<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
USF&G PACHOLDER FUND, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
USF&G PACHOLDER FUND, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
USF&G PACHOLDER FUND, INC.
Bank One Towers, East Tower 8044 Montgomery Road, Suite 382 Cincinnati, Ohio
45236
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 9, 1996
---------------------
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of USF&G
Pacholder Fund, Inc. (the "Fund") will be held on Friday, February 9, 1996, at
9:00 o'clock a.m., Eastern time, at The Harley Hotel, 8020 Montgomery Road,
Cincinnati, Ohio 45236, for the following purposes:
1. To elect a Board of seven Directors to serve until the next annual
meeting and until their successors are elected and qualified;
2. To ratify or reject the selection of the firm of Deloitte & Touche LLP
as the Fund's independent accountants for the fiscal year ending December
31, 1995; and
3. To consider and act upon such other business as may properly come
before the meeting and any adjournments thereof.
James P. Shanahan, Jr.,
Secretary
Shareholders of record at the close of business on December 28, 1995 are
entitled to notice of and to vote at the meeting.
December 29, 1995
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. YOUR
PROMPT RETURN OF THE PROXY WILL HELP ENSURE A QUORUM AT THE MEETING AND
AVOID THE EXPENSE TO THE FUND OF FURTHER SOLICITATION.
- --------------------------------------------------------------------------------
<PAGE>
USF&G PACHOLDER FUND, INC.
Bank One Towers, East Tower 8044 Montgomery Road, Suite 382 Cincinnati, Ohio
45236
---------------------
PROXY STATEMENT
---------------------
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of USF&G Pacholder Fund, Inc. (the
"Fund") for use at the annual meeting of shareholders to be held on February
9, 1996, and at any adjournments thereof. If the enclosed proxy is executed
properly and returned in time to be voted at the meeting, the shares
represented will be voted according to the instructions contained therein.
Executed proxies that are unmarked will be voted for the election of all
nominees for director and in favor of all other proposals. A proxy may be
revoked at any time prior to its exercise by filing with the Secretary of the
Fund a written notice of revocation, by delivering a duly executed proxy
bearing a later date, or by attending the meeting and voting in person.
The Fund's Annual Report to Shareholders, including audited financial
statements for the fiscal year ended December 31, 1994, has been previously
mailed to shareholders. This proxy statement was first mailed to shareholders
on or about December 29, 1995.
The Board of Directors has fixed the close of business on December 28, 1995
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting and any adjournments thereof. As of the record
date, the Fund had outstanding 4,968,638 shares of Common Stock, par value
$.01 per share, and 1,650,000 shares of 6.95% Cumulative Preferred Stock, par
value $.01 per share, each share being entitled to one vote. As of such date,
Cede & Co., nominee for The Depository Trust Company, 55 Water Street, New
York, New York 10046, held of record (and not beneficially) 91.7% of the
Fund's outstanding common stock. According to information available to the
Fund, as of the record date, USF&G Corporation, 100 Light Street, Baltimore,
Maryland 21202, and its affiliates (including their employee benefit plans)
were the beneficial owner of 5.4% of the outstanding common stock of the Fund;
and Principal Mutual Life Insurance Company, 711 High Street, Des Moines, Iowa
50392, owned of record all of the Fund's outstanding preferred stock. On the
record date, the directors and officers of the Fund as a group owned less than
one percent of the Fund's outstanding shares.
A majority of the shares of the Fund outstanding as of the record date must
be present in person or represented by proxy for the transaction of business
at the annual meeting. If a quorum is present at the meeting but sufficient
votes in favor of one or more proposals are not received, the persons named as
proxies may propose one or more adjournments of the meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of a majority of the shares present at the meeting or represented by
proxy. The persons named as proxies will vote in favor of such adjournment if
they determine that adjournment and additional solicitation is reasonable and
in the interests of shareholders of the Fund.
