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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23
File No. 811-1144
THE FINANCE COMPANY OF PENNSYLVANIA
226 Walnut Street
Philadelphia, Pennsylvania 19106
215-351-4778
Mr. Charles E. Mather III, President
226 Walnut Street
Philadelphia, Pennsylvania 19106
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THE FINANCE COMPANY OF PENNSYLVANIA
CONTENTS OF FORM N-1A
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PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Front and Back Cover Pages 1
Item 2. Risk/Return Summary: Investments, Risks and Performance 1
Item 3. Risk/Return Summary: Fee Table 1
Item 4. Investment Objectives, Principal Investment Strategies and
Related Risks 1
Item 5. Management's Discussion of Fund Performance 2
Item 6. Management, Organization and Capital Structure 2
Item 7. Shareholder Information 3
Item 8. Distribution Arrangements 3
Item 9. Financial Highlights Information 3
PART B INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Item 10. Cover Page and Table of Contents 4
Item 11. Fund History 5
Item 12. Description of the Fund and Its Investments and Risks 5
Item 13. Management of the Fund 8
Item 14. Control Persons and Principal Holders of Securities 9
Item 15. Investment Advisory and Other Services 10
Item 16. Brokerage Allocation and Other Practices 11
Item 17. Capital Stock and Other Securities 12
Item 18. Purchase, Redemption, and Pricing of Shares 12
Item 19. Taxation of the Fund 13
Item 20. Underwriters 13
Item 21. Calculation of Performance Data 13
Item 22. Financial Statements 14
PART C OTHER INFORMATION
Item 23. Exhibits 27
Item 24. Persons Controlled by or Under Common Control with
the Fund 27
Item 25. Indemnification 27
Item 26. Business and Other Connections of the Investment Adviser 28
Item 27. Principal Underwriters 28
Item 28. Location of Accounts and Records 28
Item 29. Management Services 28
Item 30. Undertakings 28
SIGNATURES
EXHIBIT INDEX
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THE FINANCE COMPANY OF PENNSYLVANIA
FORM N-1A
The Finance Company of Pennsylvania (the "Company") does not sell its shares and
thus, does not prepare a prospectus. 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.
PART A
Item 1. Front and Back Cover Pages - NOT REQUIRED
Item 2. Risk/Return Summary: Investments, Risks and Performance - NOT REQUIRED
Item 3. Risk/Return Summary: Fee Table - NOT REQUIRED
Item 4. Investment Objectives, Principal Investment Strategies and Related
Risks
The business purposes of the Company, as set forth in its Articles of
Incorporation, 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 (as in effect on December 29, 1961). The
Company's investment objective in carrying out its business as an
investment company is to seek long-term appreciation of its
shareholders' capital. Further reference is made to Item 12 of Part B
of this Registration Statement for a description of its investment
policies.
The authority to make, alter, amend or repeal these objectives is
vested in the Board of Directors, subject to the power of the
stockholders to approve such action. Item 12 of Part B identifies the
investment policies of the Company which require stockholder approval
to change.
The Board of Directors of the Company oversees the investment of its
assets in order to preserve capital and produce income for the
stockholders. The Board utilizes the services of Cooke & Bieler, Inc.
to assist with the investment of a portion of its equity holdings. The
Board does not rely on Cooke & Bieler with respect to several of the
Company's holdings - PNC Bank Corp., Penn Virginia Corporation and
Pennsylvania Warehousing and Safe Deposit Company, the international
and small cap mutual funds in which the Company invests and the money
market funds, Treasury Notes and other short term investments used for
the Company's liquidity needs, such as redemptions, dividends and
taxes. Cooke & Bieler's style can be characterized as value oriented,
and thus the overall
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approach of the Company to its portfolio may also be characterized as a
value style. The Company does not engage in active trading; on the
contrary, it makes a value judgment on the worth of an organization and
tends to hold the security for a long term. The Board considers its
investment approach to be conservative, and thus the risks are those
risks generally applicable to the equity markets. It has limited (under
10% in the aggregate) exposure to international securities and small
cap securities which may involve more risks than the broad market.
Also, as explained in Item 12 of Part B, it has had a significant
portion invested in PNC Bank Corp. and thus is subject to the risks
inherent in investing in banking institutions and having a significant
portion (approximately 39%) of assets committed to one security.
Item 5. Management's Discussion of Fund Performance - NOT REQUIRED
Item 6. Management, Organization and Capital Structure
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, 19103. Cooke & Bieler is retained to furnish reports,
statistical and research services, and advise and make recommendations
with respect to the Company's portfolio of securities and investments.
