UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05639
Pacholder High Yield Fund, Inc.
(Exact name of registrant as specified in charter)
245 Park Avenue
New York, NY 10167
(Address of principal executive offices) (Zip code)
Frank J. Nasta
270 Park Avenue
New York, NY 10017
(Name and Address of Agent for Service)
Registrants telephone number, including area code: (513) 985-3200
Date of fiscal year end: December 31
Date of reporting period: January 1, 2010 through December 31, 2010
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be
transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A
registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (OMB) control number. Please direct comments concerning the
accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Directors and Officers
|
|
|
Fergus Reid, III
Chairman and
Director
William J. Armstrong
Director
John F. Finn
Director
Dr. Matthew Goldstein
Director
Robert J. Higgins
Director
Frankie D.
Hughes
Director
Peter C. Marshall
Director
Marilyn McCoy
Director
William G. Morton,
Jr.
Director
|
|
Robert A. Oden, Jr.
Director
Frederick W. Ruebeck
Director
James J.
Schonbachler
Director
Leonard M. Spalding, Jr.
Director
Patricia A. Maleski
President and Principal Executive Officer
Joy C. Dowd
Treasurer and Principal Financial Officer
Stephen M. Ungerman
Chief Compliance
Officer
Frank J. Nasta
Secretary
|
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, fixed income securities
of domestic companies.
Investment Advisor
J.P. Morgan Investment Management Inc.
Administrator
JPMorgan Funds Management, Inc.
Custodian
JPMorgan Chase Bank, N.A.
Transfer Agent
Computershare Trust Company, N.A.
Legal Counsel
Dechert LLP
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Independent Directors Counsel
Kramer Levin Naftalis & Frankel LLP
Executive Offices
Pacholder High Yield Fund, Inc.
245
Park Avenue
New York, NY 10167
Shareholder Services
(877) 217-9502
Please
visit our web site,
www.pacholder.com
, for information on the Funds NAV, share price, news releases, and SEC filings. We created this site to provide stockholders quick and easy access to the timeliest information available regarding
the Fund.
This report is for the
information of stockholders of Pacholder High Yield Fund, Inc. It is not a prospectus, offering circular or other representation intended for use in connection with the purchase or sale of shares of the Fund or any securities mentioned in this
report.
P
ACHOLDER
H
IGH
Y
IELD
F
UND
, I
NC
.
A
NNUAL
R
EPORT
D
ECEMBER
31, 2010
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
(Unaudited)
Dear Stockholders:
2010 Annual Review
In December, volatility stemming from of the debt crisis in Europe, tighter policy
initiatives from China and the worsening U.S. deficit picture lightened. For the fourth quarter 2010, returns were positive for risk assets, sparked by an upgraded view on the overall economy as strong retail sales figures and the extension of tax
cuts for the next two years boosted the expectation for discretionary income and consumer spending in 2011. While the improved growth outlook and the extension of the tax cuts led to less volatility in high yield and equity assets, U.S. Treasury
yields rose on expectations for increased Treasury supply to meet monetary policy. However, even with a rise in yields, strong demand for increased yield supported the high yield market as the new issue market showed strength and flows into high
yield and leveraged loan mutual funds remained strongly positive. The market continued to weigh the anemic economic data; the improved GDP outlook, increased clarity on monetary and fiscal policy, strong demand, and improving credit fundamentals
were all tailwinds for high yield in 2010.
For the quarter and year ended
December 31, 2010, the Pacholder High Yield Fund, Inc. (the Fund) returned 6.67% and 24.10% respectively based on Net Asset Value (NAV) compared to the 3.13% and 14.39% returns for the Credit Suisse High Yield Index,
Developed Countries Only (the Index) and the 4.27% and 18.72% average total returns of the Morningstar Closed-End High Yield Category.
The Funds relative outperformance for the year ended December 31, 2010 was due in large part to security selection in the aerospace, chemicals,
food/drug/tobacco and information technology segments. Security selection in the financials, gaming/leisure, housing and manufacturing segments detracted from the Funds overall performance. The Funds relative outperformance in the fourth
quarter and year-to-date was enhanced due to its leverage obtained through its Auction Rate Preferred Shares (ARPS).
According to Moodys Investor Services, Inc. (Moodys), the global speculative-grade issuer-weighted default rate declined to 3.1% in December 2010 from
the December 2009 rate of 12.5%. Moodys predicted, under its baseline scenario, that the global speculative-grade default rate will continue to fall to 2.1% by the 2011 year-end.
During the quarter, the Fund was well diversified, with investments in 513 securities in 52 different industries. As of December 31, the
Funds largest industry concentration was in media, which accounted for 9.06% of its market value. For the year, the average price of the Index rose 7.59 points from $93.35 to $100.94, the average yield decreased 1.27% from 8.72% to 7.45% and
the spread over the comparable U.S. Treasury narrowed 0.62% from 6.34% to 5.72%.
Fund Strategy
Our investment strategy is based upon a credit bar bell process that is intended to take specifically targeted credit risk when our analysis indicates a favorable
risk reward opportunity, while maintaining a core of relatively stable credits. Generally, our credit barbell approach is implemented by establishing a core group of holdings of stable, liquid credits with improving fundamentals that represent the
overall high yield market with total return ideas incorporated to take advantage of inefficiencies in the market.
Auction Rate Preferred Shares and Dividends
Since February 2008, most auctions for preferred shares of closed-end funds and auction rate securities of other issuers failed. The weekly auctions for the Funds ARPS have failed since February 13, 2008.
Since that time, a number of broker-dealers announced that they will offer to repurchase auction rate securities from certain of their clients. Any action taken by the Fund to provide liquidity to the ARPS must be in the best interest of the Fund as
a whole.
From January 2009 to February 2010, the Fund paid a monthly
dividend of $0.055 per common share. Beginning with the March 2010 dividend, the Board of Directors authorized the Fund to increase the amount of monthly dividends from $0.055 to $0.060 per common share. In December 2010, the Fund also paid a
special dividend of $0.205 per common share. The Fund anticipates paying a monthly dividend of $0.060, subject to market conditions and the requirement that the Fund maintain an asset coverage of at least 200% of the ARPS after payment of dividends
As always, we appreciate your interest in the Fund and look forward to your
continued support.
Sincerely,
George C.W. Gatch
CEO-Investment
Management Americas
J.P. Morgan Asset Management
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
(Unaudited)
The
performance quoted is past performance and is not a guarantee of future results.
Closed-end funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investors shares, when
sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown.
J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to,
J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc.
Securities rated below investment grade are called high-yield bonds, non-investment grade bonds, below investment-grade bonds,
or junk bonds. They generally are rated in the fifth or lower rating categories of Standard & Poors and Moodys Investors Service. Although these securities tend to provide higher yields than higher rated securities, there
is a greater risk that the Funds share value will decline. Because this Fund primarily invests in bonds, it is subject to interest rate risks. Bond prices generally fall when interest rates rise.
Opinions and estimates offered constitute our judgment and are subject to change
without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an
offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide,
and should not be relied on for, accounting and legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only
and are not to be relied upon as advice or interpreted as a recommendation.
Availability of Portfolio Holdings and Other Information
No sooner than 10 days after the end of each month, the Funds uncertified complete schedule of its portfolio holdings will be available on our website (www.pacholder.com) In addition, the Fund files its
certified, complete schedule of its portfolio holdings with the U.S. Securities and
Exchange Commission (SEC) for the first and third
quarters of each fiscal year on Form N-Q. The Funds Form N-Qs are available, without charge, on the SECs website at www.sec.gov. The Funds Form N-Qs may be reviewed and copied at the SECs Public Reference Room in Washington,
DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
No sooner than 10 calendar days after the end of each month, the Funds top ten
holdings as of the last day of each month as well as certain other fund facts including estimated undistributed net income and statistical information will also be available on the Funds website.