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
The Board of Directors has nominated the seven persons listed below for
election as directors, each to hold office until the next annual meeting of
shareholders and until his successor is elected and qualified. Each of the
nominees is currently serving as a director of the Fund. Each director, other
than Mr. George D. Woodard, was elected by the shareholders of the Fund at the
annual meeting held on August 15, 1994. Mr. Woodard was elected by the Board
of Directors on January 16, 1995 to fill a vacancy on the board. Each nominee
has consented to being named in this proxy statement and has agreed to serve
as a director of the Fund if elected; however, should any nominee become
unable or unwilling to accept nomination or election, the persons named in the
proxy will exercise their voting power in favor of such other person or
persons as the Board of Directors of the Fund may recommend. There are no
family relationships among the nominees.
Under the Fund's charter, the holders of the outstanding shares of the
Fund's common stock, voting as a separate class, are entitled to elect two
directors; the holders of the outstanding shares of the Fund's preferred
stock, voting as a separate class, are entitled to elect two directors; and
the holders of the outstanding shares of common and preferred stock, voting
together as a single class, are entitled to elect the remaining three
directors of the Fund. The Board of Directors has nominated Messrs. Morgan and
Pacholder for election by the holders of the common stock and Messrs. Woodard
and Shanahan for election by the holders of the preferred stock. The directors
will be elected by a plurality of the votes cast at the meeting, provided that
a quorum is present.
<TABLE>
<CAPTION>
YEAR FIRST BENEFICIALLY
POSITION WITH ELECTED AS PRINCIPAL OCCUPATION DURING OWNED AS OF
NAME AND ADDRESS THE FUND A DIRECTOR PAST FIVE YEARS AND AGE DECEMBER 18, 1995
---------------- ------------- ---------- --------------------------- -----------------
<C> <S> <C> <C> <C>
Asher O. Pacholder* Chairman of the Board 1988 Chairman and Chief Executive 8,994
Bank One Towers Officer, Pacholder
8044 Montgomery Road Associates, Inc. and Chief
Cincinnati, OH 45236 Financial Officer, ICO, Inc.
(since 1995). Director, AM
International, Inc. (graphic
arts equipment & supplies),
ICO, Inc. (oil field
services), Southland Corp.
(convenience food stores)
and Trump's Castle
Associates (casino). Age 58.
James P. Shanahan, Jr.* Secretary and Director 1988 Executive Vice President and 10,500
Bank One Towers General Counsel, Pacholder
8044 Montgomery Road Associates, Inc. Director,
Cincinnati, OH 45236 LaBarge, Inc. (electronic
components and devices). Age
34.
William J. Morgan* Executive Vice 1988 President and Secretary, 9,210
Bank One Towers President, Treasurer and Pacholder Associates, Inc.
8044 Montgomery Road Director Director, Duckwall--ALCO
Cincinnati, OH 45236 Stores, Inc. (variety &
discount stores), ICO, Inc.
(oil field services) and
Kaiser Ventures, Inc.
(sanitary services). Age 41.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
POSITION YEAR FIRST BENEFICIALLY
WITH ELECTED AS PRINCIPAL OCCUPATION DURING OWNED AS OF
NAME AND ADDRESS THE FUND A DIRECTOR PAST FIVE YEARS AND AGE DECEMBER 18, 1995
---------------- -------- ---------- --------------------------- -----------------
<C> <S> <C> <C> <C>
Daniel A. Grant Director 1992 President, Utility 1,236
5394 Royal Hills Drive Management Services (since
St. Louis, MO 63129 1991); Vice President and
Assistant Treasurer,
Community Federal Savings
and Loan Association for
more than five years prior
thereto. Age 51.
John C. Sweeney* Director 1992 Senior Vice President and 0
100 Light Street Chief Investment Officer,
Baltimore, MD 21202 USF&G Investment Management
Group, Inc. (since 1992);
Principal and Practice
Director, Towers Perrin
Asset Consulting Services
(1985 to 1992). Age 50.
