SHEPMYERS INVESTMENT CO, DEF 14A, 1996-03-26

SHEPMYERS INVESTMENT CO
DEF 14A, 1996-03-26

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<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Shepmyers Investment Company
(Name of Registrant as Specified in Its Charter)

- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a- 6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transactions applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------

/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.

(1) Amount previously paid:
-----------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>

SHEPMYERS INVESTMENT COMPANY
Post Office Box 339
Hanover, Pennsylvania 17331

Notice of Annual Meeting of Shareholders

March 25, 1996

To the Shareholders of
Shepmyers Investment Company:

The Annual Meeting of Shareholders of Shepmyers Investment Company (the
"Company") will be held on April 26, 1996, at 11:00 A.M. at the offices of
Hanover Shoe Farms, Inc., Route 194 South, Hanover, Pennsylvania, for the
following purposes:

1. To elect nine directors;

2. To approve or disapprove the proposed
Advisory Agreement between the Company and Rittenhouse
Financial Services, Inc. until April 30, 1997;

3. To ratify or reject the selection of Ernst &
Young LLP as the Company's independent certified public
accountants for the year ending December 31, 1996; and

4. To transact such other business as may
properly come before the meeting.

The subjects referred to above are discussed in the Proxy Statement
attached to this notice. Each shareholder is invited to attend the Annual
Meeting of Shareholders in person. Shareholders of record at the close of
business on March 22, 1996 have the right to vote at the meeting. If you cannot
be present at the meeting, we urge you to fill in, sign, and promptly return the
enclosed proxy in order that the meeting can be held and a maximum number of
shares may be voted.

W. Bruce McConnel, III
Secretary
<PAGE>

SHEPMYERS INVESTMENT COMPANY
Post Office Box 339
Hanover, Pennsylvania 17331

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Shepmyers Investment Company (the
"Company") for use at the Annual Meeting of Shareholders, to be held on April
26, 1996 at 11:00 A.M. at the offices of Hanover Shoe Farms, Inc., Route 194
South, Hanover, Pennsylvania, and any adjournment thereof (the "Meeting"). This
statement is expected to be mailed to shareholders on or about March 28, 1996.

Only shareholders of record at the close of business on March 22, 1996 will
be entitled to vote at the Meeting. On that date, there were 768,238 shares of
the Company's common stock ("Shares") outstanding and entitled to be voted at
the Meeting. Each Share is entitled to one vote, except that shareholders have
the right to vote cumulatively in the election of directors by multiplying the
number of Shares which they are entitled to vote by the number of directors to
be elected at the Meeting, and either casting the whole number of such votes for
one candidate or distributing them among any two or more candidates. The
candidates for election receiving the highest number of votes will be elected
directors. Your proxy may be revoked by you at any time prior to its exercise by
attending the Meeting and voting in person or by giving written notice of
revocation to the Secretary of the Company. Mere presence at the Meeting without
such notice will not revoke your proxy.

The Company will bear the cost of soliciting proxies in the accompanying
form. In addition to the use of the mails, proxies may be solicited by officers,
directors, and regular employees of the Company, personally or by telephone or
telegraph.

The Company's Annual Report, containing financial statements for the year
ended December 31, 1995, has been mailed to shareholders. It is not to be
regarded as proxy-soliciting material. THE COMPANY WILL FURNISH TO SHAREHOLDERS
UPON REQUEST, WITHOUT CHARGE, COPIES OF ITS ANNUAL REPORT BY CALLING INVESTORS
TRUST COMPANY AT 1-800-826-5534 OR BY WRITING TO INVESTORS TRUST COMPANY AT 2201
RIDGEWOOD ROAD, #180, WYOMISSING, PENNSYLVANIA 19610, ATTN: ELEANOR J. FRAIN.

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<PAGE>

ELECTION OF DIRECTORS

At the Meeting, nine directors, constituting the entire Board of Directors,
are to be elected. If elected, each director will hold office until the next
Annual Meeting of Shareholders and until his successor is elected and qualified.
The persons named as proxies in the accompanying proxy have been designated by
the Board of Directors and intend to vote for the nominees named below, all of
whom are presently serving as directors. All of the Company's directors were
elected by the shareholders at the Annual Meeting of Shareholders held last
year. Paul Frey Spears, a director of the Company, is the son of P. E. Spears,
Chairman of the Board and President of the Company. Mr. P. E. Spears owns
certificates of deposit issued by Rittenhouse Trust Company ("RTC"), an
affiliate of Rittenhouse Financial Services, Inc. ("RFS"), the Company's
investment adviser. During the past five years, Mr. R. E. Lemmon, Jr., a
director of the Company, owned certificates of deposit issued by RTC.

The following persons have consented to being nominated and to serve if
elected. If any of the nominees should withdraw or otherwise become unavailable
for election as a director, the proxies will be voted for such other persons as
the Board of Directors may recommend, unless the Board of Directors reduces the
number of directors. The proxies shall have full authority and discretion to
vote cumulatively for all or as many candidates or substitutes as the proxies so
voting shall determine.

