<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Dear Stockholders:
Through the nine months ended September 30, 1999, the Pacholder Fund, Inc.'s
(the "Fund") total return was 0.61% compared to 1.17% for the CS First Boston
Global High Yield IndexTM (the "Index"). During the quarter ended September 30,
1999, the Fund's total return was -3.49% compared to the Index return of -
1.60%. The Fund's underperformance in the third quarter was primarily due to
its leverage as well as its higher exposure to credits rated single-B and below,
which were more negatively impacted in the current environment than higher rated
credits. In addition, the Fund does not invest in emerging market high yield
debt, a segment of the market that posted strong results for the quarter.
Overview of Third Quarter 1999
Interest rates fluctuated significantly during the quarter as the yield on
the benchmark 10-Year Treasury Note ranged from 5.63% to 6.15%, and closed the
quarter at 5.88%. September was the first month since March of this year that
interest rates did not rise. Investors still have concerns about additional
rate increases by the Federal Reserve. Although the Fed left short-term
borrowing rates unchanged at its last scheduled meeting on October 5th, it
shifted to a tightening bias, keeping interest rate worries alive.
Spreads on high yield bonds widened during the quarter for a number of
reasons. First, rising interest rates put pressure on most fixed income classes,
including high yield. Second, outflows from open-end high yield bond funds
forced some fund managers to sell bonds to raise cash for redemptions.
Additionally, trading activity remained light, even after the traditionally slow
Labor Day holiday. High yield trading desks are keeping their inventories low
going into year-end, further restricting secondary trading activity. Due to
these factors, the spread-to-Treasuries of the Index widened from 574 basis
points on June 30, 1999 to 632 basis points on September 30, 1999. The average
price of the Index continued to slide as interest rates rose and spreads
widened, falling from 89.29% of par to 86.12% of par during the quarter.
The Fund's portfolio is sufficiently diversified with investments in 134
companies across 28 different industries. Our highest portfolio concentration
continues to be in the Telecommunications and Broadcasting segments of the
market, areas that we believe will continue to provide good returns for the
Fund. They account for 16.6% and 8.1% of the portfolio, respectively. Our
investments in paging companies have been the only significant underperformers
in the Telecommunications segment of the portfolio. However, we believe that our
holdings in this area have good long-term value, and we expect these investments
to recover as the sector continues to consolidate. Certain investments in the
Food Service segment of the portfolio, most notably the restaurant portion, also
underperformed during the quarter. On the positive side, we have seen a rebound
in most of the Fund's investments that are tied to basic commodities due to the
continued recovery of energy and forest product prices. We also had a few
investments that outperformed the market due to merger and acquisition activity.
Performance Summary
The performance of the Fund as compared to the Index is illustrated in the
following table.
[PERFORMANCE CHART APPEARS HERE]
Performance Comparison*
(For the nine months ended September 30, 1999)
Since
Nine Inception
Months (Annualized)**
Pacholder Fund, Inc.*** 0.61% 10.48%
CS First Boston Global High Yield Index(TM) 1.17% 10.00%
*The CS First Boston High Yield Index(TM) is an unmanaged index that
is widely used as a measurement of high yield market performance.
These figures assume reinvestment of interest, dividends, and capital
gains distributions and participation in rights offerings, as
applicable. Past performance is no guarantee of future results.
**Inception date--November 11, 1988.
***Return based on Net Asset Value.
As always, we appreciate your interest in the Fund and look forward to your
continued support.
Sincerely,
Anthony L. Longi, Jr.
President
November 5, 1999
- --------------------------------------------------------------------------------
PHF WEB SITE
We are pleased to announce that we have created a web site for the Pacholder
Fund, Inc. To access this site via the Internet type:
www.phf-hy.com
Included in the site is information on the Fund's NAV, share price, news
releases, and SEC filings. We created this site to provide shareholders quick
and easy access to the timeliest information available regarding the Fund.
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
The Fund's Dividend Reinvestment Plan offers you an automatic way to reinvest
your dividends and capital gains distributions in additional shares of the
Fund. For an enrollment form and detailed information about the Plan, please
contact Firstar Bank, N.A. Corporate Trust Services, 425 Walnut Street, ML
5125, P.O. Box 1118, Cincinnati, OH 45201-1118, (800) 637-7549.