Cooke & Bieler is paid an annual fee equal to .5% of monthly portfolio
value less the value of certain investments as to which it has no
investment responsibility.
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 1998 were $440,819 or .74% of
average net assets.
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
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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. Shareholder Information
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. Shares are generally redeemed for
cash, but under certain circumstances may be redeemed in kind.
Item 8. Distribution Arrangements
a) Sales Loads - None.
b) Rule 12b-1 Fees - None.
c) Multiple Class and Master-Feeder Funds - Not applicable.
Item 9. Financial Highlights Information - NOT REQUIRED.
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PART B
FINANCE COMPANY OF PENNSYLVANIA
STATEMENT OF ADDITIONAL INFORMATION
April 28, 1999
The Finance Company of Pennsylvania (the "Company") does not sell its shares and
thus, does not prepare a prospectus. This Statement of Additional Information is
not a Prospectus. It should be read in conjunction with Part A of this
Registration Statement. Copies of the Registration Statement may be obtained by
writing to The Finance Company of Pennsylvania, 226 Walnut Street, Philadelphia,
Pennsylvania 19106.
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Table of Contents Page
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Fund History 5
Description of the Fund and Its Investment and Risks 5
Management of the Fund 8
Control Persons and Principal Holders of Securities 9
Investment Advisory and Other Services 10
Brokerage Allocation and Other Practices 11
Capital Stock and Other Securities 12
Purchase, Redemption and Pricing of Shares 12
Taxation of the Fund 13
Underwriters 13
Calculation of Performance Data 13
Financial Statements 14
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Item 11. Fund History
The Company was organized as a corporation by a special act of
the General Assembly of the Commonwealth of Pennsylvania,
approved May 12, 1871.
The Company, 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. Until
December 29, 1961, it was engaged in the business of banking;
it also held certain investments and parcels of real estate.
On December 29, 1961, it filed Articles of Amendment with the
Bureau of Corporations, Commonwealth of Pennsylvania, amending
its charter to permit it to act as an open-end 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 was no longer
engaged in the banking business.
Item 12. Description of the Fund and Its Investments and Risks
(a) Classification. The Company is a nondiversified,
open-end investment company.
(b) Investment Strategies and Risks. None except as
described in Item 4.
(c) 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 Company:
i) The issuance of senior securities: the
Company has not issued any senior
securities, and it does not propose to issue
any senior securities.
ii) The borrowing of money: the Company has not
borrowed money, and it does not propose to
borrow money.
iii) The underwriting of securities of other
issuers: the Company has not underwritten
securities of other issuers, and it does not
propose to underwrite securities of other
issuers.
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iv) The concentration of investments in particular
industries: Consistent with its policy to diversify
its investments among various industries, the Company
will nonetheless concentrate its investments in the
banking industry. The Company has held shares of PNC
Bank Corp. for many years but has no intention of
increasing the number of shares it owns. Because of
the growth in the market value of its PNC Bank
stock relative to the market value of its other
holdings, PNC Bank represented as of the end of its
most recent year more than 25% of the assets in its
portfolio. On this basis alone, the Company may be
deemed to be concentrating in the banking industry.
The Company may determine that attractive
opportunities exist to purchase securities in other
banking organizations. In no event, however, will the
Company invest more than 50% of its assets at any
time in the banking industry.
v) The purchase and sale of real estate or commodities:
the Company has neither purchased nor sold
commodities, commodity contracts or real estate, nor
does it propose to do so in the future.
vi) Making loans: The Company does not make loans.
vii) Other Policies: The Company 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 the Company 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 the Company 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.
The Company may write call options on securities it
owns, up to 5% of its total assets. A call option on
a security gives the purchaser of the option the
right to buy, and the writer of the option the
obligation to sell, the underlying security at any
time during the option period. The premium paid to
the writer is the consideration for undertaking the
obligations under the option contract. The initial
purchase (sale) of an option contract is an "opening
transaction." In order to close out an option
position, the Company may enter into a "closing
transaction," which is simply the sale (purchase) of
an option contract on the same security with
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the same exercise price and expiration date as the
option contract originally opened. If the Company is
unable to effect a closing transaction with respect
to an option it has written, it will not be able to
sell the underlying security until the option expires
or the Company delivers the security upon exercise.
The Company may write covered call options as a means
of increasing the yield on its assets and as a means
of providing limited protection against decreases in
its market value. When the Company sells an option,
if the underlying securities do not increase or
decrease to a price level that would make the
exercise of the option profitable to the holder
thereof, the option generally will expire without
being exercised, and the Company will realize as
profit the premium received for such option. When a
call option written by the Company is exercised, the
Company will be required to sell the underlying
securities to the option holder at the strike price,
and will not participate in any increase in the price
of such securities above the strike price.