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
(Unaudited)
|
|
|
|
|
|
|
|
|
Total Return *
|
|
Net Asset Value
(NAV)
|
|
|
Market
Price
|
|
1 Year
|
|
|
24.10
|
%**
|
|
|
27.90
|
%
|
5 Year
|
|
|
11.21
|
%
|
|
|
11.80
|
%
|
10 Year
|
|
|
11.29
|
%
|
|
|
10.39
|
%
|
|
|
|
|
|
|
|
|
|
Price per share at December 31, 2010
|
|
$
|
8.66
|
|
|
$
|
8.45
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Total returns assume the reinvestment of all dividends and capital gains, if any. Total returns shown are average annual returns unless otherwise noted.
|
**
|
|
The return shown is based on net asset value and may differ from the return shown in the financial highlights, which reflects adjustments made to the net asset value in
accordance with accounting principles generally accepted in the United States of America.
|
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE BONDS 105.8%
|
|
|
|
|
|
|
|
|
|
CONSUMER DISCRETIONARY 33.0%
|
|
AUTO COMPONENTS 0.5%
|
|
DPH Holdings Corp., 7.125%, 05/01/29
1,4
|
|
$
|
626
|
|
|
$
|
25,040
|
|
|
|
0.0
|
%
12
|
UCI Holdco, Inc., Sr Nt, PIK, 9.250%, 12/15/13
|
|
|
548
|
|
|
|
546,507
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
571,547
|
|
|
|
0.5
|
|
AUTOMOBILES 2.5%
|
|
Ford Holdings LLC,
|
|
|
|
|
|
|
|
|
|
|
|
|
9.300%, 03/01/30
|
|
|
262
|
|
|
|
305,230
|
|
|
|
0.3
|
|
9.375%, 03/01/20
10
|
|
|
150
|
|
|
|
171,001
|
|
|
|
0.1
|
|
Ford Motor Co.,
|
|
|
|
|
|
|
|
|
|
|
|
|
7.750%, 06/15/43
|
|
|
750
|
|
|
|
750,000
|
|
|
|
0.7
|
|
8.900%, 01/15/32
|
|
|
125
|
|
|
|
143,125
|
|
|
|
0.1
|
|
Ford Motor Co., Nt, 9.980%, 02/15/47
|
|
|
125
|
|
|
|
148,750
|
|
|
|
0.2
|
|
Motors Liquidation Co.,
|
|
|
|
|
|
|
|
|
|
|
|
|
0.000%, 03/15/36
1,4
|
|
|
55
|
Units
|
|
|
9,625
|
|
|
|
0.0
|
12
|
5.250%, 03/06/32
|
|
|
25
|
Units
|
|
|
206,265
|
|
|
|
0.2
|
|
6.250%, 07/15/33
|
|
|
15
|
Units
|
|
|
125,102
|
|
|
|
0.1
|
|
7.250%, 04/15/41
|
|
|
|
Units
11
|
|
|
1,723
|
|
|
|
0.0
|
12
|
7.250%, 07/15/41
|
|
|
|
Units
11
|
|
|
737
|
|
|
|
0.0
|
12
|
7.250%, 02/15/52
|
|
|
7
|
Units
|
|
|
58,483
|
|
|
|
0.0
|
12
|
7.375%, 05/15/48
|
|
|
10
|
Units
|
|
|
77,345
|
|
|
|
0.1
|
|
7.375%, 10/01/51
|
|
|
|
Units
11
|
|
|
1,955
|
|
|
|
0.0
|
12
|
Motors Liquidation Co., Debentures,
|
|
|
|
|
|
|
|
|
|
|
|
|
6.750%, 05/01/28
1,4
|
|
|
50
|
|
|
|
17,000
|
|
|
|
0.0
|
12
|
8.100%, 06/15/24
1,4
|
|
|
1,725
|
|
|
|
582,188
|
|
|
|
0.5
|
|
8.375%, 07/15/33
1,4
|
|
|
425
|
|
|
|
151,937
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,750,466
|
|
|
|
2.5
|
|
BROADCASTING & CABLE TV 3.4%
|
|
Adelphia Communications Corp., Pfd,
6.000%, 02/15/06
1,4
|
|
|
125
|
|
|
|
|
|
|
|
0.0
|
|
Adelphia Communications Corp., Sr Nt,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.125%, 07/15/03
1,4
|
|
|
750
|
|
|
|
11,250
|
|
|
|
0.0
|
12
|
9.375%, 11/15/09
1,4
|
|
|
560
|
|
|
|
8,400
|
|
|
|
0.0
|
12
|
Cablevision Systems Corp., 8.000%, 04/15/20
|
|
|
95
|
|
|
|
101,650
|
|
|
|
0.1
|
|
Bresnan Broadband Holdings LLC, Private Placement, Co Guar, 8.000%, 12/15/18
2
|
|
|
125
|
|
|
|
128,750
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BROADCASTING & CABLE TV (continued)
|
|
CCO Holdings LLC/CCO Holdings Capital Corp., Co Guar,
|
|
|
|
|
|
|
|
|
|
|
|
|
7.250%, 10/30/17
|
|
$
|
240
|
|
|
$
|
243,600
|
|
|
|
0.2
|
%
|
7.875%, 04/30/18
|
|
|
90
|
|
|
|
93,150
|
|
|
|
0.1
|
|
8.125%, 04/30/20
|
|
|
200
|
|
|
|
210,500
|
|
|
|
0.2
|
|
Cequel Communications Holdings I LLC and Cequel Capital Corp., Private Placement, Sr Nt, 8.625%, 11/15/17
2
|
|
|
392
|
|
|
|
409,640
|
|
|
|
0.4
|
|
Charter Communications Operating LLC/Charter Communications Operating Capital, Private Placement, Nt, 10.875%, 09/15/14
2
|
|
|
150
|
|
|
|
167,625
|
|
|
|
0.2
|
|
Citadel Broadcasting Corp., Private Placement, Co Guar, 7.750%, 12/15/18
2
|
|
|
50
|
|
|
|
51,750
|
|
|
|
0.1
|
|
Mediacom LLC/Mediacom Capital Corp., 9.125%, 08/15/19
|
|
|
245
|
|
|
|
249,900
|
|
|
|
0.2
|
|
Sirius XM Radio, Inc., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.750%, 04/01/15
2
|
|
|
180
|
|
|
|
194,850
|
|
|
|
0.2
|
|
9.750%, 09/01/15
2
|
|
|
150
|
|
|
|
168,375
|
|
|
|
0.1
|
|
Telesat Canada/Telesat LLC, (Canada),
|
|
|
|
|
|
|
|
|
|
|
|
|
11.000%, 11/01/15
|
|
|
136
|
|
|
|
152,660
|
|
|
|
0.1
|
|
12.500%, 11/01/17
10
|
|
|
150
|
|
|
|
176,625
|
|
|
|
0.2
|
|
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH, Private Placement, Sr Secd Nt, (Germany), 8.125%, 12/01/17
2
|
|
|
250
|
|
|
|
261,250
|
|
|
|
0.2
|
|
Virgin Media Finance plc, (United Kingdom), 8.375%, 10/15/19
|
|
|
225
|
|
|
|
245,813
|
|
|
|
0.2
|
|
Virgin Media Finance plc, Sr Nt, (United Kingdom), 9.125%, 08/15/16
|
|
|
450
|
|
|
|
479,250
|
|
|
|
0.4
|
|
XM Satellite Radio, Inc., Private Placement, Sr Nt, 13.000%, 08/01/13
2
|
|
|
330
|
|
|
|
392,700
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,747,738
|
|
|
|
3.4
|
|
DISTRIBUTORS 0.3%
|
|
McJunkin Red Man Corp., Private Placement, Sr Nt,
9.500%, 12/15/16
2
|
|
|
355
|
|
|
|
335,475
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
4
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVERSIFIED CONSUMER SERVICES 1.2%
|
|
Knowledge Learning Corp., Inc., Private Placement, Sr Sub Nt, 7.750%, 02/01/15
2,10
|
|
$
|
700
|
|
|
$
|
686,000
|
|
|
|
0.6
|
%
|
Mac-Gray Corp., Sr Nt, 7.625%, 08/15/15
10
|
|
|
650
|
|
|
|
638,625
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,324,625
|
|
|
|
1.2
|
|
GAMING 5.7%
|
|
Ceasars Entertainment Operating Co., Inc., 11.250%, 06/01/17
|
|
|
250
|
|
|
|
281,250
|
|
|
|
0.3
|
|
Chukchansi Economic Development Authority, Private Placement, 8.000%, 11/15/13
2
|
|
|
766
|
|
|
|
509,390
|
|
|
|
0.5
|
|
Isle of Capri Casinos, Inc., Sr Nt, 7.000%, 03/01/14
|
|
|
400
|
|
|
|
392,000
|
|
|
|
0.3
|
|
Mandalay Resort Group, Sr Nt, 7.625%, 07/15/13
|
|
|
200
|
|
|
|
189,500
|
|
|
|
0.2
|
|