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
CORPORATE DEBT SECURITIES -- 95.3%
AUTO PARTS & EQUIPMENT -- 4.5%
Dura Operating Corp., Sr Sub Nt, 9%, 5/1/09 $ 1,600 $ 1,480,000 0.7%
Group 1 Automotive, Inc., Sr Sub Nt, 10.875%,
3/1/09 1,500 1,425,000 0.7
Harvard Industries, Inc., Sr Sec Nt, 14.5%,
9/1/03 1,500 1,710,000 0.9
Hayes Lemmerz Intl, Inc., Sr Sub Nt, 9.125%,
7/15/07 1,500 1,410,000 0.7
JL French Automotive Castings, Inc., Sr Sub Nt,
11.5%, 6/1/09/2/ 1,000 987,500 0.5
JPS Automotive Products Corp., Sr Nt, 11.125%,
6/15/01 1,350 1,377,000 0.7
Safety Components International, Inc., Sr Sub Nt,
10.125%, 7/15/07 1,000 650,000 0.3
------------ ---
9,039,500 4.5
BEVERAGE & TOBACCO -- 0.5%
National Wine & Spirits, Inc., Sr Nt, 10.125%,
1/15/09 1,000 992,500 0.5
------------ ---
BROADCAST RADIO & TV -- 7.4%
Ackerly Group, Inc., Sr Sub Nt, 9%, 1/15/09 1,000 958,750 0.5
Citadel Broadcasting Company, Sr Sub Nt, 10.25%,
7/1/07 1,500 1,537,500 0.8
Cumulus Media, Inc., Sr Sub Nt, 10.375%, 7/1/08 2,000 2,045,000 1.0
Granite Broadcasting Corp., Sr Sub Nt, 10.375%,
5/15/05 2,375 2,422,500 1.2
Lamar Advertising Co., Sr Sub Nt, 9.25%, 8/15/07 1,000 1,000,000 0.5
Radio One, Inc., Sr Sub Nt, 7/12%, 5/15/04 2,220 2,275,500 1.1
Salem Communications, Sr Sub Nt, 9.5%, 10/1/07 1,000 1,000,000 0.5
Spanish Broadcasting System, Sr Nt, 12.5%,
6/15/02 500 562,500 0.3
Spanish Broadcasting System, Sr Nt, 11%, 3/15/04 1,000 1,075,000 0.5
Tri-State Outdoor Media, Sr Nt, 11%, 5/15/08 2,000 1,965,000 1.0
------------ ---
14,841,750 7.4
</TABLE>
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
BUILDING -- 4.9%
American Builders & Contractors Supply Co., Inc.,
Sr Sub Nt, 10.625%, 5/15/07 $ 2,500 $ 2,253,125 1.1%
Associated Materials, Inc., Sr Sub Nt, 9.25%,
3/1/08 1,000 920,000 0.5
Fedders North America, Inc., Sr Sub Nt, 9.375%,
8/15/07 1,500 1,455,000 0.7
MMI Products, Inc., Sr Sub Nt, 11.25%, 4/15/07 2,000 2,025,000 1.0
Omega Cabinets, Ltd, Sr Sub Nt, 10.5%, 6/15/07 2,250 2,182,500 1.1
Williams Scotsman, Inc., Sr Nt, 9.875%, 6/1/07 1,000 950,000 0.5
------------ ---
9,785,625 4.9
BUSINESS SERVICES & EQUIPMENT -- 2.4%
Knoll Inc., Sr Sub Nt, 10.875%, 3/15/06 1,525 1,692,750 0.8
Pierce Leahy Command Corp., Sr Nt. 8.125%,
5/15/08 1,000 930,000 0.5
Pierce Leahy Corp., Sr Sub Nt, 11.125%, 7/15/06 1,375 1,457,500 0.7
United Stationers Supply Co., Sr Sub Nt, 12.75%,
5/1/05 833 895,475 0.4
------------ ---
4,975,725 2.4
CABLE TELEVISION -- 2.9%
Avalon Cable of Michigan, LLC, Sr Sub Nt, 9.375%,
12/1/08 1,000 1,000,000 0.5
Classic Communications, Inc., Sr Nt, 0/13.25%,
8/1/09/2/ 1,750 1,168,125 0.6
Fundy Cable Ltd., Sr Nt, 11%, 11/15/05 1,500 1,597,500 0.8
RCN Corp., Sr Nt, 10%, 10/15/07 1,400 1,354,500 0.7
RCN Corp., Sr Disc Nt, 0/9.8%, 2/15/08 1,000 597,500 0.3