John F. Williamson Director 1991 Financial Consultant; 2,438
4740 Roanoke Parkway Director, ICO, Inc. (oil
# 601 field services); Vice
Kansas City, MO 64112 President and Senior
Portfolio Manager, American
Life & Casualty Insurance
Co. (February 1993 to
October 1994); Financial
Consultant (1991 to 1992);
Senior Vice President and
Treasurer, Community Federal
Savings and Loan Association
for five years prior
thereto. Age 57.
George D. Woodard Director 1995 Vice President, Rider Kenley 2,000
13440 N. 13th Street & Associates (accounting and
Phoenix, AZ 85022 tax services) since 1994;
Principal, George D.
Woodard, C.P.A. for more
than five years prior
thereto. Age 49.
</TABLE>
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* Nominees considered "interested persons" of the Fund (as defined in the
Investment Company Act of 1940) by reason of their affiliations with the
Fund's investment adviser.
Directors and officers of the Fund who are employed by the Fund's investment
adviser or a corporate affiliate of the investment adviser, or are retired
from such employment, serve without compensation from the Fund. The Fund pays
each director who is not an employee of the investment adviser or any
corporate affiliate of the investment adviser an annual fee of $10,000 plus
$1,000 for each meeting of the Board of Directors attended, and reimburses
directors for travel and other out-of-pocket expenses incurred by them in
connection with attending such meetings. The following table provides
compensation information for the fiscal year ended
3
<PAGE>
December 31, 1994 for all of the Fund's directors and the highest-paid
executive officers who received compensation from the Fund in excess of
$60,000.
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM FUND AND
NAME OF PERSON, COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX PAID
POSITION FUND FUND EXPENSES RETIREMENT TO DIRECTORS
- --------------- ----------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Asher O. Pacholder, 0 0 0 0
Chairman of the Board
James P. Shanahan, Jr. 0 0 0 0
Secretary and Director
William J. Morgan, 0 0 0 0
Executive Vice
President, Treasurer and
Director
Stephen F. Berman $ 6,500 0 0 $ 6,500
Director(/1/)
Daniel A. Grant, $14,500 0 0 $14,500
Director
Walter J. Olson, III, $10,000 0 0 $10,000
Director(/2/)
John C. Sweeney, 0 0 0 0
Director
John F. Williamson, $14,500 0 0 $14,500
Director
</TABLE>
- --------
(1) Mr. Berman resigned from the Board of Directors effective as of August 15,
1994.
(2) Mr. Olson resigned from the Board of Directors effective as of December
19, 1994.
For the fiscal year ended December 31, 1994, the directors of the Fund as a
group received aggregate remuneration from the Fund of $45,500.
The Board of Directors has an Audit Committee which makes recommendations to
the Board of Directors with respect to the engagement of the Fund's
independent accountants and reviews with the independent accountants the scope
and results of the audit engagement and matters having a material effect upon
the financial operations of the Fund. The Audit Committee also reviews the
pricing of illiquid securities held in the Fund's portfolio. The members of
the Audit Committee are Daniel A. Grant, John F. Williamson and George D.
Woodard. It is anticipated that Messrs. Grant, Williamson and Woodard will
comprise the Audit Committee of the new Board of Directors. The Board of
Directors does not have a Nominating Committee.
During the fiscal year ended December 31, 1994, the Board of Directors met
five times. No director attended fewer than seventy-five percent of the board
meetings. The Audit Committee held one meeting during 1994 at which all
committee members were in attendance.
4
<PAGE>
The names and business addresses of the Fund's executive officers who are
not directors, and their principal occupations during the past five years, are
set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS POSITION(S) WITH THE FUND DURING PAST FIVE YEARS
- ---------------- ------------------------- ----------------------
<S> <C> <C>
Anthony A. Longi, Jr. President Executive Vice President,
Bank One Towers Pacholder Associates, Inc.
8044 Montgomery Road
Cincinnati, Ohio 45236
James E. Gibson Senior Vice President Senior Vice President,
Bank One Towers Pacholder Associates, Inc.