<TABLE>
<CAPTION>
Principal Occupa-
Position tion(s) for the
Director with the Past Five Years and
Name Age Since Company Current Affiliations
- ---- --- ----- ------- --------------------
<S> <C> <C> <C> <C>
P. E. Spears* 71 1954 Chairman President, Treasurer,
of the and Director, Hanover
Board and Shoe Farms, Inc.
President (Standardbred horse
nursery); President,
Treasurer, and Director,
Standardbred Horse Sales
Company (Standardbred
horse auctions); Director,
Hanover Shoe Farms
Foundation, Inc.; President,
Garden State Horse Sales
Company (Standardbred
horse auctions); and President and
</TABLE>

-3-

<PAGE>

G. P. King* 78 1962 Director; Retired.
Vice
President
and
Treasurer

L. S. DeVan 48 1977 Director Director and Chief
Financial Officer,
Cyberlab, Inc. (design
and manufacture of
laboratory automation
equipment); Director
and Treasurer,
Lawrence B. Sheppard
Foundation, Inc.;
Managing General
Partner of Horse
Racing and Breeding
Partnerships; and Vice
President, Municipal
Bond Department,
Goldman, Sachs & Co.
until January 1995.

J. M. Fuss(1) 65 1979 Director Self-employed -
Licensed Battlefield
Guide, Gettysburg
National Military
Park, and accountant,
since May 1992; Vice
President,
Controller, Treasurer,
Chief Financial
Officer and Secretary
C. & J. Clark America,
Inc. (formerly The
Hanover Shoe, Inc.)
until May 1992;
Director, Vice
President, Treasurer
and Secretary C. & J.
Clark Retail, Inc.
until May 1992;
Director, CJC
Financial Company
until May 1992; and
</TABLE>

-4-

<PAGE>

Assistant Treasurer,
C. & J. Clark, Inc.
and C. & J. Clark
North America, Ltd.
until May 1992.

R. E. Lemmon, Jr. 49 1994 Director Controller and
Director, Hanover Shoe
Farms, Inc.;
Controller,
Standardbred Horse
Sales Company;
Treasurer, Garden
State Horse Sales
Company.

R. P. Myers 57 1975 Director Consultant, Veterina-
rian Services; Member,
Montana Board of
Veterinary Medical
Examiners; Coroner of
Gallatin County,
Montana; Secretary,
Treasurer and
Executive Director of
the Montana
Veterinarian Medical
Association until
1993; and Owner and
Operator of the M
Quarter Circle Live-
stock Ranch, Gallatin
Gateway, Montana until
1991.

P. F. Spears* 43 1993 Director President/CEO,
Digestive Disease
Center, Inc.

-5-

<PAGE>

J. F. Thompson, III(2) 70 1978 Director Marketing Specialist,
R.J. Reynolds (tobacco
company) until 1995.

C. D. Weber(2) 57 1994 Director President, C.A. Weber
Agency, Inc.
(insurance agency).

</TABLE>

- ----------
* Messrs. P. E. Spears and King are "interested persons"
of the Company as defined in the Investment Company Act of 1940
(the "1940 Act") because they serve as officers of the Company.
Mr. P. E. Spears also is an "interested person" of the Company
because he owns certificates of deposit issued by RTC. Mr. P. F.
Spears is an "interested person" because he is a member of the
immediate family of an affiliated person of the Company, Mr. P. E.
Spears.

1 Mr. J. M. Fuss serves as a trustee and member of
administrative committees for employee benefit plans operated by
C.& J. Clark America, Inc., of which RFS is an investment manager.

2 Mr. Thompson serves as a director of: 1) the Visiting
Nurse Association of Hanover and Spring Grove (a non-profit
healthcare services company) ("VNA"), and 2) Hanover Health
Corporation ("HHC"), and Mr. Weber serves as a director of Hanover
General Hospital ("Hanover General") and as vice chairman of HHC.
RFS serves as an investment manager for VNA, HHC and Hanover
General.

Section 30(f) of the 1940 Act and Section 16(a) of the Exchange Act require
the Company's directors and officers, certain affiliated persons of RFS, and
persons who own more than ten percent of the Company's shares to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Shares of the Company. Specific due dates have been
established and the Company is required to disclose in this Proxy Statement any
failure to file by the specific due dates. To the Company's knowledge, all of
these filing requirements were satisfied during 1995, except that Robert P.
Myers, a director of the Company, did not file on a timely basis one report
relating to one acquisition of Shares. In making this disclosure, the Company
has relied on copies of reports that were furnished to it and written
representations of its directors, officers and RFS.

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<PAGE>

The following table sets forth information with respect to Shares
beneficially owned on December 31, 1995 by those directors and officers of the
Company not listed on page 14 as "Principal Shareholders."

Amount and Nature of
Beneficial Ownership
------------------------------
Sole Voting Shared Voting
or Investment or Investment Percent
Name Power Power of Class
- ---- ------------- ------------- --------

G. P. King .................... 18,510 6,417 3.2%
R. P. Myers ................... 11,204 -0- 1.5%
J. M. Fuss .................... 1,400 5,300 *
P. F. Spears .................. 5,000 -0- *
C. D. Weber ................... 1,354 200 *
All directors and
officers as a group ........... 119,530 125,012 31.8%

- ----------
*Less than 1%.

