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

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Check the appropriate box:

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(as permitted by Rule 14a-6(e)(2))
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[ ] Soliciting Material Pursuant to ss 240.14a-12

Elder Trust
- -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

________________________________________________________________________________
(Name of Person(s) Filing proxy statement, if other than the Registrant)

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paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

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ELDERTRUST
101 East State Street
Suite 100
Kennett Square, Pennsylvania 19348
(610) 925-4200

April 23, 2001

Dear Shareholder:

You are cordially invited to attend the 2001 annual meeting of
shareholders of ElderTrust to be held on Tuesday, May 22, 2001, at 10 a.m., at
101 East State Street, Kennett Square, Pennsylvania 19348.

The annual meeting has been called for the following purposes:

(1) To elect two trustees for a term of three years; and

(2) To transact such other business as may properly come before
the annual meeting or any adjournments.

It is important that your shares be represented at the annual meeting.
Whether or not you plan to attend the annual meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed
postage-paid envelope.

Very truly yours,

/s/ D. Lee McCreary, Jr.
------------------------
D. Lee McCreary, Jr.
President, Chief Executive
Officer, Chief Financial Officer,
Treasurer and Secretary

ELDERTRUST
101 East State Street
Suite 100
Kennett Square, Pennsylvania 19348
(610) 925-4200

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

NOTICE TO ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 22, 2001

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

NOTICE IS HEREBY GIVEN that the 2001 annual meeting of shareholders of
ElderTrust will be held at 101 East State Street, Kennett Square, Pennsylvania
19348 on Tuesday, May 22, 2000 at 10 a.m., for the following purposes:

(1) To elect two trustees for a three-year term and until their
successors are elected and qualified; and

(2) To transact such other business as may properly come before
the meeting or any adjournments.

The Board of Trustees has fixed March 30, 2001 as the record date for
the determination of shareholders entitled to notice of and to vote at the
annual meeting and all adjournments thereof. Only shareholders of record at the
close of business on that date will be entitled to notice and to vote at the
annual meeting. All shareholders are cordially invited to attend the annual
meeting.

In the event that there are not sufficient votes to approve any one or
more of the foregoing proposals at the time of the annual meeting, the annual
meeting may be adjourned in order to permit further solicitation of proxies by
ElderTrust.

By Order of the Board of Trustees

/s/ D. Lee McCreary, Jr.
------------------------

D. Lee McCreary, Jr.
President, Chief Executive
Officer, Chief Financial Officer,
Treasurer and Secretary

Kennett Square, Pennsylvania
April 23, 2001

Whether or not you plan to attend the annual meeting, you are urged to
sign, date and return the enclosed proxy in the accompanying pre-addressed
envelope which requires no postage stamp. Your proxy may be revoked prior to the
voting by filing with the Secretary of ElderTrust a written revocation or a duly
executed proxy bearing a later date or by attending the annual meeting and
voting in person.

ELDERTRUST
101 East State Street
Suite 100
Kennett Square, Pennsylvania 19348
(610) 925-4200

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PROXY STATEMENT
2001 ANNUAL MEETING OF SHAREHOLDERS
May 22, 2001

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

SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

This proxy statement is furnished to shareholders of ElderTrust in
connection with the solicitation by the board of trustees of ElderTrust of
proxies to be used at the 2001 annual meeting of shareholders to be held at 101
East State Street, Kennett Square, Pennsylvania 19348 on Tuesday, May 22, 2001
at 10 a.m., and at any adjournments or postponements.

If the enclosed form of proxy is properly executed and returned to
ElderTrust in time to be voted at the annual meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted FOR the election of the board of
trustees' two nominees as trustees. If any other matters are properly brought
before the annual meeting, the persons named in the accompanying proxy will vote
the shares represented by such proxies on such matters as determined by a
majority of the board of trustees of ElderTrust. The presence of a shareholder
at the annual meeting will not automatically revoke such shareholder's proxy.
Shareholders may, however, revoke a proxy at any time prior to its exercise by
filing with the Secretary of ElderTrust a written revocation or a duly executed
proxy bearing a later date or by attending the annual meeting and voting in
person.

The cost of solicitation of proxies in the form enclosed herewith will
be borne by ElderTrust. In addition to the solicitation of proxies by mail,
ElderTrust, through its trustees, officers and regular employees, may also
solicit proxies personally or by telephone or telegraph. ElderTrust will also
request persons, firms and corporations holding shares in their names, or in the
name of their nominees, to send proxy material to and obtain proxies from
beneficial owners and will reimburse such holders for their reasonable expenses
in so doing. It is anticipated that this proxy statement will be mailed to
stockholders on or about April 23, 2001.

The securities which can be voted at the annual meeting consist of
common shares of beneficial interest of ElderTrust, par value $.01 per share.
Each share entitles its owner to one vote on all matters. The declaration of
trust of ElderTrust does not provide for cumulative voting in the election of
trustees. The board of trustees has fixed the close of business on March 30,
2001 as the record date for determination of shareholders entitled to vote at
the annual meeting. The number of common shares outstanding on the record date
was 7,119,000.

The presence, in person or by proxy, of at least a majority of the
outstanding common shares is necessary to constitute a quorum at the annual
meeting. Shareholders' votes will be tabulated by the persons appointed by the
board of trustees to act as inspectors of election for the annual meeting.

A copy of ElderTrust's 2000 annual report to shareholders accompanies
this proxy statement. The 2000 annual report to shareholders includes
ElderTrust's annual report on Form 10-K for the year ended December 31, 2000 as
filed with the SEC. Shareholders may obtain a copy of the exhibits to ElderTrust
2000 annual report on Form 10-K, upon payment of a reasonable fee, by writing to
ElderTrust, 101 East State Street, Suite 100, Kennett Square, Pennsylvania
19348, Attention: Corporate Secretary.

ELECTION OF TRUSTEES
(Proposal 1)

The declaration of trust of ElderTrust provides for a minimum of three
trustees and a maximum of nine trustees. The board of trustees of ElderTrust
currently consists of five members. The trustees are divided into three classes,
each consisting of approximately one-third of the total number of trustees. The
term of office of only one class expires in each year and their successors are
elected for terms of three years and until their successors are elected and
qualified. At the annual meeting, two trustees will be elected for a three-year
term. As described below, the board of trustees' nominees are Michael R. Walker
and Harold L. Zuber, Jr. The board of trustees recommends that you vote FOR the
board of trustees' nominees for election as trustees.

Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as trustee of Mr. Walker and Mr. Zuber, each for
a three-year term. The board of trustees believes Messrs. Walker and Zuber will
stand for election and will serve if elected as trustees. However, if they fail
to stand for election or are unable to accept election, the proxies will be
voted for the election of such other persons as a majority of the board of
trustees of ElderTrust may recommend. Trustees are elected by plurality vote.

Information as to Nominees and Other Trustees

The following table sets forth certain information regarding the board
of trustees' nominees for election as trustee and those trustees who will
continue to serve as such after the annual meeting.

Age at
March 31, Trustee For Term Position(s) Held with
2001 Since To Expire ElderTrust
--------- ------- --------- ---------------------

Nominees:
- ---------

Michael R. Walker....................... 52 1997 2004 Trustee

Harold L. Zuber, Jr..................... 51 2001 2004 Trustee

Continuing Trustees: Term Expires
- -------------------- ------------

D. Lee McCreary, Jr..................... 43 1999 2003 President, Chief
Executive Officer,
Chief Financial
Officer,
Treasurer, Secretary
and Trustee

Rodman W. Moorhead, III................. 57 1998 2003 Trustee

John G. Foos............................ 51 2000 2002 Trustee

The principal occupations for the past five years of the nominees for
trustee and the trustee whose term of office will continue after the annual
meeting are set forth below.

Michael R. Walker is Chairman of the board of trustees of ElderTrust.
Mr. Walker also founded and serves as the Chairman and Chief Executive Officer
of Genesis Health Ventures, Inc. ("Genesis") and of The Multicare Companies,
Inc., a 43.6% owned consolidated subsidiary of Genesis ("Multicare"). With
revenues of over $2.4 billion, Genesis and its subsidiaries provides eldercare
in the eastern United States through a network of Genesis ElderCare skilled
nursing and assisted living centers and long term care support services
nationwide including pharmacy, medical equipment and supplies, rehabilitation,
group purchasing, consulting and facility management. In June 2000, Genesis and
Multicare filed for protection under Chapter 11 of the U.S. Bankruptcy Code. In
addition to his responsibilities with ElderTrust and Genesis, Mr. Walker leads
the Alliance for Quality Nursing Home Care, a national coalition of the nation's
top twelve long term care providers. Since 1999, The Alliance has lobbied for
and gained nearly $5 billion in additional Medicare funding for long term care
providers. Mr. Walker holds a master of business administration degree from
Temple University and bachelor of arts in business administration degree from
Franklin and Marshall College.

Harold L. Zuber, Jr., a trustee of ElderTrust since April 2001, Mr.
Zuber has served as Vice President and Chief Financial Officer of Teleflex
Incorporated since 1990. With revenues of $1.8 billion, Teleflex manufactures
products and provides services for the automotive, marine, industrial, medical
and aerospace markets worldwide. Before Mr. Zuber was appointed Chief Financial
Officer of Teleflex he held the Vice President and Controller position from 1986
to 1990 and the Controller position from 1980 to 1986. Mr. Zuber was a Board
Member and Compensation Committee Member of Medical Sterilization, Inc. from
1997 to 1999. He holds a bachelor of science degree from Clarion University.

D. Lee McCreary, Jr., a trustee of ElderTrust since October 1999, is
the President, Chief Executive Officer, Chief Financial Officer, Treasurer and
Secretary of ElderTrust. In June 1997, Mr. McCreary became Senior Vice
President, Chief Financial Officer, Treasurer and Secretary of ElderTrust Realty
Group, Inc., predecessor to ElderTrust. In July 1999, he was named acting
President and Chief Executive Officer and was appointed to those positions on a
permanent basis and as a trustee of ElderTrust in October 1999. From September
1994 until May 1997, Mr. McCreary was Vice President-Tax Services at Siegfried,
Schieffer & Seitz, a Wilmington, Delaware-based regional accounting firm. Before
joining Siegfried, Schieffer & Seitz, he was a partner at Price Waterhouse LLP,
where he worked for over 14 years providing tax consulting services for
companies in the healthcare, real estate and financial services industries. Mr.
McCreary is a member of both the American Institute of Certified Public
Accountants and the Maryland Association of Certified Public Accountants. He
holds a bachelor of science degree from the University of Delaware.

Rodman W. Moorhead, III, a trustee of ElderTrust since January 1998,
has been employed since 1973 by E.M. Warburg, Pincus & Co., LLC, a private
equity and venture capital firm in New York, where he currently serves as senior
advisor. He is a director of Chancellor Academies, an operator of charter and
for-profit elementary schools; Coventry Health Care, Inc., a multi-market health
maintenance organization; PhyCor, Inc., a physician multi-specialty practice
management company; Scientific Learning Corporation, a computerized special
education training company; and Transkaryotic Therapies, Inc., a gene therapy
company. He is a trustee of the Taft School and a member of the Overseers
Committee on University Resources, Harvard College. Mr. Moorhead holds a masters
of business administration degree from Harvard Business School and a bachelor of
arts in economics degree from Harvard University.

John G. Foos, a trustee of ElderTrust since April 2000, has served
since July 1989 as Chief Financial Officer of Independence Blue Cross, the
largest health insurer in the Philadelphia, Pennsylvania region. Before joining
Independence Blue Cross, Mr. Foos was a partner with the public accounting firm
of KPMG, LLP. Mr. Foos is a member of the board of directors of HoosierCare,
Inc., a tax-exempt organization that owns and operates 14 long-term care
facilities in the east and midwest. Mr. Foos is a member of the American
Institute of Certified Public Accountants and the Pennsylvania Institute of
Certified Public Accountants. He holds a bachelor of science degree in
accounting from Susquehanna University.

Executive Officers Who are Not Trustees

John H. Haas was named Vice President and Chief Operating Officer of
ElderTrust in February 2000. From May 1998 to January 2000, Mr. Haas served as a
consultant to ElderTrust. From 1994 to 1998, Mr. Haas was the Vice President,
Secretary and general counsel of Senior Campus Living, LLC, a continuing care
retirement community developer and operator. He previously served of counsel to
the Baltimore-based law firm of Hodes, Ulman, Pessin & Katz, and earlier, as
Executive Vice President and Chief Operating Officer of McCormick Properties,
Inc. before its sale by its parent, McCormick & Company, Inc., the specialty
food and spice company. Mr. Haas has served as an adjunct instructor in the
Masters of Science in Real Estate at Johns Hopkins University and has taught
seminars for commercial real estate lenders, the Maryland National Park and
Planning Commission and the General Services Administration. He holds a juris
doctor degree from the University of Baltimore School of Law and a bachelor of
arts degree from the University of Connecticut.

