<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20
File No. 811-1144
THE FINANCE COMPANY OF PENNSYLVANIA
---------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
226 Walnut Street, Philadelphia, Pennsylvania 19106
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 215-351-4778
------------
Mr. Charles Mather, III, President
226 Walnut Street
Philadelphia, Pennsylvania 19106
---------------------------------------------------------------
(Name and Address of Agent for Service)
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THE FINANCE COMPANY OF PENNSYLVANIA
CONTENTS OF FORM N-1A
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Page
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PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page 3
Item 2. Synopsis 3
Item 3. Supplementary Financial Information 3
Item 4. General Information and History 3
Item 5. Management of the Company 4
Item 6. Capital Stock 4
Item 7. Purchase of Securities Being Offered 4
Item 8. Redemption or Repurchase 4
Item 9. Pending Legal Proceedings 4
PART B INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Item 10. Statement of Additional Information 5
Item 11. Table of Contents 5
Item 12. General Information and History 5
Item 13. Investment Objectives and Policies 5-7
Item 14. Management of the Company 7
Item 15. Control Persons and Principal Holders
of Securities 8
Item 16. Investment Advisory Services 8
Item 17. Brokerage Allocation 8-9
Item 18. Capital Stock 9
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered 9-10
Item 20. Tax Status 10
Item 21. Underwriters 10
Item 22. Calculation of Yield Quotations of Money
Market Funds 10
Item 23. Financial Statements and Independent Auditors'
Report 11-22
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits 23
Item 25. Persons Controlled by or Under Common Control 23
Item 26. Number of Holders of Securities 23
Item 27. Indemnification 23-24
Item 28. Business and Other Connections of
Investment Adviser 24
Item 29. Principal Underwriters 24
Item 30. Location of Accounts and Records 24
Item 31. Management Services 24
Item 32. Undertakings 24
SIGNATURES 25
EXHIBIT INDEX 26
</TABLE>
<PAGE> 3
THE FINANCE COMPANY OF PENNSYLVANIA
FORM N-1A
PART A
ITEM 1. Cover Page (Prospectus Only) - INAPPLICABLE
ITEM 2. Synopsis (Prospectus Only) - INAPPLICABLE
ITEM 3. Supplementary Financial Information - INAPPLICABLE
ITEM 4. General Information and History
General Information
Registrant was organized as a corporation by a special act of the
General Assembly of the Commonwealth of Pennsylvania, approved
May 12, 1871.
Development of Business
Registrant until December 29, 1961, carried on its business under
a special charter granted by the General Assembly of the
Commonwealth of Pennsylvania, approved May 12, 1871. It was
until December 29, 1961, engaged in the business of banking; it
also held certain investments and parcels of real estate. On
December 29, 1961, Registrant filed Articles of Amendment with
the Bureau of Corporations, Commonwealth of Pennsylvania,
amending its charter in its entirety and providing in substance
that Registrant henceforward will have as its principal purpose
that of an investment company, and on that date an agreement with
the Secretary of Banking of the Commonwealth of Pennsylvania was
entered into under which the Commonwealth recognized that the
Registrant was no longer engaged in the banking business.
Subclassification of Registrant
(a) - Registrant is an open-end investment company.
(b) - Registrant operates as a nondiversified investment
company.
The objective or objectives of the Company are: to own, purchase
and sell securities of business enterprises of any nature
whatsoever; to own, hold, use, purchase and sell real and
personal property of any nature whatsoever as principal and not
as agent; and to carry on the business of an open-end investment
company, as defined under the provisions of the Pennsylvania
Business Corporation Law.
The authority to make, alter, amend or repeal these objectives
shall be vested in the Board of Directors, subject always to the
power of the stockholders to change such action.
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<PAGE> 4
ITEM 5. Management of the Company
The Directors of the Company consist of five individuals, three
of whom are not "interested persons" of the Company as defined in
the Investment Company Act of 1940. The Directors of the Company
are responsible for the overall supervision of the operations of
the Company and perform the various duties imposed on the
Directors of investment companies by the Investment Company Act
of 1940.
The Company's investment adviser is Cooke & Bieler, Inc.,
Philadelphia, Pennsylvania 19102. Cooke & Bieler, Inc. is
retained to furnish reports, statistical and research services,
and advice and recommendations with respect to the Company's
portfolio of securities and investments. Cooke & Bieler, Inc. is
paid an annual fee equal to .5% of monthly portfolio value less
the value of certain investments.
United Missouri Bank, N.A. is the Company's Custodian. The
Company acts as its own transfer agent, dividend paying agent,
and registrar.
Total expenses for the Company during 1995 were $347,302 or .89%
of average net assets.
ITEM 6. Capital Stock
The authorized capital stock of the Company consists of 232,000
shares of capital stock, par value $10 each. Each share has
equal dividend, distribution and liquidation rights. All
dividends and distributions are payable in cash. Each holder of
capital stock has one vote for each share held. Voting rights
are cumulative for directors. The registrant met the
requirements of Subchapter M of the Internal Revenue Code during
the last fiscal year and does not anticipate any change in such
status. The Company has adopted the policy of paying out in
dividends each year substantially all net investment income. The
Company pays the applicable Federal capital gains tax for
shareholders and retains the net balance for reinvestment, except
to the extent that such gains are considered distributed to
redeeming shareholders. Shareholder inquiries should be directed
to the Company by writing or telephoning the Company at the
address or telephone number indicated on the cover of this
statement.
ITEM 7. Purchase of Securities Being Offered
INAPPLICABLE
ITEM 8. Redemption or Repurchase
Shares of the Company may be redeemed by mail by writing directly
to the Company. The redemption request must be signed exactly as
the shareholder's name appears on the form of registration and
must include the account number. If shares are owned by more
than one person, the redemption request must be signed by all
owners exactly as their names appear in the registration. Stock
certificates must be tendered along with the signed redemption
request.
ITEM 9. Pending Legal Proceedings
None
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<PAGE> 5
PART B
ITEM 10. Statement of Additional Information
The Finance Company of Pennsylvania is a nondiversified, open-end
investment company which seeks long-term appreciation of its
shareholders' capital.
The Company does not sell shares in its Fund. The Company does,
however, hold itself ready to redeem any of its outstanding
shares at net asset values as determined on the day of final
tender of the shares or on the next day on which the New York
Stock Exchange is open.
<TABLE>
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ITEM 11. Table of Contents Page
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Investment Objectives and Policies 5-7
Management of the Company 7
Investment Advisory Services 8
Brokerage Allocation 8-9
Capital Stock 9
Purchase, Redemption and Pricing of Securities Being Offered 9-10
Tax Status 10
Financial Statements and Independent Auditors' Report 11-23
</TABLE>
ITEM 12. General Information and History
INAPPLICABLE
ITEM 13. Investment Objectives and Policies
In addition to the investment objectives and policies set forth
under Item #4 of Part A, the Company has adopted the following
policies relating to the investment of its assets and its
activities, which are fundamental policies and may not be changed
without the approval of the holders of a majority of the
Company's outstanding voting securities as defined in the
Investment Company Act of 1940.
Fundamental Policies of the Registrant
(a) - The issuance of senior securities: the Registrant has not
issued any senior securities, and it does not propose to
issue any senior securities.
(b) - The borrowing of money: the Registrant has not borrowed
money, and it does not propose to borrow money.
(c) - The underwriting of securities of other issuers: the
Registrant has not underwritten securities of other
issuers, and it does not propose to underwrite securities
of other issuers.
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<PAGE> 6
(d) - The concentration of investments in particular industries:
Registrant's policy will normally be to diversify its
investments among various industries rather than to
concentrate in any one industry. However, Registrant may
at times have a substantial portion of its assets in a
particular industry if in the opinion of management
attractive opportunities occur, and it hereby expressly
reserves freedom of action with respect to such
concentration; in any event, no more than 50% of its
assets shall at any time be devoted to one particular
industry.
(e) - The purchase and sale of commodities or commodity
contracts: the Registrant has neither purchased nor sold
commodities or commodity contracts, nor does it propose to
do so in the future.
(f) - Other fundamental policies: Registrant reserves freedom
of action to, and from time to time, may invest in any
type of security or property whatever, to the extent
permitted by law. It is the policy of Registrant to
engage as its principal activity in the business of
investing and reinvesting its capital in a widely
diversified portfolio of securities with a view to holding
those which appear to offer sound possibilities of current
income and future growth of principal.
To the extent that Registrant presently owns securities of
various corporations, it is its policy to retain those
investments, adding to them if deemed advisable by the Board of
Directors, so long as they appear to meet the criteria set forth
above.
Policies with Respect to Security Investments
(a) - Registrant may invest in bonds, preferred stocks and
common stocks of other issuers. It reserves the right to
invest in such securities in any proportion deemed
advisable by its Board of Directors.
(b) - Registrant may invest no more than 25% of its assets in
the securities of any one issuer.
(c) - Registrant may acquire up to 100% of the voting securities
of any one issuer if deemed advisable by its Board of
Directors.
(d) - It is not the present policy of Registrant to invest in
companies for the purpose of exercising control or
management.
(e) - Registrant reserves the right to invest in securities of
other investment companies if deemed advisable by its
Board of Directors.
(f) - Registrant has no restrictions upon portfolio turnover of
its investments. However, it is not Registrant's policy
to engage in portfolio transactions with the objective of
seeking profits from short-term trading. It does reserve
the right, if deemed advisable or necessary by its Board
of Directors, to sell any asset at any time, regardless of
the holding period.
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<PAGE> 7
(g) - The charter of Registrant sets forth its powers and
purposes, in their entirety, as follows:
"The purpose or purposes of the corporation are: To own,
purchase and sell securities of business enterprises of
any nature whatsoever; to carry on the business of an
investment company; and to own, hold, use, purchase and
sell real and personal property of any nature
whatsoever; provided that this corporation shall not
engage in the business of banking or in any activity
other than those permitted to corporations incorporated
under the Pennsylvania Business Corporation Law."
ITEM 14. Management of the Company
Listed below are the Directors of the Company and the date at
which they first became a Director of the Company. The persons
indicated by the * are Directors who are or may be deemed to be
"interested persons" of the Company as defined in the Investment
Company Act of 1940.
<TABLE>
<CAPTION>
Name and Year
He First Became
a Director Principal Occupation
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<S> <C>
Charles E. Mather, III* President of the Company; he is President and Director of Mather &
1981 Co. (insurance brokers), with which he has been associated for more
than five years; he is also a Director of Quaker City Insurance Co.,
American Shipbuilders and Shipowners Mutual Assurance Company,
Christiana Bank & Trust Company, Greenville, DE and Addison Capital
Shares, Inc., an investment company. He is 61 years old.
Geoffrey Stengel Retired as Executive Vice President, The Church Foundation
1965 (designated Trustee of the Episcopal Diocese of Pennsylvania) on
June 30, 1986, with which he had been associated for more than five
years. He is 81 years old. Mr. Stengel retired as a director in
January 1996.
Frank A. Wood, Jr.* Secretary/Treasurer of the Company; retired as Vice President,
1975 Provident National Bank on August 1, 1986, with which he had been
associated for more than five years; President and Director,
Pennsylvania Warehousing and Safe Deposit Company, an
affiliate as defined in the Investment Company Act of 1940, and
Director, South Chester Tube Co. He is 75 years old.
