THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
PRESIDENT'S MESSAGE
- ------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The Board of Directors of the Rodney Square International Securities
Fund, Inc. (the "Corporation"), of which The Rodney Square
International Equity Fund (the "Fund") is the sole series, has voted
to liquidate the Fund and to dissolve the Corporation. The action
taken by the Board is subject to approval of the Fund's shareholders,
at a special meeting of shareholders scheduled to be held on or about
July 25, 1996. During the next few weeks, you will be receiving a
formal notice of that meeting, as well as a proxy statement discussing
the basis for the Board's action and describing the provisions of the
proposed plan of liquidation and dissolution (the "Plan"). If
approved by the Fund's shareholders, liquidation of the Fund will be
implemented in accordance with the Plan, and the requirements of the
applicable state and Federal laws. Prior to the date of the special
meeting however, you continue to have the right to redeem your shares
at net asset value.
The management of the Fund would also like to report to you the
Fund's activity for the six-month period ended April 30, 1996.
INVESTMENT RESULTS*
The Fund's total return was 10.1% through the first six months of
the fiscal year which ended April 30. This compared to a 13.2% return
for the international markets as measured by the Europe, Australia and
Far East Index (the "EAFE") and 13.8% for the U.S. market during this
period as measured by the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"). The EAFE and S&P 500 are widely followed,
unmanaged, capitalization-weighted indices of publicly traded stocks.
EAFE contains 1,125 stocks of companies representing the stock markets
of Europe, Australia, New Zealand and the Far East. The S&P 500
contains five hundred publicly traded stocks of companies based in the
U.S.
The international market returns in the period were higher when
measured in local currencies than when measured in dollar terms
because of the strengthening of the dollar against key European
currencies and against the yen. During the period the EAFE increased
over 16% when measured in local market terms.
MARKET ENVIRONMENT
The first part of 1996 has offered a mixed view of the major world
economies. While Japan is seeing the early signs of resumed activity,
Europe toys with recession. Economic indicators from Japan point to a
recovery finally underway. Between rock-bottom interest rates,
continued fiscal stimulus, a weaker yen, and an easing of deflationary
pressures, the Japanese corporate sector is enjoying a profit rebound.
While the macro-environment may be quite favorable for now, the
sustainability of this growth longer term is questionable. The
banking system remains extremely fragile and unemployment pressures
are building, yet there is increasing risk that interest rates may
rise prematurely, or that taxes may be hiked as soon as next year.
We are watchful for the early signs of increasing restraint.
- -------------------
* 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 RETURN SHOWN ABOVE DOES NOT
REFLECT THE EFFECT OF THE MAXIMUM SALES LOAD OF 4.00%. THE RETURN IS
HIGHER DUE TO THE ADVISER'S MAINTENANCE OF THE FUND'S EXPENSES. SEE
FINANCIAL HIGHLIGHTS ON PAGE 12.
1
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
PRESIDENT'S MESSAGE -- CONTINUED
- ------------------------------------------------------------------------------
In Europe, interest rates and currency levels have come down some,
but more is needed to avert recession. We expect some further rate
reductions across Europe, decoupling from whatever may be the next
U.S. move. In addition, we do not expect any new draconian fiscal
initiatives in the interest of satisfying goals for the European
Monetary Union (EMU). With no major economies, including Germany, now
qualifying for EMU, and unemployment continuing to soar, the pressures
are mounting to postpone or relax EMU. Under our scenario of less
stringent monetary and fiscal conditions, the European economies
should see their bottom sometime this year.
These cyclical trends should represent a favorable near term
backdrop for the stock markets, especially in Europe. However, over
the next several quarters what happens to the U.S. market may be more
critical. Because of the dominance of U.S. capital flows, any
meaningful correction in the U.S. market may have ripple effects
worldwide. With the U.S. market at record highs, international equity
investors should have modest expectations of near term gain.
We invite your comments and questions, and we thank you for your
investment in the Rodney Square International Equity Fund.