----------

W. Bruce McConnel, III (age 53) has served as Secretary to the Company
since 1977. He has been a partner in the law firm of Drinker Biddle & Reath
since 1977. The law firm receives legal fees as counsel to the Company and as
counsel to the Company's investment adviser. Mr. McConnel also serves as
Secretary to the Company's investment adviser.

The Board of Directors met four times during the last fiscal year. All of
the directors attended at least 75% of the meetings. The Board has no audit or
nominating committees. Officers of the Company are elected by the Board of
Directors and serve at its pleasure. Mr. P. E. Spears has served as the
Company's President since 1977, and Mr. G. P. King has served as the Company's
Vice President and Treasurer since 1977.

Each director receives an annual retainer of $600 plus $250 for each Board
of Directors meeting attended. The Chairman of the Board is paid $15,000
annually and all other officers receive $100 annually. Directors and officers
are also reimbursed for their out-of-pocket expenses incurred in attending Board
meetings.

-7-
<PAGE>

The following table provides information concerning the compensation of
each of the Company's directors for services rendered during the Company's
fiscal year ended December 31, 1995:

<TABLE>
<CAPTION>
=================================================================================================================
COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------
Pension or Total(1)
Aggregate Retirement Benefits Estimated Compensation
Compensation Accrued as Part Annual Benefits From Company
Name of Person From Company of Company Expenses Upon Retirement And Fund Complex
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
P.E. Spears $16,600 None None $16,600
- ------------------------------------------------------------------------------------------------------------------
G.P. King $1,450 None None $1,450
- ------------------------------------------------------------------------------------------------------------------
L.S. DeVan $1,350 None None $1,350
- ------------------------------------------------------------------------------------------------------------------
J.M. Fuss $1,600 None None $1,600
- ------------------------------------------------------------------------------------------------------------------
R.E. Lemmon, Jr. $1,600 None None $1,600
- ------------------------------------------------------------------------------------------------------------------
R.P. Myers $1,600 None None $1,600
- ------------------------------------------------------------------------------------------------------------------
P.F. Spears $1,350 None None $1,350
- ------------------------------------------------------------------------------------------------------------------
J.F. Thompson $1,600 None None $1,600
- ------------------------------------------------------------------------------------------------------------------
C.D. Weber $1,600 None None $1,600
==================================================================================================================
</TABLE>

1 "Fund Complex" includes Shepmyers Investment Company and NRM Investment
Company, which are advised by RFS.

APPROVAL OR DISAPPROVAL OF THE PROPOSED ADVISORY AGREEMENT

Background

At the Meeting, shareholders of the Company will be asked to approve a new
investment advisory agreement (the "Proposed Agreement") with RFS. A copy of the
Proposed Agreement is attached hereto as Exhibit A. The Proposed Agreement is
being submitted to shareholders of the Company for the first time at the
Meeting.

RFS currently serves as the Company's investment adviser under an advisory
agreement dated as of April 30, 1985 (the "Agreement"). The Agreement was last
extended by vote of the Company's shareholders holding a majority of the
outstanding Shares of the Company on April 28, 1995 because the Company's
management desired to have shareholders approve the continuation of the
Agreement.

-8-

<PAGE>

At a meeting of the Company's Board of Directors held on January 29, 1996,
RFS proposed that it enter into the Proposed Agreement with the Company removing
the provision in the current Agreement requiring RFS to furnish the Company's
Board of Directors within 60 days after the end of each of RFS's fiscal years
copies of its financial statements (including a statement of operations and a
balance sheet) for the prior fiscal year audited by independent certified public
accountants. At that meeting, the Company's directors, including a majority of
the Company's disinterested directors, voted to approve the Proposed Agreement
until April 30, 1997 and to recommend its approval by the shareholders of the
Company at the Meeting. The year before, on January 20, 1995, the Company's
Board of Directors, including a majority of the Company's disinterested
directors, voted to approve the continuation of the Agreement until April 30,
1996. At the time the Agreement was approved on January 20, 1995, and at the
time the Proposed Agreement was approved on January 29, 1996, Mr. P. E. Spears
owned certificates of deposit issued by RTC.

Board Consideration and Recommendation

The Board of Directors, including a majority of directors who are not
"interested persons" of the Company or RFS, decided to approve the Proposed
Agreement and to recommend its approval by shareholders at the Meeting after
considering various factors they believed relevant.

The provision in the Agreement requiring RFS to provide the Board
audited financial statements each fiscal year had originally been intended as a
means of monitoring the financial condition of RFS when, as a newly organized
investment adviser, it began providing investment advisory services to the
Company in 1983. However, the directors recognized that RFS's assets under
management, profitability and business prospects had increased favorably since
it first became investment adviser to the Company. Accordingly, in their
deliberations the directors gave primary consideration to the current financial
condition of RFS and concluded that there was no foreseeable circumstance
reasonably likely to impair the adviser's financial ability to provide
investment advisory services under the terms of the Proposed Agreement.

