THE RODNEY SQUARE
STRATEGIC EQUITY FUND
LOGO
(GRAPHIC OMITTED)
ANNUAL REPORT
DECEMBER 31, 1998
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
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PRESIDENT'S MESSAGE
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DEAR SHAREHOLDER:
The management of the Rodney Square Strategic Equity Fund is pleased to
report to you on the activity of the Fund for the period ended December 31,
1998.
PERFORMANCE REVIEW
The Large Cap Growth Equity Portfolio had a total return of 23.58% for the
fiscal year ended December 31, 1998. This return consisted of an increase in net
asset value per share from $21.37 on December 31, 1997 to $23.59 on December 31,
1998, plus distributions per share of $2.79. The Portfolio's performance trailed
the reported return of 38.71% for the Russell 1000 Growth Index for the same
period. Wilmington Trust Company ("WTC"), the Portfolio's advisor, assisted the
Portfolio's return by limiting total expenses of the Portfolio.
The Large Cap Value Equity Portfolio had a total return of (4.79)% from the
Portfolio's commencement of operations on June 29, 1998 to December 31, 1998.
This return consisted of a decrease in net asset value per share from $10.00 on
June 29, 1998 to $9.30 on December 31, 1998, plus distributions per share of
$0.22. The Portfolio's performance trailed the reported return of 3.10% for the
Russell 1000 Value Index for the same period. WTC, the Portfolio's advisor,
assisted the Portfolio's return by limiting total expenses of the Portfolio.
The Small Cap Equity Portfolio had a total return of (6.03)% from the
Portfolio's commencement of operations on June 29, 1998 to December 31, 1998.
This return consisted of a decrease in net asset value per share from $10.00 on
June 29, 1998 to $9.36 on December 31, 1998, plus distributions per share of
$0.04. The Portfolio's performance slightly outperformed the reported return of
(7.12)% for the Russell 2000 Index for the same period. WTC, the Portfolio's
advisor, assisted the Portfolio's return by limiting total expenses of the
Portfolio.
The International Equity Portfolio had a total return of (0.70)% from the
Portfolio's commencement of operations on June 29, 1998 to December 31, 1998.
This return consisted of a decrease in net asset value per share from $10.00 on
June 29, 1998 to $9.82 on December 31, 1998, plus distributions per share of
$0.11. The Portfolio's performance trailed the reported return of 3.51% for the
Morgan Stanley Capital International Europe, Australia and Far East Index (the
"MSCI EAFE Index") for the same period. WTC, the Portfolio's advisor, assisted
the Portfolio's return by limiting total expenses of the Portfolio.
ECONOMIC ENVIRONMENT
From a global standpoint, the major economic catalysts for the year were
quite diverse. While the domestic economy continued to display a utopian
combination of strong growth and low inflation, foreign markets reflected both
continuing strength in Europe and an ongoing struggle in Asia and Latin America.
The American economy continued to celebrate a "Golden Age" of high
employment, low inflation, strong consumer spending, and individual investor
confidence that propelled record levels of cash flows into equity mutual funds.
Interest rates cooperated heroically, as long term rates on U.S. Treasury issues
fell to historic lows and lower mortgage rates provided substantial economic
fuel to individual consumers and investors. The year was not without its
challenges, however, as economic shocks from abroad briefly, but significantly,
interrupted the celebration of prosperity during the third quarter. These
challenges continued to weigh on the market, as corporate profits weakened for
the year, yields on most non-Treasury fixed income securities moved up
significantly from their lows, and cash flows into equity mutual funds moderated
after the late summer correction.
1
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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Internationally, Europe continued to thrive in an environment of
consolidation, efficiency, and an increased focus on enhancing shareholder
value. However, the economic collapse of Russia in August interrupted the air of
prosperity in Europe and the U.S., and hindered the revival efforts of other
geographic sectors. Latin America's problems were aggravated when Russia
collapsed, and mixed signals regarding Brazil's fiscal discipline dampened the
region's attempts at recovery. In Asia, Japan's lack of will to fix its ailing
fundamentals continued to hurt its standing in the global economic community and
impeded regional recovery. Once again, its private economy contracted and only a
revival in the yen's value brought U.S. investors a positive return on Japanese
equity investments. The best available projections indicate that it will be at
least another two years until Japan's economy expands, and even then, fiscal
responsibility is a prerequisite.
At year end, the United States equity market remained the world's capital
market of choice, returning 28.6% (based on the Standard and Poor's 500 Index)
for the year compared to 28.5% for the European component of the MSCI EAFE Index
and 2.4% for the Far East component of the MSCI EAFE Index. Emerging markets as
a group returned (25.3)%. While not earning the highest return among individual
markets for the year, America's combination of efficiency, stability, currency
strength, and free economic system enabled our nation to retain its status as
the premier financial market in the world.
LARGE CAP GROWTH EQUITY PORTFOLIO
The Large Cap Growth Equity Portfolio (the "Growth Portfolio") returned
23.6% for the year ended December 31, 1998. The Standard & Poor's 500 Index ("S
& P 500 Index"), an unmanaged, capitalization-weighted index of five hundred
publicly traded stocks, achieved a gain of 28.6% for the same period. The
Russell 1000 Growth Index returned 38.7% for the year. The Russell 1000 Growth
Index is formed by assigning a style composite score to all of the companies in
the Russell 1000 Index, a passive index that includes the largest 1000 stocks in
the U.S. as measured by market capitalization, to determine their growth or
value characteristics. Approximately 70% of those stocks are placed in either
the Growth or Value Index. The remaining stocks are placed in both indices with
a weight proportional to their growth or value characteristics.
Prior to February 23, 1998, the Growth Portfolio sought to achieve its
investment objective by investing in securities of companies without regard to
market capitalization and its performance for the last year reflects the
relatively wide divergence between the returns on the stocks of large and small
U.S. companies. Effective February 23, 1998, the Growth Portfolio's investment
policies were amended to require the Growth Portfolio to invest substantially
all of its assets in equity securities of companies with large market
capitalizations with strong growth characteristics.
As of the date of this report, the Growth Portfolio is well-diversified
across every broad economic sector with particular emphasis in technology,
pharmaceuticals and healthcare, and retailing. The Growth Portfolio's strategy
continues to emphasize the purchase of stocks that possess, in the judgment of
its investment adviser, WTC, above-average long-term sustainable earnings growth
rates at reasonable prices. The Growth Portfolio's top ten holdings as of
December 31, 1998, representing approximately 26.9% of the Portfolio's assets
are:
<TABLE>
<CAPTION>
10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS 10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS
------------------- ----------------------- ------------------- -----------------------
<S> <C> <C> <C>
Cisco Systems, Inc. 3.2% General Electric Co. 2.8%
Home Depot, Inc. 3.1 Compaq Computer Corp. 2.4
Merck & Co. 3.0 Airtouch Communications, Inc. 2.3
MCI Worldcom, Inc. 3.0 Tyco International Ltd. 2.2
Staples, Inc. 2.8 Johnson & Johnson Co. 2.1
</TABLE>
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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The following graph compares the Growth Portfolio, the Russell 1000 Growth
Index and the S&P 500 Index, for the past 10 fiscal years ended December 31,
1998. Prior to February 23, 1998, the Growth Portfolio was managed by 2 or 3
different portfolio advisers. In addition, as discussed earlier, the Portfolio
operated under certain different investment policies.
LARGE CAP GROWTH EQUITY PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
Average Annual Total Return
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1 YEAR 5 YEAR 10 YEAR
-------- -------- ---------
Growth Portfolio 23.58% 20.19% 17.67%
Russell 1000 Growth
Index 38.71% 25.70% 20.57%
S&P 500 Index 28.58% 24.06% 19.19%
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CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Growth
Portfolio Russell 1000 Growth Index S&P 500 Index
12/31/88 $10,000 $10,000 $10,000
12/31/89 $12,715 $13,592 $13,149
12/31/90 $11,806 $13,557 $12,732
12/31/91 $16,710 $19,137 $16,622
12/31/92 $17,704 $20,094 $17,897
12/31/93 $20,283 $20,677 $19,685
12/31/94 $20,236 $21,227 $19,943
12/31/95 $25,989 $29,121 $27,408
12/31/96 $32,291 $35,854 $33,731
12/31/97 $41,171 $46,786 $44,984
12/31/98 $50,879 $64,897 $57,831
Growth Portfolio Russell 1000 Growth Index S&P 500 Index
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* Past performance is not necessarily indicative of future results. An
investment in the Portfolio is neither insured nor guaranteed by WTC or any
other banking institution, the U.S. Government, the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency.
The values shown reflect a hypothetical initial investment of $10,000 with
dividends reinvested. Returns are higher due to WTC's maintenance of the
Portfolio's expenses. The Russell 1000 Growth Index and the S&P500 Index are
unmanaged stock market indices without any associated expenses and the
returns assume reinvestment of all dividends.You cannot invest in an index.
Please read the prospectus carefully before investing. Distributed by
Provident Distributors, Inc. See Financial Highlights on page 27.
3
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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LARGE CAP VALUE EQUITY PORTFOLIO
The Large Cap Value Equity Portfolio (the "Value Portfolio") and its
predecessor, the Wilmington Trust Value Stock Fund (the "Value Stock Fund"),
returned a combined (2.8)% for the year ended December 31, 1998.1 The S&P 500
Index, an unmanaged, capitalization-weighted index of five hundred publicly
traded stocks, achieved a gain of 28.6% for the same period. The Russell 1000
Value Index returned 3.1% for the year. The Russell 1000 Value Index is formed
by assigning a style composite score to all of the companies in the Russell 1000
Index, a passive index that includes the largest 1000 stocks in the U.S. as
measured by market capitalization, to determine their growth or value
characteristics. Approximately 70% of the stocks are placed in either the Growth
or Value Index. The remaining stocks are placed in both indices with a weight
proportional to their growth or value characteristics.
During the past year, stock market performance was very narrow and
concentrated in the largest stocks in the S&P 500 Index. The largest 50 stocks,
by market cap, contributed nearly 80% of the return achieved by the S&P 500
Index in 1998. Given the Value Portfolio's value style, the majority of these
stocks are exceedingly overvalued, in our opinion. The stocks held in the
portfolio during the year were, on average, much smaller in market
capitalization than the largest 50 stocks in the S&P 500 and, just like the
indices of smaller capitalization stocks, dramatically underperformed the S&P
500. The Value Portfolio's and the Value Stock Fund's performance was also hurt
during the year by holdings in cyclical, economically sensitive stocks that
underperformed the overall market due to fears about world economic conditions
and a lack of exposure to strong performing sectors such as drug companies,
commercial banks, and telecommunications.
As of the date of this report, the Value Portfolio is well-diversified
across every broad economic sector with particular emphasis in insurance,
utilities, health services, and retailing. The Value Portfolio's strategy
continues to emphasize the purchase of stocks that are, in the judgment of its
investment adviser, WTC, out-of-favor and undervalued relative to their past and
potential long-term earnings. The Value Portfolio's top ten holdings as of
December 31, 1998, representing approximately 27.5% of the Portfolio's assets
are:
<TABLE>
<CAPTION>
10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS 10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS
---------------- ----------------------- ------------------- -----------------------
<S> <C> <C> <C>
Texas Utilities Co. 3.1% Genuine Parts Co. 2.7%
Consolidated Edison, Inc. 2.9 Bergen Brunswig Corp. 2.7
American General Co. 2.8 Johnson Controls, Inc. 2.7
Aetna, Inc. 2.7 Consolidated Natural Gas Co. 2.6
Supervalu, Inc. 2.7 Fortune Brands, Inc. 2.6
</TABLE>
The following graph compares the performance of the Value Portfolio and its
predecessor, the Value Stock Fund, with that of the Russell 1000 Value Index and
the S&P 500 Index. The Value Stock Fund's performance has been adjusted to
reflect the annual deduction of fees and expenses applicable to shares of the
Value Portfolio (i.e., adjusted to reflect anticipated expenses, absent
investment advisory fee waivers). The Value Stock Fund was not registered as a
mutual fund under the 1940 Act and therefore was not subject to certain
investment restrictions, limitations and diversification requirements imposed by
the 1940 Act and the Internal Revenue Code of 1986, as amended. If the Value
Stock Fund had been registered under the 1940 Act, its performance may have been
different.
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1 The Value Stock Fund was a collective investment fund that was not
registered as a mutual fund under the Investment Company Act of 1940 ("1940
Act"). On June 29, 1998, the Value Portfolio acquired all the assets and
assumed all the liabilities of the Value Stock Fund.
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PRESIDENT'S MESSAGE -- CONTINUED
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LARGE CAP VALUE EQUITY PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
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Average Annual Total Return
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SINCE
SINCE INCEPTION
6/29/98 1 YEAR 5 YEAR (12/1/91)
--------- -------- -------- -----------
Value Portfolio/
Value Stock Fund (4.79)% (2.75)% 14.30% 15.29%
Russell 1000 Value Index 3.10% 15.63% 20.86% 20.54%
S&P 500 Index 9.24% 28.58% 24.06% 21.08%
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CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Value Portfolio/
Value Stock Fund Russell 1000 Value Index S&P 500 Index
12/01/91 $10,000 $10,000 $10,000
12/31/91 $10,893 $10,838 $11,142
12/31/92 $12,362 $12,334 $11,997
12/31/93 $14,062 $14,569 $13,196
12/31/94 $13,832 $14,279 $13,369
12/31/95 $18,587 $19,754 $18,373
12/31/96 $22,650 $24,025 $22,612
12/31/97 $28,211 $32,477 $30,155
06/29/98 $28,817 $36,427 $35,495
12/31/98 $27,437 $37,556 $38,775
Value Portfolio (6/29/98-12/31/98) Russell 1000 Value Index
Value Stock Fund (12/1/91-6/29/98) S&P 500 Index
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* Past performance is not necessarily indicative of future results. An
investment in the Portfolio is neither insured nor guaranteed by WTC or any
other banking institution, the U.S. Government, the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency.
