<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Dear Stockholders:
The Pacholder Fund, Inc. ("PHF" or the "Fund") rebounded in the fourth quar-
ter of 1998 from the liquidity-driven fall suffered in the third quarter in all
credit-oriented fixed income markets. For the quarter ended December 31, 1998
PHF recorded its best quarter of the year with a total return of 3.66% compared
to the CS First Boston High Yield IndexTM (the "Index") total return of 2.74%.
For the year ended December 31, 1998 the Fund recorded a total return of
(3.19)% compared to the Index total return of 0.58%. PHF experienced a signifi-
cant rebound in the valuation of many of its bond positions during the last two
months of the year, resulting in strong performance for the fourth quarter.
While we built up a cash position in the Fund during the July through October
period because of our concerns over the near-term direction of the market, we
returned to a fully invested status by the end of the year. We moved aggres-
sively to invest our cash because of the positive change in the technical di-
rection of the market and the attractive opportunities to purchase better qual-
ity credits at wider spreads and lower prices than were available as recently
as the second quarter. During the quarter we also continued to upgrade the
credit quality of the portfolio and to reduce exposure to cyclical industries
and sectors that we believed to be relatively unattractive, a process we began
in the second quarter.
Overview of 1998
Although 1998 was difficult, it was an interesting year in the high yield
market. The market characteristics during the first half of the year were very
similar to 1997--consistent demand for the high yield bonds from mutual funds,
insurance companies, and others seeking higher yielding fixed income product;
high levels of primary issuance of new bonds; continued economic growth in the
U.S. with stable to declining interest rates; and lower than average default
rates on corporate debt. As a result of this environment, spreads remained rel-
atively stable in the market, although the pressure for spread widening began
to build by the end of the summer.
The financial crisis in Asia, which began in late 1997, spread to other de-
veloping economic regions of the world during the first half of the year. A li-
quidity crisis ensued in August, after Russia defaulted on certain debt obliga-
tions, and fears of a global recession affected all of the capital markets
around the world, particularly credit-driven fixed income markets such as high
yield. In the high yield market, liquidity declined and high yield spreads and
yield premiums continued to increase to levels not seen since 1991. The spread
to Treasuries of the Index widened from 386 basis points at the beginning of
the year to 743 basis points at the end of October. In addition, the yield pre-
mium of the Index, calculated by dividing the yield spread between the compara-
ble Treasury rate and the Index by the comparable Treasury rate, increased dra-
matically from 67% at the beginning of the year to 166% at the end of October.
Most high yield participants, including both portfolio managers and
broker/dealers, became risk averse during this period, adding to the downward
pressure on the market. As a result of these factors, the high yield market ex-
perienced its worst quarter since the third quarter of 1990.
The turning point in the domestic security markets came on October 15, when
the Federal Reserve's Open Market Committee, in a surprise move between regular
meetings, reduced the Fed Funds Rate by 25 basis points for the second time in
three weeks. This move signaled the Federal Reserve's interest in reinvigo-
rating confidence in the capital markets to avert a protracted credit crunch,
which may have driven the U.S. economy into a recession. In stark contrast to
August, the market reported its best monthly return of the year in November.
Activity in the market increased during the latter part of the quarter, as most
market participants recognized the value created by the recent market turbu-
lence. With the market's technical improvement, the spread of the Index com-
pressed from its October peak of 743 basis points to 657 basis points, and the
yield premium compressed from 166% to 141%, still above the 10-year monthly av-
erage spread of 531 basis points, and well above the 10-year monthly average
yield premium of 70%.
Outlook
We believe the high yield market currently provides exceptionally attractive
opportunities on a relative value basis compared to other fixed income alterna-
tives. During the history of the high yield market there have been only a few
periods where spreads have been as wide as they are now. However, in all of
those periods the economic and interest rate environments were not as favora-
ble. In addition, corporate debt default rates remain below long-term averages,
which is another positive factor for the current high yield environment. Market
activity has continued to increase so far this year, and we have seen a resur-
gence in the level of new high yield debt issuance, a sign that there is strong
demand for high yield bonds. It appears that the U.S. economy will continue to
grow this year, creating a healthy environment for high yield bonds. With the
total market size now standing at nearly $600 billion, there are ample opportu-
nities for us to continue to find attractive investments for the Fund.
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Performance Summary
The performance of the Fund as compared to the Index is illustrated in the
following table.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Performance Comparison*
(For the year ended December 31, 1998)
- --------------------------------------------------------------------------------
<S> <C> <C>
Since
Inception**
Year (Annualized)
- --------------------------------------------------------------------------------
Pacholder Fund, Inc.*** (3.19)% 11.22%
- --------------------------------------------------------------------------------
CS First Boston High Yield
Index/TM/ 0.58% 10.65%
- --------------------------------------------------------------------------------
</TABLE>
* 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.
In December, the Fund's Board of Directors approved a change in the Fund's
dividend policy. Starting in January 1999, the Fund began to pay its regular
dividend monthly rather than quarterly, which had been its policy since the
Fund's inception in 1988. This change was implemented in recognition of the im-
portance of the income orientation of the Fund's shareholders and the fact that
many other bond funds distribute income on a monthly basis.
As always, we appreciate your interest in the Fund and look forward to your
continued support.
Sincerely,
/s/ Anthony L. Longi, Jr.
Anthony L. Longi, Jr.