Johnathan D. Scott Senior Vice President, PNC Bank Corp., with which he has been
1990 associated since June 1985; he is also a Director of the Pennsylvania
Warehousing and Safe Deposit Company. He is 43 years old.
Herbert S. Riband, Jr. Partner in the Law firm Saul, Ewing, Remick & Saul since 1971. He is
1994 59 years old.
Shaun F. O'Malley Chairman Emeritus Price Waterhouse LLP; retired June 30, 1995 as Chairman
1996 of Price Waterhouse World Organization and U.S. Firm, with which he had
been associated for more than five years; Director of Philadelphia
Contributionship. He is 60 years old. Mr. O'Malley became a Director
in February 1996.
</TABLE>
No Director and none of the Officers received remuneration in excess of $60,000
from the Company and its subsidiaries for the year ended December 31, 1995.
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<PAGE> 8
ITEM 15. Control Persons and Principal Holders of Securities
INAPPLICABLE
ITEM 16. Investment Advisory Services
The Company's Investment Adviser, Cooke & Bieler, Inc., is
retained to furnish reports, statistical and research services,
and advice and recommendations with respect to the Company's
portfolio of securities and investments. Investment decisions
are made by the Company. Cooke & Bieler, Inc. is not a broker
and therefore the Investment Advisory Contract provides that,
with the approval of the Company's management, Cooke & Bieler,
Inc. may select such brokers, from time to time, as may appear to
be in the best interest of the Company.
The Investment Advisory Contract, unless terminated, continues
until April 30 of each year, provided that such continuance is
specifically approved at least annually either by the Board of
Directors of the Company or by the vote of a majority of the
Company's outstanding shares and, in either case, by the vote of
a majority of the Company's directors who are not parties to the
contract or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval.
The contract may be terminated at any time without penalty by
either party on sixty (60) days' written notice and will
automatically terminate in the event of any assignment. No
director of the Company is an interested party of Cooke & Bieler,
Inc.
Under the contract the Company agrees to pay monthly to the
Investment Adviser a fee equal to one-twelfth (1/12) of fifty one
hundredths of one percent (.5%) of the monthly portfolio value of
the Company (an aggregate of fifty one hundredths of one percent
(.5%) per year), it being agreed that in the determination of
monthly portfolio value, there shall not be included the holdings
of the Company in PNC Bank Corp. (formerly PNC Financial
Corporation), Pennsylvania Warehousing & Safe Deposit Company and
Penn Virginia Corporation, their successors, United States
Treasury Notes and Bonds, and such other holdings as may be
mutually agreed upon by the Company and the Investment Adviser.
The exclusion of these holdings is appropriate as they are all
holdings either without any regular trading market or without an
active regular market and/or with respect to each of which the
officers and directors have particularly close knowledge.
The total dollar amount paid by the Company under the investment
advisory contract for the last three years was $251,979.
ITEM 17. Brokerage Allocation
During the past year the Company had transactions in the ordinary
course of business with respect to its investments. Brokerage
commissions in connection with the purchase and sale of
securities for the Company's portfolio during the years 1993,
1994 and 1995 amounted to $10,500, $8,146 and $5,930,
respectively. The Company has been advised that certain brokers
who receive commissions from the Company in connection with such
transactions make statistical and research services available to
the Investment Adviser. Such services consist of items such as
basic reports on specific companies, quarterly updates on
specific companies, statistical analyses of a specific industry,
reports on the outlook for a particular industry, economic
analyses of the domestic and foreign economies and analyses of
standard portfolios (for example, diversification and beta
factors) and reports of economic statistics. To the extent that
they have value, these services may benefit not only the Company
but also the Investment
- 8 -
<PAGE> 9
Adviser and its other clients. However, the expenses of the
Company will not necessarily be reduced as a result of the
receipt of such services. The Company has been further advised
that it is the policy of the Investment Adviser to recommend for
transactions of the Company those brokers who in its judgment
will provide the best price and execution. In reaching its
decision, the Investment Adviser considers such factors as the
rate of commission to be paid by the Company with rates paid by
other institutional investors, the price of the security, the
size, type and difficulty of the transaction and the brokers'
general execution and operational facilities. Consistent with
the overall policy of obtaining the best price and execution, the
Company may from time to time pay brokerage commissions in excess
of those which another broker might have charged in effecting the
same transaction in recognition of the value of research services
provided by the broker.
ITEM 18. Capital Stock
In addition to the information set forth under Item #6 of Part A,
the following information applies to the capital stock authorized
by the Company:
Capital Stock
Common stock (only class)
(1) Dividend rights: each share has equal dividend rights,
such rights to be determined by the Board of Directors.
(2) Voting rights: one vote per share, cumulative for
directors.
(3) Liquidation rights: each share has equal liquidation
rights, pro rata, after payment of all liabilities.
(4) Preemptive rights: holders shall have preemptive rights
in any issue for cash.
(5) Conversion rights: none.
(6) Redemption provisions: See Item #8 of Part A.
(7) Sinking fund provisions: none.
(8) Liability to further calls or assessment: none.
ITEM 19. Purchase, Redemption and Pricing of Securities Being Offered
The redemption price for shares upon written request will be the
net asset value per share as next computed after receipt of such
request in good order by the Company. Payment for shares
redeemed will be made typically within several days after
receipt, if in good order, but no later than seven days after the
valuation date.
The net asset value per share is computed by dividing the total
value of the assets of the Fund, less its liabilities, by the
total number of outstanding shares. Computations are made in
accordance with generally accepted accounting principles, valuing
each listed security at its last sale price. On the day on which
the determination is made, or if no price is available, the
latest bid price is used. Securities traded over-the-counter are
valued at the mean of the latest
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<PAGE> 10
available bid and asked prices. Securities for which quotations
are not readily available, restricted securities and other assets
are valued at fair value as determined in good faith by the Board
of Directors.
The Company does not offer shares for purchase.
ITEM 20. Tax Status
The Company has elected to be taxed as a regulated investment
company meeting the requirements of the Internal Revenue Code.
As such, the Company has adopted the policy of paying out in
dividends each year substantially all net investment income.
Consistent with existing policy, the Company is paying the
applicable Federal capital gains tax for shareholders and
retaining the net balance for reinvestment, except to the extent
that such gains are considered to have been distributed to
redeeming shareholders.
ITEM 21. Underwriters
INAPPLICABLE
ITEM 22. Calculation of Yield Quotations of Money Market Funds
INAPPLICABLE
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<PAGE> 11
ITEM 23. Financial Statements and Independent Auditors' Report
<PAGE> 12
ITEM 23. Financial Statements and Independent Auditor's Report.
[LOGO]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of The Finance Company of
Pennsylvania:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The Finance Company of Pennsylvania as of
December 31, 1995, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended December 31, 1995
and 1994, and the condensed financial information for each of the years in the
five-year period ended December 31, 1995. These financial statements and the
condensed financial information are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the condensed financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the condensed
financial information are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1995 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that out audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and condensed financial information
present fairly, in all material respects, the financial position of The Finance
Company of Pennsylvania at December 31, 1995, the results of its operations, the
changes in its net assets, and the condensed financial information for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
January 17, 1996
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<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
INVESTMENTS-AT MARKET OR FAIR VALUE (NOTE 1):
U.S. TREASURY NOTES (IDENTIFIED COST
$4,926,453)................................... $ 5,265,594
MUTUAL FUNDS & OTHER SHORT-TERM INVESTMENTS
(IDENTIFIED COST $4,078,163)............... 4,078,163
COMMON STOCKS (IDENTIFIED COST $8,505,741)
INCLUDING AFFILIATE (NOTE 2)............... 34,886,124
-----------
TOTAL INVESTMENTS..................... 44,229,881
CASH.................................................. 12,595
ACCRUED INTEREST AND DIVIDENDS RECEIVABLE............. 233,905
PREPAID EXPENSES...................................... 29,784
OTHER ASSETS.......................................... 3,150
-----------
TOTAL................................. 44,509,315
-----------
LIABILITIES
DIVIDENDS PAYABLE (NOTE 6)............................ 1,075,888
ACCRUED EXPENSES AND TAXES (NOTE 1)................... 519,457
PAYABLE FOR REDEMPTIONS............................... 207,074
-----------
TOTAL................................. 1,802,419
-----------
NET ASSETS
NET ASSETS (WITH INVESTMENTS AT MARKET OR FAIR VALUE)
EQUIVALENT TO $736.90 PER SHARE ON 57,955 SHARES
OF $10 PAR VALUE CAPITAL STOCK OUTSTANDING AT
DECEMBER 31, 1995 (AUTHORIZED 232,000 SHARES).... $42,706,896
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE> 14
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
U.S. TREASURY OBLIGATIONS -- 11.91%
<TABLE>
<CAPTION>
Aggregate
Quoted
Market
Principal Identified Price
Amount Cost (Note 1)
- --------- ---------- ----------
<C> <S> <C>
U.S.TREASURY NOTES 8%
500,000 DUE 1/15/97.................. $ 499,301 $ 513,437
U.S. TREASURY NOTES 9 1/4% DUE
1,000,000 8/15/98...................... 1,000,128 1,096,563
U.S. TREASURY NOTES 8 7/8% DUE
900,000 2/15/99...................... 901,037 991,688
U.S. TREASURY NOTES 7 3/4% DUE
700,000 1/31/00...................... 699,068 760,155
U.S. TREASURY NOTES 7 7/8% DUE
1,000,000 8/15/01...................... 1,064,066 1,117,188
U.S. TREASURY NOTES 6 3/8% DUE
750,000 8/15/02...................... 762,853 786,563
---------- ----------
TOTAL............................. 4,926,453 5,265,594
---------- ----------
MUTUAL FUNDS AND OTHER SHORT-TERM
SECURITIES -- 9.22%
</TABLE>
<TABLE>
<CAPTION>
Face Value/
Principal Amount
-----------------------
<C> <S> <C> <C>
45,000 TREASURY TRUST FUND............... 45,000 45,000