Mashantucket Western Pequot Tribe, Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
5.912%, 09/01/21
1,2,4
|
|
|
475
|
|
|
|
214,743
|
|
|
|
0.2
|
|
8.500%, 11/15/15
1,2,4
|
|
|
820
|
|
|
|
107,625
|
|
|
|
0.1
|
|
MCE Finance Ltd., Sr Secd Nt, (Cayman Islands), 10.250%, 05/15/18
|
|
|
225
|
|
|
|
257,906
|
|
|
|
0.2
|
|
MGM Resorts International,
10.000%, 11/01/16
2
|
|
|
1,400
|
|
|
|
1,438,500
|
|
|
|
1.3
|
|
MGM Resorts International, Co Guar,
|
|
|
|
|
|
|
|
|
|
|
|
|
5.875%, 02/27/14
|
|
|
30
|
|
|
|
27,675
|
|
|
|
0.0
|
12
|
6.625%, 07/15/15
|
|
|
231
|
|
|
|
211,654
|
|
|
|
0.2
|
|
7.500%, 06/01/16
|
|
|
140
|
|
|
|
130,900
|
|
|
|
0.1
|
|
7.625%, 01/15/17
|
|
|
201
|
|
|
|
187,935
|
|
|
|
0.2
|
|
MGM Resorts International, Private Placement,
9.000%, 03/15/20
2
|
|
|
125
|
|
|
|
137,500
|
|
|
|
0.1
|
|
Midwest Gaming Borrower LLC/Midwest Finance Corp., Private Placement, 11.625%, 04/15/16
2
|
|
|
100
|
|
|
|
103,500
|
|
|
|
0.1
|
|
Peninsula Gaming LLC, 8.375%, 08/15/15
|
|
|
350
|
|
|
|
367,938
|
|
|
|
0.3
|
|
Pinnacle Entertainment, Inc., 8.750%, 05/15/20
|
|
|
100
|
|
|
|
103,500
|
|
|
|
0.1
|
|
San Pasqual Casino, Private Placement,
8.000%, 09/15/13
2
|
|
|
500
|
|
|
|
500,625
|
|
|
|
0.4
|
|
Seminole Hard Rock Entertainment, Inc., Private Placement, VAR, 2.802%, 03/15/14
2
|
|
|
500
|
|
|
|
457,500
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAMING (continued)
|
|
Seminole Indian Tribe of Florida, Private Placement, 7.750%, 10/01/17
2
|
|
$
|
75
|
|
|
$
|
77,437
|
|
|
|
0.1
|
%
|
Shingle Springs Tribal Gaming Authority, Private Placement, Sr Nt, 9.375%, 06/15/15
2,10
|
|
|
1,000
|
|
|
|
690,000
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,387,078
|
|
|
|
5.7
|
|
HOTELS, RESTAURANTS & LEISURE 2.8%
|
|
Banc of America Large Loan, Inc., Private Placement, VAR, 2.010%, 11/15/15
2
|
|
|
598
|
|
|
|
533,370
|
|
|
|
0.5
|
|
CKE Restaurants, Inc., Sr Secd Nt, 11.375%, 07/15/18
|
|
|
350
|
|
|
|
387,625
|
|
|
|
0.3
|
|
Dave & Busters, Inc., 11.000%, 06/01/18
|
|
|
30
|
|
|
|
32,925
|
|
|
|
0.0
|
12
|
DineEquity, Inc., Private Placement,
9.500%, 10/30/18
2
|
|
|
170
|
|
|
|
180,200
|
|
|
|
0.2
|
|
Dunkin Finance Corp., Private Placement,
9.625%, 12/01/18
2
|
|
|
250
|
|
|
|
252,500
|
|
|
|
0.2
|
|
Landrys Holdings, Inc., Private Placement,
11.500%, 06/01/14
2
|
|
|
100
|
|
|
|
98,000
|
|
|
|
0.1
|
|
Landrys Restaurants, Inc., Private Placement, Sr Secd Nt, 11.625%, 12/01/15
2
|
|
|
120
|
|
|
|
128,100
|
|
|
|
0.1
|
|
Landrys Restaurants, Inc., Sr Nt, 11.625%, 12/01/15
|
|
|
200
|
|
|
|
213,500
|
|
|
|
0.2
|
|
Real Mex Restaurants, Inc., 14.000%, 01/01/13
|
|
|
200
|
|
|
|
208,000
|
|
|
|
0.2
|
|
Royal Caribbean Cruises Ltd., Sr Nt, (Liberia), 11.875%, 07/15/15
|
|
|
231
|
|
|
|
285,285
|
|
|
|
0.3
|
|
Seneca Gaming Corp., Private Placement,
8.250%, 12/01/18
2
|
|
|
175
|
|
|
|
175,437
|
|
|
|
0.2
|
|
Speedway Motorsports, Inc., Sr Nt, 8.750%, 06/01/16
|
|
|
300
|
|
|
|
323,250
|
|
|
|
0.3
|
|
Universal City Development Partners Ltd./UCDP Finance, Inc., 10.875%, 11/15/16
|
|
|
250
|
|
|
|
273,125
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,091,317
|
|
|
|
2.8
|
|
HOUSEHOLD DURABLES 1.4%
|
|
K Hovnanian Enterprises, Inc., Sr Nt, 10.625%, 10/15/16
|
|
|
475
|
|
|
|
486,875
|
|
|
|
0.4
|
|
Lennar Corp., Sr Nt, 6.950%, 06/01/18
|
|
|
410
|
|
|
|
389,500
|
|
|
|
0.4
|
|
See Notes to Financial Statements.
5
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSEHOLD DURABLES (continued)
|
|
Meritage Homes Corp., Sr Nt,
|
|
|
|
|
|
|
|
|
|
|
|
|
6.250%, 03/15/15
|
|
$
|
75
|
|
|
$
|
75,375
|
|
|
|
0.1
|
%
|
7.150%, 04/15/20
|
|
|
260
|
|
|
|
258,700
|
|
|
|
0.2
|
|
Standard Pacific Corp., Private Placement, Co Guar,
8.375%, 05/15/18
2
|
|
|
165
|
|
|
|
165,000
|
|
|
|
0.1
|
|
Standard Pacific Corp., Sr Nt, 10.750%, 09/15/16
|
|
|
210
|
|
|
|
242,025
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,617,475
|
|
|
|
1.4
|
|
INTERNET & CATALOG RETAIL 0.2%
|
|
Affinion Group, Inc., Private Placement,
7.875%, 12/15/18
2
|
|
|
225
|
|
|
|
219,375
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEISURE EQUIPMENT & PRODUCTS 1.4%
|
|
Da-Lite Screen Co., Inc., Sr Nt, 12.500%, 04/01/15
|
|
|
375
|
|
|
|
412,500
|
|
|
|
0.3
|
|
Eastman Kodak Co., Private Placement,
9.750%, 03/01/18
2
|
|
|
740
|
|
|
|
754,800
|
|
|
|
0.7
|
|
FGI Holding Co., Inc., Private Placement, Sr Nt, PIK, 11.250%, 10/01/15
2
|
|
|
231
|
|
|
|
221,555
|
|
|
|
0.2
|
|
Icon Health & Fitness, Private Placement,
11.875%, 10/15/16
2
|
|
|
225
|
|
|
|
227,250
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,616,105
|
|
|
|
1.4
|
|
MEDIA 8.1%
|
|
Barrington Broadcasting Group LLC and Barrington Broadcasting Capital Corp., Sr Sub Nt, 10.500%, 08/15/14
|
|
|
700
|
|
|
|
661,500
|
|
|
|
0.6
|
|
Block Communications, Inc., Private Placement, Sr Nt, 8.250%, 12/15/15
2,10
|
|
|
800
|
|
|
|
806,000
|
|
|
|
0.7
|
|
Clear Channel Worldwide Holdings, Inc., Sr Nt,
|
|
|
|
|
|
|
|
|
|
|
|
|
9.250%, 12/15/17
|
|
|
125
|
|
|
|
135,937
|
|
|
|
0.1
|
|
9.250%, 12/15/17
|
|
|
500
|
|
|
|
547,500
|
|
|
|
0.5
|
|
CSC Holdings LLC, 7.625%, 07/15/18
|
|
|
50
|
|
|
|
54,250
|
|
|
|
0.1
|
|
CSC Holdings LLC, Sr Nt, 7.875%, 02/15/18
|
|
|
96
|
|
|
|
106,800
|
|
|
|
0.1
|
|
DigitalGlobe, Inc., Sr Nt, 10.500%, 05/01/14
|
|
|
250
|
|
|
|
285,313
|
|
|
|
0.3
|
|
Fisher Communications, Inc., Sr Nt, 8.625%, 09/15/14
|
|
|
500
|
|
|
|
507,500
|
|
|
|
0.5
|
|
Gannett Co., Inc., 9.375%, 11/15/17
|
|
|
110
|
|
|
|
122,650
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDIA (continued)
|
|
Gannett Co., Inc., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
6.375%, 09/01/15
2
|
|
$
|
50
|
|
|
$
|
50,375
|
|
|
|
0.0
|
%
12
|
7.125%, 09/01/18
2
|
|
|
200
|
|
|
|
200,500
|
|
|
|
0.2
|
|
Intelsat Intermediate Holding Co. S.A., (Luxembourg), 9.500%, 02/01/15
7
|
|
|
400
|
|
|
|
412,000
|
|
|
|
0.4
|
|