President
February 5, 1999
- ---------------------------------------
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan offers you an automatic way to reinvest your
dividends and capital gains distributions in shares of the Fund. For an enroll-
ment form and detailed information about the Plan, please contact Star Bank,
N.A. Corporate Trust Services, 425 Walnut Street, ML 5125, P.O. Box 1118, Cin-
cinnati, Ohio 45201-1118, (800) 727-1919 ext. 5788.
2
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets
December 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE DEBT SECURITIES -- 94.6%
AUTO PARTS & EQUIPMENT -- 3.7%
Cambridge Industries, Inc., Sr Sub Nt, 10.25%,
7/15/07 $1,000 $ 860,000 0.5%
Harvard Industries, Inc., Sr Sec Nt, 14.5%, 9/1/03 1,500 1,500,000 1.0
Hayes Lemmerz Intl, Inc., Sr Sub Nt, 9.125%, 7/15/07 1,000 1,037,500 0.7
JPS Automotive Products Corp., Sr Nt, 11.125%,
6/15/01 1,350 1,417,500 0.9
Safety Components International, Inc., Sr Sub Nt,
10.125%, 7/15/07 1,000 990,000 0.6
---------- ----
5,805,000 3.7
BROADCAST RADIO & TV -- 10.9%
Ackerly Group, Inc., Sr Sub Nt,
9%, 1/15/09/2/ 1,000 1,015,000 0.6
Citadel Broadcasting Company, Sr Sub Nt, 10.25%,
7/1/07 1,500 1,631,250 1.0
Cumulus Media, Inc., Sr Sub Nt, 10.375%, 7/1/08 1,750 1,855,000 1.2
Granite Broadcasting Corp., Sr Sub Nt, 10.375%,
5/15/05 1,625 1,641,250 1.0
LIN Holdings Corp., Sr Disc Nt,
0/10%, 3/1/08 1,000 700,000 0.5
LIN Television Corp., Sr Sub Nt, 8.375%, 3/1/08 1,000 1,000,000 0.6
Outdoor Communications, Inc., Sr Sub Nt, 9.25%,
8/15/07 1,000 1,060,000 0.7
Radio One, Inc., Sr Sub Nt,
7/12%, 5/15/04 2,220 2,220,000 1.4
Salem Communications, Sr Sub Nt, 9.5%, 10/1/07 1,000 1,030,000 0.7
Spanish Broadcasting System, Sr Nt, 7.5/12.5%,
6/15/02 500 540,000 0.3
Spanish Broadcasting System, Sr Nt, 11%, 3/15/04 1,625 1,722,500 1.1
Tri-State Outdoor Media, Sr Nt,
11%, 5/15/08 1,250 1,243,750 0.8
Young Broadcasting Inc., Sr Sub Nt, 8.75%, 6/15/07 1,500 1,522,500 1.0
---------- ----
17,181,250 10.9
</TABLE>
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BUILDING -- 4.2%
Associated Materials, Inc., Sr Sub Nt, 9.25%,
3/1/08 $1,000 $1,000,000 0.6%
Fedders North America, Inc., Sr Sub Nt, 9.375%,
8/15/07 1,500 1,511,250 1.0
MMI Products, Inc., Sr Sub Nt, 11.25%, 4/15/07 1,250 1,350,000 0.9
Omega Cabinets, Ltd, Sr Sub Nt, 10.5%, 6/15/07 1,750 1,715,000 1.1
Williams Scotsman, Inc., Sr Nt, 9.875%, 6/1/07 1,000 1,027,500 0.6
---------- ---
6,603,750 4.2
BUSINESS SERVICES & EQUIPMENT -- 3.4%
Iron Mountain, Inc., Sr Sub Nt, 8.75%, 9/30/09 1,125 1,158,750 0.7
Knoll Inc., Sr Sub Nt, 10.875%, 3/15/06 1,525 1,677,500 1.1
Pierce Leahy Corp., Sr Sub Nt, 11.125%, 7/15/06 1,375 1,519,375 1.0
United Stationers Supply Co., Sr Sub Nt, 12.75%,
5/1/05 833 928,795 0.6
---------- ---
5,284,420 3.4
CABLE TELEVISION -- 4.3%
Avalon Cable of Michigan, LLC,
Sr Sub Nt, 9.375%, 12/1/08/2/ 1,000 1,022,500 0.6
Classic Communications, Inc., Sr Nt w/ warrant,
0/13.25%, 8/01/09/2/ 1,750 1,058,750 0.7
Fundy Cable Ltd., Sr Nt,
11%, 11/15/05 1,500 1,590,000 1.0
James Cable Partners L.P., Sr Nt, 10.75%,
8/15/04 1,250 1,300,000 0.8
Mediacom LLC/Capital Corp., Sr Nt, 8.5%, 4/15/08 1,800 1,842,750 1.2
---------- ---
6,814,000 4.3
</TABLE>
3
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (continued)
December 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
- -------------------------------------------------------------------------
