<PAGE> 1
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, 1997.
PORTFOLIO REVIEW *
For the third consecutive year, the stock market was very rewarding to most
equity investors, including shareholders of the Growth Portfolio (the
"Portfolio"). The total return presented below represents change in the market
value plus capital gains distributed during the year. The return assumes that
distributions are reinvested.
<TABLE>
<CAPTION>
Net Asset Value Capital Gains Net Asset Value Total Return
Portfolio as of 12/31/96 Distributed as of 12/31/97 1/1/97 to 12/31/97
- --------- -------------- ------------- -------------- ------------------
<S> <C> <C> <C> <C>
Growth $19.22 $3.10 $21.37 27.50%
</TABLE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Strong domestic business fundamentals propelled U.S. equity markets to a
third consecutive year of returns over 20%. The Standard & Poor's 500 Index
("S&P 500"), an unmanaged, capitalization-weighted index of five hundred
publicly traded stocks, achieved a gain of 33.36% for the year. The Russell
2000, comprised of stocks of the smallest 2,000 of the 3,000 largest U.S.
companies, based on market capitalization, was up 22.36%. The Growth Portfolio
had a 27.50% return, which compared favorably to the 25.17% return for the
Lipper growth funds.
Low unemployment, strong corporate profits, subdued inflation, and
investors' continued preference for stocks benefited U.S. equity markets in
1997, despite volatility caused by higher interest rates in the spring and the
Asian economic crisis in the fall. Although the October turmoil in the Far East
caused a significant selloff across all equity markets, investors eventually
turned to large blue chip stocks and U.S. Government bonds in a "flight to
quality". Despite a mid-year period of relative strength, small and medium cap
stocks continued to underperform their larger counterparts, particularly among
growth stocks. Over the past five years, the S&P 500 Index has outperformed the
Russell 2000 Index by almost four percentage points per year.
The leading market sector for the year was financial services, as banks,
brokerage firms, and insurance companies benefited from consolidation, lower
interest rates, and strong loan growth. Other strong performers were the
airlines, oil servicing, and selected electric utilities, which benefited from
lower interest rates and deregulation. The volatile technology sector reflected
the general tone of the market, as larger issues thrived while many smaller
issues finished the year at half of their value at the end of 1996.
- ----------
* Past performance is not 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 10.
1
<PAGE> 2
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE--continued
================================================================================
As was the case in 1996, the Portfolio's primary focus remained on quality
technology issues, which represented 43% of the Portfolio's holdings at year
end. The Portfolio's outstanding relative performance for 1997 is particularly
noteworthy given the overweighting in technology and an underweighting in the
leading financial services sector. Other key holdings were health care and
retail, economic sectors that are relatively isolated from international
turmoil. Frontier Capital Management Corporation ("Frontier") and William Blair
& Company ("Blair") both contributed to performance by focusing their strong
research capabilities on companies poised for growth over the next several
years.
SUMMARY
As 1998 dawned, investors' primary concern was the potential impact of the
Asian financial crisis. Among the key interrelated concerns were the prospects
for deflation and lower corporate profits, and their potential impact on
investor and consumer confidence.
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
<TABLE>
<CAPTION>
Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93
<S> <C> <C> <C> <C> <C> <C> <C>
RS Growth Portfolio(Load) $ 9,600.00 $11,610.24 $14,762.42 $13,706.91 $19,400.76 $20,555.10 $23,549.98
S&P 500 10,000.00 11,661.00 15,356.37 14,880.32 19,412.87 20,892.13 22,998.06
<CAPTION>
Dec-94 Dec-95 Dec-96 Dec-97
<S> <C> <C> <C> <C>
RS Growth Portfolio(Load) $23,495,81 $30,175.67 $37,493.28 $47,710.19
S&P 500 23,301.63 32,058.38 39,418.99 52,569.17
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year
<S> <C> <C> <C>
S&P 500 33.36% 20.78% 18.05%
RS GROWTH (N.A.V.)** 27.50% 18.39% 17.43%
RS GROWTH (LOAD) 22.40% 17.42% 16.95%
</TABLE>
* Past performance is not indicative of future results. The values shown for
the Portfolio 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 10.