Intelsat Jackson Holdings S.A., Private Placement, (Luxembourg), 7.250%, 10/15/20
2
|
|
|
150
|
|
|
|
151,500
|
|
|
|
0.1
|
|
Intelsat Jackson Holdings S.A., Private Placement, Sr Nt, (Luxembourg), 8.500%, 11/01/19
2
|
|
|
150
|
|
|
|
163,125
|
|
|
|
0.1
|
|
Intelsat Luxembourg S.A., (Luxembourg),
|
|
|
|
|
|
|
|
|
|
|
|
|
11.250%, 02/04/17
|
|
|
777
|
|
|
|
846,930
|
|
|
|
0.8
|
|
PIK, 11.500%, 02/04/17
|
|
|
516
|
|
|
|
569,911
|
|
|
|
0.5
|
|
Intelsat Subsidiary Holding Co. S.A., (Bermuda),
8.875%, 01/15/15
10
|
|
|
140
|
|
|
|
143,850
|
|
|
|
0.1
|
|
Intelsat Subsidiary Holding Co. S.A., Private Placement, (Bermuda), 8.875%, 01/15/15
2
|
|
|
360
|
|
|
|
368,100
|
|
|
|
0.3
|
|
Lamar Media Corp., Sr Sub Nt, 6.625%, 08/15/15
|
|
|
125
|
|
|
|
126,875
|
|
|
|
0.1
|
|
McClatchy Co. (The), 11.500%, 02/15/17
|
|
|
125
|
|
|
|
140,469
|
|
|
|
0.1
|
|
Media General, Inc., 11.750%, 02/15/17
|
|
|
400
|
|
|
|
420,500
|
|
|
|
0.4
|
|
Nexstar Broadcasting, Inc./Mission Broadcasting Inc., Private Placement, 8.875%, 04/15/17
2
|
|
|
400
|
|
|
|
425,000
|
|
|
|
0.4
|
|
Nexstar Finance Holdings LLC/Nexstar Finance Holdings, Inc., Sr Disc Nt, 11.375%, 04/01/13
7
|
|
|
479
|
|
|
|
484,779
|
|
|
|
0.4
|
|
Nielsen Finance LLC/Nielsen Finance Co.,
0.000%, 08/01/16
7
|
|
|
94
|
|
|
|
98,700
|
|
|
|
0.1
|
|
Nielsen Finance LLC/Nielsen Finance Co., Private Placement, 7.750%, 10/15/18
2
|
|
|
50
|
|
|
|
51,750
|
|
|
|
0.0
|
12
|
ProQuest LLC/ProQuest Notes Co., Private Placement,
9.000%, 10/15/18
2
|
|
|
125
|
|
|
|
128,750
|
|
|
|
0.1
|
|
Radio One, Inc., PIK, 12.500%, 05/11/16
2
|
|
|
475
|
|
|
|
460,750
|
|
|
|
0.4
|
|
Sinclair Television Group, Inc., Private Placement,
8.375%, 10/15/18
2
|
|
|
100
|
|
|
|
103,250
|
|
|
|
0.1
|
|
See Notes to Financial Statements.
6
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDIA (continued)
|
|
WMG Acquisition Corp., 7.375%, 04/15/14
|
|
$
|
250
|
|
|
$
|
240,000
|
|
|
|
0.2
|
%
|
WMG Acquisition Corp., Nt, 9.500%, 06/15/16
|
|
|
61
|
|
|
|
65,423
|
|
|
|
0.1
|
|
WMG Holdings Corp., Nt, 9.500%, 12/15/14
7
|
|
|
250
|
|
|
|
239,375
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,119,362
|
|
|
|
8.1
|
|
MULTILINE RETAIL 0.3%
|
|
HSN, Inc., 11.250%, 08/01/16
|
|
|
323
|
|
|
|
368,624
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECIALTY RETAIL 4.2%
|
|
Burlington Coat Factory Investment Holdings, Inc.,
14.500%, 10/15/14
7
|
|
|
82
|
|
|
|
86,305
|
|
|
|
0.1
|
|
General Nutrition Centers, Inc., PIK, 5.750%, 03/15/14
|
|
|
461
|
|
|
|
456,390
|
|
|
|
0.4
|
|
Giraffe Acquisition Corp.,
9.125%, 12/01/18
2
|
|
|
300
|
|
|
|
312,750
|
|
|
|
0.3
|
|
Michael Foods, Inc., Private Placement, Sr Nt,
9.750%, 07/15/18
2
|
|
|
350
|
|
|
|
382,375
|
|
|
|
0.3
|
|
Michaels Stores, Inc., Private Placement,
7.750%, 11/01/18
2
|
|
|
150
|
|
|
|
149,625
|
|
|
|
0.1
|
|
Michaels Stores, Inc., Sr Nt,
0.000%, 11/01/16
7
|
|
|
1,400
|
|
|
|
1,386,000
|
|
|
|
1.2
|
|
NBC Acquisition Corp., 11.000%, 03/15/13
7
|
|
|
280
|
|
|
|
179,200
|
|
|
|
0.2
|
|
Nebraska Book Co., Inc.,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.625%, 03/15/12
10
|
|
|
245
|
|
|
|
214,375
|
|
|
|
0.2
|
|
10.000%, 12/01/11
|
|
|
345
|
|
|
|
343,275
|
|
|
|
0.3
|
|
PEP Boys-Manny Moe & Jack, Sr Nt, 7.500%, 12/15/14
|
|
|
500
|
|
|
|
507,500
|
|
|
|
0.5
|
|
Petco Animal Supplies, Inc., Private Placement,
9.250%, 12/01/18
2
|
|
|
240
|
|
|
|
252,900
|
|
|
|
0.2
|
|
Toys R Us Property Co II LLC, Sr Secd Nt, 8.500%, 12/01/17
|
|
|
285
|
|
|
|
306,375
|
|
|
|
0.3
|
|
Toys R Us, Inc., 7.875%, 04/15/13
|
|
|
118
|
|
|
|
124,195
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,701,265
|
|
|
|
4.2
|
|
TEXTILES, APPAREL & LUXURY GOODS 1.0%
|
|
Broder Brothers Co., Private Placement, PIK,
12.000%, 10/15/13
2,3,9
|
|
|
461
|
|
|
|
424,142
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TEXTILES, APPAREL & LUXURY GOODS (continued)
|
|
Quiksilver, Inc., 6.875%, 04/15/15
|
|
$
|
748
|
|
|
$
|
731,170
|
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,155,312
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
|
|
|
|
37,005,764
|
|
|
|
33.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 4.5%
|
|
BEVERAGES 0.3%
|
|
Constellation Brands, Inc., Sr Nt, 8.375%, 12/15/14
|
|
|
315
|
|
|
|
344,137
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOOD & STAPLES RETAILING 1.4%
|
|
Ingles Markets, Inc., 8.875%, 05/15/17
|
|
|
190
|
|
|
|
203,300
|
|
|
|
0.2
|
|
Rite Aid Corp., 9.500%, 06/15/17
|
|
|
1,000
|
|
|
|
850,000
|
|
|
|
0.7
|
|
Rite Aid Corp., Debentures, 7.500%, 03/01/17
|
|
|
600
|
|
|
|
576,750
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,630,050
|
|
|
|
1.4
|
|
FOOD PRODUCTS 1.3%
|
|
Eurofresh, Inc., 15.000%, 11/18/16
3,9
|
|
|
407
|
|
|
|
406,725
|
|
|
|
0.4
|
|
Simmons Foods, Inc., Private Placement,
10.500%, 11/01/17
2
|
|
|
325
|
|
|
|
346,938
|
|
|
|
0.3
|
|
Smithfield Foods, Inc., Nt,
7.750%, 05/15/13
10
|
|
|
575
|
|
|
|
612,734
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,366,397
|
|
|
|
1.3
|
|
HOUSEHOLD PRODUCTS 0.6%
|
|
Spectrum Brands Holdings, Inc., PIK, 12.000%, 08/28/19
|
|
|
596
|
|
|
|
665,581
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERSONAL PRODUCTS 0.5%
|
|
American Achievement Corp.,
10.875%, 04/15/16
2
|
|
|
360
|
|
|
|
369,000
|
|
|
|
0.3
|
|
Visant Corp., Private Placement,
10.000%, 10/01/17
2
|
|
|
156
|
|
|
|
165,750
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534,750
|
|
|
|
0.5
|
|
TOBACCO 0.4%
|
|
Alliance One International, Inc., Nt, 10.000%, 07/15/16
|
|
|
440
|
|
|
|
451,000
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Staples
|
|
|
|
|
|
|
4,991,915
|
|
|
|
4.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 11.1%
|
|
ENERGY EQUIPMENT & SERVICES 2.4%
|
|
American Petroleum Tankers LLC/AP Tankers Co., Private Placement, 10.250%, 05/01/15
2
|
|
|
270
|
|
|
|
279,450
|
|
|
|
0.2
|
|
See Notes to Financial Statements.
7
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY EQUIPMENT & SERVICES (continued)
|
|
Calfrac Holdings LP, Private Placement,
7.500%, 12/01/20
2
|
|
$
|
100
|
|
|
$
|
101,250
|
|
|
|
0.1
|
%
|
Exterran Holdings, Inc., Private Placement,
7.250%, 12/01/18
2
|
|
|
230
|
|
|
|
228,850
|
|
|
|
0.2
|
|
Frac Tech Services LLC/Frac Tech Finance, Inc., Private Placement, 7.125%, 11/15/18
2
|
|
|
70
|
|
|
|
71,050
|
|
|
|
0.1
|
|
Global Geophysical Services, Inc., 10.500%, 05/01/17
|
|
|
85
|
|
|
|
84,575
|
|
|
|
0.1
|
|
Helix Energy Solutions Group, Inc., Private Placement, 9.500%, 01/15/16
2,10
|
|
|
500
|
|
|
|
513,750
|
|
|
|
0.4
|
|
Key Energy Services, Inc., Sr Nt, 8.375%, 12/01/14
|
|
|
338
|
|
|
|
356,590
|
|
|
|
0.3
|
|
Parker Drilling Co., 9.125%, 04/01/18
|
|
|
250
|
|
|
|
261,250
|
|
|
|
0.2
|
|
PHI, Inc., Private Placement,
8.625%, 10/15/18
2
|
|
|
310
|
|
|
|
317,750
|
|
|
|
0.3
|
|
Pride International, Inc., 6.875%, 08/15/20
|
|
|
65
|
|
|
|
67,437
|
|
|
|
0.1
|
|
Seadrill Ltd., (Bermuda), 6.500%, 10/05/15
|
|
|
300
|
|
|
|
291,750
|
|
|
|
0.3
|
|
Trinidad Drilling Ltd., Private Placement, Sr Unsecd Nt, (Canada), 7.875%, 01/15/19
2
|
|
|
130
|
|
|
|
131,300
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,705,002
|
|
|
|
2.4
|
|
OIL, GAS & CONSUMABLE FUELS 8.7%
|
|
Alon Refining Krotz Springs, Inc., 13.500%, 10/15/14
|
|
|
260
|
|
|
|
249,600
|
|
|
|
0.2
|
|
Alta Mesa Holdings/Alta Mesa Finance Services Corp., 9.625%, 10/15/18
2
|
|
|
240
|
|
|
|
233,100
|
|
|
|
0.2
|
|
Antero Resources Finance Corp., Nt, 9.375%, 12/01/17
|
|
|
150
|
|
|
|
156,938
|
|
|
|
0.1
|
|
Arch Coal, Inc., 7.250%, 10/01/20
|
|
|
80
|
|
|
|
84,400
|
|
|
|
0.1
|
|
Bill Barrett Corp., 9.875%, 07/15/16
|
|
|
150
|
|
|
|
164,625
|
|
|
|
0.1
|
|
Brigham Exploration Co., Private Placement,
8.750%, 10/01/18
2
|
|
|
125
|
|
|
|
135,000
|
|
|
|
0.1
|
|
Carrizo Oil & Gas, Inc., Private Placement, 8.625%, 10/15/18
2
|
|
|
170
|
|
|
|
175,100
|
|
|
|
0.2
|
|
Citgo Petroleum Corp., Private Placement, Sr Nt,
11.500%, 07/01/17
2
|
|
|
300
|
|
|
|
336,000
|
|
|
|
0.3
|
|
Comstock Resources, Inc., Sr Nt, 8.375%, 10/15/17
|
|
|
406
|
|
|
|
407,015
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL, GAS & CONSUMABLE FUELS (continued)
|
|
Consol Energy, Inc., Private Placement,
8.250%, 04/01/20
2
|
|
$
|
125
|
|
|
$
|
135,000
|
|
|
|
0.1
|
%
|
Consol Energy, Inc., Private Placement, Sr Nt,
8.000%, 04/01/17
2
|
|
|
170
|
|
|
|
181,050
|
|
|
|
0.2
|
|
Continental Resources, Inc., Private Placement,
7.125%, 04/01/21
2
|
|
|
75
|
|
|
|
78,750
|
|
|
|
0.1
|
|
Crosstex Energy LP/Crosstex Energy Finance Corp., 8.875%, 02/15/18
|
|
|
120
|
|
|
|
128,550
|
|
|
|
0.1
|
|
Denbury Resources, Inc., 8.250%, 02/15/20
|
|
|
40
|
|
|
|
43,400
|
|
|
|
0.0
|
12
|
El Paso Performance-Linked Trust, Private Placement, Sr Nt, 7.750%, 07/15/11
2,10
|
|
|
450
|
|
|
|
460,655
|
|
|
|
0.4
|
|
El Paso Pipeline Partners Operating Co., LLC, 6.500%, 04/01/20
|
|
|
85
|
|
|
|
89,181
|
|
|
|
0.1
|
|
Ferrellgas Partners LP/Ferrellgas Partners Finance Corp., Sr Unsecd Nt, 8.625%, 06/15/20
|
|
|
325
|
|
|
|
349,375
|
|
|
|
0.3
|
|
Forbes Energy Services LLC/Forbes Energy Capital, Inc., 11.000%, 02/15/15
|
|
|
350
|
|
|
|
343,000
|
|
|
|
0.3
|
|
Foresight Energy LLC/Foresight Energy Corp., Private Placement, 9.625%, 08/15/17
2
|
|
|
180
|
|
|
|
191,700
|
|
|
|
0.2
|
|
Forest Oil Corp., Nt, 7.250%, 06/15/19
|
|
|
269
|
|
|
|
273,035
|
|
|
|
0.2
|
|
Frontier Oil Corp., 6.875%, 11/15/18
|
|
|
65
|
|
|
|
66,300
|
|
|
|
0.1
|
|
Gibson Energy ULC/GEP Midstream Finance Corp., Sr Nt, (Canada),
|
|
|
|
|
|
|
|
|
|
|
|
|
10.000%, 01/15/18
|
|
|
180
|
|
|
|
182,700
|
|
|
|
0.2
|
|
11.750%, 05/27/14
|
|
|
200
|
|
|
|
221,000
|
|
|
|
0.2
|
|
Hilcorp Energy I LP/Hilcorp Finance Co., Private Placement, 7.625%, 04/15/21
2
|
|
|
75
|
|
|
|
77,438
|
|
|
|
0.1
|
|
Holly Corp., 9.875%, 06/15/17
|
|
|
70
|
|
|
|
76,300
|
|
|
|
0.1
|
|
Holly Energy Partners LP/Holly Energy Finance Corp., Private Placement, 8.250%, 03/15/18
2
|
|
|
130
|
|
|
|
135,850
|
|
|
|
0.1
|
|
Inergy LP/Inergy Finance Corp., Private Placement,
7.000%, 10/01/18
2
|
|
|
250
|
|
|
|
251,875
|
|
|
|
0.2
|
|
MarkWest Energy Partners LP/MarkWest Energy Finance Corp., 6.750%, 11/01/20
|
|
|
150
|
|
|
|
150,000
|
|
|
|
0.1
|
|
See Notes to Financial Statements.
8
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL, GAS & CONSUMABLE FUELS (continued)
|
|
NFR Energy LLC/NFR Energy Finance Corp., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
9.750%, 02/15/17
2
|
|
$
|
360
|
|
|
$
|
355,500
|
|
|
|
0.3
|
%
|
Patriot Coal Corp., 8.250%, 04/30/18
|
|
|
125
|
|
|
|
127,187
|
|
|
|
0.1
|
|
Penn Virginia Corp., 10.375%, 06/15/16
|
|
|
21
|
|
|
|
23,415
|
|
|
|
0.0
|
12
|
Penn Virginia Resource Partners LP/Penn Virginia Resource Finance Corp., Sr Nt, 8.250%, 04/15/18
|
|
|
160
|
|
|
|
164,800
|
|
|
|
0.2
|
|
Petroleum Development Corp., Sr Nt, 12.000%, 02/15/18
|
|
|
48
|
|
|
|
53,760
|
|
|
|
0.1
|
|
Pioneer Drilling Co., 9.875%, 03/15/18
|
|
|
120
|
|
|
|
126,900
|
|
|
|
0.1
|
|
QEP Resources, Inc., 6.875%, 03/01/21
|
|
|
140
|
|
|
|
147,000
|
|
|
|
0.1
|
|
Range Resources Corp.,
|
|
|
|
|
|
|
|
|
|
|
|
|
6.750%, 08/01/20
|
|
|
20
|
|
|
|
20,625
|
|
|
|
0.0
|
12
|
7.250%, 05/01/18
|
|
|
25
|
|
|
|
26,375
|
|
|
|
0.0
|
12
|
Range Resources Corp., Sr Sub Nt, 7.500%, 05/15/16
|
|
|
267
|
|
|
|
277,013
|
|
|
|
0.3
|
|
Suburban Propane Partners LP/Suburban Energy Finance Corp., 7.375%, 03/15/20
|
|
|
65
|
|
|
|
69,387
|
|
|
|
0.1
|
|
Swift Energy Co., 8.875%, 01/15/20
|
|
|
100
|
|
|
|
108,250
|
|
|
|
0.1
|
|
Swift Energy Co., Sr Nt, 7.125%, 06/01/17
10
|
|
|
1,260
|
|
|
|
1,263,150
|
|
|
|
1.1
|
|
Targa Resources Partners LP/Targa Resources Partners Finance Corp., 8.250%, 07/01/16
|
|
|
280
|
|
|
|
295,400
|
|
|
|
0.3
|
|
Targa Resources Partners LP/Targa Resources Partners Finance Corp., Private Placement, 7.875%, 10/15/18
2
|
|
|
130
|
|
|
|
136,500
|
|
|
|
0.1
|
|
W&T Offshore, Inc., Private Placement, Sr Nt,
8.250%, 06/15/14
2
|
|
|
650
|
|
|
|
632,125
|
|
|
|
0.6
|
|
Western Refining, Inc., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 10.750%, 06/15/14
2
|
|
|
225
|
|
|
|
239,625
|
|
|
|
0.2
|
|
11.250%, 06/15/17
2
|
|
|
225
|
|
|
|
243,000
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,686,949
|
|
|
|
8.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy
|
|
|
|
|
|
|
12,391,951
|
|
|
|
11.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 12.2%
|
|
COMMERCIAL BANKS 1.3%
|
|
Bank of America Corp., VAR,
8.125%, 05/15/18
14
|
|
$
|
160
|
|
|
$
|
161,248
|
|
|
|
0.2
|
%
|
BankAmerica Capital II, Nt, 8.000%, 12/15/26
|
|
|
30
|
|
|
|
30,188
|
|
|
|
0.0
|
12
|
BankAmerica Institutional Capital B, Private Placement, 7.700%, 12/31/26
2
|
|
|
250
|
|
|
|
250,000
|
|
|
|
0.2
|
|
Barclays Bank plc, Private Placement, (United Kingdom), VAR, 7.434%, 12/15/17
2,14
|
|
|
600
|
|
|
|
586,500
|
|
|
|
0.5
|
|
Wachovia Capital Trust III, VAR,
5.800%, 03/15/11
14
|
|
|
545
|
|
|
|
472,787
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500,723
|
|
|
|
1.3
|
|
CONSUMER FINANCE 1.6%
|
|
Ally Financial, Inc., 8.000%, 11/01/31
|
|
|
842
|
|
|
|
907,255
|
|
|
|
0.8
|
|
American General Finance Corp., 6.900%, 12/15/17
|
|
|
200
|
|
|
|
161,500
|
|
|
|
0.1
|
|
Ford Motor Credit Co. LLC, Nt,
8.000%, 12/15/16
10
|
|
|
700
|
|
|
|
782,221
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,850,976
|
|
|
|
1.6
|
|
DIVERSIFIED FINANCIAL SERVICES 3.6%
|
|
ACE Cash Express, Inc., Private Placement, Sr Nt,
10.250%, 10/01/14
2,3,9
|
|
|
1,000
|
|
|
|
880,000
|
|
|
|
0.8
|
|
Aircastle Ltd., Sr Nt, (Bermuda), 9.750%, 08/01/18
|
|
|
75
|
|
|
|
81,937
|
|
|
|
0.1
|
|
CIT Group, Inc., Nt, 7.000%, 05/01/15
|
|
|
750
|
|
|
|
751,875
|
|
|
|
0.7
|
|
CNG Holdings, Inc., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
12.250%, 02/15/15
2
|
|
|
140
|
|
|
|
152,950
|
|
|
|
0.1
|
|
13.750%, 08/15/15
2
|
|
|
250
|
|
|
|
252,500
|
|
|
|
0.2
|
|
ILFC E-Capital Trust I, Private Placement, VAR,
5.990%, 12/21/65
2
|
|
|
950
|
|
|
|
719,207
|
|
|
|
0.6
|
|
ILFC E-Capital Trust II, Private Placement, VAR,
6.250%, 12/21/65
2
|
|
|
270
|
|
|
|
210,600
|
|
|
|
0.2
|
|
International Lease Finance Corp., 8.875%, 09/01/17
|
|
|
300
|
|
|
|
323,625
|
|
|
|
0.3
|
|
Northern Tier Energy LLC and Norther Tier Finance Corp., Private Placement, 10.500%, 12/01/17
2
|
|
|
100
|
|
|
|
102,000
|
|
|
|
0.1
|
|
See Notes to Financial Statements.
9
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVERSIFIED FINANCIAL SERVICES (continued)
|
|
SquareTwo Financial Corp., Private Placement,
11.625%, 04/01/17
2
|
|
$
|
425
|
|
|
$
|
418,625
|
|
|
|
0.4
|
%
|
Tops Holding Corp./Tops Markets LLC, 10.125%, 10/15/15
|
|
|
115
|
|
|
|
118,163
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,011,482
|
|
|
|
3.6
|
|
INSURANCE 5.3%
|
|
American International Group, Inc., VAR, 8.175%, 05/15/58
|
|
|
550
|
|
|
|
585,645
|
|
|
|
0.5
|
|
Crum and Forster Holdings Corp.,
7.750%, 05/01/17
10
|
|
|
600
|
|
|
|
624,000
|
|
|
|
0.6
|
|
Genworth Financial, Inc., VAR, 6.150%, 11/15/66
|
|
|
500
|
|
|
|
393,750
|
|
|
|
0.3
|
|
HUB International Holdings, Inc., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
9.000%, 12/15/14
2
|
|
|
250
|
|
|
|
253,125
|
|
|
|
0.2
|
|
10.250%, 06/15/15
2,10
|
|
|
550
|
|
|
|
551,375
|
|
|
|
0.5
|
|
Liberty Mutual Group, Inc., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
7.500%, 08/15/36
2
|
|
|
250
|
|
|
|
248,563
|
|
|
|
0.2
|
|
VAR, 10.750%, 06/15/58
2,10
|
|
|
1,720
|
|
|
|
2,081,200
|
|
|
|
1.9
|
|
Nationwide Mutual Insurance Co., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.250%, 12/01/31
2
|
|
|
108
|
|
|
|
111,040
|
|
|
|
0.1
|
|
9.375%, 08/15/39
2
|
|
|
175
|
|
|
|
202,969
|
|
|
|
0.2
|
|
USI Holdings Corp., Private Placement, Sr Sub Nt,
9.750%, 05/15/15
2,10
|
|
|
842
|
|
|
|
850,420
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,902,087
|
|
|
|
5.3
|
|
REAL ESTATE INVESTMENT TRUSTS (REITs) 0.4%
|
|
CB Richard Ellis Services, Inc.,
6.625%, 10/15/20
2
|
|
|
150
|
|
|
|
150,000
|
|
|
|
0.1
|
|
DuPont Fabros Technology LP, Nt, 8.500%, 12/15/17
|
|
|
105
|
|
|
|
112,350
|
|
|
|
0.1
|
|
First Industrial LP, Sr Nt, 6.420%, 06/01/14
|
|
|
180
|
|
|
|
178,850
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441,200
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Financials
|
|
|
|
|
|
|
13,706,468
|
|
|
|
12.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEALTH CARE 4.5%
|
|
HEALTH CARE EQUIPMENT & SUPPLIES 0.1%
|
|
DJO Finance LLC/DJO Finance Corp., Sr Nt, 10.875%, 11/15/14
|
|
|
50
|
|
|
|
54,562
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEALTH CARE PROVIDERS & SERVICES 2.3%
|
|
Capella Healthcare, Inc., Private Placement,
9.250%, 07/01/17
2
|
|
$
|
165
|
|
|
$
|
174,900
|
|
|
|
0.2
|
%
|
HCA, Inc., 5.750%, 03/15/14
10
|
|
|
195
|
|
|
|
192,075
|
|
|
|
0.2
|
|
HCA, Inc., Secd Nt,
9.250%, 11/15/16
10
|
|
|
500
|
|
|
|
533,437
|
|
|
|
0.5
|
|
Multiplan, Inc., Private Placement, Nt,
9.875%, 09/01/18
2
|
|
|
450
|
|
|
|
478,125
|
|
|
|
0.4
|
|
OnCure Holdings, Inc., Private Placement,
11.750%, 05/15/17
2
|
|
|
775
|
|
|
|
732,375
|
|
|
|
0.6
|
|
Radiation Therapy Services, Inc., Private Placement, Nt, 9.875%, 04/15/17
2
|
|
|
225
|
|
|
|
224,438
|
|
|
|
0.2
|
|
Tenet Healthcare Corp., 8.875%, 07/01/19
10
|
|
|
250
|
|
|
|
282,500
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,617,850
|
|
|
|
2.3
|
|
PHARMACEUTICALS 2.1%
|
|
Catalent Pharma Solutions, Inc., Nt, PIK, 10.250%, 04/15/15
|
|
|
402
|
|
|
|
406,376
|
|
|
|
0.4
|
|
Celtic Pharma Phinco B.V., (Bermuda), PIK,
17.000%, 06/15/12
3,9
|
|
|
1,865
|
|
|
|
932,291
|
|
|
|
0.8
|
|
Elan Finance plc/Elan Finance Corp., (Ireland), 8.750%, 10/15/16
|
|
|
500
|
|
|
|
502,500
|
|
|
|
0.5
|
|
Elan Finance plc/Elan Finance Corp., Private Placement, (Ireland), 8.750%, 10/15/16
2
|
|
|
500
|
|
|
|
501,250
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,342,417
|
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Health Care
|
|
|
|
|
|
|
5,014,829
|
|
|
|
4.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 11.9%
|
|
AEROSPACE & DEFENSE 0.4%
|
|
Bombardier, Inc., Private Placement, (Canada),
|
|
|
|
|
|
|
|
|
|
|
|
|
7.500%, 03/15/18
2
|
|
|
50
|
|
|
|
53,625
|
|
|
|
0.0
|
12
|
7.750%, 03/15/20
2
|
|
|
50
|
|
|
|
53,875
|
|
|
|
0.1
|
|
Colt Defense LLC/Colt Finance Corp., Private Placement, 8.750%, 11/15/17
2
|
|
|
72
|
|
|
|
53,280
|
|
|
|
0.0
|
12
|
Kratos Defense & Security Solutions, Inc., 10.000%, 06/01/17
|
|
|
210
|
|
|
|
232,575
|
|
|
|
0.2
|
|
Triumph Group, Inc., 8.625%, 07/15/18
|
|
|
80
|
|
|
|
87,400
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
480,755
|
|
|
|
0.4
|
|
See Notes to Financial Statements.
10
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIR FREIGHT & LOGISTICS 0.1%
|
|
AMGH Merger Sub, Inc., Private Placement,
9.250%, 11/01/18
2
|
|
$
|
72
|
|
|
$
|
75,600
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIRLINES 1.5%
|
|
American Airlines Pass Through Trust 2001-01, 7.377%, 05/23/19
|
|
|
612
|
|
|
|
581,690
|
|
|
|
0.5
|
|
Continental Airlines 2005-ERJ1 Pass Through Trust,
9.798%, 04/01/21
10
|
|
|
746
|
|
|
|
756,758
|
|
|
|
0.7
|
|
UAL 2007-1 Pass Through Trust, Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 3.003%, 07/02/14
2
|
|
|
107
|
|
|
|
94,382
|
|
|
|
0.1
|
|
7.336%, 07/02/19
2
|
|
|
84
|
|
|
|
79,611
|
|
|
|
0.0
|
12
|
UAL 2009-2B Pass Through Trust, Private Placement,
12.000%, 01/15/16
2
|
|
|
194
|
|
|
|
215,240
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,727,681
|
|
|
|
1.5
|
|
BUILDING PRODUCTS 0.1%
|
|
Associated Materials LLC, Private Placement,
9.125%, 11/01/17
2
|
|
|
75
|
|
|
|
78,375
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMERCIAL SERVICES & SUPPLIES 2.3%
|
|
Cenveo Corp., Nt, 8.875%, 02/01/18
|
|
|
200
|
|
|
|
193,500
|
|
|
|
0.2
|
|
Cenveo Corp., Private Placement,
10.500%, 08/15/16
2
|
|
|
500
|
|
|
|
491,250
|
|
|
|
0.4
|
|
Garda World Security Corp., Private Placement, (Canada), 9.750%, 03/15/17
2
|
|
|
180
|
|
|
|
193,050
|
|
|
|
0.2
|
|
Harland Clarke Holdings Corp.,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 6.000%, 05/15/15
10
|
|
|
350
|
|
|
|
290,938
|
|
|
|
0.3
|
|
9.500%, 05/15/15
|
|
|
500
|
|
|
|
475,000
|
|
|
|
0.4
|
|
Iron Mountain, Inc., 8.375%, 08/15/21
|
|
|
250
|
|
|
|
268,125
|
|
|
|
0.2
|
|
Liberty Tire Recycling, Private Placement, Nt,
11.000%, 10/01/16
2
|
|
|
275
|
|
|
|
291,500
|
|
|
|
0.3
|
|
Mobile Mini, Inc., Private Placement,
7.875%, 12/01/20
2
|
|
|
200
|
|
|
|
207,000
|
|
|
|
0.2
|
|
Quebecor World Capital Escrow Corp., (Canada),
|
|
|
|
|
|
|
|
|
|
|
|
|
6.125%, 11/15/13
1,3,4
,9
|
|
|
1,415
|
|
|
|
70,750
|
|
|
|
0.1
|
|
6.500%, 08/01/27
1,3,4
,9
|
|
|
810
|
|
|
|
40,500
|
|
|
|
0.0
|
12
|
9.750%, 01/15/15
1,3,4
,9
|
|
|
585
|
|
|
|
29,250
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,550,863
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTRUCTION & ENGINEERING 1.6%
|
|
New Enterprise Stone & Lime Co., Private Placement, Nt, 11.000%, 09/01/18
2
|
|
$
|
750
|
|
|
$
|
712,500
|
|
|
|
0.6
|
%
|
RSC Equipment Rental, Inc./RSC Holdings III LLC, Sr Nt, 9.500%, 12/01/14
10
|
|
|
643
|
|
|
|
675,150
|
|
|
|
0.6
|
|
Tutor Perini Corp., Private Placement,
7.625%, 11/01/18
2
|
|
|
150
|
|
|
|
150,750
|
|
|
|
0.1
|
|
United Rentals North America, Inc.,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.375%, 09/15/20
|
|
|
200
|
|
|
|
203,500
|
|
|
|
0.2
|
|
10.875%, 06/15/16
|
|
|
80
|
|
|
|
91,400
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,833,300
|
|
|
|
1.6
|
|
ELECTRICAL EQUIPMENT 0.4%
|
|
Belden, Inc., Sr Nt, 9.250%, 06/15/19
|
|
|
125
|
|
|
|
137,031
|
|
|
|
0.1
|
|
General Cable Corp., VAR, 2.665%, 04/01/15
|
|
|
250
|
|
|
|
238,125
|
|
|
|
0.2
|
|
International Wire Group, Inc., Private Placement,
9.750%, 04/15/15
2
|
|
|
100
|
|
|
|
104,500
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
479,656
|
|
|
|
0.4
|
|
ELECTRONIC MANUFACTURING SERVICES 0.4%
|
|
Kemet Corp., Private Placement,
10.500%, 05/01/18
2
|
|
|
375
|
|
|
|
403,125
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIAL CONGLOMERATES 0.4%
|
|
JB Poindexter & Co., Inc., Co. Guar,
8.750%, 03/15/14
10
|
|
|
434
|
|
|
|
435,085
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIAL MACHINERY 0.1%
|
|
Severstal Columbus LLC, 10.250%, 02/15/18
2
|
|
|
100
|
|
|
|
105,500
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MACHINERY 0.6%
|
|
Thermadyne Holdings Corp.,
9.000%, 12/15/17
2
|
|
|
525
|
|
|
|
541,406
|
|
|
|
0.5
|
|
Titan International, Inc., Private Placement,
7.875%, 10/01/17
2
|
|
|
125
|
|
|
|
131,875
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
673,281
|
|
|
|
0.6
|
|
MARINE 1.5%
|
|
CMA CGM S.A., Private Placement, (France),
7.250%, 02/01/13
2
|
|
|
200
|
|
|
|
200,151
|
|
|
|
0.2
|
|
Commercial Barge Line Co., Sr Nt, 12.500%, 07/15/17
|
|
|
350
|
|
|
|
404,250
|
|
|
|
0.3
|
|
See Notes to Financial Statements.