<S> <C> <C> <C>
CHEMICALS/PLASTIC -- 6.3%
AEP Industries, Inc., Sr Sub Nt,
9.875%, 11/15/07 $1,000 $1,007,500 0.6%
Applied Extrusion Technologies Inc.,
Sr Unsecd Nt, 11.5%, 4/1/02 1,500 1,563,750 1.0
Berry Plastics Corp., Sr Sub Nt,
12.25%, 4/15/04 1,750 1,824,375 1.2
Indesco International, Inc., Sr Sub Nt, 9.75%,
4/15/08 1,750 1,645,000 1.0
Polymer Group, Inc., Sr Sub Nt,
9%, 7/1/07 1,500 1,485,000 1.0
Portola Packaging Inc., Sr Nt,
10.75%, 10/1/05 1,250 1,275,000 0.8
Tekni-Plex Inc., Sr Sub Nt,
9.25%, 3/1/08 1,000 1,045,000 0.7
---------- ---
9,845,625 6.3
CLOTHING & TEXTILE -- 1.1%
Coyne International Enterprises Corp.,
Sr Sub Nt, 11.25%, 6/1/08/2/ 1,750 1,715,000 1.1
---------- ---
CONGLOMERATE -- 0.3%
Siebe Inc., Sr Sec Nt,
11.22%, 1/29/01/3/ 417 442,916 0.3
---------- ---
COSMETICS/TOILETRIES -- 0.6%
JB Williams Holdings Inc., Sr Nt,
12%, 3/1/04 875 918,750 0.6
---------- ---
DRUGS -- 1.0%
NBTY, Inc., Sr Sub Nt,
8.625%, 9/15/07 1,000 975,000 0.6
Twin Laboratories, Inc., Sr Sub,
10.25%, 5/15/06 650 702,000 0.4
---------- ---
1,677,000 1.0
ECOLOGICAL SERVICES & EQUIPMENT -- 1.3%
American Eco Corp., Sr Nt,
9.625%, 5/15/08 1,000 525,000 0.3
ICF Kaiser International Inc., Sr Sub Nt 13%,
12/31/03 1,500 750,000 0.5
Norcal Waste Systems, Sr Nt,
13.5%, 11/15/05 750 825,000 0.5
---------- ---
2,100,000 1.3
</TABLE>
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
ELECTRONICS/ELECTRIC -- 3.6%
Airxcel, Inc., Sr Sub Nt,
11%, 11/15/07 $1,175 $1,180,875 0.8%
Communications Instruments, Inc.,
Sr Sub Nt, 10%, 9/15/04 1,850 1,780,625 1.1
Elgar Holdings, Inc., Sr Nt,
9.875%, 2/1/08 1,000 890,000 0.6
Wesco Distribution, Inc., Sr Sub Nt, 9.125%, 6/1/08 1,250 1,250,000 0.8
Windmere-Durable Holdings, Inc.,
Sr Sub Nt, 10%, 7/31/08 500 467,500 0.3
---------- ---
5,569,000 3.6
EQUIPMENT LEASING -- 2.1%
Coinmach Corp., Ser D Sr Nt,
11.75%, 11/15/05 1,700 1,853,000 1.2
United Rentals, Inc., Sr Sub Nt,
9.5%, 6/1/08 1,000 1,010,000 0.6
United Rentals, Inc., Sr Sub Nt,
8.8%, 8/15/08/2/ 500 490,000 0.3
---------- ---
3,353,000 2.1
FOOD SERVICE -- 5.2%
American Restaurant Group, Inc., Sr Nt, 11.5%,
2/15/03 1,250 1,087,500 0.7
American Rice, Inc., Bank Debt,
11%, 5/31/99 586 445,031 0.3
Apple South, Inc., Sr Nt,
9.75%, 6/1/06 1,500 1,417,500 0.9
Domino's, Inc., Sr Sub Nt,
10.375% 1/15/09/2/ 625 626,563 0.4
Foodmaker Corp., Sr Nt,
9.75%, 11/1/03 1,000 1,030,000 0.6
Fresh Foods, Inc., Sr Nt,
10.75%, 6/1/06 1,500 1,410,000 0.9
Host Marriott Travel Plaza, Sr Nt,
9.5%, 5/15/05 1,250 1,278,125 0.8
TPI Enterprises, Sub Deb,
8.25%, 7/15/02 1,440 900,000 0.6
---------- ---
8,194,719 5.2
FOREST PRODUCTS -- 2.3%
Ainsworth Lumber Co. Ltd., Sr Nt, 12.5%, 7/15/07 1,500 1,492,500 1.0
Crown Packaging, Ltd., Ser B Sr Nt, 10.75%, 11/1/00 2,000 900,000 0.6
Four M Corp., Sr Nt,
12%, 6/1/06 500 370,000 0.2
Millar Western Forest Products Ltd, Sr Nt, 9.875%,
5/15/08 1,125 843,750 0.5
---------- ---
3,606,250 2.3
</TABLE>
4
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (continued)
December 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE -- 3.1%
Fisher Scientific International, Inc., Sr Sub Nt,
9%, 2/1/08 $1,600 $1,600,000 1.0%
Rose Hills Co., Sr Sub Nt, 9.5%, 11/15/04 1,750 1,697,500 1.1
Rural/Metro Corp., Sr Nt, 7.875%, 3/15/08 1,750 1,592,500 1.0
---------- ---
4,890,000 3.1
HOME FURNISHINGS -- 0.6%
Home Products Intl, Inc., Sr Sub Nt, 9.625%, 5/15/08 1,000 980,000 0.6
---------- ---
HOTEL & CASINOS -- 3.1%