The values shown reflect a hypothetical initial investment of $10,000 with
dividends reinvested. Returns are higher due to WTC's maintenance of the
Portfolio's expenses. The Russell 1000 Value Index and the S&P 500 Index are
unmanaged stock market indices without any associated expenses and the
returns assume reinvestment of all dividends. You cannot invest in an index.
Please read the prospectus carefully before investing. Distributed by
Provident Distributors,Inc. See Financial Highlights on page 28.
SMALL CAP EQUITY PORTFOLIO
The Small Cap Equity Portfolio (the "Small Cap Portfolio") and its
predecessor, the Wilmington Trust Small Cap Stock Fund (the "Small Cap Fund"),
returned a combined (2.3)% for the year ended December 31, 1998.2 The Russell
2000 Index, comprised of stocks of the smallest 2,000 of the 3,000 largest U.S.
companies based on market capitalization, returned (2.5)% for the year.
The Small Cap Portfolio has a portion of the assets managed in a growth
style and a portion of the assets managed in a value style. The purpose of the
division is to dampen the volatility inherent in small cap portfolios. The
growth portion of the portfolio returned 7.6% during the year which compared
favorably with the Russell 2000 Growth Index which was up 1.1% for the year.
Value based approaches had difficulty in the 1998 market environment and this
portfolio was no exception. The value portion was down 10.9% compared to the
Russell 2000 Value Index which was down 6.4%. The Russell 2000 Growth and Value
Indices are subsets of the Russell 2000 Index that each have the characteristics
(respectively) of growth and value oriented companies.
As of the date of this report, the Small Cap Portfolio is well diversified
across economic sectors with particular emphasis on healthcare, technology and
capital goods. The Small Cap Portfolio has less than average exposure to basic
industry, financials and REIT's. The strategy on the growth side is to purchase
companies with a significant
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2 The Small Cap Fund was a collective investment fund that was not registered
as a mutual fund under the Investment Company Act of 1940 ("1940 Act"). On
June 29, 1998, the Value Portfolio acquired all the assets and assumed all
the liabilities of the Value Stock Fund.
5
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
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PRESIDENT'S MESSAGE -- CONTINUED
================================================================================
and sustainable competitive advantage in their respective industries. The
strategy of the value side is to purchase stocks that appear undervalued
relative to their past and potential long term earnings prospects. The Small Cap
Portfolio's top ten holdings as of December 31, 1998, representing approximately
16.2% of the Portfolio's assets are:
<TABLE>
<CAPTION>
10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS 10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS
---------------- ----------------------- ------------------- -----------------------
<S> <C> <C> <C>
Williams Sonoma, Inc. 1.9% Qlogic Corp. 1.6%
O'Reilly Automotive, Inc. 1.9 Sungard Data Systems, Inc. 1.4
Acxiom Corp. 1.9 Triumph Group 1.4
Linens 'N Things, Inc. 1.7 Fiserv, Inc. 1.4
Profit Recovery Group 1.6 Conmed Corp. 1.4
</TABLE>
The following graph compares the performance of the Small Cap Portfolio and
its predecessor, the Small Cap Fund, with that of the Russell 2000 Index. The
Small Cap Fund's performance has been adjusted to reflect the annual deducation
of fees and expenses applicable to shares of the Small Cap Portfolio (i.e.,
adjusted to reflect anticipated expenses, absent investment advisory fee
waivers). The Small Cap Fund was not registered as a mutual fund under the 1940
Act and therefore was not subject to certain investment restrictions,
limitations and diversification requirements imposed by the 1940 Act and the
Internal Revenue Code of 1986, as amended. If the Small Cap Fund had been
registered under the 1940 Act, its performance may have been different.
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SMALL CAP EQUITY PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
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Average Annual Total Return
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SINCE SINCE
6/29/98 1 YEAR 4/1/97
------- ------ ------
Small Cap Portfolio/
Small Cap Fund (6.03)% (2.32)% 17.40%
Russell 2000 Index (7.12)% (2.54)% 13.99%
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CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SMALL CAP PORTFOLIO/
SMALL CAP FUND RUSSELL 2000 INDEX
4/1/97 $10,000 $10,000
12/31/97 $13,568 $12,904
6/29/98 $14,104 $13,539
12/31/98 $13,253 $12,575
Small Cap Portfolio (6/29/98-12/31/98)
Small Cap Fund (4/1/97-6/29/98)
Russell 2000 Index
* Past performance is not necessarily indicative of future results. An
investment in the Portfolio is neither insured nor guaranteed by WTC or any
other banking institution, the U.S. Government, the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency.
The values shown reflect a hypothetical initial investment of $10,000 with
dividends reinvested. Returns are higher due to WTC's maintenance of the
Portfolio's expenses. Please bear in mind that investing in small companies'
stocks can involve higher risk and volatility than those of larger
companies.The Russell 2000 Index is an unmanaged stock market index without
any associated expenses and the return assumes reinvestment of all
dividends. You cannot invest in an index. Please read the prospectus
carefully before investing.Distributed by Provident Distributors,Inc. See
Financial Highlights on page 29.
6
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
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PRESIDENT'S MESSAGE -- CONTINUED
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INTERNATIONAL EQUITY PORTFOLIO
The International Equity Portfolio (the "International Portfolio") attempts
to achieve long-term capital appreciation by investing in equity securities of
issuers located outside the United States. To achieve this objective, the
International Portfolio employs a multi-manager approach and has appointed three
investment management organizations as sub-advisors, each of which employs
distinct investment approaches to achieve their objective.
The International Portfolio and its predecessor, the Wilmington Trust
International Fund (the "International Fund"), were well diversified during the
past year in terms of both geographic and industry exposure.3 Perhaps most
importantly, the International Portfolio was well positioned to take advantage
of Europe's superiority among the regions of the world as it prepared for the
January 1, 1999 debut of the new Euro currency, a potential competitor for the
U.S. dollar. Collectively and within individual nations, consolidation and
efficiency were themes being played out in Europe. Finland, Belgium, and Italy
were among the world leaders for the year in equity returns. At year end,
countries representing the European component of MSCI EAFE Index comprised 72.0%
of the portfolio, with MSCI EAFE Index Asian markets (15.1%) and emerging
markets (6.1%) representing smaller exposures. The International Portfolio has
remained fully invested, with cash representing 6.0% of the Portfolio's net
assets at year end. For the year, the International Portfolio and its
predecessor performed competitively within the International Portfolio's peer
group and underperformed the MSCI EAFE Index, primarily due to the Index'
exclusion of emerging markets and its focus on large growth companies.
The International Portfolio's top ten holdings as of December 31, 1998,
representing approximately 12.2% of the Portfolio's assets are:
<TABLE>
<CAPTION>
10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS 10 LARGEST HOLDINGS PERCENT OF TOTAL ASSETS
------------------- ----------------------- ------------------- -----------------------
<S> <C> <C> <C>
Aegon NV 1.6% Nestle SA 1.2%
Bank of Ireland 1.4 Telecom Italia SPA di Risp 1.1
Istituto Banc San Paolo Torino 1.4 Takeda Chemical Industries 1.0
Novartis AG (Reg. Shares) 1.3 VEBA AG 1.0
Irish Life PLC 1.2 Telecom Italia SPA di Risp 1.0
</TABLE>
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3 The International Fund was a collective investment fund that was not
registered as a mutual fund under the Investment Company Act of 1940 ("1940
Act"). On June 29, 1998, the International Portfolio acquired all the assets
and assumed all the liabilities of the International Fund.
7
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THE RODNEY SQUARE STRATEGIC EQUITY FUND
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PRESIDENT'S MESSAGE -- CONTINUED
================================================================================
The following graph compares the performance of the International Portfolio
and the International Fund with that of the MSCI EAFE Index. The International
Fund's performance has been adjusted to reflect the annual deduction of fees and
expenses applicable to shares of the International Portfolio (i.e., adjusted to
reflect anticipated expenses, absent investment advisory fee waivers). The
International Fund was not registered as a mutual fund under the 1940 Act and
therefore was not subject to certain investment restrictions, limitations and
diversification requirements imposed by the 1940 Act and the Internal Revenue
Code of 1986, as amended. If the International Fund had been registered under
the 1940 Act, its performance may have been different.
INTERNATIONAL EQUITY PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT*
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
SINCE
6/29/98 1 YEAR 5 YEAR 10 YEAR
------- ------ ------ -------
International Portfolio/
International Fund (0.70)% 13.48% 6.17% 9.06%
MSCI EAFE Index 3.51% 20.00% 9.19% 5.54%
- --------------------------------------------------------------------------------
CHART (GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
International Portfolio/
International Fund MSCI EAFE Index
12/31/88 $10,000 $10,000
12/31/89 $12,782 $11,053
12/31/90 $10,815 $8,461
12/31/91 $12,397 $9,487
12/31/92 $12,374 $8,333
12/31/93 $17,650 $11,046
12/31/94 $17,410 $11,904
12/31/95 $18,680 $13,239
12/31/96 $20,287 $14,040
12/31/97 $20,983 $14,290
6/29/98 $23,981 $16,566
12/31/98 $23,813 $17,147
International Portfolio (6/29/98-12/31/98)
International Fund (12/31/88-6/29/98)
MSCI EAFE Index
- --------------------------------------------------------------------------------
* Past performance is not necessarily indicative of future results. An
investment in the Portfolio is neither insured nor guaranteed by WTC or any
other banking institution, the U.S. Government, the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency.
The values shown reflect a hypothetical initial investment of $10,000 with
dividends reinvested. Returns are higher due to WTC's maintenance of the
Portfolio's expenses. Please bear in mind that investing in foreign
securities involves special risks such as currency fluctuation, less
extensive regulation of foreign brokers and possible political instability.
The MSCIEAFEIndex is an unmanaged index representing the market value
weighted price of 1,100 stocks of the major stock exchanges in Europe,
Australia and the Far East. You cannot invest in an index. Please read the
prospectus carefully before investing. Distributed by Provident
Distributors,Inc. See Financial Highlights on page 30.