Sincerely,
/s/ Martin L. Klopping
Martin L. Klopping
President
June 14, 1996
2
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
INVESTMENTS/APRIL 30, 1996 (UNAUDITED)
(Showing Percentage of Total Value of Net Assets)
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCK - 92.4%
ARGENTINA - 1.2%
Buenos Aires Emobotel - Sponsored
ADR (Bottling & Distribution)............ 11,900 $ 188,913
----------
AUSTRALIA - 2.7%
Ampolex Ltd. (Oil Exploration)............. 19,266 65,834
Australian Gas Light Co., Ltd.
(Gas & Oil Distributor).................. 22,760 94,759
Broken Hill Propriety Co. (Metals -
Diversified)............................. 4,285 65,941
Coca Cola Amatil, Ltd. (Soft Drink
Distributor)............................. 14,826 155,947
Gold Mines of Kalgoorlie, Ltd. (Mining).... 21,390 24,868
----------
407,349
----------
BELGIUM - 0.7%
Barco NV (Holding Company - Automobile
Manufacturer)............................ 700 110,768
----------
BRAZIL - 3.3%
Cesp-Cia Ener Sao Paulo ADR (Electric
Utility)*................................ 1,400 12,911
Cia Ener De Minas Gerais ADR (Electric
Utility)................................. 700 18,166
Cia Vale Do Rio Doce ADR (Mining & Rail
Transportation).......................... 2,600 47,562
Telebras - Sponsored ADR (Telecommuni-
cations)................................. 6,900 373,462
Usinas Sideburg Minas Cerais ADR (Iron
& Steel Manufacturer).................... 4,300 49,407
----------
501,508
----------
CANADA - 1.3%
Alcan Aluminum (Aluminum Manufacturer)..... 5 160
Canadian National Railways (Transportation) 3,511 66,709
Canadian Pacific (Holding Company)......... 5,171 105,462
Teck Corp. (B Shares) (Mining & Metals).... 1,000 21,239
----------
193,570
----------
CHINA - 0.4%
Huaneng Power International, Inc. ADR
(Electric Utility)*...................... 3,500 54,688
----------
FINLAND - 0.5%
Outokumpu Oy (A Shares) (Steel & Copper
Manufacturer)............................ 4,000 69,923
Outokumpu Oy (A Warrants 1996)*............ 6,000 348
----------
70,271
----------
FRANCE - 3.3%
Alcatel Alsthom (Telecommunications,
Energy & Electricity).................... 410 38,626
Carrefour Supermarche (Retail Grocery)..... 200 156,551
LVMH (Moet-Hennessy)(Wines & Spirits)...... 300 76,880
Michelin (C.G.D.E.)(B Shares)(Tire &
Rubber).................................. 1,450 71,984
Pinault - Printemps (Retail Department
Stores).................................. 230 69,954
Total SA (B Shares)(Oil & Gas Exploration). 1,359 92,388
----------
506,383
----------
The accompanying notes are an integral part of the financial statements.
3
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ --------
GERMANY - 4.8%
BASF AG (Chemical Producer)................ 140 $38,218
Bayer AG (Chemical Production & Marketing). 120 38,716
Daimler-Benz AG (Automobile Manufacturer).. 110 60,158
Mannesmann AG (Miscellaneous Machinery).... 280 96,060
RWE AG (Manufacturer & Retailer of
Petroleum Products)...................... 2,244 87,303
SAP AG (Computer Software Services)........ 1,200 155,620
Schering AG (Pharmaceuticals).............. 900 65,961
Veba AG (Electric Utility)................. 3,780 187,292
----------
729,328
----------
HONG KONG - 4.8%
Cathay Pacific Airways (Transportation).... 110,000 192,019
First Pacific Co., Ltd. (Diversified
Holding Company)......................... 50,000 66,593
HSBC Holdings (Financial Services)......... 15,381 229,713
Hutchinson Whampoa (Real Estate)........... 18,000 111,720
Sun Hung Kai Properties (Real Estate)...... 5,000 47,682
Swire Pacific, Ltd. (A Shares)(General
Trading & Real Estate)................... 6,500 55,472
Television Broadcasts, Ltd. (Broadcast,
Radio & TV).............................. 6,000 24,051
----------
727,250
----------
INDONESIA - 3.8%
PT Hm Sampoerna (Tobacco).................. 20,000 221,030
PT Indostat-ADR (Telecommunications)....... 5,000 174,375
PT Semen Gresik (Cement Manufacturer)...... 53,000 183,680
----------
579,085
----------
IRELAND - 0.8%
Bank of Ireland (Banking).................. 17,870 128,300
----------
ITALY - 3.7%
Societa Italiana Per L'Eserreizio Delle
Telecomunicazioni, P.A.
