THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
PRESIDENT'S MESSAGE
- ---------------------------------------------------------------------------
DEAR SHAREHOLDER:
The management of the Rodney Square Multi-Manager Fund is pleased to
report to you the activity of the Fund for the year ended December 31,
1996.
PORTFOLIO REVIEW*
The stock market was very rewarding to most equity investors during
1996, including shareholders of the Growth Portfolio. The total returns
presented below represent changes in the market value plus capital gains
distributed during the year, assumes distributions are reinvested and
sales loads are not reflected.
NET ASSET VALUE CAPITAL GAINS NET ASSET VALUE TOTAL RETURN
PORTFOLIO AS OF 12/31/95 DISTRIBUTED AS OF 12/31/96 1/1/96 TO 12/31/96
- --------- -------------- ----------- -------------- ------------------
Growth $17.41 $2.41 $19.22 24.25%
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Strong mutual fund cash inflows and moderate economic growth fueled
U.S. equity markets to record levels during 1996, achieving a second
straight year of double digit returns. The Standard & Poor's 500 Index
("S&P 500"), an unmanaged, capitalization weighted index of five hundred
publicly traded stocks, achieved a 22.96% gain for the year. The Russell
2000, comprised of the smallest 2,000 of the largest 3,000 U.S. companies,
based on market capitalization, was up 16.50%. Among mutual funds with
similar objectives, the Growth Portfolio had a 24.25% return compared to
the 19.24% return for the Lipper growth fund category.
During 1996, investors focused on the direction of economic growth and
the possibility of a return of higher inflation as their principal measure
of the strength of financial markets. U.S. equity markets corrected
significantly in July as reports of robust economic growth began to filter
out. However, as the summer continued, concerns about the strength of the
economy and increased inflation subsided. This led investors to continue
to place money into stocks, with mutual funds the preferred vehicle. An
economy that was "not too hot, not too cold, but just right" continued to
provide investors reasons to invest in stocks.
Leadership within the equity markets changed quickly during 1996, but
generally gravitated toward finance, technology and energy. Banks
especially had a positive year and, based on the strength of their balance
sheets and earnings growth, are in the best shape in three decades.
Semiconductor stocks recovered quickly from a downturn in the summer to
post impressive gains. The ongoing push to increase productivity continues
to fuel demand for computer equipment and related products. Energy stocks
were propelled higher by oil and gas prices that continued to surprise
investors on the upside.
- ----------------
* 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 PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY
WILMINGTON TRUST COMPANY OR ANY OTHER BANKING INSTITUTION, THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. THE TOTAL RETURN DOES NOT
REFLECT THE EFFECT OF THE MAXIMUM SALES LOAD OF 4.00%. SEE FINANCIAL
HIGHLIGHTS ON PAGE 11.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Growth Portfolio's continued focus on quality technology stocks
helped it achieve excellent results for 1996. This was accomplished during
a year when volatility in these stocks was, at times, significant.
Frontier Capital Management Corporation ("Frontier") maintained a
significant position in technology stocks throughout 1996, with 44% of its
holdings in that sector at the end of the year. Frontier benefited from
the ongoing boom in capital spending with positions such as Sungard Data
Systems, Inc. and Tech Data Corp. William Blair & Company ("Blair") also
held a significant position in technology stocks such as Microsoft Corp.
and Oracle Systems Corp. Blair, with holdings in MBNA Corp. and State
Street Boston Corp., also took advantage of the positive climate for banks
and other financial institutions.
SUMMARY
At the close of 1996, investors were faced with markets that were at or
near their full values. The ability to add value to investors going
forward will depend on the careful choosing of individual stocks rather
than the choosing of broad market sectors. The multi-manager format of the
Portfolio allows investors to participate in a broad array of large and
small stocks using different management styles. In its role as fund
manager, Rodney Square Management Corporation will continue to review and
evaluate the individual sub-advisers in an effort to deliver consistent,
above average performance to shareholders.
[GRAPH]
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
FEB-87 DEC-87 DEC-88 DEC-89 DEC-90 DEC-91 DEC-92 DEC-93 DEC-94 DEC-95 DEC-96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RS GROWTH PORT (LOAD) 9600 8085.31 9778.39 12433 11544.7 16340.4 17312 19833.8 19788.2 25413.1 31576.6
S&P 500 10000 9380 10880.8 14326.8 13879.8 18108.9 19492.4 21457.3 21738.4 29907.6 36777.4
* PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE VALUES SHOWN FOR
THE PORTFOLIOS REFLECT THE EFFECT OF THE MAXIMUM SALES LOAD OF 4.00% ON A
HYPOTHETICAL INITIAL INVESTMENT OF $10,000 AND WITH DIVIDENDS REINVESTED.
RETURNS ARE HIGHER DUE TO MAINTENANCE OF THE PORTFOLIO'S EXPENSES BY
RODNEY SQUARE MANAGEMENT CORPORATION. SEE FINANCIAL HIGHLIGHTS ON PAGE 11.
** NAV DOES NOT REFLECT THE LOAD.
</TABLE>
The Portfolio's ten largest holdings as of December 31, 1996 are listed
below:
Household International, Inc.
Automatic Data Processing, Inc.
MBNA Corp.
First Data Corp.
State Street Boston Corp.
Molex, Inc. Class A Shares
Cognizant Corp.
Shared Medical Systems Corp.
Microsoft Corp.
Home Depot Inc.
These positions change over time and may not be in the Portfolio at any
time other than December 31, 1996.
We invite your questions and comments and 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 17, 1997
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
INVESTMENTS/DECEMBER 31, 1996
(Showing Percentage of Total Value of Net Assets)
- -------------------------------------------------------------------------
PAR VALUE
(000) (NOTE 2)
----- --------
REPURCHASE AGREEMENT - 0.1%
With C.S. First Boston Group, Inc.
at 7.10% dated 12/31/96, to be
repurchased at $106,042 on 01/02/97
collateralized by $110,000, Federal
Home Loan Mortgage Corporation
Discount Notes due 02/06/97 (market
value $109,351)(COST $106,000)............. 106 $ 106,000
-----------
SHARES
------
COMMON STOCK - 100.0%
COMMUNICATIONS & BROADCASTING - 1.8%
Airtouch Communications, Inc.*.......... 18,000 454,500
Lamar Advertising Co.*.................. 8,700 210,975
Primus Telecommunications Group, Inc.*.. 6,500 82,875
SFX Broadcasting, Inc. (A Shares)*...... 3,700 110,075
Transaction Network Services, Inc.*..... 12,850 147,775
True North Communications, Inc.......... 18,000 393,750
-----------
TOTAL COMMUNICATIONS & BROADCASTING............... 1,399,950
-----------
DURABLE GOODS - 0.3%
Intergraph Corp.*....................... 23,800 243,950
-----------
FINANCE, INSURANCE & REAL ESTATE - 9.7%
INSURANCE - 0.1%
Symons International Group, Inc.*....... 5,800 97,150
-----------
SAVINGS, CREDIT & OTHER FINANCIAL INSTITUTIONS - 2.4%
Household International, Inc............ 20,000 1,845,000
-----------
SECURITY & COMMODITY BROKERS, DEALERS & SERVICES - 2.9%
Alex Brown, Inc......................... 12,700 920,750
Raymond James Financial, Inc............ 42,193 1,271,064
-----------
2,191,814
-----------
STATE & NATIONAL BANKS - 4.3%
MBNA Corp............................... 40,000 1,660,000
State Street Boston Corp................ 25,000 1,612,500
-----------
3,272,500
-----------
TOTAL FINANCE, INSURANCE & REAL ESTATE............ 7,406,464
-----------
MANUFACTURING - 39.0%
CHEMICALS & ALLIED PRODUCTS - 2.3%
Airgas, Inc.*........................... 20,000 440,000
Cambrex Corp............................ 10,500 343,875
Hanna (M.A.) Co......................... 44,000 962,500
-----------
1,746,375
-----------
COMPUTER & OFFICE EQUIPMENT - 7.3%
Accent Color Sciences, Inc.*............ 9,300 79,050
Black Box Corp.*........................ 24,300 1,002,375
Data General Corp.*..................... 27,900 404,550
Digital Link Corp.*..................... 5,500 133,375
HPR Inc.*............................... 8,000 110,000
Hyperion Software Corp.*................ 18,100 384,625
Intel Corp.............................. 10,000 1,309,375
Linear Technology Corp.................. 10,000 438,750
Microsoft Corp.*........................ 17,000 1,404,625
Microcom, Inc.*......................... 10,400 128,700
3D Systems Corp.*....................... 6,600 84,150
Xcellenet, Inc.*........................ 4,700 75,787
-----------
5,555,362
-----------
ELECTRICAL MEASUREMENT & TEST INSTRUMENTS - 0.7%
Genrad, Inc.*........................... 23,000 534,750
-----------
FOOD & BEVERAGE - 0.4%
Smithfield Foods, Inc.*................. 8,100 307,800
-----------
MISC. ELECTRICAL MACHINERY, EQUIP. & SUPPLIES - 8.2%
Anadigics, Inc.*........................ 5,800 227,650
Berg Electronics Corp.*................. 13,600 399,500
Windmere-Durable Holdings, Inc.
Warrants, Expire 01/19/98, Exercise
Price $7.50............................ 131 704
Genlyte Group, Inc.*.................... 14,600 182,500
Lattice Semiconductor Corp.*............ 16,250 747,500
Maxim Integrated Products, Inc.*........ 24,000 1,038,000
Microchip Technology, Inc.*............. 13,900 707,162
Molex, Inc. (A Shares).................. 45,000 1,603,125
Symbol Technologies, Inc.*.............. 12,800 566,400
Xilinx, Inc.*........................... 21,000 773,063
-----------
6,245,604
-----------
MISC. INDUSTRIAL MACHINERY & EQUIP. - 4.1%
Applied Power, Inc. (A Shares).......... 12,000 475,500
Camco International, Inc................ 8,800 405,900
Harman International Industries, Inc.... 18,900 1,051,312
Illinois Tool Works, Inc................ 6,000 479,250
Tower Automotive, Inc.*................. 7,900 246,875
Varco International, Inc.*.............. 18,700 432,437
-----------
3,091,274
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 1.2%
Brown & Sharpe Manufacturing Co.
(A Shares)............................. 13,200 184,800
Cavalier Homes, Inc..................... 10,546 121,279
Continental Homes Holding Corp.......... 7,600 161,500
Pittway Corp. (A Shares)................ 8,400 449,400
-----------
916,979
-----------
NONFERROUS METALS - 0.4%
Oregon Metallurgical Corp............... 9,900 319,275
-----------
PHARMACEUTICAL PREPARATIONS - 4.1%
Anika Research, Inc.*................... 4,140 15,525
Elan Corp. plc, ADR*.................... 36,000 1,197,000
Physio-Control International Corp.*..... 8,600 193,500
R.P. Scherer Corp.*..................... 21,100 1,060,275
Smithkline Beecham plc, ADR............. 10,000 680,000
-----------
3,146,300
-----------
PRECISION INSTRUMENTS & MEDICAL SUPPLIES - 4.4%
Advanced Technology Laboratories,
Inc.*.................................. 17,800 551,800
Cognex Corp.*........................... 15,000 277,500
Fisher Scientific International......... 8,200 386,425
Haemonetics Corp.*...................... 38,400 724,800
Medtronic, Inc.......................... 10,000 680,000
Nellcor Puritan Bennet, Inc.*........... 30,000 656,250
Respironics, Inc.*...................... 5,400 93,825
-----------
3,370,600
-----------
PRINTING & PUBLISHING - 1.6%
Applied Graphics Technology, Inc.*...... 5,500 160,187
Gibson Greeting, Inc.................... 10,000 196,250
International Imaging Materials, Inc.*.. 8,200 186,550
Wallace Computer Services, Inc.......... 20,000 690,000
-----------
1,232,987
-----------
TELECOMMUNICATIONS EQUIPMENT - 3.5%
Analog Devices, Inc.*................... 34,725 1,176,309
Coherent Communications Systems Corp.*.. 7,900 154,050
Digital Microwave Corp.*................ 12,300 342,863
Microwave Power Devices, Inc.*.......... 12,300 33,825
Network Equip. Technologies, Inc.*...... 19,500 321,750
Oak Industries, Inc.*................... 7,300 167,900
Ortel Corp.*............................ 5,000 120,000
Summa Four, Inc.*....................... 5,100 42,713
Westell Technologies, Inc.*............. 11,200 256,200
-----------
2,615,610
-----------
TEXTILES & APPAREL - 0.6%
Cintas Corp............................. 7,500 440,625
-----------
TRANSPORTATION EQUIPMENT - 0.2%
Dura Automotive Systems, Inc.*.......... 6,600 148,500
-----------
TOTAL MANUFACTURING............................... 29,672,041
-----------
MINING - 3.3%
CRUDE PETROLEUM & NATURAL GAS - 2.2%
American Exploration Co.*............... 7,800 124,800
BJ Services Co.*........................ 6,200 316,200
Belco Oil & Gas Corp.*.................. 7,000 191,625
Devon Energy Corp....................... 8,400 291,900
Pogo Producing Co....................... 8,700 411,075
Snyder Oil Corp......................... 8,900 154,637
Wiser Oil Co............................ 8,800 173,800
-----------
1,664,037
-----------
MISCELLANEOUS METAL ORES - 1.1%
Minerals Technologies, Inc.............. 20,000 820,000
-----------
TOTAL MINING...................................... 2,484,037
-----------
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Fairfield Communities, Inc.*............ 1,600 39,600
-----------
SERVICES - 29.3%
AMUSEMENT & RECREATION SERVICES - 1.0%
Walt Disney Co.......................... 8,000 557,000
Scientific Games Holdings Corp.*........ 7,000 187,250
-----------
744,250
-----------
BUSINESS SERVICES - 7.8%
Automatic Data Processing, Inc.......... 40,000 1,715,000
CDI Corp.*.............................. 8,900 252,538
CUC International, Inc.*................ 20,000 475,000
Donnelley Enterprise Solutions, Inc.*... 4,300 105,350
F.Y.I. Inc.*............................ 7,700 160,737
First Data Corp......................... 45,000 1,642,500
Norrell Corp............................ 17,000 463,250
PMT Services, Inc.*..................... 20,100 351,750
Reuters Holding plc, ADR................ 5,000 382,500
Service Experts, Inc.*.................. 4,900 127,400
Snyder Communications, Inc.*............ 4,400 118,800
TMP Worldwide, Inc.*.................... 8,100 103,275
Tetra Technologies, Inc.*............... 1,700 42,925
-----------
5,941,025
-----------
COMPUTER SERVICES - 15.3%
Axiom Corp.*............................ 42,800 1,027,200
American Management Systems, Inc.*...... 20,000 490,000
BA Merchant Services, Inc. (A Shares)*.. 25,000 446,875
BDM International, Inc.................. 3,700 200,725
Boole & Babbage, Inc.*.................. 14,850 371,250
Broadway & Seymour, Inc.*............... 9,000 94,500
Ceridian Corp.*......................... 14,700 595,350
Cognizant Corp.......................... 45,000 1,485,000
Computer Task Group, Inc................ 8,900 383,812
DecisionOne Holdings Corp.*............. 6,600 108,900
Factset Research Systems, Inc.*......... 5,400 113,400
Fiserv, Inc.*........................... 22,412 823,641
Gensym Corp.*........................... 7,200 85,950
IA Corp. I*............................. 9,500 55,813
Information Resources, Inc.*............ 31 434
Intuit, Inc.*........................... 10,000 315,000
MDL Information Systems, Inc.*.......... 11,000 204,875
Manugistics Group, Inc.*................ 5,400 214,650
Marcam Corp. (Rights 1/1000 Share
of Junior Preferred @ $60)*............ 16,000 208,000
Mastech Corp.*.......................... 7,100 134,900
May & Speh, Inc.*....................... 20,000 245,000
Oracle Systems Corp.*................... 10,000 417,500
The Peak Technologies Group *........... 6,400 76,800
Projest Software, Inc.*................. 4,600 194,925
RTW, Inc.*.............................. 6,250 114,844
SCI Systems, Inc.*...................... 11,600 517,650
Shared Medical Systems Corp............. 30,000 1,477,500
State of The Art, Inc.*................. 10,700 132,412
Sungard Data Systems, Inc.*............. 23,800 940,100
Telxon Corp............................. 11,100 135,975
-----------
11,612,981
-----------
MEDICAL & HEALTH SERVICES - 3.6%
American Medical Response, Inc.*........ 6,100 198,250
Conmed Corp.*........................... 4,500 92,250
Healthsouth Corp.*...................... 30,000 1,158,750
Interim Services, Inc.*................. 22,000 781,000
Pharmaceutical Product Dev., Inc.*...... 9,200 232,300
Total Renal Care Holdings, Inc.*........ 7,000 253,750
Veterinary Centers of America, Inc.*.... 5,800 63,800
-----------
2,780,100
-----------
PERSONAL SERVICES - 0.6%
Stewart Enterprises, Inc. (A Shares).... 14,550 494,700
-----------
SANITARY SERVICES - 1.0%
Allied Waste Industries, Inc.*.......... 28,400 262,700
United Waste Systems, Inc.*............. 14,600 501,875
-----------
764,575
-----------
TOTAL SERVICES.................................... 22,337,631
-----------
TRANSPORTATION - 2.2%
Air Express International Corp.......... 29,925 965,081
Sea Containers, Ltd. ................... 11,300 176,563
U.S. Freightways Corp................... 20,000 548,750
-----------
TOTAL TRANSPORTATION.............................. 1,690,394
-----------
WHOLESALE & RETAIL TRADE - 14.3%
MISCELLANEOUS RETAIL STORES - 3.9%
Autozone, Inc.*......................... 20,000 550,000
Barnes & Noble, Inc.*................... 12,000 324,000
Best Buy Co., Inc.*..................... 14,000 148,750
Just For Feet, Inc.*.................... 6,262 164,377
Office Depot, Inc. (Rights 1/1000
Share of Junior Preferred @ $95)*...... 15,000 266,250
Sports & Recreation, Inc.*.............. 27,750 215,063
Wal-Mart Stores, Inc.................... 35,000 800,625
Walgreen Co. ........................... 13,000 520,000
-----------
2,989,065
-----------
RETAIL APPAREL & ACCESSORY STORES - 0.4%
Gymboree Corp.*......................... 3,700 84,638
Linens `n Things, Inc.*................. 9,700 190,363
-----------
275,001
-----------
RETAIL BUILDING MATERIALS - 1.8%
Home Depot, Inc......................... 28,000 1,403,500
-----------
RETAIL EATING & DRINKING PLACES - 0.6%
Applebee's International, Inc. (Rights
1/1000 Share of Preferred @ $75) 17,000 467,500
-----------
RETAIL FURNITURE & APPLIANCE STORES - 0.9%
Williams-Sonoma, Inc.*.................. 17,900 651,113
-----------
WHOLESALE CHEMICALS & DRUGS - 1.7%
Amerisource Health Corp. (A Shares)*.... 6,900 332,925
Cardinal Health, Inc.................... 16,624 968,348
-----------
1,301,273
-----------
WHOLESALE ELECTRONIC EQUIP. & COMPUTERS - 3.2%
Allen Group, Inc........................ 17,600 391,600
Daisytek International Corp.*........... 8,200 336,200
Hughes Supply, Inc...................... 5,800 250,125
Tech Data Corp.*........................ 43,800 1,199,025
Wyle Electronics........................ 7,500 296,250
-----------
2,473,200
-----------
WHOLESALE MISCELLANEOUS - 1.8%
Alco Standard Corp...................... 17,000 877,625
Bearings, Inc........................... 9,000 250,875
Staples, Inc.*.......................... 11,500 207,719
-----------
1,336,219
-----------
TOTAL WHOLESALE & RETAIL TRADE.................... 10,896,871
-----------
Total Common Stock
(Cost $47,702,993)............................... 76,170,938
-----------
TOTAL INVESTMENTS (COST $47,808,993)+ - 100.1%......... 76,276,938
OTHER ASSETS AND LIABILITIES,NET - (0.1)%.............. (103,197)
-----------
NET ASSETS - 100.0%................................... $76,173,741
===========
* Non-income producing security.
+ Cost for federal income tax purposes (Note 3).
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
ASSETS:
Investments in securities (including
repurchase agreement of $106,000), at
market (identified cost $47,808,993)
(Note 2)............................... $ 76,276,938
Dividends and interest receivable....... 49,214
Receivable for Fund shares sold......... 51,977
Other assets............................ 267
-------------
Total assets........................... 76,378,396
-------------
LIABILITIES:
Due to Manager (Note 4)................. $ 63,955
Payable for investments purchased....... 61,030
Payable for Fund shares redeemed........ 22,138
Other accrued expenses (Note 4)......... 57,532
-------------
Total liabilities...................... 204,655
-------------
NET ASSETS.............................. $ 76,173,741
-------------
NET ASSETS CONSIST OF:
Shares of beneficial interest........... $ 39,640
Additional paid-in capital.............. 47,667,243
Distributions in excess of net
realized gains......................... (1,087)
Net unrealized appreciation of
investments (Note 3)................... 28,467,945
-------------
NET ASSETS, for 3,963,965 shares
outstanding........................... $76,173,741
-------------
NET ASSET VALUE and redemption price
per share ($76,173,741 / 3,963,965
outstanding shares of beneficial
interest, $0.01 par value)............. $19.22
-------------
Maximum offering price per share
(100/96.00 of $19.22).................. $20.02
-------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
FINANCIAL STATEMENTS - CONTINUED
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
INVESTMENT INCOME:
Dividends.............................. $ 371,228
Interest............................... 84,999
-------------
456,227
-------------
EXPENSES:
Management fee (Note 4)................ $ 706,321
Distribution expenses (Note 4)......... 16,899
Custodian fee (Note 4)................. 33,657
Transfer Agent fee (Note 4)............ 15,218
Administration fee (Note 4)............ 63,569
Accounting fee (Note 4)................ 45,000
Trustees' fees and expenses (Note 4)... 5,175
Legal.................................. 39,044
Audit.................................. 36,316
Registration fees...................... 12,085
Shareholder reports.................... 20,305
Miscellaneous.......................... 13,835
-------------
Total expenses....................... 1,007,424
-------------
Net investment loss..................... (551,197)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment
transactions....................... 9,091,297
Net unrealized appreciation of
investments during the year........ 6,815,611
-------------
Net gain on investments................ 15,906,908
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 15,355,711
-------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
FINANCIAL STATEMENTS - CONTINUED
- ----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss.................... $ (551,197)
Net realized gain on investment
transactions......................... 9,091,297
Net unrealized appreciation of
investments during the year.......... 6,815,611
-------------
Net increase in net assets resulting
from operations...................... 15,355,711
-------------
Distributions to shareholders from:
Net capital gain ($2.41 per share)..... (8,583,660)
-------------
Increase in net assets from Fund
share transactions (Note 5).......... 3,090,954
-------------
Increase in net assets.................. 9,863,005
NET ASSETS:
Beginning of year...................... 66,310,736
-------------
End of year............................ $ 76,173,741
-------------
FOR THE YEAR ENDED DECEMBER 31, 1995
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss.................... $ (338,052)
Net realized gain on investment
transactions......................... 7,295,858
Net unrealized appreciation of
investments during the year.......... 8,615,648
-------------
Net increase in net assets resulting
from operations...................... 15,573,454
-------------
Distributions to shareholders from:
Net capital gain ($2.01 per share)..... (6,955,073)
-------------
Decrease in net assets from Fund share
transactions (Note 5).................. (7,574,816)
-------------
Increase in net assets.................. 1,043,565
NET ASSETS:
Beginning of year...................... 65,267,171
-------------
End of year............................ $ 66,310,736
-------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements
and notes thereto.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF YEAR .............. $17.41 $15.14 $16.39 $15.56 $15.68
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment loss* ............................. (0.15) (0.10) (0.03) (0.03) 0.00
Net realized and unrealized gain (loss)
on investments ................................. 4.37 4.38 (0.02) 2.29 0.92
------ ------ ------ ------ ------
Total from investment operations .............. 4.22 4.28 (0.05) 2.26 0.92
------ ------ ------ ------ ------
DISTRIBUTIONS:
From net realized gain on investments ............ (2.41) (2.01) (1.20) (1.43) (1.04)
------ ------ ------ ------ ------
NET ASSET VALUE - END OF YEAR ..................... $19.22 $17.41 $15.14 $16.39 $15.56
====== ====== ====== ====== ======
TOTAL RETURN** .................................... 24.25% 28.43% (0.23)% 14.57% 5.95%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses.......................................... 1.43% 1.43% 1.38% 1.42% 1.46%
Net investment loss ............................. (0.78)% (0.53)% (0.17)% (0.18)% (0.03)%
Portfolio turnover rate ........................... 34.84% 49.12% 37.05% 44.38% 37.79%
Average commission rate paid+...................... $0.063 - - - -
Net assets at end of year (000's omitted).......... $76,174 $66,311 $65,267 $66,091 $60,852
</TABLE>
* The net investment income per share for the year ended December 31, 1996
was calculated using average shares outstanding.
** These results do not include the sales load. If the sales load had been
included, the returns would have been lower.
+ Required disclosure for fiscal years beginning after September 1, 1995
pursuant to SEC regulations.
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
NOTES TO 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 Growth Portfolio
(the "Portfolio") is the only series currently offered by the Fund. 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.
2.SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of the Fund:
SECURITY VALUATION. The 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 Portfolio, through it's custodian,
receives 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. The 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 Portfolio
reclassified $(551,197) and $511,457 from accumulated net investment
loss and accumulated net realized gain, respectively, 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.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions of net investment
income earned and net capital gains realized by the Portfolio, if any,
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.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS. The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
OTHER. Investment security transactions are accounted for on a
trade date basis. The 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, 1996, purchases and sales of investment securities
(excluding short-term investments) were $24,123,641 and $27,640,441,
respectively.
The following balances for the Portfolio are as of December 31,
1996:
COST FOR NET TAX BASIS TAX BASIS GROSS TAX BASIS GROSS
FEDERAL INCOME UNREALIZED UNREALIZED UNREALIZED
TAX PURPOSES APPRECIATION APPRECIATION DEPRECIATION
------------ ------------ ------------ ------------
$47,808,993 $28,467,945 $30,446,978 ($1,979,033)
4.MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES. The Fund 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. The Portfolio's
assets are managed by portfolio advisers who have entered into advisory
agreements with RSMC and the Fund.
For management services to the Fund, RSMC receives an annual fee
equal to 1.00% of the average daily net assets of the 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
the 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. The
management fee paid to RSMC for the year ended December 31, 1996
amounted to $706,321.
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
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 the Portfolio's average daily net assets. The administration
fee paid to RSMC for the year ended December 31, 1996 amounted to
$63,569.
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 the Portfolio as follows: 0.025% of average daily net assets
of the Portfolio up to $50 million; 0.020% of average daily net assets
of the Portfolio in excess of $50 million up to $100 million and 0.015%
of average daily net assets of the 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 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 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 the Portfolio's average daily net assets to
reimburse RSD for such expenses. For the year ended December 31, 1996,
such expenses amounted to $16,899.
RSMC determines the net asset value per share of the Portfolio and
provides accounting services to the Fund pursuant to an Accounting
Services Agreement with the Fund on behalf of the Portfolio. For its
services, RSMC receives an annual fee of $45,000 plus an amount equal to
0.02% of that portion of the Portfolio's average daily net assets in
excess of $100 million. For the year ended December 31, 1996, RSMC's
fees for accounting services amounted to $45,000.
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, 1996, the fees and
expenses of the "non-interested" Trustees amounted to $5,175.
5.FUND SHARES. At December 31, 1996, there was an unlimited number of
shares of beneficial interest, $0.01 par value, authorized. The
following table summarizes the activity in shares of the Portfolio:
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------ ------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares sold.............. 167,501 $3,187,296 388,740 $7,028,995
Shares issued to
shareholders in
reinvestment of
distributions.......... 392,595 7,522,118 349,493 6,021,765
Shares redeemed.......... (404,017) (7,618,460) (1,240,767) (20,625,576)
---------- ---------- ---------- -----------
Net increase (decrease).. 156,079 $3,090,954 (502,534) $(7,574,816)
========== ===========
Shares outstanding:
Beginning of year........ 3,807,886 4,310,420
---------- ----------
End of year.............. 3,963,965 3,807,886
========== ==========
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
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 statement of assets and liabilities,
including the schedule of investments, of the Rodney Square Multi-Manager
Fund - The Growth Portfolio as of December 31, 1996, and the related
statement of operations for the year then ended, the statement of changes
in net assets for each of the two years in the period then ended, and the
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 and financial highlights. Our procedures
included confirmation of securities owned as of December 31, 1996 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 the Rodney Square Multi-Manager Fund - The Growth Portfolio at December
31, 1996, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the 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, 1997
<PAGE>
THE RODNEY SQUARE MULTI-MANAGER FUND - THE GROWTH PORTFOLIO
- -----------------------------------------------------------
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 Portfolio.
The Growth Portfolio paid distributions of $2.405 per share from net
long-term capital gains during the year ended December 31, 1996. Pursuant
to Section 852 of the Internal Revenue Code, the Growth Portfolio
designated $8,583,660 as capital gain distributions for the fiscal year
ended December 31, 1996.
<PAGE>
Outside cover - divided into two sections.
[Left Section]
TRUSTEES
Eric Brucker
Fred L. Buckner
Robert J. Christian
Martin L. Klopping
John J. Quindlen
- -------------------
OFFICERS
Martin L. Klopping, PRESIDENT
Joseph M. Fahey, Jr., VICE PRESIDENT
Robert C. Hancock, VICE PRESIDENT & TREASURER
Carl M. Rizzo, Esq., SECRETARY
Diane D. Marky, ASSISTANT SECRETARY
Connie L. Meyers, ASSISTANT SECRETARY
John J. Kelley, ASSISTANT TREASURER
- -----------------------------------
FUND MANAGER, ADMINISTRATOR AND
TRANSFER AGENT
Rodney Square Management Corporation
- ------------------------------------
CUSTODIAN
Wilmington Trust Company
- ------------------------
DISTRIBUTOR
Rodney Square Distributors, Inc.
- --------------------------------
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
- --------------------------
INDEPENDENT AUDITORS
Ernst & Young LLP
- -----------------
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THE REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
RS04-2/97
[Right section]
the RODNEY SQUARE
MULTI-MANAGER FUND
THE GROWTH PORTFOLIO
[graphic] RSMC logo
ANNUAL REPORT
DECEMBER 31, 1996