** NAV does not reflect the load.
2
<PAGE> 3
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE -- continued
================================================================================
The Portfolio's ten largest holdings as of December 31, 1997 are listed
below:
Automatic Data Processing, Inc.
Household International, Inc.
Molex, Inc. Class A Shares
Shared Medical Systems Corp.
Home Depot, Inc.
Acxiom Corp.
Tech Data Corp.
Maxim Integrated Products, Inc.
First Data Corp.
Healthsouth Corp.
These positions change over time and may not be in the portfolio at any
time other than December 31,1997.
FUND CHANGES
On February 23, 1998, Fund shareholders approved several significant
changes to the operations of the Portfolio including the assumption of full
investment management responsibility by Wilmington Trust Company, the parent of
Rodney Square Management Corporation, and a change in investment objective
whereby the Portfolio will seek "superior long-term growth of capital".
Wilmington Trust Company assumed investment control of the Portfolio from the
previous sub-advisors, Frontier and Blair, on February 24, 1998.
Up to this point, the Portfolio could be invested in the securities of
either large or small capitalization companies. Going forward, the Portfolio's
investment policy calls for investments to be made in large capitalization
equity securities with strong growth characteristics. The Portfolio's new focus
on large growth companies was made in recognition of the increasing
sophistication of our investors, many of whom prefer to make their own decisions
when allocating investments between large and small companies. To better reflect
this new focus, the Fund's name has been changed to "The Rodney Square Strategic
Equity Fund" and the name of the portfolio to the "Large Cap Growth Equity
Portoflio".
We invite your questions and comments and thank you for your investment in
the Fund. We look forward to reviewing our investment outlook and strategy with
you in our next report to shareholders.
Sincerely,
/s/ ROBERT J. CHRISTIAN
--------------------------------------
Robert J. Christian
President
February 27, 1998
3
<PAGE> 4
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / DECEMBER 31, 1997
(Showing Percentage of Total Value of Net Assets)
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
COMMON STOCK -- 95.3%
COMMUNICATIONS & BROADCASTING--1.9%
Airtouch Communications, Inc.* ...................... 28,000 $1,163,750
Lamar Advertising Co.* .............................. 8,700 345,825
Transaction Network Services, Inc.* ................. 13,950 240,637
---------
TOTAL COMMUNICATIONS & BROADCASTING 1,750,212
---------
FINANCE, INSURANCE & REAL ESTATE--7.6%
SAVINGS, CREDIT & OTHER FINANCIAL INSTITUTIONS--2.7%
Green Tree Financial Corp. ........................ 10,000 261,875
Household Intl., Inc. ............................. 17,000 2,168,563
---------
2,430,438
---------
SECURITY & COMMODITY BROKERS, DEALERS
& SERVICES--2.2%
Credit Acceptance Corp.* .......................... 30,000 232,500
Jefferies Group, Inc. ............................. 9,000 368,437
Raymond James Financial, Inc. ..................... 36,489 1,448,157
---------
2,049,094
---------
STATE & NATIONAL BANKS--2.7%
MBNA Corp. ........................................ 37,500 1,024,219
State Street Corp. ................................ 25,000 1,454,687
---------
2,478,906
---------
TOTAL FINANCE, INSURANCE & REAL ESTATE 6,958,438
---------
MANUFACTURING--37.5%
CHEMICALS & ALLIED PRODUCTS--2.6%