------------ ---
5,717,625 2.9
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (continued)
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
CHEMICALS/PLASTIC -- 4.0%
Berry Plastics Corp., Sr Sub Nt, 12.25%, 4/15/04 $ 1,750 $ 1,778,438 0.9%
Indesco International, Inc., Sr Sub Nt, 9.75%,
4/15/08 1,750 997,500 0.5
Philipp Brothers Chemicals, Inc., Sr Sub Nt,
9.875%, 6/1/08 1,750 1,592,500 0.8
Polymer Group, Inc., Sr Sub Nt, 9%, 7/1/07 1,500 1,425,000 0.7
Portola Packaging Inc., Sr Nt, 10.75%, 10/1/05 1,250 1,268,750 0.6
Tekni-Plex Inc., Sr Sub Nt, 9.25%, 3/1/08 1,000 960,000 0.5
------------ ---
8,022,188 4.0
CLOTHING & TEXTILE -- 1.3%
Coyne International Enterprises Corp., Sr Sub Nt,
11.25%, 6/1/08 2,500 2,250,000 1.1
Delta Mills, Inc., Sr Nt, 9.625%, 9/1/07 600 468,000 0.2
------------ ---
2,718,000 1.3
CONTAINERS & GLASS PRODUCTS -- 0.5%
LLS Corp., Sr Sub Nt, 11.625%, 8/1/09/2/ 1,000 990,000 0.5
------------ ---
COSMETICS/TOILETRIES -- 0.6%
Drypers Corp., Sr Nt, 10.25%, 6/15/07 1,000 800,000 0.4
JB Williams Holdings Inc., Sr Nt, 12%, 3/1/04 375 376,875 0.2
------------ ---
1,176,875 0.6
DRUGS -- 0.9%
King Pharmaceutical, Inc., Sr Sub Nt, 10.75%,
2/15/09 1,250 1,287,500 0.6
Twin Laboratories, Inc., Sr Sub Nt, 10.25%,
5/15/06 650 653,250 0.3
------------ ---
1,940,750 0.9
</TABLE>
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
ECOLOGICAL SERVICES & EQUIPMENT -- 2.5%
Allied Waste North America, Sr Sub Nt, 10%,
8/1/09/2/ $ 1,750 $ 1,601,250 0.8%
American Eco Corp., Sr Nt, 9.625%, 5/15/08 2,000 1,200,000 0.6
ICF Kaiser International Inc., Sr Sub Nt 13%,
12/31/03 1,500 750,000 0.4
Norcal Waste Systems, Sr Nt, 13.5%, 11/15/05 1,250 1,340,625 0.7
------------ ---
4,891,875 2.5
ELECTRONICS/ELECTRIC -- 6.3%
Airxcel, Inc., Sr Sub Nt, 11%, 11/15/07 1,500 1,485,000 0.7
Communications Instruments, Inc., Sr Sub Nt, 10%,
9/15/04 2,130 1,778,550 0.9
Dialog Corp., Sr Sub Nt, 11%, 11/15/07 2,000 1,745,000 0.9
Elgar Holdings, Inc., Sr Nt, 9.875%, 2/1/08 1,000 778,750 0.4
Flextronics Int'l Ltd, Sr Sub Nt, 8.75%, 10/15/07 1,820 1,792,700 0.9
Viasystems, Inc., Sr Sub Nt, 9.75%, 6/1/07 2,500 2,150,000 1.1
Wesco Distribution, Inc., Sr Sub Nt, 9.125%,
6/1/08 2,500 2,337,500 1.2
Windmere-Durable Holdings, Inc., Sr Sub Nt, 10%,
7/31/08 500 480,000 0.2
------------ ---
12,547,500 6.3
EQUIPMENT LEASING -- 1.6%
Coinmach Corp., Ser D Sr Nt, 11.75%, 11/15/05 1,750 1,850,625 0.9
United Rentals, Inc., Sr Sub Nt, 9.5%, 6/1/08 1,000 980,000 0.5
United Rentals, Inc., Sr Sub Nt, 9%, 4/1/09 500 471,250 0.2
------------ ---
3,301,875 1.6
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (continued)
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
FOOD SERVICE -- 5.8%
American Restaurant Group, Inc., Sr Nt, 11.5%,