Except as described above as to covered call options,
the Company will not write or purchase options,
including puts, calls, straddles, spreads or any
combination thereof. Nor will the Company purchase or
sell commodities, commodity contracts, oil, gas or
mineral exploration or development programs, or real
estate (although investments in marketable securities
or companies engaged in such activities are not
precluded in this restriction).
The Company 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.
The Company may invest no more than 25% of its assets
in the securities of any one issuer, based on a
valuation of its assets at the time of any investment
in such securities.
It is not the policy of the Company to invest in
companies for the purpose of exercising control or
management.
The Company reserves the right to invest in
securities of other investment companies if deemed
advisable by its Board of Directors, within the
limits prescribed by the Investment Company Act of
1940.
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(d) Temporary Defensive Position. The Board has no
policy with respect to taking temporary defensive
positions that are inconsistent with the
Company's principal investment strategies as
described in Item 4.
(e) Portfolio Turnover. The Company has no
restrictions upon portfolio turnover of its
investments. However, it is not the Company'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.
Item 13. Management of the Fund
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.
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Name and Year
First Became Director Principal Occupation
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Charles E. Mather, III* (1981) President of the Company; he is President
and Director of Mather & Co. (insurance
brokers), with which he has been associated
for more than five years; President of
Philadelphia Belt Line Railroad Co.; Director
of Christiana Bank & Trust Company, Greenville,
DE and Addison Capital Shares, Inc., an
investment company. He is 64 years old.
Frank A. Wood, Jr.* (1975) Secretary/Treasurer of the Company; retired as
Vice President, 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. He is 78
years old.
Jonathan D. Scott (1990) Senior Vice President, PNC Bank Corp., with
which he has been associated since June 1985;
he is also a Director of the Pennsylvania
Warehousing and Safe Deposit Company. He is
46 years old.
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Name and Year
First Became Director Principal Occupation
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Herbert S. Riband, Jr. (1994) Of counsel to the Law firm Saul, Ewing, Remick &
Saul since 1971. He is 62 years old.
Shaun F. O'Malley (1996) Chairman Emeritus Price Waterhouse LLP;
retired June 30, 1995 as Chairman of Price
Waterhouse World Organization and U.S. Firm,
with which he had been associated for more
than five years; Director of The Philadelphia
Contributionship, Horace Mann Educators Corp.,
Vlasic Foods International, Coty, Inc. and Regulus
Group LLC. He is 63 years old.
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The Company pays each Director who is not a salaried officer an annual
fee and a fee for each meeting of the Board and each meeting of the
Executive Committee and Audit Committee actually attended. Aggregate
remuneration for all officers and directors as a group (7 persons)
during the year was $157,975, including $46,575 paid to directors who
were not salaried officers of the Company. The Company rented office
space from Mr. Mather's employer, Mather & Co., for an annual rent of
$5,400. The Board, with Mr. Mather abstaining, approved such rental
payments as being in the Company's best interests.
The aggregate compensation paid by the Company to each of its directors
for the fiscal year ended December 31, 1998 is set forth in the table
below. None of the Company's directors is a director of any other
investment company in a "fund complex" with the Company (that is, an
investment company that receives investment advisory services from the
Company's investment adviser or any affiliated person of the Company's
investment adviser).
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Name Aggregate Compensation from the Company
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Charles E, Mather, III $ 0 1/
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Frank A. Wood, Jr. $11,350
Jonathan D. Scott $11,325 2/
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Herbert S. Riband, Jr. $11,950
Shaun F. O'Malley $11,950
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1/ Mr. Mather receives no compensation for serving as director of
the Company. Mr. Mather's salary for serving as President of
the Company was less than $60,000 for the fiscal year ended
December 31, 1998.
2/ Mr. Scott's compensation is paid to his employer.
Item 14. Control Persons and Principal Holders of Securities
As of February 5, 1999, the following stockholders were
beneficial owners, having voting and investment power, or
sharing voting and investment power, of more than 5% of the
capital stock of the Company.
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TITLE OF NAME AND ADDRESS OF BENEFICIAL OWNER NO. OF PERCENT OF
CLASS SHARES CLASS
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Common PNC Bank, sole trustee of various trusts, P.O. Box 7648, 29,426 52.81%
Philadelphia, PA 19101
Common PNC Bank, as co-trustee, custodian or adviser/agent of other 9,363 16.81%
accounts, P. O. Box 7648, Philadelphia, PA 19101
Common Mellon Bank, sole trustee of various trusts, P. O. Box 926, 3,938 7.07%
Pittsburgh, PA 15230
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While PNC Bank has the power to vote over 25% of the Company's
outstanding shares and this falls within the definition of
"control person," it may exercise the voting power only as a
fiduciary to the many individual trusts of which it is trustee
or co-trustee. Accordingly, the Company does not believe PNC
Bank is actually a controlling person.
