE**** ===== =====
You would pay the following expenses on a $1,000 investment
in either Portfolio assuming (1) 5% annual return and (2)
redemption at the end of each time period:
One year .................... $ 54 $ 55
Three years ................. 83 86
Five years .................. 115 119
Ten years ................... 204 212
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* Wilmington Trust Company and Service Organizations may
charge their clients a fee for providing administrative
or other services in connection with investments in
Portfolio shares. See "Purchase of Shares" for
additional information concerning volume reductions,
sales load waivers and reduced sales load purchase plans.
** The expenses and fees set forth in the table are for the
fiscal year ended December 31, 1995. "Other Expenses"
and "Total Portfolio Operating Expenses" for the Growth
and Income Portfolio have been restated to reflect the
Manager's voluntary agreement to waive its fee or
reimburse each Portfolio for a portion of its operating
expenses so that Total Portfolio Operating Expenses
(excluding taxes, extraordinary expenses, brokerage
commissions and interest) do not exceed an annual rate of
1.50% of average daily net assets. Without reimbursement
for the fiscal year ended December 31, 1995, "Other
Expenses" and "Total Portfolio Operating Expenses" would
have been 1.86 and 2.95, respectively, for the Growth and
Income Portfolio. For the fiscal year ended December 31,
<PAGE>
1995, no reimbursement or fee waiver was necessary for
the Growth Portfolio. (See "Management Agreements.")
*** Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge
permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
****The assumption in the Example of a 5% annual return is
required by regulations of the Securities and Exchange
Commission applicable to all mutual funds; the assumed 5%
annual return is not a prediction of, and does not
represent, either Portfolio's projected or actual
performance. In the Example, it is assumed that the
investor was subject to the maximum sales load (4.00%) on
his or her $1,000 investment.
The purpose of the preceding table is solely to aid
shareholders and prospective investors in understanding the
various expenses that investors in the Portfolios will bear
directly or indirectly.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES
INCURRED AND RETURNS MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
<PAGE>
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FINANCIAL HIGHLIGHTS
GROWTH PORTFOLIO
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The following tables include selected per share data and
other performance information for each Portfolio throughout
the following periods derived from the audited financial
statements of the Fund. They should be read in conjunction
with the Fund's financial statements and notes thereto,
appearing in the Fund's Annual Report to Shareholders for
the year ended December 31, 1995, which is included together
with the auditor's unqualified report thereon as part of the
Statement of Additional Information.
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 26, 1987
(COMMENCEMENT
OF OPERATIONS)TO
FOR THE YEARS ENDED DECEMBER 31, DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987
----- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE -
BEGINNING OF PERIOD $15.14 $16.39 $15.56 $15.68 $11.59 $12.62 $10.05 $8.37 $10.00
------ ------ ------ ------ ------ ------ ------ ----- ------
INVESTMENT OPERATIONS:
Net investment income (loss) (0.10) (0.03) (0.03) 0.00 0.07 0.11 0.14 0.07 0.08
Net realized and unrealized
gain (loss) on investments 4.38 (0.02) 2.29 0.92 4.71 (1.01) 2.58 1.68 (1.65)
----- ------ ---- ---- ---- ------ ---- ---- ------
Total from investment
operations ............ 4.28 (0.05) 2.26 0.92 4.78 (0.90) 2.72 1.75 (1.57)
---- ------ ---- ---- ---- ------ ---- ---- ------
DISTRIBUTIONS:
From net investment income 0.00 0.00 0.00 0.00 (0.07) (0.12) (0.15) (0.07) (0.06)
From net realized gain on
investments .............. (2.01) (1.20) (1.43) (1.04) (0.62) (0.01) 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ---- ---- ----
Total distributions .... (2.01) (1.20) (1.43) (1.04) (0.69) (0.13) (0.15) (0.07) (0.06)
------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE -
END OF PERIOD .......... $17.41 $15.14 $16.39 $15.56 $15.68 $11.59 $12.62 $10.05 $8.37
====== ====== ====== ====== ====== ====== ====== ====== =====
TOTAL RETURN ** ............ 28.43% (0.23)% 14.57% 5.95% 41.54% (7.15)% 27.15% 20.94% (15.78)%
Ratios (to average net assets)/Supplemental Data:
Expenses *** .............. 1.43% 1.38% 1.42% 1.46% 1.50% 1.74% 1.75% 1.75% 1.75%*
Net investment income (loss) (0.53)% (0.17)% (0.18)% (0.03)% 0.52% 0.94% 1.21% 0.77% 0.92%*
Portfolio turnover rate .... 49.12% 37.05% 44.38% 37.79% 32.63% 38.18% 83.12% 57.55% 62.00%*
Net assets at end of period
(000 omitted) ............. $66,311 $65,267 $66,091 $60,852 $56,648 $40,709 $39,571 $28,845 $24,169
</TABLE>
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* Annualized.
** These results do not include the sales charge. If the
sales charge had been included, the returns would have
been lower. The total return figure for the fiscal
<PAGE>
period ended December 31, 1987 has not been annualized.
*** Effective December 22, 1990, RSMC agreed to waive its fee
or bear any expenses (excluding taxes, extraordinary
expenses, brokerage commissions and interest) that would
cause the Portfolio's ratio of expenses to average daily
net assets to exceed, on an annual basis, 1.50%. Prior
to December 22, 1990, RSMC agreed to bear any expenses
that would cause the Portfolio's ratio of expenses to
average daily net assets to exceed, on an annual basis,
1.75%. The annualized expense ratio, had there been no
reimbursement of expenses or fee waivers by RSMC, would
have been 1.54%, 1.85%, 2.21% and 1.81% for the years
ended December 31, 1991, 1989, 1988 and for the fiscal
period ended December 31, 1987, respectively. For the
years ended December 31, 1995, 1994, 1993, 1992 and 1990,
no reimbursement or fee waiver was necessary.
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------
FOR THE PERIOD
MARCH 24, 1987
(COMMENCEMENT
OF OPERATIONS) TO
FOR THE YEARS ENDED DECEMBER 31, DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE -
BEGINNING OF PERIOD $8.33 $9.29 $10.51 $12.09 $10.47 $10.98 $8.81 $8.51 $10.00
----- ----- ------ ------ ------ ------ ----- ----- ------
Investment Operations:
Net investment income 0.13 0.10 0.10 0.18 0.28 0.36 0.28 0.26 0.15
Net realized and unrealized
gain (loss) on investments 2.02 (0.64) 1.39 0.52 2.37 (0.50) 2.18 0.29 (1.50)
---- ------ ---- ---- ---- ------ ---- ---- ------
Total from investment
operations 2.15 (0.54) 1.49 0.70 2.65 (0.14) 2.46 0.55 (1.35)
---- ------ ---- ---- ---- ------ ---- ---- ------
Distributions:
From net investment income (0.13) (0.10) (0.10) (0.18) (0.28) (0.37) (0.29) (0.25) (0.14)
From net realized gain on
investments (0.88) (0.32) (2.61) (2.10) (0.75) 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ---- ---- ---- ----
Total distributions (1.01) (0.42) (2.71) (2.28) (1.03) (0.37) (0.29) (0.25) (0.14)
------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE -
END OF PERIOD $9.47 $8.33 $9.29 $10.51 $12.09 $10.47 $10.98 $8.81 $8.51
===== ===== ===== ====== ====== ====== ====== ===== =====
TOTAL RETURN ** .......... 26.03% (5.82)% 14.26% 5.90% 25.74% (1.27)% 28.10% 6.49% (13.61)%
Ratios (to average net assets)/Supplemental Data:
Expenses *** ............ 1.50% 1.50% 1.50% 1.50% 1.50% 1.74% 1.75% 1.75% 1.75%*
Net investment income ... 1.39% 1.12% 0.80% 1.37% 2.12% 3.01% 2.77% 2.90% 2.41%*
Portfolio turnover rate... 83.49% 106.26% 68.49% 76.63% 133.02% 172.67% 107.11% 110.69% 121.31%*
Net assets at end of period
(000 omitted)............ $7,226 $6,450 $6,512 $10,147 $15,432 $19,420 $21,991 $18,323 $17,637
<PAGE>
</TABLE>
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* Annualized.
** These results do not include the sales charge. If the
sales charge had been included, the returns would have
been lower. The total return figure for the fiscal
period ended December 31, 1987 has not been annualized.
*** Effective December 22, 1990, RSMC agreed to waive its fee
or bear any expenses (excluding taxes, extraordinary
expenses, brokerage commissions and interest) that would
cause the Portfolio's ratio of expenses to average daily
net assets to exceed, on an annual basis, 1.50%. Prior
to December 22, 1990, RSMC agreed to bear any expenses
that would cause the Portfolio's ratio of expenses to
average daily net assets to exceed, on an annual basis,
1.75%. The annualized expense ratio, had there been no
reimbursement of expenses or fee waivers by RSMC, would
have been 2.95%, 3.04%, 2.85%, 2.43%, 2.29%, 2.29%,
2.15%, 2.42% and 2.25% for the eight years in the period
ended December 31, 1995 and the fiscal period ended
December 31, 1987, respectively.
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QUESTIONS AND ANSWERS ABOUT THE PORTFOLIOS
- --------------------------------------------------------------
The information provided in this section is qualified in
its entirety by reference to the more detailed information
elsewhere in this Prospectus.
WHAT ARE THE PORTFOLIOS' INVESTMENT OBJECTIVES?
The Fund is an open-end, management investment
company consisting of two separate diversified
portfolios, the Growth Portfolio and the Growth and
Income Portfolio (the "Portfolios"). The investment
objectives of the Portfolios are as follows:
THE GROWTH PORTFOLIO. This Portfolio seeks superior
long-term capital appreciation by investing in
securities of companies which are judged by its
portfolio advisers to possess strong growth
characteristics. (See "Investment Objectives and
Policies - Growth Portfolio.")
THE GROWTH AND INCOME PORTFOLIO. This Portfolio
seeks superior long-term total return through a
combination of capital appreciation and income by
investing in securities with attractive growth or
valuation characteristics or relatively high income
yields. (See "Investment Objectives and Policies -
Growth and Income Portfolio.")
For these purposes, "superior" long-term capital
appreciation or long-term total return means that which
exceeds the long-term capital appreciation or long-term
total return, respectively, from an investment in the
<PAGE>
securities comprising the Standard & Poor's 500
Composite Stock Price Index (assuming the reinvestment
of dividends and capital gain distributions).
WHAT ARE THE RISKS TO CONSIDER BEFORE INVESTING?
Investment in either Portfolio represents an
investment in securities with fluctuating market prices;
thus, the net asset value of an investor's holdings will
also fluctuate and, at the time of redemption, may be
more or less than the purchase price. Both Portfolios
may invest in securities having above-average risk. The
Portfolios may engage in certain options transactions.
Such transactions may involve certain risks, increase
costs and diminish investment performance. The Growth
Portfolio may also invest substantially in securities of
companies with small market capitalization ("small cap
companies"). Investing in securities of small cap
companies entails greater market volatility and risks of
adverse financial developments than is the case of
securities of larger companies. (See "Other Investment
Practices" and "Risk Factors.")
HOW CAN YOU BENEFIT BY INVESTING IN THE PORTFOLIOS RATHER
THAN BY INVESTING DIRECTLY IN THE SECURITIES IN WHICH THEY
INVEST?
Investing in the Portfolios offers several key
benefits:
FIRST: The Portfolios offer a way to keep money
invested in portfolios of securities professionally
managed by multiple advisers applying different
investment approaches to achieve the particular
investment objective of each Portfolio and at the same
time to maintain liquidity on a day-to-day basis. Of
course, the proceeds to you upon redemption may be more
or less than the cost of your shares. There are no
minimum periods for investment, and no fees will be
charged upon redemption.
SECOND: Investors in the Portfolios need not become
involved with the detailed bookkeeping and operating
procedures normally associated with direct investment in
these securities.
THIRD: Investors can select between the Portfolios to
correspond with their financial planning and management
objectives.
WHO IS THE FUND MANAGER?
Rodney Square Management Corporation ("RSMC" or the
"Manager"), a wholly owned subsidiary of Wilmington
Trust Company ("WTC"), is the Fund Manager and has
overall responsibility for the Portfolios' assets under
management, provides overall investment strategies and
programs for the Portfolios, recommends portfolio
<PAGE>
advisers, allocates assets among the portfolio advisers,
monitors and evaluates portfolio advisers' performance
and manages short-term investments for the Portfolios.
(See "Management of the Fund.")
WHAT IS THE MULTIPLE ADVISER TECHNIQUE?
Each Portfolio's assets are managed ordinarily by at
least two portfolio advisers, each of which has entered
into an advisory agreement with the Manager and the Fund
on behalf of the respective Portfolio. Each portfolio
adviser makes specific investments for the Portfolio in
accordance with the Portfolio's investment objective and
policies and the portfolio adviser's investment approach
and strategies.
The primary objective of the multiple adviser
structure is to reduce portfolio volatility through
multiple investment approaches, a strategy used by many
institutional investors. For example, a particular
investment approach may be successful in a bear
(falling) market, while a different approach may be more
successful in a bull (rising) market. The use of
multiple investment approaches consistent with the
investment objective and policies of a Portfolio is
designed such that different but complementary
investment approaches tend to mitigate the impact of a
single portfolio adviser's performance in the market
cycle during which such adviser's approach is less
successful. Each portfolio adviser will pursue its
approach independently of the other portfolio adviser.
Because it is unlikely that all portfolio advisers to a
single Portfolio will use the same investment approach
at any given point in time, the impact of a portfolio
adviser's relatively adverse results may be dampened by
the more successful results of the other portfolio
adviser. Conversely, the successful results of a
portfolio adviser will be dampened by less successful
results of the other portfolio adviser.
RSMC believes the use of multiple advisers enhances
each Portfolio's potential to achieve relatively
consistent and above-average investment performance, and
through relatively consistent results, the long-term
superior performance objective of each Portfolio can be
achieved. Nevertheless, there can be no assurance that
the expected advantages of the multiple adviser
technique will be realized.
WHO ARE THE PORTFOLIO ADVISERS?
The portfolio advisers of the Portfolios are:
GROWTH PORTFOLIO
Frontier Capital Management Co., Inc.
William Blair & Company L.L.C.
<PAGE>
GROWTH AND INCOME PORTFOLIO
WEDGE Capital Management L.L.P.
Sirach Capital Management, Inc.
WHAT IS THE MANAGEMENT FEE?
The Manager is paid by the Fund a monthly management
fee at an annual rate of 1.00% of each Portfolio's
average daily net assets up to $200 million of Fund
assets and 0.95% of its average daily net assets in
excess of $200 million. Although the management fee is
higher than the advisory fee paid by most investment
companies, it is not necessarily higher than the fees
charged by funds with investment objectives similar to
those of the Portfolios that use multiple advisers. The
Manager compensates the portfolio advisers out of its
management fee. No portfolio adviser receives any
direct compensation from the Fund or either Portfolio.
(See "Management Agreements.")
WHO IS THE ADMINISTRATOR, TRANSFER AGENT AND ACCOUNTING
AGENT?
RSMC serves as the Administrator and Transfer Agent
of the Fund and provides accounting services for the
Fund. (See "Management Agreements.")
WHO IS THE DISTRIBUTOR?
Rodney Square Distributors, Inc. ("RSD"), another
wholly owned subsidiary of WTC, serves as Distributor of
the Fund. (See "Management Agreements.")
HOW DO YOU PURCHASE SHARES IN THE PORTFOLIOS?
The Portfolios are designed as investment vehicles
for individual investors, trusts, corporations and other
institutional investors. Shares may be purchased at
their net asset value next determined after a purchase
order is received by RSMC and accepted by RSD, plus a
sales load equal to a maximum of 4.00% of the amount
invested, subject to certain waivers and reductions.
The minimum initial investment is $1,000, but additional
investments may be made in any amount.
Shares of each Portfolio are sold on a continuous
basis by RSD. Shares may be purchased directly from
RSD, by clients of WTC through their trust accounts or
by clients of certain institutions such as banks or
broker-dealers that have entered into servicing
agreements ("Service Organizations") with RSD through
their accounts with those Service Organizations.
Service Organizations may receive payments from RSD that
are reimbursed by the Fund under a Plan of Distribution
adopted with respect to each Portfolio pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("1940
Act"). Shares may also be purchased by wire or by mail.
(See "Purchase of Shares.")
<PAGE>
The Fund and RSD reserve the right to reject new
account applications and to close, by redemption, an
account without a certified Social Security or other
taxpayer identification number.
Please call WTC, your Service Organization or the
number listed below for further information about the
Portfolios or for assistance in opening an account:
- ------------------------------------------------------------
- NATIONWIDE .................. (800) 336-9970
- ------------------------------------------------------------
HOW DO YOU REDEEM SHARES OF THE PORTFOLIOS?
If you purchased shares of a Portfolio through an
account at WTC or a Service Organization, you may redeem
all or any of your shares in accordance with the
instructions pertaining to that account. Other
shareholders may redeem any or all of their shares by
telephone or by mail. There is no fee charged upon
redemption. (See "Redemption of Shares.")
HOW ARE DIVIDENDS AND OTHER DISTRIBUTIONS PAID?
For the Growth Portfolio, distributions of net
investment income, if any, are made annually, shortly
before or after the end of the Fund's fiscal year
(December 31). For the Growth and Income Portfolio,
distributions of net investment income, if any, are made
quarterly in March, June, September and December. Net
capital gain realized by each Portfolio, if any, is
distributed annually, shortly before or after the end of
the Fund's fiscal year. Shareholders may elect to
receive dividends and other distributions in cash by
checking the appropriate boxes on the Application & New
Account Registration form at the end of this Prospectus
("Application"). (See "Dividends, Capital Gain
Distributions and Taxes.")
ARE EXCHANGE PRIVILEGES AVAILABLE?
You may exchange all or a portion of your Portfolio
shares for shares of the other Portfolio or for shares
of any of the other funds in the Rodney Square complex
that currently offer their shares to investors, subject
to certain conditions. (See "Exchange of Shares.")
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INVESTMENT OBJECTIVES AND POLICIES
- ------------------------------------------------------------
GROWTH PORTFOLIO. The objective of the Growth Portfolio
is to produce superior long-term capital appreciation by
investing in securities of companies which are judged by its
portfolio advisers to possess strong growth characteristics.
Under normal circumstances, at least 65% of the total assets
of the Growth Portfolio is invested in equity securities,
<PAGE>
including common stock, preferred stock and investment grade
convertible securities (such as preferred stock and debt
securities that are convertible into equity securities).
"Investment grade" securities are those rated within the top
four categories by a nationally recognized statistical
rating organization or, if unrated, deemed by a portfolio
adviser to be of comparable quality.
In general, portfolio advisers of the Portfolio emphasize
investments in securities they believe demonstrate good
growth or valuation characteristics, including prospects for
increased earnings due to new products, new management,
technological developments or market changes and other
factors. Although there is no assurance of actual results,
it is anticipated that the growth investment philosophy of
the Growth Portfolio ordinarily may lead to greater
volatility and risk, lower income and greater capital
appreciation over the long-term than will the Growth and
Income Portfolio.
GROWTH AND INCOME PORTFOLIO. The objective of the Growth
and Income Portfolio is to produce superior long-term total
return through a combination of capital appreciation and
income by investing in securities with attractive growth or
valuation characteristics or relatively high income yields.
Under normal circumstances, at least 65% of the total assets
of the Growth and Income Portfolio is invested in equity
securities, including common stock, preferred stock and
investment grade convertible securities (such as preferred
stock and debt securities convertible into equity
securities).
In general, portfolio advisers of the Portfolio emphasize
investments in securities they believe demonstrate good
growth or valuation characteristics or relatively attractive
income yields. These may include securities they believe to
be undervalued based on the market price per share relative
to the company's liquidation value or earnings power or
securities they expect will benefit from the company's
prospects for strong earnings growth. Although there is no
assurance of actual results, it is anticipated that the
growth and income investment philosophy of the Growth and
Income Portfolio ordinarily may lead to less volatility and
risk, higher income and lower capital appreciation over the
long-term than will the Growth Portfolio.
BOTH PORTFOLIOS. With respect to not more than 35% of
each Portfolio's total assets, the portfolio advisers may
hold cash and invest in (i) debt securities that are rated
in the top three categories by a nationally recognized
statistical rating organization or, if unrated, are deemed
by a portfolio adviser to be of comparable quality; and (ii)
repurchase agreements involving such securities. For
temporary defensive purposes or pending investment, each
Portfolio may with respect to all or any portion of its
total assets, hold cash or invest in high grade debt
securities. Should the rating of a security be downgraded
subsequent to a Portfolio's purchase of that security, the
<PAGE>
portfolio adviser will determine whether it is in the best
interest of the Portfolio to retain that security.
MULTIPLE ADVISER TECHNIQUE. The allocation of assets
among a Portfolio's advisers is made by RSMC. (See
"Management of the Fund.") The methodologies of the
portfolio advisers of each Portfolio may vary in the types
of approaches and analytical factors that are utilized,
including, among others, relative valuation techniques,
fundamental company and industry characteristics, technical
security and market characteristics, macroeconomic estimates
and risk analysis. Because selections of securities are
made independently by each portfolio adviser, it is possible
that the securities held by one portfolio segment may also
be held by other portfolio segments of the same Portfolio.
The decision to invest defensively is also made
independently by each portfolio adviser and may result in a
Portfolio, as a whole, being defensively invested. There
can be no assurance, of course, that the investment
objective of either Portfolio will be achieved.
- ------------------------------------------------------------
OTHER INVESTMENT PRACTICES
- ------------------------------------------------------------
As described in more detail in the Statement of
Additional Information, both Portfolios may engage in the
following investment practices:
OPTIONS ON SECURITIES AND SECURITIES INDEXES. Each
Portfolio may purchase call options on securities that a
portfolio adviser intends to include in the Portfolio in
order to fix the cost of a future purchase or attempt to
enhance return by, for example, participating in an
anticipated increase in the value of a security. Each
Portfolio may purchase put options to hedge against a
decline in the market value of securities held in the
Portfolio or in an attempt to enhance return. Each
Portfolio may write (sell) put and covered call options on
securities in which it is authorized to invest. Each
Portfolio also may purchase put and call options, and write
put and covered call options, on U.S. securities indexes.
Stock index options serve to hedge against overall
fluctuations in the securities markets rather than
anticipated increases or decreases in the value of a
particular security.
U.S. GOVERNMENT OBLIGATIONS. Each Portfolio may invest
in U.S. Government obligations, including direct obligations
of the U.S. Government (such as Treasury bills, notes and
bonds) and obligations issued by U.S. Government agencies
and instrumentalities. Agencies and instrumentalities
include executive departments of the U.S. Government or
independent federal organizations supervised by Congress.
Although not all obligations of agencies and
instrumentalities are direct obligations of the U.S.
Treasury, payment of the interest and principal on these
obligations is generally backed directly or indirectly by
<PAGE>
the U.S. Government. This support can range from
obligations supported by the full faith and credit of the
United States (for example, U.S. Treasury securities) to
obligations that are supported solely or primarily by the
creditworthiness of the issuer (for example, securities
issued by the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation and the Tennessee
Valley Authority). In the case of obligations not backed by
the full faith and credit of the United States, the Fund
must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate
repayment and may not be able to assert a claim against the
United States itself in the event the agency or
instrumentality does not meet its commitments.
ILLIQUID SECURITIES. Under the Fund's investment
limitations, neither Portfolio may invest more than 15% of
its net assets in securities that are considered illiquid.
For purposes of these limitations, repurchase agreements
maturing in more than seven days, and securities that are
illiquid by virtue of legal or contractual restrictions on
resale ("restricted securities") or the absence of a readily
available market, are considered illiquid securities.
Securities that are considered restricted securities by
virtue of legal or contractual restrictions on their resale
but that are actively traded in the institutional market are
not subject to the 15% limit. A Portfolio may not, however,
invest more than 10% of its total assets in restricted
equity securities that do not have a readily available
market.
REPURCHASE AGREEMENTS. Each Portfolio may enter into
repurchase agreements with respect to any security in which
it is authorized to invest. A repurchase agreement is a
transaction in which a Portfolio purchases a security from a
bank or recognized securities dealer and simultaneously
commits to resell that security to that bank or dealer at an
agreed upon price, date and market rate of interest. While
it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility of a
decline in the market value of the underlying securities, as
well as delay and costs to the Fund in connection with
bankruptcy proceedings), it is the policy of the Fund to
limit repurchase transactions to primary dealers in U.S.
Government obligations and to banks whose creditworthiness
has been reviewed and found satisfactory by RSMC. Repurchase
agreements maturing in more than seven days are considered
to be illiquid for the purposes of the Fund's investment
limitations
MORTGAGE PASS-THROUGH CERTIFICATES. The debt securities
in which the Portfolios may invest include mortgage pass-
through certificates. Such certificates represent interests
in pools of mortgage loans and provide for the "pass-
through" of monthly payments by the mortgagors net of
service fees. Prepayments of the mortgages included in the
underlying mortgage pool may adversely impact the yield of
<PAGE>
the mortgage pass-through certificates and may also result
in more rapid prepayment of principal than the stated
maturity of the certificates would indicate.
PORTFOLIO TURNOVER. The frequency of portfolio
transactions and a Portfolio's turnover rate will vary from
year to year depending on market conditions. The portfolio
turnover rate for the Growth Portfolio for the years ended
December 31, 1995 and 1994 was 49.12% and 37.05%,
respectively. The portfolio turnover rate for the Growth
and Income Portfolio for the years ending December 31, 1995
and 1994 was 83.49% and 106.26%, respectively. The high
turnover rate for the Growth and Income Portfolio for the
year ended December 31, 1994 was a result of market
conditions during the first quarter that led to a higher
than normal number of buy/sell indicators. Because a higher
portfolio turnover rate increases transaction costs and may
have tax consequences, the portfolio advisers carefully
evaluate market conditions against these consequences. (See
"Dividends, Capital Gain Distributions and Taxes.")
OTHER INFORMATION. Each Portfolio may acquire securities
on a when-issued basis, provided that its outstanding
commitments to buy such securities do not exceed 5% of its
net assets at any time. Each Portfolio may also borrow
money for temporary or emergency purposes in an amount not
in excess of 5% of the Portfolio's total assets.
The policies set forth above are non fundamental and may
be changed by the Fund's Board of Trustees without
shareholder approval. In addition to those non fundamental
policies, each Portfolio is subject to certain fundamental
investment restrictions, that, like each Portfolios
investment objectives, may not be changed without the
affirmative vote of the holders of a majority of the
Portfolio's outstanding voting securities as defined in the
1940 Act. Each Portfolio is also subject to certain other
non fundamental investment restrictions. A description of
these investment restrictions is included in the Statement
of Additional Information.
- ------------------------------------------------------------
RISK FACTORS
- ------------------------------------------------------------
Both Portfolios may be subject to risks involved in
investing in equity securities of companies that are judged
by the portfolio advisers to possess strong growth
characteristics. Such companies may be relatively small,
new or undercapitalized, have inexperienced management or
operate in industries characterized by rapid technological
obsolescence. Accordingly, investment in the equity
securities of such companies may involve greater risk than
investment in companies that do not exhibit strong growth
characteristics. In addition, the portion of each
Portfolio's assets invested in debt securities will be
subject to credit risk and the inverse relationship between
market prices and interest rates; that is, when interest
<PAGE>
rates rise, the prices of such securities tend to go down
and, conversely, when interest rates fall, the prices of
such securities tend to rise.
The Growth Portfolio may invest substantially in
securities of small cap companies. Small cap companies may
be more vulnerable than larger companies to adverse business
or economic developments. Small cap companies may also have
limited product lines, markets or financial resources, and
may be dependent on relatively small management groups.
Securities of such companies may be less liquid and more
volatile than securities of larger companies and therefore
may involve greater risk than investing in larger companies.
In addition, small cap companies may not be well known to
the investing public, may not have institutional ownership
and may have only cyclical, static or moderate growth
prospects.
The portfolio advisers of the Growth Portfolio utilize a
growth-oriented investment philosophy, although each may
look to different indications of growth or to different
market sectors. With respect to the Growth and Income
Portfolio, Sirach Capital Management, Inc. utilizes a growth-
oriented investment philosophy and WEDGE Capital Management
L.L.P. a value-oriented investment approach. A growth-
oriented investment approach generally seeks superior
results by investing in securities of companies with above
average records or prospects for growth in revenues, or
profits or other key factors. A value-oriented investment
program seeks superior long-term capital appreciation by
investing in securities that are judged to be undervalued in
the marketplace. Such securities may be out of favor with
the general public, institutional investors or both.