1,971,776 FEDERAL TRUST FUND................ 1,971,776 1,971,776
2,061,387 FED FUND.......................... 2,061,387 2,061,387
---------- ----------
TOTAL............................. 4,078,163 4,078,163
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE> 15
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
COMMON STOCKS -- 78.87%
<TABLE>
<CAPTION>
Aggregate
Quoted
Market
Number Identified Price
of Shares Cost (Note 1)
- --------- ---------- ----------
<C> <S> <C>
PETROLEUM AND MINING -- 6.53%
16,000 EXXON CORP........................ $ 91,444 $1,288,000
10,000 MOBILE CORP. ..................... 62,715 1,117,500
15,000 PENN VIRGINIA CORP. .............. 22,382 483,750
---------- ----------
TOTAL............................. 176,541 2,889,250
---------- ----------
BANKING, INSURANCE AND FINANCIAL
HOLDING COMPANIES -- 41.17%
11,000 DUN & BRADSTREET.................. 462,115 712,250
9,500 MARSH & MCLENNAN, INC. ........... 522,710 843,125
494,000 PNC BANK CORP. ................... 298,459 15,931,500
16,000 STATE STREET BOSTON CORP. ........ 519,335 720,000
---------- ----------
TOTAL............................. 1,802,619 18,206,875
---------- ----------
MANUFACTURING AND DIVERSIFIED -- 18.76%
17,000 AMERICAN GREETINGS................ 472,000 469,625
10,000 AMP, INC. ........................ 208,710 382,500
10,000 AVERY DENNISON CORP. ............. 209,660 501,250
6,500 BOEING CO. ....................... 238,456 509,438
21,000 CORNING INC. ..................... 631,845 672,000
19,000 DOVER CORP. ...................... 345,719 700,625
6,000 DOW CHEMICAL CO. ................. 116,337 421,500
6,000 EMERSON ELECTRIC.................. 181,980 490,500
19,000 GENUINE PARTS CO. ................ 469,072 779,000
5,500 INT'L FLAVORS & FRAGRANCES........ 212,118 264,000
10,000 MINNESOTA MINING & MFG. CO. ...... 177,770 663,750
4,000 PHILIP MORRIS COS. ............... 202,530 361,000
18,500 READERS DIGEST.................... 769,106 948,125
15,000 SHERWIN WILLIAMS CO. ............. 481,800 611,250
11,000 UNION CAMP CORP. ................. 386,515 523,875
---------------------------------- ---------- ----------
TOTAL............................. 5,103,618 8,298,438
---------------------------------- ---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE> 16
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
COMMON STOCKS -- CONCLUDED
<TABLE>
<CAPTION>
Aggregate
Quoted
Market
Number Identified Price
of Shares Cost (Note 1)
- --------- ----------- -----------
<C> <S> <C>
DRUGS AND PHARMACEUTICALS -- 5.34%
9,000 BRISTOL-MYERS SQUIBB CO. ....... $ 506,137 $ 772,874
4,000 JOHNSON & JOHNSON............... 88,070 342,000
9,000 MERCK & CO. .................... 202,710 590,625
12,000 SCHERING-PLOUGH................. 342,795 657,000
----------- -----------
TOTAL........................... 1,139,712 2,362,499
----------- -----------
COMMUNICATIONS -- 1.51%
10,000 BELL ATLANTIC CORP. ............ 178,287 668,750
----------- -----------
FOOD/RETAIL MERCHANDISING -- 2.35%
14,000 COCA-COLA CO. .................. 33,565 1,039,500
----------- -----------
DIVERSIFIED HOLDING -- 3.21%
732 PENNSYLVANIA WAREHOUSING AND
SAFE DEPOSIT COMPANY (NOTE
2)......................... 71,399 1,420,812
----------- -----------
TOTAL COMMON STOCKS............. 8,505,741 34,886,124
----------- -----------
TOTAL INVESTMENTS............... $17,510,357 $44,229,881
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE> 17
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
DIVIDENDS (INCLUDING DIVIDENDS FROM
AFFILIATE -- NOTE 2).................... $ 1,416,349
INTEREST..................................... 386,659
-----------
TOTAL................................... 1,803,008
EXPENSES:
COMPENSATION.................... $ 98,400
TAXES OTHER THAN INCOME TAXES... 18,169
DIRECTORS' FEES (NOTE 5)........ 39,525
INVESTMENT ADVISORY FEES (NOTE
5)............................ 88,647
LEGAL........................... 5,455
AUDITING & ACCOUNTING........... 47,675
CUSTODIAN....................... 13,330
INSURANCE....................... 19,251
OTHER OFFICE AND
ADMINISTRATIVE................ 16,850
----------
TOTAL................................... 347,302
-----------
NET INVESTMENT INCOME.............................. 1,455,706
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
(NOTE 3):
REALIZED GAIN FROM SECURITY
TRANSACTIONS
(EXCLUDING SHORT-TERM
INVESTMENTS):
PROCEEDS FROM SALES............. $4,811,902
COST OF SECURITIES SOLD......... 3,252,543
----------
NET REALIZED GAIN....................... 1,559,359
UNREALIZED APPRECIATION OF
INVESTMENTS:
AT JANUARY 1, 1995.............. 17,777,362
AT DECEMBER 31, 1995............ 26,719,524
----------
INCREASE IN NET UNREALIZED APPRECIATION............ 8,942,162
-----------
NET GAIN ON INVESTMENTS................................. 11,957,227
-----------
CAPITAL GAINS TAX PAYABLE ON BEHALF OF SHAREHOLDERS
(NOTE 1).............................................. (499,377)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.... $11,457,850
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 16 -
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
NET INVESTMENT INCOME................ $ 1,455,706 $ 1,375,616
NET REALIZED GAIN ON INVESTMENTS..... 1,559,359 277,041
INCREASE (DECREASE) IN NET UNREALIZED
APPRECIATION ON INVESTMENTS....... 8,942,162 (4,800,243)
CAPITAL GAINS TAX PAYABLE ON BEHALF
OF SHAREHOLDERS (NOTE 1).......... (499,377) (96,208)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS......... 11,457,850 (3,243,794)
UNDISTRIBUTED INVESTMENT INCOME
INCLUDED IN PRICE OF SHARES
REDEEMED.......................... (14,095) (8,734)
REALIZED GAIN FROM SECURITY
TRANSACTIONS INCLUDED IN PRICE OF
SHARES REDEEMED................... (18,569) (2,162)
DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME................. (1,555,512) (1,367,197)
CAPITAL SHARE TRANSACTIONS:
(EXCLUSIVE OF AMOUNTS ALLOCATED TO
INVESTMENT INCOME AND NET REALIZED
GAIN FROM SECURITY TRANSACTIONS)
(NOTE 1):
COST OF SHARES OF CAPITAL STOCK
REDEEMED..................... (855,906) (547,522)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ 9,013,768 (5,169,409)
NET ASSETS:
BEGINNING OF YEAR.................... 33,693,128 38,862,537
----------- -----------
END OF YEAR [INCLUDING UNDISTRIBUTED
NET INVESTMENT LOSS OF ($269,069)
AND ($268,602) RESPECTIVELY]...... $42,706,896 $33,693,128
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 17 -
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1. SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of 1940, as
amended, as a regulated open-end investment company. On April 21, 1964, the
stockholders approved amendments to the Articles of Incorporation whereby, since
that date, the Company has held itself ready to redeem any of its outstanding
shares at net asset value. Net asset value for redemptions is determined at the
close of business on the day of formal tender of shares or the next day on which
the New York Stock Exchange is open. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Number Aggregate
of Shares amount
--------- ---------
<S> <C> <C>
Shares redeemed:
Year Ended December 31, 1995...... 1,287 $888,570
Year Ended December 31, 1994...... 880 $558,418
</TABLE>
The following is a summary of significant accounting policies consistently
followed by the Company in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
Portfolio Valuation
Marketable securities are generally valued at the last reported sales price
on December 31, 1995. Where a last sales price is not reported, the latest bid
price is used. Marketable securities for which neither a sale nor a bid price
was reported on December 31, 1995 are valued at the latest sale or bid price
previously reported. Investments in non-marketable securities are valued at fair
value as determined by the Board of Directors (see Note 2).
Federal Income Taxes
No provision has been made for Federal income taxes other than capital
gains tax because the Company has elected to be taxed as a regulated investment
company meeting certain requirements of the Internal Revenue Code. As such, the
Company is paying the applicable Federal capital gains tax for shareholders and
retaining the net balance for reinvestment, except to the extent that such gains
are considered to have been distributed to redeeming shareholders.
- 18 -
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Equalization
The Company follows the accounting practices known as "equalization" by
which a portion of the costs of redemption of capital shares equivalent to the
amount, on a per share basis, of distributable investment income on the date of
the transaction is charged to the undistributed income, so that undistributed
income per share is unaffected by Company shares redeemed. Similarly, on
redemptions, a pro rata portion of realized capital gains is charged against
undistributed realized gains.
Other
As is common in the industry, security transactions are accounted for on
the trade date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
2. NON-MARKETABLE SECURITY OF AFFILIATE
There is no ready market for the below listed security. Fair value is
established by the Board of Directors of The Finance Company of Pennsylvania.
The Pennsylvania Warehousing and Safe Deposit Company is defined as an
affiliate under the Investment Company Act of 1940 in that the Company owns 5%
or more of the outstanding voting securities of such company. Further, if at the
time of public sale of any of these shares the Company would be deemed a
"control person," it would be necessary to register said shares under the
Securities Act of 1933 prior to their sale.
<TABLE>
<CAPTION>
For the
year ended
December 31, 1995 December 31,
------------------------------------- 1995
Percent Identified Fair Dividend
Shares Owned Cost Value Income
- ------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
732 Pennsylvania
Warehousing
and Safe
Deposit
Company 16.92% $ 71,399 $1,420,812 $ 65,880
======= ========= ========== =============
</TABLE>
- 19 -
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of securities purchased, the proceeds from sales and
maturities of investments, and the cost of securities sold (excluding U.S.
Government short-term securities) for the year ended December 31, 1995 were:
<TABLE>
<CAPTION>
Historical Cost of
Cost of Proceeds from Securities
Investments Sales and Sold and
Purchased Maturities Matured
----------- ------------- -------------
<S> <C> <C> <C>
Common stocks................ $1,003,935 $ 4,145,043 $ 2,551,275
U.S. Treasury notes.......... 698,859 666,859 701,268
Mutual funds and other short-
term securities............ 5,670,163 3,264,073 3,264,073
----------- ------------- -------------
Total................... $7,372,957 $ 8,075,975 $ 6,516,616
=========== ============== ==========
</TABLE>
4. LEASE
The Company rents office space under a lease expiring in April 1996. The
lessor Company's President also serves on the Board of Directors of the Company.
Minimum annual rental for this space is $5,100.
5. OTHER INFORMATION FOR THE YEAR ENDED
DECEMBER 31, 1995
Directors of the Company, who are not also employees, are paid a fee for
attendance at meetings of the Board of Directors and its committees.
Compensation of officers amounted to $98,400.
Investment advisory fees payable monthly to Cooke & Bieler, Inc., are based
on the monthly closing portfolio value, less the value of certain investments at
an annual rate of .5 of 1%.
6. SUBSEQUENT EVENT
A dividend from net investment income of $1,071,008 was declared on
December 13, 1995 payable at $18.48 per share on January 26, 1996 to
shareholders of record on December 29, 1995.