Airgas, Inc. (Rights 1/1000 Share
of Preferred @ $100 Exp. 4/1/07)* ................ 48,700 681,800
Cambrex Corp. ..................................... 7,700 354,200
Hanna (M.A.) Co. .................................. 44,000 1,111,000
The Scotts Co.* ................................... 7,000 211,750
---------
2,358,750
---------
COMPUTER & OFFICE EQUIPMENT--6.2%
Accent Color Sciences, Inc.* ...................... 9,300 22,669
Black Box Corp.* .................................. 31,400 1,110,775
Computer Products, Inc.* .......................... 13,900 314,488
Data General Corp. (Rights 1/100 Share
of Junior Preferred @ $100)* ...................... 37,800 659,138
Digital Link Corp.* ............................... 1,500 14,437
Hyperion Software Corp.* .......................... 18,100 647,075
Intel Corp. ....................................... 16,000 1,124,000
Intergraph Corp.* ................................. 25,900 259,000
Linear Technology Corp. ........................... 10,000 576,250
Microsoft Corp.* .................................. 6,000 775,500
Paxar Corp.* ...................................... 12,300 182,193
---------
5,685,525
---------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
ELECTRICAL MEASUREMENT & TEST INSTRUMENTS--0.8%
Genrad, Inc.* ..................................... 23,000 $ 694,312
---------
FOOD & BEVERAGE--0.6%
Smithfield Foods, Inc.* ........................... 16,200 534,600
---------
IRON & STEEL--0.1%
Quanex Corp. ...................................... 3,000 84,375
---------
MISC. ELECTRICAL MACHINERY, EQUIP. & SUPPLIES--9.3%
American Precision Industries ..................... 6,500 135,281
ANADIGICS, Inc.* .................................. 8,700 262,088
Benchmark Electronics, Inc.* ...................... 8,200 182,962
Berg Electronics Corp.* ........................... 27,200 618,800
Burr-Brown Corp. * ................................ 14,100 452,963
Exar Corp.* ....................................... 9,300 153,450
Genlyte Group, Inc.* .............................. 14,600 259,150
Lattice Semiconductor Corp.* ...................... 16,250 769,844
Maxim Integrated Products, Inc.* .................. 45,200 1,559,400
Microchip Technology, Inc.* ....................... 20,850 625,500
Molex, Inc. (A Shares) ............................ 72,937 2,096,939
Phototronics, Inc. * .............................. 8,400 203,700
Semtech Corp.* .................................... 3,100 121,287
Symbol Technologies, Inc.* ........................ 19,200 724,800
Windmere-Durable Holdings, Inc.,
(Warrants, Exp. 01/19/98, Exercise
Price $7.50) .................................... 131 1,973
Xilinx, Inc.* ..................................... 10,000 350,625
---------
8,518,762
---------
MISC. INDUSTRIAL MACHINERY & EQUIP.--4.4%
Applied Power, Inc. (A Shares) .................... 12,000 828,000
Camco Intl., Inc. ................................. 8,800 560,450
Harman Intl. Industries, Inc. ..................... 18,900 802,069
Illinois Tool Works, Inc. ......................... 12,000 721,500
Innovative Valve Technologies, Inc.* .............. 1,000 20,250
Tower Automotive, Inc.* ........................... 11,500 483,719
Varco Intl., Inc.* ................................ 16,200 347,288
Watts Industries, Inc. (A Shares) ................. 8,600 243,488
---------
4,006,764
---------
MISC. MANUFACTURING INDUSTRIES--2.4%
Blyth Industries, Inc.* ........................... 20,000 598,750
Brown & Sharpe Manufacturing Co. ..................