Each Portfolio may invest in convertible securities that
are rated, at the time of purchase, in the four highest
rating categories by a nationally recognized statistical
rating organization such as Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Services or, if
unrated, deemed by a portfolio adviser to be of comparable
quality. Ratings represent the rating agency's opinion
regarding the quality of the security and are not a
guarantee of quality. Moreover, ratings may change after a
security is purchased. Moody's considers securities in the
fourth highest rating category (Baa) to have speculative
characteristics. Such securities tend to have higher
yields, but changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity
of the issuer to make principal and interest payments than
is the case for more highly rated securities.
The use of options involves certain investment risks and
transaction costs. These risks include: dependence on the
portfolio adviser's ability to predict movements in the
prices of individual securities, fluctuations in the
securities markets in general and movements in interest
rates; imperfect correlation between movements in the price
of options and movements in the price of the security or
<PAGE>
securities hedged or used for cover; the fact that skills
and techniques needed to trade options are different from
those needed to select the securities in which the
Portfolios invest; lack of assurance that a liquid secondary
market will exist for any particular option at any
particular time; and the possible need to defer closing out
certain options in order to continue to qualify for the
beneficial tax treatment afforded regulated investment
companies under the Internal Revenue Code of 1986, as
amended ("Code"). (See "The Portfolios' Investment
Policies" and "Taxes" in the Statement of Additional
Information.)
Both Portfolios may invest in foreign securities by
purchasing American Depository Receipts ("ADR's"). ADR's
are denominated in U.S. dollars and are receipts typically
issued by a U.S. bank or trust company evidencing ownership
of the underlying security. Securities of foreign issuers
are subject to the same risks that pertain to securities of
domestic issuers, notably credit risk, market risk and
liquidity risk. Additionally, securities of foreign issuers
may be subject to certain additional risks, including
adverse political and economic developments in a foreign
country, the extent and quality of government regulation of
financial markets and institutions, interest limitations,
currency controls, foreign withholding taxes and
expropriation or nationalization of foreign issuers and
their assets. There may be less publicly available
information about foreign issuers than about domestic
issuers, and foreign issuers may not be subject to the same
accounting, auditing and financial recordkeeping standards
and requirements as are domestic issuers.
- ------------------------------------------------------------
PURCHASE OF SHARES
- ------------------------------------------------------------
HOW TO PURCHASE SHARES. Portfolio shares are sold on a
continuous basis by RSD. Shares may be purchased directly
from RSD, by clients of WTC through their trust accounts, or
by clients of Service Organizations through their Service
Organization accounts. WTC and Service Organizations may
charge their clients a fee for providing administrative or
other services in connection with investments in Portfolio
shares. A trust account at WTC includes any account for
which the account records are maintained on the trust system
at WTC. Persons wishing to purchase Portfolio shares
through their accounts at WTC or a Service Organization
should contact that entity directly for appropriate
instructions. Other investors may purchase Portfolio shares
by mail or by wire as specified below.
BY MAIL. You may purchase shares by sending a check
drawn on a U.S. bank payable to The Rodney Square Multi-
Manager Fund, indicating the Portfolio you have selected,
along with a completed Application, to The Rodney Square
Multi-Manager Fund, c/o Rodney Square Management
Corporation, P.O. Box 8987, Wilmington, DE 19899-9752. A
<PAGE>
purchase order sent by overnight mail should be sent to The
Rodney Square Multi-Manager Fund, c/o Rodney Square
Management Corporation, 1105 N. Market Street, Wilmington,
DE 19801. If a subsequent investment is being made, the
check should also indicate your Portfolio account number.
When you purchase by check, the Fund may withhold payment on
redemptions until it is reasonably satisfied that the funds
are collected (which can take up to 10 days). If you
purchase shares with a check that does not clear, your
purchase will be cancelled, and you will be responsible for
any losses or fees incurred in that transaction.
BY WIRE. You may purchase shares by wiring federal
funds. To advise the Fund of the wire and, if making an
initial purchase, to obtain an account number, you must
telephone RSMC at (800) 336-9970. Once you have an account
number, instruct your bank to wire federal funds to RSMC,
c/o Wilmington Trust Company, Wilmington, DE-ABA# 0311-0009-
2, attention: The Rodney Square Multi-Manager Fund, DDA#
2610-605-2, further credit-your account number, the desired
Portfolio and your name. If you make an initial purchase by
wire, you must promptly forward a completed Application to
RSMC at the address above under "By Mail."
INDIVIDUAL RETIREMENT ACCOUNTS. Portfolio shares may be
purchased for a tax-deferred retirement plan such as an
individual retirement account ("IRA"). For an Application
for an IRA and a brochure describing a Portfolio IRA, call
RSMC at (800) 336-9970. WTC makes available its services as
IRA custodian for each shareholder account that is
established as an IRA. For these services, WTC receives an
annual fee of $10.00 per account, which fee is paid directly
to WTC by the IRA shareholder. If the fee is not paid by
the date due, Portfolio shares owned by the IRA will be
redeemed automatically for purposes of making the payment.
AUTOMATIC INVESTMENT PLAN. Shareholders may purchase
Portfolio shares through an Automatic Investment Plan.
Under the Plan, RSMC, at regular intervals, will
automatically debit a shareholder's bank checking account in
an amount of $50 or more (subsequent to the $1,000 minimum
initial investment), as specified by the shareholder. A
shareholder may elect to invest the specified amount
monthly, bimonthly, quarterly, semiannually or annually.
The purchase of Portfolio shares will be effected at their
offering price at the close of regular trading on the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m.,
Eastern time) on or about the 20th day of the month. For an
Application for the Automatic Investment Plan, check the
appropriate box of the Application at the end of this
Prospectus or call RSMC at (800) 336-9970. This service is
generally not available for WTC trust account clients, since
similar services are provided through WTC. This service may
also not be available for Service Organization clients who
are provided similar services by those organizations.
ADDITIONAL PURCHASE INFORMATION. The minimum initial
investment is $1,000, but subsequent investments may be made
<PAGE>
in any amount. WTC and Service Organizations may impose
additional minimum customer account and other requirements
in addition to this minimum initial investment requirement.
The Fund and RSD each reserve the right to reject any
purchase order and may suspend the offering of shares of
either Portfolio for a period of time.
Purchase orders received by RSMC and accepted by RSD
before the close of regular trading on the Exchange on any
Business Day of the Fund will be priced at the net asset
value per share that is determined as of the close of
regular trading on the Exchange. (See "How Net Asset Value
is Determined." ) Purchase orders received by RSMC and
accepted by RSD after the close of regular trading on the
Exchange will be priced as of the close of regular trading
on the Exchange on the following Business Day of the Fund.
A "Business Day" of the Fund is any day on which the
Exchange, RSMC and the Philadelphia branch office of the
Federal Reserve are open for business. The following are
not Business Days of the Fund: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas Day.
It is the responsibility of WTC, or the Service
Organization involved, to transmit orders for the purchase
of shares by its customers to RSMC and to deliver required
funds on a timely basis, in accordance with the procedures
stated above.
OFFERING PRICE. Shares of each Portfolio are offered at
its net asset value next determined after a purchase order
is received by RSMC and accepted by RSD, plus a sales load
which, unless shares were purchased under one of the reduced
sales load plans described as follows, will vary with the
size of the purchase as shown following:
SALES LOAD SCHEDULE
DISCOUNT TO SERVICE
SALES LOAD AS A PERCENTAGE OF ORGANIZATIONS AS A
OFFERING NET AMOUNT INVESTED PERCENTAGE OF
AMOUNT OF PURCHASE PRICE (NET ASSET VALUE) OFFERING PRICE
------------------ ---------- ------------------- ----------------
Up to $24,999 4.00% 4.17% 3.50%
$25,000-$49,999 3.50 3.63 3.05
$50,000-$99,999 3.00 3.09 2.60
$100,000-$249,999 2.50 2.56 2.15
$250,000-$499,999 2.00 2.04 1.70
$500,000-$999,999 1.00 1.01 0.80
$1,000,000 and over 0.00 0.00 0.00
REDUCED SALES LOAD PLANS. Shares may be purchased at
reduced charges through two reduced sales load plans: (1) a
right of accumulation that permits a purchase of shares of a
Portfolio to be aggregated with shares of the other
<PAGE>
Portfolio, as well as shares of other funds in the Rodney
Square complex on which the shareholder has already paid a
sales load, that are held in the purchaser's account or in
related accounts; and (2) a Letter of Intent ("LOI") that
permits a purchase of shares of a Portfolio to be aggregated
with future purchases of shares of that Portfolio, as well
as with shares of the other Portfolio and the other Rodney
Square funds that are subject to a sales load, within a
thirteen-month period.
The right of accumulation results in a reduced sales load
because the sales load is applied to the total dollar amount
of Portfolio shares being purchased, plus an amount equal to
the current net asset value of shares of the Portfolio and
shares of other Rodney Square funds on which a sales load
has already been paid that are held in the purchaser's and
related accounts at the time of purchase. Related accounts
include other individual accounts, joint accounts, spouse's
accounts and accounts for children who are under the age of
21 (but only if the purchaser serves as a guardian, trustee
or custodian for the account under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors Act and/or living
at the same residence.
The LOI program also results in a reduced sales load
because purchases of shares of the Portfolios and other
Rodney Square funds that are subject to a sales load made
within a thirteen-month period, starting with the first
purchase made pursuant to the LOI, are aggregated for
purposes of calculating the sales load applicable to each
purchase. In order to qualify under a LOI, purchases must
be made in the same account; purchases made for related
accounts may not be aggregated. The minimum investment
under a LOI is $25,000. The LOI is not a binding obligation
to purchase any amount of shares, but its execution, if
fulfilled, will result in the shareholder paying a reduced
sales load for the total anticipated amount of the purchase.
The LOI is included as part of the Application at the end
of this Prospectus. Investors should submit a completed LOI
to The Rodney Square Multi-Manager Fund, c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19899-
9752. A purchase not originally made pursuant to a LOI may
be included under a LOI executed within 90 days of that
purchase, if the purchaser informs RSMC in writing of this
intent within the 90-day period. This prior purchase will
count toward fulfillment of the LOI; however, the sales load
on any previous purchase will not be adjusted downward.
If the total amount of shares purchased does not equal
the amount stated in the LOI by the end of the eleventh
month, the investor will be notified in writing by RSMC of
the amount purchased to date, the amount required to
complete the LOI and the expiration date. Also, at this
time the investor will be notified of the actions to be
taken by RSMC if the LOI expires unfulfilled. Shares having
a value equal to 5% of the total amount to be purchased over
the thirteen-month period will be held in escrow during that
<PAGE>
period. If the total amount of shares purchased by the
expiration date does not equal the amount stated in the LOI,
RSMC will reduce shares held in escrow by the difference
between the sales load on the shares purchased at the
reduced rate and the sales load applicable to the shares as
actually purchased, and the balance of the shares then will
be released from the escrow.
SALES LOAD WAIVERS. Shares of either Portfolio may be
purchased at net asset value by "those entitled to a Sales
Load Waiver" which is defined as those employees, retirees,
and their immediate family (spouses and their children under
21 years of age), officers and trustees/directors of the
Fund or of WTC and its affiliates, any account at WTC for
which account records are maintained on WTC's computerized
trust system, employees of Service Organizations and clients
of Service Organizations which have entered into a special
Service Organization agreement with RSD, the terms of which
provide that no sales load will be charged. Portfolio
shares may also be purchased at net asset value, without a
sales load, by reinvesting dividends and capital gain
distributions.
- ------------------------------------------------------------
SHAREHOLDER ACCOUNTS
- ------------------------------------------------------------
RSMC, as Transfer Agent, maintains for each shareholder
an account expressed in terms of full and fractional shares
of each Portfolio rounded to the nearest 1/1000th of a
share.
In the interest of economy and convenience, the Fund does
not issue share certificates. Each shareholder is sent a
statement at least quarterly showing all purchases in or
redemptions from the shareholder's account. The statement
also sets forth the balance of shares held in the account by
Portfolio.
Due to the relatively high cost of maintaining small
shareholder accounts, the Fund reserves the right to close
any account with a current value of less than $500 by
redeeming all shares in the account and transferring the
proceeds to the shareholder. Shareholders will be notified
if their account value is less than $500 and will be allowed
60 days in which to increase their account balance to $500
or more to prevent the account from being closed.
Reductions in value that result solely from market activity
will not trigger an involuntary redemption.
- ------------------------------------------------------------
REDEMPTION OF SHARES
- ------------------------------------------------------------
Shareholders may redeem their shares by mail or by
telephone as described below. If you purchased your shares
through an account at WTC or a Service Organization, you may
redeem all or part of your shares in accordance with the
<PAGE>
instructions pertaining to that account. Corporations,
other organizations, trusts, fiduciaries and other
institutional investors may be required to furnish certain
additional documentation to authorize redemptions.
Redemption requests should be accompanied by the Fund's
name, the Portfolio's name and your account number.
BY MAIL. Shareholders redeeming their shares by mail
should submit written instructions with a guarantee of their
signature by an eligible institution acceptable to the
Fund's Transfer Agent, such as a bank, broker, dealer,
municipal securities dealer, government securities dealer,
credit union, national securities exchange, registered
securities association, clearing agency, or savings
association ("eligible institution") to: The Rodney Square
Multi-Manager Fund, c/o Rodney Square Management
Corporation, P.O. Box 8987, Wilmington, DE 19899-9752. A
redemption order sent by overnight mail should be sent to
The Rodney Square Multi-Manager Fund, c/o Rodney Square
Management Corporation, 1105 N. Market Street, Wilmington,
DE 19801. The instructions should indicate the specific
Portfolio from which shares are to be redeemed, the
Portfolio account number and the name of the person in whose
name the account is registered. A signature and a signature
guarantee are required for each person in whose name the
account is registered.
BY TELEPHONE. Shareholders who prefer to redeem their
shares by telephone must elect to do so by applying in
writing for telephone redemption privileges by completing an
Application for Telephone Redemptions (included at the end
of this Prospectus), which describes the telephone
redemption procedures in more detail and requires certain
information that will be used to identify the shareholder
when a telephone redemption request is made. When redeeming
by telephone, you must indicate your name, the Fund's name,
the Portfolio's name, the Portfolio account number, the
number of shares or dollar amount you wish to redeem and
certain other information necessary to identify you as the
shareholder. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are
genuine and will not be liable for any losses due to
unauthorized or fraudulent telephone transactions. During
times of drastic economic or market changes, the telephone
redemption privilege may be difficult to implement. In the
event that you are unable to reach RSMC by telephone, you
may make a redemption request by mail.
ADDITIONAL REDEMPTION INFORMATION. You may redeem all or
any part of the value of your account on any Business Day of
the Fund. Redemptions are effected at the net asset value
per share next calculated after RSMC has received your
redemption request. (See "How Net Asset Value Is
Determined.") The Fund imposes no fee when shares are
redeemed. It is the responsibility of WTC or the Service
Organization to transmit redemption orders and credit their
customers' accounts with redemption proceeds on a timely
basis.
<PAGE>
Amounts redeemed are normally mailed or wired on the next
Business Day of the Fund after receipt and acceptance of
redemption instructions (if received by RSMC before the
close of regular trading on the Exchange), but in no event
later than 7 days following such receipt and acceptance. If
the shares to be redeemed represent an investment made by
check, the Fund reserves the right not to make the
redemption proceeds available until it has reasonable
grounds to believe that the check has been collected (which
could take up to 10 days).
Redemption proceeds may be wired to your predesignated
bank account at any commercial bank in the United States if
the amount is $1,000 or more. The receiving bank may charge
a fee for this service. Alternatively, proceeds may be
mailed to your bank or, for amounts of $10,000 or less,
mailed to your Portfolio account address of record if the
address has been established for a minimum of 60 days. In
order to authorize the Fund to mail redemption proceeds to
your Portfolio account address of record, complete the
appropriate section of the Application for Telephone
Redemptions or include your Portfolio account address of
record when you submit written instructions. You may change
the account which you have designated to receive amounts
redeemed at any time. Any request to change the account
designated to receive redemption proceeds should be
accompanied by a guarantee of the shareholder's signature by
an eligible institution. Further documentation will be
required to change the designated account when shares are
held by a corporation, other organization, trust, fiduciary
or other institutional investor.
For more information on redemptions, contact RSMC or, if
your shares are held in an account with WTC or a Service
Organization, contact WTC or the Service Organization.
REINSTATEMENT PRIVILEGE. Shareholders who have redeemed
Portfolio shares have a one-time privilege to reinstate
their account without a sales load up to the dollar amount
redeemed by purchasing shares within 30 days of the
redemption. Shareholders must indicate in writing that they
are exercising this privilege and provide evidence of the
redemption date and the amount of redemption proceeds. The
reinstatement will be made at the net asset value per share
next computed after the notice of reinstatement and check
are received. The amount of a purchase under this
reinstatement privilege cannot exceed the amount of the
redemption proceeds.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own shares
of a Portfolio with a value of $10,000 or more may
participate in the Systematic Withdrawal Plan. For an
Application for the Systematic Withdrawal Plan, check the
appropriate box of the Application at the end of this
Prospectus or call RSMC at (800) 336-9970. Under the Plan,
shareholders may automatically redeem a portion of their
Portfolio shares monthly, bimonthly, quarterly, semiannually
or annually. The minimum withdrawal available is $100. The
<PAGE>
redemption of Portfolio shares will be effected at their net
asset value at the close of the Exchange on or about the
25th day of the month. If you expect to purchase additional
Portfolio shares, it may not be to your advantage to
participate in the Systematic Withdrawal Plan because
contemporary purchases and redemptions may result in adverse
tax consequences and may cause you to pay a sales load on
amounts withdrawn shortly thereafter. This service is
generally not available for WTC trust account clients, since
a similar service is provided through WTC. This service may
also not be available for Service Organization clients who
are provided a similar service by those organizations.
- ------------------------------------------------------------
EXCHANGE OF SHARES
- ------------------------------------------------------------
EXCHANGES AMONG THE RODNEY SQUARE FUNDS. You may
exchange all or a portion of your shares in a Portfolio for
shares of the other Portfolio or any of the other funds in
the Rodney Square complex that currently offer their shares
to investors. The other Rodney Square funds are:
THE RODNEY SQUARE FUND, each portfolio of which seeks a
high level of current income consistent with the
preservation of capital and liquidity by investing in money
market instruments pursuant to its investment practices.
Its portfolios are:
U.S. GOVERNMENT PORTFOLIO, which invests in U.S.
Government obligations and repurchase agreements
involving such obligations.
MONEY MARKET PORTFOLIO, which invests in obligations
of major banks, prime commercial paper and corporate
obligations, U.S. Government obligations, high quality
municipal securities and repurchase agreements involving
U.S. Government obligations.
THE RODNEY SQUARE TAX-EXEMPT FUND, which seeks as high a
level of interest income, exempt from federal income tax, as
is consistent with a portfolio of high quality, short-term
municipal obligations, selected on the basis of liquidity
and stability of principal.
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND, which uses
multiple portfolio advisers to manage the fund's assets,
seeks long-term capital appreciation primarily through
investments in equity securities (including convertible
securities) of issuers located outside the United States.
THE RODNEY SQUARE STRATEGIC FIXED-INCOME FUND, consisting
of the following portfolios:
THE RODNEY SQUARE DIVERSIFIED INCOME PORTFOLIO, which
seeks high total return, consistent with high current
income, by investing principally in various types of
investment grade fixed-income securities.
<PAGE>
THE RODNEY SQUARE MUNICIPAL INCOME PORTFOLIO, which
seeks a high level of income exempt from federal income
tax consistent with the preservation of capital.
A redemption of shares through an exchange will be
effected at the net asset value per share next determined
after receipt by RSMC of the request, and a purchase of
shares through an exchange will be effected at the net asset
value per share determined at that time or as next
determined thereafter, plus the applicable sales load, if
any. The net asset values per share of the Rodney Square
Fund portfolios and the Tax-Exempt Fund are determined at
12:00 noon, Eastern time, on each Business Day. The net
asset values per share of the Portfolios, the International
Equity Fund and the Strategic Fixed-Income Fund portfolios
are determined at the close of regular trading on the
Exchange (currently 4:00 p.m., Eastern time), on each
Business Day.
A sales load will apply to exchanges into a Portfolio
from either of the Rodney Square Fund portfolios or the Tax-
Exempt Fund, except that no sales load will be charged if
the exchanged shares were acquired by a previous exchange
and are shares on which a sales load was paid or which
represent reinvested dividends and other distributions on
such shares. In addition, shares of the Rodney Square Fund
portfolios or the Tax-Exempt Fund may be exchanged for
shares of the Portfolios without a sales load by those
entitled to a Sales Load Waiver. A sales load will not
apply to any other exchanges into the Portfolios or from the
Portfolios. Shares of the Strategic Fixed-Income Fund
portfolios must be held at least 90 days before they can be
exchanged for shares of either Portfolio or of the
International Equity Fund without an additional sales load,
unless the shares to be exchanged represent reinvested
dividends and other distributions or the shareholder of the
Strategic Fixed-Income Fund portfolios' shares is entitled
to a Sales Load Waiver.
Exchange transactions will be subject to the minimum
initial investment and other requirements of the Portfolio
into which the exchange is made. An exchange may not be
made if the exchange would leave a balance in a
shareholder's Portfolio account of less than $500.
To obtain prospectuses of the other Rodney Square funds
contact RSD. To obtain more information about exchanges or
to place exchange orders, contact RSMC or, if your shares
are held in a trust account with WTC or in an account with a
Service Organization, contact WTC or the Service
Organization. The Fund, on behalf of each Portfolio,
reserves the right to terminate or modify the exchange offer
described here and will give shareholders 60 days' notice of
such termination or modification as required by Securities
and Exchange Commission (the "SEC") rules. This exchange
offer is valid only in those jurisdictions where the sale of
the Rodney Square fund shares to be acquired through such
exchange may be legally made.
<PAGE>
- ------------------------------------------------------------
HOW NET ASSET VALUE IS DETERMINED
- ------------------------------------------------------------
RSMC determines the net asset value and offering price
per share of each Portfolio as of the close of regular
trading on the Exchange on each Business Day of the Fund.
The net asset value per share of each Portfolio is
calculated by dividing the total current market value of all
of a Portfolio's assets, less its liabilities, by the total
number of the Portfolio's shares outstanding. If any
securities do not have a readily available current market
value, they will be valued in good faith by or under the
direction of the Fund's Board of Trustees.
- ------------------------------------------------------------
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. Dividends from
the net investment income earned by the Growth Portfolio are
paid to its shareholders annually. Dividends from the net
investment income earned by the Growth and Income Portfolio
are paid to its shareholders quarterly. Distributions of
net short-term capital gain and net capital gain (the excess
of net long-term capital gain over net short-term capital
loss) realized by each Portfolio, after deducting any
available capital loss carryovers, are paid to the
respective Portfolio's shareholders annually shortly before
or after the end of the Fund's fiscal year (December 31).
An additional distribution may be made each year if
necessary to avoid the payment of an excise tax. Each
dividend is payable to shareholders who redeem, but not to
shareholders who purchase, shares of the distributing
Portfolio on the ex-dividend date. Dividends and capital
gain distributions paid by a Portfolio are automatically
reinvested in additional shares of the Portfolio by WTC and
its agents on the payment date at the net asset value on the
ex-dividend date, unless the shareholder elects on the
Application to receive them in cash, in the form of a check.
TAXES. Each Portfolio intends to continue to qualify for
treatment as a regulated investment company under the Code
so that it will be relieved of federal income tax on the
portion of its investment company taxable income (generally
consisting of net investment income plus net short-term
capital gain) and net capital gain that is distributed to
its shareholders.
Dividends from a Portfolio's taxable income (whether paid
in cash or reinvested in additional shares) are taxable to
its shareholders as ordinary income to the extent of the
Portfolio's earnings and profits. Distributions derived
from a Portfolio's net capital gain (whether paid in cash or
reinvested in additional shares), when designated as such,
are taxable to its shareholders as long-term capital gain,
regardless of the length of time they have held their
shares. Shortly after the end of each calendar year, each
<PAGE>
Portfolio notifies its shareholders of the amounts of
dividends and capital gain distributions paid (or deemed
paid) during that year.
Each Portfolio is required to withhold 31% of dividends,
capital gain distributions and redemption proceeds payable
to any individuals and certain other noncorporate
shareholders who do not provide the Portfolio with a
certified taxpayer identification number. Each Portfolio
also is required to withhold 31% of all dividends and
capital gain distributions payable to such shareholders who
otherwise are subject to backup withholding. In connection
with this withholding requirement, each investor must
certify on the Application that the Social Security or other
taxpayer identification number provided thereon is correct
and that the investor is not otherwise subject to backup
withholding.
A redemption of Portfolio shares may result in taxable
gain or loss to the redeeming shareholder, depending on
whether the redemption proceeds are more or less than the
shareholder's adjusted basis for the redeemed shares (which
normally includes any sales load paid). Similar tax
consequences generally will result from an exchange of
shares of a Portfolio for shares of the other Portfolio or
any other fund in the Rodney Square complex. (See "Exchange
of Shares.")
The foregoing is only a summary of some important federal
income tax considerations generally affecting the Portfolios
and their shareholders; a further discussion appears in the
Statement of Additional Information. In addition to these
considerations, which are applicable to any investment in
the Portfolios, there may be other federal, state or local
tax considerations applicable to a particular investor.
Prospective investors are therefore urged to consult their
tax advisers with respect to the effects of an investment on
their own tax situations.
- ------------------------------------------------------------
PERFORMANCE INFORMATION
- ------------------------------------------------------------
From time to time, quotations of either Portfolio's
average annual total return ("Standardized Return") may be
included in advertisements, sales literature or shareholder
reports. Standardized Return will show percentage rates
reflecting the average annual change in the value of an
assumed initial investment of $1,000, net of each
Portfolio's maximum 4.00% sales load, assuming the
investment has been held for periods of one year, five years
and ten years as of a stated ending date. If a ten-year
period has not yet elapsed, data will be provided as of the
end of a shorter period corresponding to the life of the
Portfolio. Standardized Return assumes that all dividends
and capital gain distributions are reinvested in additional
shares of the Portfolio.
<PAGE>
In addition, the Fund may advertise other total return
performance data ("Non Standardized Return"). Non
Standardized Return shows a percentage rate of return
encompassing all elements of return (i.e., income and
capital appreciation or depreciation); it assumes
reinvestment of all dividends and capital gain
distributions. Non Standardized Return may be quoted for
the same or different periods as those for which
Standardized Return is quoted and may or may not reflect the
effects of the Portfolios' maximum 4.00% sales load; where
not included, the inclusion of the sales load would reduce
the advertised Non Standardized Return. Non Standardized
Return may consist of a cumulative percentage rate of
return, an average annual percentage rate of return, actual
year-by-year rates or any combination thereof.
A Portfolio's Return (Standardized and Non Standardized)
is increased to the extent that RSMC has waived all or a
portion of its advisory fee, or reimbursed all or a portion
of a Portfolio's operating expenses. Returns (Standardized
and Non Standardized) are based on historical performance of
the Portfolios, show the performance of a hypothetical
investment and are not intended to indicate future
performance.
- ------------------------------------------------------------
MANAGEMENT OF THE FUND
- ------------------------------------------------------------
The Board of Trustees supervises the management,
activities and affairs of the Fund and has approved
contracts with various financial organizations to provide,
among other services, day-to-day management required by the
Portfolios and their shareholders.
MANAGER AND ADMINISTRATOR OF THE FUND. RSMC, the Fund's
Manager and Administrator and a wholly owned subsidiary of
WTC, which in turn is wholly owned by Wilmington Trust
Corporation, a publicly held bank holding company, was
organized in 1981. RSMC has overall responsibility for
assets under management, provides overall investment
strategies and programs for the Portfolios, recommends
portfolio advisers, allocates assets among the advisers,
monitors and evaluates portfolio advisers' performance and
manages short-term investments for the Portfolios. In
evaluating possible portfolio advisers and monitoring and
evaluating the investment performance of the portfolio
advisers, RSMC may seek advice from one or more consultants.
Each Portfolio's assets are managed by portfolio advisers
who enter into advisory agreements with RSMC and the Fund on
behalf of the Portfolio. (See "Management Agreements.")