- 20 -
<PAGE> 22
CONDENSED FINANCIAL INFORMATION
Selected data for each share of capital stock outstanding throughout each
period:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
---------------------------------------------------
Investment income...... $ 30.77 $ 28.64 $ 27.52 $ 26.48 $ 24.74
Expenses............... 5.97 5.59 5.38 5.58 5.14
------- ------- ------- ------- -------
Net investment
income............... 24.80 23.05 22.14 20.90 19.60
Dividends from net
investment income.... (26.73) (22.99) (22.09) (20.89) (19.81)
Net realized gain
(loss) and increase
(decrease) in
unrealized
appreciation......... 170.09 (77.72) 13.19 35.21 158.47
------- ------- ------- ------- -------
Net increase (decrease)
in net asset value... 168.16 (77.66) 13.24 35.22 158.26
Net asset value:
Beginning of year.... 568.74 646.40 633.16 597.94 439.68
------- ------- ------- ------- -------
End of year.......... $736.90 $568.74 $646.40 $633.16 $597.94
======= ======= ======= ======= =======
Annual ratio of
expenses to average
net assets........... 0.89% 0.89% 0.81% 0.91% 0.99%
Annual ratio of net
investment income to
average net assets... 3.72% 3.68% 3.34% 3.40% 3.78%
Annual portfolio
turnover rate........ 4.67% 9.17% 9.16% 7.65% 6.21%
Number of shares
outstanding at end of
period (in
thousands)........... 58 59 60 61 61
</TABLE>
See Notes to Financial Statements
- 21 -
<PAGE> 23
CHANGES IN THE PORTFOLIO OF INVESTMENTS
(EXCLUSIVE OF SHORT-TERM INVESTMENTS)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
PURCHASES
<TABLE>
<CAPTION>
Changes Balance
During December 31,
the Period 1995
---------- ------------
Number of Shares
--------------------------
<S> <C> <C>
American Greetings....................... 7,000 17,000
Corning, Inc. ........................... 3,000 21,000
</TABLE>
SALES
<TABLE>
<CAPTION>
Number of Shares
--------------------------
<S> <C> <C>
Boeing, Co. ............................. 4,000 6,500
Bristol Meyers Squibb.................... 2,500 9,000
Dover Corp. ............................. 1,500 19,000
PNC Bancorp. ............................ 10,000 494,000
Schering Plough.......................... 2,000 12,000
State Street Boston Co. ................. 4,000 16,000
Union Camp Corp. ........................ 2,500 11,000
</TABLE>
STOCK SPLITS
<TABLE>
<CAPTION>
Number of Shares
--------------------------
<S> <C> <C>
Dover Corp. ............................. 9,500 19,000
</TABLE>
- 22 -
<PAGE> 24
PART C
ITEM 24. Financial Statements and Exhibits
a. Financial Statements
1) Financial Statements filed in Part B:
Independent Auditors' Report
Statement of Assets and Liabilities -
December 31, 1995
Portfolio of Investments - December 31, 1995
Statement of Operations for the
Year Ended December 31, 1995
Statements of Changes in Net Assets for the
Years Ended December 31, 1995 and 1994
Notes to Financial Statements
Condensed Financial Information
for the Five Years Ended December 31, 1995
Changes in Portfolio of Investments
for the Six Months Ended December 31, 1995
(Unaudited)
2) All required financial statements are included in
Part B hereof, all other financial statements and
schedules are inapplicable
b. Exhibits
1) See index on page 27
ITEM 25. Persons Controlled by or Under Common Control
None
ITEM 26. Number of Holders of Securities
As of December 31, 1995, there were 137 shareholders owning
57,955 shares of capital stock of the Registrant.
ITEM 27. Indemnification
Section 410 of the Business Corporation Law of Pennsylvania
empowers a corporation to indemnify its directors and officers
against expenses incurred by them in connection with the defense
of litigation in which they are parties by reason of their having
been directors or officers of the corporation.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. If a
claim for indemnification against such liabilities (other than a
claim for payment by the Registrant of expenses incurred or paid
by a director,
- 23 -
<PAGE> 25
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a Court of appropriate jurisdiction the
issue of whether or not such indemnification by it is against
public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 28. Business and Other Connections of Investment Adviser
None
ITEM 29. Principal Underwriters
INAPPLICABLE
ITEM 30. Location of Accounts and Records
Mr. Charles Mather, III, President, The Finance Company of
Pennsylvania, 226 Walnut Street, Philadelphia, Pennsylvania 19106
ITEM 31. Management Services
None
ITEM 32. Undertakings
INAPPLICABLE
- 24 -
<PAGE> 26
S I G N A T U R E S
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant (certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to
paragraph (a) of rule 485 under the Securities Act of 1933) and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in this City of Philadelphia and Commonwealth of
Pennsylvania on the 26th day of April 1996.
The Finance Company of Pennsylvania
-----------------------------------
(Registrant)
By /s/ CHARLES MATHER, III
---------------------------------
(Charles Mather, III, President)
- 25 -
<PAGE> 27
EXHIBIT INDEX
(1) Articles of Incorporation as amended December 29, 1961 and April 21,
1964 are incorporated herein by reference to Exhibit 1 of the
Registrant's Post Effective Amendment No. 11 to its Registration
Statement on Form N-1A
(2) By-Laws as amended through February 17, 1993 are incorporated herein
by reference to the Exhibit of the Registrant's Post Effective
Amendment No. 17 to its Registration Statement on Form N-1A
(3) None
(4) Specimen copy of share certificate for Common Shares is incorporated
herein by reference to Exhibit 4 of the Registrant's Post Effective
Amendment No. 11 to its Registration Statement on Form N-1A
(5) Investment Advisory Contract between Registrant and Cooke & Bieler,
Inc. dated February 4, 1987 is incorporated herein by reference
to Exhibit 5 of the Registrant's Post Effective Amendment No. 12 to
its Registration Statement on Form N-1A
(6) None
(7) None
(8) (a) Custodian Agreement between Registration and United
Missouri Bank, N.A. dated October 24, 1994 is included
herein the attached Exhibit
(9) None
(10) Inappropriate
(11) Inappropriate
(12) None
(13) None
(14) None
(15) None
(16) None
(17) Financial Data Schedules
<PAGE> 1
Exhibit 8(a)
CUSTODY AGREEMENT
Dated 10-24, 1994
Between
UNITED MISSOURI BANK, N.A.
and
The Finance Company of Pennsylvania
Prototype Custody Agreement
for
Registered Investment Company
for Fund/Plan Clients Only
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
1. Appointment of Custodian 1
2. Definitions 1
(a) Securities 2
(b) Assets 2
(c) Instructions and Special Instructions 2
3. Delivery of Corporate Documents 2
4. Powers and Duties of Custodian and Domestic Subcustodian 3
(a) Safekeeping 3
(b) Manner of Holding Securities 4
(c) Free Delivery of Assets 5
(d) Exchange of Securities 5
(e) Purchases of Assets 6
(f) Sales of Assets 6
(g) Options 7
(h) Futures Contracts 7
(i) Segregated Accounts 8
(j) Depositary Receipts 8
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. 9
(l) Interest Bearing Deposits 9
(m) Foreign Exchange Transactions Other than as Principal 9
(n) Pledges or Loans of Securities 10
(o) Stock Dividends, Rights, Etc. 10
(p) Routine Dealings 10
(q) Collections 11
(r) Bank Accounts 11
(s) Dividends, Distributions and Redemptions 11
(t) Proceeds from Shares Sold 11
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985 12
(v) Books and Records 12
(w) Opinion of Fund's Independent Certified Public
Accountants 12
(x) Reports by Independent Certified Public Accountants 12
(y) Bills and Others Disbursements 13
5. Subcustodians 13
(a) Domestic Subcustodians 13
(b) Foreign Subcustodians 13
(c) Interim Subcustodians 14
(d) Special Subcustodians 14
(e) Termination of a Subcustodian 15
(f) Certification Regarding Foreign Subcustodians 15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
6. Standard of Care 15
(a) General Standard of Care 15
(b) Actions Prohibited by Applicable Law, Events
Beyond Custodian's Control, Armed Conflict,
Sovereign Risk, Etc. 15
(c) Liability for Past Records 16
(d) Advice of Counsel 16
(e) Advice of the Fund and Others 16
(f) Instructions Appearing to be Genuine 16
(g) Exceptions from Liability 16
7. Liability of the Custodian for Actions of Others 17
(a) Domestic Subcustodians 17
(b) Liability for Acts and Omissions of Foreign Subcustodians 17
(c) Securities Systems, Interim Subcustodians,
Special Subcustodians, Securities Depositories and
Clearing Agencies 17
(d) Defaults or Insolvencies of Brokers, Banks, Etc. 17
(e) Reimbursement of Expenses 17
8. Indemnification 18
(a) Indemnification by Fund 18
(b) Indemnification by Custodian 18
9. Advances 18
10. Liens 19
11. Compensation 19
12. Powers of Attorney 19
13. Termination and Assignment 20
14. Notices 20
15. Miscellaneous 20
</TABLE>
<PAGE> 4
CUSTODY AGREEMENT
This agreement made as of this 24th day of October, 1994, between The
Finance Company of Pennsylvania with its principal place of business located at
226 Walnut St., Philadelphia, PA 19106 (hereinafter "Fund"), and United Missouri
Bank, n.a., a national banking association with its principal place of business
located at Kansas City, Missouri (hereinafter "Custodian").
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, the Fund desires to appoint Custodian as its custodian for
the custody of Assets (as hereinafter defined) owned by the Fund which Assets
are to be held in such accounts as the Fund may establish from time to time;
and
WHEREAS, Custodian is willing to accept such appointment on the terms
and conditions hereof.
WHEREAS, the Fund represents that by separate agreement between
Fund/Plan Services, Inc. ("Fund/Plan") and the Fund, Fund/Plan (a) has agreed
to perform certain administrative functions which may include the functions of
administrator, transfer agent and accounting services agent and (b) has been
appointed by the Fund to act as its agent in respect of the transactions
contemplated in this Agreement; and
WHEREAS, the Fund represents that (a) Fund/Plan has agreed to act as
Fund's agent in respect of the transactions contemplated in this Agreement and
(b) the Bank is authorized and directed to rely upon and follow directions and
instructions given by Fund/Plan, the Fund's agent, in respect of transactions
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant
and agree as follows:
1. APPOINTMENT OF CUSTODIAN.
The Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to the Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a
custodian and agrees to perform the duties and responsibilities of Custodian as
set forth herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
1
<PAGE> 5
(a) "Security" or "Securities" shall mean stocks, bonds,
bills, rights, scrip, warrants, interim certificates and all negotiable or
nonnegotiable paper commonly known as Securities and other instruments or
obligations.
(b) "Assets" shall mean Securities, monies and other
property held by the Custodian for the benefit of the Fund.
(c)(1) "Instructions", as used herein, shall mean: (i) a
tested telex, a written (including, without limitation, facsimile transmission)
request, direction, instruction or certification signed or initialed by or on
behalf of the Fund by an Authorized Person; (ii) a telephonic or other oral
communication from a person the Custodian reasonably believes to be an
Authorized Person; or (iii) a communication effected directly between an
electro-mechanical or electronic device or system (including, without
limitation, computers) on behalf of the Fund. Instructions in the form of oral
communications shall be confirmed by the Fund by tested telex or in writing in
the manner set forth in clause (i) above, but the lack of such confirmation
shall in no way affect any action taken by the Custodian in reliance upon such
oral Instructions prior to the Custodian's receipt of such confirmation. The
Fund authorizes the Custodian to record any and all telephonic or other oral
Instructions communicated to the Custodian.
(2) "Special Instructions", as used herein, shall mean
Instructions countersigned or confirmed in writing by the Treasurer or any
Assistant Treasurer of the Fund or any other person designated by the Treasurer
of the Fund in writing, which countersignature or confirmation shall be
included on the same instrument containing the Instructions or on a separate
instrument relating thereto.
(3) Instructions and Special Instructions shall be
delivered to the Custodian at the address and/or telephone, facsimile
transmission or telex number agreed upon from time to time by the Custodian and
the Fund.
(4) Where appropriate, Instructions and Special
Instructions shall be continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution
does not violate any of the provisions of its respective charter, articles of
incorporation, articles of association or bylaws and all required corporate
action to authorize the execution and delivery of this Agreement has been
taken.
The Fund has furnished the Custodian with copies, properly certified
or authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Certificate of Incorporation (or equivalent document)
of the Fund as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund
appointing the Custodian and approving the form of
this Agreement; and
2
<PAGE> 6
(d) The Fund's current prospectus and statements of
additional information.
The Fund shall promptly furnish the Custodian with copies of any updates,
amendments or supplements to the foregoing documents.