(Telecommunications)..................... 134,000 272,806
Telecom Italia Mobile SPA
(Telecommunications)..................... 134,000 295,504
----------
568,310
----------
JAPAN - 22.3%
Bridgestone Corp. (Tires & Rubber)......... 3,000 55,742
Cannon Inc. (Photographic Equipment)....... 14,000 278,903
Dai-Ni Demden Corp. (Telecommunications)... 16 137,766
East Japan Railway Co. (Railroad
Transportation).......................... 11 58,893
Fujitsu, Ltd. (Computer Manufacturer)...... 3,000 31,032
Hitachi Metals, Ltd. (Iron & Steel
Manufacturer)............................ 24,000 314,916
Hitachi, Ltd. (Electronics)................ 9,000 97,405
Ito Yokado Co. (Grocery Retail)............ 1,000 59,095
Itochu Corp. (Miscellaneous Retail)........ 14,000 106,868
Jusco Co. (Retail Consumer Goods).......... 3,000 93,096
Kajima Corp. (Engineering)................. 4,000 45,207
Kawasaki Steel First Section (Steel
Products)................................ 10,000 36,683
The accompanying notes are an integral part of the financial statements.
4
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ --------
Keyence Corp. (Electronics)................ 800 $105,738
Kyocera Corp. (Bioceramics Manufacturer)... 1,000 75,472
Mabuchi Motor Co. (Automobile Manufacturer) 700 43,176
Matsushita Electric Industrial Co., Ltd.
(Electronics)............................ 6,000 106,313
Mitsubishi Heavy Industries, Ltd. (Heavy
Industries).............................. 9,000 80,510
NEC Corp. (Electronics).................... 11,000 140,122
NGK Spark Plug (Automobile Parts
Manufacturer)............................ 4,000 49,804
Nippon Electric Glass Co., Ltd.
(Industrial Materials Manufacturer)...... 1,000 18,677
Nippon Shokubai (Chemical Producer)........ 4,000 43,674
Nisshin Steel Co., Ltd. (Steel
Manufacturer)............................ 9,000 39,824
Nomura Securities Co., Ltd. (Securities
Dealer).................................. 6,000 131,023
Ricoh Co., Ltd. (Office Equipment)......... 5,000 58,903
Secom Co. (Electrical Engineering &
Electronics)............................. 1,000 70,875
Sekisui Chemical Co. (Chemical Producer)... 4,000 50,570
Shin-Etsu Chemical Co. (Chemical Producer). 12,600 276,356
SMC Corp. (Pneumatic Equipment
Manufacturer)............................ 1,600 124,894
Sony Music Entertainment (Miscellaneous
Manufacturer)............................ 1,100 59,736
Sumitomo Electric Industries (Electronics). 3,000 43,100
Sumitomo Marine & Fire (Property &
Casualty Insurance)...................... 14,000 133,552
Sumitomo Metal Industries (Iron & Steel
Manufacturer)............................ 22,000 70,799
Takeda Chemicals Industries
(Pharmaceuticals)........................ 3,000 52,007
TDK Corp. (Electronics).................... 2,000 114,741
THK Co., Ltd. (Industrial Machinery)....... 2,000 52,294
Tokyo Electron, Ltd. (Industrial Electronic
Machines)................................ 3,000 111,773
Tsutsumi Jewelry (Jewelry Manufacturer).... 700 35,132
----------
3,404,671
----------
KOREA - 2.6%
Korea Electric Power Corp. (Electric
Utility)................................. 6,500 180,375
Pohang Iron & Steel Co., Ltd. (Iron & Steel
Manufacturer)............................ 8,000 220,000