8044 Montgomery Road
Cincinnati, OH 45236
Mark H. Prenger Assistant Treasurer Assistant Vice President,
Bank One Towers Pacholder Associates, Inc.
8044 Montgomery Road
Cincinnati, OH 45236
</TABLE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(Proposal 2)
The Board of Directors, including all of the directors who are not
"interested persons" of the Fund (as defined in the Investment Company Act of
1940), has selected the firm of Deloitte & Touche LLP as the Fund's
independent accountants for the fiscal year ending December 31, 1995. The
employment is conditioned on the right of the Fund to terminate the employment
without penalty by vote of a majority of the outstanding securities of the
Fund (as defined in the Investment Company Act of 1940). Deloitte & Touche LLP
currently serves as the Fund's independent accountants and the Fund's
financial statements for the fiscal year ended December 31, 1994 have been
audited by Deloitte & Touche LLP, which expressed an unqualified opinion on
such financial statements. A representative of Deloitte & Touche LLP is
expected to be present at the meeting and will be available to respond to
appropriate questions raised at the meeting and to make a statement if he
wishes to do so.
Ratification of the selection of the firm of Deloitte & Touche LLP requires
the affirmative vote of a majority of all the votes cast at the meeting. For
this purpose, abstentions will be treated as shares present at the meeting for
quorum purposes but not voting and will have the same effect as votes cast
against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF
THE SELECTION OF DELOITTE & TOUCHE LLP. If the selection of Deloitte & Touche
LLP is not ratified by shareholders, the firm will not serve as the Fund's
independent accountants for the fiscal year ending December 31, 1995 and the
Board of Directors will be required to select new independent accountants.
INVESTMENT ADVISER
Pacholder & Company, Bank One Towers, East Tower, 8044 Montgomery Road,
Suite 382, Cincinnati, Ohio 45236, serves as investment adviser to the Fund
pursuant to an Investment Advisory Agreement dated November 16, 1988.
Pacholder & Company is a general partnership between Pacholder Associates,
Inc.
5
<PAGE>
("Pacholder") and USF&G Marketing Services Co., which each have a fifty-
percent partnership interest. USF&G Marketing Services Co. is an indirect
wholly-owned subsidiary of USF&G Corporation. Asher O. Pacholder, William J.
Morgan and James P. Shanahan, Jr., officers and directors of the Fund, are
shareholders, officers or directors of Pacholder. James E. Gibson, Mark H.
Prenger and Anthony A. Longi, Jr., officers of the Fund, are officers of
Pacholder. John C. Sweeney, a director of the Fund, is an officer of USF&G
Corporation.
ADMINISTRATIVE AND ACCOUNTING SERVICES
Investment Company Capital Corp. (the "Administrator") serves as
administrator of the Fund pursuant to an Administrative Agreement dated
October 24, 1988. The Administrator is a wholly-owned subsidiary of Alex.
Brown & Sons Incorporated and is located at 135 East Baltimore Street,
Baltimore, Maryland 21202.
Pursuant to an Accounting Services Agreement with the Fund, Pacholder
Associates, Inc. is responsible for (i) accounting relating to the Fund and
its investment transactions, (ii) determining the net asset value per share of
the Fund, (iii) maintaining the Fund's books of account, and (iv) monitoring,
in conjunction with the Fund's custodian, all corporate actions taken in
respect of securities held by the Fund. Pacholder Associates, Inc. is a
general partner of the Fund's investment adviser and is located at Bank One
Towers, East Tower, 8044 Montgomery Road, Suite 382, Cincinnati, Ohio 45236.
SOLICITATION OF PROXIES
In addition to solicitation by mail, solicitations on behalf of the Board of
Directors may also be made by personal interview, telegram and telephone.
