THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
PRESIDENT'S MESSAGE
- - --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The management of The Rodney Square International Equity Fund (the "Fund")
would like to report to you the Fund's activity for the six-month period ended
April 30, 1995.
INVESTMENT RESULTS*
The Fund's total return was -4.92% through the first six months of the
fiscal year which ended April 30. This compared to a 1.2% return for the
international markets as measured by the Europe, Australia and Far East Index
(the "EAFE"). The international markets underperformed the U.S. market during
this period as measured by the Standard & Poor's 500 Index (the "S&P 500"),
which provided a total return of 10.5%. The EAFE and S&P 500 are widely
followed, unmanaged, capitalization-weighted indices of publicly traded stocks.
EAFE contains 1,125 companies representing the stock markets of Europe,
Australia, New Zealand and the Far East. The S&P 500 contains 500 publicly
traded stocks of issuers located in the United States.
The Fund's underperformance against the EAFE can be attributed to
particular weakness in selected emerging market positions that the Fund had that
were not included in the EAFE and to weakness in certain U.K. positions.
The international market returns benefited from currency translation as the
dollar weakened against the yen and the deutschemark-block currencies (e.g.,
Germany, Switzerland, Netherlands and France). During the period the EAFE
actually lost 7.3% in local market terms.
MARKET ENVIRONMENT AND PORTFOLIO REVIEW
The unsettled, bear market conditions that have gripped international
equity markets since early 1994 carried on into the first four months of 1995.
It was largely through currency gains that the U.S.-dollar investor was
protected from widespread local price declines. All the major international
equity markets (with the exception of the United Kingdom) and most of the minor
ones declined in local terms during the first half of the Fund's fiscal year.
Only sharp, widespread declines of the U.S. dollar enabled the EAFE to end the
period with a small gain. The yen appreciated 15.4% against the dollar, while
the deutschemark-block currencies gained anywhere from 5.2% to 10.2%. The fact
that the dollar outperformed only the likes of the Mexican peso and the Italian
lira underscores the extent of the U.S. dollar's recent deterioration.
The world is in the midst of a currency crisis. At the heart of this
crisis lies the fundamental structural imbalance that exists between the United
States and Japan. The United States continues to spend too much and Japan, too
little. The end result is a chronic weakness of the dollar against the yen, as
the world is ever more awash in dollars and starved for yen. While these
structural problems are not new, several recent developments have aggravated the
immediate situation including:
+ The U.S. decision to backstop Mexico and the peso, leading to the
perception of the United States assuming increasing financial
responsibility for Mexico.
+ U.S. economic indicators, suggesting a soft landing and a peak in
domestic short-term interest rates.
+ The Kobe earthquake, interpreted as potentially leading to
further Japanese introversion and preempting an early resumption
of Japanese capital outflows.
While the dollar has shown signs of stabilization over the past few weeks,
the crisis is not over yet. In due time, the situation will resolve itself, but
to the extent that global market forces will provide the impetus for this
resolution, we are likely to be faced with further instability in the equity
markets. Depending on how soon this resolution takes place, the current period
of currency unrest could prove to be no more than a temporary disruption in the
world growth cycle. The longer the situation continues, however, the greater
the risk to the world economy.
The managers in the Fund have reacted in different ways to this
environment. Scudder, Stevens & Clark, Inc. ("Scudder") is concerned that the
likelihood of a protracted global growth cycle is diminishing, and they have
been scaling back on the portfolio's exposure to stocks that are most dependent
on economic growth to support current valuation levels (e.g. autos, chemicals
and certain German export-related industrial companies). Portfolio emphasis is
gravitating more towards those sectors whose earnings stream is less dependent
on the business cycle and more insulated from currency fluctuations. Examples
include more globalized companies in sectors such as energy, drugs and consumer
nondurables. Scudder has also taken a more bearish view toward Japan with a
targeted reduction from a 25% weighting to 20% of their portion of the Fund.
Their main concern is that the continued climb of the yen weakens Japan's
fragile economic recovery. Conversely, Clemente Capital, Inc. ("Clemente")
plans to increase their exposure to the Japanese market based on what they
perceive to be attractive valuations and an anticipated favorable policy
response from Japanese authorities toward more expansive monetary and fiscal
measures. Clemente's equal weighted position in Europe may be reduced because
of the weak German economy and the pressure on exports resulting from the
dollar's decline. Heavily overweighted positions may be maintained in the
emerging markets of the Pacific Rim with more modest exposures in Latin America.