Management Ownership. The aggregate amount of shares owned by
the officers and directors of the Company is less than 1%.
Item 15. Investment Advisory and Other 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 is not a
broker and therefore the Investment Advisory Contract provides
that, with the approval of the Company's management, Cooke &
Bieler 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.
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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
$100,026, $119,670 and $123,293.
Item 16. Brokerage Allocation and Other Practices
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 1996, 1997 and 1998 amounts to $7,275,
$12,836 and $11,586 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 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. For the years 1996, 1997 and 1998, the
Company paid aggregate brokerage commissions of $7,275,
$12,836 and $11,586.
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Item 17. Capital Stock and Other Securities
The only class of capital stock authorized by the Company is
Common Stock.
The following information applies to the common stock:
(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 Items 7 of Part A and 18
of Part B.
(7) Sinking fund provisions: none.
(8) Liability to further calls or assessment: none.
Item 18. Purchase, Redemption, and Pricing of Shares
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.
Shares are generally redeemed for cash, but under certain
circumstances may be redeemed in kind. In either event, the
redemption will be a taxable event to a shareholder, and thus
could result in a capital gain, capital loss, or, in certain
cases, ordinary income to the shareholder. Shareholders are
urged to consult their tax advisors as to the tax consequences
of the redemption in their particular circumstances.
The Company may follow the practice of distributing selected
appreciated securities to meet redemptions of certain
shareholders and may, within certain limits, use the selection
of securities distributed to meet such redemptions as a tax
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efficient management tool. By distributing appreciated
securities the Company can reduce its position in such
securities without realizing capital gains. Since the
Company does not distribute its shares, the distribution of
portfolio securities also enables the Company to avoid the
forced sales of securities to raise cash for meeting
redemptions. The Company intends to adopt a policy of
meeting shareholder redemptions in part through the
distribution of readily marketable securities. Such a
policy would only be adopted after giving notice to the
shareholders. A redeeming shareholder of the Company who
received securities would incur no more or less taxable
income than if the redemption had been paid in cash.
The Company will only distribute readily marketable
securities, which would be valued pursuant to the Company's
valuation procedures. However, such a shareholder will
incur brokerage charges and other costs and may be exposed
to market risk in selling the distributed securities.
The net asset value per share is computed by dividing the
total value of the assets of the Company, 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 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.
Item 19. Taxation of the Fund
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 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 to have
been distributed to redeeming shareholders. Each year the
Company advises its stockholders the amount of capital
gains taxes paid which is attributable to them, and they
may claim a credit for this amount on their federal income
tax returns.
Item 20. Underwriters - NOT APPLICABLE.
Item 21. Calculation of Performance Data
The Company does not advertise performance data.
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Item 22. Financial Statements - The required financial
statements are included in a separate section following
this item.
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[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' 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 portfolio of investments, of The Finance Company of Pennsylvania
(the "Company") as of December 31, 1998, the related statement of operations for
the year then ended, the statements of changes in net assets for the years ended
December 31, 1998 and 1997, and the condensed financial information for each of
the years in the five-year period ended December 31, 1998. 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 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, 1998 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 our 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, 1998, 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 22, 1999
-15-
<PAGE> 18
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
INVESTMENTS-AT MARKET OR FAIR VALUE (NOTE 1):
SHORT-TERM SECURITIES (IDENTIFIED COST
$3,912,602)................................ $ 3,912,489
U.S. TREASURY NOTES (IDENTIFIED COST
$5,472,000)................................... 5,673,328
COMMON STOCKS (IDENTIFIED COST $11,467,996)