Aladdin Gaming, Sr Disc Nt, 0/13.5%, 3/1/10 2,750 687,500 0.4
Harrahs Operating Co., Inc., Sr Nt, 7.875%, 12/15/05 1,000 1,011,079 0.6
Hollywood Park, Inc., Sr Sub Nt, 9.5%, 8/1/07 1,250 1,243,750 0.8
Prime Hospitality Corp., Sr Sub Nt, 9.75%, 4/1/07 1,375 1,402,500 0.9
Showboat Marina Casino, 1st Mtg, 13.5%, 3/15/03 500 565,000 0.4
---------- ---
4,909,829 3.1
INDUSTRIAL EQUIPMENT -- 4.8%
Anchor Lamina, Inc., Sr Sub Nt, 9.875%, 2/1/08 1,500 1,350,000 0.9
Columbus McKinnon Corp., Sr Sub Nt, 8.5%, 4/1/08 1,250 1,175,000 0.7
Elgin National Industries, Sr Nt, 11%, 11/1/07 1,000 1,005,000 0.6
International Knife & Saw, Sr Sub Nt, 11.375%,
11/15/06 2,250 2,306,250 1.5
Jackson Products, Inc., Sr Sub Nt, 9.5%, 4/15/05 1,500 1,470,000 0.9
Spin Cycle, Inc., Sr Disc Nt w/ warrants, 0/12.75%,
5/1/05/2/ 750 315,000 0.2
---------- ---
7,621,250 4.8
LEISURE -- 2.0%
Bally Total Fitness Holding Corp., Sr Sub Nt,
9.875%, 10/15/07 1,500 1,470,000 1.0
Guitar Center Mgmt., Sr Nt, 11%, 7/1/06 1,520 1,596,000 1.0
---------- ---
3,066,000 2.0
</TABLE>
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NON-FERROUS METALS -- 1.6%
Easco Corp., Sr Nt, 10%, 3/15/01 $1,000 $1,010,000 0.6%
Echo Bay Mines Ltd., Jr Sub Debs, 11%, 4/1/27 1,000 540,000 0.3
Renco Metals Inc., Sr Nt, 11.5%, 7/1/03 1,000 1,030,000 0.7
---------- ---
2,580,000 1.6
OIL & GAS -- 1.9%
Giant Industries Inc., Sr Sub Nt, 9%, 9/1/07 1,000 950,000 0.6
Northern Offshore ASA, Sr Nt, 10%, 5/15/05/2/ 1,000 520,000 0.3
TransContinental Corp., Sr Sec Nt, 15%, 12/1/03/2/ 1,500 1,448,325 1.0
---------- ---
2,918,325 1.9
PUBLISHING -- 5.6%
The Learning Co., Inc., Sr Nt, 5.5%, 11/1/00 2,000 1,972,500 1.3
Liberty Group Publishing, Inc., Sr Sub Nt, 9.375%,
2/1/08 2,000 1,960,000 1.2
Perry-Judd, Sr Sub Nt, 10.625%, 12/15/07 1,750 1,837,500 1.2
RH Donnelley, Inc., Sr Sub Nt, 9.125%, 6/1/08 1,000 1,047,500 0.7
Sun Media Corp., Sr Sub Nt, 9.5%, 2/15/07 1,750 1,942,500 1.2
---------- ---
8,760,000 5.6
RETAILERS -- 3.9%
Central Tractor Farm & Country, Sr Nt, 10.625%,
4/1/07 1,500 1,537,500 1.0
Frank's Nursery & Crafts, Sr Sub Nt, 10.25%, 3/1/08 1,750 1,723,750 1.1
Herff Jones Inc., Sr Sub Nt, 11%, 8/15/05 1,250 1,343,750 0.9
Travelcenters of America, Sr Sub Nt, 10.25%, 4/1/07 1,500 1,485,000 0.9
---------- ---
6,090,000 3.9
STEEL -- 1.4%
NS Group, Inc., Sr Nt, 13.5%, 7/15/03 2,000 2,140,000 1.4
---------- ---
</TABLE>
5
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (continued)
December 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Par of Net
Description (000) Value Assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS/CELLULAR
COMMUNICATION -- 12.2%
American Mobile Satellite Corp., Sr Nt, 12.25%,
4/1/08 $1,000 $ 620,000 0.4%
Arch Communications Group, Inc., Sr Nt, 12.75%,
7/1/07/2/ 2,500 2,500,000 1.6
Centennial Cellular, Sr Nt,
8.875%, 11/1/01 1,000 1,057,500 0.7
DTI Holdings, Inc., Sr Disc Nt, 0/12.5%, 3/1/08 2,750 715,000 0.5
Dobson/Sygnet Communications Corp., Sr Nt, 12.25%,
12/15/08/2/ 1,250 1,271,875 0.8
FaciliCom International, Sr Nt,
10.5%, 1/15/08 2,000 1,600,000 1.0
GCI, Inc., Sr Nt,
9.75%, 8/1/07 1,500 1,485,000 1.0
Metrocall Inc., Sr Sub Nt,
10.375%, 10/1/07 2,000 1,960,000 1.2
MobileMedia Communications, Inc., Bank Debt,
10.25%, 11/1/07 2,477 2,408,567 1.5
MobileMedia Communications, Inc., Sr Sub Nt,
9.375%, 11/1/07/4/ 1,175 141,000 0.1
MobileMedia Communications, Inc., Sr Sub Nt,
0/10.5%, 12/1/03/4/ 1,000 110,000 0.1
Paging Network do Brasil Holding Co. LLC, Sr Nt,