Board Meetings and Committees

During 2000, the board of trustees of ElderTrust held five regular
meetings and two special meetings. For the 2000 period, no incumbent trustee
attended fewer than 75 percent of the aggregate of (A) the total number of
meetings held by the board of trustees held during the period for which he has
been a trustee and (B) the total number of meetings held by all committees of
the board of trustees on which the trustee served during the period that he
served.

ElderTrust has the following board committees:

Audit Committee. The current members of the audit committee are Messrs.
Foos, Moorhead and Zuber. Mr. Zuber was appointed as a member of the audit
committee upon his appointment as a trustee in April 2001. Mr. Foos serves as
chairman of the audit committee. The audit committee has the authority (A) to
make recommendations concerning the engagement of the independent auditor, (B)
to review with the independent auditors the plans and results of the audit
engagement, (C) to review the independence of the independent public
accountants, (D) to approve professional services provided by the independent
public accountants, (E) to consider the range of audit and non-audit fees and
(F) to review the adequacy of ElderTrust's internal accounting controls. The
audit committee held three meetings during 2000. The board of trustees believes
that each of the current members of the audit committee is an "independent"
trustee within the meaning of applicable rules of the New York Stock Exchange.
The board of trustees has adopted a written charter for the audit committee, a
copy of which is attached to this proxy statement as Annex A.

Compensation and Share Option Committee. The compensation and share
option committee was in existence from January 1 through September 12, 2000. The
members of the compensation and share option committee for the period of January
1 through January 31, 2000 were Mr. Moorhead and a former member of the board of

trustees who resigned as a trustee in January 2000. The members of the
compensation and share option committee for the period of February 1 through
September 12, 2000 were Messrs. Moorhead and Walker. Mr. Moorhead served as
Chairman of the committee. The compensation and share option committee has the
authority (A) to determine compensation for ElderTrust's executive officers, (B)
to review and make recommendations concerning proposals by management with
respect to compensation, bonuses, employment agreements and other benefits and
policies for ElderTrust's executive officers and (C) to take all actions and
make all determinations, including the grant of options, distribution equivalent
rights and share awards, under ElderTrust's share option and incentive plans.
The compensation and share option committee held two meetings during 2000. In
September 2000, the board of trustees re-established the compensation committee
and the share option committee as separate committees of the board.

Compensation Committee. The compensation committee was re-established
in September 2000 as a separate committee to the board. The current members of
the compensation committee are Messrs. Walker and Moorhead. Mr. Moorhead serves
as Chairman of the committee. The compensation committee has the authority (A)
to determine compensation for ElderTrust's executive officers and (B) to review
and make recommendations concerning proposals by management with respect to
compensation, bonuses, employment agreements and other benefits and policies for
ElderTrust's executive officers. The compensation committee held one meeting
during 2000.

Share Option Committee. The share option committee was re-established
in September 2000. The current members of the share option committee are Messrs.
Foos and Moorhead. Mr. Foos serves as Chairman of the committee. The share
option committee has the authority to take all actions and make all
determinations, including the grant of options, distribution equivalent rights
and share awards, under ElderTrust's share option and incentive plans. The share
option committee held one meeting during 2000.

Asset Management Committee. The asset management committee was formed
in May 2000. The current members of the asset management committee are Messrs.
McCreary, Moorhead and Foos. Mr. McCreary serves as Chairman of the committee.
The asset management committee has the authority to take all actions in
connection with the Company's assets and asset transactions. The asset
management committee held three meetings during 2000.

AUDIT COMMITTEE REPORT

Each year the audit committee recommends to the board of trustees,
the appointment of the ElderTrust's independent certified public accountants.
The audit committee has received and reviewed the disclosures in the letter from
the independent public accountants required by Independence Standards Board
Standard No. 1, Independence Discussions with audit committees, as amended, and
has discussed with the independent public accountants that firm's independence
from ElderTrust. The audit committee has also discussed with the independent
public accounts the matters required to be discussed by the Statement on
Auditing Standards No. 61, Communication with audit committees, as amended.

The audit committee has reviewed and discussed the audited financial
statements for the year ended December 31, 2000 and related matters with
management and Elder Trust's independent public accountants, reviewed Elder
Trust's Annual Report on Form 10-K filed with the Securities and Exchange
Commission and reviewed such accounting and auditing issues concerning
ElderTrust and its subsidiaries and affiliates as the audit committee deemed
appropriate. Based on these discussions and reviews, the audit committee has
recommended to the board of trustees that the audited financial statements for
the year ended December 31, 2000 be included in the ElderTrust's Annual Report
on Form 10-K for the year ended December 31, 2000 for filing with the Securities
and Exchange Commission. The audit committee held 3 meetings during 2000.

AUDIT COMMITTEE
March 26, 2001

John G. Foos, Chairman
Rodman W. Moorhead III

Nominations by Shareholders

The entire board of trustees acts as a nominating committee for
selecting the board of trustees' nominees for election as trustees and has made
its nominations for the annual meeting. The bylaws of ElderTrust require that
shareholder nominations for trustees be made pursuant to timely notice in
writing to the Secretary of ElderTrust. To be timely, notice must be delivered
to the principal executive offices of ElderTrust not later than the close of
business on the 60th day nor earlier than the close of business on the 90th day
prior to the first anniversary of the preceding year's annual meeting. However,
if the date of the annual meeting is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date, notice by the shareholder to be
timely must be delivered not earlier than the close of business on the 90th day
prior to the annual meeting and not later than the close of business on the
later of the 60th day prior to the annual meeting or the tenth day following the
day on which public announcement of the date of the annual meeting is first made
by ElderTrust. A shareholder's notice of nomination must set forth certain
information specified in ElderTrust's bylaws concerning each person the
shareholder proposes to nominate for election and the nominating shareholder.
Under the bylaws, shareholder nominations for the annual meeting were required
to be received not later than the close of business on March 26, 2001 nor
earlier than the close of business on February 21, 2001. No such nominations
were received. ElderTrust's bylaws provide that no person may be elected as a
trustee unless nominated in accordance with the procedures set forth in the
bylaws.

Compensation of Trustees

Effective January 1, 2000, non-employee trustees of ElderTrust receive
a $10,000 annual retainer, a $1,000 attendance fee for regularly scheduled board
meetings and a $500 attendance fee for committee meetings and telephone meetings
of the board. ElderTrust also reimburses its trustees for travel expenses
incurred in connection with attending meetings of the board of trustees and
committee meetings.