(A Shares) ...................................... 13,200 134,475
Cavalier Homes, Inc. .............................. 3,046 29,698
Continental Homes Holding Corp. ................... 7,600 305,900
Cuno, Inc.* ....................................... 10,000 152,500
Fairfield Communities, Inc.* ...................... 7,600 335,350
Pittway Corp. (A Shares) .......................... 8,400 584,850
---------
2,141,523
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- continued
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
PHARMACEUTICAL PREPARATIONS--2.7%
Elan Corp. plc ADR* ......................... 10,000 $ 511,875
R.P. Scherer Corp.* ......................... 15,100 921,100
Smithkline Beecham plc ADR .................. 20,000 1,028,750
----------
2,461,725
----------
PRECISION INSTRUMENTS & MEDICAL SUPPLIES--3.2%
ATL Ultrasound, Inc.* ....................... 17,800 818,800
Boston Scientific Corp.* .................... 10,000 458,750
Cognex Corp.* ............................... 15,000 408,750
Invacare Corp. .............................. 17,400 378,450
Medtronic, Inc. ............................. 15,000 784,688
Respironics, Inc.* .......................... 5,400 120,825
----------
2,970,263
----------
PRINTING & PUBLISHING--1.7%
Applied Graphics Technology, Inc.* .......... 7,000 372,750
Gibson Greeting, Inc. ....................... 10,000 218,750
Wallace Computer Services, Inc. ............. 25,000 971,875
----------
1,563,375
----------
SHIPS & BOAT BUILDING & REPAIRS--0.3%
Halter Marine Group, Inc.* .................. 8,850 255,544
----------
TELECOMMUNICATIONS EQUIPMENT--2.4%
Allen Telecom, Inc.* ........................ 14,200 261,812
Analog Devices, Inc.* ....................... 29,600 819,550
Coherent Communications
Systems Corp.* ............................ 7,900 220,212
Digital Microwave Corp.* .................... 14,600 211,700
Microwave Power Devices, Inc.* .............. 12,300 86,100
Network Equipment Technologies, Inc.* ....... 19,500 285,188
Oak Industries, Inc.* ....................... 7,300 216,718
Ortel Corp.* ................................ 5,000 78,750
----------
2,180,030
----------
TRANSPORTATION--0.2%
Fritz Companies, Inc.* ...................... 16,100 224,394
----------
TRANSPORTATION EQUIPMENT--0.6%
Dura Automotive Systems, Inc.* .............. 6,600 163,350
Wabash National Corp. ....................... 13,400 381,062
----------
544,412
----------
TOTAL MANUFACTURING ...................................... 34,224,354
----------
MINING--2.0%
CRUDE PETROLEUM & NATURAL GAS--1.3%
BJ Services Co.* ............................ 6,200 446,013
Cal Dive International, Inc.* ............... 4,700 115,150
Devon Energy Corp. .......................... 8,400 323,400
Snyder Oil Corp. ............................ 11,900 217,175
Tom Brown, Inc.* ............................ 3,100 59,675
----------
1,161,413
----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
MISCELLANEOUS METAL ORES--0.7%
Minerals Technologies, Inc. ................ 15,000 $ 681,562
----------
TOTAL MINING ............................................ 1,842,975
----------
SERVICES--32.2%
AMUSEMENT & RECREATION SERVICES--1.2%
Carnival Corp. ............................. 15,000 830,625
Scientific Games Holdings Corp. ............
(Rights 1/100 of Junior Preferred
@ $84 Exp. 08/11/07)* .................... 10,300 208,575
----------
1,039,200
----------
BUSINESS SERVICES--9.9%
Automatic Data Processing, Inc. ............ 45,500 2,792,563
CDI Corp.* ................................. 8,900 407,175
Cendant Corp.* ............................. 40,000 1,375,000
Donnelley Enterprise Solutions, Inc.* ...... 6,100 48,800
F.Y.I., Inc.* .............................. 7,700 177,100
First Data Corp. ........................... 53,000 1,550,250
Gartner Group Inc. (A Shares)* ............. 35,000 1,303,750
Norrell Corp. .............................. 17,000 337,875
PMT Services, Inc.* ........................ 20,100 278,888
Reuters Holding plc ADR .................... 5,000 331,250
Service Experts, Inc.* ..................... 4,900 140,263
Tetra Technologies, Inc.* .................. 7,800 164,288
TMP Worldwide, Inc.* ....................... 8,100 186,300
----------
9,093,502
----------
COMPUTER SERVICES--15.3%
Acxiom Corp.* .............................. 97,800 1,882,650
American Management Systems, Inc.* ......... 28,100 547,950
BA Merchant Services, Inc. (A Shares)* ..... 30,000 532,500
Boole & Babbage, Inc.* ..................... 14,850 443,644
Broadway & Seymour, Inc.* .................. 10,900 104,912
Cognizant Corp. ............................ 15,000 668,438
Computer Task Group, Inc. .................. 17,800 633,012
Factset Research Systems, Inc.* ............ 5,400 166,050
Fiserv, Inc.* .............................. 22,412 1,100,990