13.5%, 6/6/05 500 260,000 0.2
Pathnet, Inc., Sr Nt,
12.25%, 4/15/08 1,000 700,000 0.4
Phonetel Technologies, Inc., Sr Nt, 12%,
12/15/06/4/ 3,450 1,259,250 0.8
Price Communications Wireless, Inc., Sr Sec Nt,
9.125%, 12/15/06/2/ 1,000 1,010,000 0.6
Rural Cellular Corp., Sr Sub Nt, 9.625%, 5/15/08 2,050 2,055,125 1.3
------------ ----
19,153,317 12.2
TRANSPORTATION -- 4.1%
Greyhound Lines, Inc., Sr Nt,
11.5%, 4/15/07 1,500 1,702,500 1.1
Holt Group, Sr Nt,
9.75%, 1/15/06/2/ 1,000 690,000 0.4
Moran Transportation Co., Bank Debt, 8.813%,
12/31/05 2,500 2,500,000 1.6
Moran Transport Co., 1st Mtg, 11.75%, 7/15/04 1,500 1,605,000 1.0
------------ ----
6,497,500 4.1
Total Corporate Debt Securities
(amortized cost $155,158,775) 148,716,901 94.6
------------ ----
</TABLE>
<TABLE>
<CAPTION>
Shares/ Percent
Par of Net
Description (000) Value Assets
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
EQUITY INVESTMENTS -- 3.1%
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
American Mobile Satellite Corp.,Warrants,/1/,/3/ 1,000 0 0.0
Arch Communications Group, Inc., Common Stock/1/ 39,795 57,205 0.0
Concentric Network Corp., Pfd,
13.5% PIK, 6/1/10 1,065 910,575 0.6
DTI Holdings, Inc., Warrants, 3/1/08/1/,/3/ 13,750 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/ 41,199 314,142 0.2
International Wireless Communications,
Warrants/1/,/3/ 1,000 0 0.0
Iridium LLC and Iridium Capital Corp., Warrants,
7/15/05/1/ 1,000 125,000 0.1
Optel, Inc., Class C Common Stock/1/ 750 3,000 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 2,540 2,311,436 1.5
Rural Cellular Corp., Pfd,
11.375% PIK, 5/15/10 1,057 983,419 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
TransContinental Corp, Pfd, 6%/1/ 60,000 40,980 0.0
TCR Holding Corp., Pfd, Class B/1/ 30,000 1,800 0.0
TCR Holding Corp., Pfd, Class C/1/ 16,500 923 0.0
TCR Holding Corp., Pfd, Class D/1/ 43,500 2,306 0.0
TCR Holding Corp., Pfd, Class E/1/ 90,000 5,670 0.0
US Leather Corp., Common Stock/1/ 93,269 69,952 0.1
---------- ---
Total Equity Investments
(cost $6,117,748) 4,826,408 3.1
---------- ---
</TABLE>
6
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded)
December 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/ Percent
Par of Net
Description (000) Value Assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
SECURITIES LENDING PROGRAM ASSETS - 5.4%
Morgan Stanley Corp. 5.650%, dated 12/31/98,
matures 1/4/99, repurchase price $7,510,353 $7,510 $ 7,510,353 4.8%
Lehman Brothers Holdings, Inc. MTN Tranche
#TR00291,
dated 3/3/98, daily resettable floating rate
due 3/3/00
(at amortized cost) 1,000 986,860 0.6
------------ -----
Total Securities Lending Program Assets (at
amortized cost) 8,497,213 5.4
TOTAL INVESTMENTS
(amortized cost $169,773,736) $162,040,522 103.1
Payable Upon Return of Securities Loaned (8,497,213) (5.4)
Other Assets in Excess of Liabilities 3,646,329 2.3
------------ -----
Net Assets $157,189,638 100.0
Less: Outstanding Preferred Stock (49,000,000)
------------
Net Assets Applicable to 7,124,721 Shares of
Common Stock Outstanding $108,189,638
============
Net Asset Value Per Common Share ($108,189,638 /
7,124,721) $15.19
======
- -------------------------------------------------------------------------------
</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
$13,683,013 or 8.7% of net assets.
3 Board valued security. These securities amounted to $442,916 or 0.3% of net
assets.