In addition, the Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or Trustees
and all amendments or supplements thereto, properly certified or authenticated,
designating certain officers or employees of the Fund who will have continuing
authority to certify to the Custodian: (a) the names, titles, signatures and
scope of authority of all persons authorized to give Instructions or any other
notice, request, direction, instruction, certificate or instrument on behalf of
the Fund, and (b) the names, titles and signatures of those persons authorized
to countersign or confirm Special Instructions on behalf of the Fund (in both
cases collectively, the "Authorized Persons" and individually, an "Authorized
Person"). Such Resolutions and certificates may be accepted and relied upon by
the Custodian as conclusive evidence of the facts set forth therein and shall
be considered to be in full force and effect until delivery to the Custodian of
a similar Resolution or certificate to the contrary. Upon delivery of a
certificate which deletes or does not include the name(s) of a person
previously authorized to give Instructions or to countersign or confirm Special
Instructions, such persons shall no longer be considered an Authorized Person
authorized to give Instructions or to countersign or confirm Special
Instructions. Unless the certificate specifically requires that the approval
of anyone else will first have been obtained, the Custodian will be under no
obligation to inquire into the right of the person giving such Instructions or
Special Instructions to do so. Notwithstanding any of the foregoing, no
Instructions or Special Instructions received by the Custodian from the Fund
will be deemed to authorize or permit any director, trustee, officer, employee,
or agent of the Fund to withdraw any of the Assets of the Fund upon the mere
receipt of such authorization. Special Instructions or Instructions from such
director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant to
Section 5(a).
The Bank's performance of its duties hereunder and the
day-to-day operations of the Custody Account shall be in accordance with
written service standards furnished to the Fund, care of the Fund's agent,
Fund/Plan, by the bank from time to time. Such service standards, as amended
from time to time, are incorporated herein by reference.
(a) Safekeeping.
The Custodian will keep safely the Assets of the Fund which
are delivered to it from time to time. The Custodian shall not be responsible
for any property of the Fund held or received by the Fund and not delivered to
the Custodian.
3
<PAGE> 7
The Bank shall supply to the Fund addressed care of its
agent, Fund/Plan, from time to time as mutually agreed upon a written statement
with respect to all of the Property in the Custody Account. In the event that
the Fund, acting through its agent, Fund/Plan, does not inform the Bank in
writing of any exceptions or objections within thirty (30) days after receipt
of such statement, the Fund shall be deemed to have approved such statement.
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of
the Fund either: (i) by physical possession of the share certificates or other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in
accordance with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio
Securities which have been delivered to it in physical form, by registering the
same in the name of the Fund or its nominee, or in the name of the Custodian or
its nominee, for whose actions the Fund and Custodian, respectively, shall be
fully responsible. Upon the receipt of instructions, the Custodian shall hold
such Securities in street certificate form, so called, with or without any
indication of fiduciary capacity. However, unless it receives Instructions to
the contrary, the Custodian will register all such portfolio Securities in the
name of the Custodian's authorized nominee. All such Securities shall be held
in an account of the Custodian containing only assets of the Fund or only
assets held by the Custodian as a fiduciary, provided that the records of the
Custodian shall indicate at all times the Fund or other customer for which such
Securities are held in such accounts and the respective interests therein.
(3) The Custodian may deposit and/or maintain domestic
Securities owned by the Fund in, and the Fund hereby approves use of: (a) The
Depository Trust Company; (b) The Participants Trust Company; and (c) any
book-entry system as provided in (i) Subpart 0 of Treasury Circular No. 300, 31
CFR 306.115, (ii) Subpart B of Treasury Circular Public Debt Series No. 27-76,
31 CFR 350.2, or (iii) the book-entry regulations of federal agencies
substantially in the form of 31 CFR 306.115. Upon the receipt of Special
Instructions, the Custodian may deposit and/or maintain domestic Securities
owned by the Fund in any other domestic clearing agency registered with the
Securities and Exchange Commission ("SEC") under Section 17A of the Securities
Exchange Act of 1934 (or as may otherwise be authorized by the SEC to serve in
the capacity of depository or clearing agent for the Securities or other assets
of investment companies) which acts as a Securities depository. Each of the
foregoing shall be referred to in this Agreement as a "Securities System", and
all such Securities Systems shall be listed on the attached Appendix A. Use of
a Securities System shall be in accordance with applicable Federal Reserve
Board and SEC rules and regulations, if any, and subject to the following
provisions:
(i) The Custodian may deposit the Securities directly or
through one or more agents or Subcustodians which are
also qualified to act as custodians for investment
companies.
(ii) The Custodian shall deposit and/or maintain the
Securities in a Securities System, provided that such
Securities are represented in an account ("Account")
of the Custodian in the Securities System that
includes only assets held by the Custodian as a
fiduciary, custodian or otherwise for customers.
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<PAGE> 8
(iii) The books and records of the Custodian shall at all
times identify those Securities belonging to the Fund
which are maintained in a Securities System.
(iv) The Custodian shall pay for Securities purchased for
the account of the Fund only upon (a) receipt of
advice from the Securities System that such
Securities have been transferred to the Account of
the Custodian in accordance with the rules of the
Securities System, and (b) the making of an entry on
the records of the Custodian to reflect such payment
and transfer for the account of the Fund. The
Custodian shall transfer Securities sold for the
account of the Fund only upon (a) receipt of advice
from the Securities System that payment for such
Securities has been transferred to the Account of the
Custodian in accordance with the rules of the
Securities System, and (b) the making of an entry on
the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of
all advices from the Securities System relating to
transfers of Securities for the account of the Fund
shall be maintained for the Fund by the Custodian.
The Custodian shall deliver to the Fund on the next
succeeding business day daily transaction reports
which shall include each day's transactions in the
Securities System for the account of the Fund. Such
transaction reports shall be delivered to the Fund or
any agent designated by the Fund pursuant to
Instructions, by computer or in such other manner as
the Fund and Custodian may agree.
(v) The Custodian shall, if requested by the Fund
pursuant to Instructions, provide the Fund with
reports obtained by the Custodian or any Subcustodian
with respect to a Securities System's accounting
system, internal accounting control and procedures
for safeguarding Securities deposited in the
Securities System.
(vi) Upon receipt of Special Instructions, the Custodian
shall terminate the use of any Securities System on
behalf of the Fund as promptly as practicable and
shall take all actions reasonably practicable to
safeguard the Securities of the Fund maintained with
such Securities System.
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and
except as provided in Section 3 hereof, the Custodian, upon receipt of Special
Instructions, will undertake to make free delivery of Assets, provided such
Assets are on hand and available, in connection with the Fund's transactions
and to transfer such Assets to such broker, dealer, Subcustodian, bank, agent,
Securities System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange
portfolio Securities held by it for the Fund for other Securities or cash paid
in connection with any reorganization, recapitalization, merger, consolidation,
or conversion of
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<PAGE> 9
convertible Securities, and will deposit any such Securities in accordance with
the terms of any reorganization or protective plan.
Without Instructions, the Custodian is authorized to exchange
Securities held by it in temporary form for Securities in definitive form, to
surrender Securities for transfer into a name or nominee name as permitted in
Section 4(b)(2), to effect an exchange of shares in a stock split or when the
par value of the stock is changed, to sell any fractional shares, and, upon
receiving payment therefor, to surrender bonds or other Securities held by it
at maturity or call.
(e) Purchases of Assets.
(1) Securities Purchases. In accordance with
Instructions, the Custodian shall, with respect to a purchase of Securities,
pay for such Securities out of monies held for the Fund's account for which the
purchase was made, but only insofar as monies are available therein for such
purpose, and receive the portfolio Securities so purchased. Unless the
Custodian has received Special Instructions to the contrary, such payment will
be made only upon receipt of Securities by the Custodian, a clearing
corporation of a national Securities exchange of which the Custodian is a
member, or a Securities System in accordance with the provisions of Section
4(b)(3) hereof. Notwithstanding the foregoing, upon receipt of Instructions:
(i) in connection with a repurchase agreement, the Custodian may release funds
to a Securities System prior to the receipt of advice from the Securities
System that the Securities underlying such repurchase agreement have been
transferred by book-entry into the Account maintained with such Securities
System by the Custodian, provided that the Custodian's instructions to the
Securities System require that the Securities System may make payment of such
funds to the other party to the repurchase agreement only upon transfer by
book-entry of the Securities underlying the repurchase agreement into such
Account; (ii) in the case of Interest Bearing Deposits, currency deposits, and
other deposits, foreign exchange transactions, futures contracts or options,
pursuant to Sections 4(g), 4(h), 4(l), and 4(m) hereof, the Custodian may make
payment therefor before receipt of an advice of transaction; and (iii) in the
case of Securities as to which payment for the Security and receipt of the
instrument evidencing the Security are under generally accepted trade practice
or the terms of the instrument representing the Security expected to take place
in different locations or through separate parties, such as commercial paper
which is indexed to foreign currency exchange rates, derivatives and similar
Securities, the Custodian may make payment for such Securities prior to
delivery thereof in accordance with such generally accepted trade practice or
the terms of the instrument representing such Security.
(2) Other Assets Purchased. Upon receipt of Instructions
and except as otherwise provided herein, the Custodian shall pay for and
receive other Assets for the account of the Fund as provided in Instructions.
(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions,
the Custodian will, with respect to a sale, deliver or cause to be delivered
the Securities thus designated as sold to the broker or other person specified
in the Instructions relating to such sale. Unless the Custodian has received
Special Instructions to the contrary, such delivery shall be made only upon
receipt of payment therefor in the form of: (a) cash, certified check, bank
cashier's check, bank credit, or bank wire transfer; (b) credit to the account
of the Custodian with a clearing
6
<PAGE> 10
corporation of a national Securities exchange of which the Custodian is a
member; or (c) credit to the Account of the Custodian with a Securities System,
in accordance with the provisions of Section 4(b)(3) hereof. Notwithstanding
the foregoing, Securities held in physical form may be delivered and paid for
in accordance with "street delivery customer" to a broker or its clearing
agent, against delivery to the Custodian of a receipt for such Securities,
provided that the Custodian shall have taken reasonable steps to ensure prompt
collection of the payment for, or return of, such Securities by the broker or
its clearing agent, and provided further that the Custodian shall not be
responsible for the selection of or the failure or inability to perform of such
broker or its clearing agent or for any related loss arising from delivery or
custody of such Securities prior to receiving payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and
except as otherwise provided herein, the Custodian shall receive payment for
and deliver other Assets for the account of the Fund as provided in
Instructions.
(g) Options.
(1) Upon receipt of Instructions relating to the purchase
of an option or sale of a covered call option, the Custodian shall: (a) receive
and retain confirmations or other documents, if any, evidencing the purchase or
writing of the option by the Fund; (b) if the transaction involves the sale of
a covered call option, deposit and maintain in a segregated account the
Securities (either physically or by book-entry in a Securities System) subject
to the covered call option written on behalf of the Fund; and (c) pay, release
and/or transfer such Securities, cash or other Assets in accordance with any
notices or other communications evidencing the expiration, termination or
exercise of such options which are furnished to the Custodian by the Options
Clearing Corporation (the "OCC"), the securities or options exchanges on which
such options were traded, or such other organization as may be responsible for
handling such option transactions.