We invite your comments and questions and we thank you for your investment
in the Rodney Square International Equity Fund.
Sincerely,
/s/ Peter J. Succoso
Peter J. Succoso
President
June 12, 1995
* PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. AN
INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY WILMINGTON
TRUST COMPANY OR ANY OTHER BANKING INSTITUTION, THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR
ANY OTHER AGENCY. THE TOTAL RETURNS SHOWN ABOVE DO NOT REFLECT THE EFFECT
OF THE MAXIMUM SALES LOAD OF 4.00%. RETURNS ARE HIGHER DUE TO THE
ADVISER'S MAINTENANCE OF THE FUND'S EXPENSES. SEE FINANCIAL HIGHLIGHTS ON
PAGE 12.
2
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
INVESTMENTS / APRIL 30, 1995 (UNAUDITED)
(Showing Percentage of Total Value of Net Assets)
- - --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCK -- 83.8%
AUSTRALIA -- 2.1%
Ampolex Limited (Oil Exploration)................. 19,266 $ 55,858
Australian Gas Light Co., Ltd. (Gas &
Oil Distributor)............................. 22,036 72,418
Broken Hill Propriety Co. (Metals - Diversified).. 4,947 72,256
Coca Cola Amatil, Ltd. (Soft Drink Distributor)... 11,671 71,596
CRA, Ltd. (Metals Mining)......................... 3,950 56,944
MIM Holdings (Metals Mining)...................... 7 10
Western Mining Corp. Holdings, Ltd. (Mineral
Mining)...................................... 12,306 69,919
-----------
399,001
-----------
BRAZIL -- 0.8%
Cia Vale Do Rio Doce ADR (Mining & Rail
Transportation).............................. 1,300 54,374
Telecomunicacoes Brasileiras SA
(Telecommunications)......................... 1,400 50,071
Usinas Sideburg Minas Cerais (Iron & Steel
Manufacturer)................................ 4,300 51,892
-----------
156,337
-----------
CANADA -- 2.0%
Alcan Aluminum (Aluminum Manufacturer)............ 1,018 28,746
Canadian Pacific (Holding Co.).................... 5,087 77,410
Renaissance Energy, Ltd. (Oil & Gas Exploration)*. 3,000 67,657
Royal Plastics Group Ltd. (Plastics Manufacturer). 17,000 180,785
Teck Corp. Class B (Mining & Metals).............. 1,000 17,418
-----------
372,016
-----------
CHINA -- 0.3%
Huaneng Power International Inc. ADR
(Utilities - Electric)....................... 3,500 50,750
-----------
FINLAND -- 2.0%
Kone Corp. 'B' (Elevator Manufacturer)............ 240 29,901
Metra Oy 'B' Shares (Miscellaneous Manufacturer).. 6,100 248,072
Outokumpu Oy 'A' (Steel & Copper Manufacturer).... 4,800 85,980
Outokumpu Oy 'A' Warrants 1996*................... 6,000 3,527
-----------
367,480
-----------
The accompanying notes are an integral part of the financial statements.
3
FRANCE -- 5.7%
Carrefour Supermache (Retail Grocery)............. 200 100,752
Compagnie De Saint Gobain (Building Materials
Producer).................................... 460 59,789
Credit Lyonnais Cert D'Investment (Banking)....... 800 39,745
LVMH (Moet-Hennessy) (Wines & Spirits)............ 1,360 259,871
Michelin Class B (C.G.D.E.) (Tire & Rubber)....... 1,450 65,341
Pinault - Printemps (Retail Department Stores).... 230 52,268
Seita (Tobacco Products).......................... 1,020 31,226
Societe Nationale Elf Aquitaine (Petroleum Co.)... 1,061 85,150
Television Francaise (T.F.I.) (Broadcasting,
Radio & TV).................................. 310 28,446
Total SA 'B' (Oil & Gas Exploration).............. 1,321 82,934
Union Assurancesfederale SA (Insurance)........... 400 41,037
Zodiac SA (Rubberized Products)................... 1,908 228,498
-----------
1,075,057
-----------
GERMANY -- 6.4%
Allianz AG Holding (Registered) (Insurance)....... 18 33,128
BASF AG (Chemical Manufacturer)................... 310 69,441
Bayer AG DM50 (Chemical Production and Marketing)* 120 29,717
Deutsche Bank AG (Banking)........................ 189 93,129
Mannesmann AG (Miscellaneous Machinery)........... 412 112,785
Munich Reinsurance (Registered) (Insurance)....... 24 48,296
Munich Reinsurance Warrants....................... 4 464
RWE AG (Manufactures and Sells Petroleum Products) 150 50,798
SAP AG (Computer Software Services)............... 120 123,917
Schering AG (Pharmaceuticals)..................... 90 67,157