As Administrator, RSMC supplies office facilities, non
investment related statistical and research data, stationery
and office supplies, executive and administrative services,
internal auditing and regulatory compliance services. RSMC
also prepares reports to shareholders of the Portfolios and
proxy statements, updates prospectuses, and makes filings
<PAGE>
with the SEC and state securities authorities. RSMC also
determines the amount of dividends and other distributions
payable to shareholders, prepares financial statements and
footnotes and supervises the preparation of federal and
state tax returns.
RSMC also serves as Fund Manager and Administrator to the
Rodney Square Fund portfolios and the Tax-Exempt Fund,
serves as Administrator to the International Equity Fund and
the Strategic Fixed-Income Fund portfolios and provides
asset management services to collective investment funds
maintained by WTC. In the past, RSMC has provided asset
management services to individuals, personal trusts,
municipalities, corporations and other organizations. At
December 31, 1995, the aggregate assets of the three
investment companies managed by RSMC totaled approximately
$1.4 billion. RSMC also serves as Sub-Investment Adviser to
three portfolios of the Emerald Funds, which portfolio
assets totaled approximately $379.6 million at December 31,
1995.
Martin L. Klopping, President of RSMC, has been
responsible for monitoring the day-to-day activity of the
portfolio advisers of the Fund since the commencement of
operations of each of the Portfolios: February 26, 1987 for
the Growth Portfolio and March 24, 1987 for the Growth and
Income Portfolio. Mr. Klopping has served as President of
RSMC for the past eleven years.
PORTFOLIO ADVISERS. Each portfolio adviser makes
specific portfolio investments for that segment of the
assets of a Portfolio under its management in accordance
with the particular Portfolio's investment objective and the
portfolio adviser's investment approach and strategies. A
portfolio adviser may direct Portfolio transactions to a
brokerage affiliate of another portfolio adviser. The
portfolio advisers designated for each Portfolio are listed
and described below.
Selection and retention criteria for portfolio advisers
include (1) their historical performance records; (2) an
investment approach that is distinct in relation to the
approaches of each of the Portfolio's other portfolio
advisers; (3) consistent performance in the context of the
markets and preservation of capital in declining markets;
(4) organizational stability and reputation; (5) the quality
and depth of investment personnel; and (6) the ability of
the portfolio adviser to apply its approach consistently.
Each portfolio adviser will not necessarily exhibit all of
the criteria to the same degree. Portfolio advisers are
paid by RSMC (not the Fund).
<PAGE>
The Portfolios' portfolio advisers are as follows:
GROWTH PORTFOLIO
----------------
FRONTIER CAPITAL MANAGEMENT CO., INC.
99 Summer Street
Boston, Massachusetts 02110
Frontier Capital Management Co., Inc. ("Frontier") seeks
to identify industry sectors likely to achieve significantly
above average rates of growth over a two to three year time
period. All investments are subjected to intensive internal
research and monitoring. Portfolios generally are broadly
diversified. Companies are selected on the basis of
relative earnings growth criteria. The firm will invest in
companies whose market capitalizations at time of initial
purchase are not greater than $500 million. Frontier began
operations in 1981. The professional staff own 86% of the
firm's stock, including controlling interests held by J.
David Wimberly and Thomas W. Duncan, with the remainder
owned by private investors. The firm had approximately $2.2
billion of assets under management as of December 31, 1995.
The firm also advises certain of WTC's collective investment
funds. Thomas W. Duncan, President of Frontier, has the day-
to-day responsibility for the management of that portion of
the Portfolio's assets under Frontier's control. Mr. Duncan
has been a portfolio manager for the Fund since February 25,
1987.
WILLIAM BLAIR & COMPANY L.L.C.
222 West Adams Street
Chicago, Illinois 60606
William Blair & Company ("Blair") invests in companies
that represent highly profitable, enduring business
franchises, capable of achieving consistent, above-average
earnings growth. The investment in growth companies ranges
from emerging companies to large corporations. For over 25
years, the firm has internally researched scores of mid-
sized growth companies and believes it knows the management,
profitability characteristics, business franchise and growth
prospects of these companies. The firm attempts to assess
the long-term fundamentals of such companies and invests in
them when they are judged to be attractively priced. Blair,
founded in 1935, is a financial services firm with over 100
principals, all of whom are active in the business. Blair's
investment management group acts as adviser to over 500
clients and had over $6 billion under discretionary
management as of December 31, 1995. Blair also serves as
investment adviser to William Blair Mutual Funds, Inc., a
registered investment company. John P. Nicholas has served
as the portfolio manager for that portion of the Portfolio's
assets under Blair's management since December 2, 1989. Mr.
Nicholas has acted as a portfolio manager for eleven years
and has been employed by Blair for over 24 years.
<PAGE>
GROWTH AND INCOME PORTFOLIO
---------------------------
WEDGE CAPITAL MANAGEMENT L.L.P.
2920 One First Union Center
301 S. College Street
Charlotte, North Carolina 28202
WEDGE Capital Management L.L.P. ("WEDGE") follows a
disciplined, four-step approach to portfolio management.
First, capital markets are analyzed to measure overall
return and risk potential, taking into account valuation,
economic and technical factors. Second, a relative value
model is used to rank return potential for individual equity
investments. Third, companies are reviewed to assure that
prospective holdings have acceptable financial quality.
Finally, portfolios are constructed after fundamental,
industry and company management analysis. WEDGE, including
its predecessors, has been in operation since 1984. The
firm is organized as a limited liability partnership
controlled by seven general partners. The firm had
approximately $2.2 billion in assets under management as of
December 31, 1995. Richard X. Hodde has been the portfolio
manager of that portion of the Portfolio's assets under
WEDGE's control since December 24, 1990. Mr. Hodde has
served as a General Partner and the Chief Investment Officer
of WEDGE during the past six years.
SIRACH CAPITAL MANAGEMENT, INC.
3323 One Union Square
Seattle, Washington 98101
Sirach Capital Management, Inc. ("Sirach") follows a
proprietary "ranking system" approach to investing which
consists of buying tests that are ranked according to
decile. The firm believes that companies that possess a
higher "ranking score" are likely to provide superior rates
of return over an extended period of time relative to the
stock market in general. The components to the ranking
system include past earnings per share growth rates,
earnings accelerations, prospective earnings, "surprise"
probabilities, relative financial strength, cash flowback
and other financial ratios. Sirach, including its
predecessors, has been in operation since 1970 and is
controlled by United Asset Management, a publicly traded
company. As of December 31, 1995, Sirach managed
approximately $5.2 billion in assets. The firm also acts as
an investment adviser to The UAM Funds, Inc., a registered
investment company with separate series, and certain of
WTC's collective investment funds. George B. Kauffman is
the principal portfolio manager for that portion of the
Portfolio's assets under Sirach's control, and Robert L.
Stephenson acts as the Risk Control Officer. Mr. Kauffman
has acted as a portfolio manager for Sirach during the past
six years while Mr. Stephenson has served as a research
coordinator for the past six years.
<PAGE>
- ------------------------------------------------------------
MANAGEMENT AGREEMENTS
- ------------------------------------------------------------
FUND MANAGEMENT, ADMINISTRATION, ACCOUNTING AND TRANSFER
AGENCY AGREEMENTS. The Fund Management Agreement provides
that RSMC will, subject to supervision by the Board of
Trustees, manage the investment of the assets of each
Portfolio in accordance with the investment objective and
policies of each Portfolio and any directions which the
Fund's Trustees may issue to RSMC from time to time. For
its services to the Fund, RSMC receives an annual fee equal
to 1.00% of the average daily net assets of the Fund up to
$200 million and 0.95% of the Fund's average daily net
assets in excess of $200 million. This fee is higher than
that charged to many funds which invest primarily in equity
securities but not necessarily higher than the fees charged
to funds with investment objectives similar to those of the
Portfolios which use multiple advisers. The annual fee rate
is the same with respect to each Portfolio.
RSMC serves as Administrator of the Portfolios, pursuant
to an Administration Agreement with the Fund. For the
provision of administrative and operational services and
facilities, RSMC receives a monthly fee from the Fund at an
annual rate of 0.09% of each Portfolio's average daily net
assets. As Accounting Agent, RSMC determines the net asset
value per share of each Portfolio and provides accounting
services to the Portfolios pursuant to an Accounting
Services Agreement with the Fund on behalf of each
Portfolio. For the provision of the accounting services,
RSMC receives from the Fund an annual fee of $45,000 per
Portfolio plus an amount equal to 0.02% of the average daily
net assets of each Portfolio in excess of $100 million.
RSMC also serves as Transfer Agent and Dividend Paying Agent
of the Fund pursuant to a separate Transfer Agency Agreement
with the Fund on behalf of each Portfolio. Pursuant to such
Agreement, the Fund pays RSMC $7 and $10 per account per
year with respect to the Growth Portfolio and the Growth and
Income Portfolio, respectively, plus various other
transaction fees, subject to a minimum fee per Portfolio of
$1,000 per month, plus out-of-pocket expenses.
ADVISORY AGREEMENTS. Pursuant to an Advisory Agreement
among each portfolio adviser, RSMC and the Fund, and on
behalf of each Portfolio, the portfolio adviser determines
what securities should be purchased, held or sold for its
segment of the Portfolio. The portfolio adviser also
selects brokers or dealers to execute portfolio
transactions. Each Advisory Agreement provides for the
monthly payment to the portfolio adviser by RSMC (not the
Fund) of a fee at the approximate annual rate of 0.5% of the
average daily net assets under the portfolio adviser's
management.
CUSTODIAN. WTC serves as Custodian of the Fund. For its
custody services, the Fund pays WTC an annual fee based upon
the average net assets of each Portfolio as follows: $0.25
<PAGE>
per $1,000 on the first $50 million; $0.20 per $1,000 on the
next $50 million and $0.15 per $1,000 over $100 million,
plus, $15 per purchase, sale or maturity of a portfolio
security. The custodian fee is subject to a minimum charge
of $1,000 per Portfolio per month, exclusive of any
transaction charges.
DISTRIBUTION AGREEMENT AND RULE 12B-1 PLAN. Pursuant to
a Distribution Agreement with the Fund, and on behalf of
each Portfolio, RSD manages the Fund's distribution efforts
and provides assistance and expertise in developing
marketing plans and materials, enters into dealer agreements
with broker-dealers and other financial institutions to sell
shares of the Portfolios and directly, or through its
affiliates, provides investor support services.
Under a Plan of Distribution adopted with respect to each
Portfolio pursuant to Rule 12b-1 under the 1940 Act (the
"12b-1 Plans"), the Fund on behalf of each Portfolio may
reimburse RSD for distribution expenses incurred in
connection with the distribution efforts described above.
The 12b-1 Plans provide that RSD may be reimbursed for
amounts paid and expenses incurred for distribution
activities encompassed by Rule 12b-1, such as public
relations services, telephone services, sales presentations,
media charges, preparation, printing and mailing advertising
and sales literature, data processing necessary to support a
distribution effort, printing and mailing prospectuses, and
distribution and shareholder servicing activities of
broker/dealers and other financial institutions. The Board
of Trustees has authorized annual payments of up to 0.25%
of each Portfolio's average net assets to reimburse RSD for
making payments to certain Service Organizations who have
sold Portfolio shares and for other distribution expenses.
BANKING LAWS. Banking laws prohibit deposit-taking
institutions and certain of their affiliates from
underwriting or distributing securities. WTC believes, and
counsel to WTC has advised the Fund that WTC and its
affiliates may perform the services contemplated by their
respective Agreements with the Fund without violation of
applicable banking laws or regulations. If WTC or its
affiliates were prohibited from performing these services,
it is expected that the Board of Trustees would consider
entering into agreements with other entities. If a bank
were prohibited from acting as a Service Organization, its
shareholder clients would be expected to be permitted to
remain Portfolio shareholders and alternative means for
servicing such shareholders would be sought. It is not
expected that shareholders would suffer any adverse
financial consequences as a result of any of these
occurrences.
State securities laws may require banks and financial
institutions involved in distribution to register as
dealers, even if this is not required by federal law.
<PAGE>
- ------------------------------------------------------------
DESCRIPTION OF THE FUND
- ------------------------------------------------------------
The Fund is an open-end, management investment company
established as a Massachusetts business trust on August 19,
1986 by a Declaration of Trust. On December 21, 1990 the
Total Return Portfolio of the Fund changed its investment
objective and name to that of the Growth and Income
Portfolio.
The Fund's capital consists of an unlimited number of
shares of beneficial interest. The authorized shares of
beneficial interest of the Fund are currently divided into
two series or portfolios. The Trustees are empowered by the
Declaration of Trust and the Bylaws to establish additional
portfolios, although they have no present intention of doing
so. Shares of the Portfolios entitle their holders to one
vote per share and fractional votes for fractional shares
held. Separate votes are taken by each Portfolio on matters
affecting that Portfolio. Shares have non cumulative voting
rights, do not have preemptive or subscription rights and
are transferable. As of March 31, 1996, WTC owned by virtue
of shared or sole voting or investment power on behalf of
its underlying customer accounts 77.4% of the shares of the
Growth Portfolio and 59.3% of the shares of the Growth and
Income Portfolio and may be deemed to be a controlling
person of each Portfolio under the 1940 Act.
The Fund does not hold annual meetings of shareholders.
There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as
less than a majority of the Trustees holding office have
been elected by shareholders, at which time the Trustees
then in office will call a shareholders' meeting for the
election of Trustees. Under the 1940 Act, shareholders of
record owning no less than two-thirds of the outstanding
shares of the Fund may remove a Trustee by vote cast in
person or by proxy at a meeting called for that purpose.
The Trustees are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of
any Trustee when requested in writing to do so by the
shareholders of record owning not less than 10% of the
Fund's outstanding shares.
Because the Portfolios use a combined Prospectus and
combined Statement of Additional Information, it is possible
that a Portfolio might become liable for a misstatement of
the other Portfolio in those documents. The Trustees of the
Fund have considered this in approving the use of a combined
Prospectus and Statement of Additional Information.
<PAGE>
[GRAPHIC]
the Rodney Square
Multi-Manager Fund
APPLICATION & NEW ACCOUNT REGISTRATION
- -------------------------------------------------------------------------------
INSTRUCTIONS: RETURN THIS COMPLETED FORM TO:
FOR WIRING INSTRUCTIONS OR FOR THE RODNEY SQUARE MULTI-MANAGER FUND
ASSISTANCE IN COMPLETING THIS C/O RODNEY SQUARE MANAGEMENT CORPORATION
FORM CALL (800) 336-9970 P.O. BOX 8987
WILMINGTON, DE 19899-9752
- -------------------------------------------------------------------------------
PORTFOLIO SELECTION ($1,000 MINIMUM)
__ GROWTH PORTFOLIO $ _______________
__ GROWTH AND INCOME PORTFOLIO $ _______________
TOTAL AMOUNT TO BE INVESTED $ _______________
_____ By check. (Make payable to "The Rodney Square Multi-Manager Fund")
_____ By wire. Call 1-800-336-9970 for Instructions.
Bank from which funds will be wired _______________ wire date ___________
- -------------------------------------------------------------------------------
ACCOUNT REGISTRATION - JOINT TENANTS USE LINES 1 AND 2; CUSTODIAN FOR A MINOR,
USE LINES 1 AND 3; CORPORATION, TRUST OR OTHER ORGANIZATION OR ANY FIDUCIARY
CAPACITY, USE LINE 4.
1. Individual ______________ __ _____________ ____________________
First Name MI Last Name Customer Tax ID No.*
2. Joint Tenancy** ______________ __ _____________ ____________________
First Name MI Last Name Customer Tax ID No.*
3. Gifts to Minors*** _________________ ____________________ under the _____
Minor's Name Customer Tax ID NO.* State
4. Other Registration __________________________________ ____________________
Customer Tax ID No.*
5. If Trust, Date of Trust Instrument: ______________________________________
6. _____________________________________
Your Occupation
7. ___________________________________ _____________________________________
Employer's Name Employer's Address
* Customer Tax Identification No.: (a) for an individual, joint tenants, or a
custodial account under the Uniform Gifts/Transfers to Minors Act, supply the
Social Security number of the registered account owner who is to be taxed;
(b) for a trust, a corporation, a partnership, an organization, a fiduciary,
etc., supply the Employer Identification number of the legal entity or
organization that will report income and/or gains.
** "Joint Tenants with Rights of Survivorship" unless otherwise specified.
*** Regulated by the state's Uniform Gift/Transfers to Minors Act.
- -------------------------------------------------------------------------------
ADDRESS OF RECORD
__________________________________________________________________________
Street
__________________________________________________________________________
City State Zip Code
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
DISTRIBUTION OPTIONS - IF THESE BOXES ARE NOT CHECKED, ALL DISTRIBUTIONS WILL
BE INVESTED IN ADDITIONAL SHARES.
Pay Cash for:
Income Dividends Other
GROWTH PORTFOLIO _____ _____
GROWTH AND INCOME PORTFOLIO _____ _____
- -------------------------------------------------------------------------------
CHECK ANY OF THE FOLLOWING IF YOU WOULD LIKE ADDITIONAL INFORMATION ABOUT A
PARTICULAR PLAN OR SERVICE SENT TO YOU.
_____ AUTOMATIC INVESTMENT PLAN _____ SYSTEMATIC WITHDRAWL PLAN
- -------------------------------------------------------------------------------
RIGHTS OF ACCUMULATION (SEE PROSPECTUS) - INDICATE ANY RELATED ACCOUNT(S) IN
FUNDS OR PORTFOLIOS IN THE RODNEY SQUARE COMPLEX WHICH WOULD QUALIFY FOR A
REDUCED SALES LOAD AS OUTLINED UNDER "PURCHASE OF SHARES-REDUCED SALES LOAD
PLANS" IN THE PROSPECTUS.
_______________________ _____________ ______________________ _______________
Fund/Portfolio Name Account No. Registered Owner Relationship
_______________________ _____________ ______________________ _______________
Fund/Portfolio Name Account No. Registered Owner Relationship
- -------------------------------------------------------------------------------
LETTER OF INTENT
I agree to the Letter of Intent provisions set forth below. I am not obligated
but intend to invest an aggregate amount of at least:
__ $25,000 __ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
under the terms described under "PURCHASE OF SHARES-Reduced Sales Load Plans"
in the Prospectus, over a thirteen-month period beginning ____________________.
I hereby irrevocably constitute and appoint RSMC as my agent and attorney to
surrender for redemption any or all escrowed shares with full power of
substitution in the premises.
I understand that this letter is not effective until it is accepted by RSMC.
________________________________ _____________________________
Authorized Signature Authorized Signature
- -------------------------------------------------------------------------------
SALES LOAD WAIVERS - PLEASE INDICATE IN THE SPACE PROVIDED THE NATURE OF YOUR
ELIGIBILITY FOR A WAIVER OF SALES LOADS. (SEE "PURCHASE OF SHARES-SALES LOAD
WAIVERS" IN THE PROSPECTUS.)
Nature of Affiliation ________________________________________________________.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
CERTIFICATIONS AND SIGNATURE(S) - PLEASE SIGN EXACTLY AS REGISTERED UNDER
"ACCOUNT REGISTRATION."
I have received and read the Prospectus for The Rodney Square Multi-Manager
Fund and agree to its terms; I am of legal age. I understand that the shares
offered by this Prospectus are not deposits of, or guaranteed by, Wilmington
Trust Company, nor are the shares insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. I further under-
stand that investment in these shares involves investment risks, including
possible loss of principal. If a corporate customer, I certify that
appropriate corporate resolutions authorizing investment in The Rodney Square
Multi-Manager Fund have been duly adopted.
I certify under penalties of perjury that the Social Security number or
taxpayer identification number shown above is correct. Unless the box below
is checked, I certify under penalties of perjury that I am not subject to
backup withholding because the Internal Revenue Service (a) has not notified
me that I am as a result of failure to report all interest or dividends, or
(b) has notified me that I am no longer subject to backup withholding. The
certifications in this paragraph are required from all nonexempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemption proceeds under the federal income tax law.
_____ Check here if you are subject to backup withholding.
Signature ______________________________________ Date ___________________
Signature ______________________________________ Date ___________________
Joint Owner/Trustee
Check one: ___ Owner ___ Trustee ___ Custodian ___ Other ________________
- -------------------------------------------------------------------------------
IDENTIFICATION OF SERVICE ORGANIZATION
We authorize Rodney Square Management Corporation ("RSMC"), and Rodney Square
Distributors, Inc. ("RSD") in the case of transactions by telephone, to act as
our agents in connection with transactions authorized by this order form.
Service Organization Name and Code ________________________ __ __ __ __ __
Branch Address and Code ___________________________________ __ __ __
Representative or Other Employee Code _____________________ __ __ __ __
Authorized Signature of Service Organization ___________ Telephone ( )________
- -------------------------------------------------------------------------------
<PAGE>
[GRAPHIC]
the Rodney Square
Multi-Manager Fund
APPLICATION FOR TELEPHONE REDEMPTION
- -------------------------------------------------------------------------------
Telephone redemption permits redemption of fund shares by telephone, with
proceeds directed only to the fund account address of record or to the bank
account designated below. For investments by check, telephone redemption is
available only after these shares have been on the Fund's books for 10 days.
This form is to be used to add or change the telephone redemption option on
your Rodney Square Multi-Manager Fund account(s).
- -------------------------------------------------------------------------------
ACCOUNT INFORMATION
Portfolio Name(s):_________________________________________________________
Fund Account Number(s):____________________________________________________
(Please provide if you are a current account holder:)
REGISTERED IN THE NAME(S) OF:_______________________________________________
_______________________________________________
_______________________________________________
REGISTERED ADDRESS: _______________________________________________
_______________________________________________
NOTE: If this form is not submitted with the application, a corporate
resolution must be included for accounts registered to other than an
individual, a fiduciary or partnership.
- -------------------------------------------------------------------------------
REDEMPTION INSTRUCTIONS
_____ Add _____ Change
CHECK ONE OR MORE.
_____ Mail proceeds to my fund account address of record (must by $10,000
or less and address must be established for a minimum of 60 days)
_____ Mail proceeds to my bank
_____ Wire proceeds to my bank (minimum $1,000)
_____ All of the above
Telephone redemption by wire can be used only with financial institutions that
are participants in the Federal Reserve Bank Wire System. If the financial
institution you designate is not a Federal Reserve participant, telephone
redemption proceeds will be mailed to the named financial institution. In
either case, it may take a day or two, upon receipt for your financial
institution to credit your bank account with the proceeds, depending on its
internal crediting procedures.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
BANK INFORMATION - PLEASE COMPLETE THE FOLLOWING INFORMATION ONLY IF PROCEEDS
MAILED/WIRED TO YOUR BANK WAS SELECTED. A VOIDED BANK CHECK MUST BE ATTACHED
TO THIS APPLICATION.
Name of Bank ____________________________________________
Bank Routing Transit # ____________________________________________
Bank Address ____________________________________________
City/State/Zip ____________________________________________
Bank Account Number ____________________________________________
Name(s) on Bank Account ____________________________________________
- ------------------------------------------------------------------------------
AUTHORIZATIONS
By electing the telephone redemption option, I appoint Rodney Square
Management Corporation ("RSMC"), my agent to redeem shares of any designated
Rodney Square fund when so instructed by telephone. This power will continue
if I am disabled or incapacitated. I understand that a request for telephone
redemption may be made by anyone, but the proceeds will be sent only to the
account address of record or to the bank listed above. Proceeds in excess of
$10,000 will only be sent to your predesignated bank. By signing below, I
agree on behalf of myself, my assigns, and successors, not to hold RSMC and
any of its affiliates, or any Rodney Square fund responsible for acting under
the powers I have given RSMC in accordance with the procedures described in
the Prospectus. I also agree that all account and registration information
I have given will remain the same unless I instruct RSMC otherwise in a
written form, including a signature guarantee. If I want to terminate this
agreement, I will give RSMC at least ten days notice in writing. If RSMC or
ther Rodney Square funds want to terminate this agreement, they will give me
at least ten days notice in writing.
ALL OWNERS ON THE ACCOUNT MUST SIGN BELOW AND OBTAIN SIGNATURE GUARANTEE(S).
___________________________________ _____________________________________
Signature of Individual Owner Signature of Joint Owner (if any)
____________________________________________________________________________
Signature of Corporate Officer, Trustee or other - please include your title
You must have a signature(s) guaranteed by an eligible institution acceptable
to the Fund's transfer agent, such as a bank, broker/dealer, government
securities dealer, credit union, national securities exchange, registered
securities association, clearing agency or savings association. A Notary
Public is not an acceptable guarantor.
SIGNATURE GUARANTEE(S) (stamp)
<PAGE>
<PAGE>
[Outside cover -- Divided into three sections]
[Leftmost Section]
TRUSTEES
Eric Brucker
Fred L. Buckner
Martin L. Klopping
John J. Quindlen
- ------------------
OFFICERS
Martin L. Klopping, PRESIDENT
Joseph M. Fahey, Jr., VICE PRESIDENT
Robert C. Hancock, VICE PRESIDENT & TREASURER
Diane D. Marky, ASSISTANT SECRETARY
Connie L. Meyers, ASSISTANT SECRETARY
Louis C. Schwartz, Esq., ASSISTANT SECRETARY
John J. Kelley, ASSISTANT TREASURER
- -------------------------------------
ADMINISTRATOR AND TRANSFER AGENT
Rodney Square Management Corporation
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
- ---------------------------
INVESTMENT ADVISER AND CUSTODIAN
Wilmington Trust Company
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
- ---------------------------
DISTRIBUTOR
Rodney Square Distributors, Inc.
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
<PAGE>
[Middle Section]
THE RODNEY SQUARE
MULTI-MANAGER
FUND
[Graphic] Caesar
Rodney upon his
galloping horse
facing right,
reverse image on
dark background
PROSPECTUS
MAY 1, 1996
<PAGE>
TABLE OF CONTENTS
Expense Table................................ 2
Financial Highlights Growth Portfolio........ 3
Financial Highlights Growth & Income
Portfolio................................. 4
Questions and Answers About
the Portfolios............................ 5
Investment Objectives and Policies........... 8
Other Investment Practices................... 9
Risk Factors................................. 11
Purchase of Shares........................... 12
Shareholder Accounts......................... 15
Redemption of Shares......................... 15
Exchange of Shares........................... 17
How Net Asset Value is Determined............ 19
Dividends, Capital Gains Distribution
and Taxes................................. 19
Performance Information...................... 20
Management of the Fund....................... 20
Management Agreements........................ 23
Description of the Fund...................... 25
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
The Rodney Square Multi-Manager Fund (the "Fund") consists of
two separate portfolios, the Growth Portfolio and the Growth
and Income Portfolio (each, a "Portfolio" and collectively, the
"Portfolios"). The Growth Portfolio seeks superior long-term
capital appreciation by investing in securities of companies
which are judged by its portfolio advisers to possess strong
growth characteristics. The Growth and Income Portfolio seeks
superior long-term total return through a combination of
capital appreciation and income by investing in securities with
attractive growth or valuation characteristics or relatively
high income yields. Shares of the Growth and Income Portfolio
are currently not being offered for investment.
- ---------------------------------------------------------------
Statement of Additional Information
May 1, 1996
- ---------------------------------------------------------------
This Statement of Additional Information is not a
prospectus and should be read in conjunction with the Fund's
current Prospectus, dated May 1, 1996, as amended from time to
time. A copy of the current Prospectus may be obtained without
charge, by writing to Rodney Square Distributors, Inc. ("RSD"),
Rodney Square North, 1100 North Market Street, Wilmington, DE
19890-0001 and from certain institutions such as banks or
broker-dealers that have entered into servicing agreements with
RSD or by calling (800) 336-9970.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
THE PORTFOLIOS' INVESTMENT POLICIES...................... 1
INVESTMENT LIMITATIONS................................... 4
TRUSTEES AND OFFICERS.................................... 6
RODNEY SQUARE MANAGEMENT CORPORATION..................... 8
WILMINGTON TRUST COMPANY................................. 9
INVESTMENT MANAGEMENT SERVICES........................... 9
Fund Management Agreement............................. 9
Advisory Agreements................................... 11
ADMINISTRATION, ACCOUNTING AND DISTRIBUTION
AGREEMENTS AND RULE 12b-1 PLAN...................... 13
REDEMPTIONS.............................................. 17
PORTFOLIO TRANSACTIONS................................... 18
NET ASSET VALUE.......................................... 19
PERFORMANCE INFORMATION.................................. 20
TAXES.................................................... 27
DESCRIPTION OF THE FUND.................................. 30
OTHER INFORMATION........................................ 31
FINANCIAL STATEMENTS..................................... 32
APPENDIX................................................. A - 1
<PAGE>
THE PORTFOLIOS' INVESTMENT POLICIES
The following information supplements the information
concerning each Portfolio's investment objective, policies and
limitations found in the Prospectus.