(2) Upon receipt of Instructions relating to the sale of
a naked option (including stock index and commodity options), the Custodian,
the Fund and the broker-dealer shall enter into an agreement to comply with the
rules of the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and the Fund's Instructions, the
Custodian shall: (a) receive and retain confirmations or other documents, if
any, evidencing the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by book-entry in a
Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such
options were traded, or such other organization as may be responsible for
handling such option transactions. The Fund and the broker-dealer shall be
responsible for determining the quality and quantity of assets held in any
segregated account established in compliance with applicable margin maintenance
requirements and the performance of other terms of any option contract.
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into
a futures margin procedural agreement among the Fund, the Custodian and the
designated futures commission merchant (a "Procedural Agreement"). Under the
Procedural Agreement the
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<PAGE> 11
Custodian shall: (a) receive and retain confirmations, if any, evidencing the
purchase or sale of a futures contract or an option on a futures contract by
the Fund; (b) deposit and maintain in a segregated account cash, Securities
and/or other Assets designated as initial, maintenance or variation "margin"
deposits intended to secure the Fund's performance of its obligations under any
futures contracts purchased or sold, or any options on futures contracts
written by the Fund, in accordance with the provisions of any Procedural
Agreement designed to comply with the provisions of the Commodity Futures
Trading Commission and/or any commodity exchange or contract market (such as
the Chicago Board of Trade), or any similar organization(s), regarding such
margin deposits; and (c) release Assets from and/or transfer Assets into such
margin accounts only in accordance with any such Procedural Agreements. The
Fund and such futures commission merchant shall be responsible for determining
the type and amount of Assets held in the segregated account or paid to the
broker-dealer in compliance with applicable margin maintenance requirements and
the performance of any futures contract or option on a futures contract in
accordance with its terms.
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish
and maintain on its books a segregated account or accounts for and on behalf of
the Fund, into which account or accounts may be transferred Assets of the Fund,
including Securities maintained by the Custodian in a Securities System
pursuant to Paragraph (b)(3) of this Section 4, said account or accounts to be
maintained (i) for the purposes set forth in Sections 4(g), 4(h) and 4(n) and
(ii) for the purpose of compliance by the Fund with the procedures required by
the SEC Investment Company Act Release Number 10666 or any subsequent release
or releases relating to the maintenance of segregated accounts by registered
investment companies, or (iii) for such other purposes as may be set forth,
from time to time, in Special Instructions. The Custodian shall not be
responsible for the determination of the type or amount of Assets to be held in
any segregated account referred to in this paragraph, or for compliance by the
Fund with required procedures noted in (ii) above.
(j) Depositary Receipts.
Upon receipt of Instructions, the Custodian shall surrender or cause
to be surrendered Securities to the depositary used for such Securities by an
issuer of American Depositary Receipts or International Depositary Receipts
(hereinafter referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such Securities and written evidence
satisfactory to the organization surrendering the same that the depositary has
acknowledged receipt of instructions to issue ADRs with respect to such
Securities in the name of the Custodian or a nominee of the Custodian, for
delivery in accordance with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause
to be surrendered ADRs to the issuer thereof, against a written receipt
therefor adequately describing the ADRs surrendered and written evidence
satisfactory to the organization surrendering the same that the issuer of the
ADRs has acknowledged receipt of instructions to cause its depository to
deliver the Securities underlying such ADRs in accordance with such
instructions.
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<PAGE> 12
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver
warrants, puts, calls, rights or similar Securities to the issuer or trustee
thereof (or to the agent of such issuer or trustee) for the purpose of exercise
or sale, provided that the new Securities, cash or other Assets, if any,
acquired as a result of such actions are to be delivered to the Custodian; and
(b) deposit Securities upon invitations for tenders thereof, provided that the
consideration for such Securities is to be paid or delivered to the Custodian,
or the tendered Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of
security ownership, and shall notify the Fund of such action in writing by
facsimile transmission or in such other manner as the Fund and Custodian may
agree in writing.
The Fund agrees that if it gives an Instruction for the performance of
an act on the last permissible date of a period established by any optional
offer or on the last permissible date for the performance of such act, the Fund
shall hold the Bank harmless from any adverse consequences in connection with
acting upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase
interest bearing fixed term and call deposits (hereinafter referred to,
collectively, as "Interest Bearing Deposits") for the account of the Fund, the
Custodian shall purchase such Interest Bearing Deposits in the name of the Fund
with such banks or trust companies, including the Custodian, any Subcustodian
or any subsidiary or affiliate of the Custodian (hereinafter referred to as
"Banking Institutions"), and in such amounts as the Fund may direct pursuant to
Instructions. Such Interest Bearing Deposits may be denominated in U.S. Dollars
or other currencies, as the Fund may determine and direct pursuant to
Instructions. The responsibilities of the Custodian to the Fund for Interest
Bearing Deposits issued by the Custodian shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
issued by the Custodian, (a) the Custodian shall be responsible for the
collection of income and the transmission of cash to and from such accounts;
and (b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or for the failure of such Banking Institution to pay upon
demand.
(m) Foreign Exchange Transactions Other than as
Principal.
(1) Upon receipt of Instructions, the Custodian shall
settle foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery on behalf of and for the account of the
Fund with such currency brokers or Banking Institutions as the Fund may
determine and direct pursuant to Instructions. The Fund accepts full
responsibility for its use of third party foreign exchange brokers and for
execution of said foreign exchange contracts and understands that the Fund
shall be responsible for any and all costs and interest charges which may be
incurred as a result of the failure or delay of its third party broker to
deliver foreign exchange. The Custodian shall have no responsibility with
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<PAGE> 13
respect to the selection of the currency brokers or Banking Institutions with
which the Fund deals or, so long as the Custodian acts in accordance with
Instructions, for the failure of such brokers or Banking Institutions to comply
with the terms of any contract or option.
(2) Notwithstanding anything to the contrary contained
herein, upon receipt of Instructions the Custodian may, in connection with a
foreign exchange contract, make free outgoing payments of cash in the form of
U.S. Dollars or foreign currency prior to receipt of confirmation of such
foreign exchange contract or confirmation that the countervalue currency
completing such contract has been delivered or received.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from the Fund, the
Custodian will release or cause to be released Securities held in custody to
the pledgees designated in such Instructions by way of pledge or hypothecation
to secure loans incurred by the Fund with various lenders including but not
limited to United Missouri Bank, n.a.; provided, however, that the Securities
shall be released only upon payment to the Custodian of the monies borrowed,
except that in cases where additional collateral is required to secure existing
borrowings, further Securities may be released or delivered, or caused to be
released or delivered for that purpose upon receipt of Instructions. Upon
receipt of Instructions, the Custodian will pay, but only from funds available
for such purpose, any such loan upon re-delivery to it of the Securities
pledged or hypothecated therefor and upon surrender of the note or notes
evidencing such loan. In lieu of delivering collateral to a pledgee, the
Custodian, on the receipt of Instructions, shall transfer the pledged
Securities to a segregated account for the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution
of a separate Securities Lending Agreement, the Custodian will release
Securities held in custody to the borrower designated in such Instructions and
may, except as otherwise provided below, deliver such Securities prior to the
receipt of collateral, if any, for such borrowing, provided that, in case of
loans of Securities held by a Securities System that are secured by cash
collateral, the Custodian's instructions to the Securities System shall require
that the Securities System deliver the Securities of the Fund to the borrower
thereof only upon receipt of the collateral for such borrowing. The Custodian
shall have no responsibility or liability for any loss arising from the
delivery of Securities prior to the receipt of collateral. Upon receipt of
Instructions and the loaned Securities, the Custodian will release the
collateral to the borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends,
rights, and other items of like nature and, upon receipt of Instructions, take
action with respect to the same as directed in such Instructions.
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and
mechanical matters in accordance with industry standards in connection with the
sale, exchange, substitution, purchase, transfer, or other dealings with
Securities or other property of the Fund except as may be otherwise provided in
this Agreement or
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directed from time to time by Instructions from the Fund. The Custodian may
also make payments to itself or others from the Assets for disbursements and
out-of-pocket expenses incidental to handling Securities or other similar items
relating to its duties under this Agreement, provided that all such payments
shall be accounted for to the Fund.
(q) Collections.
The Custodian shall (a) collect amounts due and payable to the
Fund with respect to portfolio Securities and other Assets; (b) promptly
credit to the account of the Fund all income and other payments relating to
portfolio Securities and other Assets held by the Custodian hereunder upon
Custodian's receipt of such income or payments or as otherwise agreed in
writing by the Custodian and the Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other payments
with respect to portfolio Securities and other Assets, or in connection with
the transfer of such Securities or other Assets; provided, however, that with
respect to portfolio Securities registered in so-called street name, or
physical Securities with variable interest rates, the Custodian shall use its
best efforts to collect amounts due and payable to the Fund. The Custodian
shall notify the Fund in writing by facsimile transmission or in such other
manner as the Fund and Custodian may agree in writing if any amount payable
with respect to portfolio Securities or other Assets is not received by the
Custodian when due. The Custodian shall not be responsible for the collection
of amounts due and payable with respect to portfolio Securities or other Assets
that are in default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank
account or accounts on the books of the Custodian; provided that such bank
account(s) shall be in the name of the Custodian or a nominee thereof, for the
account of the Fund, and shall be subject only to draft or order of the
Custodian. The responsibilities of the Custodian to the Fund for deposits
accepted on the Custodian's books shall be that of a U.S. bank for a similar
deposit.
(s) Dividends, Distributions and Redemptions.
To enable the Fund to pay dividends or other distributions to
shareholders of the Fund and to make payment to shareholders who have requested
repurchase or redemption of their shares of the Fund (collectively, the
"Shares"), the Custodian shall release cash or Securities insofar as available.
In the case of cash, the Custodian shall, upon the receipt of Instructions,
transfer such funds by check or wire transfer to any account at any bank or
trust company designated by the Fund in such Instructions. In the case of
Securities, the Custodian shall, upon the receipt of Special Instructions, make
such transfer to any entity or account designated by the Fund in such Special
Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments
received for shares issued or sold from time to time by the Fund, and shall
credit such funds to the account of the Fund. The Custodian shall notify the
Fund of Custodian's receipt of cash in payment for shares issued by the Fund by
facsimile transmission or in
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<PAGE> 15
such other manner as the Fund and the Custodian shall agree. Upon receipt of
Instructions, the Custodian shall: (a) deliver all federal funds received by
the Custodian in payment for shares as may be set forth in such Instructions
and at a time agreed upon between the Custodian and the Fund; and (b) make
federal funds available to the Fund as of specified times agreed upon from time
to time by the Fund and the Custodian, in the amount of checks received in
payment for shares which are deposited to the accounts of the Fund.
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985.
The Custodian shall deliver or cause to be delivered to the
Fund all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by the Fund that are
received by the Custodian any Subcustodian, or any nominee of either of them,
and, upon receipt of Instructions, the Custodian shall execute and deliver, or
cause such Subcustodian or nominee to execute and deliver, such proxies or
other authorizations as may be required. Except as directed pursuant to
Instructions, neither the Custodian nor any Subcustodian or nominee shall vote
upon any such Securities, or execute any proxy to vote thereon, or give any
consent or take any other action with respect thereto.
The Custodian will not release the identity of the Fund to an
issuer which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct communications
between such issuer and the Fund unless the Fund directs the Custodian
otherwise in writing.
(v) Books and Records.