2/15/03 $ 1,250 $ 1,062,500 0.5%
American Rice, Inc., Bank Debt, 10.75%,
5/31/99/3/ 419 314,557 0.2
Ameriserve Food Distribution, Inc., Sr Sub Nt,
8.875%, 10/15/06 1,250 981,250 0.5
Apple South, Inc., Sr Nt, 9.75%, 6/1/06 1,500 1,335,000 0.7
Avado Brands, Inc., Sr Sub Nt, 11.75%, 6/15/09 500 420,000 0.2
Domino's, Inc., Sr Sub Nt, 10.375%, 1/15/09 1,625 1,527,500 0.8
Foodmaker Corp., Sr Nt, 9.75%, 11/1/03 1,000 1,017,500 0.5
Fresh Foods, Inc., Sr Nt, 10.75%, 6/1/06 2,500 2,300,000 1.1
TPI Enterprises, Sub Deb, 8.25%, 7/15/02 1,440 792,000 0.4
Volume Services America, Inc., Sr Sub Nt, 11.25%,
3/1/09/2/ 1,750 1,741,250 0.9
------------ ---
11,491,557 5.8
FOREST PRODUCTS -- 4.8%
Ainsworth Lumber Co. Ltd., Sr Nt, 12.5%, 7/15/07 3,000 3,307,500 1.6
American Tissue, Inc., Sr Sec Nt, 12.5%,
7/15/06/2/ 1,500 1,417,500 0.7
Crown Packaging, Ltd., Ser B Sr Nt, 10.75%,
11/1/00 2,250 1,833,750 0.9
Millar Western Forest Products Ltd, Sr Nt,
9.875%, 5/15/08 1,500 1,443,750 0.7
Riverwood Int'l Corp., Sr Nt, 10.875%, 4/1/08 2,000 1,870,000 0.9
------------ ---
9,872,500 4.8
</TABLE>
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
HEALTH CARE -- 2.5%
Concentra Operating Corp., Sr Sub Nt, 13%,
8/15/09/2/ $ 1,250 $ 1,251,562 0.6%
Fisher Scientific International, Inc., Sr Sub Nt,
9%, 2/1/08 1,100 1,025,750 0.5
Fisher Scientific International, Inc., Sr Sub Nt,
Add-on, 9%, 2/1/08 225 209,813 0.1
Hanger Orthopedic Group, Inc., Sr Sub Nt, 11.25%,
6/15/09/2/ 1,000 1,000,000 0.5
Rose Hills Co., Sr Sub Nt, 9.5%, 11/15/04 1,750 1,540,000 0.8
------------ ---
5,027,125 2.5
HOME FURNISHINGS -- 1.2%
Home Products Intl, Inc., Sr Sub Nt, 9.625%,
5/15/08 1,500 1,335,000 0.7
Mattress Discounters Co., Sr Nt w/warrant,
12.625%, 7/15/07/2/ 1,000 945,000 0.5
------------ ---
2,280,000 1.2
HOTEL & CASINOS -- 2.8%
Aladdin Gaming, Sr Disc Nt, 0/13.5%, 3/1/10 2,750 1,072,500 0.5
Hollywood Park, Inc., Sr Sub Nt, 9.5%, 8/1/07 1,250 1,218,750 0.6
Lodgian Financing Corp., Sr Sub Nt, 12.25%,
7/15/09/2/ 1,000 980,000 0.5
Prime Hospitality Corp., 1st Mtg, 9.25%, 1/15/06 1,000 990,000 0.5
Prime Hospitality Corp., Sr Sub Nt, 9.75%, 4/1/07 1,375 1,340,625 0.7
------------ ---
5,601,875 2.8
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (continued)
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
INDUSTRIAL EQUIPMENT -- 5.3%
Anchor Lamina, Inc., Sr Sub Nt, 9.875%, 2/1/08 $ 2,000 $ 1,720,000 0.9%
Columbus McKinnon Corp., Sr Sub Nt, 8.5%, 4/1/08 1,250 1,121,875 0.6
Elgin National Industries, Sr Nt, 11%, 11/1/07 1,000 910,000 0.5
International Knife & Saw, Sr Sub Nt, 11.375%,
11/15/06 2,500 1,931,250 1.0
Jackson Products, Inc., Sr Sub Nt, 9.5%, 4/15/05 2,000 1,840,000 0.9
Precision Partners, Inc., Sr Sub Nt, 12%,
3/15/09/2/ 1,175 1,057,500 0.5
Simonds Industries, Inc., Sr Sub Nt, 10.25%,