INCLUDING AFFILIATE (NOTE 2)............... 51,667,627
-----------
TOTAL INVESTMENTS..................... 61,253,444
CASH.................................................. 273,312
ACCRUED INTEREST AND DIVIDENDS RECEIVABLE............. 204,919
PREPAID EXPENSES...................................... 15,526
OTHER ASSETS.......................................... 5,950
-----------
TOTAL................................. 61,753,151
-----------
LIABILITIES
DIVIDENDS PAYABLE (NOTE 6)............................ 928,645
ACCRUED EXPENSES AND TAXES (NOTE 1)................... 1,242,028
-----------
TOTAL................................. 2,170,673
-----------
NET ASSETS
NET ASSETS (WITH INVESTMENTS AT MARKET OR FAIR VALUE)
EQUIVALENT TO $1,067.46 PER SHARE ON SHARES OF
55,817 $10 PAR VALUE CAPITAL STOCK OUTSTANDING AT
DECEMBER 31, 1998 (AUTHORIZED 232,000 SHARES).... $59,582,478
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-16-
<PAGE> 19
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
SHORT-TERM SECURITIES -- 6.39%
<TABLE>
<CAPTION>
Aggregate
Quoted
Face Value/ Identified Market Price
Principal Amount Cost (Note 1)
---------------- ---------- ------------
<C> <S> <C> <C>
2,114,016 FED FUND........................ $2,114,016 $2,114,016
696,369 FEDERAL TRUST FUND.............. 696,369 696,369
10,000 TREASURY TRUST FUND............. 10,000 10,000
500,000 U.S. TREAS. BILL; 1/21/99....... 498,769 498,764
600,000 U.S. TREAS. BILL; 4/1/99........ 593,448 593,340
---------- ----------
TOTAL........................... 3,912,602 3,912,489
---------- ----------
</TABLE>
U.S. TREASURY NOTES -- 9.26%
<TABLE>
<CAPTION>
Principal
Amount
- ---------------------
<C> <S> <C> <C>
900,000 U.S. TREASURY NOTES 8 7/8% DUE
2/15/99.................... 900,042 904,219
700,000 U.S. TREASURY NOTES 7 3/4% DUE
1/31/00.................... 699,752 722,312
500,000 U.S. TREASURY NOTES 5 3/8%
DUE 6/30/00................ 499,205 505,156
1,000,000 U.S. TREASURY NOTES 7 7/8% DUE
8/15/01.................... 1,029,879 1,078,437
750,000 U.S. TREASURY NOTES 6 3/8% DUE
8/15/02.................... 757,033 791,016
1,000,000 U.S. TREASURY NOTES 7 1/4%
DUE 8/15/04................ 1,088,104 1,124,375
500,000 U.S. TREASURY NOTES 6 1/2% DUE
5/15/05.................... 497,985 547,813
---------- ----------
TOTAL........................... 5,472,000 5,673,328
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-17-
<PAGE> 20
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
COMMON STOCKS -- 84.35%
<TABLE>
<CAPTION>
Aggregate
Quoted
Number Identified Market Price
of Shares Cost (Note 1)
- --------------------- ----------- ------------
<C> <S> <C> <C>
PETROLEUM AND MINING -- 7.56%
32,000 EXXON CORP..................... $ 91,444 $ 2,340,000
20,000 MOBIL CORP. ................... 62,715 1,742,500
30,000 PENN VIRGINIA CORP. ........... 22,382 551,250
----------- -----------
TOTAL.......................... 176,541 4,633,750
----------- -----------
BANKING, INSURANCE AND FINANCIAL
HOLDING COMPANIES -- 40.98%
16,500 MARSH & MCLENNAN, INC. ........ 428,861 964,219
434,000 PNC BANK CORP. ................ 262,209 23,436,000
10,000 STATE STREET CORP. ............ 152,542 701,250
----------- -----------
TOTAL.......................... 843,612 25,101,469
----------- -----------
MANUFACTURING AND DIVERSIFIED -- 21.09%
16,573 AMP, INC. ..................... 494,677 862,832
7,000 AVON PRODUCTS.................. 190,663 309,750
5,000 BOEING CO. .................... 245,662 163,125
23,000 CORNING INC. .................. 662,567 1,035,000
29,000 DOVER CORP. ................... 261,750 1,062,125
6,000 DOW CHEMICAL CO. .............. 116,337 545,625
12,000 EMERSON ELECTRIC............... 181,980 726,000
28,500 GENUINE PARTS.................. 469,072 952,969
15,000 HASBRO......................... 422,456 541,875
6,000 INT'L BUSINESS MACHINES........ 310,335 1,106,250
10,000 MINNESOTA MINING & MFG. CO. ... 170,764 711,250
24,000 MOTOROLA ...................... 1,155,551 1,465,500
25,000 PALL CORP. .................... 579,250 632,813
11,000 RAYCHEM........................ 242,550 355,437
20,000 RUBBERMAID INC. ............... 474,275 628,750
10,000 SNAP-ON INC. .................. 302,187 348,125
30,000 SHERWIN WILLIAMS CO. .......... 481,800 881,250
5,000 XEROX CORP. ................... 234,100 590,000
------------------------------- ----------- -----------
TOTAL.......................... 6,995,976 12,918,676
------------------------------- ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-18-
<PAGE> 21
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
COMMON STOCKS -- CONCLUDED
<TABLE>
<CAPTION>
Aggregate
Quoted
Number Identified Market Price
of Shares Cost (Note 1)
- --------------------- ----------- ------------
<C> <S> <C> <C>
PHARMACEUTICALS -- 2.66%
8,000 JOHNSON & JOHNSON.............. $ 88,070 $ 671,000
6,500 MERCK & CO. ................... 146,402 958,750
----------- -----------
TOTAL.......................... 234,472 1,629,750
----------- -----------
COMMUNICATIONS -- 1.76%
20,000 BELL ATLANTIC CORP. ........... 178,287 1,080,000
----------- -----------
FOOD/RETAIL -- 2.19%
20,000 COCA-COLA CO. ................. 23,981 1,340,000
----------- -----------
INTERNATIONAL FUNDS -- 3.39%
80,496 SCUDDER INT'L EQUITY INVEST.