The Custodian shall maintain such records relating to its
activities under this Agreement as are required to be maintained by Rule 31a-1
under the Investment Company Act of 1940 ("the 1940 Act") and to preserve them
for the periods prescribed in Rule 31a-2 under the 1940 Act. These records
shall be open for inspection by duly authorized officers, employees or agents
(including independent public accountants) of the Fund during normal business
hours of the Custodian.
The Custodian shall provide accountings relating to its
activities under this Agreement as shall be agreed upon by the Fund and the
Custodian.
(w) Opinion of Fund's Independent Certified Public
Accountants.
The Custodian shall take all reasonable action as the Fund may
request to obtain from year to year favorable opinions from the Fund's
independent certified public accountants with respect to the Custodian's
activities hereunder and in connection with the preparation of the Fund's
periodic reports to the SEC and with respect to any other requirements of the
SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of the Fund, the Custodian shall deliver to the
Fund a written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, Securities
and other
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Assets, including cash, Securities and other Assets deposited and/or maintained
in a Securities System or with a Subcustodian. Such report shall be of
sufficient scope and in sufficient detail as may reasonably be required by the
Fund and as may reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or
cause to be paid, all bills, statements, or other obligations of the Fund.
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions
of this Agreement, the Custodian may appoint one or more Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians, or Interim
Subcustodians (as each are hereinafter defined) to act on behalf of the Fund.
A Domestic Subcustodian, in accordance with the provisions of this
Agreement, may also appoint a Foreign Subcustodian, Special Subcustodian, or
Interim Subcustodian to act on behalf of the Fund. For purposes of this
Agreement, all Domestic Subcustodians, Foreign Subcustodians, Special
Subcustodians and Interim Subcustodians shall be referred to collectively as
"Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint
any bank as defined in Section 2(a)(5) of the 1940 Act or any trust company or
other entity, any of which meet the requirements of a custodian under Section
17(f) of the 1940 Act and the rules and regulations thereunder, to act for the
Custodian on behalf of the Fund as a subcustodian for purposes of holding
Assets of the Fund and performing other functions of the Custodian within the
United States (a "Domestic Subcustodian"). The Fund shall approve in writing
the appointment of the proposed Domestic Subcustodian; and the Custodian's
appointment of any such Domestic Subcustodian shall not be effective without
such prior written approval of the Fund. Each such duly approved Domestic
Subcustodian shall be listed on Appendix A attached hereto, as it may be
amended, from time to time.
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic
Subcustodian to appoint, any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under Section 17(f) of the 1940
Act and the rules and regulations thereunder to act for the Custodian on behalf
of the Fund as a subcustodian or sub-subcustodian (if appointed by a Domestic
Subcustodian) for purposes of holding Assets of the Fund and performing other
functions of the Custodian in countries other than the United States of America
(hereinafter referred to as a "Foreign Subcustodian" in the context of either a
subcustodian or a sub-subcustodian); provided that the Custodian shall have
obtained written confirmation from the Fund of the approval of the Board of
Directors or other governing body of the Fund (which approval may be withheld
in the sole discretion of such Board of Directors or other governing body or
entity) with respect to (i) the identity of any proposed Foreign Subcustodian
(including branch designation), (ii) the country or countries in which, and the
securities depositories or clearing agencies (hereinafter "Securities
Depositories and Clearing Agencies"), if any,
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<PAGE> 17
through which, the Custodian or any proposed Foreign Subcustodian is authorized
to hold Securities and other Assets of the Fund, and (iii) the form and terms
of the subcustodian agreement to be entered into with such proposed Foreign
Subcustodian. Each such duly approved Foreign Subcustodian and the countries
where and the securities Depositories and Clearing Agencies through which they
may hold Securities and other Assets of the Fund shall be listed on Appendix A
attached hereto, as it my be amended, from time to time. The Fund shall be
responsible for informing the Custodian sufficiently in advance of a proposed
investment which is to be held in a country in which no Foreign Subcustodian is
authorized to act, in order that there shall be sufficient time for the
Custodian, or any Domestic Subcustodian, to effect the appropriate arrangements
with a proposed Foreign Subcustodian, including obtaining approval as provided
in this Section 5(b). In connection with the appointment of any Foreign
Subcustodian, the Custodian shall, or shall cause the Domestic Subcustodian to,
enter into a subcustodian agreement with the Foreign Subcustodian in form and
substance approved by the Fund. The Custodian shall not consent to the
amendment of, and shall cause any Domestic Subcustodian not to consent to the
amendment of, any agreement entered into with a Foreign Subcustodian, which
materially affects the Fund's rights under such agreement, except upon prior
written approval of the Fund pursuant to Special Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that the Fund
shall invest in an Asset to be held in a country in which no Foreign
Subcustodian is authorized to act, the Custodian shall notify the Fund in
writing by facsimile transmission or in such other manner as the Fund and
Custodian shall agree in writing of the unavailability of an approved Foreign
Subcustodian in such country; and upon the receipt of Special Instructions from
the Fund, the Custodian shall, or shall cause its Domestic Subcustodian to,
appoint or approve an entity (referred to herein as an "Interim Subcustodian")
designated in such Special Instructions to hold such Security or other Asset.
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall, on
behalf of the Fund, appoint one or more banks, trust companies or other
entities designated in such Special Instructions to act for the Custodian on
behalf of the Fund as a subcustodian for purposes of: (i) effecting third-party
repurchase transactions with banks, brokers, dealers or other entities through
the use of a common custodian or subcustodian; (ii) providing depository and
clearing agency services with respect to certain variable rate demand note
Securities, (iii) providing depository and clearing agency services with
respect to dollar denominated Securities, and (iv) effecting any other
transactions designated by the Fund in such Special Instructions. Each such
designated subcustodian (hereinafter referred to as a "Special Subcustodian")
shall be listed on Appendix A attached hereto, as it may be amended from time
to time. In connection with the appointment of any Special Subcustodian, the
Custodian shall enter into a subcustodian agreement with the Special
Subcustodian in form and substance approved by the Fund in Special
Instructions. The Custodian shall not amend any subcustodian agreement entered
into with a Special Subcustodian, or waive any rights under such agreement,
except upon prior approval pursuant to Special Instructions.
14
<PAGE> 18
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon
notification to the Fund, terminate any Subcustodian of the Fund in accordance
with the termination provisions under the applicable subcustodian agreement,
and upon the receipt of Special Instructions, the Custodian will terminate any
Subcustodian in accordance with the termination provisions under the applicable
subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of the Fund, the Custodian shall deliver to the Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then acting
on behalf of the Custodian; (ii) the countries in which and the Securities
Depositories and Clearing Agencies through which each such Foreign Subcustodian
is then holding cash, Securities and other Assets of the Fund; and (iii) such
other information as may be requested by the Fund, and as the Custodian shall
be reasonably able to obtain, to evidence compliance with rules and regulations
under the 1940 Act.
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to the Fund for all losses,
damages and reasonable costs and expenses suffered or incurred by the Fund
resulting from the gross negligence or willful misfeasance of the Custodian;
provided, however, in no event shall the Custodian be liable for special,
indirect or consequential damages arising under or in connection with this
Agreement.
(b) Actions Prohibited by Applicable Law, Events Beyond
Custodian's Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian
incur liability hereunder if the Custodian or any Subcustodian or Securities
System, or any subcustodian, Securities System, Securities Depository or
Clearing Agency utilized by the Custodian or any such Subcustodian, or any
nominee of the Custodian or any Subcustodian (individually, a "Person") is
prevented, forbidden or delayed from performing, or omits to perform, any act
or thing which this Agreement provides shall be performed or omitted to be
performed, by reason of: (i) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
of any foreign country, or political subdivision thereof or of any court of
competent jurisdiction (and neither the Custodian nor any other Person shall be
obligated to take any action contrary thereto); or (ii) any event beyond the
control of the Custodian or other Person such as armed conflict, riots,
strikes, lockouts, labor disputes, equipment or transmission failures, natural
disasters, or failure of the mails, transportation, communications or power
supply; or (iii) any "Sovereign Risk." A "Sovereign Risk" shall mean
nationalization, expropriation, devaluation, revaluation, confiscation,
seizure, cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, taxes, levies or other charges affecting the Fund's Assets;
or acts of armed conflict, terrorism, insurrection or revolution; or any other
act or event beyond the Custodian's or such other Person's control.
15
<PAGE> 19
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall
have any liability in respect of any loss, damage or expense suffered by the
Fund, insofar as such loss, damage or expense arises from the performance of
the Custodian or any Domestic Subcustodian in reliance upon records that were
maintained for the Fund by entities other than the Custodian or any Domestic
Subcustodian prior to the Custodian's employment hereunder.
(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall be entitled
to receive and act upon advice of counsel of its own choosing on all matters.
The Custodian and all Domestic Subcustodians shall be without liability for any
actions taken or omitted in good faith pursuant to the advice of counsel.
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the
advice of the Fund and upon statements of the Fund's accountants and other
persons believed by it in good faith to be expert in matters upon which they
are consulted, and neither the Custodian nor any Domestic Subcustodian shall be
liable for any actions taken or omitted, in good faith, pursuant to such advice
or statements.
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully
protected and indemnified in acting as a custodian hereunder upon any
Resolutions of the Board of Directors or Trustees, Instructions, Special
Instructions, advice, notice, request, consent, certificate, instrument or paper
appearing to it to be genuine and to have been properly executed and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained from the Fund
hereunder a certificate signed by any officer of the Fund authorized to
countersign or confirm Special Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions
hereof, neither the Custodian nor any Domestic Subcustodian shall be under any
duty or obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased
by or for the Fund, the legality of the purchase
thereof or evidence of ownership required to be
received by the Fund, or the propriety of the
decision to purchase or amount paid therefor;
(ii) the legality of the sale of any securities by or for
the Fund, or the propriety of the amount for which
the same were sold; or
(iii) any other expenditures, encumbrances of Securities,
borrowings or similar actions with respect to the
Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any
16
<PAGE> 20
provisions of the Fund's Declaration of Trust, Partnership Agreement, Articles
of Incorporation or By-Laws or votes or proceedings of the shareholders,
trustees, partners or directors of the Fund, or the Fund's currently effective
Registration Statement on file with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of
any Domestic Subcustodian to the same extent as if such actions or omissions
were performed by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign
Subcustodians.
The Custodian shall be liable to the Fund for any loss or
damage to the Fund caused by or resulting from the acts or omissions of any
Foreign Subcustodian to the extent that, under the terms set forth in the
subcustodian agreement between the Custodian or a Domestic Subcustodian and
such Foreign Subcustodian, the Foreign Subcustodian has failed to perform in
accordance with the standard of conduct imposed under such subcustodian
agreement and the Custodian or Domestic Subcustodian recovers from the Foreign
Subcustodian under the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special
Subcustodians, Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to the Fund for any loss,
damage or expense suffered or incurred by the Fund resulting from or occasioned
by the actions or omissions of a Securities System, Interim Subcustodian,
Special Subcustodian, or Securities Depository and Clearing Agency unless such
loss, damage or expense is caused by, or results from, the gross negligence or
willful misfeasance of the Custodian.
(d) Defaults or Insolvencies of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or
expense suffered or incurred by the Fund resulting from or occasioned by the
actions, omissions, neglects, defaults or insolvency of any broker, bank, trust
company or any other person with whom the Custodian may deal (other than any of
such entities acting as a Subcustodian, Securities System or Securities
Depository and Clearing Agency, for whose actions the liability of the
Custodian is set out elsewhere in this Agreement) unless such loss, damage or
expense is caused by, or results from, the gross negligence or willful
misfeasance of the Custodian.