7/1/08 1,800 1,530,000 0.8
Spincycle, Inc., Sr Disc Nt, 0/12.75%, 5/1/05 750 114,375 0.1
------------ ---
10,225,000 5.3
LEISURE -- 2.6%
Bally Total Fitness Holding Corp., Sr Sub Nt,
9.875%, 10/15/07 1,500 1,413,750 0.7
Guitar Center Mgmt., Sr Nt, 11%, 7/1/06 1,520 1,504,800 0.7
SFX Entertainment, Inc., Sr Sub Nt, 9.125%,
12/1/08 2,500 2,375,000 1.2
------------ ---
5,293,550 2.6
NON-FERROUS METALS -- 2.7%
Better Minerals and Aggregates Co., Sr Sub Nt,
13%, 9/15/09/2/ 1,250 1,254,688 0.6
Easco Corp., Sr Nt, 10%, 3/15/01 1,000 1,008,750 0.5
Echo Bay Mines Ltd., Jr Sub Debs, 11%, 4/1/27 1,000 600,000 0.3
Oglebay Norton Co., Sr Sub Nt, 10%, 2/1/09 1,625 1,576,250 0.8
Renco Metals Inc., Sr Nt, 11.5%, 7/1/03 1,000 910,000 0.5
------------ ---
5,349,688 2.7
</TABLE>
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
OIL & GAS -- 2.4%
Giant Industries Inc., Sr Sub Nt, 9.75%, 11/15/03 $ 875 $ 859,687 0.4%
Giant Industries Inc., Sr Sub Nt, 9%, 9/1/07 1,000 920,000 0.5
Northern Offshore ASA, Sr Nt, 10%, 5/15/05 1,000 610,000 0.3
TransContinental Corp., Sr Sec Nt, 15%,
12/1/03/2/ 1,604 1,491,487 0.7
TransContinental Corp., Sr Sec Nt, Add On, 15%,
12/1/03/2/ 1,069 994,324 0.5
------------ ---
4,875,498 2.4
PUBLISHING -- 3.8%
Liberty Group Publishing, Inc., Sr Sub Nt,
9.375%, 2/1/08 2,000 1,800,000 0.9
Liberty Group Publishing, Inc., Sr Disc Nt,
0/11.625%, 2/1/09 1,125 540,000 0.3
Perry-Judd, Sr Sub Nt, 10.625%, 12/15/07 2,750 2,502,500 1.2
Phoenix Color Corp., Sr Sub Nt, 10.375%, 2/1/09 3,000 2,880,000 1.4
------------ ---
7,722,500 3.8
RETAILERS -- 3.9%
Central Tractor Farm & Country, Sr Nt, 10.625%,
4/1/07 1,500 1,477,500 0.7
Frank's Nursery & Crafts, Sr Sub Nt, 10.25%,
3/1/08 1,750 1,487,500 0.7
G&G Retail, Inc., Sr Sub Nt, 11%, 5/15/06/2/ 1,750 1,594,688 0.8
Herff Jones Inc., Sr Sub Nt, 11%, 8/15/05 1,250 1,326,562 0.7
Travelcenters of America, Sr Sub Nt, 10.25%,
4/1/07 2,000 1,970,000 1.0
------------ ---
7,856,250 3.9
STEEL -- 1.3%
NS Group, Inc., Sr Nt, 13.5%, 7/15/03 2,500 2,587,500 1.3
------------ ---
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (continued)
September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS/CELLULAR COMMUNICATION -- 14.7%
Alaska Communications Systems Holdings, Inc., Sr
Sub Nt, 9.375%, 5/15/09/2/ $ 1,000 $ 940,000 0.5%
Arch Communications Group, Inc., Sr Nt, 12.75%,
7/1/07 750 526,875 0.3
Arch Communications Group, Inc., Sr Nt, 14%,
11/1/04 1,250 1,100,000 0.5
CCPR Services, Inc., Sr Sub, 10%, 2/1/07 2,250 2,432,813 1.2
Centennial Cellular, Sr Sub Nt, 10.75%, 12/15/08 2,375 2,470,000 1.2
Convergent Communications, Inc., Sr Nt, 13%,
4/1/08 3,750 2,803,125 1.4
Crown Castle Int'l Corp., Sr Nt, 0/10.375%,
5/15/11 1,500 855,000 0.4
Crown Castle Int'l Corp., Sr Sub Nt, 9.5%,