Veba AG (Electric Utility)........................ 378 141,579
Viag AG (Metal Manufacturer)...................... 172 64,060
Volkswagen AG (Automobile Manufacturer)........... 150 41,987
Wella AG (Personal Care Products)................. 416 325,801
-----------
1,202,259
-----------
HONG KONG -- 3.6%
Cheung Kong Holdings, Ltd. (Real Estate).......... 14,000 58,934
China Light & Power Co., Ltd. (Electric Co.)...... 9,300 43,832
Great Eagle Co., Ltd. (Real Estate Development
and Investment Company)...................... 26,400 47,385
HSBC Holdings (Financial Services)................ 21,412 248,147
Hutchinson Whampoa (Real Estate).................. 18,000 78,096
Hysan Development Co., Ltd. (Real Estate)......... 28,000 59,657
Sun Hung Kai Properties (Real Estate)............. 5,000 31,894
Swire Pacific Ltd., 'A' (General Trading and
Real Estate)................................. 11,500 76,847
Television Broadcasts Ltd. (Broadcast, Radio & TV) 6,000 22,313
-----------
667,105
-----------
INDONESIA -- 0.4%
PT Mayora Indah (Food Processing)................. 22,000 78,812
-----------
The accompanying notes are an integral part of the financial statements.
4
IRELAND -- 1.6%
Fyffes plc (Produce Distribution)................. 180,000 304,910
-----------
ITALY -- 2.3%
Instituto Natl. Assicurazioni (Insurance)*........ 58,000 77,796
Societa Italiana Per L'Eserreizio Delle
Telecomunicazioni, P.A. (Telecommunications). 134,000 355,894
-----------
433,690
-----------
JAPAN -- 25.1%
Asahi Printing & Packaging (Printing & Publishing) 6,600 176,572
Cannon Inc. (Photographic Equipment).............. 8,000 132,221
Dai-Ni Demden Corp. (Telecommunications).......... 16 140,782
Fujitsu Ltd. (Computer Manufacturer).............. 8,000 81,711
Hitachi Metals, Ltd. (Iron & Steel Manufacturer).. 24,000 291,076
Hitachi, Ltd. (Electronics)....................... 9,000 91,496
Ito Yokado Co. (Grocery Retail)................... 1,000 53,863
Itochu Corp. (Miscellaneous Retail Trade)......... 14,000 94,885
Japan Associated Finance (Financial Services)..... 1,000 122,471
Japan Telecom Co., Ltd. (Telecommunications)...... 1 23,305
JGC Corp. (Engineering & Construction)............ 2,300 36,373
Kaneshita Construction (Construction)............. 10,000 145,062
Kawasaki Steel First Section (Steel Products)..... 10,000 40,427
Keiyu (Automobile & Truck Sales).................. 6,300 191,019
Keyence Corp. (Electronics)....................... 800 85,230
Komori Corp. (Printing Machine Manufacturer)...... 1,000 24,851
Kyocera Corp. (Bioceramics Manufacturer).......... 4,000 309,150
Mabuchi Motor Co. (Automobile Manufacturer)....... 1,200 79,190
Matsushita Electric Industrial Co., Ltd.
(Electronics)................................ 6,000 100,593
Mitsui Trust & Banking (Banking).................. 24,000 268,817
NEC Corp. (Electronics)........................... 22,000 243,277
NGK Spark Plug (Spark Plug Manufacturer).......... 7,000 81,568
Nichiei Co. (Financial Services).................. 2,000 127,703
Nippon Kanzai (Commercial Services)............... 8,400 338,590
Nippon Shokubai (Chemical Manufacturer)........... 6,000 61,568
Nisshin Steel Co., Ltd. (Steel Manufacturer)...... 9,000 45,160
NSK Limited (Bearings Manufacturer)............... 7,000 51,022
Secom Co. (Electrical Engineering and Electronics) 1,000 65,159
Shin-Etsu Chemical Co. (Chemical Producer)........ 12,000 232,576
SMC Corp. (Pneumatic Equipment Manufacturer)...... 1,600 84,659
Sony Corp. (Electronics).......................... 2,000 100,830
Sony Music Entertainment (Miscellaneous
Manufacturer)................................ 1,100 55,849
Sumitomo Electric Industries (Electronics)........ 3,000 40,665
Sumitomo Metal Industries (Iron & Steel
Manufacturer)................................ 22,000 72,198
Takara Printing (Printing & Publishing)........... 11,000 209,270
Ten Allied (Restaurant & Food Services)........... 8,400 144,825
Tokyo Electron Ltd. (Industrial Electronic
Machines).................................... 7,000 218,069
Tsutsumi Jewelry (Jewelry Manufacturer)........... 700 42,532
-----------
4,704,614
-----------
The accompanying notes are an integral part of the financial statements.