The growth oriented nature of certain of the Portfolios'
investments may lead to long holding periods for many portfolio
investments; such investments, during a declining market cycle,
may lead to above average price volatility in the securities of
a Portfolio and consequently in that Portfolio's net asset
value per share. Rodney Square Management Corporation ("RSMC"
or the "Manager") believes that the appointment of multiple
portfolio advisers taking different investment approaches
mitigates the extremes of potential volatility. Additionally,
each Portfolio may invest in securities issued by smaller
companies, which may result in the respective Portfolio having
fewer opportunities to sell such securities at a favorable
price.
LOANS OF PORTFOLIO SECURITIES. Although the Portfolios
have no present intention of doing so, each Portfolio may from
time to time lend its portfolio securities to brokers, dealers
and financial institutions. Such loans by either Portfolio
will in no event exceed one-third of that Portfolio's total
assets and will be secured by collateral in the form of cash or
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, which at all times while the
loan is outstanding will be maintained in an amount at least
equal to the current market value of the loaned securities.
The primary risk involved in lending securities is that of
a financial failure by the borrower. In such a situation, the
borrower might be unable to return the loaned securities at a
time when the value of the collateral has fallen below the
amount necessary to replace the loaned securities. The
borrower would be liable for the shortage, but the Portfolio
would be an unsecured creditor with respect to such shortage
and might not be able to recover all or any of it. In order to
minimize this risk, each Portfolio will make loans of
securities only to firms deemed creditworthy by the Manager and
only when, in the judgment of the Manager, the consideration
that the Portfolio will receive from the borrower justifies the
risk.
U.S. GOVERNMENT OBLIGATIONS. A portion of the assets of a
Portfolio may consist of Treasury bonds, Government National
Mortgage Association ("GNMA") mortgage-backed certificates and
other U.S. Government obligations representing ownership
interests in mortgage pools, such as securities issued by the
Federal National Mortgage Association ("FNMA") and by the
Federal Home Loan Mortgage Corporation ("FHLMC"). The payment
of interest and principal on the latter securities are
guaranteed by FNMA and FHLMC, respectively. FNMA and FHLMC are
federally chartered corporations supervised by the U.S.
Government acting as government instrumentalities under
authority granted by Congress. Securities issued and backed by
FNMA and FHLMC are not backed by the full faith and credit of
<PAGE>
the United States; however, their close relationship with the
U.S. Government makes them high quality securities with minimal
credit risks. FNMA and FHLMC are each authorized to borrow to
a limited extent from the U.S. Treasury to meet their
obligations.
Although the mortgage loans in the pool underlying a GNMA
certificate will have maturities of up to 30 years, the actual
average life of a GNMA certificate typically will be
substantially less because the mortgages will be subject to
normal principal amortization and may be prepaid prior to
maturity. Prepayment rates vary widely and may be affected by
changes in mortgage interest rates. In periods of falling
interest rates, the rate of prepayment on higher interest rate
mortgages tends to increase, thereby shortening the actual
average life of the GNMA certificate. Conversely, when
interest rates are rising, the rate of prepayment tends to
decrease, thereby lengthening the actual average life of the
GNMA certificate. Reinvestment of prepayments may occur at
rates higher or lower than the original yield on the
certificates. Due to the prepayment possibility and the need
to reinvest prepayments of principal at current rates, GNMA
certificates may be less effective than typical non-callable
bonds of similar maturities at "locking in" higher yields
during the period of declining interest rates, although they
may have comparable risks of decline in value during periods of
rising interest rates. GNMA pass-through certificates may
include securities backed by adjustable-rate mortgages which
bear interest at a rate which will be adjusted periodically.
WHEN-ISSUED SECURITIES. New issues of U.S. Government
obligations may be offered on a when-issued basis. This means
that delivery and payment for the securities normally will take
place approximately 15 to 90 days after the date of the
transaction. The payment obligation and the interest rate that
will be received are each fixed at the time the buyer enters
into the commitment. A Portfolio will make commitments to
purchase such securities only with the intention of actually
acquiring the securities, but the Portfolio may dispose of the
commitment before the settlement date if it is deemed advisable
as a matter of investment strategy. A separate account of the
Fund will be established at the Fund's custodian bank, into
which cash and/or marketable high quality debt securities equal
to the amount of the above commitments will be deposited with
respect to each Portfolio. If the market value of the
deposited securities declines, additional cash or securities
will be placed in the account on a daily basis so that the
market value of the account will equal the amount of such
commitments by the Portfolio. Each Portfolio expects that its
outstanding commitments at any one time to purchase when-issued
securities will not exceed 5% of its net asset value.
A security purchased on a when-issued basis is recorded as
an asset on the commitment date and is subject to changes in
market value generally based upon changes in the level of
interest rates. Thus, upon delivery, its market value may be
higher or lower than its cost resulting in an increase or
decrease in a Portfolio's net asset value.
<PAGE>
When payment for a when-issued security is due, a
Portfolio will meet its obligations from then-available cash
flow, the sale of securities held in the separate account or
the sale of other securities. The sale of securities to meet
such obligations carries with it a greater potential for the
realization of capital gains.
ILLIQUID SECURITIES. Neither Portfolio may purchase or
otherwise acquire any security or invest in a repurchase
agreement with respect to any securities if, as a result, more
than 15% of such Portfolio's net assets (taken at current
value) would be invested in illiquid securities. For purposes
of this limitation, repurchase agreements not entitling the
holder to payment of principal within seven days and securities
that are illiquid by virtue of legal or contractual
restrictions on resale ("restricted securities") or the absence
of a readily available market are considered illiquid.
Restricted securities may be sold only in privately
negotiated transactions or in public offerings with respect to
which a registration statement is in effect under the
Securities Act of 1933 (the "1933 Act"). Such securities
include those that are subject to restrictions contained in the
securities laws of other countries. Securities that are freely
marketable in the country where they are principally traded,
but would not be freely marketable in the United States, will
not be subject to this 15% limit. Where registration is
required, the Portfolio may be obligated to pay all or part of
the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the
Portfolio may be permitted to sell a security under an
effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might
obtain a less favorable price than prevailed when it decided to
sell.
In recent years a large institutional market has developed
for certain securities that are not registered under the 1933
Act, including private placements, repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. These instruments are often
restricted securities because the securities are either
themselves exempt from registration or sold in transactions not
requiring registration. Institutional investors generally will
not seek to sell these instruments to the general public, but
instead will often depend either on an efficient institutional
market in which such unregistered securities can be readily
resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or
legal restrictions on resale to the general public or certain
institutions is not dispositive of the liquidity of such
investments.
To facilitate the increased size of the institutional
markets for unregistered securities, the Securities and
Exchange Commission (the "SEC") adopted Rule 144A under the
1933 Act. Rule 144A establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of
<PAGE>
certain securities to qualified institutional buyers.
Institutional markets for restricted securities have developed
as a result of Rule 144A, providing both readily ascertainable
values for restricted securities and the ability to liquidate
an investment to satisfy share redemption orders. Such markets
might include automated systems for the trading, clearance and
settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National
Association of Securities Dealers, Inc. An insufficient number
of qualified buyers interested in purchasing Rule 144A eligible
restricted securities held by the Portfolio, however, could
affect adversely the marketability of such portfolio
securities, and a Portfolio might be unable to dispose of such
securities promptly or at reasonable prices.
The Board of Trustees has delegated the function of making
day-to-day determinations of liquidity to RSMC and the
portfolio advisers pursuant to guidelines approved by the
Board. RSMC and the portfolio advisers take into account a
number of factors in reaching liquidity decisions, including
(1) the frequency of trades for the security, (2) the number of
dealers that make quotes for the security, (3) the number of
dealers that have undertaken to make a market in the security,
(4) the number of other potential purchasers and (5) the nature
of the security and how trading is effected (e.g., the time
needed to sell the security, how offers are solicited and the
mechanics of transfer). RSMC and the portfolio advisers
monitor the liquidity of restricted securities in each
Portfolio and report periodically on such decisions to the
Board of Trustees.
COMMERCIAL PAPER. Commercial paper consists of short-term
(up to 270 days) unsecured promissory notes issued by
corporations in order to finance their current operations. The
Portfolios may invest only in commercial paper rated A-1 or
higher by Standard & Poor's Ratings Services or Prime-1 by
Moody's Investors Service, Inc.
OPTION INCOME AND HEDGING STRATEGIES. Each Portfolio may
purchase and write (sell) both exchange-traded options and
options traded on the over-the-counter market. These
strategies are described in detail in the Appendix.
INVESTMENT LIMITATIONS
The investment limitations described below are
fundamental, and may not be changed with respect to either
Portfolio without the affirmative vote of the lesser of (i) 67%
or more of the shares of the Portfolio present at a
shareholders' meeting if holders of more than 50% of the
outstanding shares of the Portfolio are present in person or by
proxy or (ii) more than 50% of the outstanding shares of the
Portfolio.
<PAGE>
Each Portfolio will not as a matter of fundamental policy:
1. with respect to 75% of the Portfolio's total assets,
invest more than 5% of the value of its total assets in the
securities of any one issuer, except debt obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government obligations");
2. with respect to 75% of the Portfolio's total assets,
purchase the securities of any issuer if such purchase would
cause more than 10% of the voting securities of such issuer to
be held by the Portfolio;
3. borrow money, except that the Portfolio may borrow an
amount not exceeding 5% of its total assets for temporary or
emergency purposes;
4. purchase securities (other than U.S. Government
obligations), if such purchase would cause more than 25% in the
aggregate of the market value of the total assets of the
Portfolio at the time of such purchase to be invested in the
securities of one or more issuers having their principal
business activities in the same industry;
5. act as underwriter of the securities issued by others,
except to the extent that the purchase of securities in
accordance with the Portfolio's investment objective and
policies directly from the issuer thereof and the later
disposition thereof may be deemed to be underwriting;
6. issue senior securities, except as appropriate to
evidence indebtedness that the Fund is permitted to incur and
except that the Fund may issue shares of additional series
which the Trustees may establish;
7. purchase or sell real estate (including limited
partnership interests but excluding securities secured by real
estate or interests therein), interests in oil, gas or mineral
leases, commodities or commodity contracts, except that the
Fund, on behalf of any Portfolio, reserves the freedom of
action (i) to hold and to sell real estate acquired for the
Portfolio as a result of the ownership of marketable securities
provided that the Portfolio's ownership of real estate for
which there is no established market will never exceed 10% of
its net assets and (ii) to purchase or sell futures contracts
including but not limited to contracts for the future delivery
of securities and futures contracts based on securities
indexes; or
8. make loans to other persons, except loans of portfolio
securities and except to the extent that the purchase of debt
obligations in accordance with the Portfolio's investment
objectives and policies and the entry into repurchase
agreements may be deemed to be loans.
In addition, each Portfolio has adopted several non
fundamental policies, which can be changed by the Board of
Trustees without shareholder approval.
<PAGE>
As a matter of non fundamental policy, each Portfolio will
not:
1. purchase or otherwise acquire any security or invest
in a repurchase agreement with respect to any securities if, as
a result, more than 15% of the Portfolio's net assets (taken at
current value) would be invested in repurchase agreements not
entitling the holder to payment of principal within seven days
and in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily
available market;
2. purchase the securities of open-end investment
companies or invest more than 10% of its total net assets,
taken at market value, in the securities of closed-end
investment companies, provided that no purchase of securities
of closed-end companies shall be made except by purchase in the
open market when no commission or profit to a sponsor or
broker-dealer results from such purchase other than the
customary broker's commission (except when part of a plan of
merger, consolidation, reorganization or acquisition of
assets);
3. invest in securities of any issuer which, together
with any predecessor, has been in operation for less than three
years if, as a result, more than 5% of the Portfolio's total
assets would then be invested in such securities;
4. purchase or retain the securities of an issuer if, to
the Fund's knowledge, one or more of the Trustees/Directors or
officers of the Fund, the Manager, or the portfolio adviser
responsible for its investments, individually own beneficially
more than 1/2 of 1% of the securities of such issuer and
together own beneficially more than 5% of such securities;
5. invest more than 10% of the value of its assets in
options on securities indexes;
6. write covered call or put options having aggregate
exercise prices greater than 25% of the value of its net
assets;
7. invest more than 5% of its net assets in warrants or
more than 2% of its net assets in warrants that are not listed
on a national securities exchange (for this purpose warrants
which are attached to other securities will be deemed of no
value);
8. enter into a transaction for the purpose of making a
short-term profit, provided that each Portfolio may dispose of
a security at any time if the portfolio adviser believes it to
be in the Portfolio's best interest to do so;
9. purchase securities on margin or make short sales,
unless by virtue of its ownership of other securities, it has
the right to obtain securities equivalent in kind and amount to
the securities sold and, if the right is conditional, the sale
is made upon the same conditions; or
<PAGE>
10. engage in futures contract transactions.
If necessary in order to comply with limitations imposed
by certain state securities commissions, each Portfolio may
adopt additional restrictions.
For purposes of fundamental investment limitation (1),
repurchase agreements fully collateralized by U.S. Government
obligations will be treated as U.S. Government obligations.
Whenever an investment policy or limitation states a maximum
percentage of a Portfolio's assets that may be invested in any
security or other asset or sets forth a policy regarding
quality standards, such percentage or standard limitation shall
be determined immediately after the Portfolio's acquisition of
such security or other asset. Accordingly, any later increase
or decrease resulting from a change in values, net assets or
other circumstances will not be considered when determining
whether the investment complies with the Portfolio's investment
policies and limitations.
"Value" for the purposes of all investment limitations
shall mean the value used in determining the Portfolio's net
asset value.
TRUSTEES AND OFFICERS
The Fund has a Board, presently composed of four Trustees,
which supervises the Portfolios' activities and reviews
contractual arrangements with companies that provide the
Portfolios with services. The Fund's Trustees and officers are
listed below. Except as indicated, each individual has held
the office shown or other offices in the same company for the
last five years. All persons named as Trustees also serve in
similar capacities for The Rodney Square Fund, The Rodney
Square Tax-Exempt Fund, The Rodney Square Strategic Fixed-
Income Fund and The Rodney Square International Securities
Fund, Inc. Those Trustees who are "interested persons" of the
Fund, as defined in the Investment Company Act of 1940 (the
"1940 Act"), by virtue of their positions with either RSMC or
Wilmington Trust Company ("WTC"), the parent of RSMC, are
indicated by an asterisk (*).
*MARTIN L. KLOPPING, Rodney Square North, 1100 N. Market
Street, Wilmington, DE 19890-0001, President elected in 1995,
and Trustee, age 43, has been President and Director of RSMC
since 1984. He is also a Director of RSD, elected in 1992. He
is also a Chartered Financial Analyst and member of the SEC
Rules and Investment Advisers Committees of the Investment
Company Institute.
ERIC BRUCKER, School of Management, University of Michigan,
Dearborn, MI 48128, Trustee, age 54, has been Dean of the
School of Management at the University of Michigan since June
1992. He was Professor of Economics, Trenton State College
from September 1989 through June 1992. He was Vice President
<PAGE>
for Academic Affairs, Trenton State College, from September
1989 through June 1991. From 1976 until September 1989, he was
Dean of the College of Business and Economics and Chairman of
various committees at the University of Delaware. He is a
member of the Detroit Economic Club.
FRED L. BUCKNER, 5 Hearth Lane, Greenville, DE 19807, Trustee,
age 64, has retired as President and Chief Operating Officer of
Hercules Incorporated (diversified chemicals), positions he has
held from March 1987 through March 1992. He also served as a
member of the Hercules Incorporated Board of Directors from
1986 through March 1992.
JOHN J. QUINDLEN, 313 Southwinds, 1250 Southwinds Blvd., Vero
Beach, FL. 32963, Trustee, age 63, has retired as Senior Vice
President-Finance of E.I. du Pont de Nemours and Company, Inc.
(diversified chemicals), a position he held from 1984 to
November 30, 1993. He also served as Chief Financial Officer
of E.I. du Pont de Nemours and Company, Inc. from 1984 through
June 30, 1993. Mr. Quindlen also serves as a Trustee of the
Kiewit Mutual Fund since July, 1994. Mr. Quindlen serves as a
Director of Atlantic Aviation, Inc. and St. Joe Paper Co. and a
Trustee of Winterthur Museum and Gardens and Medical Center of
Delaware.
JOSEPH M. FAHEY, Jr., Rodney Square North, 1100 N. Market
Street, Wilmington, DE 19890-0001, Vice President, age 39, has
been with RSMC since 1984, as a Secretary of RSMC since 1986
and a Vice President of RSMC since 1992. He was an Assistant
Vice President of RSMC from 1988 to 1992 and Senior Investment
Officer of RSMC from 1984 to 1988.
ROBERT C. HANCOCK, Rodney Square North, 1100 N. Market Street,
Wilmington, DE 19890-0001, Vice President and Treasurer, age
44, has been Vice President of RSMC since 1988 and Treasurer of
RSMC since 1990. He is also a member of the
Accounting/Treasurer Committee of the Investment Company
Institute.
DIANE D. MARKY, Rodney Square North, 1100 N. Market Street,
Wilmington, DE 19890-0001, Assistant Secretary, age 31, has
been a Senior Fund Administrator of RSMC since 1994 and a Fund
Administration Officer since 1991. She was a Mutual Fund
Accountant for RSMC from 1989 to 1991.
CONNIE L. MEYERS, Rodney Square North, 1100 N. Market Street,
Wilmington, DE 19890-001, Assistant Secretary, age 35, has
been a Fund Administrator of RSMC since August, 1994. She was
a Corporate Custody Administrator for WTC from 1989 to 1994.
LOUIS C. SCHWARTZ, Rodney Square North, 1100 N. Market Street,
Wilmington, DE 19890-0001, Assistant Secretary, age 28, has
been a Senior Fund Administrator of RSMC since 1995 and a Fund
Administration Officer since February, 1996. He was an
Associate of the law offices of Mason, Briody, Gallagher &
Taylor from 1993 to 1995.
<PAGE>
JOHN J. KELLEY, Rodney Square North, 1100 N. Market Street,
Wilmington, DE 19890-0001, Assistant Treasurer, age 36, has
been a Vice President of RSMC since 1995. He was an Assistant
Vice President of RSMC from 1989 to 1994.
The fees of the Trustees who are not "interested persons"
of the Fund ("Independent Trustees"), as defined in the 1940
Act, are paid by each Portfolio. For the fiscal year ended
December 31, 1995, such fees amounted to $5,400 for the Growth
Portfolio and $4,950 for the Growth and Income Portfolio. Each
Portfolio may also reimburse Independant Trustees for expenses
incurred in attending meetings of the Fund's Board. The
following table shows the fees paid during calendar 1995 to the
Independent Trustees for their service to the Fund and to the
Rodney Square Family of Funds. On December 31, 1995, the
Trustees and officers of the Fund, as a group, owned
beneficially, or may be deemed to have owned beneficially, less
than 1% of the outstanding shares of the Growth Portfolio and
of the Growth and Income Portfolio.
1995 TRUSTEES FEES
TOTAL FEES FROM TOTAL FEES FROM THE RODNEY
INDEPENDENT TRUSTEE THE FUND SQUARE FAMILY OF FUNDS
- ------------------- --------------- --------------------------
Eric Brucker $3,450 $16,900
Fred L. Buckner $3,450 $16,900
John J. Quindlen $3,450 $16,900
RODNEY SQUARE MANAGEMENT CORPORATION
RSMC, a Delaware corporation organized on September 17,
1981, is a wholly owned subsidiary of WTC, a state-chartered
bank organized as a Delaware corporation in 1903. WTC is the
wholly owned subsidiary of Wilmington Trust Corporation, a
publicly held bank holding company. Through RSMC's management
of the Fund and its selection of portfolio advisers, the Fund
offers investors access to a group of advisers not available
from most other mutual funds and specialized investment
techniques normally available only to institutional clients.
RSMC provides asset management services to collective
investment funds maintained by WTC and acts as Investment
Adviser, Administrator, Transfer Agent and Dividend Paying
Agent to the Fund and to two other registered investment
companies: The Rodney Square Fund and The Rodney Square Tax-
Exempt Fund.
Several affiliates of RSMC are also engaged in the
investment advisory business. Wilmington Trust FSB, a wholly
owned subsidiary of WTC, exercises investment discretion over
certain institutional accounts.
<PAGE>
RSD, a wholly owned subsidiary of WTC and the Fund's
Distributor, is a registered broker-dealer. Wilmington
Brokerage Services Company, another wholly owned subsidiary of
WTC, is a registered investment adviser and a registered broker-
dealer.
WILMINGTON TRUST COMPANY
WTC, the parent of RSMC, serves as Custodian for the Fund
pursuant to a Custodian Agreement dated January 30, 1987.
Pursuant to such Agreement, the Fund pays WTC an annual fee
based upon the average net assets of each Portfolio as follows:
$0.25 per $1,000 on the first $50 million; $0.20 per $1,000 on
the next $50 million and $0.15 per $1,000 over $100 million,
plus $15 per purchase, sale or maturity of a portfolio
security. This fee is subject to a minimum charge of $1,000
per portfolio per month, exclusive of any transaction charges.
The Fund benefits from the experience, conservative values
and special heritage of WTC and its affiliates. WTC is a
financially strong bank and enjoys a reputation for providing
exceptional consistency, stability and discipline in managing
both short-term and long-term investments. WTC is Delaware's
largest full-service bank and, with more than $75 billion in
trust, custody and investment management assets, WTC ranks
among the nation's leading financial services firms. As of
December 31, 1995, the trust department of WTC was the
seventeenth largest in the United States as measured by
discretionary assets under management. WTC is engaged in a
variety of investment advisory activities, including the
management of collective investment pools, and has nearly a
century of experience managing the personal investments of high
net-worth individuals. Its current roster of institutional
clients includes several Fortune 500 companies as well.
Certain departments in WTC engage in investment management
activities that utilize a variety of investment instruments.
WTC is also the Investment Adviser of The Rodney Square
Strategic Fixed-Income Fund and The Rodney Square International
Equity Fund.
INVESTMENT MANAGEMENT SERVICES
FUND MANAGEMENT AGREEMENT. RSMC has served as Manager to
the Fund since its inception, currently pursuant to a Fund
Management Agreement dated December 2, 1989.
Under the Fund Management Agreement, RSMC has agreed to
waive all or a portion of its advisory fee or reimburse the
Fund annually to the extent that the annual operating expenses
of a Portfolio exceed the lowest expense limitation prescribed
by certain states in which shares of the Portfolios are
qualified or registered for offer or sale. RSMC understands
that the lowest applicable limitation (excluding brokerage
commissions, interest, taxes, distribution fees and
extraordinary expenses) is currently 2.5% on the first $30
<PAGE>
million of a Portfolio's average daily net assets, 2.0% of the
next $70 million of its average daily net assets, and 1.5% of
its average daily net assets in excess of $100 million. RSMC
also has agreed voluntarily to waive all or a portion of its
fee or reimburse the Fund, on behalf of each Portfolio, monthly
to the extent that expenses (excluding brokerage commissions,
interest, taxes and extraordinary expenses) incurred by a
Portfolio exceed an annual rate of 1.50% of the average daily
net assets of that Portfolio. This undertaking, which is not
contained in the Fund Management Agreement, may be amended or
rescinded in the future.
The following chart contains the amount of RSMC's
management fees for each Portfolio for the fiscal years ended
December 31, 1995, 1994 and 1993:
PORTFOLIO 1995(1) 1994(2) 1993(3)
--------- ------- ------- -------
Growth Portfolio $640,522 $667,782 $605,215
Growth and Income
Portfolio $69,211 $63,713 $70,148
- ---------------
1 For the fiscal year ended December 31, 1995, RSMC
reimbursed the Growth and Income Portfolio on the amount of
$100,039. For the same period, RSMC did not reimburse the
Growth Portfolio.
2. For the fiscal year ended December 31, 1995, RSMC
reimbursed the Growth and Income Portfolio on the amount of
$98,149. For the same period, RSMC did not reimburse the
Growth Portfolio.
3. For the fiscal year ended December 31, 1995, RSMC
reimbursed the Growth and Income Portfolio on the amount of
$94,881. For the same period, RSMC did not reimburse the
Growth Portfolio.
- ---------------
The Fund Management Agreement provides that RSMC is
responsible for the provision of investment management and
related services to the Fund, subject to the direction of the
Board of Trustees and the officers of the Fund. The Agreement
also provides that RSMC may delegate its investment decision-
making authority to the portfolio advisers.
Under the Agreement, the Fund, on behalf of the
Portfolios, assumes responsibility for paying or entering into
arrangements with third parties to pay all Fund expenses which
are not expressly assumed by RSMC. Such expenses include: (i)
fees payable for administrative services provided by the Fund's
administrator; (ii) fees payable for services provided by the
Fund's independent public accountants; (iii) fees payable for
transfer agent, registrar, dividend disbursement and
shareholder recordkeeping services; (iv) fees payable for
accounting services; (v) fees payable for custodial services;
(vi) the cost of obtaining quotations for calculating the value
<PAGE>
of the assets of each Portfolio; (vii) taxes levied against the
Fund or either Portfolio; (viii) brokerage fees and commissions
in connection with the purchase and sale of portfolio
securities; (ix) costs, including the interest expense, of
borrowing money; (x) the Fund's pro-rata share of costs and/or
fees incident to holding meetings of the Trustees and
shareholders, preparation, filing and mailing of prospectuses
and reports, maintenance of the Fund's corporate existence, and
registration of shares with federal and state securities
authorities; (xi) legal fees and expenses; (xii) the costs of
printing share certificates representing shares of each
Portfolio; (xiii) the Fund's pro-rata share of fees payable to,
and expenses of, members of the Board of Trustees who are
not "interested persons" of the Fund; (xiv) each Portfolio's
pro-rata share of premiums payable on the fidelity bond
required by Section 17(g) of the 1940 Act, and any other
premiums payable on insurance policies related to the Fund's
business and the investment activities of its Portfolios;
(xv) distribution fees; (xvi) fees, voluntary assessments and
other expenses incurred in connection with the Fund's
membership in investment company organizations; and (xvii) such
non-recurring expenses as may arise, including actions, suits
or proceedings to which the Fund is a party and the Fund's pro-
rata share of the legal obligation which the Fund may have to
indemnify its Trustees and officers with respect thereto.
The Agreement provides that RSMC, in the absence of
willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties under such Agreement, shall
not be liable to the Fund or its shareholders for any act or
omission in the course of, or connected with, providing
services under the Agreement or for any losses that may be
sustained in the purchase, holding or sale of any security.
The Agreement is terminable without penalty on sixty (60) days'
written notice by RSMC or by the Fund (by action of its Board
of Trustees or by vote of a majority of the Fund's outstanding
voting securities), and terminates automatically in the event
of its assignment. The Agreement continues in effect from year
to year so long as its continuance is approved at least
annually (i) by the vote of a majority of the Independent
Trustees at a meeting called for the purpose of voting on such
approval and (ii) by the vote of a majority of the Trustees or
by the vote of a majority of the outstanding voting securities
of the Fund.
ADVISORY AGREEMENTS. The Fund has entered into Advisory
Agreements with RSMC and the portfolio advisers listed below
pursuant to which RSMC pays a monthly fee to each portfolio
adviser at the approximate annual rate of 0.5% of the average
daily net assets under the portfolio adviser's management.
During the fiscal years ended December 31, 1995, 1994 and 1993
RSMC paid the following advisory fees:
<PAGE>
ADVISORY FEE RECEIVED
GROWTH PORTFOLIO FROM RSMC
YEAR ENDED YEAR ENDED YEAR ENDED
PORTFOLIO ADVISER 12/31/95 12/31/94 12/31/93
----------------- ---------- ---------- ----------
Frontier Capital Management
Co., Inc. $152,932 $119,560 $106,016
Spears Benzak Salomon &
Farrell (terminated $20,857 $105,283 $97,380
as of 3/31/95)
William Blair & $146,471 $109,048 $99,212
Company L.L.C.