Gensym Corp. (Rights 1/1000 share
of Junior Preferred @ $35 Exp 04/8/07)* ... 7,200 32,850
Hypercom Corp.* ............................ 6,500 91,812
IA Corp. I* ................................ 9,500 18,406
Information Management Assoc.* ............. 7,200 67,500
JDA Software Group, Inc.* .................. 4,700 164,500
Manugistics Group, Inc.* ................... 10,800 481,950
Mapics, Inc.* .............................. 16,000 174,000
Marcam Solutions* .......................... 8,000 58,000
Mastech Corp.* ............................. 7,300 231,775
Mentor Graphics Corp.* ..................... 20,700 200,531
Oracle Systems Corp.* ...................... 15,000 334,687
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- continued
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Project Software, Inc.* ..................... 7,000 $ 164,500
PSW Technologies, Inc.* ..................... 6,700 97,150
SCI Systems, Inc.* .......................... 23,200 1,010,650
Shared Medical Systems Corp. ................ 30,000 1,980,000
State of The Art, Inc.* ..................... 7,700 125,125
Sterling Commerce, Inc.* .................... 20,000 768,750
Sungard Data Systems, Inc.* ................. 47,600 1,475,600
System Software Associates, Inc. ............ 14,900 130,375
Telxon Corp. ................................ 13,300 317,537
----------
14,005,844
----------
HOTELS & OTHER LODGING PLACES--0.2%
Servico, Inc.* .............................. 11,200 189,000
----------
MEDICAL & HEALTH SERVICES--3.9%
Covance, Inc.* .............................. 25,000 496,875
Coventry Corp.* ............................. 17,000 259,250
Curative Health Services, Inc.* ............. 7,400 224,775
Healthsouth Corp.* .......................... 55,000 1,526,250
Interim Services, Inc.* ..................... 26,300 680,513
Medirisk, Inc.* ............................. 8,100 89,100
Res-Care, Inc.* ............................. 8,900 258,100
----------
3,534,863
----------
PERSONAL SERVICES--0.7%
Stewart Enterprises, Inc. (A Shares) ........ 14,550 678,394
----------
SANITARY SERVICES--1.0%
Allied Waste Industries, Inc.* .............. 28,400 662,075
Superior Services, Inc.* .................... 9,900 285,863
----------
947,938
----------
TOTAL SERVICES ........................................... 29,488,741
----------
TRANSPORTATION--2.9%
AirExpress International Corp. .............. 44,887 1,369,054
Sea Containers, Ltd. (A Shares) ............. 11,300 361,600
USFreightways Corp. ......................... 29,000 942,500
----------
TOTAL TRANSPORTATION ..................................... 2,673,154
----------
WHOLESALE & RETAIL TRADE--11.2%
MISCELLANEOUS RETAIL STORES--0.8%
Best Buy Co., Inc.* ......................... 14,000 516,250
West Marine, Inc. ........................... 7,100 158,862
----------
675,112
----------
RETAIL APPAREL & ACCESSORY STORES--1.5%
Gymboree Corp. .............................. 11,600 317,550
Linens 'n Things, Inc.* ..................... 17,500 763,438
Stage Stores, Inc. * ........................ 7,400 276,575
----------
1,357,563
----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
RETAIL BUILDING MATERIALS--3.0%
Barnett, Inc.* .............................. 5,600 $ 123,200
Home Depot, Inc. ............................ 32,000 1,884,000
Lowe's Companies, Inc. ...................... 15,000 715,312
----------
2,722,512
----------
RETAIL EATING & DRINKING PLACES--0.3%
Applebee's Intl., Inc. (Rights 1/1000,
Share of Preferred @
$75 Exp. 09/07/04) ....................... 17,000 307,062
----------
RETAIL FURNITURE & APPLIANCE STORES--0.8%
Williams-Sonoma, Inc.* ...................... 17,900 749,563
----------
WHOLESALE ELECTRONIC EQUIP. & COMPUTERS--2.2%
Daisytek Intl. Corp.* ....................... 8,200 284,950
Tech Data Corp.* ............................ 43,800 1,702,725
----------
1,987,675
----------
WHOLESALE MISCELLANEOUS--2.6%
Applied Industrial Technology, Inc. ......... 12,900 345,075
Staples, Inc.* .............................. 35,000 971,250
Viking Office Products, Inc.* ............... 50,000 1,090,625
----------
2,406,950
----------
TOTAL WHOLESALE & RETAIL TRADE ........................... 10,206,437
----------
TOTAL COMMON STOCK
(COST $49,860,380) ...................................... 87,144,311
----------
</TABLE>
REPURCHASE AGREEMENTS--4.8%
<TABLE>
<CAPTION>
Par
(000)
-----
<S> <C> <C>
With UBS Securities , Inc. at 6.80%,
dated 12/31/97, to be repurchased
at $4,430,173 on 01/02/98,
collaterialized by $4,614,734
Government National Mortgage
Association securities with
various maturities to 11/15/32
(market value $4,521,241)
(COST $4,428,500) ........................ 4,429 4,428,500
-----------
TOTAL INVESTMENTS