5
MALAYSIA -- 2.6%
Aokam Perdana Berhad (Paper Manufacturer)......... 7,000 31,466
Leader Universal Holdings (Electrical Equipment).. 41,666 135,833
Malayan Banking (Banking)......................... 6,000 41,064
Technology Resources Industries (Furniture
Manufacturer)................................ 23,000 58,681
United Engineers Ltd. (Engineering & Construction) 38,000 218,523
-----------
485,567
-----------
NETHERLANDS -- 6.7%
Aegon (Insurance)................................. 1,370 106,851
AKZO N.V. (Chemicals)............................. 380 44,272
Elsevier N.V. (Publisher)......................... 5,810 63,929
Heineken N.V. (Beverage Producer)................. 650 93,187
International Nederlanden Groep (Financial
Services).................................... 1,382 73,170
Philips Electronics N.V. (Electronics)............ 2,570 98,475
Polygram N.V. (Music Producer and Publisher)...... 5,680 322,050
Royal Dutch Petroleum (Petroleum Exploration)..... 370 45,861
Schlumberger Ltd. ADR (Oil & Gas Equipment)....... 1,400 88,025
Vnu-Ver Ned Uitgev Ver Bezit (Publishing &
Printing).................................... 2,270 255,063
Wolters Kluwer N.V. (Publishing and Printing)..... 810 66,216
-----------
1,257,099
-----------
NEW ZEALAND -- 1.3%
Carter Holt Harvey (Paper Manufacturer)........... 18,600 47,336
Fletcher Challenge Ltd. (Paper Products).......... 41,000 110,415
Telecom Corp. of New Zealand Ltd.
(Telecommunications)......................... 21,320 89,713
-----------
247,464
-----------
NORWAY -- 1.0%
Kvaerner AS 'A' (Marine Transportation
Manufacturer)................................ 1,600 73,448
Saga Petroleum AS 'A' (Oil & Gas Exploration)..... 8,200 119,532
-----------
192,980
-----------
PHILIPPINES -- 2.0%
Manila Electric Co. 'B' (Electric Utility)........ 14,850 154,408
Metropolitan Bank & Trust (Banking)............... 12,005 218,446
Philippine National Bank (Banking)................ 367 3,487
-----------
376,341
-----------
SINGAPORE -- 1.2%
Development Bank of Singapore, Ltd. (Banking)..... 20,250 216,539
-----------
The accompanying notes are an integral part of the financial statements.
6
SPAIN -- 1.0%
Empresa Nacional de Electricidad SA (Utility)..... 1,350 64,002
Fomento de Contruc y Contratas (Construction)..... 400 36,819
Repsol SA (Oil and Gas Exploration)............... 2,595 82,864
-----------
183,685
-----------
SWEDEN -- 1.5%
Astra AB 'A' Free (Pharmaceuticals)............... 3,925 114,409
SKF AB 'B' Free (Miscellaneous Machinery)......... 5,800 116,829
Volvo AB 'B' Free (Automobile & Truck
Manufacturer)................................ 2,300 43,167
-----------
274,405
-----------
SWITZERLAND -- 4.5%
BBC Brown Boveri Group Ptg. Certificate
(Energy Holding Co.)......................... 140 139,187
Ciba-Geigy AG (Bearer) (Pharmaceuticals).......... 128 87,989
Nestle SA (Registered) (Food and Beverage
Manufacturer)................................ 333 327,555
Schweizerische Ruckversicherungse (Insurance)..... 109 76,557
Schweizerische Ruckversicherungse 'B' Warrants*... 200 2,110
SGS Societe Gen de Surveill (Bearer) (Commercial
Services).................................... 56 94,023
Sulzer AG (Miscellaneous Manufacturer)............ 82 49,736
Zurich Versicherungs (Registered) (Insurance)..... 61 65,526
-----------
842,683
-----------
THAILAND -- 1.7%
American Standard Sanitaryware Ltd.