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 12, 1999
8
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THE RODNEY SQUARE STRATEGIC EQUITY FUND -- LARGE CAP GROWTH EQUITY PORTFOLIO
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INVESTMENTS / DECEMBER 31, 1998
(Showing Percentage of Total Value of Net Assets)
================================================================================
VALUE
SHARES (NOTE 2)
---------- ----------
COMMON STOCK -- 98.5%
COMMUNICATION & BROADCASTING -- 5.3%
Airtouch Communications, Inc.* ..................... 70,500 $ 5,084,812
MCI Worldcom, Inc.* ................................ 94,000 6,744,500
-----------
TOTAL COMMUNICATION & BROADCASTING 11,829,312
-----------
FINANCE & INSURANCE -- 7.6%
INSURANCE CARRIERS -- 3.8%
American International Group, Inc. ................. 38,125 3,683,828
Conseco, Inc. ...................................... 25,000 764,062
Equitable Cos., Inc. ............................... 26,000 1,504,750
Protective Life Corp. .............................. 65,000 2,587,812
-----------
8,540,452
-----------
SECURITY & COMMODITY BROKERS,
DEALERS & SERVICES -- 2.3%
Raymond James Financial, Inc. ...................... 30,000 633,750
SunAmerica, Inc. ................................... 56,250 4,563,281
-----------
5,197,031
-----------
STATE & NATIONAL BANKS -- 1.5%
Citigroup, Inc. .................................... 30,499 1,509,700
State Street Corp. ................................. 25,000 1,739,062
-----------
3,248,762
-----------
TOTAL FINANCE & INSURANCE 16,986,245
-----------
MANUFACTURING -- 44.0%
AIRCRAFT & AEROSPACE -- 2.7%
Allied-Signal, Inc. .................................. 70,000 3,101,875
United Technologies Corp. ............................ 26,500 2,881,875
-----------
5,983,750
-----------
CHEMICAL & ALLIED PRODUCTS -- 2.8%
Air Products & Chemicals, Inc. ....................... 95,000 3,800,000
Sigma Aldrich Corp. .................................. 85,000 2,496,875
-----------
6,296,875
-----------
COMPUTERS & OFFICE EQUIPMENT -- 10.4%
Compaq Computer Corp. ................................ 130,000 5,451,875
Computer Associates International, Inc ............... 60,250 2,568,156
Dell Computer Corp.* ................................. 50,000 3,659,375
Hewlett-Packard Co. .................................. 54,000 3,688,875
Intel Corp. .......................................... 35,000 4,149,687
Microsoft Corp.* ..................................... 26,400 3,661,350
-----------
23,179,318
-----------
CONSUMER PRODUCTS -- 1.2%
Fortune Brands, Inc. ................................. 60,000 1,897,500
Procter & Gamble Co. ................................. 9,000 821,812
-----------
2,719,312
-----------
VALUE
SHARES (NOTE 2)
---------- ---------
ELECTRONICS -- 2.3%
Analog Devices, Inc.* .................................. 120,000 $ 3,765,000
Maxim Integrated Products, Inc.* ....................... 30,200 1,319,362
-----------
5,084,362
-----------
FOOD & BEVERAGE -- 3.2%
Coca-Cola Co. .......................................... 20,000 1,337,500
PepsiCo, Inc. .......................................... 85,000 3,479,688
Sara Lee Corp. ......................................... 80,000 2,255,000
-----------
7,072,188
-----------
MISC. ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES -- 4.9%
General Electric Co. ................................... 61,000 6,225,813
Tyco International Ltd. ................................ 64,000 4,828,000
-----------
11,053,813
-----------
MISC. INDUSTRIAL MACHINERY & EQUIPMENT -- 1.6%
Illinois Tool Works, Inc. .............................. 62,000 3,596,000
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES-- 3.0%
American Home Products Corp. ........................... 50,000 2,815,625
Berkshire Hathaway, Inc. (B Shares) .................... 1,365 3,207,750
Monsanto Co. ........................................... 15,000 712,500
-----------
6,735,875
-----------
OIL FIELD MACHINERY & EQUIPMENT -- 1.0%
Schlumberger Ltd. ...................................... 46,384 2,139,462
-----------
PHARMACEUTICAL PREPARATIONS-- 6.9%
Abbott Laboratories .................................... 55,000 2,695,000
Amgen, Inc.* ........................................... 10,000 1,045,625
Biogen, Inc.* .......................................... 7,000 581,000
Bristol-Meyers Squibb Co. .............................. 20,000 2,676,250
Chiron Corp.* .......................................... 50,000 1,309,375
Johnson & Johnson Co. .................................. 55,000 4,613,125
Schering-Plough Corp. .................................. 43,000 2,375,750
-----------
15,296,125
-----------
PRECISION INSTRUMENTS & MEDICAL SUPPLIES -- 1.7%
Baxter International, Inc. ............................. 18,000 1,157,625
Medtronic, Inc. ........................................ 35,000 2,598,750
-----------
3,756,375
-----------
TELECOMMUNICATIONS EQUIPMENT-- 1.4%
Tellabs, Inc.* ......................................... 20,000 1,371,250
Uniphase Corp.* ........................................ 27,000 1,873,125
-----------
3,244,375
-----------
TOBACCO -- 0.9%
Philip Morris Cos., Inc. ............................... 40,000 2,140,000
-----------
TOTAL MANUFACTURING ........................................... 98,297,830
-----------
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- LARGE CAP GROWTH EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
VALUE
SHARES (NOTE 2)
------- ----------
OIL & GAS -- 0.9%
Enron Oil & Gas Co. .................................. 110,000 $ 1,897,500
-----------
SERVICES -- 25.8%
AMUSEMENT & RECREATIONAL SERVICES -- 2.2%
Carnival Corp., (A Shares) ........................... 40,000 1,920,000
Warner-Lambert Co. ................................... 39,000 2,932,313
-----------
4,852,313
-----------
BUSINESS SERVICES -- 7.9%
Automatic Data Processing, Inc. ...................... 30,500 2,445,719
Corrections Corporation of America* .................. 73,000 1,286,625
Equifax, Inc. ........................................ 36,000 1,230,750
Gartner Group, Inc.* ................................. 60,000 1,275,000
Halliburton Co. ...................................... 59,500 1,762,688
Interpublic Group of Cos., Inc. ...................... 15,000 1,196,250
Merck & Co., Inc. .................................... 46,000 6,793,625
Williams Cos., Inc. .................................. 54,000 1,684,125
-----------
17,674,782
-----------
COMPUTER SERVICES -- 12.8%
Acxiom Corp.* ........................................ 70,000 2,170,000
American Management Systems, Inc.* ................... 58,100 2,324,000
Cisco Systems, Inc.* ................................. 76,500 7,100,156
IMS Health Inc. ...................................... 46,500 3,507,844
Network Associates, Inc.* ............................ 60,000 3,975,000
Oracle Corp.* ........................................ 90,000 3,881,250
Peoplesoft, Inc.* ................................... 80,000 1,515,000
Sterling Commerce, Inc.* ............................. 10,000 450,000
Sun Microsystems, Inc.* .............................. 20,000 1,712,500
SunGard Data Systems, Inc.* .......................... 47,600 1,889,125
-----------
28,524,875
-----------
MEDICAL & HEALTH SERVICES -- 1.0%
Healthsouth Corp.* ................................... 149,000 2,300,188
-----------
PERSONAL SERVICES -- 0.6%
Service Corp. International .......................... 21,900 833,569
Stewart Enterprises, Inc. ............................ 29,100 647,475
-----------
1,481,044
-----------
SANITARY SERVICES -- 1.3%
Waste Management, Inc. ............................... 60,715 2,830,837
-----------
TOTAL SERVICES .............................................. 57,664,039
-----------
VALUE
SHARES (NOTE 2)
-------- -----------
WHOLESALE & RETAIL TRADE -- 14.9%
MISCELLANEOUS RETAIL STORES -- 5.1%
Borders Group, Inc.* ............................... 100,000 $ 2,493,750
Costco Companies, Inc.* ............................ 40,000 2,887,500
Dayton Hudson Corp. ................................ 30,000 1,627,500
Dollar General Corp. ............................... 46,875 1,107,422
Family Dollar Stores, Inc. ......................... 150,000 3,300,000
------------
11,416,172
------------
RETAIL APPAREL & ACCESSORY STORES -- 1.3%
Linens 'N Things, Inc.* ............................ 75,000 2,971,875
------------
RETAIL BUILDING MATERIAL-- 3.2%
Home Depot, Inc. ................................... 115,000 7,036,563
------------
RETAIL FURNITURE & APPLIANCE STORES -- 0.7%
Williams Sonoma, Inc.* ............................. 35,800 1,443,188
------------
RETAIL OFFICE SUPPLIES -- 2.8%
Staples, Inc. * .................................... 143,500 6,269,156
------------
WHOLESALE CHEMICALS & DRUGS -- 1.8%
Cardinal Health, Inc. .............................. 53,467 4,056,809
------------
TOTAL WHOLESALE & RETAIL TRADE ........................... 33,193,763
------------
TOTAL COMMON STOCK
(COST $174,609,670) .................................... 219,868,689
------------
SHORT-TERM INVESTMENTS -- 1.7%
Samson Street Fund -
Money Market Portfolio 1,924,062 1,924,062
Temp Cash Fund - Dollar Series .................... 1,924,062 1,924,062
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,848,124) ...................................... 3,848,124
------------
Total Investments -- 100.2%
(Cost $178,457,794)(DAGGER) ................................... 223,716,813
OTHER ASSETS AND
LIABILITIES, NET-- (0.2%) ..................................... (565,337)
------------
NET ASSETS-- 100.0% .............................................. $223,151,476
============
* Non-income producing security.
(DAGGER) The cost for Federal income tax purposes. At December 31, 1998, net
unrealized appreciation was $45,259,019. This consisted of aggregate
gross unrealized appreciation for all securities for which there was an
excess of market value over tax cost of $52,774,539, and aggregate
gross unrealized depreciation for all securities for which there was an
excess of tax cost over market value of $7,515,520.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- LARGE CAP VALUE EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS /DECEMBER 31, 1998
(Showing Percentage of Total Value of Net Assets)
================================================================================
VALUE
SHARES (NOTE 2)
------- -----------
COMMON STOCK -- 93.6%
ELECTRIC, GAS & WATER UTILITIES -- 18.0%
BEC Energy ......................................... 26,300 $ 1,083,231
Coastal Corp. ...................................... 50,500 1,764,344
Consolidated Edison, Inc. .......................... 51,300 2,712,488
Consolidated Natural Gas Co. ....................... 45,400 2,451,600
Entergy Corp. ...................................... 75,500 2,349,938
Houston Industries, Inc. ........................... 42,100 1,352,463
New Century Energies, Inc. ......................... 44,900 2,188,875
Texas Utilities Co. ................................ 63,800 2,978,663
-----------
TOTAL ELECTRIC, GAS & WATER UTILITIES 16,881,602
-----------
FINANCE & INSURANCE -- 17.5%
INSURANCE CARRIERS -- 12.6%
Aetna, Inc. ........................................ 33,200 2,610,350
Allmerica Financial Corp. .......................... 39,500 2,286,062
American General Corp. ............................. 34,200 2,667,600
MBIA, Inc. ......................................... 34,500 2,261,906
Safeco Corp. ....................................... 46,400 1,992,300
-----------
11,818,218
-----------
SECURITY & COMMODITY BROKERS, DEALERS & SERVICES -- 2.7%
Chase Manhattan Corp. .............................. 19,800 1,347,637
J.P. Morgan & Co., Inc. ............................ 11,700 1,229,231
-----------
2,576,868
-----------
STATE & NATIONAL BANKS -- 2.2%
Bank One Corp. ..................................... 22,000 1,123,375
First Union Corp. .................................. 15,100 918,269
-----------
2,041,644
-----------
TOTAL FINANCE & INSURANCE ................................. 16,436,730
-----------
MANUFACTURING -- 32.1%
CHEMICAL & ALLIED PRODUCTS -- 2.5%
Great Lakes Chemical Corp. ......................... 58,900 2,356,000
-----------
CONSUMER PRODUCTS -- 5.7%
American Greetings Corp. ........................... 41,400 1,699,987
American Home Products Corp. ....................... 21,900 1,233,244
Fortune Brands, Inc. ............................... 77,005 2,435,283
-----------
5,368,514
-----------
ELECTRONICS -- 7.5%
Avnet, Inc. ........................................ 30,967 1,873,503
Emerson Electric Co. ............................... 18,200 1,138,637
Harris Corp. ....................................... 46,796 1,713,903
Raytheon Co. (A shares) ............................ 44,300 2,289,756
-----------
7,015,799
-----------
VALUE
SHARES (NOTE 2)
------- ----------
IRON & STEEL -- 2.4%
LTV Corp. ............................................ 384,600 $ 2,235,487
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES -- 7.6%
Cooper Industries, Inc. .............................. 42,000 2,002,875
Genuine Parts Co. .................................... 77,200 2,581,375
Johnson Controls, Inc. ............................... 43,100 2,542,900
-----------
7,127,150
-----------
OIL FIELD MACHINERY & EQUIPMENT -- 2.1%
Baker Hughes, Inc. ................................... 113,600 2,009,300
-----------
PHARMACEUTICAL PREPARATIONS -- 1.9%
Bausch & Lomb, Inc. .................................. 2,800 168,000
Pharmacia & Upjohn, Inc. ............................. 28,300 1,602,487
-----------
1,770,487
-----------
TEXTILES & APPAREL -- 2.4%
VF Corp. ............................................. 47,300 2,217,188
-----------
TOTAL MANUFACTURING ......................................... 30,099,925
-----------
OIL & GAS -- 1.3%
Kerr-McGee Corp. ..................................... 31,200 1,193,400
-----------
TOTAL OIL & GAS ............................................. 1,193,400
-----------
SERVICES -- 3.4%
Columbia Healthcare Corp. ............................ 91,900 2,274,525
Meditrust Corp. ...................................... 57,700 872,713
-----------
TOTAL SERVICES .............................................. 3,147,238
-----------
WHOLESALE & RETAIL TRADE -- 16.7%
MISCELLANEOUS RETAIL STORES -- 3.5%
Dillards, Inc. (A shares) ............................ 70,900 2,011,788
Toys "R" Us, Inc. * ................................. 74,300 1,253,813
-----------
3,265,601
-----------
RETAIL EATING & DRINKING PLACES -- 1.5%
Darden Restaurants ................................... 78,900 1,420,200
-----------
RETAIL FOOD STORES -- 5.2%
Food Lion Inc. Class A ............................... 219,400 2,331,125
Supervalu, Inc. ...................................... 92,500 2,590,000
-----------
4,921,125
-----------
TRANSPORTATION -- 2.3%
AMR Corp.* ........................................... 36,200 2,149,375
-----------
WHOLESALE MISCELLANEOUS -- 4.2%
Bergen Brunswig Corp. ................................ 73,933 2,578,413
Unisource Worldwide, Inc. ........................... 185,500 1,344,875
-----------
3,923,288
-----------
TOTAL WHOLESALE & RETAIL TRADE .............................. 15,679,589
-----------
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- LARGE CAP VALUE EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
VALUE
SHARES (NOTE 2)
------------ ----------
REAL ESTATE INVESTMENT TRUSTS -- 4.6%
Archstone Communities Trust ................... 104,900 $ 2,124,225
Post Properties, Inc. ......................... 56,600 2,175,563
-----------
TOTAL REAL ESTATE INVESTMENT TRUSTS ...................... 4,299,788
-----------
TOTAL COMMON STOCK
(COST $82,999,503) ..................................... 87,738,272
-----------
SHORT-TERM INVESTMENTS -- 6.5%
Samson Street Fund -
Money Market Portfolio ...................... 3,059,360 3,059,360
Temp Cash Fund - Dollar Series ................ 3,059,359 3,059,359
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $6,118,719) ...................................... 6,118,719
-----------
TOTAL INVESTMENTS -- 100.1%
(Cost $89,118,222)(DAGGER) .................................... 93,856,991
OTHER ASSETS AND
LIABILITIES, NET-- (0.1%) ..................................... (77,419)
-----------
NET ASSETS-- 100.0% .............................................. $93,779,572
===========
* Non-income producing security
(DAGGER) The cost for Federal income tax purposes. At December 31, 1998,
net unrealized appreciation was $4,738,769. This consisted of aggregate
gross unrealized appreciation for all securities for which there was an
excess of market value over tax cost of $12,086,992, and aggregate gross
unrealized depreciation for all securities for which there was an excess of
tax cost over market value of $7,348,223.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / DECEMBER 31, 1998
(Showing Percentage of Total Value of Net Assets)
================================================================================
VALUE
SHARES (NOTE 2)
---------- ----------
COMMON STOCK -- 96.6%
COMMUNICATION & BROADCASTING -- 0.4%
Abovenet Communications, Inc.* ................ 10,000 $ 210,000
Primus Telecommunications Group, Inc.* ........ 9,000 148,500
----------
TOTAL COMMUNICATION & BROADCASTING ........................ 358,500
----------
ELECTRIC, GAS & WATER UTILITIES-- 3.6%
Central Hudson Gas & Electric ................. 9,200 411,700
Commonwealth Energy Systems ................... 19,300 781,650
Nevada Power Co. .............................. 23,500 611,000
Northwest Natural Gas Co. ..................... 24,800 641,700
Rochester Gas and Electric Corp. .............. 17,000 531,250
----------
TOTAL ELECTRIC, GAS & WATER UTILITIES ..................... 2,977,300
----------
FINANCE & INSURANCE -- 8.3%
INSURANCE CARRIERS -- 4.1%
Guaranteed Life Companies Inc. ................ 19,800 366,300
HCC Insurance Holdings, Inc. .................. 22,000 387,750
Life USA Holding, Inc. ........................ 47,500 611,562
Medical Assurance, Inc.* ...................... 11,000 363,687
Protective Life Corp. ......................... 19,200 764,400
PXRE Corp. .................................... 19,700 493,731
RenaissanceRe Holdings Limited ................ 11,238 411,592
----------
3,399,022
----------
SAVINGS, CREDIT & OTHER FINANCIAL INSTITUTIONS -- 1.3%
Affiliated Managers Group, Inc.* .............. 15,000 448,125
JSB Financial, Inc. ........................... 11,000 598,125
----------
1,046,250
----------
SECURITY & COMMODITY BROKERS, DEALERS & SERVICES -- 2.0%
ARM Financial Group, Inc.