The directors also considered certain provisions in the Agreement and the
Proposed Agreement, and noted the fact that each agreement: 1) requires RFS to
promptly notify the Board in writing if at any time a material decrease in the
amount of assets managed by it or other material adverse change in its business
or financial condition occurs or is reasonably expected to occur, and 2) may be
terminated at any time (without the payment of any penalty) on 24 hours' notice
by the Company. In light of these provisions, the directors concluded that the
Company continued to be sufficiently protected should there be any material
adverse change in RFS's business which might impair its ability to provide
investment advisory services.

Finally, the directors also considered the nature and quality of the
advisory services provided to the Company by RFS, the advisory fee (noting that
the advisory fee payable to RFS under the Agreement and the Proposed Agreement
were the same), the experience of personnel providing such services, the
resources of RFS, and the Company's investmemt performance and expense ratio in
relation to relevant indices. The directors concluded that the advisory fee was
fair in light of the services provided to the Company.

Accordingly, the directors believe that the Proposed Agreement is in the
best interests of the Company and recommend its approval by shareholders at the
Meeting.

-9-

<PAGE>

The approval or disapproval of the Proposed Agreement is being submitted to
the Company's shareholders at the Meeting pursuant to the requirements of
Section 15 of the 1940 Act. If the Proposed Agreement is not approved by a
majority of the outstanding Shares of the Company, the Board of Directors will
reconsider the Company's contractual relationship with RFS.

Description of the Proposed Agreement

The Proposed Agreement and the Agreement are similar in many respects and
provide for the same compensation payable to RFS. The following is a description
of the Proposed Agreement, and the significant differences between the Proposed
Agreement and the Agreement. As noted, a copy of the Proposed Agreement is
attached as Exhibit A. This summary is qualified in its entirety by reference to
such Exhibit.

The Proposed Agreement, like the Agreement, provides that RFS shall, at its
expense, use its own staff and facilities to maintain a continuous review of the
Company's portfolio, to determine what securities should be purchased or sold by
the Company and what portion of its assets should remain uninvested. In
addition, RFS is required at its expense to keep the books and records of the
Company; to maintain a continuous record of the Company's portfolio investments;
to furnish related reports and other data which the Board may request; and to
compute the net asset value of the Company's Shares at such time as the Board
may direct. RFS also bears the expense of obtaining portfolio pricing
information. RFS is required to furnish the Company, at the Company's expense,
with the services of persons whose duties shall include supervising the
preparation of (except for the legal and auditing aspects) the Company's public
financial statements, reports to shareholders, and any other reports or
statements required by regulatory authorities or otherwise, and stenographic,
telephone, telegraphic, mailing, and other facilities as the Board may request
in connection with the operation of the Company. RFS is not required to give the
Company preferential treatment as compared with the treatment given to any other
investment company or customer.

Municipal bonds are normally purchased and sold in principal transactions
and brokerage commissions are normally not paid by the Company in connection
with its transactions. No commissions were paid by the Company last year. The
Proposed Agreement, like the Agreement, authorizes RFS to recommend and cause
the Company to pay brokerage commissions in excess of commissions which might be
charged by other brokers, where a determination is made that the amount of
commission paid is reasonable in relation to the brokerage and research services
provided by the broker to the Company, viewed in terms of the particular
transactions or RFS' overall responsibilities with respect to the Company.
Brokers are selected on the basis of best execution, price, and

-10-

<PAGE>

availability of securities which meet the Company's investment
objectives.

The Agreement, unlike the Proposed Agreement, provides that RFS will
furnish the Company's Board annually with audited financial statements
(including a statement of operations and balance sheet). The Agreement and the
Proposed Agreement provide that RFS will notify the Board promptly of any
material decrease in its assets under management or other material adverse
change in its business.

The Proposed Agreement, like the Agreement, also provides that RFS shall be
liable only for willful misfeasance, bad faith, or gross negligence in the
performance of its duties or reckless disregard of its obligations thereunder,
and that RFS, subject to the foregoing, shall not be liable for any action taken
or omitted in good faith on the advice of counsel, provided that such counsel is
satisfactory to the Company. The Proposed Agreement, like the Agreement, may be
terminated at any time without payment of any penalty on 30 days' written notice
by RFS and may be terminated by the Company's Board of Directors or by a vote of
the holders of a majority of its outstanding shares upon 24 hours' notice. The
Proposed Agreement, like the Agreement, will terminate automatically in the
event of its assignment.

The Proposed Agreement, like the Agreement, provides for the payment of an
annual fee to RFS at the flat rate of $25,000, paid monthly. Of this $25,000
annual fee, $6,800 is to be allocated to Raymond J. Keefe for accounting
services provided to the Company. The Proposed Agreement, like the Agreement,
provides that the fee will be reduced in any fiscal year of the Company by the
amount that the expenses of the Company (including such fee but excluding taxes,
brokerage commissions, interest, and extraordinary expenses) exceed the
applicable expense limitations imposed by applicable state securities
regulations or authorities. The Company has not to date been subject to such
expense limitations. During its fiscal year ended December 31, 1995, the Company
paid advisory fees to RFS of $25,000, $6,800 of which was paid to Raymond J.
Keefe.