TR. ...................... 1,943,728 2,073,573
----------- -----------
SMALL CAP FUNDS -- 1.44%
69,881 KALMAR SMALL CAP FUND.......... 1,000,000 883,997
----------- -----------
DIVERSIFIED HOLDING -- 3.28%
732 PENNSYLVANIA WAREHOUSING AND
SAFE DEPOSIT COMPANY (NOTE
2)........................ 71,399 2,006,412
----------- -----------
TOTAL COMMON STOCKS............ 11,467,996 51,667,627
----------- -----------
TOTAL INVESTMENTS.............. $20,852,598 $61,253,444
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-19-
<PAGE> 22
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
DIVIDENDS (INCLUDING DIVIDENDS FROM
AFFILIATE -- NOTE 2)................... $ 1,459,807
INTEREST.................................... 413,809
-----------
TOTAL.................................. 1,873,616
EXPENSES:
COMPENSATION................... $ 111,400
TAXES OTHER THAN INCOME
TAXES........................ 25,736
DIRECTORS' FEES (NOTE 5)....... 46,575
INVESTMENT ADVISORY FEES
(NOTE 5)..................... 123,293
LEGAL.......................... 10,842
AUDITING & ACCOUNTING.......... 50,450
CUSTODIAN...................... 16,151
INSURANCE...................... 20,658
OTHER OFFICE AND
ADMINISTRATIVE............... 35,714
-----------
TOTAL.................................. 440,819
-----------
NET INVESTMENT INCOME............................. 1,432,797
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE 3):
REALIZED GAIN FROM SECURITY
TRANSACTIONS (EXCLUDING
SHORT-TERM INVESTMENTS):
PROCEEDS FROM SALES............ $ 6,255,721
COST OF SECURITIES SOLD........ 2,746,932
-----------
NET REALIZED GAIN...................... 3,508,789
UNREALIZED APPRECIATION OF
INVESTMENTS:
AT JANUARY 1, 1998............. 41,823,661
AT DECEMBER 31, 1998........... 40,400,846
-----------
DECREASE IN NET UNREALIZED APPRECIATION........... (1,422,815)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........ 2,085,974
CAPITAL GAINS TAX PAYABLE ON BEHALF OF SHAREHOLDERS
(NOTE 1)............................................. (1,218,450)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $ 2,300,321
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-20-
<PAGE> 23
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
NET INVESTMENT INCOME................ $ 1,432,797 $ 1,443,971
NET REALIZED GAIN ON INVESTMENTS..... 3,508,789 2,678,716
(DECREASE) INCREASE IN NET UNREALIZED
APPRECIATION ON INVESTMENTS....... (1,422,815) 11,032,034
CAPITAL GAINS TAX PAYABLE ON BEHALF
OF SHAREHOLDERS (NOTE 1).......... (1,218,450) (929,093)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... 2,300,321 14,225,628
UNDISTRIBUTED INVESTMENT INCOME
INCLUDED IN PRICE OF SHARES
REDEEMED.......................... (4,941) (10,922)
REALIZED GAIN FROM SECURITY
TRANSACTIONS INCLUDED IN PRICE OF
SHARES REDEEMED................... (27,502) (24,166)
DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME................. (1,427,702) (1,433,374)
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..................... (621,152) (1,163,998)
----------- -----------
TOTAL INCREASE IN NET ASSETS......... 219,024 11,593,168
NET ASSETS:
BEGINNING OF YEAR.................... 59,363,454 47,770,286
----------- -----------
END OF YEAR [INCLUDING UNDISTRIBUTED
NET INVESTMENT LOSS OF $269,302
AND $269,456 RESPECTIVELY]........ $59,582,478 $59,363,454
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-21-
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
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, 1998............. 606 $ 653,594
Year Ended December 31, 1997............. 1,284 $1,199,086
</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
Investments are valued using published bid quotes as of December 31, 1998.