(Household Products)......................... 1,000 16,815
Siam City Bank plc (Banking)...................... 210,000 217,471
The Siam Commercial Bank, Ltd. (Banking).......... 11,000 93,837
-----------
328,123
-----------
TURKEY -- 0.4%
Turkiye Garanti Bankasi AS ADS (Banking).......... 32,000 80,832
-----------
UNITED KINGDOM -- 7.6%
Bank of Ireland (Banking)......................... 2,062 11,232
British Gas plc (Gas Utilities)................... 14,400 70,162
British Steel (Steel Manufacturer)................ 22,900 62,542
De La Rue plc (Specialty Printing)................ 15,900 230,740
Enterprise Oil ord. (Oil & Gas Exploration)....... 16,700 111,054
Hanson plc (Diversified Holding Co.).............. 15,005 57,287
Powergen plc (Electric Utility)................... 11,100 86,730
Reuters Holdings plc Class B (Publishing)......... 26,550 202,729
The accompanying notes are an integral part of the financial statements.
7
Royal Bank of Scotland Group plc (Banking)........ 34,200 229,917
Smithkline Beecham Class A (Pharmaceuticals)...... 10,400 82,605
The R.T.Z. Corp. (Metals Mining).................. 8,165 104,240
Thorn EMI plc (Amusement and Recreation Services). 5,366 98,596
Waste Management International (Environmental
Services)*................................... 6,600 27,731
Zeneca Group plc (Pharmaceuticals)................ 3,000 43,827
-----------
1,419,392
-----------
TOTAL COMMON STOCK (COST $14,365,965)............. 15,717,141
-----------
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
CORPORATE BONDS -- 1.6%
Amer Group, 6.25%, 06/15/03 (Convertible Bond)
(COST $289,446).............................. $330,000 $ 296,175
-----------
TOTAL INVESTMENTS (COST $14,655,411)** -- 85.4%........ 16,013,316
OTHER ASSETS AND LIABILITIES -- NET 14.6%.............. 2,744,426
-----------
NET ASSETS -- 100.0%................................... $18,757,742
===========
* Non-income producing security.
** The cost for federal income tax purposes was $14,658,405. At April 30,
1995, net unrealized appreciation was $1,354,911. This consisted of
aggregate gross unrealized appreciation for all securities in which there
was an excess of market value over tax cost of $2,032,715 and aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over market value of $677,804.
SECTOR DIVERSIFICATION
- - --------------------------------------------------------------------------------
VALUE
% OF NET (NOTE 2)
ASSETS (IN THOUSANDS)
---------- --------------
Basic Industry................................ 12.24% $ 2,296
Financial..................................... 15.11 2,834
Producer Durables............................. 16.17 3,034
Consumer Cyclical............................. 13.95 2,616
Utilities..................................... 7.17 1,344
Media & Services.............................. 13.67 2,565
Energy........................................ 4.95 929
Health........................................ 2.11 396
------ -------
TOTAL INVESTMENT PORTFOLIO.................... 85.37 16,014
Other Assets and Liabilities, Net............. 14.63 2,744
------ -------
NET ASSETS.................................... 100.00% $18,758
====== =======
The accompanying notes are an integral part of the financial statements.
8
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (Unaudited)
ASSETS:
Investments, at market (identified cost
$14,655,411) (Note 2)...................... $16,013,316
Cash in interest bearing account..................... 2,654,497
Receivables:
Fund shares sold................................ 1,415
Dividends and interest.......................... 86,323
Foreign taxes recoverable....................... 105,753
Other assets......................................... 927
-----------
Total assets............................... 18,862,231
LIABILITIES:
Payables:
Fund shares redeemed............................ $39,943
Due to Adviser (Note 4)......................... 1,645
Accrued expenses (Note 4)....................... 62,901
-------
Total liabilities.......................... 104,489
-----------
NET ASSETS, at market value.......................... $18,757,742
===========
NET ASSETS CONSIST OF:
Common stock......................................... $ 16,057
Additional capital paid in........................... 17,471,444
Undistributed net investment income.................. 637,862
Accumulated net realized gain (loss) on:
Investments..................................... 167,393
Foreign currency transactions................... (906,612)
Net unrealized appreciation on:
Investments..................................... 1,357,905
Translation of assets and liabilities in
foreign currencies......................... 13,693
-----------
NET ASSETS, for 1,605,718 shares outstanding......... $18,757,742
===========
NET ASSET VALUE and redemption price per share
share ($18,757,742 / 1,605,718 outstanding
shares of common stock, $0.01 par value)........ $11.68
======
Maximum offering price per share
(100/96 of $11.68)......................... $12.17
======
The accompanying notes are an integral part of the financial statements.