Upon approval of shareholders at the Meeting, the Proposed Agreement will
be effective as of April 30, 1996 and will continue in effect until April 30,
1997, and thereafter for successive yearly periods, provided such continuance is
specifically approved annually in the manner required by the 1940 Act.

-11-

<PAGE>

Investment Adviser

RFS, a registered investment adviser, is located at Two Radnor Corporate
Center, Suite 420, 100 Matsonford Road, Radnor, Pennsylvania 19087.

The name and principal occupation of the principal executive officer and
each director of RFS as of February 5, 1996 were as follows: George W. Connell,
621 Pembroke Road, Bryn Mawr, Pennsylvania 19010 (Sole Shareholder, Principal
Executive Officer and a director), David Robinson, 1129 South New Street, West
Chester, Pennsylvania 19382 (Chief Operating Officer and a director) and Bruce
Rosenfield, 132 Fairview Road, Penn Valley, Pennsylvania 19072 (a director).

W. Bruce McConnel, III, serves as Secretary to RFS and as Secretary to the
Company. RFS has advised the Company that it currently exercises investment
discretion over advisory accounts having total assets as of January 31, 1996 of
approximately $4.4 billion. RFS also performs other financial services to
personal and institutional clients.

RFS also serves as investment adviser to another investment company, NRM
Investment Company ("NRM"), which has an investment objective similar to that of
the Company. The following table sets forth certain information with respect to
NRM:

Net Assets
as of
Name of Fund December 31, 1995 Annual Rate of Advisory Fee
------------ ----------------- ---------------------------
NRM Investment Company $ 17,013,745 $10,000(1)

- -------------

(1) RFS provides NRM with investment advisory services on a non- discretionary
basis. Its activities are limited to making recommendations with respect to
purchases and sales of securities in accordance with NRM's investment
policies, its registration statement and the requirements of the 1940 Act
and the Internal Revenue Code of 1986. In contrast to these
non-discretionary advisory services, the Company's advisory agreement
provides that RFS shall, at its expense, use its own staff and facilities
to maintain a continuous review of the Company's portfolio, to determine
what securities should be purchased or sold by the Company and what portion
of its assets should remain uninvested.

-12-

<PAGE>

RELATIONSHIP WITH AND RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS

A majority of the members of the Board of Directors who are not "interested
persons" of the Company (as defined in the 1940 Act) selected Ernst & Young LLP
("Ernst & Young"), the Company's auditors beginning in 1978, as independent
certified public accountants for the Company for the year ending December 31,
1996. The ratification of the selection of independent certified public
accountants is to be voted upon at the Meeting, and it is intended that the
persons named in the accompanying proxy will vote in favor of ratification. The
selection of independent accountants is being submitted for ratification at the
Meeting as required by the Securities Exchange Act of 1934. Ernst & Young has
informed the Company that it has no material direct or indirect interest in the
Company. A representative of Ernst & Young is expected to be present at the
Meeting, will have an opportunity to make a statement and will be available to
respond to appropriate questions.

Votes Required for Approval of Matters at the Meeting

Presence at the Meeting in person or by proxy of the holders of a majority
of the Shares of the Company entitled to vote is necessary to constitute a
quorum. Under the 1940 Act, approval of the Proposed Agreement at the Meeting
requires the affirmative vote of the holders of a "majority of the outstanding
Shares" which, as used in this proxy statement, means the lesser of (i) 67% of
the Company's voting Shares present at the Meeting if the holders of more than
50% of the outstanding voting Shares are present in person or by proxy, or (ii)
more than 50% of the Company's outstanding voting Shares. Under Pennsylvania
law, a vote cast does not include an abstention or the failure to vote for or
against a proposal. Therefore, for purposes of determining the affirmative vote
of a "majority of the outstanding Shares," an abstention or the failure to vote,
including a broker non-vote, will be the equivalent to voting against approval
of the Proposed Agreement. Ratification of the selection of Ernst & Young LLP as
the Company's independent certified public accountants at the Meeting will
require the affirmative vote of a majority of the Shares cast on the proposal.
Under Pennsylvania law, an abstention or the failure to vote for or against the
selection of accountants, including a broker non-vote, will not be counted for
purposes of determining the affirmative vote of a majority of the votes cast.

-13-

<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth information concerning persons known by the
Company to own beneficially more than 5% of its Shares on December 31, 1995:

<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------

Sole Voting or Shared Voting or Percent of
Name and Address Investment Power Investment Power Class
- ---------------- ---------------- ---------------- -----
<S> <C> <C> <C>
CoreStates
(Hamilton) Bank 146,456(1)(a) 98,722(1)(b) 31.9%
Broad and Chestnut Streets
Philadelphia, PA

First National 46,456(2) 6.0%
Bank of Pennsylvania
Hermitage Square
Hermitage, PA 16148

Paul E. Spears 75,047 41,585(3) 15.2%
106 Oak Street
Hanover, PA

Josephine F. Spears 41,585(4) 5.4%
106 Oak Street
Hanover, PA

Henrietta Myers Miller 98,937 83,660(1)(b) 23.8%
R.D. #2
Downingtown, PA

Lawrence S. DeVan 7,015 71,510(5) 10.2%
200 Round Hill Road
Greenwich, CT
</TABLE>

- ----------

(1)(a) CoreStates (Hamilton) Bank serves as Trustee U/A dated 2/6/40
executed by H.D. Sheppard for the benefit of Charlotte S. DeVan
with respect to 46,456 Shares; and CoreStates (Hamilton) Bank
serves as Trustee with Charlotte S. DeVan UDT Lawrence B.
Sheppard dated 4/21/59 with respect to 100,000 Shares. CoreStates
(Hamilton) Bank has sole voting and investment power over all
146,456 Shares.