ADVISORY FEE RECEIVED
GROWTH AND INCOME PORTFOLIO FROM RSMC
YEAR ENDED YEAR ENDED YEAR ENDED
PORTFOLIO ADVISER 12/31/95 12/31/94 12/31/93
----------------- ---------- ---------- ----------
Wedge Capital Management L.L.P. $17,362 $15,997 $16,986
Sirach Capital Management, Inc. $17,244 $15,859 $18,088
Each Advisory Agreement provides that the portfolio
adviser has discretionary investment authority (including the
selection of brokers and dealers for the execution of the
Fund's portfolio transactions) with respect to the portion of
the Fund's assets allocated to it by RSMC, subject to the
restrictions of the 1940 Act, the Internal Revenue Code of
1986, as amended (the "Code"), applicable state securities
laws, the supervision and control of the Trustees, the relevant
Portfolio's investment objectives, policies and restrictions
and the instructions of the Trustees and RSMC.
Each Advisory Agreement provides that the portfolio
adviser will not be liable for any action taken, omitted or
suffered to be taken except if such acts or omissions are the
result of willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. The Agreements continue in effect
from year to year so long as continuance of each such Agreement
is approved at least annually (i) by the vote of a majority of
the Independent Trustees at a meeting called for the purpose of
voting on such approval and (ii) by the vote of a majority of
the Trustees or by the vote of a majority of the outstanding
voting securities of the relevant Portfolio. Each Advisory
Agreement terminates automatically in the event of its
assignment and is terminable on written notice by the Fund
(without penalty, by action of the Board of Trustees or by vote
of a majority of the Portfolio's outstanding voting securities)
or by RSMC or the portfolio adviser. The Agreement provides
that written notice of termination must be provided by the
Fund, RSMC or the portfolio adviser within thirty (30) days of
the termination date.
<PAGE>
ADMINISTRATION, ACCOUNTING AND DISTRIBUTION AGREEMENTS AND RULE
12b-1 PLAN
RSMC, a Delaware corporation organized on September 17,
1981, serves as Administrator of the Fund pursuant to an
Administration Agreement effective as of December 31, 1992.
For the services provided, RSMC receives a monthly
administration fee from the Fund at an annual rate of 0.09% of
each Portfolio's average daily net assets.
For the fiscal years ended December 31, 1995, 1994 and
1993, the Fund paid the fees listed below for administrative
services to RSMC:
ADMINISTRATION FEES PAID BY PORTFOLIO
GROWTH PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED
12/31/95 12/31/94 12/31/93
---------- ---------- ----------
RSMC $57,647 $60,100 $54,470
ADMINISTRATION FEES PAID BY PORTFOLIO
GROWTH AND INCOME PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED
12/31/95 12/31/94 12/31/93
---------- ---------- ----------
RSMC $6,229 $5,734 $6,313
Under the terms of the Administration Agreement, RSMC
agrees to: (a) supply office facilities, non-investment
related statistical and research data, executive and
administrative services, stationery and office supplies and
corporate management services for the Fund; (b) prepare and
file, if necessary, reports to shareholders of the Fund and
reports with the SEC and state securities commissions; (c)
monitor the Fund's compliance with the investment restrictions
and limitations imposed by the 1940 Act, and state Blue Sky
laws and applicable regulations thereunder, the fundamental and
non fundamental investment policies and limitations set forth
in the Prospectus and this Statement of Additional Information,
and the investment restrictions and limitations necessary for
each Portfolio of the Fund to qualify as a regulated investment
company under the Code ("RIC"); (d) monitor sales of the Fund's
shares and ensure that such shares are properly registered with
the SEC and applicable state authorities; (e) prepare and
monitor an expense budget for each Portfolio, including setting
and revising accruals for each category of expenses; (f)
determine the amount of dividends and other distributions
payable to shareholders as necessary to, among other things,
maintain the qualification of each Portfolio as a RIC; (g)
prepare and distribute to appropriate parties notices
<PAGE>
announcing the declaration of dividends and other distributions
to shareholders; (h) prepare financial statements and footnotes
and other financial information with such frequency and in such
format as required to be included in reports to shareholders
and the SEC; (i) supervise the preparation of federal and state
tax returns; (j) review sales literature and file such with
regulatory authorities, as necessary; (k) maintain Fund/Serv
membership; (l) provide information regarding material
developments in state securities regulation; and (m) provide
personnel to serve as officers of the Fund if so elected by the
Board of Trustees. Additionally, RSMC agrees to create and
maintain all necessary records in accordance with all
applicable laws, rules and regulations pertaining to the
various functions performed by it and not otherwise created and
maintained by another party pursuant to contract with the Fund.
RSMC may at any time or times in its discretion appoint (and
may at any time remove) other parties as its agent to carry out
any of the provisions of the Administration Agreement.
The Administration Agreement provides that RSMC and its
affiliates shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which the Administration
Agreement relates, except to the extent of a loss resulting
from willful misfeasance, bad faith or gross negligence on
their part in the performance of their obligations and duties
under the Administration Agreement.
The Administration Agreement became effective at the close
of business on December 31, 1992, and continues in effect from
year to year so long as its continuance is approved at least
annually by a majority of the Trustees, including a majority of
the Independent Trustees. The Agreement is terminable by the
Fund by sixty (60) days' written notice given to RSMC or by
RSMC by six (6) months' written notice given to the Fund.
RSMC determines the net asset value per share of each
Portfolio and provides accounting services to the Fund pursuant
to an Accounting Services Agreement with the Fund. For each of
the fiscal years ended December 31, 1995, 1994, and 1993, RSMC
was paid an accounting service fee of $45,000 per Portfolio.
Under the terms of the Accounting Services Agreement, RSMC
agrees to: (a) perform the following accounting functions on a
daily basis: (1) journalize the Fund's investment, capital
share and income and expense activities, (2) verify investment
buy/sell trade tickets when received from the portfolio
advisers and transmit trades to the Fund's Custodian for proper
settlement, (3) maintain individual ledgers for investment
securities, (4) maintain historical tax lots for each security,
(5) reconcile cash and investment balances of the Fund with the
Custodian, and provide the portfolio advisers with the
beginning cash balance available for investment purposes, (6)
update the cash availability throughout the day as required by
the portfolio advisers, (7) post to and prepare the Fund's
Statement of Assets and Liabilities and the Statement of
Operations, (8) calculate various contractual expenses (e.g.,
advisory and custody fees), (9) control all disbursements from
<PAGE>
the Fund and authorize such disbursements upon written
instructions, (10) calculate capital gains and losses, (11)
determine the Fund's net income, (12) obtain security market
quotes from services approved by the portfolio adviser, or if
such quotes are unavailable, then obtain such prices from the
portfolio adviser, and in either case calculate the market
value of the Fund's investments, (13) transmit or mail a copy
of the portfolio valuation to the Manager and to the portfolio
advisers, (14) compute the net asset value of the Fund, (15)
compute the Fund's yields, total return, expense ratios and
portfolio turnover rate, and (16) monitor the expense accruals
and notify Fund management of any proposed adjustments; (b)
prepare monthly financial statements which include the Schedule
of Investments, the Statement of Assets and Liabilities, the
Statement of Operations, the Statement of Changes in Net
Assets, the Cash Statement and the Schedule of Capital Gains
and Losses; (c) prepare monthly security transactions listings;
(d) prepare quarterly broker security transactions summaries;
(e) supply various Fund statistical data as requested on an
ongoing basis; (f) assist in the preparation of support
schedules necessary for completion of Federal and state tax
returns; (g) assist in the preparation and filing of the Fund's
semiannual reports with the SEC on Form N-SAR; (h) assist in
the preparation and filing of the Fund's annual and semiannual
shareholder reports and proxy statements; (i) assist with the
preparation of registration statements on Form N-1A and other
filings relating to the registration of shares of the Fund; (j)
monitor each Portfolio's status as a RIC; and (k) act as
liaison with the Fund's independent public accountants and
provide account analyses, fiscal year summaries and other audit
related schedules. Additionally, RSMC agrees to keep, in
accordance with all applicable laws, rules and regulations, all
books and records with respect to the Fund's books of account
and records of the Fund's securities transactions.
The Accounting Services Agreement provides that RSMC shall
not be liable for any act or omission which does not constitute
willful misfeasance, bad faith or gross negligence on the part
of RSMC in the performance of its obligations and duties under
the Accounting Services Agreement or reckless disregard by RSMC
of such duties and obligation.
The Accounting Services Agreement became effective on
October 1, 1989, and continues in effect from year to year as
long as its continuance is approved at least annually by a
majority of the Trustees, including a majority of the
Independent Trustees. The Agreement is terminable by the Fund
or RSMC by three (3) months' written notice.
RSD serves as the Distributor of each Portfolio's shares
pursuant to a Distribution Agreement with the Fund. Under the
terms of the Distribution Agreement, RSD is granted the right
to sell shares of the Portfolios as agent for the Fund, to
retain a portion of sales load proceeds as underwriting
commissions and to reallocate a portion of sales load proceeds
to dealers who have sold Portfolio shares. For the fiscal year
ended December 31, 1995, 1994 and 1993, RSD received
underwriting commissions of $5,691, $10,910 and $5,266,
respectively.
<PAGE>
Under the terms of the Distribution Agreement, RSD agrees
to use all reasonable efforts to secure purchasers for shares
of the Portfolios and to pay expenses of printing and
distributing prospectuses, statements of additional information
and reports prepared for use in connection with the sale of
Portfolio shares and any other literature and advertising used
in connection with the offering, subject to reimbursement
pursuant to each Portfolio's Plan of Distribution adopted
pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans").
The Distribution Agreement provides that RSD, in the
absence of willful misfeasance, bad faith or gross negligence
in the performance of its duties or by reason of reckless
disregard of its obligations and duties under the Agreement,
will not be liable to the Fund or its shareholders for losses
arising in connection with the sale of Portfolio shares.
The Distribution Agreement became effective as of December
31, 1992 and continues in effect from year to year as long as
its continuance is approved at least annually by a majority of
the Trustees, including a majority of the Independent Trustees.
The Distribution Agreement terminates automatically in the
event of its assignment. The Agreement is also terminable
without payment of any penalty (i) by the Fund (by vote of a
majority of the Trustees of the Fund who are not interested
persons of the Fund and who have no direct or indirect
financial interest in the operation of any Rule 12b-1 Plan of
the Fund or any agreements related to the 12b-1 Plan or by vote
of a majority of the outstanding voting securities of the Fund)
on sixty (60) days' written notice to RSD; or (ii) by RSD on
sixty (60) days' written notice to the Fund.
RSD may be reimbursed for distribution expenses according
to each 12b-1 Plan which the Board of Trustees and the
shareholders of the Portfolios have adopted. Each 12b-1 Plan
provides that RSD may be reimbursed for distribution activities
encompassed by Rule 12b-1, such as public relations services,
telephone services, sales presentations, media charges,
preparation, printing and mailing advertising and sales
literature, data processing necessary to support a distribution
effort, printing and mailing of prospectuses, and distribution
and shareholder servicing activities of certain financial
institutions such as banks or broker-dealers who have entered
into servicing agreements with RSD ("Service Organizations")
and other financial institutions, including fairly allocable
internal expenses of RSD and payments to third parties.
The 12b-1 Plans further provide that reimbursement shall
be made for any month only to the extent that such payment does
not exceed (i) 0.35% on an annualized basis of each Portfolio's
average net assets; and (ii) limitations set from time to time
by the Board of Trustees. The Board of Trustees has only
authorized implementation of each 12b-1 Plan for annual
payments of up to 0.25% of each Portfolio's average net assets
to reimburse RSD for paying "trail commissions" to Service
Organizations who have sold Portfolio shares and for marketing
efforts focusing on the preparation and distribution of
marketing materials. For the fiscal year ended December 31,
<PAGE>
1995, payments under the 12b-1 Plans amounted to $18,594, and
$5,995 for the Growth and Growth and Income Portfolios,
respectively. $10,564 and $4,500 were paid in trail
commissions for the Growth and Growth and Income Portfolios,
respectively. $2,645 and $289 was paid for prospectus printing
for the Growth and Growth and Income Portfolios, respectively
and $5,385 and $1,206 was paid for preparation and distribution
of marketing materials for the Growth and Growth and Income
Portfolios, respectively.
The 12b-1 Plans provide that they shall not operate or be
construed to limit the extent to which RSMC or any other
person, other than the Fund, may incur costs and bear expenses
associated with the distribution of shares of the Fund. The
Fund may execute portfolio transactions with and purchase
securities issued by depository institutions that receive
payments under the 12b-1 Plans. No preference for instruments
issued by such depository institutions is shown in the
selection of investments.
REDEMPTIONS
To ensure proper authorization before redeeming shares of
the Portfolios, RSMC may require additional documents such as,
but not restricted to, stock powers, trust instruments,
certificates of death, appointments as executor, certificates
of corporate authority and waivers of tax required in some
states when settling estates.
Clients of WTC who have purchased shares through their
trust accounts and clients of Service Organizations who have
purchased shares through their accounts with those Service
Organizations should contact WTC or the Service Organization
prior to submitting a redemption request to ensure that all
necessary documents accompany the request. When shares are
held in the name of a corporation, trust, fiduciary or
partnership, WTC requires, in addition to the stock power,
certified evidence of authority to sign the necessary
instruments of transfer. These procedures are for the
protection of shareholders and should be followed to ensure
prompt payment. Redemption requests must not be conditional as
to date or price of the redemption. Redemption proceeds will be
sent within seven days of acceptance of shares tendered for
redemption. Delay may result if the purchase check has not yet
cleared, but the delay will be no longer than required to
verify that the purchase check has cleared, and the Fund will
act as quickly as possible to minimize delay.
The value of shares redeemed may be more or less than the
shareholder's cost, depending on the net asset value at the
time of redemption. Redemption of shares may result in tax
consequences (gain or loss) to the shareholder, and the
proceeds of a redemption may be subject to backup withholding.
A shareholder's right to redeem shares and to receive
payment therefor may be suspended when (a) the New York Stock
Exchange (the "Exchange") is closed or trading on the Exchange
<PAGE>
is restricted, (b) an emergency exists as a result of which it
is not reasonably practicable to dispose of a Portfolio's
securities or to determine the value of the net assets of a
Portfolio or Portfolios, or (c) ordered by a governmental body
having jurisdiction over the Fund for the protection of the
shareholders. In the case of any such suspension, shareholders
of the affected Portfolio may withdraw their requests for
redemption or may receive payment based on the net asset value
of the Portfolio next determined after the suspension is
lifted.
The Fund reserves the right, if conditions exist which
make cash payments undesirable, to honor any request for
redemption by making payment in whole or in part with readily
marketable securities chosen by the Fund and valued in the same
way as they would be valued for purposes of computing the net
asset value of the applicable Portfolio. If payment is made in
securities, a shareholder may incur transaction expenses in
converting those securities into cash. The Fund has elected,
however, to be governed by Rule 18f-1 under the 1940 Act, as a
result of which the Fund, on behalf of the Portfolios, is
obligated to redeem shares solely in cash if the redemption
requests are made by one shareholder account up to the lesser
of $250,000 or 1% of the net assets of the applicable Portfolio
during any 90-day period. This election is irrevocable unless
the SEC permits its withdrawal.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities on a
securities exchange are effected by brokers, and the Portfolios
pay brokerage commissions for this service. In the
over-the-counter market, securities are generally traded on a
"net" basis with dealers acting as principal for their own
accounts without a stated commission, although the price of the
security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. During the fiscal years ended December
31, 1995, 1994 and 1993, the Fund paid total brokerage
commissions of $116,972, $61,503, and $71,627, respectively,
for the Growth Portfolio, and $11,851, $14,428, and $16,817,
respectively, for the Growth and Income Portfolio.
The primary objective in placing orders on behalf of the
Portfolios for the purchase and sale of securities is to obtain
best execution at the most favorable prices through responsible
broker-dealers and, where commission rates are negotiable, at
competitive rates. Although the Portfolios may pay higher
commissions in return for brokerage and research services, it
must be determined that such commission is reasonable in
relation to the value of the brokerage and/or research services
that have been provided. In selecting a broker or dealer, RSMC
and each portfolio adviser consider, among other things, (i)
the price of the securities to be purchased or sold; (ii) the
rate of the commission; (iii) the size and difficulty of the
<PAGE>
order; (iv) the reliability, integrity, financial condition,
general execution and operational capability of any competing
broker or dealer; (v) the value and quality of the brokerage
and research services provided to RSMC, the portfolio advisers
or to the Fund; and (vi) the level of any brokerage commissions
paid to any broker or dealer who is an affiliate of RSMC or of
a portfolio adviser ("Affiliated Broker").
RSMC and the portfolio advisers cannot readily determine
the extent to which commission rates or net prices charged by
broker-dealers reflect the value of their research services.
In such cases, RSMC and the portfolio advisers receive services
they otherwise might have had to perform themselves. The
research services provided by brokers or dealers can be useful
to RSMC and the portfolio advisers in serving their other
clients, as well as in serving the Fund. Conversely,
information provided to RSMC and the portfolio advisers by
brokers or dealers who have executed transaction orders on
behalf of other portfolio advisers' or RSMC's clients may be
useful to RSMC and the portfolio advisers in providing services
to the Fund. During the fiscal year ended December 31, 1995,
the Growth and the Growth and Income Portfolios paid $31,364
and $279, respectively, in brokerage commissions, amounting to
26.81% and 2.35% of each respective Portfolio's aggregate
brokerage commissions for the year, involving transactions in
the amount of $13,094,255 and $151,757, respectively, to
brokers because of research services provided. The Portfolios
may purchase and sell portfolio securities to and from dealers
who provide the Portfolios with research services. Portfolio
transactions will not be directed by the Portfolios to dealers
solely on the basis of research services provided.
In order for an Affiliated Broker to effect any portfolio
transactions for the Portfolios, the commissions, fees or other
remuneration received by the Affiliated Broker must be
reasonable and fair compared to the commissions, fees or other
remuneration paid to other brokers in connection with
comparable transactions involving similar securities being
purchased or sold on an exchange during a comparable period of
time. This standard allows an Affiliated Broker to receive no
more than the remuneration which would be expected to be
received by an unaffiliated broker in a commensurate
arms-length transaction. The Fund's Board of Trustees has
adopted procedures in conformity with Rule 17e-1 under the 1940
Act to ensure that all brokerage commissions paid to Affiliated
Brokers are reasonable and fair. During the fiscal years ended
December 31, 1995 and 1994, the Fund did not pay any brokerage
commissions to Affiliated Brokers.
Some of the portfolio advisers' and RSMC's other clients
have investment objectives and programs similar to that of the
Portfolios. Occasionally, RSMC and the portfolio advisers may
make recommendations to other clients which result in their
purchasing or selling securities simultaneously with the
Portfolios. Consequently, the demand for securities being
purchased or the supply of securities being sold may increase,
and this could have an adverse effect on the price of those
securities. It is the policy of RSMC and the portfolio
<PAGE>
advisers not to favor one client over another in making
recommendations or in placing orders. When two or more clients
are simultaneously engaged in the purchase or sale of the same
security and if the entire order cannot be made in a single
order, the securities are allocated among clients in a manner
believed to be equitable to each. If two or more of the
clients of RSMC and the portfolio advisers simultaneously
purchase or sell the same security, RSMC and the portfolio
advisers allocate the prices and amounts according to a formula
considered by the officers of each affected investment company
and by the officers of WTC and its affiliates to be equitable
to each account. While in some cases this practice could have
a detrimental effect upon the price or the value of the
security as far as a Portfolio is concerned, or upon its
ability to complete its entire order, in other cases it is
believed that coordination and the ability to participate in
volume transactions will be beneficial to the Portfolios.
PORTFOLIO TURNOVER. The portfolio turnover rate is
calculated by dividing the lesser of the Portfolio's annual
purchases or sales of portfolio securities for the particular
fiscal year by the monthly average value of the portfolio
securities owned by the Portfolio during the year. All
securities, including options, whose maturity or the expiration
date at the time of acquisition was one year or less are to be
excluded from both the numerator and the denominator.
NET ASSET VALUE
In valuing a Portfolio's assets, a security listed on the
Exchange (and not subject to restrictions against sale by the
Portfolio on the Exchange) will be valued at its last sale
price on the Exchange on the day the security is valued.
Lacking any sales on such day, the security will be valued at
the mean between the closing asked price and the closing bid
price. Securities listed on other exchanges (and not subject
to restriction against sale by the Portfolio on such exchanges)
will be similarly valued, using quotations on the exchange on
which the security is traded most extensively. Unlisted
securities which are quoted on the National Association of
Securities Dealers' National Market System, for which there
have been sales of such securities on such day, shall be valued
at the last sale price reported on such system on the day the
security is valued. If there are no such sales on such day,
the value shall be the mean between the closing asked price and
the closing bid price. The value of such securities quoted on
the Nasdaq Stock Market System, but not listed on the National
Market System, shall be valued at the mean between the closing
asked price and the closing bid price. Unlisted securities
which are not quoted on the Nasdaq Stock Market System and for
which over-the-counter market quotations are readily available
will be valued at the mean between the current bid and asked
prices for such security in the over-the-counter market. Other
unlisted securities (and listed securities subject to
restriction on sale) will be valued at fair value as determined
in good faith under the direction of the Board of Trustees
although the actual calculation may be done by others.
<PAGE>
Short-term investments with remaining maturities of less than
61 days are valued at amortized cost.
PERFORMANCE INFORMATION
The performance of a Portfolio may be quoted in terms of
its total return in advertising and other promotional materials
("performance advertisements"). Performance data quoted
represents past performance and is not intended to indicate
future performance. The investment return and principal value
of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original
cost. Performance of each Portfolio will vary based on changes
in market conditions and the level of each Portfolio's
expenses.
TOTAL RETURN CALCULATIONS. Average annual total return
quotes used in the Portfolios' performance advertisements are
calculated according to the following formula:
P (1 + T)n = ERV
where: P = hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at end of the
period of a hypothetical $1,000
payment made at the beginning of
that period.
Under the foregoing formula, the time periods used in
performance advertisements will be based on rolling calendar
quarters, updated to the last day of the most recent calendar
quarter prior to submission of the advertisement for
publication. Average annual total return, or "T" in the
formula above, is computed by finding the average annual
compounded rate of return over the period that would equate the
initial amount invested to the ending redeemable value ("ERV").
In calculating the ERV for standardized average annual total
return, each Portfolio's maximum 4.00% sales load is deducted
from the initial $1,000 payment and all dividends and other
distributions by the Portfolio are assumed to have been
reinvested at net asset value on the reinvestment date during
the period. The following table reflects the Portfolios'
standardized and non standardized average annual total returns
for the periods stated below:
<PAGE>
AVERAGE ANNUAL TOTAL RETURN - GROWTH PORTFOLIO
106 MONTHS SINCE
INCEPTION
1 YEAR 5 YEARS FEB. 26, 1987
ENDED ENDED THROUGH
SALES LOAD(4) DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1995
------------- ------------- ------------- -------------
4.00% 23.29% 16.14% 11.11%
None 28.43% 17.09% 11.62%
AVERAGE ANNUAL TOTAL RETURN - GROWTH AND INCOME PORTFOLIO
105 MONTHS SINCE
INCEPTION
1 YEAR 5 YEARS MARCH 24, 1987
ENDED ENDED THROUGH
SALES LOAD(4) DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1995(5)
------------- ------------- ------------- ----------------
4.00% 20.99% 11.63% 8.32%
None 26.03% 12.55% 8.82%
- ---------------
4 The Growth Portfolio's and the Growth and Income
Portfolio's maximum sales load were each reduced on November
25, 1991 from 5.75% to 4.00%. The lower maximum sales load is
reflected in the standardized average annual total return set
forth in this table.
5 The performance of the Growth and Income Portfolio
prior to December 21, 1990, the date on which it changed its
name and investment objective, is required to be included in
the standardized average annual total return calculation but
does not necessarily reflect what the Growth and Income
Portfolio's performance would have been under its current
objective.
- ---------------
Because shares of the Portfolios may be purchased at a
reduced sales load or without a sales load under certain
circumstances, non standardized average annual total return is
also computed without deducting the sales load from the initial
$1,000 payment for the ERV calculation. The Portfolios may
also from time to time include in such advertising and
promotional materials additional non standardized total return
figures that are not calculated according to the formula set
forth above ("cumulative total return"). The Portfolios
calculate cumulative total return for a specific period of time
by assuming the investment of $1,000 in Portfolio shares and
assuming the reinvestment of each dividend and other
distribution at net asset value. Percentage rates of return
are then determined by subtracting the value of the investment
at the beginning of the period from the ending value and by
<PAGE>
dividing the remainder by the beginning value. The Portfolios
do not take sales loads into account in calculating cumulative
total return; the inclusion of such loads would reduce such
return. The Growth Portfolio's cumulative total return was,
for the fiscal year ended December 31, 1995: 28.43%; for the
five-years ended December 31, 1995: 120.13%; and for the
period since the Portfolio's inception on February 26, 1987
through December 31, 1995: 164.72%. The Growth and Income
Portfolio's cumulative total return was, for the fiscal year
ended December 31, 1995: 26.03%; for the five-years ended
December 31, 1995: 80.58%; and for the period since the
Portfolio's inception on March 24, 1987 through December 31,
1995: 110.11%.
Average annual and cumulative total returns for the
Portfolios may be quoted as a dollar amount, as well as a
percentage, and may be calculated for a series of investments
or a series of redemptions, as well as for a single investment
or a single redemption, over any time period. Total returns
may be broken down into their components of income and capital
gain (including capital gain distributions and changes in share
price) to illustrate the relationship of those factors and
their contributions to total return.
The following tables show the income and capital elements
of each Portfolio's total return and compares them to the cost
of living (as measured by the Consumer Price Index) over the
same periods. During the periods quoted, interest rates and
bond prices fluctuated widely; the table should not be
considered representative of the dividend income or capital
gain or loss that could be realized from an investment in
either Portfolio today.
During the periods from February 26, 1987 (Commencement of
Operations) through December 31, 1995 for the Growth Portfolio
and March 24, 1987 (Commencement of Operations) through
December 31, 1995 for the Growth and Income Portfolio, a
hypothetical $10,000 investment in each Portfolio would have
grown to $26,472 and $21,011, respectively, assuming all
distributions were reinvested and no sales load was paid.
<PAGE>
GROWTH PORTFOLIO
Value of Value of Value of Increase in
Initial Reinvested Reinvested Cost of Living
Period Ended $10,000 Income Capital Gain (Consumer
December 31 Investment Dividends Distributions Total Value Price Index)
- ------------ ---------- --------- ------------- ----------- ------------
1995 $17,410 $732 $8,330 $26,472 37.5%
1994 $15,140 $636 $4,836 $20,612 34.1%
1993 $16,390 $689 $3,581 $20,660 30.6%
1992 $15,560 $654 $1,820 $18,034 27.2%
1991 $15,680 $659 $ 682 $17,021 23.6%
1990 $11,590 $423 $ 12 $12,025 19.9%
1989 $12,620 $331 - $12,951 13.0%
1988 $10,050 $136 - $10,186 8.0%
1987(6) $ 8,370 $ 52 - $ 8,422 3.4%
- ---------------
6 From commencement of operations, February 26, 1987.
- ---------------
Explanatory Note: A hypothetical initial investment of
$10,000 on February 26, 1987, together with the aggregate cost
of reinvested dividends and other distributions for the entire
period covered (their cash value at the time they were
reinvested), would have amounted to $18,175. If dividends and
other distributions had not been reinvested, the total value of
the investment in the Growth Portfolio over time would have
been smaller, and cash payments for the period would have
amounted to $471 for income dividends and $6,311 for other
distributions. This table does not reflect tax consequences or
the Growth Portfolio's 4.00% maximum sales load, which would
reduce the year-end values of the $10,000 investment from those
shown here.