9
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- - --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six-Month Period Ended April 30, 1995 (Unaudited)
INVESTMENT INCOME:
Dividends.................................. $ 159,488
Interest................................... 55,165
-----------
214,653
Less foreign taxes withheld................ (21,100)
-----------
193,553
EXPENSES:
Advisory fee (Note 4)...................... $107,940
Administration fee (Note 4)................ 9,714
Accounting fee (Note 4).................... 37,192
Distribution expenses (Note 4)............. 4,286
Custodian fees............................. 36,506
Reports to shareholders.................... 4,323
Legal...................................... 9,540
Audit...................................... 17,894
Registration fees.......................... 10,427
Directors' fees and expenses (Note 4)...... 2,330
Transfer Agency fees....................... 7,674
Other...................................... 6,406
--------
Total expenses before reimbursement
from Adviser..................... 254,232
Reimbursement of expenses from
Adviser (Note 4)................. (65,337)
--------
Expenses, net......................... 188,895
-----------
Net investment income...................... 4,658
-----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Investments................................ 60,325
Foreign currency transactions.............. (19,075)
Net unrealized appreciation (depreciation)
during the period on:
Investments................................ (1,444,266)
Translation of assets and liabilities
in foreign currencies................. 6,269
-----------
Net realized and unrealized loss from
investments and foreign currency........... (1,396,747)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................. $(1,392,089)
===========
The accompanying notes are an integral part of the financial statements.
10
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
FINANCIAL STATEMENTS -- CONTINUED
- - --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH FOR THE FISCAL
PERIOD ENDED YEAR ENDED
APRIL 30, 1995 OCTOBER 31,
(UNAUDITED) 1994
----------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)............... $ 4,658 $ (51,649)
Net realized gain (loss) on:
Investments........................... 60,325 1,993,499
Foreign currency transactions......... (19,075) (61,586)
Net unrealized appreciation
(depreciation) during the period on:
Investments........................... (1,444,266) 302,721
Translation of assets and liabilties
in foreign currencies............ 6,269 9,127
----------- -----------
Net increase (decrease) in net assets
resulting from operations............. (1,392,089) 2,192,112
----------- -----------
Distributions to shareholders from:
Net realized gains from investment
transactions($1.00 and $0.19 per
share, respectively).................. (1,850,722) (322,092)
----------- -----------
Increase (decrease) in net assets from Fund
share transactions (Note 5)........... (2,456,707) 3,642,020
----------- -----------
Increase (decrease) in net assets.......... (5,699,518) 5,512,040
NET ASSETS:
Beginning of period........................ 24,457,260 18,945,220
----------- -----------
End of period (including undistributed
net investment income of $637,862
and $633,204, respectively)........... $18,757,742 $24,457,260
=========== ===========
The accompanying notes are an integral part of the financial statements.
11
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements and
notes thereto.
FOR THE SIX-MONTH
PERIOD ENDED FOR THE FISCAL YEARS ENDED
APRIL 30, 1995 OCTOBER 31,
--------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
----------- ---- ---- ---- ---- ----
NET ASSET VALUE - BEGINNING
OF PERIOD ............ $13.36 $12.35 $ 9.60 $11.64 $11.08 $12.08
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income
(loss)................ -- (0.03) 0.04 0.01 0.18 0.12
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions.......... (0.68) 1.23 2.71 (1.24) 0.62 (0.71)
------ ------ ------ ------ ------ ------
Total from investment
operations........ (0.68) 1.20 2.75 (1.23) 0.80 (0.59)
------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
From net investment
income................ -- -- -- (0.05) (0.13) (0.08)
From net realized gains
on investment
transactions.......... (1.00) (0.19) -- (0.76) (0.11) (0.33)
------ ------ ------ ------ ------ ------
Total distributions. (1.00) (0.19) -- (0.81) (0.24) (0.41)
------ ------ ------ ------ ------ ------
NET ASSET VALUE - END OF
PERIOD................ $11.68 $13.36 $12.35 $ 9.60 $11.64 $11.08
====== ====== ====== ====== ====== ======
TOTAL RETURN 1............ (4.92)% 9.74% 28.65% (11.42)% 7.42% (5.35)%
RATIOS (TO AVERAGE NET ASSETS)/
SUPPLEMENTAL DATA:
Expenses 2.............. 1.75%* 1.75% 1.75% 1.75% 1.75% 1.75%
Net investment income
(loss)................ 0.04%* (0.21)% 0.37% 0.09% 1.12% 0.93%
12
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
FINANCIAL HIGHLIGHTS -- CONTINUED
- - --------------------------------------------------------------------------------
Portfolio turnover rate... 84.27%* 81.22% 148.4% 103.7% 74.5% 57.4%
Net assets at end of
period (000 omitted).. $18,758 $24,457 $18,945 $20,418 $43,413 $58,533
- - -------------------------
1 These results do not include the sales load. If the sales load had been
included, the returns would have been lower. The total return for the six-
month period ended April 30, 1995 has not been annualized.