(1)(b) Henrietta Myers Miller, Original Trustee, shares voting and
investment power with CoreStates (Hamilton) Bank, Successor
Trustee to Edna Powl Myers for Robert Clinton Myers, 2nd et al U/A
dated 5/7/63 with respect to 83,660 Shares; CoreStates (Hamilton)
Bank serves as Trustee U/W of Lawrence B. Sheppard and has shared
voting and investment power over 13,602 Shares with Russell C.
Williams; and Lawrence S. DeVan has shared voting and investment
power over 1,460 shares with CoreStates (Hamilton) Bank.

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<PAGE>

(2) First National Bank of Pennsylvania is the successor trustee to S.E.
Bank N.A. U/A dated 2/6/40 executed by H.D. Sheppard for the benefit of
Alma S. Tolhurst. First National Bank of Pennsylvania has sole voting
and investment power over all 46,456 Shares.

(3) Paul E. Spears has shared voting and investment power over all 41,585
Shares with his wife, Josephine F. Spears.

(4) Josephine F. Spears has shared voting and investment power over all
41,585 Shares with her husband, Paul E. Spears.

(5) Lawrence S. DeVan has shared investment power over 12,980 and 29,866 of
these Shares with his father W. Todd DeVan and his mother Charlotte S.
DeVan, respectively, has shared voting and investment power over 1,460
of these Shares with CoreStates (Hamilton) Bank and has shared voting
and investment power over 27,204 of these Shares with Provident
National Bank.

SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

A shareholder proposal for the Annual Meeting of Shareholders to be held in
1997 must be received by the Company at its principal offices not later than
November 25, 1996, in order for the proposal to be included in the Company's
proxy materials relating to its next Annual Meeting.

OTHER MATTERS

No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment of the Meeting, the persons
named in the enclosed proxy will vote thereon according to their best judgment
in the interests of the Company.

Dated: March 25, 1996

SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING
AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.

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<PAGE>

EXHIBIT A
ADVISORY AGREEMENT

April 30, 1996

Rittenhouse Financial Services, Inc.
Two Radnor Corporate Center
Suite 400
100 Matsonford Road
Radnor, Pennsylvania 19087

Gentlemen:

Shepmyers Investment Company, a Pennsylvania corporation (the
"Fund"), is an investment company registered under the Investment Company Act of
1940 which invests and reinvests its assets in a portfolio of securities and
investments. The Fund hereby engages you to act as its Investment Manager to
render investment advisory and administrative services subject to the terms and
conditions herein set forth.

SECTION 1. Investment Management Services.

You shall use your staff and other facilities to conduct and
maintain a continuous review of the Fund's portfolio of securities and
investments, and shall from time to time determine what securities should be
purchased or sold by the Fund, what portion of the assets of the Fund should
remain uninvested, and the extent to which the Fund should otherwise use its
investment powers. In conducting such review and making such determinations, you
shall follow the Fund's investment policies as delineated and limited by the
statements contained in documents filed with the Securities and Exchange
Commission, as amended from time to time, the policies and restrictions set
forth in this Agreement or otherwise adopted by the Board of Directors, and the
provisions of the Investment Company Act of 1940 and the rules promulgated
thereunder, so that at all times the Fund shall be in compliance with its
policies and restrictions and the Investment Company Act of 1940. The Fund
agrees to supply you with copies of all such documents and to notify you of any
changes in its investment policies and restrictions on a timely basis.

In rendering such investment management services to the Fund
pursuant to this Agreement, you may at your own expense employ, retain or
otherwise avail yourself of the services or facilities of other persons or
organizations for the purpose of providing you or the Fund with such statistical
and other factual information, such advice regarding economic factors and
trends,

<PAGE>

such advice as to occasional transactions in specific securities or such other
information, advice or assistance as you may deem necessary, appropriate or
convenient for the discharge of your obligations hereunder or otherwise helpful
to the Fund.

You and any person performing executive, administrative or
trading functions for the Fund whose services were made available to the Fund by
you are authorized to recommend that the Fund pay, or cause the Fund to pay,
brokerage commissions to any member of a securities exchange or securities
broker or dealer which may be in excess of the amount which another member of
such an exchange or broker or dealer would have charged for effecting such
transaction, if you or such officer or employee determine in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services (as such term is defined in Section 28(e)(3) of
the Securities Exchange Act of 1934 and the rules, regulations and releases of
the Securities and Exchange Commission thereunder) provided by such member or
broker or dealer with respect to your investment management services hereunder,
viewed in terms of either that particular transaction or your overall
responsibilities with respect to the Fund.