Non-employee trustees of ElderTrust are also eligible to participate in
ElderTrust's share option and incentive plans. In April 2001, each of
ElderTrust's non-employee trustees, including Messrs. Walker, Foos and Moorhead,
received ten-year options for 2,000 shares each at an exercise price of $2.6875
per share, plus distribution equivalent rights for an equivalent number of
shares. The options vested immediately. In September 2000, each non-employee
trustee received an additional ten-year option grant for 30,000 shares vesting
in three equal annual installments beginning September 25, 2000. The option
exercise price of these options is $0.75 per share. The vesting of these options
will accelerate upon a change in control of ElderTrust. For this purpose, a
change in control of ElderTrust includes (A) a person becoming the beneficial
owner of 50% or more of the voting power of the outstanding securities of
ElderTrust, (B) a change in a majority of the board of trustees during any
two-year period other than resulting from mandatory retirement, death or
disability of one or more trustees, (C) a merger or consolidation of ElderTrust
if shareholders of ElderTrust own less than 80% of the equity of the surviving
entity or its parent, (D) the sale of all or substantially all of the assets of
ElderTrust, (E) any person commences a tender offer to acquire beneficial
ownership of 50% or more of the outstanding voting shares of ElderTrust unless

the board of trustees determines that such action does not constitute a change
in control or (F) a change of control of ElderTrust of a type required to be
disclosed under the federal proxy rules.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

Executive Compensation

The following table sets forth the cash and other compensation paid by
ElderTrust for 2000, 1999 and 1998 to each person who served as an executive
officer of ElderTrust during 2000.

Summary Compensation Table

Long-Term
Compensation/
Annual Compensation Awards
-------------------------------- ---------------------
Common Shares All Other
Name and Principal Underlying Compensation
Position(s) Year Salary ($) Bonus ($) Options (#) ($)
- ------------------------------- -------- -------------- ------------------ --------------------- ------------------

D. Lee McCreary, Jr. 2000 $ 235,600 $ 500,000 250,000 $ 51,700 (1)
President, Chief 1999 162,700 - 225,000 58,200
Executive Officer, 1998 125,400 - 50,000 27,500
Chief Financial
Officer, Treasurer and
Secretary

John H. Haas 2000 192,300 - 25,000 -
Vice President and 1999 N/A N/A N/A N/A
Chief Operating 1998 N/A N/A N/A N/A
Officer

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

(1) Represents (a) $45,700 earned on distribution equivalent rights for a total
of 40,000 common shares held by Mr. McCreary at December 31, 2000 and (b)
2000 contributions of $6,000 made by ElderTrust to Mr. McCreary's account
under the Simple IRA Retirement Plan maintained by ElderTrust for its
employees.

Option Grants

The following table contains information with respect to share options
granted in 2000 to each of ElderTrust's executive officers. The options granted
to executive officers in 2000 were ten-year Qualified Stock Options and ten-year
Non-Qualified Options as noted below.

Option Grants In Last Fiscal Year

Potential Realizable
% of Value at Assumed
Common Total Options Annual Rates of Share
Shares Granted to Exercise Price Appreciation for
Underlying Employees in or Base Option Term
Options Fiscal Price Expiration -----------
Name Granted Year ($/Sh) Date 5% ($) 10% ($)
---- -------- ---------- ------ ------------ ----------- ----------

Qualified Stock Options:
- ------------------------

D. Lee McCreary, Jr. 250,000 78.1% $0.75 09/25/10 (1) $117,900 $298,900

John H. Haas 15,000 4.7 0.75 09/25/10 (1) 7,100 17,900

Non-Qualified Options:
- ----------------------

John H. Haas 10,000 100.0 2.75 05/23/10 (2) 17,300 43,800

- ---------
(1) These options vested 1/3 immediately and 1/3 on each of the next two
anniversaries of the date of grant. The vesting options will accelerate upon
any change in control of ElderTrust, as described under "Compensation of
Trustees."
(2) These options vest over two years. The vesting options will accelerate upon
any change in control of ElderTrust, as described under "Compensation of
Trustees."

Option Exercises and Holdings

The following table sets forth information concerning the number of
securities underlying unexercised options at the 2000 year-end and the 2000
year-end value of all unexercised in-the-money options held by ElderTrust's
executive officers. No executive officer exercised any options in 2000.

Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values

Number of Common Shares
Underlying Value of Unexercised
Unexercised Options(#) In-the-Money Options($)
--------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ----------- ------------- ----------- -------------

D. Lee McCreary, Jr. 185,000 340,000 $ 49,967 $ 89,033
John H. Haas 5,000 20,000 1,400 8,400

Employment Agreement

ElderTrust has entered into an employment agreement with D. Lee
McCreary, Jr. dated October 13, 1999, under which Mr. McCreary serves as
ElderTrust's President and Chief Executive Officer. The initial term of the
employment agreement is three years, subject to annual renewals commencing on
October 13, 2002, unless earlier terminated. Mr. McCreary's initial annual base
salary under the employment agreement was $200,000, effective July 29, 1999,
when he began serving as acting president and Chief Executive Officer of
ElderTrust. The annual base salary is subject to increase on an annual basis by

the board of trustees. For 2000, Mr. McCreary's base salary was $250,000. Mr.
McCreary also is entitled to receive incentive compensation in the form of share
options and bonuses as determined by the share option and compensation
committees of the board of trustees.

Mr. McCreary's employment may be terminated by ElderTrust (a) upon 15
days' notice for cause by a two-thirds vote of the entire board of trustees or
(b) upon 90 days' notice without cause by a two-thirds vote of the entire board
of trustees. Mr. McCreary may terminate his employment on 90 days' notice if (a)
ElderTrust terminates by a two-thirds vote of the entire board of trustees the
automatic extension of the term of his employment agreement, (b) ElderTrust
assigns duties to him that are inconsistent with his status with ElderTrust or
substantially alters the nature or status of his responsibilities, (c)
ElderTrust reduces his base salary under his employment agreement, (d)
ElderTrust relocates his principal place of employment or relocates the
principal office or corporate headquarters to a location 35 miles or more from
his current principal place of employment, (e) there is a change in control of
ElderTrust, (f) a material failure on the part of ElderTrust to comply with any
of the provisions of the employment agreement, (g) any termination of his
employment for reasons other than death, disability or cause or the termination
by the board of trustees of the automatic extension of the term of his
employment agreement or (h) the commencement by of a proceeding seeking the
liquidation, reorganization, dissolution or winding-up of ElderTrust or its
subsidiaries or the appointment of a bankruptcy trustee or receiver for
ElderTrust or its subsidiaries.