----------
400,375
----------
MALAYSIA - 1.4%
Maylayan Banking (Banking)................. 6,000 58,467
Petronas Gas Berhad (Oil & Gas Exploration) 23,000 101,456
Renong Berhad (Diversified Holding Company) 27,000 46,990
Renong Berhad (Rights 1996)*............... 5,400 520
Renong Berhad (Warrants 1997)*............. 3,375 325
----------
207,758
----------
MEXICO - 0.4%
Cemex, S.A. (Cement & Heavy Construction).. 16,000 67,462
----------
NETHERLANDS - 6.2%
Aegon N.V. (Insurance)..................... 3,425 163,630
AKZO N.V. (Chemicals)...................... 380 44,274
Elsevier N.V. (Publisher).................. 3,170 47,884
The accompanying notes are an integral part of the financial statements.
5
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ --------
Heineken N.V. (Beverage Manufacturer)...... 250 $52,488
International Nederlanden Groep (Financial
Services)................................ 1,411 109,295
Philips Electronics N.V. (Electronics)..... 2,570 91,033
Polygram N.V. (Music Producer & Publisher). 5,680 339,204
Royal Dutch Petroleum (Petroleum
Exploration)............................. 370 52,879
Wolters Kluwer N.V. (Publishing & Printing) 470 51,540
----------
952,227
----------
NEW ZEALAND - 0.6%
Telecom Corp. of New Zealand, Ltd.
(Telecommunications)..................... 21,320 90,480
----------
NORWAY - 1.3%
Fokus Banken AS (Banking)*................. 5,300 28,585
Norsk Hydro, AS (Industrial)............... 3,600 164,272
----------
192,857
----------
PHILIPPINES - 3.4%
Aboitiz Equity Ventures Inc. (Holding
Company)................................. 100,000 19,486
Ayala Corp. (B Shares)(Real Estate
Developer)............................... 6,000 8,482
Ayala Land Inc. (B Shares)(Real Estate
Developer)............................... 12,000 18,569
C & P Homes, Inc. (Real Estate Developer)*. 35,000 30,088
Fil-Estate Land, Inc. (Real Estate
Developer)............................... 111,200 116,838
Filinvest Land, Inc. (Real Estate
Developer)............................... 80,000 41,264
Metropolitan Bank & Trust (Banking)........ 3,009 81,051
Pilipino Telephone Corp.
(Telecommunications)..................... 124,000 182,401
SM Prime Holdings, Inc. (Real Estate
Developer)*.............................. 80,000 23,230
----------
521,409
----------
SINGAPORE - 0.4%
Development Bank of Singapore, Ltd.
(Banking)................................ 4,250 53,847
----------
SOUTH AFRICA - 0.1%
Anglo American Gold Investment ADR
(Mining)................................. 100 1,025
Anglo American Gold Investment (Mining).... 121 12,402
----------
13,427
----------
SPAIN - 0.6%
Repsol SA (Oil & Gas Exploration).......... 2,595 95,393
----------
SWEDEN - 3.2%
Astra AB (A Shares)(Pharmaceuticals)....... 2,525 112,332
Om Gruppen AB (General Services)........... 12,000 246,123
Skandia Forsakrings AB (Insurance)......... 2,800 64,039
SKF AB (B Shares) (Miscellaneous Machinery) 2,900 67,610
----------
490,104
----------
SWITZERLAND - 7.3%
BBC Brown Boveri Group Ptg. Certificate
(Energy Holding Company)................. 125 151,123
Ciba-Geigy AG (Bearer Shares)
(Pharmaceuticals)........................ 133 154,024
The accompanying notes are an integral part of the financial statements.