SECTION 2. Resumes and Reports.

You shall at your own expense maintain a continuous record of
all the investments and securities which comprise the Fund's portfolio and shall
furnish to the Board of Directors of the Fund (the "Board"), at any time it so
requests reports with respect to its portfolio in the form prescribed by the
Board. You shall also render to the Board, at its regularly scheduled meetings,
and at such other times as the Board may request, a report on all matters
pertaining to your services as Investment Manager hereunder, in the form
prescribed by the Board. In addition, at your own expense you shall furnish the
Fund with such reports and other data as the Board shall request, including,
without limitation, industry surveys, news of recent developments, statistical
data, and such other information as may keep the Board properly informed on
developments relating to the Fund's portfolio, or similar data relating to
securities which you include in the portfolio of the Fund.

SECTION 3. Other Duties and Services.

You shall at your own expense keep the books and records of
the Fund, and on behalf of the Fund shall compute the net asset value, net
investment income and tax-exempt interest income of the Fund (in accordance with
any instructions of the Board of Directors) at such times as the Board may
direct. You may obtain, at your expense, pricing information from brokers,
dealers or others to assist you in computing such net asset value. You shall
perform such other services as are reasonably incidental to the foregoing
duties. You shall furnish to the Fund and to such other

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<PAGE>

persons as the Fund may direct any statements with respect to the net asset
value, net investment income and tax-exempt interest income of the Fund, at such
times, and in such forms, as the Fund may prescribe.

When and if the Board so requests, you shall furnish the Fund
at its expense the services of a person or persons satisfactory to the Fund
whose duties shall include supervising the preparation of (except for the legal
and auditing aspects thereof) the Fund's public financial statements and
reports, its reports to shareholders and others, and any statements or reports
to regulatory authorities of the United States, or states thereof in which the
Fund has qualified its shares for sale.

In addition, you shall furnish to the Fund at its expense
stenographic, telephone, telegraphic, mailing, and other facilities as the Board
may request in connection with the operations of the Fund. It is the intent of
this Agreement that through your staff you shall supply at the Fund's expense
such services as are deemed by the Board to be necessary or desirable and proper
for the continuous operation of the Fund. However, you shall not be required to
perform (a) those services customarily performed by the members of the Board;
(b) those services customarily performed by the officers; or (c) those services
customarily performed by the custodian, transfer agent, registrar, dividend
disbursing agent, independent accountants, broker, dealer or legal counsel.

SECTION 4. Multiple Capacities.

Nothing contained in this Agreement shall be deemed to
prohibit you from acting, and being separately compensated for acting, in one or
more capacities on behalf of the Fund. Whenever you shall be required to act in
multiple capacities on behalf of the Fund, either under this Agreement or by
virtue of this and any other agreement between you and the Fund, you shall
maintain the appropriate separate accounts and records for each such capacity.
The Fund understands that you may act in one or more capacities on behalf of
other investment companies and customers. While information and recommendations
supplied to the Fund shall, in your judgment, be appropriate under the
circumstances and in light of the investment objective of the Fund, they may be
different from the information and recommendations supplied by you to other
investment companies and customers. You shall give the Fund equitable treatment
under the circumstances in receiving information, recommendations and any other
services requested of you, but you shall not be required to give preferential
treatment to the Fund as compared with the treatment given to any other
investment company or customer. It is agreed that all advice and recommendations
will be held in confidence and will be used only with respect to the Fund.

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<PAGE>

SECTION 5. Payment of Expenses.

Unless otherwise provided herein, you shall assume and pay all
of your own costs and expenses incurred in rendering the advisory and other
services required to be furnished by you under this Agreement. The Fund agrees
to assume and pay, or reimburse you for, its operating expenses, including,
without limitation, taxes, interest charges, custodians, transfer agents and
registrars and costs incurred in preparing shareholder reports and proxy
materials. The Fund will also pay any brokerage commissions on its portfolio
transactions.

SECTION 6. Compensation for Services.

As compensation for your services, the Fund will pay to you,
on the last business day in each month a monthly fee of $2,083.33. This fee
shall be reduced in any fiscal year of the Fund by the amount that the expenses
of the Fund, including such fee but excluding taxes, brokerage commissions,
interest, and extraordinary expenses, exceed the applicable expense limitations
imposed by state securities regulations or authorities. Reductions shall be made
at the time of each monthly payment on an estimated basis, if appropriate, and
an adjustment to reflect the reduction on an annual basis shall be made, if
necessary, in the fee payable with respect to the last month in any fiscal year
of the Fund. You shall promptly refund any amount paid in excess of the fee
determined to be due for such year.

Such compensation for your services as is provided for in this
Section shall be the only compensation to which you shall be entitled under this
Agreement.

If this Agreement shall become effective subsequent to the
first day of a month, or shall terminate before the last day of a month, your
compensation shall be pro rated for such fraction of the month during which this
Agreement is in effect.

SECTION 7. Liability of the Investment Adviser.