(A Shares) .................................. 34,500 765,469
T & W Financial Corp.* ........................ 65,000 731,250
Waddell & Reed Financial, Inc. ................ 5,000 118,437
----------
1,615,156
----------
STATE & NATIONAL BANKS -- 0.9%
Commonwealth Bancorp., Inc. ................... 46,900 729,881
----------
TOTAL FINANCE & INSURANCE ................................. 6,790,309
----------
MANUFACTURING -- 38.1%
AIRCRAFT & AEROSPACE -- 1.4%
Triumph Group, Inc.* .......................... 37,000 1,184,000
----------
AUTOMOTIVE EQUIPMENT -- 1.2%
Borge-Warner Automotive, Inc. ................. 9,500 530,219
Hayes Lemmerz International, Inc.* ............ 7,000 211,312
Lawson Products, Inc. ......................... 9,600 220,800
----------
962,331
----------
VALUE
SHARES (NOTE 2)
-------- -----------
CHEMICAL & ALLIED PRODUCTS-- 1.7%
Bush Boake Allen, Inc.* ............................... 23,200 $ 817,800
Cambrex Corp. ......................................... 20,000 480,000
Tetra Technologies, Inc.* ............................. 9,700 106,094
----------
1,403,894
----------
COMPUTERS & OFFICE EQUIPMENT-- 3.6%
Data General Corp.* ................................... 47,500 780,781
Hyperion Solutions, Corp.* ............................ 33,750 607,500
Maxtor Corp.* ......................................... 20,000 280,000
QLogic Corp.* ......................................... 10,000 1,308,750
----------
2,977,031
----------
CONSUMER PRODUCTS -- 0.3%
Gibson Greetings, Inc.* ............................... 19,800 235,125
----------
ELECTRONICS -- 1.8%
Analog Devices, Inc.* ................................. 15,100 473,762
Burr-Brown Corp.* ..................................... 24,975 585,352
Lattice Semiconductor Corp.* .......................... 9,000 413,156
----------
1,472,270
----------
FOOD AND BEVERAGE -- 0.5%
Chiquita Brands International, Inc. ................... 44,000 420,750
----------
LIGHTING FIXTURES -- 1.5%
Advanced Lighting Technologies,
Inc.* ............................................... 40,300 392,925
Juno Lighting, Inc. ................................... 34,100 797,087
----------
1,190,012
----------
MANUFACTURED HOMES -- 0.2%
Cavalier Homes, Inc. .................................. 13,125 149,297
----------
METAL PRODUCTS -- 1.4%
Commercial Metals Co. ................................. 15,900 441,225
Commonwealth Industries, Inc. ......................... 28,100 263,437
Shiloh Industries, Inc.* .............................. 32,100 421,312
----------
1,125,974
----------
MISC. ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES -- 1.5%
Marshall Industries* .................................. 20,600 504,700
Mercury Computer Systems, Inc.* ....................... 12,000 337,500
Sensormatic Electronics Corp.* ........................ 22,000 152,625
Spectrian Corp.* ...................................... 19,500 251,062
----------
1,245,887
----------
MISC. INDUSTRIAL MACHINERY & EQUIPMENT -- 5.2%
Applied Industrial Technologies, Inc. ................. 22,875 317,391
Brown & Sharpe Manufacturing Co. ......................
(A Shares)* ......................................... 43,600 348,800
Cognex Corp. * ........................................ 18,800 376,000
DT Industries, Inc. ................................... 26,000 409,500
Global Industrial Technologies, Inc.* ................. 85,000 908,437
The accompanying notes are an integral part of the financial statements
13
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
VALUE
SHARES (NOTE 2)
-------- --------
IDEX Corp. ........................................ 27,100 $ 663,950
Terex Corp.* ...................................... 14,500 414,156
Titan International, Inc. ......................... 31,000 294,500
Varco International, Inc.* ........................ 32,000 248,000
Watts Industries, Inc. ............................ 18,600 309,225
----------
4,289,959
----------
MISCELLANEOUS MANUFACTURING INDUSTRIES -- 3.0%
Griffon Corp.* .................................... 82,400 875,500
Harman International Industries ................... 16,910 644,694
International Speedway Corp.
(A Shares) ...................................... 24,000 972,000
----------
2,492,194
----------
PAPER & PAPER PRODUCTS -- 0.7%
Glatfelter (P.H.) Co. ............................. 47,300 585,337
----------
PHARMACEUTICAL PREPARATIONS -- 1.8%
Agouron Pharmaceuticals, Inc.* .................... 12,000 705,000
Cellegy Pharmaceuticals* .......................... 25,000 87,500
Guilford Pharmaceuticals, Inc.* ................... 10,000 142,500
Roberts Pharmaceuticals* .......................... 26,100 567,675
----------
1,502,675
----------
PRECISION INSTRUMENTS & MEDICAL SUPPLIES -- 8.4%
Anika Therapeutics Inc.* .......................... 3,240 17,415
Closure Medical Corp.* ............................ 15,000 447,187
Conmed Corp.* ..................................... 35,700 1,178,100
Cryolife Inc.* .................................... 46,000 546,250
Haemonetics Corp.* ................................ 33,000 750,750
Maxxim Medical, Inc.* ............................. 27,500 818,125
Mentor Corp. ...................................... 28,000 656,250
Protein Design Lab, Inc.* ......................... 30,000 697,500
Respironics, Inc. * .............................. 33,700 675,053
Theragenics Corp.* ................................ 64,000 1,076,000
----------
6,862,630
----------
TELECOMMUNICATIONS EQUIPMENT-- 3.0%
Allen Telecom, Inc.* .............................. 63,000 421,312
Anadigics, Inc.* .................................. 15,100 172,706
Black Box Corp.* .................................. 16,700 632,512
Glenayre Technologies* ............................ 60,700 269,356
Network Equipment Technologies* ................... 38,000 391,875
Xylan Corp.* ...................................... 35,000 614,687
----------
2,502,448
----------
VALUE
SHARES (NOTE 2)
-------- --------
TEXTILES & APPAREL -- 0.9%
Unifirst Corp. .................................... 20,000 $ 456,250
Wellman, Inc. ..................................... 25,600 260,800
----------
717,050
----------
TOTAL MANUFACTURING ....................................... 31,318,864
----------
OIL & GAS -- 2.8%
Devon Energy Corp. ................................ 15,000 460,313
Energen Corp. ..................................... 33,600 655,200
Pool Energy Service Co.* .......................... 57,900 626,044
Tesoro Petroleum* ................................. 46,100 558,962
----------
TOTAL OIL & GAS ........................................... 2,300,519
----------
REAL ESTATE INVESTMENT TRUSTS -- 1.9%
American Health Properties, Inc. .................. 20,300 418,688
Developers Diversified Realty Corp. ............... 30,700 544,925
Kilroy Realty Corp. ............................... 25,300 581,900
----------
TOTAL REAL ESTATE INVESTMENT TRUSTS ....................... 1,545,513
----------
SERVICES -- 21.4%
BUSINESS SERVICES -- 3.5%
CDI Corp. * ....................................... 12,500 252,344
Inacom Corp.* ..................................... 18,900 281,138
Norrell Corp. ..................................... 34,600 510,350
SOS Staffing Services, Inc.* ...................... 24,000 174,000
Sterling Commerce, Inc.* .......................... 1,673 75,285
The Profit Recovery Group
International, Inc.* ............................ 35,000 1,310,313
Towne Services, Inc. .............................. 35,000 245,000
-----------
2,848,430
-----------
COMPUTER SERVICES -- 9.7%
Acxiom Corp.* ..................................... 50,700 1,571,700
Aspen Technology, Inc.* ........................... 20,000 290,000
Boole & Babbage Inc.* ............................. 22,612 665,641
Ceridian Corp.* ................................... 9,200 642,275
Computer Task Group, Inc.* ........................ 22,200 602,175
Factset Research Systems, Inc.* ................... 17,200 1,062,100
Fiserv, Inc. * .................................... 23,000 1,183,063
Mastech Corp.* .................................... 26,200 749,975
SunGard Data Systems, Inc.* ....................... 30,000 1,190,625
----------
7,957,554
----------
MEDICAL & HEALTH SERVICES -- 2.8%
Healthplan Services Corp. ......................... 60,500 695,750
Integrated Health Services, Inc. .................. 40,300 569,238
New American Healthcare Corp. ..................... 30,000 335,625
Orthodontic Centers of America, Inc.* ............. 39,000 758,063
----------
2,358,676
----------
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- SMALL CAP EQUITY PORTFOLIO
- -------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
===============================================================================
VALUE
SHARES (NOTE 2)
-------- ---------
PERSONAL SERVICES -- 4.3%
Alternative Living Services, Inc.* ................ 31,000 $1,061,750
F.Y.I., Inc.* ..................................... 10,200 326,400
ITT Educational Services, Inc.* ................... 25,000 850,000
Shurgard Storage Centers, Inc. .................... 18,200 469,788
Stewart Enterprises, Inc. ......................... 36,300 807,675
-----------
3,515,613
-----------
SANITARY SERVICES -- 1.1%
Allied Waste Industries, Inc. * ................... 37,900 895,388
-----------
TOTAL SERVICES ............................................ 17,575,661
-----------
TRANSPORTATION -- 3.9%
Air Express International Corp. ................... 34,580 752,115
Coach USA, Inc.* .................................. 15,000 520,313
Consolidated Freightways Corp.* ................... 45,600 723,900
Sea Containers, Ltd. .............................. 25,544 764,724
Yellow Corp.* ..................................... 21,200 405,450
-----------
3,166,502
-----------
TOTAL TRANSPORTATION ...................................... 3,166,502
-----------
WHOLESALE & RETAIL TRADE -- 16.2%
MISCELLANEOUS RETAIL STORES -- 4.5%
A.C. Moore Arts & Crafts, Inc.* ................... 56,000 343,000
Barnes & Noble, Inc.* ............................. 13,800 586,500
Borders Group, Inc.* .............................. 15,000 374,063
Longs Drug Stores, Inc. ........................... 22,800 855,000
O'Reilly Automotive, Inc.* ........................ 33,400 1,578,150
-----------
3,736,713
-----------
RETAIL APPAREL & ACCESSORY STORES -- 2.6%
Big Dog Holdings, Inc.* ........................... 38,000 180,500
Brown Group, Inc. ................................. 32,100 563,756
Linens 'N Things, Inc.* ........................... 35,200 1,394,800
-----------
2,139,056
-----------
RETAIL BUILDING MATERIAL-- 0.7%
Hughes Supply, Inc. ............................... 19,300 564,525
-----------
RETAIL EATING & DRINKING PLACES -- 1.7%
Bob Evans Farms, Inc. ............................. 31,700 826,181
Checkers Drive-In Restaurants* .................... 3,093 387
Mortons Restaurant Group, Inc.* ................... 30,000 566,250
-----------
1,392,818
-----------
RETAIL FOOD STORES -- 0.5%
Ingles Markets, Inc., (A Shares) .................. 37,700 412,344
-----------
VALUE
SHARES (NOTE 2)
-------- ----------
RETAIL FURNITURE & APPLIANCE STORES -- 3.2%
Heilig-Meyers Co. ................................. 46,500 $ 310,969
Springs Industries, Inc. (A Shares) ............... 9,700 401,944
Williams Sonoma, Inc.* ............................ 39,200 1,580,250
Winsloew Furniture, Inc. * ....................... 12,000 318,000
-----------
2,611,163
-----------
WHOLESALE - CHEMICALS & DRUGS -- 0.6%
AmeriSource Health Corp.
(A Shares)* ..................................... 7,500 487,500
-----------
WHOLESALE MISCELLANEOUS -- 2.4%
A.M. Castle & Co. ................................. 26,000 390,000
Merkert American Corp.* ........................... 10,000 151,250
Nash-Finch Company ................................ 29,100 414,675
Tristar Aerospace Co.* ............................ 32,000 224,000
Watsco, Inc. ...................................... 47,000 787,250
-----------
1,967,175
-----------
TOTAL WHOLESALE & RETAIL TRADE ........................... 13,311,294
-----------
TOTAL COMMON STOCK
(COST $68,108,969) ..................................... 79,344,462
-----------
SHORT-TERM INVESTMENTS -- 4.1%
Samson Street Fund - Money Market Portfolio ...... 1,670,479 1,670,479
Temp Cash Fund - Dollar Series ................... 1,670,481 1,670,481
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,340,960) ....................................... 3,340,960
-----------
TOTAL INVESTMENTS -- 100.7%
(Cost $71,449,929)(DAGGER) ..................................... 82,685,422
OTHER ASSETS AND
LIABILITIES, NET-- (0.7%) ...................................... (529,898)
-----------
NET ASSETS-- 100.0% ............................................... $82,155,524
===========
* Non-income producing security
(DAGGER) The cost for Federal income tax purposes. At December 31, 1998, net
unrealized appreciation was $11,235,493. This consisted of aggregate gross
unrealized appreciation for all securities for which there was an excess of
market value over tax cost of $20,063,870, and aggregate gross unrealized
depreciation for all securities for which there was an excess of tax cost
over market value of $8,828,377.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS / DECEMBER 31, 1998
(Showing Percentage of Total Value of Net Assets)
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- -------- ----------
<S> <C> <C> <C>
COMMON STOCK -- 93.9%
Argentina -- 0.8%
YPF Sociedad Anonima, ADR Energy Sources ................... 21,100 $ 589,481
----------
AUSTRALIA -- 2.1%
AMP Limited* Insurance ........................ 3,800 48,189
Australia & New Zealand
Bank Group Ltd. Banking .......................... 63,000 412,694
Broken Hill Proprietary Co. Ltd. Metals-Non-Ferrous ............... 19,000 140,068
National Australia Bank Ltd. Banking .......................... 25,200 380,235
Publishing & Broadcasting Ltd. Broadcasting & Publishing ........ 35,000 153,064
QBE Insurance Group Ltd. Insurance ........................ 64,000 264,972
WMC Ltd. Metals-Non-Ferrous ............... 38,000 114,674
Woodside Petroleum Ltd. Energy Sources ................... 14,100 63,133
----------
1,577,029
----------
AUSTRIA -- 0.6%
OMV AG Energy Sources ................... 2,200 207,459
RHI AG Building Materials & Components .. 8,600 224,211
---------
431,670
---------
Belgium -- 0.8%
Barco NV Electronic Components & Instruments 2,000 564,731
---------
BRAZIL -- 0.3%
Companhia Vale Do Rio Doce* Metals-Non-Ferrous ............... 3,200 --
Telecomunicacoes Brasileiras
SA ADR Telecommunications ............... 2,800 203,525
---------
203,525
---------
CANADA -- 1.8%
Canadian National Railway Co. Transportation-Road & Rail ....... 5,860 303,988
Imasco Limited Multi-Industrial ................. 26,721 568,892
Royal Bank of Canada Banking .......................... 8,400 418,649
---------
1,291,529
---------
CHILE -- 0.2%
Enersis SA ADR Utilities-Electrical & Gas ....... 6,600 170,363
---------
DENMARK -- 0.7%
Danisco AS Beverages & Tobacco .............. 6,100 330,670
Kapital Holding AS Banking .......................... 3,029 149,919
Unidanmark AS Financial Services ............... 800 72,278
---------
552,867
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- ------ ----------
<S> <C> <C> <C>
FINLAND -- 2.9%
Fortum Corp.* Energy Sources ................... 16,700 $ 102,246
Kemira Oyj Chemicals ........................ 20,300 146,338
Merita PLC (A Shares) Banking .......................... 72,450 460,748
Nokia Corp., ADR Electronic Components & Instruments 3,700 445,619
Nokia Oyj (A Shares) Electrical & Electronics ......... 4,300 526,538
Pohjola Group Insurance Corp.
(B Shares) Insurance ........................ 4,200 230,601
UPM-Kymmene Oyj Forest Products & Paper .......... 7,000 196,315
----------
2,108,405
----------
FRANCE -- 8.2%
Accor SA Leisure & Tourism ................ 1,555 336,833
Air Liquide Chemicals ........................ 656 120,372
Axa Insurance ........................ 2,158 312,922
Cap Gemini SA Business & Public Services ....... 3,400 545,972
Carrefour Supermarche SA Merchandising .................... 143 108,005
Christian Dior SA Recreation & Other Consumer Goods 1,487 164,512
Credit Commercial de France Banking .......................... 2,054 190,839
Elf Aquitaine SA Energy Sources ................... 2,390 276,395
France Telecom SA Telecommunications ............... 19 1,510
Groupe Danone Food & Household Products ........ 821 235,159
Lafarge SA Building Materials & Components .. 3,900 370,730
Lagardere SCA Multi-Industrial ................. 7,347 312,373
Louis Vuitton Moet Hennessy Recreation & Other Consumer Goods 1,037 205,321
Michelin CGDE (B Shares) Automobiles ...................... 3,820 152,841
Pernod Ricard Beverages & Tobacco .............. 1,136 73,822
Promodes Food & Household Products ........ 800 582,027
Rhone-Poulenc SA Health & Personal Care ........... 4,219 217,219
Societe BIC SA Recreation & Other Consumer Goods 1,714 95,120
Societe Nationale
D'Exploitation des Tabacs Beverages & Tobacco .............. 5,200 325,815
STM Microelectronics NV* Telecommunications ............... 2,099 165,335
Suez Lyonnaise des Eaux Business & Public Services ....... 1,877 385,749
Thomson CSF Aerospace & Military Technology .. 6,080 261,225
Valeo SA Industrial Components ............ 1,890 149,008
Vivendi Utilities-Electrical & Gas ....... 1,800 467,240
----------
6,056,344
----------
Germany -- 8.5%
Allianz AG Insurance ........................ 1,029 383,046
BASF AG Chemicals ........................ 5,930 226,263
Bayerische Hypo-Und Vereinsbank AG Banking .......................... 3,291 260,427
DaimlerChrysler AG* Automobiles ...................... 6,318 627,800
Deutsche Telekom AG Telecommunications ............... 11,722 385,327
Deutsche Telekom AG ADR Telecommunications ............... 3,226 105,652
Douglas Holding AG Textiles & Apparel ............... 4,200 248,376
Heidelberger Druckmaschinen Machinery & Engineering .......... 761 55,560
Hoechst AG Health & Personal Care ........... 17,628 729,232
Mannesmann AG Telecommunications ............... 3,639 421,134
The accompanying notes are an integral part of the financial statements.
17
</TABLE>
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- ------ ----------
<S> <C> <C> <C>
Metro AG Merchandising .................... 4,695 $ 369,280
Meunchener Rueckver AG (Warrants)* Insurance ........................ 33 1,545
Muenchener Rueckver AG
(Reg. Shares) Insurance ........................ 781 382,166
RWE AG Utilities-Electrical & Gas ....... 2,974 164,279
SAP AG Business & Public Services ....... 910 393,385
Schering AG Health & Personal Care ........... 2,901 364,901
Siemens AG Electrical & Electronics ......... 2,783 182,966
VEBA AG Utilities-Electrical & Gas ....... 12,817 759,466
Viag AG Utilities-Electrical & Gas ....... 374 221,182
----------
6,281,987
----------
GREECE -- 0.5%
Hellenic Telecommunication Organization
ADR* Telecommunications 29,500 390,875
----------
HONG KONG -- 2.4%
Anhui Expressway Co., Ltd.
(B Shares) Machinery & Engineering .......... 154,000 18,090
Cheung Kong Holdings, Ltd. Real Estate ...................... 24,000 172,712
China Telecom, Ltd. Telecommunications ............... 12,000 20,756
Citic Pacific, Ltd. Multi-Industrial ................. 69,000 148,741
Cosco Pacific, Ltd. Multi-Industrial ................. 58,000 24,145
Esprit Holdings, Ltd. Textiles & Apparel ............... 536,000 231,779
GZI Transport, Ltd. Machinery & Engineering .......... 72,000 14,127
Hong Kong & China Gas
Company, Ltd. Utilities-Electrical & Gas ....... 215,000 273,363
Hutchinson Whampoa, Ltd. Multi-Industrial ................. 21,000 148,412
Jiangsu Expressway Co., Ltd. Machinery & Engineering .......... 122,000 26,614
Kerry Properties, Ltd. Real Estate ...................... 43,396 35,010
National Mutual Asia, Ltd.* Insurance ........................ 315,000 235,833
New World Development Co., Ltd. Real Estate ...................... 66,765 168,054
New World Infrastructure, Ltd.* Business & Public Services ....... 56,600 82,923
Shenzhen Expressway Co., Ltd. Machinery & Engineering .......... 120,000 27,882
Sichuan Expressway Co. (B Shares) Machinery & Engineering .......... 146,000 12,815
Sun Hung Kai Properties Real Estate ...................... 9,000 65,638
Zhejiang Expressway
Co., Ltd. (B Shares) Machinery & Engineering .......... 134,000 27,156
----------
1,734,050
----------
IRELAND -- 3.5%
Bank of Ireland Banking .......................... 49,399 1,101,154
Independent Newspapers PLC Broadcasting & Publishing ........ 143,981 579,639
Irish Life PLC Insurance ........................ 95,000 895,219
----------
2,576,012
----------
ISRAEL -- 1.1%
ECI Telecommunications, Ltd.* Electronic Components & Instruments 13,600 484,500
Orbotech, Ltd.* Electronic Components & Instruments 6,600 312,675
----------
797,175
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- ------ ----------
<S> <C> <C> <C>
Italy -- 6.5%
Assicurazioni Generali Insurance ........................ 12,760 $ 533,960
Banca Commerciale Italiana Banking .......................... 23,300 161,090
Banca di Roma* Banking .......................... 88,800 150,792
Banca Nazionale del Lovoro* Banking .......................... 47,900 143,652
ENI SPA Energy Sources ................... 34,300 224,660
Finmeccanica SPA* Aerospace & Military Technology .. 166,700 171,159
Gruppo Editoriale L'Espresso Broadcasting & Publishing ........ 8,500 74,747
Istituto Banc San Paolo Torino Banking .......................... 58,990 1,044,648
Istituto Nazionale Delle
Assicurazioni Insurance ........................ 42,800 113,302
La Rinascente SPA Merchandising .................... 7,400 76,271
Mondadori (Arnoldo) Editore SPA Broadcasting & Publishing ........ 5,400 71,557
Olivetti Group SPA* Telecommunications ............... 56,000 195,283
Seat Pagine Gialle SPA Broadcasting & Publishing ........ 215,700 166,135
Telecom Italia SPA Telecommunications ............... 101,647 869,205
Telecom Italia SPA di Risp Telecommunications ............... 120,000 756,873
Unione Immobiliare SPA* Real Estate ...................... 42,800 22,375
----------
4,775,709
-----------
JAPAN -- 9.6%
Canon, Inc. Data Processing & Reproduction ... 4,000 85,641
Daiwa Securities Co., Ltd. Financial Services ............... 28,000 95,818
Familymart Co. Food & Household Products ........ 7,700 385,012
Fujitsu Ltd. Data Processing & Reproduction ... 12,000 160,111
Honda Motor Co., Ltd. Automobiles ...................... 13,000 427,584
Kyushu Electric Power Co., Inc. Utilities-Electrical & Gas ....... 3,000 57,183
Matsushita Electric Industrial
Co., Ltd. Appliances & Household Durables .. 9,000 159,499
Minebea Co., Ltd. Industrial Components ............ 11,000 126,192
Murata Manufacturing Co., Ltd. Electronic Components & Instruments 4,000 166,317
Nichiei Co., Ltd. Financial Services ............... 1,350 107,716
Nikko Securities Co., Ltd. Financial Services ............... 25,000 69,816
Nintendo Co., Ltd. Recreation & Other Consumer Goods 1,200 116,493
Nippon Telegraph & Telephone Corp. Telecommunications ............... 44,000 340,152
NTT Mobile Communication
Network, Inc.* Telecommunications ............... 13,000 535,920
Sony Corp. Appliances & Household Durables .. 3,500 255,371
Sumitomo Electric Industries Industrial Components ............ 5,000 56,340
Taisho Pharmaceutical Co., Ltd. Health & Personal Care ........... 5,000 137,859
Takeda Chemical Industries Health & Personal Care ........... 20,000 771,300
Takefuji Corp. Financial Services ............... 3,900 285,248
TDK Corp. Electronic Components & Instruments 7,000 641,065
Teijin, Ltd. Chemicals ........................ 29,000 106,954
The Chugoku Electric Power
Co., Inc. Utilities-Electrical & Gas ....... 3,000 54,922
Tokyo Electric Power Co. Utilities-Electrical & Gas ....... 24,700 610,949
Tokyo Electron, Ltd. Electronic Components & Instruments 4,000 152,132
Toshiba Corp. Electrical & Electronics ......... 111,000 662,281
Yamanouchi Pharmaceutical
Co., Ltd. Health & Personal Care ........... 6,000 193,623
Yasuda Fire & Marine Insurance
Co., Limited Insurance ........................ 69,000 332,776
----------
7,094,274
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- ------ ----------
<S> <C> <C> <C>
MEXICO -- 0.7%
Desc SA de CV (B Shares) Multi-Industrial ................. 271,500 $ 227,858
Grupo Collado SA* Metals-Steel ..................... 106,000 64,309
Panamerican Beverages, Inc., ADR Beverages & Tobacco .............. 9,800 213,763
Tubos de Acero de Mexico SA, ADR Industrial Components ............ 5,900 37,981
----------
543,911
----------
Netherlands -- 7.8%
Aegon NV Insurance ....................... 10,122 1,243,786
AKZO Nobel NV Chemicals ....................... 4,260 194,087
Benckiser NV (B Shares) Recreation & Other Consumer Goods 5,700 373,594
Buhrmann NV Data Processing & Reproduction .. 14,640 262,120
Elsevier NV Broadcasting & Publishing ....... 12,510 175,321
Heineken Holdings Beverages & Tobacco ............. 7,262 348,272
Koninklijke Ahold NV Merchandising ................... 3,470 128,324
Koninklijke Bols Wessanen NV Beverages & Tobacco ............. 16,300 210,195
Koninklijke KPN NV Telecommunications .............. 7,700 385,690
New Holland NV Machinery & Engineering ......... 11,000 150,563
Philips Electronics NV Appliances & Household Durables . 9,300 624,415
Royal Dutch/Shell Group Energy Sources .................. 2,960 147,477
Unilever NV Food & Household Products ....... 6,100 521,705
Vedior NV Business & Public Services ...... 16,900 333,203
VNU NV Broadcasting & Publishing ....... 18,000 679,088
----------
5,777,840
----------
NEW ZEALAND -- 0.7%
Telecom Corp. of New Zealand, Ltd. Telecommunications .............. 119,000 518,616
----------
NORWAY -- 0.8%
Orkla ASA (A Shares) Multi-Industrial ................ 8,200 122,159
Orkla ASA (B Shares) Multi-Industrial ................ 17,700 231,160
Sparebanken NOR Banking ......................... 12,720 247,095
----------
600,414
----------
PHILIPPINES -- 0.3%
Philippine Long Distance
Telephone Co. Telecommunications .............. 8,700 225,656
----------
PORTUGAL -- 1.0%
Jeronimo Martins & Filho Merchandising ................... 3,800 207,888
Telecel-Comunicacaoes Pessoais SA Telecommunications .............. 2,500 511,050
----------
718,938
----------
SINGAPORE -- 0.4%
Elec & Eltek International
Co., Ltd. Electronic Components & Instruments 58,000 313,200
----------
SOUTH AFRICA -- 0.2%
Sasol, Ltd. Transportation-Shipping ......... 46,200 174,744
----------
SOUTH KOREA -- 0.9%
Samsung Electronics Co. Electrical & Electronics ........ 4,800 322,138
SK Telecom Co., Ltd., ADR Telecommunications .............. 36,050 367,259
----------
689,397
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- ------ ----------
<S> <C> <C> <C>
SPAIN -- 3.2%
Actividades de Construction y
Servicios SA* Construction & Housing .......... 12,600 $ 497,985
Banco Santander SA Banking ......................... 693 13,792
Repsol SA Energy Sources .................. 5,200 277,816
Superdiplo SA* Food & Household Products ....... 20,000 563,903
Union Electrica Fenosa SA Utilities-Electrical & Gas ...... 20,000 346,529
Vallehermoso SA Real Estate ..................... 45,000 644,713
----------
2,344,738
----------
SWEDEN -- 3.8%
AGA AB (B Shares) Chemicals ....................... 5,300 69,638
Astra AB (B Shares) Health & Personal Care .......... 20,500 417,307