<PAGE>
GROWTH AND INCOME PORTFOLIO
Value of Value of Value of Increase in
Initial Reinvested Reinvested Cost of Living
Period Ended $10,000 Income Capital Gain (Consumer
December 31 Investment Dividends Distributions Total Value Price Index)
- ------------ ---------- --------- ------------- ----------- ------------
1995 $ 9,470 $2,236 $9,305 $21,011 36.9%
1994 $ 8,330 $1,732 $6,609 $16,671 33.5%
1993 $ 9,290 $1,729 $6,682 $17,701 30.1%
1992 $10,510 $1,658 $3,324 $15,492 26.6%
1991 $12,090 $1,674 $ 866 $14,630 23.0%
1990 $10,470 $1,165 - $11,635 19.4%
1989 $10,980 $ 805 - $11,785 12.5%
1988 $ 8,810 $ 389 - $ 9,199 7.5%
1987(7) $ 8,510 $ 129 - $ 8,639 2.9%
- ---------------
7 From commencement of operations, March 24, 1987.
- ---------------
Explanatory Note: A hypothetical initial investment of
$10,000 made on March 24, 1987, together with the aggregate
cost of reinvested dividends and other distributions for the
entire period covered (their cash value at the time they were
reinvested), would have amounted to $21,952. If dividends and
other distributions had not been reinvested, the total value of
the investment in the Growth and Income Portfolio over time
would have been smaller, and cash payments for the period would
have amounted to $1,941 for income dividends and $6,554 for
other distributions. This table does not reflect tax
consequences or the Growth and Income Portfolio's 4.00% maximum
sales load, which would reduce the year-end values of the
$10,000 investment from those shown here.
The preceding performance figures were affected by fee
waivers and reimbursement of the Portfolios' expenses by the
Portfolios' service providers during the relevant time periods.
Without such waivers and reimbursements, the total return
figures quoted above would have been lower.
The Fund may also from time to time along with performance
advertisements, present its investments in the form of the
"Schedule of Investments" included in the Annual Report to the
shareholders of the Fund as of and for the fiscal year ended
December 31, 1995, a copy of which is attached hereto and
incorporated by reference.
<PAGE>
COMPARISON OF PORTFOLIO PERFORMANCE
A comparison of the quoted performance offered for various
investments is valid only if performance is calculated in the
same manner. Since there are many methods of calculating
performance, investors should consider the effects of the
methods used to calculate returns when comparing returns on
shares of a Portfolio with returns quoted with respect to other
investment companies or types of investments.
In connection with communicating its total return to
current or prospective shareholders, a Portfolio also may
compare these figures to the performance of other mutual funds
tracked by mutual fund rating services or to other unmanaged
indexes which may assume reinvestment of dividends but
generally do not reflect deductions for administrative and
management costs. The return of a Portfolio may be compared to
relevant domestic indexes. Examples include but are not
limited to the Standard & Poor's 500 Composite Stock Price
Index, a widely followed, capitalization weighted index
containing 500 of the largest publicly traded stocks. The
total return of these unmanaged indexes assumes the
reinvestment of all dividends and other distributions, if
applicable, paid by the indexed stocks. Comparisons to these
indexes may be used in advertisements, shareholder reports and
otherwise.
From time to time, in marketing and other literature, a
Portfolio's performance may be compared to the performance of
broad groups of mutual funds with similar investment goals, as
tracked by independent organizations such as, Investment
Company Data, Inc., Lipper Analytical Services, Inc. ("Lipper")
(a mutual fund research firm which analyzes over 1,800 mutual
funds), CDA Investment Technologies, Inc., Morningstar, Inc.
and other independent organizations. When Lipper's tracking
results are used, the Portfolio will be compared to Lipper's
appropriat fund category, that is, by fund objective and
portfolio holdings. Rankings may be listed among one or more
of the asset-size classes as determined by Lipper. When
other organizations' tracking results are used, a Portfolio
will be compared to the appropriate fund category, that is,
by fund objective and portfolio holdings, or to the
appropriate volatility grouping, where volatility is a measure
of a fund's risk.
Since the assets in all funds are always changing, a
Portfolio may be ranked within one asset-size class at one time
and in another asset-size class at some other time. In
addition, the independent organization chosen to rank the
Portfolio in marketing and promotional literature may change
from time to time depending upon the basis of the independent
organization's categorizations of mutual funds, changes in a
Portfolio's investment policies and investments, a Portfolio's
asset size and other factors deemed relevant. Advertisements
and other marketing literature will indicate the time period
and Lipper asset-size class, as applicable, for the ranking in
question.
Evaluations of Portfolio performance made by independent
sources may also be used in advertisements concerning a
<PAGE>
Portfolio, including reprints of, or selections from,
editorials or articles about the Portfolio. Sources for
Portfolio performance information and articles about a
Portfolio may include the following:
ASIAN WALL STREET JOURNAL, a weekly Asian newspaper that often
reviews U.S. mutual funds investing internationally.
BARRON'S, a Dow Jones and Company, Inc. business and financial
weekly that periodically reviews mutual fund performance data.
BUSINESS WEEK, a national business weekly that periodically
reports the performance rankings and ratings of a variety of
mutual funds investing abroad.
CDA INVESTMENT TECHNOLOGIES, INC., an organization that
provides performance and ranking information through examining
the dollar results of hypothetical mutual fund investments and
comparing these results against appropriate market indexes.
CHANGING TIMES, The Kiplinger Magazine, a monthly investment
advisory publication that periodically features the performance
of a variety of securities.
CONSUMER DIGEST, a monthly business/financial magazine that
includes a "Money Watch" section featuring financial news.
FINANCIAL TIMES, Europe's business newspaper, which features
from time to time articles on international or country-specific
funds.
FINANCIAL WORLD, a general business/financial magazine that
includes a "Market Watch" department reporting on activities in
the mutual fund industry.
FORBES, a national business publication that from time to time
reports the performance of specific investment companies in the
mutual fund industry.
FORTUNE, a national business publication that periodically
rates the performance of a variety of mutual funds.
THE FRANK RUSSELL COMPANY, a West-Coast investment management
firm that periodically evaluates international stock markets
and compares foreign equity market performance to U.S. stock
market performance.
GLOBAL INVESTOR, a European publication that periodically
reviews the performance of U.S. mutual funds investing
internationally.
INVESTMENT COMPANY DATA, INC., an independent organization that
provides performance ranking information for broad classes of
mutual funds.
INVESTOR'S DAILY, a daily newspaper that features financial,
economic, and business news.
<PAGE>
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE
ANALYSIS, a weekly publication of industry-wide mutual fund
averages by type of fund.
MONEY, a monthly magazine that from time to time features both
specific funds and the mutual fund industry as a whole.
MUTUAL FUND VALUES, a biweekly Morningstar, Inc. publication
that provides ratings of mutual funds based on fund
performance, risk and portfolio characteristics.
THE NEW YORK TIMES, a nationally distributed newspaper that
regularly covers financial news.
PERSONAL INVESTING NEWS, a monthly news publication that often
reports on investment opportunities and market conditions.
PERSONAL INVESTOR, a monthly investment advisory publication
that includes a "Mutual Funds Outlook" section reporting on
mutual fund performance measures, yields, indexes and portfolio
holdings.
SUCCESS, a monthly magazine targeted to the world of
entrepreneurs and growing business, often featuring mutual fund
performance data.
USA TODAY, the nation's number one daily newspaper.
U.S. NEWS AND WORLD REPORT, a national business weekly that
periodically reports mutual fund performance data.
WALL STREET JOURNAL, a Dow Jones and Company, Inc. newspaper
that regularly covers financial news.
WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual
compendium of information about mutual funds and other
investment companies, including comparative data on funds'
backgrounds, management policies, salient features, management
results, income and dividend records, and price ranges.
TAXES
GENERAL. Each Portfolio is treated as a separate
corporation for federal income tax purposes. In order to
continue to qualify for treatment as a RIC, each Portfolio must
distribute to its shareholders for each taxable year at least
90% of its investment company taxable income (consisting
generally of net investment income plus net short-term capital
gain) and must meet several additional requirements. For each
Portfolio, these requirements include the following: (a) the
Portfolio must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition
of securities, or other income (including gains from options)
derived with respect to its business of investing in securities
("Income Requirement"); (b) the Portfolio must derive less than
30% of its gross income each taxable year from the sale or
<PAGE>
other disposition of securities or options held for less than
three months ("Short-Short Limitation"); (c) at the close of
each quarter of the Portfolio's taxable year, at least 50% of
the value of its total assets must be represented by cash and
cash items, U.S. Government securities and other securities,
with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of
the Portfolio's total assets and that does not represent more
than 10% of the issuer's outstanding voting securities; and (d)
at the close of each quarter of the Portfolio's taxable year,
not more than 25% of the value of its total assets may be
invested in securities (other than U.S. Government securities)
of any one issuer.
If either Portfolio failed to qualify for treatment as a
RIC in any taxable year, it would be subject to tax on its
taxable income at corporate rates and all distributions from
earnings and profits, including any distributions from net tax-
exempt income and net capital gain (the excess of net long-term
capital gains over net short-term capital loss), would be
taxable to its shareholders as ordinary income. In addition,
that Portfolio could be required to recognize unrealized gains,
pay substantial taxes and interest and make substantial
distributions before requalifying as a RIC.
DISTRIBUTIONS. Each Portfolio will be subject to a
nondeductible 4% excise tax to the extent it fails to
distribute by the end of any calendar year substantially all of
its ordinary income for that year and its capital gain net
income for the one-year period ending on October 31 of that
year, plus certain other amounts. With respect to the capital
gain net income measurement period, the Growth Portfolio has
made an election to substitute its tax year, which ends on
December 31, for the one-year period ending on October 31. For
this and other purposes, dividends and other distributions
declared in October, November or December of any year and
payable to shareholders of record on a date in one of those
months will be deemed to have been paid by a Portfolio and
received by its shareholders on December 31 of that year if
they are paid by the Portfolio during the following January.
Accordingly, such distributions will be taxed to the
shareholders for the year in which that December 31 falls.
It is anticipated that all or a portion of the dividends
from each Portfolio's net investment income will qualify for
the dividends-received deduction allowed to corporations. The
qualifying portion for a Portfolio may not exceed the aggregate
dividends received by the Portfolio from U.S. corporations.
However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are
subject indirectly to the alternative minimum tax. Moreover,
the dividends-received deduction will be reduced to the extent
the shares with respect to which the dividends are received are
treated as debt-financed and will be eliminated if those shares
are deemed to have been held for less than 46 days.
Distributions of net short-term capital gain and net capital
gain are not eligible for the dividends-received deduction.
<PAGE>
Any loss realized by a shareholder upon the redemption of
shares within six months from the date of their purchase will
be treated as a long-term, instead of a short-term, capital
loss to the extent of any capital gain distributions to that
shareholder with respect to those shares.
Distributions by a Portfolio from net investment income or
capital gains will result in a reduction in the net asset value
of the Portfolio's shares. Should a distribution reduce the
net asset value below a shareholder's cost basis, the
distribution nevertheless will be taxable to the shareholder
even though, from an investment standpoint, it may constitute a
partial return of capital. In particular, investors should be
careful to consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that
time includes the amount of the forthcoming distribution.
Those investors purchasing shares just prior to a distribution
will receive a partial return of their investment upon the
distribution that nevertheless will be taxable to them.
If a Portfolio makes a distribution to shareholders in
excess of its current and accumulated "earnings and profits" in
any taxable year, the excess distribution will be treated by
each shareholder as a return of capital to the extent of the
shareholder's tax basis and thereafter as capital gain.
Although a return of capital is not taxable, it does reduce a
shareholder's tax basis.
Special rules apply when a shareholder (1) disposes of
shares of a Portfolio through a redemption or exchange within
90 days after purchase thereof and (2) subsequently reacquires
shares of that Portfolio or acquires shares of any other Rodney
Square fund (including the other Portfolio) on which a sales
load normally is imposed without paying any sales load because
of the reinstatement privilege or the exchange privilege. (See
"Redemption of Shares" and "Exchange of Shares" in the
Prospectus.) In these cases, any gain on the disposition of
the original Portfolio shares will be increased, or the loss
thereon decreased, by the amount of the sales load paid when
the shares were acquired; and that amount will increase the
adjusted basis of the shares subsequently acquired. Moreover,
if the reinstatement privilege is exercised (or shares of a
Portfolio are redeemed within 30 days after other shares of
that Portfolio are purchased), gain on the redemption
nevertheless will be taxable, but any loss arising out of the
redeemed shares will not be deductible to the extent of the
amount of shares purchased and an adjustment will be made to
the shareholder's basis for the newly purchased shares.
TAX TREATMENT OF OPTIONS. The use of options involves
complex rules that determine for income tax purposes the
character and timing of recognition of the gains and losses a
Portfolio realizes in connection therewith and thereby affect,
among other things, the amount of income that is available for
distribution to shareholders. Income from transactions in
options derived by a Portfolio with respect to its business of
investing in securities qualifies as permissible income under
the Income Requirement. Income from the sale or other
<PAGE>
disposition of options held for less than three months,
however, will be subject to the Short-Short Limitation.
If a Portfolio satisfies certain requirements, any
increase in value of a position that is part of a "designated
hedge" will be offset by any decrease in value (whether
realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the
Portfolio satisfies the Short-Short Limitation. Thus, only the
net gain (if any) from the designated hedge will be included in
gross income for purposes of that limitation. The Portfolios
anticipate engaging in hedging transactions that are intended
to qualify for this treatment, but at the present time it is
not clear whether this treatment will be available for all of
the Portfolios' hedging transactions. To the extent this
treatment is not available, a Portfolio may be forced to defer
the closing out of certain options beyond the time when it
otherwise would be advantageous to do so, in order for the
Portfolio to continue to qualify as a RIC.
A Portfolio's use of options strategies may create
"straddles" for federal income tax purposes, which may result
in the deferral of losses, adjustments in the holding periods
of securities held by the Portfolio and conversion of
short-term capital losses into long-term capital losses. Each
Portfolio monitors its transactions in options and may make
certain tax elections in order to mitigate these consequences
and prevent disqualification of the Portfolio as a RIC.
WASH SALES. The "wash sale" rules of the Code generally
postpone deduction of a loss incurred upon the disposition of
securities if, within 30 days before or after the disposition,
the taxpayer acquires, or enters into a contract or purchases
an option to acquire, substantially identical securities.
Because a portfolio adviser of a Portfolio may not be fully
aware, on a current basis, of purchases and sales effected by
the other portfolio adviser of the same Portfolio, it is
possible that a loss incurred upon the sale of certain
securities by one portfolio adviser may not be deductible
currently for tax purposes, because the other portfolio adviser
has purchased or does purchase, within the applicable period,
substantially identical securities. Each Portfolio attempts to
reduce the likelihood of adverse tax consequences from the
operation of the wash sale rules by making each of its
portfolio advisers aware of losses sustained by its other
portfolio advisers.
DESCRIPTION OF THE FUND
The Fund is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances,
be held personally liable for the obligations of the trust.
However, the Fund's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or
<PAGE>
executed by the Fund or the Trustees. The Declaration of Trust
provides for indemnification out of the assets of the
applicable Portfolio of any shareholder held personally liable
solely by virtue of ownership of shares of a Portfolio. The
Declaration of Trust also provides that the applicable
Portfolio shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the
Portfolio and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss because of shareholder
liability is limited to circumstances in which a Portfolio
itself would be unable to meet its obligations. RSMC believes
that, in view of the above, the risk of personal liability to
shareholders is remote.
The Fund's Declaration of Trust further provides that the
Trustees will not be liable for neglect or wrong doing provided
they have exercised reasonable care and have acted in the
reasonable belief that their actions are in the best interest
of the Fund, but nothing in the Declaration of Trust protects
or indemnifies a Trustee against any liability to which he or
she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of his or her office.
The shares of each Portfolio that are issued by the Fund
are fully paid and nonassessable. The assets of the Fund
received for the issuance or sale of Portfolio shares and all
income, earnings, profits and proceeds therefrom, subject only
to the right of creditors, are allocated to the respective
Portfolio and constitute the underlying assets of that
Portfolio. The underlying assets of each Portfolio are
segregated on the books of account and are charged with the
liabilities in respect to such Portfolio and with a share of
the general liabilities of the Fund. Expenses with respect to
the Portfolios are allocated in proportion to the net asset
values of the respective Portfolios except where allocations of
direct expenses can otherwise be fairly made. The officers of
the Fund, subject to the general supervision of the Board of
Trustees, have the power to determine which liabilities are
allocable to a given Portfolio or which are general or
allocable to the two Portfolios.
The Declaration of Trust provides that the Fund will
continue indefinitely unless a majority of the shareholders of
the Fund or a majority of the shareholders of the affected
Portfolio approve: (a) the sale of the Fund's assets or the
Portfolio's assets to another diversified open-end management
investment company; or (b) the liquidation of the Fund or the
Portfolio. In the event of the liquidation of the Fund or a
Portfolio, affected shareholders are entitled to receive the
assets of the Fund or Portfolio that are available for
distribution.
OTHER INFORMATION
INDEPENDENT AUDITORS. Ernst & Young LLP, 1 North Charles
Street, Baltimore, MD 21201, serves as the Fund's independent
auditors, providing services which include (1) audit of the
<PAGE>
annual financial statements for the Portfolios, (2) assistance
and consultation in connection with SEC filings and (3)
preparation of the annual federal and state income tax returns
filed on behalf of each Portfolio.
The financial statements and financial highlights of the
Portfolios appearing or incorporated by reference in the Fund's
Prospectus and this Statement of Additional Information have
been audited by Ernst & Young LLP, independent auditors, to the
extent indicated in their reports thereon also appearing
elsewhere herein and in the Registration Statement or
incorporated by reference. Such financial statements have been
included herein or incorporated herein by reference in reliance
upon such reports given upon the authority of such firm as
experts in accounting and auditing.
LEGAL COUNSEL. Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., 2nd Floor, Washington, DC 20036,
serves as counsel to the Fund.
CUSTODIAN. Wilmington Trust Company, Rodney Square North,
1100 N. Market Street, 2nd floor, Wilmington, DE 19890-0001,
serves as the Fund's Custodian.
TRANSFER AGENT. Rodney Square Management Corporation,
Rodney Square North, 1100 N. Market Street, Wilmington, DE
19890-0001, serves as the Fund's Transfer Agent and Dividend
Paying Agent. The Fund pays RSMC $7 and $10 for the Growth
Portfolio and the Growth and Income Portfolio, respectively,
per account per year plus various other transaction fees,
subject to a minimum fee of $1,000 per month, plus out-of-
pocket expenses.
SUBSTANTIAL SHAREHOLDERS. As of March 31, 1996, WTC owned
of record 92.3% of the shares of the Growth Portfolio,
including 77.4% owned beneficially, all on behalf of its
customer accounts. As of such date, WTC owned of record 73.5%
of the shares of the Growth and Income Portfolio, including
59.3% owned beneficially, all on behalf of its customer
accounts. In addition, as of March 31, 1996, Morris, Nichols,
Arsht & Tunnell Profit Sharing Plan, for which WTC serves as
plan trustee, beneficially owned 11.3% of the Growth and Income
Portfolio.
FINANCIAL STATEMENTS
The Schedule of Investments as of December 31, 1995 for
each of the Portfolios; the Statement of Assets and Liabilities
as of December 31, 1995 for each of the Portfolios; the
Statement of Operations for the fiscal year ended December 31,
1995 for each of the Portfolios; the Statement of Changes in
Net Assets for the fiscal years ended December 31, 1995 and
December 31, 1994 for each of the Portfolios; the Financial
Highlights for the fiscal years ended December 31, 1995, 1994,
1993, 1992 and 1991 for each of the Portfolios; and the Notes
to the Financial Statements and the Report of Independent
Auditors, each of which is included in the Annual Report to the
<PAGE>
shareholders of the Fund as of and for the fiscal year ended
December 31, 1995, are attached hereto, and are hereby
incorporated by reference.
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
PRESIDENT'S MESSAGE
- ------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The management of Rodney Square Multi-Manager Fund would like to report
to you on the Fund's activity for the year ended December 31, 1995.
PORTFOLIO REVIEW*
The stock market during 1995 proved quite rewarding for most investors as
reflected by the Portfolios' investment returns. The total returns presented
below represent changes in market value plus any income or capital gains
distributed during the year, assume distributions are reinvested, and do not
reflect the effect of a sales load.
NET ASSET
VALUE AS OF CAPITAL GAINS & NET ASSET VALUE TOTAL RETURN
PORTFOLIO 12/31/94 INCOME DISTRIBUTED AS OF 12/31/95 1/1/95-12/31/95
- ---------- ----------- ------------------ --------------- ---------------
Growth $15.14 $2.01 $17.41 28.4%
Growth and
Income 8.33 1.01 9.47 26.0%
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The overall strength of U.S. financial markets helped push a number of
domestic stock indices to record levels in 1995. The Standard & Poor's 500
Index ("S&P 500"), an unmanaged, capitalization weighted index of five hundred
publicly traded stocks, achieved a 37.6% gain for the year. The Russell 2000,
comprised of the smallest 2000 stocks out of the 3000 largest U.S. companies,
based on market capitalization, was up 28.4% for the year. Among mutual funds
with similar objectives, the Growth Portfolio's 28.4% return compared to the
average return of 30.8% for all growth funds, as measured by Lipper Analytical
Services ("Lipper"). The Growth and Income Portfolio's return of 26.0%
compared to the 30.9% average return of the Lipper growth and income funds
category.
- ----------------------------------
* PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUES MAY FLUCTUATE, SO THAT, WHEN
REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. AN
INVESTMENT IN THE PORTFOLIOS IS NEITHER INSURED NOR GUARANTEED BY
<PAGE>
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 TOTAL RETURNS DO NOT REFLECT THE
EFFECT OF THE MAXIMUM SALES LOAD OF 4.00%. SOME RETURNS ARE HIGHER DUE
TO THE MANAGER'S MAINTENANCE OF EXPENSES. SEE FINANCIAL HIGHLIGHTS ON
PAGES 22 AND 23.
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
PRESIDENT'S MESSAGE-CONTINUED
- ------------------------------------------------------------------------------
The forces behind the rally in stocks during 1995 were low interest
rates, expanding earnings, modest inflation and a strong dollar. During 1995,
larger capitalization stocks generally outperformed small capitalization
("small cap") stocks as a slow growing economy and budget worries in
Washington led investors toward larger, more defensive, stocks. It also
became evident that small cap stocks, especially technology-oriented
companies, were not immune from the business cycle. The inability to maintain
earnings growth in the face of slowing consumer spending and pricing pressure
stalled the surprising rally in small cap stocks in 1995. Hence, technology
stocks, market leaders for the first nine months of 1995, fell sharply during
the fourth quarter.
THE GROWTH PORTFOLIO
The Growth Portfolio's small cap stock orientation led the advisers of
the Portfolio to large holdings of technology stocks during 1995. Many of
these stocks posted excellent returns, despite the year end sell off in the
sector. Frontier Capital Management Co. held almost half of its portfolio in
technology oriented companies like SCI Systems, Inc., which manufactures
computers for other computer companies. William Blair & Co. ("Blair")
emphasized companies with niche products and services that offer franchise-
like cash flow. Blair, in addition to holding technology stocks such as
Microsoft Corp. and Xilinx, Inc., also concentrated in specialty financial
companies like credit card issuer MBNA Corp.
[GRAPHICAL REPRESENTATION (POINTS AND LINES) REQUIRED BY ITEM 5A OF FORM N-1A]
[FOLLOWING ARE GRAPH POINTS AND TOTAL RETURNS]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT*
<TABLE>
<CAPTION>
Feb-87 Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth
Portfolio $10,000 $9,500 $10,100 $14,000 $14,000 $16,000 $18,000 $20,000 $20,500 $30,000
S&P 500
Index $9,900 $9,400 $10,000 $13,000 $12,000 $15,000 $17,000 $19,500 $19,500 $25,000
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR INCEPTION
------ ------ ---------
FUND** 23.29% 16.14% 11.11%
FUND*** 28.43% 17.09% 11.62%
INDEX 37.58% 16.60% 12.61%
- ------------------------------
<PAGE>
* PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RETURNS ARE HIGHER
DUE TO MAINTENANCE OF THE PORTFOLIO'S EXPENSES BY RODNEY SQUARE
MANAGEMENT CORP. SEE FINANCIAL HIGHLIGHTS ON PAGE 22.
** THESE VALUES REFLECT THE EFFECT OF THE MAXIMUM SALES LOAD OF 4.00%.
*** THESE VALUES DO NOT REFLECT THE EFFECT OF THE SALES LOAD.
2
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
PRESIDENT'S MESSAGE-CONTINUED
- ------------------------------------------------------------------------------
THE GROWTH AND INCOME PORTFOLIO
The advisers of the Growth and Income Portfolio took advantage of the
positive moves by larger company stocks during 1995. Sirach Capital
Management, Inc. ("Sirach") found value in the finance and healthcare sectors
with holdings in Citicorp and Johnson & Johnson. Returns from these sectors
reflect the move that occurred in the second half of 1995 toward larger
companies with more predictable growth characteristics. Wedge Capital
Management L.L.P. ("Wedge") also took advantage of the merger and acquisition
activity in financial stocks with holdings in banks such as Chemical Banking
Corp. and First Union Corp. Wedge's holdings in oil companies such as British
Petroleum Co. Ltd. and Royal Dutch Petroleum Co., benefited from the firming
of energy prices in 1995. Because of its value disciplines, Wedge held a
relatively large cash position throughout the year.
All of the advisers generally agree that 1996 will not be a repeat of
1995. They agree the key for success in 1996 will be the ability to find
value in individual stocks as opposed to entire sectors. Each of our advisers
employ various valuation screens designed to isolate those companies with the
best characteristics for future growth. We feel strongly that this, combined
with the multi-manager format, which allows investors to reduce their
investment volatility through multiple investment approaches, will deliver
superior returns. Rodney Square Management Corporation will continue to
review and evaluate the individual advisers in an effort to deliver above
average performance for our shareholders.
[GRAPHICAL REPRESENTATION (POINTS AND LINES) REQUIRED BY ITEM 5A OF FORM N-1A]
[FOLLOWING ARE GRAPH POINTS AND TOTAL RETURNS]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT*
<TABLE>
<CAPTION>
Feb-87 Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and
Income Portfolio $10,000 $9,500 $10,100 $14,000 $14,000 $16,000 $18,000 $20,000 $20,500 $30,000
S&P 500 Index $9,900 $9,400 $10,000 $13,000 $12,000 $15,000 $17,000 $19,500 $19,500 $25,000
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR INCEPTION
------ ------ ---------
FUND** 20.99% 11.63% 8.32%
FUND*** 26.03% 12.55% 8.82%
INDEX 37.58% 16.60% 12.34%
<PAGE>
- ------------------------------
* PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RETURNS ARE HIGHER
DUE TO MAINTENANCE OF THE PORTFOLIO'S EXPENSES BY RODNEY SQUARE
MANAGEMENT CORP. SEE FINANCIAL HIGHLIGHTS ON PAGE 23.
** THESE VALUES REFLECT THE EFFECT OF THE MAXIMUM SALES LOAD OF 4.00%.
*** THESE VALUES DO NOT REFLECT THE EFFECT OF THE SALES LOAD.
3
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
PRESIDENT'S MESSAGE-CONTINUED
- ------------------------------------------------------------------------------
We invite your questions and comments, and we thank you for your
investment in The Rodney Square Multi-Manager Fund. We look forward to
reviewing our investment outlook and strategy with you in our next report to
shareholders.