2 The Adviser absorbed a portion of the Fund's expenses amounting to $0.035,
$.05, $.19, $.05, $.019, and $.002 per share for the six-month period ended
April 30, 1995, and for each of the five fiscal years in the period ended
October 31, 1994, respectively. If these expenses had been incurred by the
Fund, the ratio of expenses to average daily net assets would have been
2.36%, 2.15%, 3.51%, 2.20%, 1.87%, and 1.77%, for the six-month period
ended April 30, 1995, and for each of the five fiscal years in the period
ended October 31, 1994, respectively.
* Annualized
13
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- - --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND. The Rodney Square International Securities Fund,
Inc. (the "Corporation"), a diversified, open-end management investment
company, was incorporated in Maryland on July 24, 1987, and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). Its
Articles of Incorporation permit the Board of Directors to establish an
unlimited number of series each of which may issue separate classes of
shares. The Rodney Square International Equity Fund (the "Fund"), the only
series established, commenced investment operations on November 2, 1987.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the
significant accounting policies of the Fund:
SECURITY VALUATION. The Fund's securities, except investments with
remaining maturities of 60 days or less, are valued at their market value
as determined by their last sales price in the principal market in which
the securities are normally traded. Lacking any sales, a security will be
valued at the mean between the closing bid and ask price. Debt securities
having a maturity of 60 days or less are valued at cost with any premium
amortized or discount accreted over the period remaining until maturity.
All other securities and assets are valued at fair value as determined in
good faith by or under the direction of the Board of Directors.
FEDERAL INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code and to distribute all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. Distributions of net investment
income and net realized gains, if any, will be made annually. Additional
distributions may be made to the extent necessary to avoid the payment of a
4% excise tax.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund 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.
The Fund 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.
14
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- - --------------------------------------------------------------------------------
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 Fund's 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
Fund may enter into forward foreign currency exchange contracts.
Additionally, from time to time the Fund 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.
OTHER. Investment security transactions are accounted for on a trade date
basis. The Fund uses 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, except that if the ex-dividend date
has passed, certain dividends from foreign securities are recorded as soon
as the Fund is informed of the ex-dividend date. Interest income is
recorded on an accrual basis.
3. PURCHASES AND SALES OF INVESTMENT SECURITIES. Purchases and sales of
investment securities (excluding short-term investments) for the six-month
period ended April 30, 1995 were $8,261,669 and $12,915,227, respectively.
4. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES. The Fund employs
Wilmington Trust Company ("WTC"), a wholly owned subsidiary of Wilmington
Trust Corporation, a publicly held bank holding company, to furnish
investment advisory services to the Fund. Under WTC's Advisory Contract
with the Corporation, WTC acts as Investment Adviser and, subject to the
supervision of the Board of Directors, directs the investments of the Fund.
The Fund's assets are managed by two sub-advisers, each of which has
entered into an identical Sub-Advisory Agreement with WTC and the
Corporation. Each sub-adviser makes specific investments for the Fund in
accordance with the Fund's investment objective, policies and limitations,
and is compensated by WTC for the services it provides.
The Fund pays WTC a monthly fee at the annual rate of 1.00% of the average
daily net assets of the Fund. WTC has agreed to waive its advisory fee or
reimburse the Fund monthly to the extent that expenses (excluding taxes,
extraordinary expenses, brokerage commissions and interest) exceed an
15
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- - --------------------------------------------------------------------------------
annual rate of 1.75% of the Fund's average daily net assets. This
undertaking may be rescinded at any time in the future. The advisory fee
for the six-month period ended April 30, 1995 amounted to $107,940. During
the six-month period ended April 30, 1995, WTC reimbursed a portion of the
Fund's expenses in the amount of $65,337.