8/1/11/2/ 1,000 950,000 0.5
Dobson/Sygnet Communications Corp., Sr Nt,
12.25%, 12/15/08 1,750 1,828,750 0.9
DTI Holdings, Inc., Sr Disc Nt, 0/12.5%, 3/1/08 5,000 1,750,000 0.9
FaciliCom International, Sr Nt, 10.5%, 1/15/08 2,000 1,620,000 0.8
GCI, Inc., Sr Nt, 9.75%, 8/1/07 2,500 2,400,000 1.2
GlobeNet Communications Group, Ltd., Sr Nt, 13%,
7/15/07/2/ 1,750 1,717,187 0.9
Metrocall Inc., Sr Sub Nt, 10.375%, 10/1/07 2,500 1,625,000 0.8
Paging Network do Brasil Holding Co. LLC, Sr Nt,
13.5%, 6/6/05 500 102,500 0.1
Pathnet, Inc., Sr Nt, 12.25%, 4/15/08 1,000 520,000 0.3
Phonetel Technologies, Inc., Sr Nt, 12%,
12/15/06/4/ 3,775 679,500 0.3
Price Communications Wireless, Inc., Sr Sec Nt,
9.125%, 12/15/06 1,000 1,017,500 0.5
Rural Cellular Corp., Sr Sub Nt, 9.625%, 5/15/08 2,050 2,101,250 1.0
Splitrock Services, Inc., Sr Nt, 11.75%, 7/15/08 2,250 2,025,000 1.0
------------ ----
29,464,500 14.7
</TABLE>
<TABLE>
<CAPTION>
Shares/ Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
TRANSPORTATION -- 1.2%
Moran Transportation Co., Bank Debt, 8.25%,
12/31/05 $ 2,494 $ 2,487,500 1.2%
------------ ----
Total Corporate Debt Securities
(amortized cost $206,778,988) 191,076,831 95.3
------------ ----
EQUITY INVESTMENTS -- 3.2%
Aladdin Gaming/Capital Corp., Warrants,
3/1/10/1/,/3/ 27,500 0 0.0
Allegiance Telecom, Inc., Warrants, 2/3/08/1/,/3/ 1,000 0 0.0
Arch Communications Group, Inc., Common Stock/1/ 197,524 790,095 0.4
Arch Communications Group, Inc., Warrants,
9/1/01/1/ 68,783 12,897 0.0
Classic Communications, Inc., Common Stock/1/,/3/ 5,250 0 0.0
Concentric Network Corp., Pfd, 13.5% PIK, 6/1/10 1,175 1,081,396 0.5
Convergent Communications, Inc., Common Stock/1/ 10,800 112,050 0.1
DTI Holdings, Inc., Warrants, 3/1/08/1/,/3/ 25,000 0 0.0
Glasstech, Inc., Warrants, 6/30/04/1/,/3/ 1,000 0 0.0
Gulf States Steel, Warrants, 4/15/03/1/,/3/ 500 0 0.0
Harvard Industries, Inc., Common Stock/1/ 191,199 1,780,540 1.0
Optel, Inc., Class C Common Stock/1/ 750 7 0.0
Orion Network Systems, Warrants, 1/15/07/1/,/3/ 1,250 0 0.0
Paging Network do Brasil Holding Co. LLC,
Warrants/1/,/3/ 500 0 0.0
Pathnet, Inc., Warrants, 4/15/08/1/,/3/ 1,000 0 0.0
Paxson Communications, Pfd, 12.5% PIK, 10/31/06 1,063 1,137,422 0.6
Rural Cellular Corp., Pfd, 11.375% PIK, 5/15/10 1,162 1,185,689 0.6
Sabreliner Corp., Warrants, 4/15/03/1/,/3/ 500 0 0.0
San Jacinto Holdings, Common Stock/1/,/3/ 2,246 0 0.0
Spincycle, Inc., Warrants, 5/1/05/1/,/3/ 750 0 0.0
Splitrock Services, Inc., Warrants, 7/15/08/1/ 1,250 90,000 0.0
TransContinental Corp, Pfd, 6%/1/ 60,000 40,980 0.0
TransContinental Corp, Pfd, 3%/1/ 41,494 28,340 0.0
TCR Holding Corp., Pfd, Class B/1/ 50,747 3,045 0.0
</TABLE>
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6
<PAGE>
PACHOLDER FUND, INC.