4 Security is in default.
- --------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
7
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest, dividends and other................................... $ 17,737,833
EXPENSES:
Investment advisory fee (Note 5)................................ 869,714
Administrative fee (Note 5)..................................... 168,853
Printing, postage and other..................................... 122,325
Custodian, transfer agent and accounting fees (Note 5).......... 61,715
Directors' fees................................................. 60,313
Legal fees...................................................... 55,143
Audit fee....................................................... 35,854
Insurance....................................................... 19,866
------------
Total Expenses.................................................. 1,393,783
------------
Net Investment Income........................................... 16,344,050
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain/(loss) on investments......................... (2,513,330)
Net unrealized appreciation/(depreciation) on investments....... (13,950,069)
------------
Net realized and unrealized gain/(loss) on investments.......... (16,463,399)
------------
Net increase/(decrease) in net assets resulting from
operations..................................................... (119,349)
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS.......................... (3,487,500)
------------
NET INCREASE/(DECREASE) IN NET ASSETS APPLICABLE TO COMMON
STOCKHOLDERS RESULTING FROM OPERATIONS AND DISTRIBUTIONS TO
PREFERRED STOCKHOLDERS........................................... $ (3,606,849)
============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Statements of Changes in Net Assets
- ---------------------------------------------------------------------------------
For the Year For the Year
Ended Ended
December 31, December 31,
1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C>
INCREASE/DECREASE IN NET ASSETS:
Operations:
Net investment income.............................. $ 16,344,050 $ 14,719,598
Net realized gain/(loss) on investments............ (2,513,330) 3,055,834
Net unrealized appreciation/(depreciation) on
investments....................................... (13,950,069) 1,368,510
------------ ------------
Net increase/(decrease) in net assets resulting from
operations......................................... (119,349) 19,143,942
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Preferred dividends of $1.42 per share............. (3,487,500) (3,291,554)
Common dividends:
Net investment income of $1.70 and net investment
income and short-term gains of $1.715 per share,
respectively..................................... (12,084,472) (11,258,184)
Net realized long-term gains of $0.165 per share.. -- (1,169,032)
------------ ------------
Total decrease in net assets from distributions to
stockholders....................................... (15,571,972) (15,718,770)
------------ ------------
FUND SHARE TRANSACTIONS
(NOTES 2 AND 3):
Net proceeds/(cost) from issuance/(exchange) of
preferred stock................................... (30,388) 15,858,554
Value of 28,314 and 24,915 shares issued in
reinvestment of dividends, respectively........... 469,141 428,876
Net proceeds from 2,079,850 shares of common stock
issued in rights offering after deducting
$1,121,753 of offering expenses................... -- 32,675,810
------------ ------------
Total increase in net assets derived from fund share
transactions....................................... 438,753 48,963,240
------------ ------------
Total net increase/(decrease) in net assets......... (15,252,568) 52,388,412
NET ASSETS:
Beginning of period................................ 172,442,206 120,053,794
------------ ------------
End of Period...................................... $157,189,638 $172,442,206
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
8
<PAGE>
PACHOLDER FUND, INC.
- -------------------------------------------------------------------------------
Financial Highlights
(Contained below is per share operating performance data for a share of common
stock outstanding, total return performance, ratios to average net assets and
other supplemental data. This information has been derived from information
provided in the financial statements and market price data for the Fund's
shares.)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of year...... $17.40 $17.44 $16.02 $16.86 $19.23
--------- --------- --------- --------- -------
Net investment income... 2.30 2.22 2.16 2.19 2.12
Net realized and
unrealized gain/(loss)
on investments......... (2.32) 0.83 1.42 (0.06) (1.64)
--------- --------- --------- --------- -------
Net increase in net
asset value resulting
from operations........ (0.02) 3.05 3.58 2.13 0.48
--------- --------- --------- --------- -------
Distributions to
Stockholders from:
Preferred dividends..... (0.49) (0.49) (0.46) (0.29) (0.24)
Common:
Net investment income
and short-term gains.. (1.70) (1.72) (1.70) (1.90) (1.92)
Net realized long-term
gains................. -- (0.16) -- -- --
--------- --------- --------- --------- -------
Total distributions to
preferred and common
stockholders........... (2.19) (2.37) (2.16) (2.19) (2.16)
--------- --------- --------- --------- -------
Capital Change Resulting
from the Issuance of
Fund Shares:
Common Shares........... -- (0.69) -- (0.67) (0.69)
Preferred Shares........ -- (0.03) -- (0.11) --
--------- --------- --------- --------- -------
-- (0.72) -- (0.78) (0.69)
--------- --------- --------- --------- -------
Net asset value, end of
year................... $15.19 $17.40 $17.44 $16.02 $16.86
========= ========= ========= ========= =======
Market value per share,
end of year............ $16.38 $18.19 $17.88 $17.38 $16.75
========= ========= ========= ========= =======
TOTAL INVESTMENT RETURN:
Based on market value
per common share(/1/).. (0.16%) 13.23% 14.37% 16.04% (11.12%)
Based on net asset value
per common share(/2/).. (3.19%) 15.44% 20.40% 10.68% 0.72%
RATIOS TO AVERAGE NET
ASSETS(/3/):
Expenses............... 0.83% 1.47% 1.80% 0.86% 1.64%
Net investment income.. 9.72% 8.92% 9.21% 10.45% 10.17%
SUPPLEMENTAL DATA:
Net assets at end of
year, net of preferred
stock (000)............ $108,190 $123,442 $87,054 $79,596 $58,925
Average net assets
during year, net of
preferred stock (000).. $119,223 $118,893 $83,074 $79,614 $59,002
Portfolio turnover
rate................... 88% 116% 76% 83% 102%
Number of preferred
shares outstanding at
end of year............ 2,450,000 2,450,000 1,650,000 1,650,000 8,600
Asset coverage per share
of preferred stock
outstanding at end of
year................... $64 $70 $73 $66 $7,852
Liquidation and average
market value per share
of preferred stock..... $20 $20 $20 $20 $1,000
- --------------------------------------------------------------------------------
</TABLE>
/1/Total investment return excludes the effects of commissions.
/2/Dividends and distributions, if any, are assumed, for purposes of this
calculation, to be reinvested at prices obtained under the Fund's dividend
reinvestment plan. Rights offerings, if any, are assumed, for purposes of
this calculation, to be fully subscribed under the terms of the rights
offering.
/3/Ratios calculated on the basis of expenses and net investment income
applicable to both the common and preferred shares relative to the average
net assets of both the common and preferred shareholders.
See accompanying Notes to Financial Statements.
9
<PAGE>
PACHOLDER FUND, INC.