Rodney Square Management Corporation ("RSMC"), a wholly owned subsidiary of
WTC, serves as Administrator to the Fund pursuant to an Administration
Agreement with the Corporation dated December 31, 1992. As Administrator,
RSMC is responsible for services such as financial reporting, compliance
monitoring and corporate management. For the services provided, RSMC
receives a monthly administration fee from the Fund at an annual rate of
0.09% of the Fund's average daily net assets. The administration fee paid
to RSMC for the six-month period ended April 30, 1995 amounted to $9,714.
Pursuant to a Distribution Agreement with the Corporation dated as of
December 31, 1992, Rodney Square Distributors, Inc. ("RSD"), a wholly owned
subsidiary of WTC, manages the Fund's distribution efforts and utilizes its
personnel to provide assistance and expertise in developing marketing plans
and materials. The Corporation's Board of Directors has adopted, and the
Fund's shareholders have approved, a distribution plan (the "12b-1 Plan")
pursuant to Rule 12b-1 under the 1940 Act to allow the Fund to reimburse
RSD for certain distribution activities and to allow WTC to incur certain
expenses the payment of which may be considered to constitute indirect
payment by the Corporation of distribution expenses of the Fund. The Board
of Directors has authorized a payment of up to 0.25% of the Fund's
average daily net assets annually to reimburse RSD for such expenses. For
the six-month period ended April 30, 1995 such expenses amounted to $4,286.
RSMC determines the net asset value per share and provides accounting
services to the Fund pursuant to an Accounting Services Agreement with the
Corporation. For its services, RSMC receives an annual fee of $75,000 plus
an amount equal to 0.03% of that portion of the Fund's average daily net
assets over $100,000,000. For the six-month period ended April 30, 1995,
RSMC's fees for accounting services amounted to $37,192.
RSMC serves as Transfer Agent and Dividend Paying Agent to the Fund
pursuant to a Transfer Agent Agreement with the Corporation dated December
31, 1992. The Fund pays RSMC $7 per account per year, subject to a minimum
fee of $1,000, per month, plus out-of-pocket expenses.
The Directors of the Corporation who are "interested persons" of the
Corporation, WTC or its affiliates and all personnel of the Corporation or
WTC performing services related to research, statistical and investment
activities are paid by WTC or its affiliates. The fees and expenses of the
"non-interested" Directors amounted to $2,330 for the six-month period
ended April 30, 1995.
5. FUND SHARES. At April 30, 1995, there were 100,000,000 shares of $.01 par
value common stock authorized. Transactions in shares of the Fund were as
follows:
16
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- - -------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- - --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD
ENDED APRIL 30, 1995 FOR THE FISCAL YEAR
(UNAUDITED) ENDED OCTOBER 31,1994
-------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Shares sold.............. 75,315 $896,261 576,988 $7,319,590
Shares issued to share-
holders in reinvest-
ment of distributions
from net investment
income and net
realized gains...... 108,347 1,239,487 20,434 264,415
Shares redeemed.......... (407,941) (4,592,455) (301,534) (3,941,985)
--------- ----------- --------- ----------
Net increase (decrease).. (224,279) $(2,456,707) 295,888 $3,642,020
=========== ==========
Shares outstanding:
Beginning of period. 1,829,997 1,534,109
--------- ---------
End of period....... 1,605,718 1,829,997
========= =========
17
DIRECTORS
Eric Brucker
Fred L. Buckner
Martin L. Klopping
John J. Quindlen
Peter J. Succoso the RODNEY SQUARE
--------------------
INTERNATIONAL
OFFICERS
Peter J. Succoso, PRESIDENT EQUITY FUND
Joseph M. Fahey, Jr., VICE PRESIDENT
Robert C. Hancock, VICE PRESIDENT & TREASURER
Marilyn Talman, Esq., SECRETARY
Leah M. Anderson, ASSISTANT SECRETARY
Diane D. Marky, ASSISTANT SECRETARY
Connie L. Meyers, ASSISTANT SECRETARY
John J. Kelley, ASSISTANT TREASURER
----------------------------------------
INVESTMENT ADVISER
Wilmington Trust Company [Graphic] Ceasar
---------------------------- Rodney upon his
galloping horse
ADMINISTRATOR AND TRANSFER AGENT facing right,
Rodney Square Management Corporation reverse image on
----------------------------------------- dark background
CUSTODIAN
Chase Manhattan Bank, N.A.
------------------------------
DISTRIBUTOR
Rodney Square Distributors, Inc.
------------------------------------
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
------------------------------
INDEPENDENT AUDITORS
Ernst & Young LLP SEMIANNUAL REPORT
---------------------
APRIL 30, 1995
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.