Costs used to determine realized gain or loss from securities transactions are
those of the specific securities sold. 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.
-22-
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. The Company's financial statements include amounts that are based on
management's best estimates and judgments. Actual results could differ from
those estimates.
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, 1998 December 31,
--------------------------------- 1998
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 $2,006,412 $84,180
====== ======= ========== =======
</TABLE>
-23-
<PAGE> 26
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, 1998 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.............. $ 3,028,848 $ 5,255,721 $ 1,746,932
U.S. Treasury Notes........ 1,592,318 1,000,000 1,000,000
Short-term securities...... 6,701,279 8,002,822 8,002,822
----------- ----------- -----------
Total................. $11,322,445 $14,258,543 $10,749,754
=========== =========== ===========
</TABLE>
4. LEASE
The Company rents office space under a lease expiring in April 1999. The
lessor Company's President also serves on the Board of Directors of the Company.
Minimum annual rental for this space is $5,400.
5. OTHER INFORMATION FOR THE YEAR ENDED
DECEMBER 31, 1998
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 $111,400.
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 $923,213 was declared on December
9, 1998 payable at $16.54 per share on January 29, 1999 to shareholders of
record on December 31, 1998.
-24-
<PAGE> 27
CONDENSED FINANCIAL INFORMATION
Selected data for each share of capital stock outstanding throughout each
period:
<TABLE>
<CAPTION>
Year Ended December 31
1998 1997 1996 1995 1994
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Investment income......... $ 33.33 $ 32.49 $ 32.33 $ 30.77 $ 28.64
Expenses.................. 7.84 7.27 6.68 5.97 5.59
--------- --------- ------- ------- -------
Net investment income..... 25.49 25.22 25.65 24.80 23.05
Dividends from net
investment income....... (25.54) (25.33) (25.67) (26.73) (22.99)
Net realized gain (loss)
and increase (decrease)
in unrealized
appreciation............ 15.40 224.41 90.93 170.09 (77.72)
--------- --------- ------- ------- -------
Net increase (decrease) in
net asset value......... 15.35 224.30 90.91 168.16 (77.66)
Net asset value:
Beginning of year....... 1,052.11 827.81 736.90 568.74 646.40
--------- --------- ------- ------- -------
End of year............. $1,067.46 $1,052.11 $827.81 $736.90 $568.74
========= ========= ======= ======= =======
Annual ratio of expenses
to average net assets... 0.74% 0.78% 0.86% 0.89% 0.89%
Annual ratio of net
investment income to
average net assets...... 2.42% 2.68% 3.32% 3.72% 3.68%
Annual portfolio turnover
rate.................... 8.13% 10.44% 5.29% 4.67% 9.17%
Number of shares
outstanding at end of
period (in thousands)... 55 56 58 58 59
</TABLE>
See Notes to Financial Statements
-25-
<PAGE> 28
CHANGES IN THE PORTFOLIO OF INVESTMENTS
(EXCLUSIVE OF SHORT-TERM INVESTMENTS)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
PURCHASES
<TABLE>
<CAPTION>
Changes Balance
During December 31,
the Period 1998
---------- ------------
Number of Shares
-------------------------
<S> <C> <C>
Avon Products............................ 7,000 7,000
Snap-On Inc.............................. 10,000 10,000
Raychem.................................. 11,000 11,000
Motorola................................. 12,000 24,000
</TABLE>
SALES
<TABLE>
<CAPTION>
Number of Shares
-------------------------
<S> <C> <C>
AMP Inc.................................. 2,427 16,573
Boeing Co. .............................. 7,000 5,000
Fluor Corp............................... 10,000 --
Int'l Business Machines.................. 1,000 6,000
Int'l Flavors & Fragrances............... 8,000 --
Merck & Co. ............................. 1,000 6,500
</TABLE>
YEAR 2000
Year 2000 compliance relates to the ability of computer hardware and
software to respond to the problems posed by the fact that computer programs
have traditionally been written using two digits rather than four to define the
applicable year. As a consequence, unless modified, computer programs and
systems will not be able to differentiate between the year 2000 and 1900, which
could result in system failures and the generation of erroneous data. The
Company has formulated a plan with respect to becoming year 2000 compliant,
involving the implementation of a new computer system that is year 2000
compliant as well as obtaining representations from outside service providers
that they are year 2000 compliant. The Company expects to complete its plan and
therefore be year 2000 compliant by the end of the first quarter of 1999. To
date, the Company has not incurred, nor does it expect to incur any significant
costs with respect to becoming year 2000 compliant.