- -------------------------------------------------------------------------------
Notes to Financial Statements
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES -- Pacholder Fund, Inc. (the "Fund") is a
closed-end, diversified management investment company registered under the
Investment Company Act of 1940. The Fund seeks a high level of total return
through current income and capital appreciation by investing primarily in
high yield, high risk fixed income securities of domestic companies. The Fund
was incorporated under the laws of the State of Maryland in August, 1988.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Portfolio securities are priced at the bid side of
the market by an independent pricing service. Restricted securities, portfo-
lio securities not priced by the independent pricing service and other as-
sets are valued at fair value as determined under procedures established by
the Board of Directors. At December 31, 1998, there were board valued secu-
rities of $442,916 or 0.3% of net assets as of such date. Short-term obliga-
tions with remaining maturities of 60 days or less at the date of purchase
are valued at amortized cost.
B. FEDERAL TAXES -- It is the Fund's policy, to make sufficient distributions
to shareholders of net investment income and net realized capital gains to
comply with the requirements of the Internal Revenue Code applicable to reg-
ulated investment companies. A provision of $32,828 for federal excise tax
is required at December 31, 1998 because the Fund distributed less than 98%
of net investment income, although the Fund did comply with the Internal
Revenue Code's requirements applicable to investment companies.
C. SECURITIES TRANSACTIONS -- Securities transactions are accounted for on
the date the securities are purchased or sold (trade date). Realized gains
and losses on securities transactions are determined on an identified cost
basis. Interest and dividend income is recorded on an accrual basis. The
Fund amortizes discounts or premiums on purchases of portfolio securities on
the same basis for both financial reporting and tax purposes. The Fund has
elected to defer the accretion of market discount until disposition of the
security.
D. SECURITY LENDING -- The Fund lends its securities to approved brokers to
earn additional income and receives cash as collateral to secure the loans.
Collateral is maintained at not less than 102% of the value of loaned secu-
rities. Although the risk of lending is mitigated by the collateral, the
Fund could experience a delay in recovering its securities and a possible
loss of income or value if the borrower fails to return them.
E. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and ex-
penses are accrued at least weekly. Dividends to stockholders are paid from
net investment income monthly, and distributions of net realized capital
gains, if any, are paid at least annually. Dividends to preferred stockhold-
ers are accrued at least weekly and are paid quarterly from net investment
income.
F. UNFUNDED COMMITMENTS -- As of December 31, 1998, the Fund had unfunded
commitments to loan up to $338,417, at the option of the borrower, pursuant
to the Fund's investment in the loan agreement with American Rice, Inc.
G. WHEN, AS AND IF ISSUED SECURITIES -- The Fund may engage in "when-issued"
or "delayed delivery" transactions. The Fund records when-issued securities
on the trade date and maintains security positions such that sufficient liq-
uid assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked
to market weekly and begin earning interest on the settlement date. No
"when-issued" or "delayed delivery" purchase commitments were included in
the portfolio of investments as of December 31, 1998.
H. ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make esti-
mates and assumptions that affect the reported amounts of assets and liabil-
ities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses dur-
ing the reporting period. Actual results could differ from those estimates.
2. COMMON STOCK -- At December 31, 1998, there were 47,550,000 shares of com-
mon stock with a $.01 par value authorized and 7,124,721 shares outstanding.
During the year ended December 31, 1998, the Fund issued 28,314 shares of
common stock in connection with its dividend reinvestment plan.
On March 14, 1997, the Fund issued 2,079,850 shares of common stock at $16.25
per share as part of a rights offering for the common stockholders of the
Fund. Expenses related to the rights offering totaling $1,121,753 were re-
corded as a reduction of the proceeds of the offering. These expenses in-
cluded $304,178 paid to Winton Associates, Inc., a wholly-owned subsidiary of
Pacholder Associates, Inc. (an affiliate of the Fund's investment advisor),
for financial and advisory services, including advising the Fund regarding
the structure of the rights offering and the materials utilized therewith,
coordinating the distribution arrangements for the rights offering, and pro-
viding information and support services to soliciting broker-dealers.
10
<PAGE>
PACHOLDER FUND, INC.
- -------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3. PREFERRED STOCK -- On March 3, 1997, the Fund exchanged 1,650,000 shares of
Series A Cumulative Preferred Stock and issued 800,000 shares of Series B Cu-
mulative Preferred Stock in a private sale at an offering price of $20 per
share. Dividends on these shares are payable quarterly at an annual rate of
7.15% for the Series A shares and 7.05% for the Series B shares. The pre-
ferred stock is subject to mandatory redemption on March 2, 2002, at a re-
demption price equal to $20 per share, plus accumulated and unpaid dividends.
The preferred stock is also subject to special mandatory redemption at a re-
demption price of $20 per share, plus accumulated and unpaid dividends and a
premium, as defined, if the Fund is not in compliance with the required asset
coverage, other financial tests and restrictions set forth in its charter. In
general, the holders of the preferred stock and the common stock vote to-
gether as a single class, except that the preferred stockholders, as a sepa-
rate class, vote to elect two members of the Board of Directors, and separate
votes are required on certain matters that affect the respective interests of
the preferred stock and common stock. The preferred stock has a liquidation
preference of $20 per share, plus accumulated and unpaid dividends. The of-
fering expenses of the preferred stock were $127,124, which were recorded as
a reduction of paid-in capital for common stockholders. These expenses in-
cluded $60,000 paid to Winton Associates, Inc. for financial and advisory
services, including advising the Fund regarding the structure of the pre-
ferred stock, and coordinating the arrangements of the private placement of
preferred stock offering. The expenses related to the transaction were
$14,322, which were recorded as a reduction of paid-in capital for common
stockholders.