If ElderTrust terminates Mr. McCreary's employment without cause, or
Mr. McCreary terminates his employment agreement as described above, Mr.
McCreary would be entitled to a severance payment equal to three times his
average annual base salary for the preceding three years, or, if less, over the
expired term of his employment agreement, plus the average annual value as of
the date of grant of his share options vesting in a fiscal year and the value of
his dividend equivalent rights credited to his account in the fiscal year
immediately preceding his termination, provided that the value attributed to
such share options and distribution equivalent rights shall not exceed 50% of
his average annual base salary for the three-year period preceding the
termination of his employment agreement. All share options, awards and similar
equity rights, if any, also would vest and become exercisable immediately prior
to his termination and remain exercisable through their original terms.
Following termination of his employment agreement for any reason, other than for
cause or upon Mr. McCreary's death, ElderTrust would maintain in full force and
effect, for the greater of two years or the remaining term of the employment
agreement, all employee benefit plans and programs to which Mr. McCreary was
entitled prior to his termination.

If Mr. McCreary becomes disabled for a period of twelve months or for
periods aggregating more than twelve months in any 24-month period, ElderTrust
may terminate Mr. McCreary's employment upon 30 days' notice and payment of any
unpaid portion of his salary, bonus and benefits up to the last day of the month
of his termination. Upon Mr. McCreary's death, his heirs would be entitled to
receive the unpaid portion of his salary, bonus and accrued benefits through the
last day of the month of his death. Upon the death or disability of Mr.
McCreary, all distribution equivalent rights and share options would become
fully vested.

Report on Executive Compensation

The compensation committee makes compensation decisions for
ElderTrust's executive officers. The share option committee administers
ElderTrust's share option and incentive plans. ElderTrust's compensation
policies and practices with respect to executive officers are designed and
implemented to motivate and retain senior executives. Total compensation is
currently divided into three primary components: base salary, share options and
distribution equivalent rights and bonuses.

ElderTrust uses its share option and incentive plans as a long-term
incentive plan for executive officers and key employees. The objectives of the
share option and incentive plans are to align the long-term interests of
executive officers and shareholders by creating a direct link between executive
compensation and shareholder return, and to enable executives to develop and
maintain a long-term equity interest in ElderTrust.

John Haas was named Vice President and Chief Operating Officer of
ElderTrust in February 2000. From May 1998 to January 2000, Mr. Haas served as a
consultant at ElderTrust. Mr. Haas' base salary of $200,000 for 2000 and initial
grant of 10,000 options were determined based on the recommendation of
ElderTrust's management and were approved by the compensation and share option
committee. In September 2000, Mr. Hass received an additional option grant for
15,000 shares based on his performance in 2000 and as recommended by
ElderTrust's management.

Lee McCreary became Acting President and Chief Executive Officer of
ElderTrust in July 1999. He became President and Chief Executive Officer of
ElderTrust on a permanent basis in October 1999. His base salary of $250,000 for
2000 was determined in accordance with his employment agreement. In March, 2000,
Mr. McCreary was paid a cash bonus of $200,000. The compensation and share
option committee approved this bonus based primarily on Mr. McCreary's
performance in 1999. In 1999, under Mr. McCreary's leadership, ElderTrust
successfully closed $32.7 million of mortgage refinancing on five properties and
successfully negotiated an extension of the due date of ElderTrust's Bank Credit
Facility from its then maturity date of January 1, 2000 until June 30, 2001. In
September 2000, Mr. McCreary received an option grant of 250,000 shares, and in
December 2000, he was paid a bonus for 2000 of $300,000. These options and bonus
were awarded to him based on his significant accomplishments on behalf of
ElderTrust in 2000. During 2000, Mr. McCreary successfully negotiated the
restructuring of Genesis' and Muticare's loans and leases with ElderTrust
following the June 2000 bankruptcy filings by Genesis and Multicare under
chapter 11 of the U.S. Bankruptcy Code. He also successfully negotiated a
further extension of the maturity date of ElderTrust's Bank Credit Facility from
June 30, 2001 until August 30, 2002.

Generally, Section 162(m) of the Internal Revenue Code of 1986, as
amended, denies deduction to any publicly held company, such as ElderTrust, for
certain compensation exceeding $1,000,000 paid to the Chief Executive Officer
and the four other highest paid executive officers. Certain "performance-based
compensation" is excluded from this $1,000,000 cap. At this time, none of
ElderTrust's executive officer's compensation subject to the deductibility
limits exceeds $1,000,000. In the compensation committee's view, ElderTrust is
not likely to be affected by the nondeductibility rules in the near future.

COMPENSATION COMMITTEE SHARE OPTION COMMITTEE

Rodman W. Moorhead, III, Chairman John G. Foos, Chairman
Michael R. Walker Rodman W. Moorhead, III

Compensation Committee Interlocks and Insider Participation

The Compensation committee is composed entirely of non-employee
trustees. During 2000, Messrs. Walker and Moorhead served on the compensation
committee. In addition to serving as chairman of the board of trustees of
ElderTrust, Mr. Walker serves as chairman of the board and Chief Executive
Officer of Genesis, ElderTrust's principal tenant, and Multicare.

2000 transactions with Geneses and Multicare were as follows:

Transactions between ElderTrust and Genesis and Genesis Equity Investees

During 2000, ElderTrust, through its majority owned subsidiary,
ElderTrust Operating Limited Partnership, leased eight properties to
consolidated subsidiaries of Genesis under percentage and minimum rent leases,
each for an initial ten-year period with two five-year renewals. In addition,
six properties were leased under minimum rent leases to entities in which
Genesis accounts for its investment using the equity method of accounting
("Genesis Equity Investees"), each with an initial term of ten to twelve years.
Consolidated subsidiaries of Genesis also leased space under fixed rent leases
in three medical office and other buildings. The term of these leases are for up
to five years, subject to renewal. Finally, a consolidated subsidiary of Genesis
managed one skilled nursing facility leased to an unrelated third party.
ElderTrust received lease payments of $14.8 million in 2000 on properties leased
to or managed by consolidated subsidiaries of Genesis or Genesis Equity
Investees.

At December 31, 2000, ElderTrust, Operating Limited Partnership had
four term loans and two construction loans totaling $16.2 million made in 1998
to consolidated subsidiaries of Genesis, including two term and one construction
loan made to subsidiaries of Multicare. These loans had original maturities of
between two and three years, subject to extension by the borrower for up to four
successive one-year terms, with a weighted average interest rate of 9.9% on
December 31, 2000. The largest aggregate amount of indebtedness outstanding at
any time during 2000 was $34.3 million. ElderTrust Operating Limited Partnership
recorded interest income on these loans of $2.6 million in 2000.