(COST $54,288,880)--100.1% .................................. 91,572,811
OTHER ASSETS AND
LIABILITIES, NET--(0.1)% .................................... (127,671)
-----------
NET ASSETS--100.0% ........................................... $91,445,140
===========
</TABLE>
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
ASSETS:
<S> <C> <C>
Investments in securities (including repurchase agreement of
$4,428,500), at market (identified cost $54,288,880) (Note 2) ...... $91,572,811
Dividends and interest receivable ..................................... 39,235
Receivable for investment securities sold ............................. 6,877
Receivable for Fund shares sold ....................................... 1,466
Other assets .......................................................... 238
-----------
Total assets ....................................................... 91,620,627
-----------
LIABILITIES:
Due to Manager (Note 4) ............................................... $ 76,277
Other accrued expenses (Note 4) ....................................... 99,210
-----------
Total liabilities .................................................. 175,487
-----------
NET ASSETS ............................................................ $91,445,140
===========
NET ASSETS CONSIST OF:
Shares of beneficial interest ......................................... $ 42,796
Additional paid-in capital ............................................ 54,118,413
Net unrealized appreciation of investments (Note 3) ................... 37,283,931
-----------
NET ASSETS, for 4,279,574 shares outstanding .......................... $91,445,140
===========
NET ASSET VALUE and redemption price per share ($91,445,140 divided by
4,279,574 outstanding shares of beneficial interest, $0.01 par
value) ............................................................. $21.37
======
Maximum offering price per share (100/96.00 of $21.37) ................ $22.26
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- continued
================================================================================
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 293,753
Interest ..................................................... 147,388
-----------
Total investment income ...................................... 441,141
-----------
EXPENSES:
Management fee (Note 4) ...................................... $ 840,071
Distribution expenses (Note 4) ............................... 26,982
Custodian fee (Note 4) ....................................... 37,836
Transfer Agent fee (Note 4) .................................. 18,081
Administration fee (Note 4) .................................. 75,606
Accounting fee (Note 4) ...................................... 45,000
Trustees' fees and expenses (Note 4) ......................... 5,850
Legal fees ................................................... 31,132
Audit fees ................................................... 32,000
Registration fees ............................................ 14,629
Shareholder reports .......................................... 20,377
Miscellaneous ................................................ 14,421
----------
Total expenses ............................................... 1,161,985
-----------
Net investment loss ............................................. (720,844)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions ................. 12,134,827
Net change in unrealized appreciation of investments ......... 8,815,986
-----------
Net gain on investments ...................................... 20,950,813
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $20,229,969
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- continued
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C>
FOR THE YEAR ENDED DECEMBER 31, 1997
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss ..................................... $ (720,844)
Net realized gain on investment transactions ............ 12,134,827
Net change in unrealized appreciation of investments .... 8,815,986
------------
Net increase in net assets resulting from operations .... 20,229,969
------------
Distributions to shareholders from:
Net capital gain ........................................ (11,758,959)
------------
Increase in net assets from Fund share transactions (Note 5) 6,800,389
------------
Increase in net assets ..................................... 15,271,399
------------
NET ASSETS:
Beginning of year ....................................... 76,173,741
------------
End of year ............................................. $ 91,445,140
============
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 change in unrealized appreciation of investments .... 6,815,611
------------
Net increase in net assets resulting from operations .... 15,355,711