On December 14, 1998, the Fund issued Series C Preferred Stock and Series D
Preferred Stock in exchange for all of the Fund's Series A Preferred Stock
and Series B Preferred Stock. The Series C and D shares have substantially
identical terms and conditions to the Series A and B shares, with the excep-
tion of a less restrictive asset coverage test. At December 31, 1998, accrued
preferred dividends were $174,375. The expenses related to the transaction
were $30,388, which were recorded as a reduction of paid-in capital for com-
mon stockholders.
4. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of securities (ex-
cluding commercial paper) for the year ended December 31, 1998 aggregated
$155,559,305 and $152,687,394, respectively.
At December 31, 1998, the federal income tax basis of securities was
$161,276,523; unrealized depreciation aggregated $7,733,214, of which
$4,128,342 related to appreciated securities and $12,160,931 related to de-
preciated securities.
At December 31, 1998, the Fund had available a capital loss carryforward of
$2,513,330, which expires in 2006, to offset any future net capital gains.
5. TRANSACTIONS WITH INVESTMENT ADVISOR, ADMINISTRATOR AND ACCOUNTING SERVICES
AGENT -- The Fund has an investment advisory agreement with Pacholder & Com-
pany, LLC (the "Advisor") pursuant to which the Advisor serves as the Fund's
investment advisor. The Fund pays the Advisor an advisory fee that varies
based on the total return investment performance of the Fund for the prior
12-month period relative to the percentage change in the CS First Boston High
Yield Index(TM). The fee, which is accrued at least weekly and paid quarter-
ly, ranges from a maximum of 1.40% to a minimum of 0.40% (on an annualized
basis) of the average net assets of the Fund. For the year ended December 31,
1998, the Fund's total return was (3.19%). For the same period, the total re-
turn of the CS First Boston High Yield Index(TM) was 0.58%. For the year
ended December 31, 1998, the advisory fee is calculated based on 0.52% of av-
erage net assets of the Fund. Certain officers and directors of the Fund are
also managers of the Advisor. At December 31, 1998, accrued advisory fees
were $323,309.
The Fund has an administrative services agreement with Kenwood Administrative
Management, L.P. ("KAM") (an affiliate of the Advisor) pursuant to which KAM
provides certain administrative services to the Fund. Under the agreement,
KAM receives from the Fund a fee, accrued at least weekly and paid monthly,
at the annual rate of 0.10% of the average weekly net assets of the Fund. At
December 31, 1998, accrued administrative fees were $13,521.
The Fund has an agreement with Pacholder Associates, Inc. (an affiliate of
the Advisor) to provide portfolio accounting and pricing services to the
Fund. Under the agreement, Pacholder Associates, Inc. receives from the Fund
a fee, accrued at least weekly and paid monthly, at the annual rate of 0.025%
of the first $100 million of the Fund's average weekly net assets and 0.015%
of such assets in excess of $100 million. At December 31, 1998, accrued ac-
counting fees were $3,729.
11
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (Concluded)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. NET ASSETS CONSIST OF:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Common Stock ($.01 par value)...................... $ 71,247 $ 70,964
Preferred Stock.................................... 49,000,000 49,000,000
Paid-in capital.................................... 117,319,801 116,868,368
Undistributed net investment income................ 1,045,134 273,056
Accumulated net realized gain/(loss) on
investments....................................... (2,513,330) 12,963
Unrealized appreciation/(depreciation) on
investments....................................... (7,733,214) 6,216,855
------------ ------------
$157,189,638 $172,442,206
============ ============
</TABLE>
7. SUBSEQUENT EVENT:
On January 19, 1999, the Fund filed a registration statement on Form N-2 with
the Securities and Exchange Commission ("SEC"). Upon approval from the SEC and
the Fund's Board of Directors the Fund will commence a rights offering that
will increase the common shares and assets of the Fund.
12
<PAGE>
PACHOLDER FUND, INC.
- --------------------------------------------------------------------------------
Independent Auditors' Report
- ---------------------------------------
- --------------------------------------------------------------------------------
To the Stockholders and Directors
Pacholder Fund, Inc.
We have audited the accompanying statement of net assets of Pacholder Fund,
Inc., including the schedule of investments, as of December 31, 1998, the re-
lated statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these fi-
nancial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of De-
cember 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant esti-
mates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pacholder Fund, Inc. at December 31, 1998, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Dayton, Ohio
February 5, 1999
13
<PAGE>
- --------------------------------------------------------------------------------
Pacholder Fund, Inc.
Annual Report
December 31, 1998
- --------------------------------------------------------------------------------
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, high risk fixed income securities
of domestic companies.
Investment Advisor
Pacholder & Company, LLC
Administrator
Kenwood Administrative Management, L.P.
Custodian
Star Bank, N.A.
Transfer Agent
Star Bank, N.A.
Legal Counsel
Piper & Marbury L.L.P.
Independent Auditors
Deloitte & Touche LLP
Executive Offices
Pacholder Fund, Inc.
8044 Montgomery Road
Suite 382
Cincinnati, OH 45236
(513) 985-3200
- --------------------------------------------------------------------------------
This report is sent to the shareholders of Pacholder Fund, Inc. for their
information. 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.
- --------------------------------------------------------------------------------