Additionally, at December 31, 2000, ElderTrust Operating Limited
Partnership had one term loan totaling $4.8 million with a Genesis Equity
Investee. The term loan had an original maturity of two years, subject to
extension by the borrower for one one-year term, with an interest rate of 9.5%.
The maturity date has been extended to May 2002. The interest rate was also
adjusted to 10% as part of the extention. The largest aggregate amount of
indebtedness outstanding at any time during 2000 was $4.8 million. The Operating
Partnership recorded interest income on this loan of $0.5 million in 2000.

Other Transactions between ElderTrust and its Equity Investees and Genesis
and Genesis Equity Investees

ET Sub-Meridian Limited Partnership, L.L.P. ElderTrust, through
ElderTrust Operating Limited Partnership, has a 99% limited partnership interest

in ET Sub-Meridian Limited Partnership, L.L.P. ("ET Sub-Meridian"). The 1%
general partner interest is owned by a limited liability company of which
Mr. McCreary is the sole member. ET Sub-Meridian owns the leasehold and purchase
option rights to seven skilled nursing facilities located in Maryland and
New Jersey, which it purchased from Genesis for $35.5 million in cash and
issuance of $8.5 million in term loans during September 1998. ElderTrust
guaranteed the $8.5 million promissory note of ET Sub-Meridian payable to
Genesis. The purchase options are exercisable by ET Sub-Meridian in
September 2008 for a cash exercise price of $66.5 million. At December 31, 2000,
ET Sub-Meridian had a $17.6 million subordinated demand loan bearing interest at
12% per annum payable to ElderTrust in connection with the above transaction.
The largest aggregate amount of indebtedness outstanding on the note payable
from ET Sub-Meridian at any time during 2000 was $17.6 million.

At December 31, 2000, ET Sub-Meridian subleased these seven properties
to subsidiaries of Genesis under minimum rent leases, each for an initial
ten-year period with a ten-year renewal option. ET Sub-Meridian received
sublease payments of $9.8 million in 2000 from these subsidiaries of Genesis.

ElderTrust recorded $2.1 million in interest income for the year ended
December 31, 2000 on the note payable from ET Sub-Meridian. ElderTrust also
recorded a loss of $2.5 million related to the portion of its equity interest in
ET Sub-Meridian's results of operations for the year ended December 31, 2000.

ET Sub-Heritage Andover, LLC
ET Sub-Vernon Court, LLC
ET Sub-Cabot Park, LLC
ET Sub-Cleveland Circle, LLC

ElderTrust, through four limited liability companies (ET Sub-Heritage
Andover, LLC, ET Sub-Vernon Court, LLC, ET Sub-Cabot Park, LLC, and ET
Sub-Cleveland Circle, LLC), has member interests in three assisted living
facilities and one independent living facility, which it acquired during
December 1998 from an unrelated third party. A Genesis Equity Investee leases
each of the facilities.

ElderTrust is the sole member of ET Sub-Heritage Andover, LLC, which,
accordingly, is consolidated into ElderTrust's consolidated financial statements
at December 31, 2000. In each of the remaining three limited liability
companies, ElderTrust has a 99% member interest. The 1% managing member interest
in these three companies is owned by a limited liability company of which Mr.
McCreary is the sole member. ElderTrust currently has the option to acquire the
1% managing member interest in ET Sub-Vernon Court, LLC from Mr. McCreary. The
option exercise price is $3,200. As ElderTrust has the ability to acquire the 1%
managing member interest in ET Sub-Vernon Court, LLC for a nominal amount, this
company is consolidated into ElderTrust's consolidated financial statements at
December 31, 2000.

At December 31, 2000, ET Sub-Cabot Park, LLC and ET Sub-Cleveland
Circle, LLC, equity investees of ElderTrust, each leased one property to a
Genesis Equity Investee under a minimum rent lease, with an initial term of ten

years and a ten-year renewal option. ET Sub-Cabot Park, LLC and ET Sub-Cleveland
Circle, LLC received aggregate lease payments of $3.0 million in 2000 from
Genesis Equity Investees.

ElderTrust recorded an aggregate loss of $342,000 related to the
portion of its equity interest in ET-Sub-Cabot Park, LLC's and ET Sub-Cleveland
Circle, LLC's results of operations for the year ended December 31, 2000.

Genesis and Multicare Chapter 11 Bankruptcy Filings; Lease and Loan
Restructurings

On June 22, 2000, Genesis and Multicare filed for protection under
chapter 11 of the U.S. Bankruptcy Code. During the balance of 2000, ElderTrust,
Genesis and Multicare and Genesis and Multicare's major creditors negotiated
agreements to restructure Genesis' and Multicare's loan and lease obligations
with the ElderTrust. The agreements were approved by the U.S. Bankruptcy Court
on January 4, 2001 and were consummated on January 31, 2001.

The agreements included the following lease and loan modifications:

o Twenty-one of the existing twenty-three lease agreements
between Genesis subsidiaries and ElderTrust continued in
effect in accordance with their terms, except as provided
below:
- Two leases were modified to reduce combined rents
for the properties by $745,000 per year;
- One lease was modified to create an early
termination right commencing on December 31, 2002;
and
- One lease was modified to permit ElderTrust to
terminate the lease during 2001 without penalty if
the current tenant is unable to achieve occupancy
targets specified by loan documents secured by
property.

o Two leases (Windsor Office Building and Windsor Clinic/
Training facility) were terminated when the two properties
subject to the leases were sold to Genesis for $1.25 million;
Genesis paid for the two properties through an increase in the
notes receivable described below;
o An $8.5 million loan previously guaranteed by ElderTrust and
owed to Genesis by ET Sub-Meridian (ET Sub-Meridian), an
unconsolidated subsidiary of ElderTrust, was conveyed to
ElderTrust in a manner to effect a $8.5 million reduction in
amounts owed to ElderTrust by Genesis;
o The maturity date for three loans (Oaks, Coquina and Mifflin)
made previously by ElderTrust to Genesis and affiliated
entities with unpaid principal balances totaling approximately
$7.5 million at June 30, 2000 (after taking into account the
aforementioned $1.25 million increase and $8.5 million
reduction) were extended to June 30, 2002 at the rates in
effect prior to the Genesis bankruptcy filing;
o The maturity date and interest rate for one loan (Harbor
Place) with a principal balance of approximately $4.8 million
made by ElderTrust to an entity in which Genesis owns a 100%
limited partner interest was extended to May 31, 2002 at a 10%
interest rate, an increase of 0.5%;

o ElderTrust acquired three properties secured by three loans
(Lehigh, Berkshire and Sanatoga) with outstanding principal
amounts totaling approximately $19.5 million, and having a net
book value of $12.5 million, at December 31, 2000, in exchange
for the outstanding indebtedness. These properties were then
leased back to Multicare under long-term operating lease
agreements. ElderTrust has no other transactions with this
entity; and
o ElderTrust is no longer obligated to purchase and leaseback
the Mifflin, Coquina Place, Oaks and Harbor Place properties.