You shall be liable only for willful misfeasance, bad faith or
gross negligence in the performance of your duties or reckless disregard of your
obligations under this Agreement, and nothing herein shall protect you against
any such liability to the Fund or its shareholders. You shall not be liable for
the acts and omissions of any agent (other than a director, officer or employee
of yours) employed by you, nor for those of any bank, trust company, broker or
other person with whom or into whose hands any moneys, shares of the Fund or
securities and investments may be deposited or come, pursuant to the provisions
of this Agreement. You shall not be liable for any defects in title of any
property acquired, nor for any loss unless it shall occur through your own
willful default. Subject to the foregoing, you shall not be liable

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<PAGE>

for any action taken or omitted in good faith on the written advice of counsel,
provided that such counsel is satisfactory to the Fund.

SECTION 8. Additional Covenants.

You shall promptly notify the Board in writing if at any time
a material decrease in the amount of assets which you manage or other material
adverse change in your business or financial condition occurs or is reasonably
expected to occur.

SECTION 9. Termination of Agreement and Assignment.

This Agreement may be terminated at any time, without the
payment of any penalty, (i) on 30 days' written notice by you or (ii) on 24
hours' notice by the Fund, acting pursuant to a resolution adopted by the Board
or by the vote of the holders of a majority of the outstanding shares of the
Fund. This Agreement shall automatically terminate in the event of its
assignment. Termination shall not affect the rights of the parties which have
accrued prior thereto.

SECTION 10. Duration of Agreement.

This Agreement shall be effective April 30, 1996 and, unless
sooner terminated, shall continue until April 30, 1997. Thereafter it shall
continue for successive yearly periods, provided that such continuance is
specifically approved annually in the manner required by the Investment Company
Act of 1940.

SECTION 11. Definition.

When used in this Agreement, the term "a majority of the
outstanding shares of the Fund" means the lesser of (1) 67% of the Fund's shares
present at a meeting if the holders of more than 50% of the outstanding shares
are present in person or by proxy, or (2) more than 50% of the outstanding
shares of the Fund, and the terms "assignment" and "interested persons" shall
have the meanings given such terms in the Investment Company Act of 1940.

SECTION 12. Concerning Applicable Provisions of Law.

This Agreement shall be subject to all applicable provisions
of law, including, without limitation, the applicable provisions of the
Investment Company Act of 1940. To the extent that any provision herein
contained conflicts with any such applicable provisions of law, the latter shall
control.

This Agreement is executed and delivered in Hanover,
Pennsylvania, and the laws of the Commonwealth of Pennsylvania shall govern its
construction, validity and effect.

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<PAGE>

If the agreement set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this letter and returning the same
to the undersigned, whereupon this letter shall constitute a binding agreement
between the parties hereto.

Yours very truly,

SHEPMYERS INVESTMENT COMPANY

------------------------------
Paul E. Spears, President

Accepted:

RITTENHOUSE FINANCIAL SERVICES, INC.

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<PAGE>

PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
SHEPMYERS INVESTMENT COMPANY

The undersigned hereby appoints Shirley J. Kuhn and James E.
Harvey and each of them, attorneys with full power of substitution and
revocation, to attend the Annual Meeting of Shareholders of Shepmyers Investment
Company on April 26, 1996, and any adjournment thereof (the "Meeting"), and to
vote all Shares which the undersigned would be entitled to vote if personally
present upon the following matters, as set forth in the Notice of Annual Meeting
of Shareholders and related Proxy Statement, and upon such other business as may
properly come before the Meeting:

1. Election of Directors:

/ / FOR all nominees listed below (except as
marked to the contrary below)

/ / WITHHOLD AUTHORITY to vote for all
nominees listed below

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH HIS NAME IN THE LIST
BELOW:

P.E. Spears R.P. Myers
G.P. King P.F. Spears
L.S. DeVan J.F. Thompson, III
J.M. Fuss C.D. Weber
R.E. Lemmon, Jr.

2. Proposal to approve the Proposed Advisory Agreement between
the Company and Rittenhouse Financial Services, Inc. in the
form attached as Exhibit A to the Proxy Statement:

/ / FOR / / AGAINST / / ABSTAIN

3. Proposal to ratify the selection of Ernst & Young LLP as the
Company's independent certified public accountants for the
year ending December 31, 1996:

/ / FOR / / AGAINST / / ABSTAIN

4. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Meeting.

<PAGE>

ALL PROXIES WILL BE VOTED, AND WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS NOTED HEREON. IN THE ABSENCE OF INSTRUCTIONS, THIS PROXY WILL BE
TREATED AS GRANTING AUTHORITY TO VOTE IN FAVOR OF THE ELECTION OF DIRECTORS
(INCLUDING AUTHORITY TO VOTE CUMULATIVELY) AND WILL BE VOTED FOR PROPOSALS 2, 3
AND 4 ABOVE.

The undersigned hereby revokes any
proxy or proxies heretofore given
to vote such Shares at said
Meeting or any adjournment
thereof.

----------------------------------

----------------------------------
Sign here exactly as name(s)
appear on left.

Dated:____________________________

PLEASE DATE, SIGN, AND RETURN THIS PROXY
IN THE ENCLOSED ADDRESSED ENVELOPE