Autoliv, Inc., ADR Automobiles ..................... 7,500 278,906
Autoliv, Inc. Automobiles ..................... 1,100 39,492
Bure Investment Aktiebolaget Health & Personal Care .......... 11,000 156,066
NetCom Systems AB (B Shares)* Telecommunications .............. 12,000 488,555
Pharmacia & Upjohn, Inc. Health & Personal Care .......... 5,000 280,055
Svenska Handelsbanken (B Shares) Banking ......................... 13,000 498,795
Swedish Match AB Beverages & Tobacco ............. 90,000 327,554
Trelleborg AB (B Shares) Multi-Industrial ................ 34,500 280,919
----------
2,837,287
----------
SWITZERLAND -- 5.6%
Clariant AG Chemicals ....................... 176 82,267
Nestle SA Food & Household Products ....... 404 879,489
Novartis AG (Bearer Shares) Health & Personal Care .......... 299 587,777
Novartis AG (Reg. Shares) Health & Personal Care .......... 521 1,024,187
Roche Holding AG Health & Personal Care .......... 39 475,901
Swisscom AG Telecommunications .............. 1,689 707,091
Zurich Allied AG* Insurance ....................... 460 340,609
----------
4,097,321
----------
THAILAND -- 0.9%
BEC World Public Co., Ltd. Broadcasting & Publishing ....... 65,000 357,792
PTT Exploration & Production* Metals-Non-Ferrous .............. 41,000 288,876
----------
646,668
----------
UNITED KINGDOM -- 16.9%
Amvescap PLC Financial Services .............. 38,000 294,786
BAA PLC Transportation-Airlines ......... 27,338 319,079
Bank of Ireland Banking ......................... 24,400 536,286
Barclays PLC Banking ......................... 8,600 185,442
BOC Group PLC Chemicals ....................... 21,673 309,934
British Aerospace PLC Transportation-Airlines ......... 71,200 603,571
British Airways PLC Transportation-Airlines ......... 11,464 77,297
British Energy PLC Utilities-Electrical & Gas ...... 57,000 652,006
British Petroleum Co. PLC Energy Sources .................. 15,287 228,276
Bunzl PLC Forest Products & Paper ......... 80,000 313,462
Carlton Communications PLC Leisure & Tourism ............... 60,792 559,339
Charter PLC Multi-Industrial ................ 28,300 153,500
Cookson Group PLC Multi-Industrial ................ 159,000 343,910
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- ------ ----------
<S> <C> <C> <C>
Diageo PLC Data Processing & Reproduction .. 39,612 $ 450,803
Enterprise Oil PLC Energy Sources .................. 12,262 59,675
General Electric Co. PLC Electrical & Electronics ........ 38,599 348,401
Glaxo Wellcome PLC Health & Personal Care .......... 19,674 676,935
Greencore Group PLC Food & Household Products ....... 59,000 267,008
Imperial Chemical Industries PLC Chemcials ....................... 22,210 192,526
Imperial Tobacco Group PLC Beverages & Tobacco ............. 18,400 197,155
Lasmo PLC Energy Sources .................. 42,320 69,708
Lloyds TSB Group PLC Banking ......................... 301 4,282
Lucasvarity PLC Automobiles ..................... 73,000 243,524
Mirror Group PLC Broadcasting & Publishing ....... 82,000 203,967
Monument Oil and Gas PLC* Chemicals ....................... 62,163 36,458
National Westminster Bank PLC Banking ......................... 18,100 349,032
Orange PLC* Telecommunications .............. 38,142 443,275
Pearson PLC Broadcasting & Publishing ....... 15,613 309,906
Powergen UK PLC Utilities-Electrical & Gas ...... 21,000 276,026
Reckitt & Colman PLC Recreation & Other Consumer Goods 16,000 211,903
Reed International PLC Broadcasting & Publishing ....... 16,059 125,580
Reuters Group PLC Business & Public Services ...... 43,563 457,352
Rio Tinto PLC Metals-Non-Ferrous .............. 27,307 317,581
Rolls-Royce PLC Aerospace & Military Technology . 73,000 302,431
Sema Group PLC Business & Public Services ...... 29,000 284,919
Shell Transport & Trading Co. PLC Energy Sources .................. 42,245 259,537
Smith Industries PLC Electronic Components & Instruments 16,000 228,275
Smithkline Beecham PLC Health & Personal Care .......... 25,529 356,794
The Mayflower Corp. PLC Machinery & Engineering ......... 94,000 203,318
Vodafone Group PLC Telecommunications .............. 23,000 373,492
WPP Group PLC Business & Public Services ...... 78,000 474,660
Zeneca Group PLC Health & Personal Care .......... 3,936 171,381
-----------
12,472,792
-----------
UNITED STATES -- 0.2%
Pharmacia & Upjohn, Inc. Health & Personal Care .......... 2,200 124,575
-----------
Total COMMON Stock
(COST $60,219,851) ................................................... 69,282,123
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
VALUE
INDUSTRY SHARES (NOTE 2)
-------- ------ ----------
<S> <C> <C> <C>
PREFERRED STOCK -- 1.2%
Brazil -- 0.1%
Telesp Celular SA (B Shares)* Telecommunications .............. 950,000 $ 43,246
--------
FRANCE -- 0.3%
Casino Guichard Perrach SA Merchandising ................... 3,400 218,511
--------
GERMANY -- 0.8%
Fresenius AG Health & Personal Care .......... 1,666 350,095
SAP AG Business & Public Services ...... 524 251,532
--------
601,627
--------
Total PREFERRED Stock
(COST $900,253) ....................................................... 863,384
--------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS -- 0.0%
GERMANY -- 0.0%
Daimler-Benz, 06/14/02 (Cost $4,265) ................................ DEM 54 4,912
-----------
TOTAL INVESTMENTS (Cost $61,124,369)(DAGGER)-- 95.1% ........................... 70,150,419
OTHER ASSETS AND Liabilities, NET-- 4.9% ....................................... 3,634,027
-----------
NET ASSETS-- 100.0% ............................................................ $73,784,446
===========
</TABLE>
* Non-income producing security.
(DAGGER) The cost for Federal income tax purposes was $61,149,580. At December
31, 1998, net unrealized appreciation was $9,000,839. This consisted of
aggregate gross unrealized appreciation for all securities for which there
was an excess of market value over tax cost of $13,145,063, and aggregate
gross unrealized depreciation for all securities for which there was an
excess of tax cost over market value of $4,144,224.
DEM - Deutsche Mark
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP INTERNATIONAL
GROWTH EQUITY VALUE EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value ............... $223,716,813 $93,856,991 $82,685,422 $70,150,419
Cash in interest bearing account .................. -- -- -- 4,463,595
Receivables:
Dividends and interest ......................... 179,436 200,782 68,379 71,115
Fund shares sold ............................... 198,274 465,594 98,127 45,412
Foreign taxes .................................. -- -- -- 127,716
Investment securities sold ..................... -- 603,297 -- --
Other assets ...................................... 491 38,040 35,258 54,728
------------ ----------- ----------- -----------
Total assets ................................... 224,095,014 95,164,704 82,887,186 74,912,985
------------ ----------- ----------- -----------
LIABILITIES:
Due to Manager .................................... 35,327 43,987 41,827 27,561
Payables:
Fund shares redeemed ........................... 834,469 361,011 639,599 201,746
Unrealized depreciation on forward foreign currency
exchange contracts (Note 7) ................. -- -- -- 121,769
Investment securities purchased ................ -- 923,347 -- 735,410
Other accrued expenses ............................ 73,742 56,787 50,236 42,053
------------ ----------- ----------- -----------
Total liabilities .............................. 943,538 1,385,132 731,662 1,128,539
------------ ----------- ----------- -----------
NET ASSETS ........................................ $223,151,476 $93,779,572 $82,155,524 $73,784,446
============ =========== =========== ===========
NET ASSETS CONSIST OF:
Shares of beneficial interest ..................... $ 94,614 $ 100,823 $ 87,738 $ 75,159
Additional paid--in capital ....................... 177,797,843 92,917,114 71,163,842 64,047,561
Undistributed net investment income ............... -- 682 1,585 --
Accumulated net realized gain (loss) on:
Investment transactions ........................ -- (3,977,816) (333,134) 755,250
Net unrealized appreciation (depreciation) on:
Investments .................................... 45,259,019 4,738,769 11,235,493 9,026,050
Translation of assets and liabilities in
foreign currencies .......................... -- -- -- (119,574)
------------ ----------- ----------- -----------
NET ASSETS ........................................ $223,151,476 $93,779,572 $82,155,524 $73,784,446
============ =========== =========== ===========
Shares of beneficial interest outstanding ......... 9,461,354 10,082,306 8,773,817 7,515,919
------------ ----------- ----------- -----------
NET ASSET VALUE, offering and redemption price
per share (Net assets/outstanding shares of
beneficial interest) ........................... $23.59 $9.30 $9.36 $9.82
====== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
================================================================================
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP INTERNATIONAL
GROWTH EQUITY VALUE EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO(DAGGER) PORTFOLIO(DAGGER) PORTFOLIO(DAGGER)
------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ...................................... $ 866,051 $ 1,167,170 $ 374,818 $ 383,770
Interest ....................................... 193,635 145,317 108,913 119,313
Foreign taxes withheld ......................... -- -- -- (10,822)
----------- ----------- ----------- -----------
1,059,686 1,312,487 483,731 492,261
----------- ----------- ----------- -----------
EXPENSES:
Management fee ................................. 868,191 256,307 231,603 219,865
Accounting & administration fee ................ 150,210 46,601 38,600 33,825
Custodian fee .................................. 33,056 9,656 9,109 41,750
Transfer agent fee ............................. 51,598 19,590 18,555 14,858
Trustees' fees ................................. 5,230 1,554 1,554 1,554
Professional fees .............................. 172,635 30,331 26,421 25,347
Registration fees .............................. 58,282 30,768 25,448 21,475
Amortization of organizational expenses ........ -- 3,938 3,617 5,287
Other expenses ................................. 17,353 10,447 10,419 9,623
----------- ----------- ----------- -----------
Total expenses .............................. 1,356,555 409,192 365,326 373,584
Management fee waived ....................... (179,082) (59,683) (56,522) (35,331)
----------- ----------- ----------- -----------
Total expenses, net ...................... 1,177,473 349,509 308,804 338,253
----------- ----------- ----------- -----------
Net investment income (loss) ...................... (117,787) 962,978 174,927 154,008
------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain (loss) from:
Investment transactions ..................... 23,800,207 (2,789,214) (188,829) 1,568,013
Foreign currency related transactions ....... -- -- -- (190,404)
----------- ----------- ----------- -----------
Total net realized gain (loss) ........... 23,800,207 (2,789,214) (188,829) 1,377,609
----------- ----------- ----------- -----------
Change in unrealized appreciation (depreciation) of:
Investments ................................. 7,975,088 (2,689,372) (4,659,464) (1,333,735)
Foreign currency ............................ -- -- -- (119,574)
----------- ----------- ----------- -----------
Total change in unrealized appreciation
(depreciation) ........................ 7,975,088 (2,689,372) (4,659,464) (1,453,309)
----------- ----------- ----------- -----------
Net gain (loss) on investments and
foreign currency ............................ 31,775,295 (5,478,586) (4,848,293) (75,700)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ................................ $31,657,508 $(4,515,608) $(4,673,366) $ 78,308
=========== =========== =========== ===========
<FN>
(DAGGER) Commenced operations on June 29, 1998.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP INTERNATIONAL
GROWTH EQUITY VALUE EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO(DAGGER) PORTFOLIO(DAGGER) PORTFOLIO(DAGGER)
------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss) ...................... $ (117,787) $ 962,978 $174,927 $ 154,008
Net realized gain (loss) from investment and
foreign currency transactions .................. 23,800,207 (2,789,214) (188,829) 1,377,609
Change in unrealized appreciation (depreciation) of
investments and foreign currency ............... 7,975,088 (2,689,372) (4,659,464) (1,453,309)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting
from operations ................................... 31,657,508 (4,515,608) (4,673,366) 78,308
------------ ------------ ----------- -----------
Distributions to shareholders:
Net investment income ............................. -- (962,296) (173,342) --
Net realized gains ................................ (23,800,865) -- -- (812,763)
In excess of net realized gains ................... -- (1,188,602) (144,305) --
------------ ------------ ----------- -----------
Total Distributions ......................... (23,800,865) (2,150,898) (317,647) (812,763)
------------ ------------ ----------- -----------
Increase in net assets from Fund share
transactions (Note 5) ............................. 123,849,693 100,446,078 87,146,537 74,518,901
------------ ------------ ----------- -----------
Increase in net assets ............................... 131,706,336 93,779,572 82,155,524 73,784,446
Net Assets:
Beginning of year ................................. 91,445,140 -- -- --
------------ ------------ ----------- -----------
End of year ....................................... $223,151,476 $ 93,779,572 $82,155,524 $73,784,446
============ ============ =========== ===========
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 during the year .................... 8,815,986
------------
Net increase in net assets resulting from operations . 20,229,969
------------
Distributions to shareholders from:
Net realized gains ................................ (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
============
<FN>
(DAGGER) Commenced operations on June 29, 1998.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- LARGE CAP GROWTH EQUITY 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,
----------------------------------------------------------------
1998(DAGGER) 1997 1996 1995 1994
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-- BEGINNING OF YEAR $21.37 $19.22 $17.41 $15.14 $16.39
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment loss 1 ....................... (0.01) (0.19) (0.15) (0.10) (0.03)
Net realized and unrealized gain (loss)
on investments ........................... 5.02 5.44 4.37 4.38 (0.02)
------ ------ ----- ------ ------
Total from investment operations ...... 5.01 5.25 4.22 4.28 (0.05)
------ ------ ----- ------ ------
DISTRIBUTIONS:
From net realized gain on investments ....... (2.79) (3.10) (2.41) (2.01) (1.20)
------- ------ ------ ------ ------
NET ASSET VALUE-- END OF YEAR .................. $23.59 $21.37 $19.22 $17.41 $15.14
======= ====== ====== ====== ======
TOTAL RETURN ................................... 23.58% 27.50% 24.25% 28.43% (0.23)%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses (net of fee waivers) ............... 0.80% 1.38% 1.43% 1.43% 1.38%
Expenses (excluding fee waivers) ............ 0.92% N/A N/A N/A N/A
Net investment loss ......................... (0.08)% (0.86)% (0.78)% (0.53)% (0.17)%
Portfolio turnover rate ........................ 51.64% 28.05% 34.84% 49.12% 37.05%
Net assets at end of period (000 omitted) ...... $223,151 $91,445 $76,174 $66,311 $65,267
<FN>
(DAGGER) Effective February 23, 1998, Wilmington Trust Company (WTC) assumed the
responsibility of Adviser to the Large Cap Growth Portfolio and with the
change in Adviser the investment objective of the Portfolio was changed to
seek superior long-term growth of capital by investing in large cap U.S.