6
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------------
VALUE
SHARES (NOTE 2)
------ --------
Elektrowatt AG (Electric Holding Company).. 109 $42,899
Nestle SA (Registered Shares)(Food &
Beverage Manufacturer)................... 37 41,294
Sandoz AG (Bearer Shares)(Pharmaceuticals.. 94 102,706
Sandoz AG (Registered Shares)
(Pharmaceuticals)........................ 95 104,105
SGS Societe Gen DE Surveill (Bearer
Shares)(Commercial Services)............. 56 126,717
Sig Schweizerische Industrie-Gesellschaft
Holding AG (Industrial Machinery)......... 131 311,249
Zurich Versicherungsgesellschaft
(Insurance)............................... 305 85,530
----------
1,119,647
----------
THAILAND - 2.9%
American Standard Sanitaryware, Ltd.
(Household Products)...................... 1,000 17,030
Bangkok Bank Co., Ltd. (Banking)............ 2,800 40,586
Krung Thai Bank Public Co. (Banking)........ 13,000 63,841
PTT Exploration and Production Public Co.
(Oil & Gas Exploration)................... 8,200 114,312
Thai Farmers Bank Co. (Banking)............. 3,200 36,752
The Siam Commercial Bank, Ltd. (Banking).... 11,000 162,059
----------
434,580
----------
UNITED KINGDOM - 8.4%
B.A.T. Industries plc (Tobacco)............. 30,388 230,122
Bank of Ireland (Banking)................... 2,062 14,934
De La Rue plc (Specialty Printing).......... 3,313 37,333
Guinness plc (Brewery)...................... 5,000 36,054
Kingfisher plc (Retail Department Stores)... 11,099 99,538
Lonrho, plc (Industrial Holding Company).... 7,360 21,428
Powergen plc (Electric Utility)............. 11,460 96,465
Reuters Holdings plc (B Shares)(Publishing) 26,550 300,685
Smithkline Beecham plc (Pharmaceuticals).... 6,439 68,479
The R.T.Z. Corp. (Metals Mining)............ 8,337 131,551
Thorn EMI plc (Amusement & Recreation
Services)................................. 5,467 151,953
Zeneca Group plc (Pharmaceuticals).......... 4,700 98,907
----------
1,287,449
----------
TOTAL COMMON STOCK (COST $11,202,729)................... 14,097,409
----------
TOTAL INVESTMENTS (COST $11,202,729)+ - 92.4%................ 14,097,409
OTHER ASSETS AND LIABILITIES, NET - 7.6%..................... 1,153,825
----------
NET ASSETS - 100.0%.......................................... $15,251,234
===========
* Non-income producing security.
+ The cost for federal income tax purposes was $11,205,723. At April
30, 1996, net unrealized appreciation was $2,891,686. This consisted
of aggregate gross unrealized appreciation for all securities in which
there was an excess of market value over tax cost of $3,141,954 and
aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over market value of $250,268.
The accompanying notes are an integral part of the financial statements.
7
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
INVESTMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- ------------------------------------------------------------------------------
VALUE
% OF NET (NOTE 2)
ASSETS (IN THOUSANDS)
-------- --------------
Basic Industry............................ 14.90 $2,272
Financial................................. 13.37 2,039
Producer Durables......................... 16.03 2,445
Consumer Cyclical......................... 20.63 3,147
Utilities................................. 14.15 2,158
Media & Services.......................... 2.77 422
Energy.................................... 5.61 855
Health.................................... 4.97 759
------ -------
Total Investment Portfolio................ 92.43 14,097
Other Assets and Liabilities, Net......... 7.57 1,154
------ -------
Total Net Assets.......................... 100.00% $15,251
====== =======
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, 1996 (Unaudited)
ASSETS:
Investments, at market (identified
cost $11,202,729)(Note 2)................. $14,097,409
Cash in interest bearing account............ 1,286,299
Forward foreign currency exchange
contracts held at market
(identified cost $167,162)................. 167,310
Receivables:
Investments sold........................... 61,759
Fund shares sold........................... 390
Dividends and interest..................... 51,327
Due from Adviser........................... 4,375
Foreign taxes recoverable.................. 11,319
Forward foreign currency exchange
contracts sold (Note 6).................. 428,140
Other assets................................ 554
Total assets.......................... 16,108,882
-----------
LIABILITIES:
Payables:
Investments purchased...................... $167,310
Accrued expenses (Note 4).................. 57,926
Forward foreign currency exchange
contracts held........................... 570,653
Foreign currencies to deliver (Note 6)..... 61,759
---------
Total liabilities...................... 857,648
-----------
NET ASSETS, at market value................. $15,251,234
===========
NET ASSETS CONSIST OF:
Common stock................................ $11,664
Additional capital paid in.................. 11,980,762
Accumulated net investment loss............. (22,220)
Accumulated net realized gain on:
Investments................................ 323,701
Foreign currency transactions.............. 36,262
Net unrealized appreciation on:
Investments................................ 2,894,680
Translation of assets and liabilities
in foreign currencies.................... 26,385
-----------
NET ASSETS, for 1,166,430 shares
outstanding............................... $15,251,234
===========
NET ASSET VALUE and redemption price
per share ($15,251,234 / 1,166,430
outstanding shares of common stock,
$0.01 par value).......................... $13.08
======
Maximum offering price per share
(100/96 of $13.08)........................ $13.63
======
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, 1996 (Unaudited)
INVESTMENT INCOME:
Dividends................................ $109,212
Interest................................. 23,209
-----------
132,421
Less foreign taxes withheld.............. (11,372)
-----------
121,049
EXPENSES:
Advisory fee (Note 4).................... $74,926
Administration fee (Note 4).............. 6,743
Accounting fee (Note 4).................. 37,295
Distribution expenses (Note 4)........... 3,667
Custodian fees........................... 28,583
Reports to shareholders.................. 6,819
Legal.................................... 14,435
Audit.................................... 17,901
Registration fees........................ 9,047
Directors' fees and expenses (Note 4).... 2,685
Transfer Agency fees..................... 7,438
Other.................................... 7,359
--------
Total expenses before reimbursement
from Adviser......................... 216,898
Reimbursement of expenses from
Adviser (Note 4)..................... (85,601)
--------
Expenses, net......................... 131,297
-----------
Net investment loss...................... (10,248)
-----------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain from:
Investments.............................. 319,778
Foreign currency transactions............ 39,815
Net unrealized appreciation during
the period on:
Investments............................ 1,075,852
Translation of assets and liabilities
in foreign currencies................ 13,334
-----------
Net realized and unrealized gain from
investments and foreign currency......... 1,448,779
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ $1,438,531
===========
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, OCTOBER 31,
1996+ 1995
----------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss).............. $(10,248) $55,838
Net realized gain (loss) on:
Investments............................. 319,778 250,757
Foreign currency transactions........... 39,815 (3,553)
Net unrealized appreciation
(depreciation) during the period on:
Investments............................ 1,075,852 (983,343)
Translation of assets and
liabilities in foreign currencies.... 13,334 5,627
--------- ---------
Net increase (decrease) in net
assets resulting from operations........ 1,438,531 (674,674)
--------- ---------
Distributions to shareholders from:
Net investment income ($0.06 and
$0.00 per share, respectively).......... (67,810) -
Net realized gain from investment
transactions ($0.20 and $1.00
per share, respectively)................ (246,834) (1,850,722)
--------- ----------
Total distributions to shareholders..... (314,644) (1,850,722)
--------- ----------
Decrease in net assets from Fund share
transactions (Note 5).................... (1,112,081) (6,692,436)
Increase (decrease) in net assets......... 11,806 (9,217,832)
NET ASSETS:
Beginning of period....................... 15,239,428 24,457,260
---------- ----------
End of period (including undistributed
net investment income (loss) of
$(22,220) and $55,838, respectively).... $15,251,234 $15,239,428
=========== ===========
+ Unaudited.
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.
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED
APRIL 30, FOR THE FISCAL YEARS ENDED OCTOBER 31,
1996+ 1995 1994 1993 1992 1991
----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD...... $12.14 $13.36 $12.35 $9.60 $11.64 $11.08
------ ------ ------ ----- ------ ------
INVESTMENT OPERATIONS:
Net investment income (loss)............ (0.01) 0.03 (0.03) 0.04 0.01 0.18
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions.......................... 1.21 (0.25) 1.23 2.71 (1.24) 0.62
----- ------ ----- ----- ------ -----
Total from investment operations..... 1.20 (0.22) 1.20 2.75 (1.23) 0.80
----- ------ ----- ----- ------ -----
DISTRIBUTIONS:
From net investment income.............. (0.06) - - - (0.05) (0.13)
From net realized gain on
investment transactions............... (0.20) (1.00) (0.19) - (0.76) (0.11)
------ ------ ------ ----- ------ ------
Total distributions.................. (0.26) (1.00) (0.19) - (0.81) (0.24)
------ ------ ------ ----- ------ ------
NET ASSET VALUE - END OF PERIOD............ $13.08 $12.14 $13.36 $12.35 $9.60 $11.64
====== ====== ====== ====== ===== ======
TOTAL RETURN**............................. 10.07% (1.18)% 9.74% 28.65% (11.42)% 7.42%
Ratios (to average net assets)/
Supplemental Data:
Expenses***............................ 1.75%* 1.75% 1.75% 1.75% 1.75% 1.75%
Net investment income (loss)........... (0.14)%* 0.29% (0.21)% 0.37% 0.09% 1.12%
Portfolio turnover rate.................... 71.5%* 67.1% 81.2% 148.4% 103.7% 74.5%
Average commission rate paid............... $0.0356 - - - - -
Net assets at end of period ($000 omitted). 15,251 15,239 24,457 18,945 20,418 43,413
<FN>
+ Unaudited.
* Annualized.
** 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, 1996 has not been annualized.
*** The Adviser absorbed a portion of the Fund's expenses amounting to
$.07, $.09, $.05, $.19, $.05, and $.02 per share for the six-month
period ended April 30, 1996 and for each of the five fiscal years in
the period ended October 31, 1995, respectively. If these expenses
had been incurred by the Fund, the ratio of expenses to average daily
net assets would have been 2.89%, 2.51%, 2.15%, 3.51%, 2.20%, and
1.87%, for the six-month period ended April 30, 1996 and for each of
the five fiscal years in the period ended October 31, 1995,
respectively.
</TABLE>
12
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. The Fund's investment
objective is to seek long-term capital appreciation primarily through
investment in equity securities (including convertible securities) of
issuers located outside the United States.
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 unless the Corporation's Board of
Directors determines that this does not represent fair value. 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.
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 denominated assets.
13
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------
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.
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 effect 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 revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
OTHER. Investment security transactions are accounted for on a trade
date basis. The 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 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.
During the fiscal year ended October 31, 1995, the Fund reclassified
$633,204, $107,068, and $(887,537) from undistributed net investment
income, accumulated net realized gain on investments, and accumulated
net realized (loss) on foreign currency transactions, respectively, to
additional capital paid in. These reclassifications were made to
present undistributed income and accumulated gains (losses) on a tax
basis and have no impact on the net asset value of the Fund.
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, 1996 were $5,015,634 and $6,380,543,
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 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,
1996 amounted to $74,926. During the six-month period ended April 30,
1996, WTC reimbursed a portion of the Fund's expenses in the amount of
$85,601.
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, 1996 amounted to $6,743.
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
14
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------
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, 1996 such expenses amounted
to $3,667.
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, 1996, RSMC's fees for accounting services amounted to
$37,295.
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 $2,685 for the six-month period ended April 30, 1996.
5.FUND SHARES. At April 30, 1996, there were 100,000,000 shares of
$0.01 par value common stock authorized. Transactions in shares of
the Fund were as follows:
FOR THE SIX-MONTH FOR THE FISCAL
PERIOD ENDED YEAR ENDED
APRIL 30, 1996+ OCTOBER 31,1995
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------- --------- -------- ---------
Shares sold.................... 56,628 $692,588 219,948 $2,630,182
Shares issued to shareholders
in reinvestment of
distributions from net
investment income and net
realized gains............... 19,826 239,890 108,347 1,239,487
Shares redeemed................ (165,674) (2,044,559) (902,642) (10,562,105)
--------- ----------- --------- ------------
Net decrease................... (89,220) $(1,112,081) (574,347) $(6,692,436)
============ ============
Shares outstanding:
Beginning of period........... 1,255,650 1,829,997
--------- ---------
End of period................. 1,166,430 1,255,650
========= =========
+ Unaudited.
15
THE RODNEY SQUARE INTERNATIONAL EQUITY FUND
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
- ------------------------------------------------------------------------
6.COMMITMENTS. As of April 30, 1996, the Fund had entered into
forward foreign currency exchange contracts which contractually
obligate the Fund to deliver currencies at specified future dates.
The open contracts were as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
SETTLEMENT (DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR DATE U.S. DOLLARS
------------------------- ----------------------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
French Franc 318,593 U.S. Dollar 61,821 05/31/96 63
Japanese Yen 35,166,666 U.S. Dollar 366,319 09/20/96 24,968
U.S. Dollar 339,643 Japanese Yen 35,166,666 09/20/96 1,707
U.S. Dollar 103,552 Malaysian Ringgit 258,785 05/06/96 224
U.S. Dollar 63,848 Philippine Peso 1,668,368 05/01/96 105
U.S. Dollar 63,610 Thailand Baht 1,604,249 05/02/96 (76)
</TABLE>
7.LIQUIDATION OF THE CORPORATION. On May 20, 1996, the Board of
Directors approved the submission to shareholders of a proposal to
liquidate and dissolve the Corporation. A special meeting of
shareholders is scheduled to be held on or about July 25, 1996 to
consider the proposal. If approved by the shareholders, the
Corporation would be liquidated and dissolved as soon thereafter as is
practicable.
16
<PAGE>
[Outside cover -- divided into two sections]
[Left Section]
DIRECTORS
Eric Brucker
Fred L. Buckner
Robert J. Christian
Martin L. Klopping
John J. Quindlen
-------------------
OFFICERS
Martin L. Klopping, PRESIDENT
Joseph M. Fahey, Jr., VICE PRESIDENT
Robert C. Hancock, VICE PRESIDENT & TREASURER
Diane D. Marky, ASSISTANT SECRETARY
Connie L. Meyers, ASSISTANT SECRETARY
Louis C. Schwartz, Esq., ASSISTANT SECRETARY
John J. Kelley, ASSISTANT TREASURER
--------------------------------------------
INVESTMENT ADVISER
Wilmington Trust Company
----------------------------
ADMINISTRATOR AND
TRANSFER AGENT
Rodney Square Management Corporation
----------------------------------------
CUSTODIAN
Chase Manhattan Bank, N.A.
------------------------------
DISTRIBUTOR
Rodney Square Distributors, Inc.
------------------------------------
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
------------------------------
INDEPENDENT AUDITORS
Ernst & Young LLP
---------------------
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE FUND. THE REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
RS16 6/96
[Right Section]
the RODNEY SQUARE
INTERNATIONAL
EQUITY FUND
[GRAPHIC] RSMC Logo
SEMIANNUAL REPORT
APRIL 30, 1996