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Statement of Net Assets (continued)
September 30, 1999 (Unaudited)
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<TABLE>
<CAPTION>
Shares/ Percent
Par of Net
Description (000) Value Assets
<S> <C> <C> <C>
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EQUITY INVESTMENTS -- (continued)
TCR Holding Corp., Pfd, Class C/1/ $ 27,911 $ 1,563 0.0%
TCR Holding Corp., Pfd, Class D/1/ 73,583 3,900 0.0
TCR Holding Corp., Pfd, Class E/1/ 152,241 9,591 0.0
US Leather Corp., Common Stock/1/ 93,269 69,952 0.0
------------ ---
Total Equity Investments
(cost $7,654,076) 6,347,467 3.2
------------ ---
</TABLE>
<TABLE>
<S> <C> <C> <C>
SECURITIES LENDING PROGRAM ASSETS -- 4.6%
Lehman Brothers Holdings, Inc. 5.95%, dated
9/30/99, matures 10/1/99 (at amortized cost) 8,221 8,221,333 4.1
Lehman Brothers Holdings, Inc. MTN Tranche
#TR00291, dated 3/3/98, daily resettable floating
rate due 3/3/00 (at amortized cost) 1,000 999,110 0.5
------------ -----
9,220,443 4.6
------------ -----
TOTAL INVESTMENTS
(amortized cost $223,388,469) $206,644,741 102.9
Payable Upon Return of Securities Loaned (9,220,443) (4.6)
Other Assets in Excess of Liabilities 3,339,929 1.7
------------ -----
Net Assets $200,764,227 100.0%
Less: Outstanding Preferred Stock (70,000,000)
------------
Net Assets Applicable to 9,504,994 Shares of Common
Stock Outstanding $130,764,227
============
Net Asset Value Per Common Share
($130,764,227/9,504,994) $13.76
======
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</TABLE>
/1/Non-income producing security.
/2/Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
amounted to $22,082,061 or 11.0% of net assets.
/3/Board valued security. These securities amounted to $314,557 or less than
0.2% of net assets.
/4/Security is in default.
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7
<PAGE>
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Pacholder Fund, Inc.
Third Quarter Report
September 30, 1999
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PACHOLDER FUND, INC.
Directors and Officers
William J. Morgan Anthony L. Longi, Jr.
Chairman and Treasurer President
John F. Williamson James P. Shanahan, Jr.
Director Secretary
George D. Woodard James E. Gibson
Director Senior Vice President
Daniel A. Grant Mark H. Prenger
Director Assistant Treasurer
Investment Objective
A closed-end fund seeking a high level of total return
through current income and capital appreciation by
investing primarily in high yield, lower rated fixed-income securities
of domestic companies.
Investment Advisor
Pacholder & Company, LLC
Administrator
Kenwood Administrative Management, Inc.
Custodian and Transfer Agent
Firstar Bank, N.A.
Legal Counsel
Piper Marbury Rudnick & Wolfe LLP
Independent Auditors
Deloitte & Touche LLP
Executive Offices
Pacholder Fund, Inc.
8044 Montgomery Road
Suite 480
Cincinnati, OH 45236
(513) 985-3200
Website: www.phf-hy.com
This report is for the information
of shareholders of Pacholder Fund, Inc.
It is not a prospectus, offering
circular or other representation intended
for use in connection with the purchase
or sale of shares of the Fund or any
securities mentioned in this report.
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