------------
Distributions to shareholders from:
Net capital gain ........................................ (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
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- continued
================================================================================
The following table includes selected data for a share outstanding throughout
each period 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,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF YEAR ............. $ 19.22 $ 17.41 $ 15.14 $ 16.39 $ 15.56
INVESTMENT OPERATIONS:
Net investment loss* ......................... (0.19) (0.15) (0.10) (0.03) (0.03)
Net realized and unrealized gain (loss)
on investments ............................ 5.44 4.37 4.38 (0.02) 2.29
----------- ----------- ---------- ---------- ----------
Total from investment operations ....... 5.25 4.22 4.28 (0.05) 2.26
----------- ----------- ---------- ---------- ----------
DISTRIBUTIONS:
From net realized gain on investments ........ (3.10) (2.41) (2.01) (1.20) (1.43)
----------- ----------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR ................... $ 21.37 $ 19.22 $ 17.41 $ 15.14 $ 16.39
=========== =========== ========== ========== ==========
TOTAL RETURN ** ................................. 27.50% 24.25% 28.43% (0.23)% 14.57%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses ..................................... 1.38% 1.43% 1.43% 1.38% 1.42%
Net investment loss .......................... (0.86)% (0.78)% (0.53)% (0.17)% (0.18)%
Portfolio turnover rate ......................... 28.05% 34.84% 49.12% 37.05% 44.38%
Average commission rate paid +................... $ 0.058 $ 0.063 -- -- --
Net assets at end of year (000 omitted) ......... $ 91,445 $ 76,174 $ 66,311 $ 65,267 $ 66,091
</TABLE>
* Per share information for net investment loss for the years ended December
31, 1996 and 1997 were calculated using the average shares outstanding
method.
** 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.
10
<PAGE> 11
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- continued
================================================================================
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 at least 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 has been made in the financial statements. The
portfolio has reclassified $(376,872) and $(343,972) from accumulated net
investment loss to accumulated net realized gains and additional paid-in
capital, respectively. 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.
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 if
necessary.
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.
11
<PAGE> 12
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- continued
================================================================================
3. PURCHASES AND SALES OF INVESTMENT SECURITIES. During the fiscal year ended
December 31, 1997, purchases and sales of investment securities (excluding
short-term investments) were $22,751,666 and $32,706,580, respectively.
The following balances for the Portfolio are as of December 31, 1997:
<TABLE>
<CAPTION>
Cost for Net Tax Basis Tax Basis Gross Tax Basis Gross
Federal Income Unrealized Unrealized Unrealized
Tax Purposes Appreciation Appreciation Depreciation
-------------- ------------- --------------- ---------------
<S> <C> <C> <C>
$54,288,880 $37,283,931 $39,210,052 $(1,926,121)
</TABLE>
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.
It is anticipated that the 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 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 the Portfolio up to $200 million
of Fund net 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 fees
earned by RSMC for the fiscal year ended December 31, 1997 amounted to
$840,071.
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 the
Portfolio's average daily net assets. The administration fee earned by RSMC
for the fiscal year ended December 31, 1997 amounted to $75,606.
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.
12
<PAGE> 13
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- continued
================================================================================
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 the 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 the Portfolio's average daily net assets to
reimburse RSD for such expenses. For the fiscal year ended December 31,
1997, such expenses amounted to $26,982.
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 fiscal year ended December 31, 1997, 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 fiscal year ended December 31, 1997 the fees and expenses of the
"non-interested" Trustees amounted to $5,850.
5. FUND SHARES. At December 31, 1997, 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:
<TABLE>
<CAPTION>
For the Fiscal Year Ended For the Fiscal Year Ended
December 31, 1997 December 31, 1996
------------------------- --------------------------
Shares Amount Shares Amount
--------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold ........................... 179,170 $ 3,907,003 167,501 $3,187,296
Shares issued to shareholders .........
in reinvestment of distributions .... 490,664 10,372,625 392,595 7,522,118
Shares redeemed ....................... (354,225) (7,479,239) (404,017) (7,618,460)
--------- ----------- --------- ----------
Net increase .......................... 315,609 $ 6,800,389 156,079 $3,090,954
=========== ==========
Shares outstanding: ...................
Beginning of year ..................... 3,963,965 3,807,886
--------- ---------
End of year ........................... 4,279,574 3,963,965
========= =========
</TABLE>
13
<PAGE> 14
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- continued
================================================================================
6. OPERATIONAL CHANGES TO THE PORTFOLIO. Effective January 26, 1998 (1) the
Fund entered into an Administration and Accounting Services Agreement and a
Transfer Agency Agreement with PFPC Inc. ("PFPC") whereby PFPC succeeds
RSMC as Administrator, Accounting Agent and Transfer Agent of the Fund; (2)
the Fund entered into a Secretarial Services Agreement with RSMC whereby
RSMC continues to provide corporate secretarial services for the Fund; and
(3) WTC entered into a Sub-Custodian Agreement with PNC Bank, N.A. ("PNC")
whereby PNC provides sub-custodial services with respect to the Fund's
portfolio securities. Also effective January 26, 1998, the Portfolio's
front-end sales charge was eliminated and its Rule 12b-1 Plan was
terminated.
In addition, at a meeting of shareholders of the Fund held on February 23,
1998, shareholders approved, among other proposals, a change in the
investment management structure of the Portfolio such that, pursuant to an
advisory agreement between WTC and the Fund (the "Advisory Agreement"), WTC
would be responsible for the day-to-day management of the Portfolio's
assets without the use of any sub-advisers. Under the Advisory Agreement,
WTC receives an annual fee equal to 0.55% of the Portfolio's average daily
net assets. WTC has agreed to waive its fee or reimburse the Portfolio
monthly to the extent that the Portfolio's operating expenses (excluding
taxes, extraordinary expenses, brokerage commissions and interest) exceed
an annual rate of 0.75% of the Portfolio's average daily net assets. In
connection with the change in the investment management structure of the
Portfolio, the name of the Fund was changed to The Rodney Square Strategic
Equity Fund and the name of the Portfolio was changed to the Large Cap
Growth Equity Portfolio.
14
<PAGE> 15
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, 1997, 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, 1997 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, 1997,
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 its financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
January 15, 1998
Except for Note 6, as to which the date is
February 23, 1998
15
<PAGE> 16
THE RODNEY SQUARE MULTI-MANAGER FUND -- THE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
================================================================================
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 $3.101 per share from net
long-term capital gains during the year ended December 31, 1997. Pursuant
to Section 852 of the Internal Revenue Code, the Growth Portfolio
designated $11,758,959 as capital gain distributions for the fiscal year
ended December 31, 1997. Of this total capital gain distribution amount,
the Growth Portfolio made a 28 Percent Rate Gain distribution of $5,382,076
and a 20 Percent Rate Gain distribution of $6,376,883.
16
<PAGE> 17
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17
<PAGE> 18
(This page intentionally left blank.)
18
<PAGE> 19
TRUSTEES
Eric Brucker
Fred L. Buckner
Robert J. Christian
John J. Quindlen
Nina M. Webb
----------
OFFICERS
Robert J. Christian, President
Nina M. Webb, Vice President
John J. Kelley, Vice President & Treasurer
Carl M. Rizzo, Esq., Secretary
Diane J. Drake, Assistant Secretary
Mary Jane Maloney, Assistant Secretary
John C. McDonnell, Assistant Treasurer
----------
ADMINISTRATOR,
TRANSFER AGENT AND
ACCOUNTING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
----------
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
----------
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.
RS19 - 12/97
the RODNEY SQUARE
MULTI-MANAGER FUND
THE GROWTH PORTFOLIO
[LOGO]
ANNUAL REPORT
DECEMBER 31, 1997
19