In addition, the minimum rent for the Willowbrook and the
Phillipsburg facilities was reduced by $346,000 and $395,400, respectively, to
$295,000 and $177,500, respectively, per year. The lease term of the Rittenhouse
facility has been extended to 2018 representing a minimum increase of $8.9
million in additional rents over the extended term.

Performance Graph

The following graph compares the cumulative total shareholder return on
ElderTrust's common shares since January 27, 1998, the date ElderTrust's common
shares began trading on the New York Stock Exchange, with the cumulative total
shareholder return from January 27, 1998 through December 31, 2000 of (A) the
NAREIT Equity REIT Index for all REITs and (B) the NAREIT Health Care Equity
REIT Index. The comparison assumes $100 was invested on January 27, 1998 in
ElderTrust's common shares and in each of the indices and assumes reinvestment
of distributions. ElderTrust suspended the payment of cash distributions to its
shareholders in the third quarter of 2000.

[GRAPHIC OMITTED]

NAREIT NAREIT
Equity REIT Index Health Care
(all REITs) Equity REIT Index ElderTrust
------------------ ------------------ ----------
January 27, 1998 $100 $100 $100
December 31, 1998 85 83 69
December 31, 1999 81 63 46
December 31, 2000 103 79 38

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires
ElderTrust trustees, officers and beneficial owners of more than 10% of
ElderTrust's outstanding equity securities to file with the SEC initial reports
of ownership of ElderTrust's equity securities and to file subsequent reports
when there are changes in such ownership. Based on a review of reports submitted
to ElderTrust for 2000, ElderTrust believes that all Section 16(a) filing
requirements for that year applicable to such persons were complied with on a
timely basis except for Mr. Walker who was late filing one Form 4 covering a
total of five purchases.

Certain Relationships and Related Transactions

ElderTrust Operating Limited Partnership has a nonvoting 95% equity
interest in ET Capital Corp. ("ET Capital"). The remaining voting 5% equity
interest in ET Capital is owned by Mr. McCreary. Messrs. Walker and McCreary
serve as the directors of ET Capital. Mr. McCreary is president, Secretary and
Treasurer of ET Capital. As of December 31, 1999, ET Capital owned a $7.8
million second trust mortgage note executed by AGE Institute of Florida, which
it acquired from Genesis during 1998. This note is secured by a second lien on
11 Florida skilled nursing facilities owned by AGE Institute of Florida and a
second lien on accounts receivable and other working capital assets. The $40.0
million first mortgage loan that is guaranteed by Genesis, is held by a third
party. The facilities were managed by subsidiaries of Genesis through September
30, 2000. The AGE Institute of Florida's second mortgage note to ET Capital
matures on September 30, 2008 with payments of interest only, at a fixed annual
rate of 13% due quarterly until the note is paid in full. The borrower ceased
making interest payments to ET Capital during the quarter ended June 30, 2000
and since June 2000 the borrower has been in default under the $40.0 million
first mortgage loan. ET Capital recorded a provision for bad debts of $8.8
million as of December 31, 2000 for interest and principal due on the $7.8
million second trust mortgage note through December 31, 2000.

ElderTrust recorded $0.7 million in interest income for the year ended
December 31, 2000 on the notes payable from ET Capital. ElderTrust also recorded
a loss of $7.2 million related to the portion of its equity interest in ET
Capital's results of operations for the year ended December 31, 2000. In
addition, ElderTrust recorded an impairment loss of $1.4 million on the
remaining balance of the notes receivable from ET Capital issued in connection
with the second mortgage transaction.

In addition to the AGE Institute of Florida second trust mortgage note,
ET Capital has notes receivable aggregating $4.4 million at December 31, 2000
from two of ElderTrusts' Equity Investees and one of ElderTrusts' consolidated
subsidiaries. These loans mature at various dates from April 2008 to December
2011 and bear interest at 14% per annum with interest and principal payable
monthly. ET Capital's long-term debt includes two demand promissory notes
payable to ElderTrust aggregating $5.9 million at December 31, 2000 in
connection with the above second mortgage note transaction. These notes bear
interest at a weighted average rate of 12.1% per annum with interest only
payable quarterly. ET Capital ceased making interest payments, on these notes to
ElderTrust during the quarter ended June 30, 2000. Management of ElderTrust has
determined that these notes are fully impaired at December 31, 2000.

In addition, ET Capital has loans payable to ElderTrust aggregating
$3.3 million, bearing interest at 15% and maturing at various dates from April
2008 to December 2011. Payments on these notes were current at December 31,
2000.

For a description of other transactions involving ElderTrust and its trustees,
see "Compensation Committee Interlocks and Insider Participation."

SECURITIES OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of ElderTrust common shares, including common shares that
may be issued in exchange for units of limited partnership of the ElderTrust
Operating Limited Partnership presented for redemption and upon exercise of
options exercisable within 60 days, for (a) each trustee and executive officer
of ElderTrust, (b) each person believed by management to beneficially own more
than 5% of the outstanding common shares and (c) all trustees and executive
officers as a group. The information is as of March 30, 2001. Except as
indicated below, each person has sole voting and investment power.

Units of
Limited
Number of Partnership of Common Percent of
Common the Operating Share All Common
Name of Beneficial Owner Shares Partnership Options Total Shares
- ------------------------- --------- -------------- ------- ----- ----------

Michael R. Walker 427,035 318,975 164,000 910,010 12.8%

George Weaver
642 Second Street
Brooklyn, NY 11215 400,000 - - 400,000 5.6

D. Lee McCreary, Jr. 33,703 12,000 190,000 235,703 3.3

Harold Zuber, Jr. 160,700 - - 160,700 2.3

Rodman W. Moorhead, III 37,500 - 21,500 59,000 *

John G. Foos 1,500 - 14,000 15,500 *

John H. Haas - - 5,000 5,000 *

All trustees and executive officers as
a group (6 persons)(1) 660,438 330,975 394,500 1,385,913 19.5

- -------------------------
* Less than one percent.

(1) Total excludes Mr. George Weaver.

INDEPENDENT PUBLIC ACCOUNTANTS

The board of trustees has appointed KPMG LLP to act as the Company's
independent public accountants for 2001. Representatives of KPMG LLP will be
present at the annual meeting. They will be given an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.

KPMG LLP's fees for providing services to ElderTrust in 2000 were as
follows:

Audit Fees

Audit fees billed for services rendered in connection with Eldertrust's
annual audit of 2000 financial statements and the review of quarterly financial
statements for each quarter ended March 31, 2000, June 30, 2000, September 30,
2000 and December 31, 2000 were $92,500.