Certain officers and regular agents of the Fund, who will receive no
additional compensation for their services, may use their efforts, by
telephone or otherwise, to request the return of proxies. The costs of
preparing, assembling, mailing and transmitting proxy materials and of
soliciting proxies on behalf of the Board of Directors will be borne by the
Fund. The Fund will reimburse, upon request, broker-dealers and other
custodians, nominees and fiduciaries for their reasonable expenses of sending
proxy soliciting material to beneficial owners.
OTHER BUSINESS
The management of the Fund knows of no other business that may come before
the annual meeting. If any additional matters are properly presented at the
meeting, the persons named in the enclosed proxy, or their substitutes, will
vote such proxy in accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal for inclusion in the proxy
statement for the next annual meeting of shareholders, such proposal must be
submitted in writing and received by the Secretary of the Fund on or before
March 1, 1996.
ANNUAL REPORT
The Fund's annual report for the fiscal year ended December 31, 1994 and the
semi-annual report for the six month period ended June 30, 1995 are available
at no charge by writing to the Fund at Bank One Towers, 8044 Montgomery Road,
Suite 382, Cincinnati, Ohio 45236, or by calling 1-800-426-5523.
6
<PAGE>
PROXY
USF&G PACHOLDER FUND, INC.
6.95% Cumulative Preferred Stock, $.01 Par Value
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Anthony A. Longi, Jr. and James P.
Shanahan, Jr., and each of them, as proxies with power of substitution, and
hereby authorize each of them to represent and to vote as designated below, all
the shares of 6.95% Cumulative Preferred Stock, par value $.01 per share, of
USF&G Pacholder Fund, Inc. which the undersigned is entitled to vote at the
annual meeting of shareholders to be held on February 9, 1996, and at any
adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is given, this proxy will
be voted "FOR" the election of all nominees for Director and "FOR" Proposal 2.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
1. Election of Directors: [_] FOR [_] WITHHOLD [_] FOR ALL EXCEPT
Instruction: To withhold authority to vote for any individual nominee, mark
the "For All Except" box and strike a line through the nominee(s) name. Your
shares will be voted for the remaining nominee(s).
Daniel A. Grant, James P. Shanahan, Jr., John C. Sweeney, John F.
Williamson and George D. Woodard
2. FOR [_] AGAINST [_] ABSTAIN [_] with respect to ratification of the
selection of Deloitte & Touche LLP
as independent accountants.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
---------------------------------
Name:
Title:
Dated:
------------------------------
<PAGE>
PROXY PROXY
USF&G PACHOLDER FUND, INC.
Common Stock, $.01 Par Value
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Anthony A. Longi, Jr. and James P. Shanahan, Jr.
and each of them, as proxies with power of substitution, and hereby authorizes
each of them to represent and to vote as designated on the reverse of this card,
all the shares of Common Stock, par value $.01 per share, of USF&G Pacholder
Fund, Inc. which the undersigned is entitled to vote at the annual meeting of
shareholders to be held on February 9, 1996, and at any adjournments thereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is given, this proxy will be voted
"FOR" the election of all nominees for Director and "FOR" Proposal 2. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign this proxy exactly as your name appears on this proxy. An executor,
administrator, trustee or guardian should sign as such. If more than one
trustee, all should sign. ALL JOINT OWNERS MUST SIGN. If a corporation, please
provide the full name of the corporation and the name of the authorized officer
signing on his behalf.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------ --------------------------------------
- ------------------------------------ --------------------------------------
- ------------------------------------ --------------------------------------
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1.) Election of Directors. [_] [_] [_]
Daniel A. Grant, William J. Morgan, Arthur O. Pacholder,
John C. Sweeney and John F. Williamson
Instruction: To withhold authority to vote for any individual nominee, mark
the "For All Except" box and strike a line through the nominee(s) name. Your
shares will be voted for the remaining nominee(s).
For Against Abstain
2.) With respect to ratification of the [_] [_] [_]
selection of Deloitte & Touche LLP
as independent accountants.
---------------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shareholder sign here Co-owner sign here
Mark box at right if comments or address change have been
noted on the reverse side of this card. [_]
RECORD DATE SHARES:
