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:
[x] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PACHOLDER HIGH YIELD FUND, INC.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PACHOLDER HIGH YIELD FUND, INC.
8044 Montgomery Road, Suite 480
Cincinnati, OH 45236
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on December 17, 2002
-------------------------
November 15, 2002
To the Stockholders:
The Annual Meeting of the shareholders of Pacholder High Yield Fund, Inc.
(the "Fund") will be held on December 17, 2002, at 11 o'clock a.m., Eastern
Time, at Bank One Towers Conference Room, 8044 Montgomery Road, East Tower, 1st
Floor, Cincinnati, Ohio, for the following purposes:
1. To elect a Board of four Directors to serve until the next Annual
Meeting and until their successors are elected and qualified (Proposal 1);
2. To approve a new investment advisory agreement between the Fund and
Pacholder & Company, LLC (the "Adviser") effective upon termination of the
current investment advisory agreement (Proposal 2);
3. To consider and act upon such other business as may properly come
before the meeting and any adjournments thereof.
The close of business on November 8, 2002, has been fixed as the record
date for the determination of stockholders entitled to receive notice of and to
vote at the meeting.
By Order of the Board of Directors,
James P. Shanahan, Jr.
Secretary
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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.
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PACHOLDER HIGH YIELD FUND, INC.
8044 Montgomery Road, Suite 480
Cincinnati, OH 45236
______________________
PROXY STATEMENT
______________________
Annual Meeting of Shareholders to be held December 17, 2002
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Pacholder High Yield Fund, Inc. (the
"Fund") for use at the Annual Meeting of shareholders to be held on December 17,
2002, 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. This proxy statement and the related
proxy card will be mailed to shareholders on or about November 15, 2002.
The Board of Directors has fixed the close of business on November 8, 2002,
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 [_________] shares of Common Stock and 2,640 shares of
Series W Auction Rate Cumulative Preferred Stock. Each outstanding share is
entitled to one vote. According to information available to the Fund, as of the
record date, no person owned beneficially 5% or more of the outstanding shares
of the Fund. On the record date, the directors and officers of the Fund as a
group owned beneficially [_________] shares of the Fund, which is [less than 1%]
of the Fund's outstanding shares.
The presence in person or by proxy of the holders entitled to cast a
majority of all the votes entitled to be cast at the meeting will constitute a
quorum for the transaction of business at the Annual Meeting. Broker non-votes,
abstentions and withhold-authority votes all count for the purpose of
determining a quorum. 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.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors has nominated the four 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 and was elected at the
Annual Meeting of shareholders held on October 2, 2001.
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 Auction
Rate Cumulative Preferred Stock, voting as a separate class, are entitled to
elect two directors and the holders of the outstanding shares of Common Stock
and Auction Rate Cumulative Preferred Stock, voting together as a single class,
are entitled to elect the remaining directors of the Fund. The Board of
Directors has nominated Messrs. Morgan and Woodard for election by holders of
the Auction Rate Cumulative Preferred Stock and Messrs. Grant and Williamson for
election by the holders of the Common Stock and Auction Rate Cumulative
Preferred Stock, voting together as a single class. The directors will be
elected by a plurality of the votes cast at the meeting, provided that a quorum
is present. Votes to withhold authority will not be considered votes cast for
this purpose. The following tables set forth information concerning the
nominees.
Name, Address Position(s) Held Term of Office and Principal Occupation(s)
------------- ---------------- ------------------ -----------------------
and Age with the Fund Length of Time Served During Past 5 Years
------- ------------- --------------------- -------------------
Interested Director
-------------------
William J. Morgan* Chairman of the Elected Annually/ President, Treasurer and
8044 Montgomery Road Board, President Positions Held since Director, Pacholder
Suite 480 and Director 1988 Associates, Inc.
Cincinnati, OH 45236
Age 48
__________
* Mr. Morgan is considered an "interested person" of the Fund as defined
in the Investment Company Act of 1940 (the "1940 Act") because of his
affiliation with the Fund's investment adviser, Pacholder & Company,
LLC (the "Adviser"), which is an affiliate of Pacholder Associates,
Inc.
2
Name, Address Position(s) Held Term of Office and Principal Occupation(s)
- ------------- ---------------- ------------------ -----------------------
and Age with the Fund Length of Time Served During Past 5 Years
- ------- ------------- --------------------- -------------------
Non-Interested Directors
- ------------------------
George D. Woodard Director Elected Annually/ Closely Held Business
22229 North 54th Way Position Held Since Specialist, Henry & Horne,
Phoenix, AZ 85054-7144 1995 P.L.C. (certified public
accountants) (since March
Age 56 2000 and 1996-1999); Realtor
with A.S.K. Realty (August
1999-February 2000).
Daniel A. Grant
1440 Greenfield Director Elected Annually/ President, Utility
Crossing Position Held since Management Services
Ballwin, MO 63021 1992 (business consulting).
Age 58
John F. Williamson Director Elected Annually/ Chairman and President,
6215 Squires Court Position Held Since Williamson Associates, Inc.
Spring, TX 77389 1991 (investment adviser) (since
1997); and Executive Vice
Age 64 President and Chief
Financial Officer, Asset
Allocation Concepts, Inc.
(investment adviser)
(1995-1996).
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES LISTED ABOVE.
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3
Fund Shares Owned by Directors
The following table sets forth, for each director, the amount and dollar
range of equity shares beneficially owned in the Fund as of September 30, 2002.
The information as to beneficial ownership is based on statements furnished to
the Fund by each director. Unless otherwise noted, (i) beneficial ownership is
based on sole investment power and (ii) each director's individual beneficial
shareholdings of the Fund constitute less than 1% of the outstanding shares of
the Fund. The Fund is not part of a fund complex.
Name of Director Amount of Fund Shares Dollar Range of Fund Shares
---------------- --------------------- ---------------------------
Beneficially Owned Beneficially Owned
------------------ ------------------
[select range:]
William J. Morgan* [To be provided] [$1-10,000]
[$10,001-$50,000]
[$50,001-$100,000]
[Over $100,000]
[select range:]
George D. Woodard [To be provided] [$1-10,000]
[$10,001-$50,000]
[$50,001-$100,000]
[Over $100,000]
[select range:]
Daniel A. Grant [To be provided] [$1-10,000]
[$10,001-$50,000]
[$50,001-$100,000]
[Over $100,000]
[select range:]
John F. Williamson [To be provided] [$1-10,000]
[$10,001-$50,000]
[$50,001-$100,000]
[Over $100,000]
___________
* Mr. Morgan is considered an "interested person" of the Fund as defined
in the 1940 Act because of his affiliation with the Adviser, which is
an affiliate of Pacholder Associates, Inc.
Audit Committee and Board of Directors Meetings
The Board of Directors has an Audit Committee that is composed entirely of
directors who are not "interested persons" of the Fund, the Adviser or its
affiliates as that term is defined in the 1940 Act. The Audit Committee operates
pursuant to a written charter, which was most recently amended on December 13,
2000, and most recently filed with the Securities and Exchange Commission
("SEC") in 2001. The Audit Committee is responsible for conferring with the
Fund's independent accountants, reviewing the scope and procedures of the
year-end audit, reviewing annual financial statements and recommending the
selection of the Fund's independent accountants. In addition, the Audit
Committee may address questions arising with respect to the valuation of certain
securities in the Fund's portfolio. The members of the Audit Committee are
George F. Woodard (Chairman), Daniel A. Grant and John F.
4
Williamson. The report of the Audit Committee, as approved on February 20, 2002,
is attached to this proxy statement as Appendix 1.
During the fiscal year ended December 31, 2001, the Board of Directors met
eight times. No director attended fewer than 75% of the board meetings. The
Audit Committee held two meetings during 2001 at which all committee members
were in attendance.
Officers of the Fund
The officers of the Fund are elected by and hold office at discretion of
the Board of Directors of the Fund. The Board of Directors has selected three
officers of the Fund. The following table sets forth information concerning each
officer of the Fund who served during all of the last fiscal year of the Fund,
including the amount of equity shares beneficially owned by the officers in the
Fund as of [September 30, 2002]. The information as to beneficial ownership is
based on statements furnished to the Fund by each officer. Unless otherwise
noted, (i) beneficial ownership is based on sole investment power and (ii) each
officer's individual beneficial shareholdings of the Fund constitute less than
1% of the outstanding shares of the Fund.
Name, Address Position(s) Held Term of Office and Principal Amount of Fund
- ------------- ---------------- ------------------ --------- --------------
and Age with the Fund Length of Time Occupation(s) During Shares
- ------- ------------- -------------- -------------------- ------
Served Past 5 Years Beneficially Owned
------ ------------ ------------------
William J. Morgan* Chairman of the Positions Held President, Treasurer [To be provided]
8044 Montgomery Road Board, President Since 1988 and Director,
Suite and Director Pacholder
480 Associates, Inc.
Cincinnati, OH 45236
Age 48
James P. Shanahan, Jr.* Secretary Position Held since Executive Vice [To be provided]
8044 Montgomery Road 1988 President and
Suite General Counsel,
480 Pacholder
Cincinnati, OH 45236 Associates, Inc.
Age 41
James E. Gibson* Treasurer Position Held since Executive Vice [To be provided]
8044 Montgomery Road [1995] President, Pacholder
Suite Associates, Inc.
480
Cincinnati, OH 45236
Age 37
__________
* Messrs. Morgan, Shanahan and Gibson are considered "interested persons" of
the Fund as defined in the 1940 Act because of their affiliation with the
Adviser, which is an affiliate of Pacholder Associates, Inc.
5
Compensation of Directors and Officers
Directors and officers of the Fund, who are employed by the Adviser or a
corporate affiliate of the Adviser, serve without compensation from the Fund.
The Fund pays each director who is not an employee of the Adviser or any
corporate affiliate of the Adviser an annual fee of $10,000 plus $1,500 or
$1,000 for each meeting of the Board of Directors attended in person or by
telephone, respectively, and reimburses directors for travel and other
out-of-pocket expenses incurred by them in connection with attending in-person
meetings. The Fund's officers are compensated by the Adviser for services
rendered to the Fund. The following table sets forth the information concerning
the compensation paid by the Fund to directors and officers during the fiscal
year ended December 31, 2001.
Name and Position Aggregate Compensation
----------------- ----------------------
from the Fund(1)
----------------
William J. Morgan* $0
Chairman of the Board, President
and Director
George D. Woodard $22,000
Director
Daniel A. Grant $22,000
Director
John F. Williamson $22,000
Director
James P. Shanahan, Jr.* $0
Secretary
James E. $0
Gibson*
Treasurer
__________
(1) The Fund does not offer any pension or retirement plan benefits to its
directors or officers. The Fund is not part of a fund complex.
* Messrs. Morgan, Shanahan and Gibson are considered "interested
persons" of the Fund as defined in the 1940 Act because of their
affiliation with the Adviser, which is an affiliate of Pacholder
Associates, Inc.
Section 16(a) Beneficial Owner Reporting Compliance
[Based on information submitted to the Fund, all directors and officers of
the Fund filed on a timely basis with the SEC the reports of beneficial
ownership of Fund shares required by Section 16(a) of the Securities Exchange
Act of 1934.]
6
PROPOSAL 2: APPROVAL OF NEW ADVISORY AGREEMENT
Background
Pacholder & Company, LLC (the "Adviser") serves as investment adviser to
the Fund pursuant to an investment advisory agreement between the Adviser and
the Fund dated August 20, 1998 (the "Current Advisory Agreement"). The Current
Advisory Agreement was approved by shareholders on June 30, 1998 and amended
effective January 1, 2000. As explained in more detail below, shareholders are
being asked to approve a new investment advisory agreement between the Adviser
and the Fund (the "New Advisory Agreement").
The Current Advisory Agreement, as required by the 1940 Act, contains a
provision requiring that the agreement terminate in the event of an
"assignment." Under the 1940 Act, a change in control of an investment adviser
results in an assignment and termination of the Adviser's investment advisory
contracts. As described below, one of the members of the Adviser will undergo a
change in control upon consummation of a proposed transaction. Such a change in
control could be deemed to result in a change in control of the Adviser, and
could be deemed to result in the assignment of, and therefore the termination
of, the Current Advisory Contract. To avoid any uncertainty about the status of
the Current Advisory Agreement, the Board of Directors believes that it is
prudent and in the best interest of the Fund to obtain shareholder approval of
the New Advisory Agreement. As discussed below, neither the Adviser, nor the
personnel responsible for providing advisory services to the Fund, nor the
services provided to the Fund, will change due to the proposed transaction. THE
NEW ADVISORY AGREEMENT CONTAINS TERMS SUBSTANTIALLY IDENTICAL TO THOSE IN THE
CURRENT ADVISORY AGREEMENT.
Summary of the Proposed Transaction
Pacholder Associates, Inc., located at 8044 Montgomery Road, Suite 480,
Cincinnati, Ohio, owns 51% of the equity interest in the Adviser, and Banc One
Investment Advisors Corporation, an indirect wholly-owned subsidiary of Bank One
Corporation, located at 1111 Polaris Parkway, Columbus, Ohio, owns the remaining
49%. Currently, Asher O. and Sylvia A. Pacholder (the "Pacholders") own
approximately 60% of the shares of Pacholder Associates, Inc. The remainder of
Pacholder Associates, Inc. is owned by William J. Morgan, President of Pacholder
Associates, Inc, and other employees of Pacholder Associates, Inc. The
Pacholders propose to withdraw as shareholders of Pacholder Associates, Inc. in
a transaction that will result in the redemption of their shares, the issuance
of new shares to William J. Morgan and other employees of Pacholder Associates
Inc., and the issuance of a convertible note to Bank One Corporation (the
"Proposed Transaction"). The note would be immediately convertible by Bank One
Corporation into up to 42% of the total outstanding common shares of Pacholder
Associates, Inc. on a fully diluted basis. Bank One Corporation also would
receive an option to acquire all of the outstanding shares of Pacholder
Associates, Inc. that is exercisable after five years. In connection with the
Proposed Transaction, the Pacholders would resign all positions held with
Pacholder Associates Inc., including their positions as members of the company's
board of directors.
The 1940 Act provides a rebuttable presumption that the direct or
indirect owner of more than 25% of the outstanding shares of an entity controls
that entity. Because Pacholder Associates, Inc. may be deemed to control the
Adviser, the change in control of Pacholder Associates, Inc. may be deemed to
result in a change in control of the Adviser. Based largely on this presumption,
the Adviser has advised the Fund's Board of Directors that it believes that
consummation of the Proposed Transaction may cause an assignment of the Current
Advisory Agreement. To avoid any uncertainty about the status of the
7
Current Advisory Agreement, the Fund's directors believe that it is prudent and
in the best interest of the Fund to obtain shareholder approval of the New
Advisory Agreement.
The Proposed Transaction would not result in any change to the Adviser's
personnel, day-to-day management of the Fund or financial condition. William J.
Morgan would continue to serve as the Adviser's portfolio manager and continue
to have primarily responsibility for the day-to-day management of the Fund's
portfolio. The Adviser's Board of Managers would retain its existing
composition, as set forth below:
Name and Address Principal Occupation
---------------- --------------------
William J. Morgan President, Treasurer and Director,
8044 Montgomery Road Pacholder Associates, Inc.
Suite 480
Cincinnati, OH 45236
James P. Shanahan Executive Vice President and General
8044 Montgomery Road Counsel, Pacholder Associates, Inc.
Suite 480
Cincinnati, OH 45236
Mark A. Beeson Chief Financial Officer, Banc One
1111 Polaris Parkway Investment Management Group (since
Columbus, OH 43271-0211 November 2001); Senior Managing
Director, Banc One Investment
Advisors Corporation (since November
2001); Chief Executive Officer and
President, One Group Administrative
Services, Inc. (since October 1999);
Chief Executive Officer and
President, One Group Dealer
Services, Inc. (since October 1999).
Gary J. Madich Senior Managing Director, Banc One
1111 Polaris Parkway Investment Advisors Corporation.
Columbus, OH 43271-0211
The Current and New Advisory Agreements
Except for differences in the effective and renewal dates, the Current and
New Advisory Agreements are the same in all material respects. A form of the New
Advisory Agreement is attached to this proxy statement as Exhibit A.
Pursuant to both agreements, the Adviser, subject to the supervision of the
Fund's Board of Directors and in accordance with the Fund's investment
objective, policies and restrictions, identifies securities suitable for
investment by the Fund, makes investment decisions, and places purchase and sale
orders. Both agreements provide that the Adviser will obtain and evaluate such
information and advice relating to the economy, securities markets and specific
securities as it considers necessary or useful to make investment decisions on
behalf of the Fund, and will manage continuously the assets of the Fund in a
manner consistent with its investment objective and policies.
8
Under both agreements, in addition to managing the Fund's investments, the
Adviser maintains certain of the Fund's records and furnishes, at its own
expense, such office space, facilities, equipment, clerical help and bookkeeping
as the Fund may reasonably require in the conduct of its business. In addition,
the Adviser pays the salaries of all personnel, including officers of the Fund
who are employees of the Adviser.
Expenses not expressly assumed by the Adviser under both agreements are
paid by the Fund. The expenses borne by the Fund include, but are not limited
to, the following: investment advisory fees; fees and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; expenses of registration of the Fund and its shares under federal and
state securities laws; all expenses of stockholders' and directors' meetings and
of preparing, printing and mailing prospectuses, proxy statements and reports to
stockholders; directors' fees and expenses; expenses incident to any dividend
reinvestment program; charges and expenses of any outside service used for
pricing of the Fund's portfolio securities; fees and expenses of legal counsel
and independent accountants; membership dues of industry associations; interest
on borrowings; fees and expenses incident to the listing of the Fund's shares on
any stock exchange; insurance premiums; and extraordinary expenses (including,
but not limited to, legal claims and liabilities and litigation costs and any
indemnification relating thereto).
As full compensation for the services provided, facilities furnished and
expenses paid by the Adviser under both the Current and New Advisory Agreement,
the Adviser is entitled to receive an annual investment advisory fee which
increases or decreases from a "fulcrum fee" of 0.90% of the Fund's average net
assets based on the total return investment performance of the Fund for the
prior 12-month period relative to the percentage change in the Credit Suisse
First Boston Domestic + High Yield Index(TM) (the "Index") for the same period
(the "Index Return"). The investment advisory fee is paid quarterly at an annual
rate that varies between 0.40% and 1.40% of the Fund's average net assets. The
fee is structured so that it will be 0.90% if the Fund's investment performance
for the preceding 12 months (net of all fees and expenses, including the
advisory fee) equals the Index Return. The advisory fee increases or decreases
from the 0.90% "fulcrum fee" by 10% of the difference between the Fund's
investment performance during the preceding 12 months and the Index Return
during the period, up to the maximum fee of 1.40% or down to the minimum fee of
0.40%. For the fiscal year ending December 31, 2001, investment advisory fees
paid by the Fund were $751,497.
Each agreement provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations thereunder, the
Adviser is not liable to the Fund or its stockholders for any act or omission by
the Adviser or for any losses sustained by the Fund or its stockholders. Neither
agreement restricts the Adviser from acting as investment manager or Adviser to
others, including entities that may have investment objectives similar or
identical to those of the Fund.
Both the Current Advisory Agreement and the New Advisory Agreement are
renewable annually by the Board of Directors of the Fund, or by vote of the
holders of "a majority of the outstanding voting securities" (as defined in the
1940 Act) of the Fund, and by the vote of a majority of the directors of the
Fund who are not parties to the agreement or "interested persons" (as defined in
the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
The Current and New Advisory Agreements terminate automatically in the
event of an "assignment" (as defined in the 1940 Act) and may be terminated
without penalty at any time by majority vote of the entire Board of Directors of
the Fund, or by vote of the holders of "a majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund, on 30 days' written notice
to the Adviser, or by the Adviser on 180 days' written notice to the Fund.
9
Consideration by the Board of Directors
On May 20, 2002, the Board of Directors held a meeting called for the
purpose of considering the New Advisory Agreement. At the meeting, senior
officers of the Adviser and Pacholder Associates, Inc. discussed the Proposed
Transaction. The Board of Directors considered, among other things, the
expectation that after the Proposed Transaction the Adviser would continue to
operate its business in the same manner as before the Proposed Transaction. The
Board of Directors took into account that the Proposed Transaction was not
expected to result in any change with respect to the Adviser's Board of
Directors, personnel, day-to-day management of the Fund, income statement or
balance sheet. In addition, the Board of Managers considered that the New
Advisory Agreement would be identical to the Current Advisory Agreement in all
material respects except for the contracts' effective and renewal dates.
In addition, the Board of Directors considered a wide range of information
of the type it regularly considers when determining to continue the Fund's
Current Advisory Agreement as in effect from year to year. The Board considered,
among other things:
. the Adviser's personnel, resources and investment process;
. the scope and quality of the services that the Adviser has been
providing to the Fund;
. the investment performance of the Fund and of similar funds managed by
other advisers over various periods;
. the advisory fee rate payable to the Adviser by the Fund and payable
by similar funds managed by other advisers;
. the total expense ratio of the Fund and of similar funds managed by
other advisers;
. compensation payable by the Fund to affiliates of the Adviser for
other services; and
. information regarding the profitability of the Current Advisory
Agreement to the Adviser and its affiliates.
The Board of Directors also considered, to the extent they may be deemed
applicable, the provisions of Section 15(f) of the 1940 Act. Section 15(f)
provides, in effect, that the investment adviser of a registered investment
company, or an affiliated person of such adviser, may receive any amount or
benefit in connection with the sale of the adviser's business provided that two
conditions are satisfied. First, an "unfair burden" must not be imposed on the
investment company as a result of the sale or any express or implied terms,
conditions or understandings applicable thereto. The term "unfair burden" as
defined in the 1940 Act includes any arrangement during the two-year period
after the transaction whereby the predecessor or successor investment adviser,
or any "interested person" (as defined in the 1940 Act) of such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from any person in connection with the purchase or sale of securities or other
property to, from or on behalf of the investment company (other than ordinary
fees for bona fide principal underwriting services), or from the investment
company or its security holders (other than fees for bona fide investment
advisory and other services). The Board of Directors was advised that management
was not aware of any circumstances relating to the Proposed Transaction that
might result in the imposition of an "unfair
10
burden" on the Fund. The second condition of Section 15(f) is that, during the
three-year period immediately following the Proposed Transaction, at least 75%
of the investment company's board of directors must not be "interested persons"
(as defined in the 1940 Act) of the successor or predecessor Adviser. The Board
of Directors currently satisfies and intends to continue to satisfy this
condition.
After consideration of the proposal, and such other information as the
directors deemed relevant, the Board of Directors, including all of the
directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund, determined that the New Advisory Agreement is in the best interest of the
Fund's shareholders and voted to approve the submission of the New Advisory
Agreement to shareholders of the Fund.
Required Vote
Approval of the New Advisory Agreement requires the affirmative vote of "a
majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund. Under the 1940 Act, the vote of "a majority of the outstanding
securities" means the vote (i) of 67% or more of the shares present at the
meeting, if the holders of more than 50% of the shares are present or
represented by proxy, or (ii) of more than 50% of the shares, whichever is the
less. For this purpose, the holders of the Preferred Stock and the Common Stock
will vote together as one class. Abstentions and broker non-votes (i.e., shares
held in the name of a broker or nominee for which an executed proxy is received,
but which have not been voted because the broker or nominee does not have
discretionary voting power and voting instructions have not been received from
the beneficial owner) will not be considered votes cast and, for purposes of (i)
above, will have the same effect as votes cast against the proposal.
If the New Advisory Agreement is approved by shareholders of the Fund, it
will become effective upon termination of the Current Advisory Agreement in
accordance with its terms, which would occur upon consummation of the Proposed
Transaction. If the Proposed Transaction is not consummated, the Current
Advisory Agreement will remain in effect until otherwise terminated.
If the New Advisory Agreement is not approved by the shareholders of the
Fund, the Current Advisory Agreement will remain in effect until terminated in
accordance with its terms and the Board of Directors will consider whether to
pursue alternative action.
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
NEW ADVISORY AGREEMENT.
- --------------------------------------------------------------------------------
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.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
Pacholder & Company, LLC (the "Adviser") serves as the Fund's investment
adviser. The Adviser is an affiliate of Pacholder Associates, Inc., an
investment advisory firm. The principal business address of the Adviser is 8044
Montgomery Road, Suite 480, Cincinnati, OH 45236. The Adviser makes
11
and implements investment decisions and supervises all aspects of the Fund's
operations. It also provides a continuous investment program for the Fund,
including investment research and management with respect to all securities and
investments of the Fund.
Administrative and Accounting Services
Kenwood Administrative Management, Inc. (the "Administrator"), 8044
Montgomery Road, Suite 480, Cincinnati, OH 45236, an affiliate of the Adviser
and Pacholder Associates, Inc., serves as administrator of the Fund. The
Administrator monitors the Fund's compliance with various regulatory
requirements, coordinates and monitors the activities of the Fund's other
service providers, handles various public and shareholder relations matters, and
assists in the preparation of financial and other reports. For the fiscal year
ending December 31, 2001, the total amount of administrative fees paid by the
Fund was $196,136.
Pacholder Associates, Inc., an affiliate of the Adviser, is responsible for
(i) accounting relating 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, including dividends and distributions and
stock splits, in respect of securities held in the Fund's portfolio. For the
fiscal year ending December 31, 2001, the total amount of accounting fees paid
by the Fund was $44,327.
INFORMATION CONCERNING THE INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the
independent auditors for the Fund for the fiscal year ending December 31, 2002.
The firm of Deloitte & Touche LLP has been the Fund's independent auditors since
its inception in November 1988. In addition, Deloitte & Touche LLP prepares the
Fund's federal and state income tax returns and provides certain non-audit
services. Deloitte & Touche LLP, in accordance with Independence Standards Board
Standard No. 1, has confirmed to the Audit Committee that they are independent
auditors with respect to the Fund. The Audit Committee has considered whether
the provision by the independent auditors to the Fund of non-audit services to
the Fund or of professional services to the Adviser and entities that control,
are controlled by or are under common control with the Adviser is compatible
with maintaining the auditors' independence and has discussed the auditors'
independence with them. Representatives of Deloitte & Touche LLP are not
expected to be present at the Annual Meeting but have been given the opportunity
to make a statement if they so desire and will be available should any matter
arise requiring their presence.
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for the audit of the Fund's annual financial statements, and
the review of the financial statements included in the Fund's reports to
shareholders, for fiscal year ended December 31, 2001 were [$52,780].
Financial Information Systems Design and Implementation Fees
There were no fees billed by Deloitte & Touche LLP for the fiscal year
ended December 31, 2001, for professional services rendered for financial
information systems design and implementation services provided to the Fund, the
Adviser or entities that control, are controlled by or are under common control
with the Adviser that provide services to the Fund.
12
All Other Fees
There were [$___________] in fees billed by Deloitte & Touche LLP for the
fiscal year ended December 31, 2001, for other services provided to the Fund,
the Adviser and entities that control, are controlled by or are under common
control with the Adviser that provide services to the Fund.
SOLICITATION OF PROXIES
In addition to solicitation by mail, solicitations on behalf of the Board
of Directors may 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 solicitation materials to beneficial
owners.
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal for inclusion in the proxy
statement for the next Annual Meeting of shareholders, the proposal must be
submitted in writing and received by the Secretary of the Fund within a
reasonable time before the Fund begins to print and mail its proxy materials.
SHAREHOLDER REPORTS
The Fund's Annual Report for the fiscal year ended December 31, 2001, and
Semi-Annual Report for the six months ended June 30, 2002, may be obtained
without charge by calling the Fund toll free at 1-800-837-2755 or by writing to
Pacholder High Yield Fund, Inc., c/o Kenwood Administrative Management, Inc.,
8044 Montgomery Road, Suite 480, Cincinnati, OH 45236.
13
APPENDIX 1
PACHOLDER HIGH YIELD FUND, INC.
(the "Fund")
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of the Fund met on February
20, 2002 to review the Fund's audited financial statements for the fiscal year
ended December 31, 2001. The Audit Committee operates pursuant to a charter last
amended December 13, 2000, which sets forth the roles of the Fund's management,
independent auditors, the Board of Directors and the Audit Committee in the
Fund's financial reporting process. Pursuant to the charter, the Fund's
management is responsible for the preparation, presentation and integrity of the
Fund's financial statements, and for the procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
independent auditors for the Fund are responsible for planning and carrying out
proper audits and reviews. The role of the Audit Committee is to assist the
Board of Directors in its oversight of the financial reporting process by, among
other things, reviewing the scope and results of the Fund's annual audit with
the Fund's independent auditors and recommending the initial and ongoing
engagement of such auditors.
In performing its oversight function, the Audit Committee has reviewed and
discussed the audited financial statements with the Fund's management and its
independent auditors, Deloitte & Touche LLP. The Audit Committee has discussed
with Deloitte & Touche LLP the matters required to be discussed by Statement on
Auditing Standards No. 61 and has received the written disclosures and the
letter from Deloitte & Touche LLP required by Independence Standards Board
Standard No. 1. The Audit Committee also has discussed the independence of
Deloitte & Touche LLP with Deloitte & Touche LLP.
Members of the Audit Committee rely without independent verification on the
information provided and the representations made to them by management and
Deloitte & Touche LLP. Accordingly, the Audit Committee's oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles and policies or
appropriate internal controls and procedures designed to ensure compliance with
accounting standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions referred to above do not guarantee
that the audit of the Fund's financial statements has been carried out in
accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that Deloitte & Touche LLP is in fact "independent."
Based upon this review and related discussions, and subject to the
limitations on the role and responsibilities of the Audit Committee set forth
above and in the charter, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Fund's Annual
Report for the year ended December 31, 2001.
This report has been approved by all of the members of the Audit Committee
(whose names are listed below), each of whom has been determined to be
independent pursuant to Section 121(A) of the American Stock Exchange's listing
standards.
Submitted by the Audit Committee
of the Fund's Board of Directors
George D. Woodard (Chairman)
Daniel A. Grant
John F. Williamson
As approved on February 20, 2002.
2
EXHIBIT 1
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the [ ] day of [ ], 200[ ], by and between Pacholder
High Yield Fund, Inc., a Maryland corporation (hereinafter called the "Fund"),
and Pacholder & Company, LLC, an Ohio limited liability company (hereinafter
called the "Adviser").
WHEREAS, the Fund is engaged in business as a diversified, closed-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and engages in
the business of acting as investment adviser;
WHEREAS, the Fund desires to retain the Adviser to render management and
investment advisory services in the manner and on the terms and conditions
hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform services on said
terms and conditions;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. Duties and Responsibilities of Adviser.
A. Investment Advisory Services. The Fund hereby retains the Adviser to
act as investment manager of the Fund and, subject to the supervision of the
Fund's Board of Directors, to supervise the investment activities of the Fund as
hereinafter set forth giving due consideration to the policies of the Fund as
expressed in the Fund's Registration Statement on Form N-2 under the 1940 Act
and under the Securities Act of 1933, as amended, as well as to the factors
affecting the status of the Fund as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended. Without limiting the generality of
the foregoing, the Adviser:
(i) shall obtain and evaluate such information and advice
relating to the economy, securities market and securities as it
deems necessary or useful to discharge its duties hereunder;
(ii) shall continuously manage the assets of the Fund in a manner
consistent with the investment objectives and policies of the Fund;
(iii) shall determine the securities to be purchased, sold or
otherwise disposed of by the Fund and the timing of such
purchases, sales and dispositions; and
(iv) shall take such further action, including the placing of
purchase and sale orders on behalf of the Fund, as the Adviser
shall deem necessary or appropriate. The Adviser shall also
furnish to or place at the disposal of the Fund such of the
information, evaluations, analyses and opinions formulated or
obtained by the Adviser in the discharge of its duties as the Fund
may, from time to time, reasonably request.
B. Reports to Fund. The Adviser shall furnish to or place at the
disposal of the Fund such information, reports, evaluations, analyses and
opinions as the Fund may, at any time or from time to time, reasonably request
or as the Adviser may deem helpful to the Fund.
C. Fund Personnel. The Adviser agrees to permit individuals who are
officers or employees of the Adviser to serve (if duly elected or appointed) as
officers, directors, members of any committee of directors, members of any
advisory board, or members of any other committee of the Fund, without
remuneration from or other cost to the Fund.