Sincerely,
/s/ Martin L. Klopping
Martin L. Klopping
President
February 10, 1996
4
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH PORTFOLIO
- -----------------------------------------------------
INVESTMENTS/DECEMBER 31, 1995
(Showing Percentage of Total Value of Net Assets)
- -----------------------------------------------------------------------------
PAR VALUE
(000) (NOTE 2)
----- -----------
REPURCHASE AGREEMENTS - 4.1%
WITH CS FIRST BOSTON GROUP, INC.
at 6.00%, dated 12/29/95, to be
repurchased at $2,737,124 on
01/02/96, collateralized by
$2,803,449 Federal Farm Credit
Bank Discount Notes with various
MATURITIES TO 06/05/96
(COST $2,735,300).......................... 2,735 $ 2,735,300
-----------
SHARES
------
COMMON STOCK - 96.2%
FINANCE, INSURANCE & REAL ESTATE - 9.9%
INSURANCE CARRIERS - 1.1%
Compdent Corp.*......................... 4,300 178,450
GCR Holdings, Ltd....................... 8,300 186,750
Meadowbrook Insurance Group, Inc.*...... 6,000 201,000
Renaissancere Holdings Ltd.*............ 6,500 197,438
-----------
763,638
-----------
SAVINGS, CREDIT & OTHER FINANCIAL INSTITUTIONS - 2.5%
Advanta Corp. (B Shares)................ 10,000 363,750
Household International, Inc............ 22,000 1,300,750
-----------
1,664,500
-----------
SECURITY & COMMODITY BROKERS, DEALERS & SERVICES - 2.9%
Alex Brown, Inc......................... 12,700 533,400
Federal Home Loan Mortgage Corp......... 6,000 501,000
Raymond James Financial, Inc............ 42,193 891,327
-----------
1,925,727
-----------
STATE & NATIONAL BANKS - 3.4%
MBNA Corp............................... 30,000 1,106,250
State Street Boston Corp................ 25,000 1,125,000
-----------
2,231,250
-----------
TOTAL FINANCE, INSURANCE
& REAL ESTATE....................... 6,585,115
-----------
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH PORTFOLIO
- -----------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ -----------
MANUFACTURING - 36.1%
CHEMICALS & ALLIED PRODUCTS - 4.1%
Air Products and Chemicals, Inc......... 16,000 $ 844,000
Airgas, Inc.*........................... 15,000 498,750
Applied Extrusion Technologies, Inc.*... 6,500 81,250
Cambrex Corp............................ 7,000 289,625
Hanna (M.A.) Co......................... 36,000 1,008,000
-----------
2,721,625
-----------
COMPUTER & OFFICE EQUIPMENT - 5.0%
3D Systems Corp.*....................... 5,000 118,750
Cirrus Logic, Inc.*..................... 11,700 231,075
Data General Corp.*..................... 23,000 316,250
Digi International, Inc.*............... 15,000 285,000
Digital Link Corp....................... 5,500 77,687
HPR Inc.*............................... 4,000 120,500
Hyperion Software Corp.*................ 13,400 284,750
Intel Corp.............................. 12,000 681,000
Microcom, Inc.*......................... 5,600 145,600
Microsoft Corp.*........................ 10,000 877,500
Network Appliance, Inc.*................ 2,100 84,263
Xcellenet, Inc.* 4,700 69,913
-----------
3,292,288
-----------
FOOD & BEVERAGE - 0.4%
Smithfield Foods, Inc.*................. 8,100 257,175
-----------
MISC. ELECTRICAL MACHINERY, EQUIP. & SUPPLIES - 3.8%
Genlyte Group, Inc.*.................... 14,600 98,550
GenRad, Inc.*........................... 23,000 221,375
Microchip Technology, Inc.*............. 13,700 500,050
Molex, Inc. (A Shares).................. 45,000 1,378,125
Watkins-Johnson Co...................... 6,700 293,125
-----------
2,491,225
-----------
MISC. INDUSTRIAL MACHINERY & EQUIP. - 3.5%
Augat, Inc.............................. 24,200 414,425
Camco International, Inc................ 6,800 190,400
Harman International Industries, Inc.... 18,900 758,363
Illinois Tool Works, Inc................ 11,000 649,000
Tower Automotive, Inc.*................. 7,900 138,250
Varco International, Inc.*.............. 14,900 178,800
-----------
2,329,238
-----------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH PORTFOLIO
- -----------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ -----------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.2%
Cavalier Homes, Inc..................... 5,625 $ 116,719
Continental Homes Holding Corp.......... 7,600 187,150
Newell Co............................... 20,000 517,500
Pittway Corp. (A Shares)................ 7,400 501,350
Whittaker Corp.*........................ 6,100 132,675
-----------
1,455,394
-----------
PHARMACEUTICAL PREPARATIONS - 4.6%
Abbott Laboratories..................... 19,000 793,250
Alpharma, Inc. (A Shares)............... 12,800 334,400
Anika Research, Inc.*................... 4,140 16,042
Elan Corp. plc, ADR*.................... 18,000 875,250
R.P. Scherer Corp.*..................... 21,100 1,036,537
-----------
3,055,479
-----------
PRECISION INSTRUMENTS & MEDICAL SUPPLIES - 5.2%
Advanced Technology Laboratories,
Inc.*................................. 17,800 436,100
Cognex Corp.*........................... 15,000 521,250
Fisher Scientific International......... 8,200 273,675
Gelman Sciences, Inc.*.................. 5,500 138,875
Haemonetics Corp.*...................... 33,400 592,850
Kensey Nash Corp.*...................... 5,100 63,750
Nellcor Puritan Bennet, Inc.*........... 13,000 754,000
Research Medical, Inc.*................. 5,800 156,600
Spacelabs Medical, Inc.*................ 17,600 506,000
-----------
3,443,100
-----------
PRINTING & PUBLISHING - 1.0%
Banta Corp.............................. 10,000 440,000
International Imaging Materials, Inc.*.. 8,200 207,050
-----------
647,050
-----------
TELECOMMUNICATIONS EQUIPMENT - 3.3%
Analog Devices, Inc.*................... 33,150 1,172,681
Microwave Power Devices, Inc.*.......... 9,000 100,125
Network Equipment Technologies, Inc.*... 17,600 481,800
Oak Industries, Inc.*................... 7,300 136,875
Summa Four, Inc......................... 5,100 68,212
TSX Corp.*.............................. 4,600 98,900
Westell Technologies, Inc.*............. 5,600 140,700
-----------
2,199,293
-----------
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH PORTFOLIO
- -----------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ -----------
TEXTILES & APPAREL - 2.1%
Authentic Fitness Corp.................. 11,500 $ 238,625
Cintas Corp............................. 20,000 890,000
Donnkenny, Inc.......................... 9,300 168,563
Fieldcrest Cannon, Inc.*................ 6,500 108,062
-----------
1,405,250
-----------
TRANSPORTATION EQUIPMENT - 0.9%
OEA, Inc................................ 20,000 597,500
-----------
TOTAL MANUFACTURING................... 23,894,617
-----------
MINING - 3.5%
CRUDE PETROLEUM & NATURAL GAS - 1.5%
Benton Oil & Gas Co.*................... 7,900 118,500
Devon Energy Corp....................... 12,900 328,950
Pogo Producing Co....................... 12,000 339,000
Weatherford Enterra, Inc.*.............. 7,943 229,354
-----------
1,015,804
-----------
MISCELLANEOUS METAL ORES - 2.0%
AMCOL International Corp................ 14,700 209,475
Minerals Technologies Inc............... 30,000 1,095,000
-----------
1,304,475
-----------
TOTAL MINING.......................... 2,320,279
-----------
SERVICES - 22.6%
BUSINESS SERVICES - 8.4%
Automatic Data Processing, Inc.......... 24,000 1,782,000
CUC International, Inc.*................ 14,000 477,750
First Data Corp......................... 25,000 1,671,875
Norrell Corp............................ 6,700 196,812
The Olsten Corp......................... 10,000 395,000
PMT Services, Inc.*..................... 6,700 202,675
PST Vans, Inc.*......................... 4,000 18,500
Shared Medical Systems Corp............. 15,000 815,625
-----------
5,560,237
-----------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH PORTFOLIO
- -----------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ -----------
COMPUTER SERVICES - 7.5%
Acxiom Corp.*........................... 25,100 $ 687,113
American Management Systems, Inc.*...... 13,000 390,000
Banyan Systems, Inc.*................... 9,100 93,275
Boole & Babbage, Inc.*.................. 9,900 242,550
Broadway & Seymour, Inc.*............... 9,000 146,250
Ceridian Corp.*......................... 14,700 606,375
Computer Task Group, Inc................ 8,900 175,775
Fiserv, Inc.*........................... 23,412 702,360
MDL Information Systems, Inc.*.......... 10,200 234,600
Marcam Corp.*........................... 16,000 244,000
Project Software, Inc................... 4,600 160,425
SPS Transaction Services, Inc.*......... 8,900 263,662
State of The Art, Inc.*................. 10,700 105,663
Sungard Data Systems, Inc.*............. 23,800 678,300
Technology Solutions Co.*............... 500 9,750
Telxon Corp............................. 11,100 251,138
-----------
4,991,236
-----------
MEDICAL & HEALTH SERVICES - 5.8%
American Medical Response, Inc.*........ 6,100 198,250
HealthSouth Corp.*...................... 34,000 990,250
HealthWise of America, Inc.*............ 7,050 274,950
Interim Services Inc.*.................. 19,000 660,250
Medaphis Corp.*......................... 14,000 518,000
Ornda Healthcorp*....................... 25,600 595,200
Owen Healthcare, Inc.*.................. 7,700 212,713
Sterling Healthcare Group*.............. 5,400 57,375
Total Renal Care Holdings, Inc.*........ 7,000 206,500
Veterinary Centers of America, Inc.*.... 5,800 97,875
-----------
3,811,363
-----------
PERSONAL SERVICES - 0.5%
Stewart Enterprises, Inc. (A Shares).... 9,700 358,900
-----------
SANITARY SERVICES - 0.4%
United Waste Systems, Inc.*............. 7,100 264,475
-----------
TOTAL SERVICES........................ 14,986,211
-----------
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH PORTFOLIO
- -----------------------------------------------------
INVESTMENTS-CONTINUED
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ -----------
TRANSPORTATION, COMMUNICATION, ELECTRIC
& SANITATION - 4.2%
COMMUNICATION & BROADCASTING - 2.2%
Airtouch Communications, Inc.*.......... 18,000 $ 508,500
ANADIGICS, Inc.*........................ 5,400 114,750
Reuters Holding plc, ADR................ 10,000 551,250
SFX Broadcasting, Inc. (A Shares)*...... 3,700 111,925
Transaction Network Services, Inc.*..... 6,300 157,500
-----------
1,443,925
-----------
ELECTRIC, GAS & WATER UTILITIES - 0.1%
Southwestern Energy Co.................. 8,000 102,000
-----------
TRANSPORTATION - 1.9%
Air Express International Corp.......... 29,925 688,275
Covenant Transport, Inc. (A Shares)..... 6,000 72,000
TNT Freightways Corp.................... 25,000 503,125
-----------
1,263,400
-----------
TOTAL TRANSPORTATION,
COMMUNICATION, ELECTRIC
& SANITATION........................ 2,809,325
-----------
WHOLESALE & RETAIL TRADE - 19.9%
MISCELLANEOUS RETAIL STORES - 2.8%
Barnes & Noble Inc.*.................... 9,000 261,000
Best Buy Co., Inc.*..................... 19,400 315,250
Just For Feet, Inc.*.................... 7,575 270,806
Sports & Recreation, Inc.*.............. 20,550 146,419
Trend-Lines, Inc. (A Shares)*........... 7,650 76,500
Wal-Mart Stores, Inc.................... 35,000 783,125
-----------
1,853,100
-----------
RETAIL BUILDING MATERIALS - 2.0%
Home Depot, Inc......................... 28,000 1,340,500
-----------
RETAIL EATING & DRINKING PLACES - 0.7%
Applebee's International, Inc. Rights
1/1000 Share of Preferred @ $75....... 17,000 386,750
Hometown Buffet Inc.*................... 7,900 87,394
-----------
474,144
-----------
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH PORTFOLIO
- -----------------------------------------------------
INVESTMENTS-CONTINUED
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ -----------
RETAIL FURNITURE & APPLIANCE STORES - 0.5%
Williams-Sonoma, Inc.*.................. 15,700 $ 290,450
-----------
WHOLESALE CHEMICALS & DRUGS - 2.1%
Amerisource Health Corp. (A Shares)*.... 6,900 $227,700
Cardinal Health, Inc.................... 12,616 690,726
Walgreen Co............................. 16,000 478,000
-----------
1,396,426
-----------
WHOLESALE ELECTRONIC EQUIP. & COMPUTERS - 9.1%
Arrow Electronics, Inc.*................ 15,700 677,063
Daisytek International Corp.*........... 6,900 212,175
Inmac Corp.*............................ 17,000 196,562
Lattice Semiconductor Corp.*............ 21,450 699,806
Maxim Integrated Products, Inc.*........ 46,800 1,801,800
SCI Systems, Inc.*...................... 14,300 443,300
Symbol Technologies, Inc.*.............. 16,600 655,700
Tech Data Corp.*........................ 43,800 657,000
Wyle Electronics........................ 7,500 263,437
Xilinx, Inc.*........................... 14,000 427,000
-----------
6,033,843
-----------
WHOLESALE MISCELLANEOUS - 2.7%
Alco Standard Corp...................... 22,000 1,003,750
Bearings, Inc........................... 9,000 263,250
Grainger (W.W.), Inc.................... 8,000 530,000
-----------
1,797,000
-----------
TOTAL WHOLESALE
& RETAIL TRADE...................... 13,185,463
-----------
TOTAL COMMON STOCK
(COST $42,128,676).................. 63,781,010
-----------
TOTAL INVESTMENTS
(COST $44,863,976)** - 100.3%................ 66,516,310
OTHER ASSETS AND LIABILITIES,
NET - (0.3)% ................................ (205,574)
-----------
NET ASSETS - 100.0%............................ $66,310,736
===========
* Non-income producing security.
** Cost for federal income tax purposes (Note 3).
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH AND INCOME PORTFOLIO
- ----------------------------------------------------------------
INVESTMENTS/DECEMBER 31, 1995
(Showing Percentage of Total Value of Net Assets)
- -----------------------------------------------------------------------------
PAR VALUE
(000) (NOTE 2)
----- ----------
REPURCHASE AGREEMENTS - 20.6%
With C.S. Boston Group, Inc. at 6.00%,
dated 12/29/95, to be repurchased
at $1,485,890 on 01/02/96, collateralized
by $1,523,720 Federal Farm Credit Bank
Discount Notes with various maturities
to 05/14/96 (COST 1,484,900).......... 1,485 $1,484,900
----------
SHARES
------
COMMON STOCK - 79.4%
COMMUNICATION & BROADCASTING - 0.7%
Viacom Inc., (B Shares)*................ 1,000 47,375
----------
ELECTRIC, GAS & TELECOMMUNICATION UTILITIES - 6.5%
Coastal Corp............................ 2,500 93,125
Peco Energy Co.......................... 800 24,100
Telefonica de Espana S.A., ADR.......... 1,900 79,562
Unicom Corp............................. 1,700 55,675
Williams Cos., Inc...................... 3,800 166,725
WorldCom Inc.*.......................... 1,500 52,875
----------
472,062
----------
FINANCE, INSURANCE & REAL ESTATE - 13.9%
INSURANCE CARRIERS - 4.4%
Aflac, Inc............................ 300 13,013
American General Corp................. 1,300 45,337
American International Group, Inc..... 750 69,375
Exel Ltd.............................. 400 24,400
MGIC Investment Corp.................. 1,000 54,250
Providian Corp........................ 500 20,375
St. Paul Cos., Inc.................... 1,600 89,000
----------
315,750
----------
SAVINGS, CREDIT & OTHER FINANCIAL INSTITUTIONS - 1.1%
Mercury Finance Co.................... 2,250 29,812
Washington Federal, Inc............... 1,892 48,482
----------
78,294
----------
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH AND INCOME PORTFOLIO
- ----------------------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ ----------
STATE & NATIONAL BANKS - 8.4%
Bank of Boston Corp..................... 1,000 $ 46,250
BankAmerica Corp........................ 1,000 64,750
Capital One Financial Corp.............. 1,500 35,812
Chemical Banking Corp................... 1,000 58,750
Citicorp................................ 600 40,350
Comerica, Inc........................... 1,500 60,188
First Bank Systems, Inc................. 300 14,888
First Union Corp........................ 2,000 111,250
Keycorp................................. 2,500 90,625
MBNA Corp............................... 500 18,438
Suntrust Banks, Inc..................... 1,000 68,500
----------
609,801
----------
TOTAL FINANCE, INSURANCE
& REAL ESTATE....................... 1,003,845
----------
MANUFACTURING - 38.6%
TRANSPORTATION - 2.9%
AMR Corp.*.............................. 700 51,975
CSX Corp................................ 1,800 82,125
Illinois Central Corp................... 2,000 76,750
----------
210,850
----------
CHEMICALS & ALLIED PRODUCTS - 6.0%
Amgen, Inc.............................. 1,400 83,125
Eastman Chemical Co..................... 2,100 131,513
FMC Corp................................ 800 54,100
IMC Global Inc.......................... 900 36,788
Mallinckrodt Group, Inc................. 2,700 98,212
Praxair, Inc............................ 1,000 33,625
----------
437,363
----------
COMPUTER & OFFICE EQUIPMENT - 6.1%
Bay Networks, Inc....................... 750 30,844
Hewlett-Packard Co...................... 800 67,000
Intel Corp.............................. 800 45,400
International Business Machines Corp.... 800 73,400
LSI Logic Corp.*........................ 1,000 32,750
Microsoft Corp.*........................ 400 35,100
Paychex, Inc............................ 1,000 49,875
Xerox Corp.............................. 800 109,600
----------
443,969
----------
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH AND INCOME PORTFOLIO
- ----------------------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ ----------
FOOD & BEVERAGE - 3.4%
CPC International....................... 500 $ 34,312
Conagra, Inc............................ 1,500 61,875
IBP, Inc................................ 500 25,250
Pepsico, Inc............................ 1,300 72,637
Sysco Corp.............................. 1,500 48,750
----------
242,824
----------
IRON & STEEL - 1.0%
British Steel plc, ADS.................. 2,700 69,188
----------
MISC. ELECTRICAL MACHINERY, EQUIP. & SUPPLIES - 3.4%
Black & Decker Corp..................... 1,000 35,250
General Electric Co..................... 1,100 79,200
Loral Corp.............................. 1,100 38,913
Raytheon Co............................. 2,000 94,500
----------
247,863
----------
MISC. INDUSTRIAL MACHINERY & EQUIP. - 0.9%
Case Corp............................... 500 22,875
Deere & Co.............................. 1,200 42,300
----------
65,175
----------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 1.6%
Gillette Co............................. 1,000 52,125
Premark International, Inc.............. 400 20,250
Procter & Gamble Co..................... 500 41,500
----------
113,875
----------
PAPER & PAPER PRODUCTS - 1.6%
Boise Cascade Corp...................... 1,400 48,475
Mead Corp............................... 800 41,800
Weyerhaeuser Co......................... 600 25,950
----------
116,225
----------
PHARMACEUTICAL PREPARATIONS - 3.8%
Abbott Laboratories..................... 2,000 83,500
Bristol-Myers Squibb Co................. 300 25,762
Johnson & Johnson....................... 500 42,812
Merck & Co., Inc........................ 600 39,450
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH AND INCOME PORTFOLIO
- ----------------------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ ----------
Pfizer, Inc............................. 500 $ 31,500
Schering-Plough, Inc.................... 1,000 54,750
----------
277,774
----------
PRECISION INSTRUMENTS & MEDICAL SUPPLIES - 0.6%
Beckman Instruments, Inc................ 700 24,763
Nellcor Puritan Bennet, Inc.*........... 300 17,400
----------
42,163
----------
PRINTING & PUBLISHING - 0.6%
American Greetings Corp................. 1,700 46,963
----------
RUBBER & PLASTICS - 1.4%
Goodyear Tire & Rubber Co............... 2,200 99,825
----------
TELECOMMUNICATIONS EQUIPMENT - 1.1%
ADC Telecommunications, Inc............. 1,000 36,500
Adaptec, Inc............................ 1,000 41,000
----------
77,500
----------
TEXTILES & APPAREL - 0.8%
Nautica Enterprises, Inc.*.............. 450 19,688
Nine West Group, Inc.*.................. 1,000 37,500
----------
57,188
----------
TRANSPORTATION EQUIPMENT - 3.4%
AlliedSignal, Inc....................... 1,500 71,250
Echlin, Inc............................. 500 18,250
Ford Motor Co........................... 1,700 49,300
General Motors Corp. (E Shares)......... 1,000 52,000
Rockwell International Corp............. 1,000 52,875
----------
243,675
----------
TOTAL MANUFACTURING................... 2,792,420
----------
MINING - 6.9%
COAL - 0.4%
Pittston Services Group................. 900 28,238
----------
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH AND INCOME PORTFOLIO
- ----------------------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ ----------
CRUDE PETROLEUM & NATURAL GAS - 5.5%
Atlantic Richfield Co................... 300 $ 33,225
British Petroleum Co. Ltd., ADR......... 702 71,692
Chevron Corp............................ 1,000 52,500
Halliburton Co.......................... 1,000 50,625
Mobil Corp.............................. 500 56,000
Nova Corp............................... 2,300 18,400
Royal Dutch Petroleum Co................ 600 84,675
Tenneco, Inc............................ 700 34,738
----------
401,855
----------
MISCELLANEOUS METAL ORES - 1.0%
Potash Corp. of Saskatchewan, Inc....... 1,000 70,875
----------
TOTAL MINING.......................... 500,968
----------
SERVICES - 6.8%
BUSINESS SERVICES - 2.2%
CUC International, Inc.*................ 1,250 42,656
Equifax, Inc............................ 2,600 55,575
First Data Corp......................... 300 20,062
Marriott International Inc.............. 1,000 38,250
----------
156,543
----------
MEDICAL & HEALTH SERVICES - 4.1%
Columbia/HCA Healthcare Corp............ 2,784 141,288
Foundation Health Corp.................. 1,200 51,600
Phycor, Inc.*........................... 1,125 56,883
Vencor, Inc.*........................... 1,500 48,750
----------
298,521
----------
SANITARY SERVICES - 0.5%
Sanifill Inc.*.......................... 1,000 33,375
----------
TOTAL SERVICES 488,439
----------
WHOLESALE & RETAIL TRADE - 6.0%
MISCELLANEOUS RETAIL STORES - 3.0%
Eckerd Corp.*........................... 1,500 66,937
General Nutrition Cos................... 900 20,700
Price/Costco, Inc....................... 1,500 22,875
Walgreen Co............................. 2,500 74,688
Wal-Mart Stores, Inc.................... 1,500 33,562
----------
218,762
----------
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND/GROWTH AND INCOME PORTFOLIO
- ----------------------------------------------------------------
INVESTMENTS-CONTINUED
- -----------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ ----------
RETAIL EATING & DRINKING PLACES - 1.3%
McDonald's Corp......................... 2,000 $ 90,250
----------
RETAIL FOOD STORES - 1.3%
Safeway Inc.*........................... 1,500 77,250
SuperValu, Inc.......................... 600 18,900
----------
96,150
----------
WHOLESALE ELECTRONIC EQUIP. & COMPUTERS - 0.4%
Arrow Electronics, Inc.*................ 700 30,187
----------
TOTAL WHOLESALE
& RETAIL TRADE...................... 435,349
----------
TOTAL COMMON STOCK
(COST $4,624,593)..................... 5,740,458
----------
TOTAL INVESTMENTS
(COST $6,109,493)** - 100.0%................. 7,225,358
OTHER ASSETS AND LIABILITIES,
NET - (0.0)% ................................ 354
----------
NET ASSETS - 100.0%............................ $7,225,712
==========
* Non-income producing security.
** Cost for federal income tax purposes was $6,116,504 (Note 3).
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
GROWTH GROWTH AND INCOME
PORTFOLIO PORTFOLIO
----------- -----------------
ASSETS:
Investments in securities (including
repurchase agreements of
$2,735,300 and $1,484,900,
respectively), at market
(identified cost $44,863,976
and $6,109,493, respectively) (Note 2)... $66,516,310 $7,225,358
Dividends and interest receivable.......... 48,134 9,037
Receivable for Fund shares sold............ 41,872 19,251
Other assets............................... 300 32
----------- ----------
Total assets..................... 66,606,616 7,253,678
----------- ----------
LIABILITIES:
Due to Manager (Note 4).................... 56,431 147
Payable for investments purchased.......... 179,109 -
Other accrued expenses (Note 4)............ 60,340 27,819
----------- ----------
Total liabilities................ 295,880 27,966
----------- ----------
NET ASSETS................................. $66,310,736 $7,225,712
=========== ==========
NET ASSETS CONSIST OF:
Undistributed net investment income........ $ - $ 273
Net unrealized appreciation of
investments (Note 3)..................... 21,652,334 1,115,865
Accumulated net realized gain.............. 2,733 -
Distributions in excess of net
realized gains........................... - (7,079)
Shares of beneficial interest.............. 38,079 7,633
Additional paid-in capital................. 44,617,590 6,109,020
----------- ----------
NET ASSETS, for 3,807,886 and
763,267 shares outstanding,
respectively............................. $66,310,736 $7,225,712
=========== ==========
NET ASSET VALUE and redemption
price per share ($66,310,736 / 3,807,886
and $7,225,712 / 763,267 outstanding
shares of beneficial interest,
$0.01 par value, respectively)........... $17.41 $9.47
====== =====
Maximum offering price per share
(100/96.00 of $17.41 and
100/96.00 of $9.47, respectively)........ $18.14 $9.86
====== =====
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
FINANCIAL STATEMENTS-CONTINUED
- -----------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Fiscal Year Ended December 31, 1995
GROWTH GROWTH AND INCOME
PORTFOLIO PORTFOLIO
----------- -----------------
INVESTMENT INCOME:
Income:
Dividends................................ $ 413,900 $ 106,072
Interest................................. 161,320 93,927
----------- ----------
575,220 199,999
----------- ----------
Expenses:
Management fee (Note 4).................. 640,522 69,211
Distribution expenses (Note 4)........... 18,594 5,995
Custodian fee (Note 4)................... 34,765 27,431
Transfer Agent fee (Note 4).............. 14,108 13,235
Administration fee (Note 4).............. 57,64 76,229
Accounting fee (Note 4).................. 45,000 45,000
Trustees' fees and expenses (Note 4)..... 5,398 4,950
Legal.................................... 21,465 2,407
Audit.................................... 38,574 8,837
Registration fees........................ 13,995 14,372
Miscellaneous............................ 23,204 6,189
----------- ----------
Total expenses before
reimbursement.................. 913,272 203,856
Reimbursement from Manager
(Note 4)....................... - (100,039)
----------- ----------
Total expenses, net........................ 913,272 103,817
----------- ----------
Net investment income (loss)............... (338,052) 96,182
----------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment
transactions........................... 7,295,858 612,530
Net unrealized appreciation of investments
during the year........................ 8,615,648 893,146
----------- ----------
Net gain on investments.................... 15,911,506 1,505,676
----------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.......................... $15,573,454 $1,601,858
=========== ==========
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
FINANCIAL STATEMENTS-CONTINUED
- -----------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
GROWTH GROWTH AND INCOME
PORTFOLIO PORTFOLIO
----------- -----------------
FOR THE YEAR ENDED DECEMBER 31, 1995
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)............. $ (338,052) $ 96,182
Net realized gain on investment
transactions........................... 7,295,858 612,530
Net unrealized appreciation of
investments during the year............ 8,615,648 893,146
----------- ----------
Net increase in net assets resulting
from operations........................ 15,573,454 1,601,858
----------- ----------
Distributions to shareholders from:
Net investment income ($0.00 and
$0.13 per share, respectively)......... - (96,184)
Net realized capital gains ($2.01
and $0.88 per share, respectively)..... (6,955,073) (612,961)
----------- ----------
Total distributions to shareholders...... (6,955,073) (709,145)
----------- ----------
Decrease in net assets from Fund share
transactions (Note 5).................... (7,574,816) (116,957)
----------- ----------
Increase in net assets..................... 1,043,565 775,756
NET ASSETS:
Beginning of year........................ 65,267,171 6,449,956
----------- ----------
End of year
(including undistributed net
investment income of $0 and $273,
respectively).......................... $66,310,736 $7,225,712
=========== ==========
FOR THE YEAR ENDED DECEMBER 31, 1994
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)............. $ (115,975) $ 71,085
Net realized gain on investment
transactions........................... 4,911,108 236,741
Net unrealized depreciation
of investments during the year......... (4,935,019) (709,145)
----------- ----------
Net decrease in net assets resulting
from operations........................ (139,886) (401,319)
----------- ----------
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
FINANCIAL STATEMENTS-CONTINUED
- -----------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS-CONTINUED
GROWTH GROWTH AND INCOME
PORTFOLIO PORTFOLIO
----------- -----------------
Distributions to shareholders from:
Net investment income ($0.00 and $0.10
per share, respectively)............... $ - $ (70,810)
Net capital gain ($1.20 and $0.32
per share, respectively)............... (4,796,011) (240,067)
----------- ----------
Total distributions to shareholders...... (4,796,011) (310,877)
----------- ----------
Increase in net assets from Fund share
transactions (Note 5).................... 4,112,033 650,262
----------- ----------
Decrease in net assets..................... (823,864) (61,934)
NET ASSETS:
Beginning of year........................ 66,091,035 6,511,890
----------- ----------
End of year
(including accumulated net
investment income (loss) of
$(239,522) and $275, respectively)..... $65,267,171 $6,449,956
=========== ==========
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following tables include selected data for a share outstanding for each
Portfolio throughout each year and other performance information derived from
the financial statements. They should be read in conjunction with the
financial statements and notes thereto.