equity securities that are judged by WTC to possess strong growth
characteristics.
1 The net investment loss per share for the years ended December 31, 1996
and 1997 was calculated using average shares outstanding method.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- LARGE CAP VALUE EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
================================================================================
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements and
notes thereto.
FOR THE PERIOD
JUNE 29, 1998(DAGGER)
THROUGH
DECEMBER 31, 1998
---------------------
NET ASSET VALUE-- BEGINNING OF PERIOD $10.00
------
INVESTMENT OPERATIONS:
Net investment income .............................. 0.10
Net realized and unrealized gain (loss)
on investments .................................. (0.58)
------
Total from investment operations ............. (0.48)
------
DISTRIBUTIONS:
From net investment income ......................... (0.10)
In excess of net realized gain on investments ...... (0.12)
------
Total distributions .......................... (0.22)
------
NET ASSET VALUE-- END OF PERIOD ....................... $ 9.30
======
TOTAL RETURN 1 ........................................ (4.79)%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses (net of fee waivers) ...................... 0.75%*
Expenses (excluding fee waivers) ................... 0.88%*
Net investment income .............................. 2.07%*
Portfolio turnover rate ............................... 36.78%
Net assets at end of period (000 omitted) ............. $93,780
(DAGGER) Commencement of operations.
1 Not annualized.
* Annualized.
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
================================================================================
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements and
notes thereto.
FOR THE PERIOD
JUNE 29, 1998(DAGGER)
THROUGH
DECEMBER 31, 1998
--------------------
NET ASSET VALUE-- BEGINNING OF PERIOD $10.00
------
INVESTMENT OPERATIONS:
Net investment income ............................... 0.02
Net realized and unrealized gain (loss)
on investments .................................. (0.62)
------
Total from investment operations ............. (0.60)
------
DISTRIBUTIONS:
From net investment income ......................... (0.02)
In excess of net realized gain on investments ...... (0.02)
------
Total distributions .......................... (0.04)
------
NET ASSET VALUE-- END OF PERIOD ....................... $ 9.36
======
TOTAL RETURN 1 ........................................ (6.03)%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses (net of fee waivers) ...................... 0.80%*
Expenses (excluding fee waivers) ................... 0.95%*
Net investment income .............................. 0.45%*
Portfolio turnover rate ............................... 9.81%
Net assets at end of period (000 omitted) ............. $82,156
(DAGGER) Commencement of operations.
1 Not annualized.
* Annualized.
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND -- INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
================================================================================
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements and
notes thereto.
FOR THE PERIOD
JUNE 29, 1998(DAGGER)
THROUGH
DECEMBER 31, 1998
---------------------
NET ASSET VALUE-- BEGINNING OF PERIOD $10.00
------
INVESTMENT OPERATIONS:
Net investment income ............................... 0.02
Net realized and unrealized gain (loss)
on investments and foreign currencies ............ (0.09)
------
Total from investment operations .............. (0.07)
------
DISTRIBUTIONS:
From net realized gain on investments ............... (0.11)
------
NET ASSET VALUE-- END OF PERIOD ........................ $ 9.82
======
TOTAL RETURN 1 ......................................... (0.70)%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses (net of fee waivers) ....................... 1.00%*
Expenses (excluding fee waivers) .................... 1.10%*
Net investment income ............................... 0.46%*
Portfolio turnover rate ................................ 27.66%
Net assets at end of period (000 omitted) .............. $73,784
(DAGGER) Commencement of operations.
1 Not annualized.
* Annualized.
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. DESCRIPTION OF THE FUND. The Rodney Square Strategic Equity Fund (the
"Fund"), formerly the Rodney Square Multi-Manager Fund, is a diversified,
open-end, management investment company organized as a Massachusetts
business trust on August 19, 1986, and is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund consists of four
separate portfolios (the "Portfolios"): the Large Cap Growth Equity
Portfolio, formerly the Growth Portfolio, the Large Cap Value Equity
Portfolio, the Small Cap Equity Portfolio and the International Equity
Portfolio.
Effective February 23, 1998, The Large Cap Growth Equity Portfolio (the
"Growth Portfolio") seeks superior long-term growth of capital by investing
in large cap U.S. equity securities that are judged by the Portfolio's
adviser, Wilmington Trust Company ("WTC" or "Adviser"), to possess strong
growth characteristics. Prior to February 23, 1998, the Growth Portfolio
sought to achieve its investment objective by investing at least 65% of
total assets in equity securities without regard to the market
capitalization of the issuers of such securities.
The Large Cap Value Equity Portfolio (the "Value Portfolio") seeks superior
long-term growth of capital by investing in large cap U.S. equity securities
that are judged by WTC to be undervalued in the marketplace relative to
underlying profitability.
The Small Cap Equity Portfolio (the "Small Cap Portfolio") seeks superior
long-term growth of capital by investing in small cap U.S. equity securities
that are judged by WTC to either possess strong growth characteristics or to
be undervalued in the marketplace relative to underlying profitability.
The International Equity Portfolio (the "International Portfolio") seeks
superior long-term capital appreciation by investing primarily in equity
securities of issuers located outside the United States.
The Value Portfolio, Small Cap Portfolio and International Portfolio
commenced operations on June 29, 1998.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of the Fund:
SECURITY VALUATION. Portfolio 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.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the International
Portfolio are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars on the following basis:
(i) market value of investment securities, assets and liabilities at the
daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on the
respective dates of such transactions.
31
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
================================================================================
The International Portfolio does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the International
Portfolio books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities other than investments
in securities at the end of the fiscal period, resulting from changes in
exchange rates.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the
International Portfolio may enter into forward foreign currency exchange
contracts. Additionally, from time to time the International Portfolio may
enter into these contracts to hedge certain foreign currency assets. Foreign
currency exchange contracts are recorded at market value. Certain risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts. Realized gains or
losses arising from such transactions are included in net realized gain
(loss) from foreign currency transactions.
FEDERAL INCOME TAXES. The Portfolios are treated as separate entities and
intend to qualify for treatment as "regulated investment companies" under
Subchapter M of the Internal Revenue Code of 1986, as amended, and to
distribute all of their taxable income to their shareholders. Therefore, no
federal income tax provision has been made in the financial statements.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions of net investment income earned
and net capital gains realized by the Portfolios, if any, will be made
annually in December. An additional distribution may be made, if necessary.
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles.To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences
do not require such reclassification.
DEFERRED ORGANIZATION COSTS. Costs incurred by the Value Portfolio, SmallCap
Portfolio and the International Portfolio in connection with their initial
registration and public offering of shares have been deferred and are being
amortized on a straight-line basis over a five-year period beginning on the
date the Portfolios commenced operations.
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.
32
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
================================================================================
OTHER. Investment security transactions are accounted for on a trade date
basis. The Portfolios use the specific identification method for determining
realized gain or loss on investments for both financial and federal income
tax reporting purposes. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income and expenses are
reported on the accrual basis.
3. PURCHASES AND SALES OF INVESTMENT SECURITIES. During the period ended
December 31, 1998, purchases and sales of investment securities (excluding
short-term investments) by the Portfolios were as follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO VALUE PORTFOLIO SMALL CAP PORTFOLIO INTERNATIONAL PORTFOLIO
---------------- --------------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Purchases $75,863,619 $34,997,367 $13,701,818 $28,134,809
Sales 86,788,352 31,300,975 7,019,223 17,037,624
</TABLE>
4. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES. Effective February
23, 1998, WTC, a wholly owned subsidiary of Wilmington Trust Corporation,
serves as Investment Adviser to the Fund. Under the Advisory Agreement, WTC
directs the investments of each Portfolio in accordance with that
Portfolio's investment objectives, policies and limitations. In addition,
WTC recommends sub-advisers for the International Equity Portfolio,
allocates assets among the sub-advisers, and monitors and evaluates the
sub-advisers' performance. For WTC's services under the Advisory Agreement,
the Growth Portfolio, Value Portfolio, Small Cap Portfolio and International
Portfolio pay a monthly fee calculated daily at the annual rates of 0.55%,
0.55%, 0.60% and 0.65%, respectively, of the average daily net assets of
each Portfolio. WTC has agreed to waive its fee or reimburse each Portfolio
monthly to the extent that expenses of the Portfolio (excluding taxes,
extraordinary expenses, brokerage commissions and interest) exceed an annual
rate of 0.75% of the average daily net assets of the Growth Portfolio, 0.75%
of the average daily net assets of the Value Portfolio, 0.80% of the average
daily net assets of the Small Cap Portfolio and 1.00% of the average daily
net assets of the International Portfolio. WTC's fee for the Growth
Portfolio for the period February 23, 1998 through December 31, 1998
amounted to $737,236, of which $179,082 was waived. WTC's fee for the Value
Portfolio, Small Cap Portfolio and International Portfolio for the period
June 29, 1998 through December 31, 1998, amounted to $256,307, $231,603 and
$219,865, of which $59,683, $56,522 and $35,331 was waived, respectively.
Prior to February 23, 1998, the Fund employed Rodney Square Management
Corporation ("RSMC"), a wholly owned subsidiary of WTC, to provide asset
management, consulting services and other services to the Fund. For
management services to the Fund, RSMC received an annual fee equal to 1.00%
of the average daily net assets of the Growth Portfolio up to $200 million
of Fund net assets and 0.95% of the average daily net assets in excess of
$200 million. RSMC had agreed to waive its fees or reimburse the Growth
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 period January 1, 1998 through February 23, 1998 amounted to
$130,955.
WTC also serves as custodian of the assets of the Growth Portfolio, Value
Portfolio and Small Cap Portfolio and receives a fee for the service. PNC
Bank, N.A. serves as sub-custodian to the assets of these Portfolios, and is
paid by WTC out of its fee. Bankers Trust Company serves as Custodian of the
International Portfolio's assets, and employs foreign sub-custodians to
maintain the International Portfolio's assets outside the United States.
33
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
================================================================================
Effective February 2, 1998, PFPC Inc. ("PFPC"), an indirect wholly owned
subsidiary of PNC Bank Corp., performs certain administrative and accounting
services, including determining the net asset value per share of each
Portfolio, pursuant to an Administration and Accounting Services Agreement
with the Fund. For the services provided, the Fund pays PFPC an annual fee
equal to the amount derived from the following schedule: 0.10% of each
Portfolio's first $1 billion of average daily net assets; 0.075% of each
Portfolio's next $500 million in average net assets; 0.05% of each
Portfolio's next $500 million of average daily net assets; and 0.035% of
each Portfolio's average daily nets assets in excess of $2 billion. In
addition, any related out-of-pocket expenses incurred by PFPC in the
provision of services to a Portfolio are borne by that Portfolio. PFPC's
fees for the Growth Portfolio for the period February 2, 1998 through
December 31, 1998 amounted to $140,942. PFPC's fees for the Value Portfolio,
Small Cap Portfolio and International Portfolio for the period June 29, 1998
through December 31, 1998, amounted to $46,601, $38,600 and $33,825,
respectively.
Prior to February 2, 1998, RSMC served as Administrator to the Fund pursuant
to an Administration Agreement with the Fund on behalf of the Growth
Portfolio. For the services provided, RSMC received a monthly administration
fee from the Fund at an annual rate of 0.09% of the Growth Portfolio's
average daily net assets. The administration fee earned by RSMC for the
Growth Portfolio for the period January 1, 1998 through February 1, 1998,
amounted to $5,446.
Prior to February 2, 1998, RSMC determined the net asset value per share of
the Growth Portfolio and provided accounting services to the Fund pursuant
to an Accounting Services Agreement with the Fund on behalf of the Growth
Portfolio. For its services, RSMC received an annual fee of $45,000, plus an
amount equal to 0.02% of that portion of the Growth Portfolio's average
daily net assets in excess of $100 million. For the period January 1, 1998
through February 1, 1998, RSMC's fees for accounting services for the Growth
Portfolio amounted to $3,822.