D. Personnel, Office Space, and Facilities of Adviser. The Adviser at its
own expense shall furnish or provide and pay the cost of such office space,
office equipment, office personnel, and office services as the Adviser requires
in the performance of its investment advisory and other obligations under this
Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Adviser. The Adviser shall bear the cost of rendering
the investment management and supervisory services to be performed by it under
this Agreement, and shall, at its own expense, pay the compensation of the
officers and employees of the Fund who are employees of the Adviser or any
corporate affiliate of the Adviser, if any, and provide such office space,
facilities and equipment and such clerical help and bookkeeping services as the
Fund shall reasonably require in the conduct of its business. The Adviser shall
also bear the cost of telephone service, heat, light, power and other utilities
provided to the Fund.
B. Expenses Paid by Fund. The Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including without limitation: the charges
and expenses of any registrar, any custodian or depository appointed by the Fund
for the safekeeping of its cash, portfolio securities and other property, and
any stock transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio transactions to
which the Fund is a party; all taxes, including securities issuance and transfer
taxes, and fees payable by the Fund to federal, state or other governmental
agencies; the cost and expense of engraving or printing of certificates
representing shares of the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and its shares with the
Securities and Exchange Commission and various states and other jurisdictions
(including filing fees and legal fees and disbursements of counsel and the costs
and expenses of preparation, printing (including typesetting) and distributing a
prospectus for such purposes); all expenses of stockholders' and directors'
meetings and of preparing, printing and mailing proxy statements and reports to
stockholders; fees of directors or members of any advisory board or committee
who are not employees of the Adviser or any corporate affiliate of the Adviser;
travel expenses of directors; all expenses incident to the payment of any
dividend reinvestment program; charges and expenses of any outside service used
for pricing of the Fund's portfolio securities; charges and expenses of legal
counsel, including counsel to the directors of the Fund who are not "interested
persons" (as defined in the 1940 Act) of the Fund or the Adviser, and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
fees and expenses incident to the listing of the Fund's shares on any stock
exchange; postage; insurance premiums on property or personnel (including
officers and directors) of the Fund which inure to its benefit; extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); fees and expenses of
counsel, accountants and investment bankers; and all other charges and costs of
the Fund's operation unless otherwise explicitly provided herein.
3. Compensation.
A. Fulcrum Fee. As full compensation for the services provided,
facilities furnished and expenses paid by the Adviser under this Agreement, the
Fund agrees to pay the Adviser an annual investment advisory fee, which
increases and decreases proportionately based on the investment performance of
the Fund in relation to the investment record of the Credit Suisse First Boston
Domestic+ High Yield Index (the "Index"). The advisory fee shall be accrued at
least weekly and paid quarterly as soon as practicable after the end of each
calendar quarter, as follows:
(i) If the Fund's investment performance for the 12 months
immediately preceding the end of the quarter is equivalent to the
investment record of the Index for the same 12-month period, then
the advisory fee shall be computed at the annual rate of 0.90% of
the Fund's average net assets. The rate at which the advisory fee
is computed shall be increased or decreased from the 0.90%
fulcrum fee by 10% of the amount by which the investment
performance of the Fund exceeds or is less than the investment
record of the Index, up to a maximum of 1.40% and down to a
minimum of 0.40%. For purposes of calculating the amount of the
advisory fee, the Fund's average net assets shall be determined by
taking the average of all determinations of such net assets during
the applicable 12-month period and the Fund's net assets shall mean
the total assets of the Fund minus accrued liabilities of the Fund
other than the principal amount of any outstanding senior
securities representing indebtedness (within the meaning of Section
18 of the 1940 Act). The investment performance of the
2
Fund and the investment record of the Index shall be determined in
accordance with the Advisers Act and the rules and regulations
promulgated thereunder.
(ii) The compensation payable to the Adviser after the end of each
quarter shall be equal to the amount of the annual advisory fee
calculated as provided in sub-paragraph (i) above reduced by the
compensation previously paid by the Fund to the Adviser in respect
of the applicable 12-month period. In the event that such prior
payments should exceed the amount of the annual advisory fee
payable hereunder, the Adviser shall remit to the Fund such excess
as soon as practicable after the end of the quarter.
B. Proration. If the Adviser shall serve for less than the whole of any
quarter, the investment advisory fee shall be prorated on the basis of the
12-month period immediately preceding the date of termination of this Agreement.
4. Brokerage. Subject to the approval of the Board of Directors of the
Fund, the Adviser, in carrying out its duties under Section 1. A., may cause the
Fund to pay a broker-dealer which furnishes brokerage and research services
within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a higher commission than that which might be
charged by another broker-dealer, if such commission is deemed reasonable in
relation to the brokerage and research services provided by the broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Adviser with respect to the accounts as to which it
exercises investment discretion (as such term is defined under Section 3(a)(35)
of the Exchange Act).
5. Adviser's Use of the Services of Others. The Adviser may (at its cost
except as contemplated by Sections 2 and 4 of this Agreement) employ, retain or
otherwise avail itself of the services or facilities of other persons or
organizations for the purpose of providing the Adviser or the Fund with such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities or such other information, advice or assistance as the Adviser may
deem necessary, appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge of Adviser's
overall responsibilities with respect to the other accounts which it serves as
investment adviser.
6. Ownership of Records. All records required to be maintained and
preserved by the Fund pursuant to the provisions of rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the 1940 Act and
maintained and preserved by the Adviser on behalf of the Fund are the property
of the Fund and will be surrendered by the Adviser promptly on request by the
Fund.
7. Limitation of Liability of Adviser. The Adviser will use its best
efforts in the supervision and management of the investment activities of the
Fund, but in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations hereunder the Adviser shall not be liable
to the Fund or any of its shareholders for any error of judgment or mistake of
law or for any act or omission by the Adviser or for any losses sustained by the
Fund or its shareholders.