Financial Information Systems Design and Implementation Fees

None.

Other Fees

The audit committee of the board of trustees has considered whether the
provision of the foregoing non-audit services by KPMG LLP is compatible with
maintaining KPMG LLP's independence.

Other fees for other services performed by KPMG, LLP totaled $10,700.

DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS

Proposals of shareholders intended to be presented at the 2002 annual
meeting must be received by ElderTrust no later than December 24, 2001 pursuant
to the proxy soliciting rules of the SEC in order to be considered for inclusion
in ElderTrust's proxy statement and form of proxy relating to the 2002 annual
meeting. Nothing in this paragraph shall be deemed to require ElderTrust to
include in its proxy statement and proxy relating to the 2002 annual meeting any
shareholder proposal which may be omitted from its proxy materials pursuant to
applicable regulations of the SEC in effect at the time such proposal is
received.

Pursuant to ElderTrust's bylaws, any shareholder who intends to present
a proposal for action at the 2002 annual meeting also must have delivered notice
to the principal executive offices of ElderTrust not later than the close of
business on March 25, 2002 nor earlier than the close of business on February
21, 2002; however, if the date of the 2002 annual meeting is advanced by more
than 30 days or delayed by more than 60 days from May 22, 2002 notice by the
shareholder to be timely must be delivered not earlier than the close of
business on the 90th day prior to the 2002 annual meeting and not later than the
close of business on the later of the 60th day prior to the 2002 annual meeting
or the tenth day following the day on which public announcement of the date of
the 2002 annual meeting is first made by ElderTrust.

OTHER BUSINESS TO BE TRANSACTED

The board of trustees does not know of any other matters to be
presented for action by the shareholders at the annual meeting. If, however, any
other matters not now known are properly brought before the meeting, the persons
named in the accompanying proxy will vote such proxy in accordance with the
determination of a majority of the board of trustees.

By Order of the Board of Trustees

/s/ D. Lee McCreary, Jr.
------------------------

D. Lee McCreary, Jr.
President, Chief Executive
Officer, Chief Financial Officer,
Treasurer and Secretary

Kennett Square, Pennsylvania
April 23, 2001

ANNEX A

ELDERTRUST
----------

AUDIT COMMITTEE CHARTER

I. PURPOSE

The primary function of the Audit Committee is to assist the Board of
Trustees in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures and practices
at all levels. The Audit Committee's primary duties and responsibilities are to:

Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.

Review and appraise the audit efforts of the Corporation's independent
accountants and, if applicable, its internal auditing department.

Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing department
(if applicable), and the Board of Trustees.

The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.

II. COMPOSITION

The Audit Committee shall be comprised of two or more trustees as
determined by the Board, each of whom shall be independent and non-management
directors, and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of the
Committee shall have accounting or related financial management expertise.

The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.

III. MEETINGS

The Committee shall meet at least two times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee should meet at least annually with management, the
director of the internal auditing

A-1

department (if applicable) and the independent accountants in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed privately. The Committee should communicate its
activities to the full Board of Trustees on a regular basis.

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Audit Committee shall:

Documents/Reports Review

Review and update this Charter periodically as conditions dictate.

Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by the
independent accountants.

Review the regular internal reports to management prepared by the
internal auditing department and management's response (if applicable).

Review with financial management and, if appropriate, the independent
accountants the 10-Q prior to its filing or prior to the release of earnings.

Independent Accountants

Recommend to the board of trustees the selection of the independent
accountants, considering independence and effectiveness and approve the fees and
the other compensation to be paid to the independent accountants. On an annual
basis, the Committee should review and discuss with the accountants all
significant relationships, including non-audit work, the accountants have with
the Corporation to determine the accountants' independence.

Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances warrant.

Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and accuracy of
the organization's financial statements.

Financial Reporting Processes

In consultation with the independent accountants and (if applicable)
the internal auditors, review the integrity of the organization's financial
reporting processes, both internal and external.

Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.

A-2

Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as suggested by
the independent accountants, management, or (if applicable) the internal
auditing department.

Process Improvement

Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and (if applicable)
the internal auditors regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
appropriateness of such judgments.

Following completion of the annual audit review separately with
each of management, the independent accountants and (if applicable) the internal
auditing department any significant difficulties encountered during the course
of the audit, including any restrictions on the scope of work or access to
required information.

Review any significant disagreement among management and the
independent accountants or (if applicable) the internal auditing department in
connection with the preparation of the financial statements.

Review with the independent accountants, the internal auditing
department (if applicable) and management the extent to which changes or
improvements in financial or accounting practices, as approved by the Audit
Committee, have been implemented.

Ethical and Legal Compliance

Establish and review a Code of Ethical Conduct and ensure that
management has established a system to enforce this Code.

Review the Corporation's procedures for compliance with laws and
government regulations and review any specific legal matter that could have a
significant impact on the organization's financial statements.

Periodically review the Corporation's need to create an internal
audit department.

Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board deems
necessary or appropriate.

A-3

ELDERTRUST
101 East State Street, Suite 100, Kennett Square, PA 19348
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - MAY 22, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned shareholder of ElderTrust hereby appoints D. Lee McCreary,
Jr. and John H. Haas, and each of them, with full power of substitution, as
proxies to cast all votes, as designated below, which the undersigned
shareholder is entitled to cast at the 2001 annual meeting of shareholders to be
held on May 22, 2001 at 10 a.m., local time, at 101 East State Street, Kennett
Square, PA 19348, and at any adjournments, upon the following matters:

(Continued and to be signed on reverse side)

THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED SHAREHOLDER. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1 AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF A
MAJORITY OF THE BOARD OF TRUSTEES AS TO OTHER MATTERS.

1. To elect two trustees each for three-year terms:
Michael R. Walker and Harold L. Zuber, Jr.

FOR both nominees listed WITHHOLD AUTHORITY
above to vote for both nominees
listed above

o o

(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)

________________________________________________________________________________

2. As determined by a majority of ElderTrust's board of
trustees, the proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournments.

The undersigned shareholder hereby acknowledges receipt of the
Notice of Annual Meeting and Proxy Statement and hereby revokes any proxy or
proxies heretofore given. This proxy may be revoked at any time prior to its
exercise.

If you receive more than one proxy card, please date, sign and
return all cards in the accompanying envelope.

Signature:________________________________

Date:_____________________________________
(Please date and sign here exactly as name
hereon. When signing as attorney,
administrator, trustee or guardian, give
full title as such; and when stock has
been issued in the name of two or more
persons, all should sign.)