(e) Reimbursement of Expenses.
The Fund agrees to reimburse the Custodian for all
out-of-pocket expenses incurred by the Custodian in connection with this
Agreement, but excluding salaries and usual overhead expenses.
17
<PAGE> 21
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, the
Fund agrees to indemnify and hold harmless the Custodian and its nominees from
all losse, damages and expenses (including attorneys' fees) suffered or
incurred by the Custodian or its nominee caused by or arising from actions
taken by the Custodian, its employees or agents in the performance of its
duties and obligations under this Agreement, including, but not limited to, any
indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent the Custodian is liable under Sections 6 or 7 hereof.
If the Fund requires the Custodian to take any action with
respect to Securities, which action involves the payment of money or which may,
in the opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in
addition to the obligations provided in Sections 6 and 7, the Custodian agrees
to indemnify and hold harmless the Fund from all losses, damages and expenses
suffered or incurred by the Fund caused by the gross negligence or willful
misfeasance of the Custodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or
any Subcustodian, Securities System, or Securities Depository or Clearing
Agency acting either directly or indirectly under agreement with the Custodian
(each of which for purposes of this Section 9 shall be referred to as
"Custodian"), makes any payment or transfer of funds on behalf of the Fund as
to which there would be, at the close of business on the date of such payment
or transfer, insufficient funds held by the Custodian on behalf of the Fund,
the Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to the Fund in an amount sufficient to allow the completion
of the transaction by reason of which such payment or transfer of funds is to
be made. In addition, in the event the Custodian is directed by Instructions
to make any payment or transfer of funds on behalf of the Fund as to which it
is subsequently determined that the Fund has overdrawn its cash account with
the Custodian as of the close of business on the date of such payment or
transfer, said overdraft shall constitute an Advance. Any Advance shall be
payable by the Fund on demand by Custodian, unless otherwise agreed by the Fund
and the Custodian, and shall accrue interest from the date of the Advance to
the date of payment by the Fund to the Custodian at a rate agreed upon in
writing from time to time by the Custodian and the Fund. It is understood that
any transaction in respect of which the Custodian shall have made an Advance,
including but not limited to a foreign exchange contract or transaction in
respect of which the Custodian is not acting as a principal, is for the account
of and at the risk of the Fund, and not, by reason of such Advance, deemed to
be a transaction undertaken by the Custodian for its own account and risk. The
Custodian and the Fund acknowledge
18
<PAGE> 22
that the purpose of Advances is to finance temporarily the purchase or sale of
Securities for prompt delivery in accordance with the settlement terms of such
transactions or to meet emergency expenses not reasonably foreseeable by the
Fund. The Custodian shall promptly notify the Fund of any Advance. Such
notification shall be sent by facsimile transmission or in such other manner as
the Fund and the Custodian may agree.
10. LIENS.
The Bank shall have a lien on the Property in the Custody
Account to secure payment of fees and expenses for the services rendered under
this Agreement. If the Bank advances cash or securities to the Fund for any
purpose or in the event that the Bank or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of its duties hereunder, except such as may arise from its
or its nominee's negligent action, negligent failure to act or willful
misconduct, any Property at any time held for the Custody Account shall be
security therefor and the Fund hereby grants a security interest therein to the
Bank. The Fund shall promptly reimburse the Bank for any such advance of cash
or securities or any such taxes, charges, expenses, assessments, claims or
liabilities upon request for payment, but should the Fund fail to so reimburse
the Bank, the Bank shall be entitled to dispose of such Property to the extent
necessary to obtain reimbursement. The Bank shall be entitled to debit any
account of the Fund with the Bank including, without limitation, the Custody
Account, in connection with any such advance and any interest on such advance
as the Bank deems reasonable.
11. COMPENSATION.
Payment for the Bank's compensation for services rendered
hereunder shall be the responsibility of the Fund. The Fund represents that by
separate agreement it has appointed Fund/Plan as its agent, and that Fund/Plan,
as agent for the Fund, has agreed to pay the compensation payable in respect of
such services promptly upon receipt of statements therefore. The Fund shall
pay to Fund/Plan fees for services (including the Bank's custodian services) in
accordance with the terms of an agreement between Fund/Plan and the Fund. The
Fund hereby directs the Bank to (i) send all statements for compensation to its
attention care of Fund/Plan at the following address: Fund/Plan Services, Inc.,
2 W. Elm Street, Conshohocken, PA 19428, Attention: Mr. Elmer Gardner, Senior
Vice President, and (ii) accept all payments made by Fund/Plan in the Fund's
name as if such payments were made directly by the Fund. The Custodian's
compensation for services rendered hereunder is set forth in an agreement
between the Bank and Fund/Plan. Should Fun/Plan fail to pay or remit such
compensation to the Bank, the Bank will be entitled to debit the Custody
Account directly for such compensation. In the absence of sufficient cash in
the Custody Account to cover compensation, the Fund shall promptly pay the bank
for the unpaid compensation due hereunder. In the absence of prompt payments
for the Fund of the unpaid compensation, the Bank shall be entitled to
exercise, in addition to all other rights existing in law or equity, the rights
set forth in Section 10 hereof.
12. POWERS OF ATTORNEY.
Upon request, the Fund shall deliver to the Custodian such
proxies, powers of attorney or other instruments as may be reasonable and
necessary or desirable in connection with the performance by the Custodian or
any Subcustodian of
19
<PAGE> 23
their respective obligations under this Agreement or any applicable
subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
The Fund or the Custodian may terminate this Agreement by
notice in writing, delivered or mailed, postage prepaid (certified mail, return
receipt requested) to the other not less than 90 days prior to the date upon
which such termination shall take effect. Upon termination of this Agreement,
the Fund shall pay to the Custodian such fees as may be due the Custodian
hereunder as well as its reimbursable disbursements, costs and expenses paid or
incurred. Upon termination of this Agreement, the Custodian shall deliver, at
the terminating party's expense, all Assets held by it hereunder to the Fund or
as otherwise designated by the Fund by Special Instructions. Upon such
delivery, the Custodian shall have no further obligations or liabilities under
this Agreement except as to the final resolution of matters relating to
activity occurring prior to the effective date of termination.
This Agreement may not be assigned by the Custodian or the
Fund without the respective consent of the other, duly authorized by a
resolution by its Board of Directors or Trustees.
14. NOTICES.
Notices, requests, instructions and other writings delivered
to the Fund at 226 Walnut St., Philadelphia, PA 19106, postage prepaid, or to
such other address as the Fund may have designated to the Custodian in writing,
shall be deemed to have been properly delivered or given to the Fund.
The Fund shall give prior notice to the Bank of any change in
its place of incorporation or organization, mailing address, or sponsors, any
significant change in management, investment objectives, fees or redemption
rights and any change to the appointment of Fund/Plan as its agent.
Notices, requests, instructions and other writings delivered
to the Securities Administration Department of the Custodian at its office at
928 Grand Avenue, Kansas City, Missouri, or mailed postage prepaid, to the
Custodian's Securities Administration Department, Post Office Box 226, Kansas
City, Missouri 64141, or to such other addresses as the Custodian may have
designated to the Fund in writing, shall be deemed to have been properly
delivered or given to the Custodian hereunder; provided, however, that
procedures for the delivery of Instructions and Special Instructions shall be
governed by Section 2(c) hereof.
15. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State
of Missouri and shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement
shall be binding upon, and inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended,
modified or waived, in any manner except in writing, properly executed by both
parties hereto; provided,
20
<PAGE> 24
however, Appendix A may be amended from time to time as Domestic Subcustodians
Foreign Subcustodians, Special Subcustodians, and Securities Depositories and
Clearing Agencies are approved or terminated according to the terms of this
Agreement.
(d) The captions in this Agreement are included for
convenience of reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(e) This Agreement shall be effective as of the date of
execution hereof.
(f) This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(g) The following terms are defined terms within the
meaning of this Agreement, and the definitions thereof are found in the
following sections of the Agreement:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2
Authorized Person 3
Banking Institution 4(l)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(l)
Liability 10
OCC 4(g)(2)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2
Securities Depositories and 5(b)
Clearing Agencies
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2
Special Subcustodian 5(c)
Subcustodian 5
1940 Act 4(v)
</TABLE>
(h) If any part, term or provision of this Agreement is
held to be illegal, in conflict with any law or otherwise invalid by any court
of competent jurisdiction, the remaining portion or portions shall be
considered severable and shall not be affected, and the rights and obligations
of the parties shall be
21
<PAGE> 25
construed and enforced as if this Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding
and agreement of the parties hereto with respect to the subject matter hereof,
and accordingly supersedes, as of the effective date of this Agreement, any
custodian agreement heretofore in effect between the Fund and the Custodian.
IN WITNESS WHEREOF, the parties hereto have caused this Custody
Agreement to be executed by their duly respective authorized officers.
UMB BANK N.A.
-----------------------------
By: By: /s/ PATRICIA. A. PETERSON
-------------------------- ---------------------------
Title: Title: SENIOR VICE PRESIDENT
----------------------- -----------------------
[FUND] THE FINANCE COMPANY OF PENNSYLVANIA
By: [SIG]
------------------------------
Title: President
---------------------------
22
<PAGE> 26
APPENDIX A
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
Brown Brothers Harriman & Company (Foreign Securities Only)
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant's Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS AND CLEARING AGENCIES
--------- --------------------- ---------------------
Euroclear
<TABLE>
<S> <C>
THE FINANCE COMPANY OF PENNSYLVANIA UMB Bank, n.a.
- -----------------------------------
By: [SIG] By: /s/ PATRICIA A. PETERSON
----------------------------- --------------------------
Title: PRESIDENT Title: SENIOR VICE PRESIDENT
------------------------- -----------------------
Date: 10-24-94
---------------------------
</TABLE>
23
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 17,510,357
<INVESTMENTS-AT-VALUE> 44,229,881
<RECEIVABLES> 0
<ASSETS-OTHER> 3,150
<OTHER-ITEMS-ASSETS> 276,284
<TOTAL-ASSETS> 44,509,315
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,802,419
<TOTAL-LIABILITIES> 1,802,419
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 57,955
<SHARES-COMMON-PRIOR> 59,242
<ACCUMULATED-NII-CURRENT> (269,069)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 26,719,524
<NET-ASSETS> 42,706,896
<DIVIDEND-INCOME> 1,416,349
<INTEREST-INCOME> 386,659
<OTHER-INCOME> 0
<EXPENSES-NET> 347,302
<NET-INVESTMENT-INCOME> 1,455,706
<REALIZED-GAINS-CURRENT> 1,559,359
<APPREC-INCREASE-CURRENT> 8,942,162
<NET-CHANGE-FROM-OPS> 11,457,850
<EQUALIZATION> (888,570)
<DISTRIBUTIONS-OF-INCOME> 1,555,512
<DISTRIBUTIONS-OF-GAINS> 499,377
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 1,287
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,013,768
<ACCUMULATED-NII-PRIOR> (268,602)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 88,647
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 347,302
<AVERAGE-NET-ASSETS> 38,710,000
<PER-SHARE-NAV-BEGIN> 568.74
<PER-SHARE-NII> 24.80
<PER-SHARE-GAIN-APPREC> 170.09
<PER-SHARE-DIVIDEND> 26.73
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 736.90
<EXPENSE-RATIO> 0.009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