8. Services to Other Clients. Subject to Section 12 of this Agreement,
nothing contained in this Agreement shall prevent the Adviser or any affiliated
person of the Adviser from acting as investment adviser or manager for any other
person, firm or corporation and shall not in any way bind or restrict the
Adviser or any such affiliated person from buying, selling or trading any
securities or commodities for their own accounts or for the account of others
for whom they may be acting. Nothing in this Agreement shall limit or restrict
the right of any director, officer or employee of the Adviser to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business whether of a similar or
dissimilar nature.
9. Use of Adviser's Name. The Fund may include the name "Pacholder" or
any other name derived from the name "Pacholder" only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the business of the Adviser as investment adviser. At such time as this
Agreement or any extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Fund will (by corporate action, if
necessary) cease to use any name derived from the name "Pacholder", any name
similar thereto or any other name indicating that it is advised by or otherwise
connected with the Adviser, or with any organization which shall have succeeded
to the
3
Adviser's business as investment adviser.
10. Term of Agreement. This Agreement shall become effective as of the
date first written above and, unless sooner terminated as provided herein shall
continue in effect until June 30, 200[ ]. Thereafter, if not terminated, this
Agreement shall continue in effect for successive periods of 12 months each
ending on June 30 of each year, provided such continuance is specifically
approved at least annually by the vote of holders of "a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Fund or by
the Board of Directors of the Fund, and, in either event, by the vote of a
majority of the directors of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon 30 days' written notice to
the Adviser, either by majority vote of the directors of the Fund or by the vote
of the holders of a majority of the outstanding voting securities of the Fund;
(b) this Agreement shall immediately terminate in the event of its assignment
(to the extent required by the 1940 Act and the rules thereunder) unless such
automatic termination shall be prevented by an exemptive order of the Securities
and Exchange Commission; and (c) the Adviser may terminate this Agreement
without payment of penalty on 180 days' written notice to the Fund. In the event
the Adviser elects to terminate this Agreement, the advisory fee payable during
the 180-day period will be the lesser of the fee payable under this Agreement or
the fee which will be payable to the Adviser under any new advisory agreement
with the Fund. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
11. Amendment. This Agreement may be amended by the parties without the
vote or consent of the stockholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision hereof,
or if they deem it necessary to conform this Agreement to the requirements of
applicable federal laws or regulations, but neither the Fund nor the Adviser
shall be liable for failing to do so.
12. Allocation of Services. The Adviser reserves the right to manage other
investment accounts, including those with investment objectives similar to the
Fund. Securities considered as investments for the Fund may also be appropriate
for other investment accounts managed by the Adviser. Subject to applicable laws
and regulations, the Adviser will attempt to allocate equitably portfolio
transactions among the portfolios of its other investment accounts whenever
decisions are made to purchase or sell securities by the Fund and one or more of
such other accounts simultaneously. In making such allocations, the main factors
to be considered by the Adviser will be the respective investment objectives of
the Fund and such other accounts, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment by the
Fund and such other accounts, the size of investment commitments generally held
by the Fund and such accounts, and the opinions of the persons responsible for
recommending investments to the Fund and such other accounts.
13. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Ohio and the applicable provisions of the 1940 Act and
the Advisers Act. To the extent the applicable law of the State of Ohio, or any
of the provisions herein, conflict with the applicable provisions of the 1940
Act or the Advisers Act, the latter shall control.
4
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Cincinnati, Ohio.
WITNESS: PACHOLDER HIGH YIELD FUND, INC.
____________________________ By: ____________________________
WITNESS: PACHOLDER & COMPANY, LLC
By: PACHOLDER ASSOCIATES, INC.
_____________________________ By: _____________________________
5
Pacholder High Yield Fund, Inc.
Common Stock, $.01 Par Value
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints William J. Morgan, James E. Gibson 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 below on
this card, all the shares of Common Stock, par value $.01 per share, of
Pacholder High Yield Fund, Inc. which the undersigned is entitled to vote at the
Annual Meeting of shareholders to be held on December 17, 2002, 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" all proposals. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the meeting.
Please be sure to sign and date this Proxy
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
Pacholder High Yield Fund, Inc. 2002 ANNUAL MEETING
[X] Please Mark Votes as in this example
1.) Election of Directors. With- For All 2.) To approve the New Advisory For Against Abstain
For hold Except Agreement between the Adviser and
[_] [_] [_] Fund effective upon termination of the
Current Advisory Agreement. [_] [_] [_]
Daniel A. Grant
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.
Check appropriate box
Indicate changes below: Date _________________ RECORD DATE SHARES
Address Change? [_] Name Change? [_]
Box
[------------------------------------]
Signature(s) In Box
Please sign 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 its behalf.
Pacholder High Yield Fund, Inc.
Series W Auction Rate Cumulative Preferred Stock, $.01 Par Value
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints William J. Morgan, James E. Gibson 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 below, all
the shares of Series W Auction Rate Cumulative Preferred Stock, par value $.01
per share, of Pacholder High Yield Fund, Inc. which the undersigned is entitled
to vote at the Annual Meeting of shareholders to be held on December 17, 2002,
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" all proposals. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the meeting.
[X] Please Mark Votes as in this example
1.) Election of Directors. With- For All 2.) To approve the New Advisory For Against Abstain
For hold Except Agreement between the Adviser and
[_] [_] [_] Fund effective upon termination of the
Current Advisory Agreement. [_] [_] [_]
William J. Morgan
George D. Woodard
Daniel A. Grant
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.
Check appropriate box
Indicate changes below: Date _________________ RECORD DATE SHARES
Address Change? [_] Name Change? [_]
Box
[------------------------------------]
Signature(s) In Box
Please sign 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 its behalf.