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
GROWTH PORTFOLIO
NET ASSET VALUE - BEGINNING OF YEAR. $15.14 $16.39 $15.56 $15.68 $11.59
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income (loss)...... (0.10) (0.03) (0.03) 0.00 0.07
Net realized and unrealized
gain (loss)on investments....... 4.38 (0.02) 2.29 0.92 4.71
------ ------ ------ ------ ------
Total from investment
operations.................. 4.28 (0.05) 2.26 0.92 4.78
------ ------ ------ ------ ------
DISTRIBUTIONS:
From net investment income........ 0.00 0.00 0.00 0.00 (0.07)
From net realized gain on
investments..................... (2.01) (1.20) (1.43) (1.04) (0.62)
------ ------ ------ ------ ------
Total distributions........... (2.01) (1.20) (1.43) (1.04) (0.69)
------ ------ ------ ------ ------
NET ASSET VALUE - END OF YEAR....... $17.41 $15.14 $16.39 $15.56 $15.68
====== ====== ====== ====== ======
TOTAL RETURN*....................... 28.43% (0.23)% 14.57% 5.95% 41.54%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses**...................... 1.43% 1.38% 1.42% 1.46% 1.50%
Net investment income (loss).... (0.53)% (0.17)% (0.18)% (0.03)% 0.52%
Portfolio turnover rate........... 49.12% 37.05% 44.38% 37.79% 32.63%
Net assets at end of year
(000 omitted)................... $66,311 $65,267 $66,091 $60,852 $56,648
* These results do not include the sales load. If the sales load had
been included, the returns would have been lower.
** RSMC reimbursed a portion of the Portfolio's expenses amounting to
0.04% of average daily net assets for the year ended December 31, 1991.
The annualized expense ratio, had there been no reimbursement of
expenses by RSMC, would have been 1.54%.
22
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
FINANCIAL HIGHLIGHTS-CONTINUED
- -----------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
GROWTH AND INCOME PORTFOLIO
NET ASSET VALUE - BEGINNING OF YEAR.. $8.33 $9.29 $10.51 $12.09 $10.47
INVESTMENT OPERATIONS:
Net investment income.............. 0.13 0.10 0.10 0.18 0.28
Net realized and unrealized
gain (loss) on investments....... 2.02 (0.64) 1.39 0.52 2.37
------ ------------ ------ ------
Total from investment
operations................... 2.15 (0.54) 1.49 0.70 2.65
------ ------ ------ ------ ------
DISTRIBUTIONS:
From net investment income......... (0.13) (0.10) (0.10) (0.18) (0.28)
From net realized gain on
investments...................... (0.88) (0.32) (2.61) (2.10) (0.75)
------ ------ ------ ------ ------
Total distributions............ (1.01) (0.42) (2.71) (2.28) (1.03)
------ ------ ------ ------ ------
NET ASSET VALUE - END OF YEAR........ $9.47 $8.33 $9.29 $10.51 $12.09
====== ====== ====== ====== ======
TOTAL RETURN*........................ 26.03% (5.82)% 14.26% 5.90% 25.74%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses**....................... 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income............ 1.39% 1.12% 0.80% 1.37% 2.12%
Portfolio turnover rate............ 83.49% 106.26% 68.49% 76.63% 133.02%
Net assets at end of year
(000 omitted).................... $7,226 $6,450 $6,512 $10,147 $15,432
* These results do not include the sales load. If the sales load had
been included, the returns would have been lower.
** RSMC reimbursed a portion of the Portfolio's expenses amounting to
1.45%, 1.54%, 1.35%, 0.93% and 0.79% for the five years in the period
ended December 31, 1995, respectively. The annualized expense ratio,
had there been no reimbursement of expenses by RSMC, would have been
2.95%, 3.04%, 2.85%, 2.43%, and 2.29%, respectively.
23
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND. The Rodney Square Multi-Manager Fund (the
"Fund") is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end management
investment company established as a Massachusetts business trust. The
Declaration of Trust, dated August 19, 1986, as last amended on February
15, 1993, permits the Board of Trustees to establish separate series each
of which issues a separate class of shares. The authorized shares of
beneficial interest in the Fund are currently divided into two series,
the Growth Portfolio and the Growth and Income Portfolio (each, a
"Portfolio" and collectively, the "Portfolios"). The investment
objective of the Growth Portfolio is to produce superior long-term
capital appreciation by investing in securities of companies which are
judged by its portfolio advisers to possess strong growth
characteristics. The investment objective of the Growth and Income
Portfolio is to produce superior long-term total return through a
combination of capital appreciation and income by investing in securities
with attractive growth or valuation characteristics or relatively high
income yields.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of the Fund:
SECURITY VALUATION. Each Portfolio's securities, except short-term
investments with remaining maturities of 60 days or less, are valued at
their market value as determined by their last sale price in the
principal market in which these securities are normally traded. Lacking
any sales, such securities will be valued at the mean between the closing
bid and ask price. Short-term investments with remaining maturities of
60 days or less are valued at amortized cost, which approximates market
value, unless the Fund's Board of Trustees determines that this does not
represent fair value. The value of all other securities is determined in
good faith under the direction of the Board of Trustees.
REPURCHASE AGREEMENTS. The Portfolios, through their custodian, receive
delivery of the underlying securities, the market value of which at the
time of purchase is required to be an amount equal to at least 101% of
the resale price. Rodney Square Management Corporation ("RSMC") is
responsible for determining that the value of these underlying securities
is at all times equal to 101% of the resale price.
FEDERAL INCOME TAXES. Each Portfolio is treated as a separate entity and
intends to continue to qualify for treatment as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986 and to
distribute all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required. The Growth Portfolio
reclassified $(577,574) and $558,143 from accumulated net investment loss
and accumulated net realized gain, repectively, to additional paid-in
capital. These reclassifications were made to present undistributed
income and accumulated gains on a tax basis and have no impact on the net
asset value of the Portfolio. Certain temporary book/tax timing
differences are reflected as "distributions in excess of net realized
gains" in the Statement of Assets and Liabilities.
24
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
NOTES TO THE FINANCIAL STATEMENTS-CONTINUED
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Distributions of net investment income
earned by the Growth Portfolio will be made annually in December.
Distributions of net investment income earned by the Growth and Income
Portfolio will be made quarterly in March, June, September and December.
Distributions of net capital gains realized by each Portfolio will be
made annually in December. An additional distribution may be made to the
extent necessary to avoid the payment of a 4% excise tax.
OTHER. Investment security transactions are accounted for on a trade
date basis. Each Portfolio uses the specific identification method for
determining realized gain or loss on investments for both financial and
federal income tax reporting purposes.
3. PURCHASES AND SALES OF INVESTMENT SECURITIES. During the year ended
December 31, 1995, purchases and sales of investment securities
(excluding short-term investments) aggregated as follows:
GROWTH AND
GROWTH PORTFOLIO INCOME PORTFOLIO
---------------- ----------------
Purchases....... $30,253,215 $4,473,251
Sales........... 43,533,448 5,007,247
The following balances are as of December 31, 1995:
TAX BASIS TAX BASIS
COST FOR NET TAX BASIS GROSS GROSS
FEDERAL INCOME UNREALIZED UNREALIZED UNREALIZED
PORTFOLIO TAX PURPOSES APPRECIATION APPRECIATION DEPRECIATION
------------ -------------- ------------- ------------ ------------
Growth......... $44,863,976 $21,652,334 $23,148,441 $(1,496,107)
Growth
and Income... 6,116,504 1,108,854 1,150,490 (41,636)
4. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES. The Fund, on
behalf of each Portfolio, employs RSMC, a wholly owned subsidiary of
Wilmington Trust Company ("WTC"), which in turn is wholly owned by
Wilmington Trust Corporation, a publicly held bank holding company, to
provide asset management, consulting services and other services to the
Fund. Each Portfolio's assets are managed by portfolio advisers who have
entered into advisory agreements with RSMC and the Fund. It is
anticipated that each Portfolio will ordinarily be served by at least two
portfolio advisers. RSMC, as well as each portfolio adviser, is
considered an "investment adviser" to the applicable Portfolio as that
term is defined in the 1940 Act.
For management services to the Fund, RSMC receives an annual fee equal to
1.00% of the average daily net assets of each Portfolio up to $200
million of Fund assets and 0.95% of the average daily net assets in
excess of $200 million. RSMC has agreed to waive its fees or reimburse
each Portfolio monthly to the extent that operating expenses (excluding
taxes, extraordinary expenses, brokerage commissions and interest) exceed
an annual rate of 1.50% of average daily net assets.
25
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
NOTES TO THE FINANCIAL STATEMENTS-CONTINUED
- ------------------------------------------------------------------------------
The following table summarizes the management fees for the year ended
December 31, 1995:
GROSS
MANAGEMENT REIMBURSEMENT
PORTFOLIO FEE FROM MANAGER
-------------------- ---------- -------------
Growth................ $640,522 $ -
Growth and Income..... 69,211 100,039
RSMC serves as Administrator to the Fund under an Administration
Agreement dated December 31, 1992. Pursuant to this agreement, RSMC is
responsible for services such as budgeting, maintaining federal and state
registration for the Fund's shares, financial reporting, compliance
monitoring and corporate management. For the services provided, RSMC
receives a monthly administration fee from the Fund at an annual rate of
0.09% of each Portfolio's average daily net assets. The administration
fee paid to RSMC for the year ended December 31, 1995 amounted to $57,647
and $6,229 for the Growth Portfolio and the Growth and Income Portfolio,
respectively.
WTC serves as Custodian of the assets of the Fund. For its services, WTC
is paid an annual fee based upon the average daily net assets of each
Portfolio as follows: 0.025% of average daily net assets of each
Portfolio up to $50 million; 0.020% of average daily net assets of each
Portfolio in excess of $50 million up to $100 million and 0.015% of
average daily net assets of each Portfolio over $100 million, plus $15
per purchase, sale or maturity of a portfolio security. The custodian
fee is subject to a minimum charge of $1,000 per Portfolio, per month,
exclusive of any transaction charges.
RSMC serves as Transfer and Dividend Paying Agent for the Fund pursuant
to a Transfer Agent Agreement with the Fund dated December 31, 1992. For
its services, the Fund pays RSMC $7 per shareholder account per year,
plus various other transaction fees, subject to a minimum of $1,000 per
month, plus out-of-pocket expenses.
Pursuant to a Distribution Agreement with the Fund dated December 31,
1992, Rodney Square Distributors, Inc. ("RSD"), a wholly owned subsidiary
of WTC, manages the Fund's distribution efforts and provides assistance
and expertise in developing marketing plans and materials. The Fund's
Board of Trustees has adopted, and the Fund's shareholders have approved,
a distribution plan with respect to each Portfolio pursuant to Rule 12b-1
under the 1940 Act to allow the Fund to reimburse RSD for certain
distribution activities and to allow WTC to incur certain expenses, the
payment of which may be considered to constitute indirect payment by the
Fund of distribution expenses. The Board of Trustees has authorized
annual payments of up to 0.25% of each Portfolio's average daily net
assets to reimburse RSD for such expenses. For the year ended December
31, 1995, such expenses amounted to $18,594 and $5,995 for the Growth
Portfolio and the Growth and Income Portfolio, respectively.
26
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
NOTES TO THE FINANCIAL STATEMENTS-CONTINUED
- ------------------------------------------------------------------------------
RSMC determines the net asset value per share of each Portfolio and
provides accounting services to the Fund pursuant to an Accounting
Services Agreement with the Fund on behalf of each Portfolio. For its
services, RSMC receives an annual fee of $45,000 per Portfolio plus an
amount equal to 0.02% of that portion of each Portfolio's average daily
net assets in excess of $100 million. For the year ended December 31,
1995, RSMC's fees for accounting services amounted to $45,000 per
Portfolio.
The salaries of all officers of the Fund, the Trustees who are
"interested persons" of the Fund, RSMC, RSD, or their affiliates and all
personnel of the Fund, RSMC or RSD performing services related to
research, statistical and investment activities are paid by RSMC, RSD or
their affiliates. For the year ended December 31, 1995 the fees and
expenses of the "non-interested" Trustees amounted to $5,398 and $4,950
for the Growth Portfolio and the Growth and Income Portfolio,
repectively.
5. FUND SHARES. At December 31, 1995, there was an unlimited number of
shares of beneficial interest, $0.01 par value, authorized. The
following table summarizes the activity in shares of each Portfolio:
GROWTH PORTFOLIO
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
---------- --------- --------- ----------
Shares sold............ 388,740 $ 7,028,995 323,662 $5,252,086
Shares issued
to shareholders
in reinvestment
of dividends......... 349,493 6,021,765 303,972 4,553,501
Shares redeemed........(1,240,767) (20,625,576) (350,492) (5,693,554)
---------- ----------- --------- ----------
Net increase
(decrease)........... (502,534) $(7,574,816) 277,142 $4,112,033
=========== ==========
Shares outstanding:
Beginning of year...... 4,310,420 4,033,278
---------- ---------
End of year............ 3,807,886 4,310,420
========== =========
27
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
NOTES TO THE FINANCIAL STATEMENTS-CONTINUED
- -----------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
---------- --------- --------- ----------
Shares sold.......... 121,230 $1,137,365 236,338 $2,127,357
Shares issued
to shareholders
in reinvestment
of dividends....... 72,293 681,872 34,067 285,058
Shares redeemed...... (204,858) (1,936,194) (196,585) (1,762,153)
-------- ---------- -------- ----------
Net increase
(decrease).......... (11,335) $ (116,957) 73,820 $ 650,262
========== ==========
Shares outstanding:
Beginning of year.... 774,602 700,782
-------- --------
End of year.......... 763,267 774,602
======== ========
28
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
REPORT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Trustees of The Rodney Square Multi-Manager Fund:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of The Rodney Square Multi-Manager
Fund (comprising, respectively, the Growth and Growth and Income Portfolios)
as of December 31, 1995, and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the five years
in the period then ended. 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. Our procedures included confirmation of securities
owned as of December 31, 1995 by correspondence with the 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 Multi-Manager Fund
at December 31, 1995, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Baltimore, Maryland
January 24, 1996
29
THE RODNEY SQUARE MULTI-MANAGER FUND
- ------------------------------------
TAX INFORMATION
- ------------------------------------------------------------------------------
By now shareholders to whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV from the Fund.
The Growth and the Growth and Income Portfolios paid distributions of $2.0065
and $0.5930, respectively, from net long-term capital gains during the year
ended December 31, 1995. Pursuant to Section 852 of the Internal Revenue
Code, the Growth and the Growth and Income Portfolios designate $6,933,993 and
$411,742, respectively, as capital gain distributions for the fiscal year
ended December 31, 1995.
<PAGE>
30
TRUSTEES THE RODNEY SQUARE
Eric Brucker MULTI-MANAGER FUND
Fred L. Buckner
Martin L. Klopping
John J. Quindlen
------------------
OFFICERS
Martin L. Klopping, PRESIDENT
Joseph M. Fahey, Jr., VICE PRESIDENT
Robert C. Hancock, VICE PRESIDENT & TREASURER
Marilyn Talman, Esq., SECRETARY
Diane D. Marky, ASSISTANT SECRETARY
Connie L. Meyers, ASSISTANT SECRETARY
Louis C. Schwartz, Esq., ASSISTANT SECRETARY
John J. Kelley, ASSISTANT TREASURER
- ---------------------------------------------
[Graphic] Ceasar
Rodney upon his
FUND MANAGER, ADMINISTRATOR AND galloping horse
TRANSFER AGENT facing right,
Rodney Square Management Corporation reverse image on
------------------------------------ dark background
CUSTODIAN
Wilmington Trust Company
------------------------
DISTRIBUTOR
Rodney Square Distributors, Inc.
--------------------------------
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
--------------------------
ANNUAL REPORT
DECEMBER 31, 1995
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.
RS04 - 2/96
<PAGE>
APPENDIX
DESCRIPTION OF OPTION INCOME AND HEDGING STRATEGIES
The following describes the Fund's option income and
hedging strategies.
OPTION INCOME AND HEDGING STRATEGIES. Each Portfolio may
purchase and write (sell) both exchange-traded options and
options traded on the over-the-counter ("OTC") market.
Currently, options on debt securities are primarily traded on
the OTC market. Exchange-traded options in the U.S. are
issued by a clearing organization affiliated with the exchange
on which the option is listed, which, in effect, guarantees
completion of every exchange-traded option transaction. In
contrast, OTC options are contracts between a Portfolio and its
contra-party with no clearing organization guarantee. Thus,
when a Portfolio purchases an OTC option, it relies on the
dealer from which it has purchased the OTC option to make or
take delivery of the securities underlying the option. Failure
by the dealer to do so would result in the loss of any premium
paid by the Portfolio as well as the loss of the expected
benefit of the transaction.
Each Portfolio may purchase call options on securities
that a portfolio adviser intends to include in the Portfolio in
order to fix the cost of a future purchase. Call options also
may be used as a means of enhancing returns by, for example,
participating in an anticipated price increase of a security.
In the event of a decline in the price of the underlying
security, use of this strategy would serve to limit the
potential loss to a Portfolio to the option premium paid;
conversely, if the market price of the underlying security
increases above the exercise price and a Portfolio either sells
or exercises the option, any profit eventually realized would
be reduced by the premium paid.
Each Portfolio may purchase put options on securities in
order to hedge against a decline in the market value of
securities held in its portfolio or to attempt to enhance
return. The put option enables a Portfolio to sell the
underlying security at the predetermined exercise price; thus,
the potential for loss to the Portfolio below the exercise
price is limited to the option premium paid. If the market
price of the underlying security is higher than the exercise
price of the put option, any profit the Portfolio realizes on
the sale of the security would be reduced by the premium paid
for the put option less any amount for which the put option may
be sold.
Each Portfolio may on certain occasions wish to hedge
against a decline in the market value of securities held in its
portfolio at a time when put options on those particular
securities are not available for purchase. Each Portfolio may
therefore purchase a put option on other carefully selected
securities, the values of which historically have a high degree
of positive correlation to the value of such portfolio
<PAGE>
securities. If the portfolio adviser's judgment is correct,
changes in the value of the put options should generally offset
changes in the value of the portfolio securities being hedged.
However, the correlation between the two values may not be as
close in these transactions as in transactions in which a
Portfolio purchases a put option on a security held in its
portfolio. If the portfolio adviser's judgment is not correct,
the value of the securities underlying the put option may
decrease less than the value of the Portfolio's securities, and
therefore the put option may not provide complete protection
against a decline in the value of the Portfolio's securities
below the level sought to be protected by the put option.
Each Portfolio may write covered call options on
securities in which it is authorized to invest for hedging or
to increase return in the form of premiums received from the
purchases of the options. A call option gives the purchaser of
the option the right to buy, and the writer (seller) the
obligation to sell, the underlying security at the exercise
price during the option period. The strategy may be used to
provide limited protection against a decrease in the market
price of the security, in an amount equal to the premium
received for writing the call option less any transaction
costs. Thus, if the market price of the underlying security
held by a Portfolio declines, the amount of such decline will
be offset wholly or in part by the amount of the premium
received by the Portfolio. If, however, there is an increase
in the market price of the underlying security and the option
is exercised, the Portfolio would be obligated to sell the
security at less than its market value. The Portfolio would
give up the ability to sell any portfolio securities used to
cover the call option while the call option was outstanding.
Portfolio securities used to cover OTC options written also may
be considered illiquid, and therefore subject to each
Portfolio's limitation on investing no more than 15% of its net
asset in illiquid securities, unless the OTC options are sold
to qualified dealers who agree that the Portfolio may
repurchase any OTC options it writes for a maximum price to be
calculated by a formula set forth in the option agreement. The
cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value
of the option. In addition, the Portfolio could lose the
ability to participate in an increase in the value of such
securities above the exercise price of the call option because
such an increase would likely be offset by an increase in the
cost of closing out the call option (or could be negated if the
buyer chose to exercise the call option at an exercise price
below the current market value).
Each Portfolio may also write covered put options on
securities in which it is authorized to invest. A put option
gives the purchaser of the option the right to sell, and the
writer (seller) the obligation to buy, the underlying security
at the exercise price during the option period. So long as the
obligation of the writer continues, the writer may be assigned
an exercise notice by the broker-dealer through whom such
option was sold, requiring it to make payment of the exercise
<PAGE>
price against delivery of the underlying security. The
operation of put options in other respects, including their
related risks and rewards, is substantially identical to that
of call options. If the put option is not exercised, the
Portfolio will realize income in the amount of the premium
received. This technique could be used to enhance current
return during periods of market uncertainty. The risk in such
a transaction would be that the market price of the underlying
security would decline below the exercise price less the
premiums received, in which case the Portfolio would expect to
suffer a loss.
Each Portfolio may purchase put and call options and write
covered put and covered call options on U.S. securities indexes
in much the same manner as the more traditional options
discussed above, except that index options may serve as a hedge
against overall fluctuations in the securities markets or a
market sector rather than anticipated increases or decreases in
the value of a particular security. An index assigns values to
the securities included in the index and fluctuates with
changes in such values. Settlements of index options are
effected with cash payments and do not involve delivery of
securities. Thus, upon settlement of an index option, the
purchaser will realize, and the writer will pay, an amount
based on the difference between the exercise price and the
closing price of the index. The effectiveness of hedging
techniques using index options will depend on the extent to
which price movements in the index selected correlate with
price movements of the securities in which a Portfolio invests.
Perfect correlation is not possible because the securities held
or to be acquired by a Portfolio will not exactly match the
composition of the securities indexes on which options are
purchased or written.
OPTIONS GUIDELINES. In view of the risks involved in
using the options strategies described above, each Portfolio
has adopted the following investment guidelines to govern its
use of such strategies; these guidelines may be modified
without shareholder vote:
(1) each Portfolio will write only covered options, and
each such option will remain covered so long as the Portfolio
is obligated under the option;
(2) each Portfolio will not write call or put options
having aggregate exercise prices greater than 25% of its net
assets;
(3) each Portfolio may purchase a put or call option only
if the value of its premium, when aggregated with the premiums
on all other options held by the Portfolio, does not exceed 5%
of the Portfolio's total assets;
(4) each Portfolio may purchase protective put options
(under which the security to be sold is identical or
substantially identical to a security already held by the
Portfolio or which the Portfolio has the right to purchase)
with respect to not more than 25% of the value of its net
assets;
<PAGE>
(5) each Portfolio may purchase put and call options,
other than protective put options, with a value of up to 5% of
the value of the Portfolio's net assets; and
(6) each Portfolio will not invest more than 10% of the
value of its assets in options on securities indexes.
COVER FOR OPTIONS STRATEGIES. The Portfolios will not use
leverage in their options strategies and will write only
covered options. Accordingly, the Portfolios will comply with
guidelines established by the SEC with respect to coverage of
options strategies and will either (1) set aside cash, U.S.
Government or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount,
or (2) hold securities or other options positions whose values
are expected to offset its obligations thereunder. Securities
or other options positions used for cover cannot be sold or
closed out while the option strategy is outstanding, unless
they are replaced with similar assets. As a result, there is a
possibility that the use of cover involving a large percentage
of a Portfolio's assets could impede portfolio management or
the Portfolio's ability to meet redemption requests or other
current obligations.
SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING. A
Portfolio may effectively terminate its right or obligation
under an option by entering into a closing transaction. If a
Portfolio wishes to terminate its obligation to purchase or
sell securities under a put or call option it has written, the
Portfolio may purchase a put or a call option of the same
series (that is, an option identical in its terms to the option
previously written); this is known as a closing purchase
transaction. Conversely, in order to terminate its right to
purchase or sell specified securities under a call or put
option it has purchased, a Portfolio may sell an option of the
same series as the option held; this is known as a closing sale
transaction. Closing transactions essentially permit a
Portfolio to realize profits or limit losses on its options
positions prior to the exercise or expiration of the option. If
a Portfolio is unable to effect a closing purchase transaction
with respect to options it has acquired, the Portfolio will
have to allow the options to expire without recovering all or a
portion of the option premiums paid. If a Portfolio is unable
to effect a closing purchase transaction with respect to
covered options it has written, the Portfolio will not be able
to sell the underlying securities or dispose of assets used as
cover until the options expire or are exercised, and the
Portfolio may experience material losses due to losses on the
option transaction itself and in the covering securities.
In considering the use of options to enhance returns or
for hedging purposes, particular note should be taken of the
following:
(1) The value of an option position will reflect, among
other things, the current market price of the underlying
security or index, the time remaining until expiration, the
relationship of the exercise price to the market price, the
<PAGE>
historical price volatility of the underlying security or index
and general market conditions. For this reason, the successful
use of options depends upon a portfolio adviser's ability to
forecast the direction of price fluctuations in the underlying
securities or, in the case of index options, fluctuations in
the market sector represented by the selected index.
(2) Options normally have expiration dates of up to three
years. The exercise price of the options may be below, equal
to or above the current market value of the underlying security
or index. Purchased options that expire unexercised have no
value. Unless an option purchased by the Portfolio is
exercised or unless a closing transaction is effected with
respect to that position, the Portfolio will realize a loss in
the amount of the premium paid and any transaction costs.
(3) A position in an exchange-listed option may be closed
out only on an exchange that provides a secondary market for
identical options. Most exchange-listed options relate to
stocks. Although each Portfolio intends to purchase or write
only those exchange-traded options for which there appears to
be a liquid secondary market, there is no assurance that a
liquid secondary market will exist for any particular option at
any particular time. Closing transactions may be effected with
respect to options traded in the OTC markets (currently the
primary markets for options on debt securities) only by
negotiating directly with the other party to the option
contract or in a secondary market for the option if such other
market exists. Although each Portfolio will enter into OTC
options with dealers that agree to enter into, and that are
expected to be capable of entering into, closing transactions
with the Portfolio, there can be no assurance that the
Portfolio will be able to liquidate an OTC option at a
favorable price at any time prior to expiration. In the event
of insolvency of the contra-party, a Portfolio may be unable to
liquidate an OTC option. Accordingly, it may not be possible
to effect closing transactions with respect to certain options,
which would result in the Portfolio having to exercise those
options that it has purchased in order to realize any profit.
With respect to options written by a Portfolio, the inability
to enter into a closing transaction may result in material
losses to the Portfolio. For example, because a Portfolio must
maintain a covered position with respect to any call option it
writes on a security or index, the Portfolio may not sell the
underlying securities (or invest any cash or securities used to
cover the option) during the period it is obligated under such
option. This requirement may impair a Portfolio's ability to
sell a portfolio security or make an investment at a time when
such a sale or investment might be advantageous.
(4) Securities index options are settled exclusively in
cash. If a Portfolio writes a call option on an index, the
Portfolio will not know in advance the difference, if any,
between the closing value of the index on the exercise date and
the exercise price of the call option itself and thus will not
know the amount of cash payable upon settlement. In addition,
a holder of an index option, who exercises it before the
closing index value for that day is available, runs the risk
<PAGE>
that the level of the underlying index may subsequently change.
(5) A Portfolio's activities in the options markets may
result in a higher portfolio turnover rate and additional
brokerage costs; nevertheless, a Portfolio also may save on
commissions by using options as a hedge rather than buying or
selling individual securities in anticipation or as a result of
market movements.
<PAGE>
_______________________________
1 For the fiscal year ended December 31, 1995, RSMC
reimbursed the Growth and Income Portfolio in the amount of
$100,039. For the same period, RSMC did not reimburse the
Growth Portfolio.
2 For the fiscal year ended December 31, 1994, RSMC
reimbursed the Growth and Income Portfolio in the amount of
$98,149. For the same period, RSMC did not reimburse the
Growth Portfolio.
3 For the fiscal year ended December 31, 1993, RSMC
reimbursed the Growth and Income Portfolio in the amount of
$94,881. For the same period, RSMC did not reimburse the
Growth Portfolio.
4 The Growth Portfolio's and the Growth and Income
Portfolio's maximum sales load were each reduced on November
25, 1991 from 5.75% to 4.00%. The lower maximum sales load is
reflected in the standardized average annual total return set
forth in this table.
5 The performance of the Growth and Income Portfolio
prior to December 21, 1990, the date on which it changed its
name and investment objective, is required to be included in
the standardized average annual total return calculation but
does not necessarily reflect what the Growth and Income
Portfolio's performance would have been under its current
objective.
6 From commencement of operations, February 26, 1987.
7 From commencement of operations, March 24, 1987.