Effective February 2, 1998, PFPC serves as transfer and dividend disbursing
agent to the Fund. For these services, the Fund pays PFPC an annual fee of
0.03% of the Fund's average daily net assets, plus transaction charges and
out-of-pocket expenses. Prior to February 2, 1998, RSMC served as transfer
and dividend disbursing agent to the Fund. For its services, the Fund paid
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, 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. Prior to January 26, 1998, the
Fund's Board of Trustees had authorized, pursuant to a Rule 12b-1 plan of
distribution, a payment of up to 0.25% of the Growth Portfolio's average
daily net assets annually to reimburse RSD for expenses incurred in
connection with distribution activities. Effective January 26, 1998, the
Fund's Rule 12b-1 plan was terminated. For the period January 1, 1998
through January 25, 1998, expenses incurred by the Growth Portfolio under
the terminated Rule 12b-1 plan amounted to $1,396.
The salaries of all officers of the Fund, the Trustees who are "interested
persons" of the Fund, RSMC, RSD, WTC or their affiliates and all personnel
of the Fund, RSMC, RSD or WTC performing services related to research,
statistical and investment activities are paid by RSMC, RSD, WTC or their
affiliates.
34
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
================================================================================
5. FUND SHARES. At December 31, 1998, 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 Portfolios:
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
THE GROWTH PORTFOLIO DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------- ----------------------
<S> <C> <C> <C> <C>
SHARES AMOUNT SHARES AMOUNT
-------- ------------ -------- -----------
Shares sold ........................ 601,227 $ 13,986,641 179,170 $ 3,907,003
Shares issued in exchange for
securities transferred in-kind
(Note 6) ........................ 4,749,182 113,362,975 -- --
Shares issued to shareholders in
reinvestment of distributions 972,651 22,740,589 490,664 10,372,625
Shares redeemed .................... (1,141,10) (26,240,512) (354,225) (7,479,239)
---------- ------------ --------- -----------
Net increase ....................... 5,181,960 $123,849,693 315,609 $ 6,800,389
============ ===========
Shares outstanding:
Beginning of year .................. 4,279,574 3,963,965
---------- ---------
End of year ........................ 9,461,534 4,279,574
========== =========
</TABLE>
FOR THE PERIOD
JUNE 29, 1998(DAGGER)
THE VALUE PORTFOLIO THROUGH DECEMBER 31, 1998
----------------------------
SHARES AMOUNT
---------- ------------
Shares sold ....................... 998,364 $ 9,377,897
Shares issued in exchange for
securities transferred in-kind
(Note 6) ....................... 9,470,838 94,708,383
Shares issued to shareholders in
reinvestment of distributions .. 231,206 2,124,787
Shares redeemed ................... (618,102) (5,764,989)
---------- -----------
Net increase ...................... 10,082,306 $100,446,078
============
Shares outstanding:
Beginning of period ............... --
----------
End of period ..................... 10,082,306
==========
(DAGGER) Commencement of operations.
35
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
================================================================================
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE 29, 1998(DAGGER)
THE SMALL CAP PORTFOLIO THROUGH DECEMBER 31, 1998
------------------------------------
SHARES AMOUNT
--------- -----------
<S> <C> <C>
Shares sold ................................... 1,594,097 $14,358,820
Shares issued in exchange for
securities transferred in-kind (Note 6) .... 7,904,155 79,041,552
Shares issued to shareholders in
reinvestment of distributions .............. 33,474 306,962
Shares redeemed ............................... (757,909) (6,560,797)
--------- -----------
Net increase .................................. 8,773,817 $87,146,537
===========
Shares outstanding:
Beginning of period ........................... --
---------
End of period ................................. 8,773,817
=========
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE 29, 1998(DAGGER)
THE INTERNATIONAL PORTFOLIO THROUGH DECEMBER 31, 1998
------------------------------------
SHARES AMOUNT
---------- -----------
<S> <C> <C>
Shares sold ................................... 1,425,587 $13,411,791
Shares issued in exchange for
securities transferred in-kind (Note 6) .... 6,353,419 63,534,185
Shares issued to shareholders in
reinvestment of distributions .............. 82,135 803,274
Shares redeemed ............................... (345,222) (3,230,349)
--------- -----------
Net increase .................................. 7,515,919 $74,518,901
===========
Shares outstanding:
Beginning of period ........................... --
---------
End of period ................................. 7,515,919
=========
<FN>
(DAGGER) Commencement of operations.
</FN>
</TABLE>
36
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
================================================================================
6. TRANSFERS IN-KIND AND COMMENCEMENT OF NEW PORTFOLIOS. Effective June 29,
1998, the Wilmington Trust Growth Stock Fund ("Growth Stock Fund"), the
Wilmington Trust Value Stock Fund ("Value Stock Fund"), the Wilmington Trust
Small Cap Fund ("Small Cap Fund") and the Wilmington Trust International
Fund ("International Fund"), each a Wilmington Trust Collective Investment
Fund ("WTCIF"), transferred all of their net assets, including their
securities, to the Growth Portfolio, the Value Portfolio, the Small Cap
Portfolio and the International Portfolio, respectively. The shareholders of
each WTCIF received shares of the respective Portfolios based on the net
assets transferred divided by the net asset value of the respective
Portfolio.
The transfer was conducted on a taxable basis with respect to the Growth
Stock Fund, whereby any unrealized appreciation or depreciation on the
securities on the date of transfer was recognized by the Growth Stock Fund
and the Growth Portfolio's basis in the securities reflect their market
value as of the date of transfer.
The transfer of securities was conducted on a tax-free basis with respect to
the Value Stock Fund, the Small Cap Fund and the International Fund, whereby
any unrealized appreciation or depreciation on the securities on the date of
transfer was not treated as a taxable event by the Value Stock Fund, Small
Cap Fund and the International Fund. The Value Portfolio's, the Small Cap
Portfolio's and the International Portfolio's basis in the securities
reflect their historical cost basis as of the date of transfer.
The following table summarized the aforementioned transactions:
THE WILMINGTON TRUST COLLECTIVE INVESTMENT FUNDS
NET ASSET UNREALIZED
SHARES AT VALUE AT APPRECIATION
FUND NAME 6/28/98 6/28/98 AT 6/28/98
------------ --------- ------------ ------------
Growth Stock Fund 1,696,889 $113,362,975 $30,345,500
Value Stock Fund 2,046,297 94,708,383 7,428,141
Small Cap Fund 2,559,982 79,041,552 15,894,957
International Fund 2,152,552 63,534,185 10,359,785
THE RODNEY SQUARE STRATEGIC EQUITY FUND
COMBINED
SHARES NET ASSETS NAV
ISSUED IN AFTER PER
PORTFOLIO NAME EXCHANGE EXCHANGE SHARE
--------------- --------- ------------ ------
Growth Portfolio 4,749,182 $209,657,472 $23.87
Value Portfolio 9,470,838 94,708,383 10.00
Small Cap Portfolio 7,904,155 79,041,552 10.00
International Portfolio 6,353,419 63,534,185 10.00
37
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
================================================================================
7. COMMITMENTS. As of December 31, 1998, the International Portfolio had
entered into forward foreign currency exchange contracts which contractually
obligate the Portfolio to deliver or receive currencies at specified future
dates. The open contracts were as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
SETTLEMENT CONTRACT VALUE AT APPRECIATION
DATE CURRENCY PURCHASED AMOUNT 12/31/98 (DEPRECIATION)
---------- ------------------ -------- -------- --------------
<S> <C> <C> <C> <C>
1/4/99 3,343 Australian Dollar $ 2,050 $ 2,050 $--
1/7/99 3,538 Australian Dollar 2,174 2,170 (4)
1/4/99 158,270 British Pound 267,445 263,332 (4,113)
1/4/99 79,745 Deutsche Mark 47,967 47,880 (87)
1/5/99 67,537 Hong Kong Dollar 8,728 8,718 (10)
1/4/99 143,434,398 Italian Lira 87,131 86,988 (143)
1/5/99 8,611,911 Italian Lira 5,208 5,223 15
1/7/99 5,774,400 Italian Lira 3,483 3,502 19
1/8/99 12,903,362 Italian Lira 7,835 7,826 (9)
-------- -------- -------
$432,021 $427,689 $(4,332)
======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
NET UNREALIZED
SETTLEMENT CONTRACT VALUE AT APPRECIATION
DATE CURRENCY SOLD AMOUNT 12/31/98 (DEPRECIATION)
---------- ---------------- -------- --------- -------------
<S> <C> <C> <C> <C>
3/1/99 1,787,500 Hong Kong Dollar $220,000 $230,675 $ (10,675)
3/4/99 75,655,669 Japanese Yen 568,000 674,762 (106,762)
-------- -------- ---------
$788,000 $905,437 $(117,437)
======== ======== =========
</TABLE>
8. SUBSEQUENT EVENT. Effective January 1, 1999, Provident Distributors, Inc.
replaced Rodney Square Distributors, Inc. as the distributor of the Fund and
PFPC Trust Company replaced PNC Bank, N.A. as the Fund's sub-custodian.
38
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
================================================================================
To the Shareholders and Trustees of The Rodney Square Strategic Equity Fund:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of The Rodney Square Strategic
Equity Fund (comprised of the Large Cap Growth Equity, Large Cap Value
Equity, Small Cap Equity and International Equity Portfolios) (the "Fund")
as of December 31, 1998, and the related statements of operations,
statements of changes in net assets and financial highlights for each of the
periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and financial highlights. Our procedures
included confirmation of securities owned as of December 31, 1998, 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 Strategic
Equity Fund at December 31, 1998, and the results of their operations, the
changes in their net assets and their financial highlights for each of the
periods indicated therein, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 5, 1999
39
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTICE TO SHAREHOLDERS (UNAUDITED)
================================================================================
TAX INFORMATION
By now shareholders to whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV from their respective Portfolio.
Pursuant to Section 852 of the Internal Revenue Code of 1986, as amended,
the following Portfolios of the Fund paid a 20% capital gain distribution
(from net long-term capital gains) during the year ended December 31, 1998.
The following table summarizes the capital gain distributions:
TOTAL 20%
CAPITAL GAIN CAPITAL GAIN
PER SHARE DISTRIBUTION
-------------- -----------
Large Cap Growth Equity Portfolio $2.7946 $23,800,865
Large Cap Value Equity Portfolio 0.1208 1,188,602
Small Cap Equity Portfolio 0.0164 144,305
International Equity Portfolio 0.1091 812,763
For corporate shareholders, 100% of the ordinary income distributions
(dividend income plus short-term gains, if any) for the Large Cap Value
Equity and the Small Cap Equity Portfolio qualify for the dividends-received
deduction.
SPECIAL MEETINGS OF SHAREHOLDERS
A special meeting of the shareholders of the Growth Portfolio was held on
February 23, 1998 to vote on the following proposals. The description of
each proposal and the number of shares voted are as follows:
1. Election of Trustees; Eric Brucker, Fred L. Buckner, Robert J. Christian,
John J. Quindlen and Nina M. Webb. The results of the shares voted were
as follows:
FOR AGAINST ABSTAIN
--------- ------- -------
2,978,171 4,619 --
2. Approval of a new investment advisory agreement for the Growth Portfolio.
The results of the shares voted were as follows:
FOR AGAINST ABSTAIN
--------- -------- -------
2,978,171 4,619 --
3. Approve the amendment of the investment objectives of the Growth
Portfolio. The results of the shares voted were as follows:
FOR AGAINST ABSTAIN
--------- -------- -------
2,978,171 4,619 --
40
<PAGE>
THE RODNEY SQUARE STRATEGIC EQUITY FUND
- --------------------------------------------------------------------------------
NOTICE TO SHAREHOLDERS (UNAUDITED) -- CONTINUED
================================================================================
SPECIAL MEETINGS OF SHAREHOLDERS -- CONTINUED
4. Approve the amendment of the fundamental investment limitations of the
Growth Portfolio. The results of the shares voted were as follows:
FOR AGAINST ABSTAIN
--------- ------- -------
2,978,171 4,619 --
5. Approve the amendment of the Fund's Declaration of Trust. The results of
the shares voted were as follows:
FOR AGAINST ABSTAIN
--------- ------- -------
2,978,171 4,619 --
At a special meeting on December 21, 1998, shareholders of the International
Equity Portfolio approved the reassignment of the sub-advisory contract with
Scudder Kemper Investments, Inc. The reassignment of the sub-advisor
contract was required due to a change in control of Scudder Kemper
Investments, Inc. The results of the shareholder vote were as follows;
7,169,951 votes for approval, 0 votes against approval and 265,106 votes
were not cast.
41
<PAGE>
[This Page Intentionally Left Blank.]
<PAGE>
TRUSTEES
Eric Brucker
Fred L. Buckner
Robert J. Christian
John J. Quindlen
-------------------------------------------
OFFICERS
Robert J. Christian, PRESIDENT
E. Matthew Brown, VICE PRESIDENT
John J. Kelley, VICE PRESIDENT & TREASURER
Carl M. Rizzo, Esq., SECRETARY
Mary Jane Maloney, ASSISTANT SECRETARY
John C. McDonnell, ASSISTANT TREASURER
-------------------------------------------
INVESTMENT ADVISER
Wilmington Trust Company
Rodney Square North
1100 N. Market St.
Wilmington, DE 19890-0001
-------------------------------------------
ADMINISTRATOR,
TRANSFER AGENT AND
ACCOUNTING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
-------------------------------------------
DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Center, 6th Floor
West Conshohocken, PA 19428-2961
-------------------------------------------
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
-------------------------------------------
INDEPENDENT AUDITORS
Ernst & Young LLP
-------------------------------------------
CUSTODIANS
Wilmington Trust Company
Bankers Trust Company
-------------------------------------------
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 12/98