-26-
<PAGE> 29
PART C
Item 23. Exhibits
(a) Articles of Incorporation as amended December 29,
1961 and April 21, 1964 are incorporated by reference
to Exhibit (1) of the Company's Post Effective
Amendment No. 21 to its Registration Statement on
Form N-1A.
(b) By-Laws as amended through February 19, 1997 are
incorporated by reference to Exhibit 2(a) of the
Company's Post Effective Amendment No. 21 to its
Registration Statement on Form N-1A.
(d) Investment Advisory Contract between the Company and
Cooke & Bieler, Inc. Dated February 4, 1987 is
incorporated by reference to Exhibit (5) of the
Company's Post Effective Amendment No. 21 to its
Registration Statement on Form N-1A.
(g) Custodian Agreement between the Company and United
Missouri Bank, N.A. dated October 24, 1994 is
incorporated by reference to Exhibit 8(a) of the
Company's Post Effective Amendment No. 20 to its
Registration Statement on Form N-1A.
(n) Financial Data Schedule.
Item 24. Persons Controlled by or Under Common Control with the Fund
NONE
Item 25. Indemnification
Sections 1741 et seq. of the Pennsylvania Business Corporation
Law (the PBCL) provide that a business corporation may
indemnify directors and officers against liabilities they may
incur in such capacities provided certain standards are met,
including good faith and the reasonable belief that the
particular action is in, or not opposed to, the best interests
of the corporation. In general, this power to indemnify does
not exist in the case of actions against a director or officer
by or in the right of the corporation if the person entitled
to indemnification shall have been adjudged to be liable
unless a court determines upon application that the person is
fairly and reasonably entitled to indemnification despite the
adjudication of liability. However, Section 1746 of the PBCL
provides that the other sections of the law are not exclusive
and that further indemnification may be provided by by-law,
agreement or otherwise except where the act or failure to act
giving rise to a claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness.
The corporation is required to indemnify directors and
officers against expenses they may incur in defending actions
against
-27-
<PAGE> 30
themselves as such directors or officers if they are
successful on the merits or otherwise in the defense of such
actions.
The Company's By-Laws also provide indemnification to the
directors and officers of the Company to the fullest extent
permitted by law. The Company maintains, on behalf of its
directors and officers, insurance protection against certain
liabilities arising out of the discharge of their duties, as
well as insurance covering the Company for indemnification
payments made to directors and officers for liabilities.
Item 26. Business and Other Connections of the Investment Adviser -
NONE.
Item 27. Principal Underwriters - NOT APPLICABLE.
Item 28. Location of Accounts and Records
Mr. Charles Mather, III, President, The Finance Company of
Pennsylvania, 226 Walnut Street, Philadelphia, Pennsylvania
19106.
Item 29. Management Services - NONE.
Item 30. Undertakings - NOT APPLICABLE.
-28-
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Company 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 28th day of April, 1999.
THE FINANCE COMPANY OF PENNSYLVANIA
By: _____________________________________
Charles Mather, III, President
-29-
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 20,852,598
<INVESTMENTS-AT-VALUE> 61,253,444
<RECEIVABLES> 0
<ASSETS-OTHER> 21,476
<OTHER-ITEMS-ASSETS> 478,231
<TOTAL-ASSETS> 61,753,151
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,170,673
<TOTAL-LIABILITIES> 2,170,673
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 55,817
<SHARES-COMMON-PRIOR> 56,423
<ACCUMULATED-NII-CURRENT> 269,302
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40,400,846
<NET-ASSETS> 59,582,478
<DIVIDEND-INCOME> 1,459,807
<INTEREST-INCOME> 413,809
<OTHER-INCOME> 0
<EXPENSES-NET> 440,819
<NET-INVESTMENT-INCOME> 1,432,797
<REALIZED-GAINS-CURRENT> 3,508,789
<APPREC-INCREASE-CURRENT> (1,422,815)
<NET-CHANGE-FROM-OPS> 2,300,321
<EQUALIZATION> 653,595
<DISTRIBUTIONS-OF-INCOME> 1,427,702
<DISTRIBUTIONS-OF-GAINS> 1,218,450
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 606
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 219,024
<ACCUMULATED-NII-PRIOR> 269,456
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 123,293
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440,819
<AVERAGE-NET-ASSETS> 59,472,966
<PER-SHARE-NAV-BEGIN> 1,052.11
<PER-SHARE-NII> 25.49
<PER-SHARE-GAIN-APPREC> 15.40
<PER-SHARE-DIVIDEND> 25.54
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1,067.46
<EXPENSE-RATIO> .74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