11
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARINE (continued)
|
|
General Maritime Corp., Sr Nt, 12.000%, 11/15/17
|
|
$
|
289
|
|
|
$
|
278,885
|
|
|
|
0.2
|
%
|
Navios Maritime Holdings Inc/Navios Maritime Finance U.S., Inc., 8.875%, 11/01/17
|
|
|
377
|
|
|
|
408,102
|
|
|
|
0.4
|
|
Sevan Marine ASA, Private Placement, (Norway),
12.000%, 08/10/15
2
|
|
|
100
|
|
|
|
105,500
|
|
|
|
0.1
|
|
Ultrapetrol Bahamas Ltd., 1st Mtg, (Bahamas),
9.000%, 11/24/14
10
|
|
|
310
|
|
|
|
313,875
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,710,763
|
|
|
|
1.5
|
|
ROAD & RAIL 2.5%
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., 9.625%, 03/15/18
|
|
|
290
|
|
|
|
312,475
|
|
|
|
0.3
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., Nt, 7.750%, 05/15/16
|
|
|
200
|
|
|
|
204,000
|
|
|
|
0.2
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., Private Placement, 8.250%, 01/15/19
2
|
|
|
150
|
|
|
|
151,500
|
|
|
|
0.1
|
|
Kansas City Southern de Mexico S.A. de C.V., Private Placement, Sr Nt, (Mexico), 6.625%, 12/15/20
2
|
|
|
113
|
|
|
|
113,282
|
|
|
|
0.1
|
|
Kansas City Southern Railway, Sr Nt, 8.000%, 06/01/15
|
|
|
250
|
|
|
|
268,750
|
|
|
|
0.2
|
|
Quality Distribution LLC/QD Capital Corp.,
|
|
|
|
|
|
|
|
|
|
|
|
|
9.875%, 11/01/18
2
|
|
|
1,100
|
|
|
|
1,091,750
|
|
|
|
1.0
|
|
PIK, 11.750%, 11/01/13
3,9
|
|
|
328
|
|
|
|
324,943
|
|
|
|
0.3
|
|
RailAmerica, Inc., 9.250%, 07/01/17
|
|
|
300
|
|
|
|
329,625
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,796,325
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Industrials
|
|
|
|
|
|
|
13,350,309
|
|
|
|
11.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 5.3%
|
|
COMMUNICATIONS EQUIPMENT 0.7%
|
|
Avaya, Inc., Sr Nt, 9.750%, 11/01/15
|
|
|
500
|
|
|
|
508,750
|
|
|
|
0.5
|
|
Brightstar Corp., Private Placement,
9.500%, 12/01/16
2
|
|
|
260
|
|
|
|
264,550
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
773,300
|
|
|
|
0.7
|
|
COMPUTERS & PERIPHERALS 0.8%
|
|
Seagate HDD Cayman, Private Placement, Co Guar, (Cayman Islands), 7.750%, 12/15/18
2
|
|
|
450
|
|
|
|
455,625
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTERS & PERIPHERALS (continued)
|
|
Seagate HDD Cayman, Private Placement, Sr Nt, (Cayman Islands), 6.875%, 05/01/20
2
|
|
$
|
170
|
|
|
$
|
162,350
|
|
|
|
0.1
|
%
|
Stratus Technologies, Inc., Private Placement, Sr Secd Nt, 12.000%, 03/29/15
2
|
|
|
380
|
|
|
|
319,200
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
937,175
|
|
|
|
0.8
|
|
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS 1.0%
|
|
Intcomex, Inc., Private Placement,
13.250%, 12/15/14
2
|
|
|
218
|
|
|
|
233,260
|
|
|
|
0.2
|
|
Sanmina-SCI Corp., Private Placement, Sr Nt, VAR,
3.052%, 06/15/14
2
|
|
|
200
|
|
|
|
189,000
|
|
|
|
0.2
|
|
Smart Modular Technologies WWH, Inc., Sr Nt, (Cayman Islands), VAR, 5.790%, 04/01/12
3,9
|
|
|
423
|
|
|
|
418,093
|
|
|
|
0.4
|
|
Viasystems, Inc., Private Placement,
12.000%, 01/15/15
2
|
|
|
225
|
|
|
|
251,438
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,091,791
|
|
|
|
1.0
|
|
INTERNET SOFTWARE & SERVICES 0.3%
|
|
Equinix, Inc., Sub Nt, 8.125%, 03/01/18
|
|
|
185
|
|
|
|
193,325
|
|
|
|
0.2
|
|
Terremark Worldwide, Inc., Sr Nt, 12.000%, 06/15/17
|
|
|
125
|
|
|
|
143,125
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
336,450
|
|
|
|
0.3
|
|
IT SERVICES 1.3%
|
|
Compucom Systems, Inc., Private Placement,
12.500%, 10/01/15
2
|
|
|
225
|
|
|
|
241,875
|
|
|
|
0.2
|
|
First Data Corp., 9.875%, 09/24/15
|
|
|
19
|
|
|
|
18,097
|
|
|
|
0.0
|
12
|
First Data Corp., Private Placement, Sr Nt,
12.625%, 01/15/21
2
|
|
|
80
|
|
|
|
76,400
|
|
|
|
0.1
|
|
First Data Corp., Private Placement, Sr Secd,
8.250%, 01/15/21
2
|
|
|
80
|
|
|
|
76,800
|
|
|
|
0.1
|
|
Sitel LLC/Sitel Finance Corp., Private Placement, Sr Nt, 11.500%, 04/01/18
2
|
|
|
850
|
|
|
|
701,250
|
|
|
|
0.6
|
|
Stream Global Services, Inc., Sr Nt, 11.250%, 10/01/14
|
|
|
100
|
|
|
|
100,750
|
|
|
|
0.1
|
|
Unisys Corp., Private Placement,
14.250%, 09/15/15
2
|
|
|
201
|
|
|
|
239,693
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,454,865
|
|
|
|
1.3
|
|
See Notes to Financial Statements.
12
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 1.2%
|
|
Amkor Technology, Inc., 7.375%, 05/01/18
|
|
$
|
170
|
|
|
$
|
176,800
|
|
|
|
0.2
|
%
|
Freescale Semiconductor, Inc., Private Placement, Nt,
|
|
|
|
|
|
|
|
|
|
|
|
|
9.250%, 04/15/18
2
|
|
|
105
|
|
|
|
115,500
|
|
|
|
0.1
|
|
10.750%, 08/01/20
2
|
|
|
65
|
|
|
|
70,850
|
|
|
|
0.1
|
|
NXP B.V./NXP Funding LLC, Private Placement, (Netherlands), 9.750%, 08/01/18
2
|
|
|
100
|
|
|
|
112,500
|
|
|
|
0.1
|
|
NXP B.V./NXP Funding LLC, Sr Nt, (Netherlands),
7.875%, 10/15/14
10
|
|
|
415
|
|
|
|
431,600
|
|
|
|
0.4
|
|
NXP B.V./NXP Funding LLC, Sr Nt, VAR, (Netherlands), VAR, 3.039%, 10/15/13
|
|
|
400
|
|
|
|
394,000
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,301,250
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Information Technology
|
|
|
|
|
|
|
5,894,831
|
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MATERIALS 9.1%
|
|
CHEMICALS 2.3%
|
|
CF Industries, Inc., 7.125%, 05/01/20
|
|
|
90
|
|
|
|
98,550
|
|
|
|
0.1
|
|
Chemtura Corp., Private Placement,
7.875%, 09/01/18
2
|
|
|
150
|
|
|
|
159,375
|
|
|
|
0.1
|
|
LBI Escrow Corp., Private Placement,
8.000%, 11/01/17
2
|
|
|
292
|
|
|
|
323,025
|
|
|
|
0.3
|
|
Lyondell Chemical Co., 11.000%, 05/01/18
|
|
|
967
|
|
|
|
1,094,716
|
|
|
|
1.0
|
|
Nalco Co., Private Placement, Sr Nt,
6.625%, 01/15/19
2
|
|
|
185
|
|
|
|
189,163
|
|
|
|
0.2
|
|
Omnova Solutions, Inc., Private Placement,
7.875%, 11/01/18
2
|
|
|
40
|
|
|
|
40,300
|
|
|
|
0.0
|
12
|
PolyOne Corp., 7.375%, 09/15/20
|
|
|
280
|
|
|
|
290,150
|
|
|
|
0.2
|
|
Sterling Chemicals, Inc., 10.250%, 04/01/15
|
|
|
350
|
|
|
|
358,750
|
|
|
|
0.3
|
|
TPC Group LLC, Private Placement,
8.250%, 10/01/17
2
|
|
|
75
|
|
|
|
78,563
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,632,592
|
|
|
|
2.3
|
|
CONSTRUCTION MATERIALS 0.2%
|
|
Texas Industries, Inc., Private Placement,
9.250%, 08/15/20
2
|
|
|
200
|
|
|
|
212,500
|
|
|
|
0.2
|
|
U.S. Concrete, Inc., Private Placement Secd Nt, 9.500%, 08/31/15
2
|
|
|
46
|
|
|
|
52,670
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
265,170
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTAINERS & PACKAGING 3.0%
|
|
Ardagh Packaging Finance plc, Private Placement, Sr Sub Nt, (Ireland), 9.125%, 10/15/20
2
|
|
$
|
200
|
|
|
$
|
208,000
|
|
|
|
0.2
|
%
|
Berry Plastics Corp., 9.500%, 05/15/18
|
|
|
595
|
|
|
|
596,488
|
|
|
|
0.5
|
|
Berry Plastics Corp., Co Guar, 8.250%, 11/15/15
|
|
|
165
|
|
|
|
174,900
|
|
|
|
0.2
|
|
Berry Plastics Corp., Private Placement,
9.750%, 01/15/21
2
|
|
|
300
|
|
|
|
297,000
|
|
|
|
0.3
|
|
Berry Plastics Corp., Sr Nt, 10.250%, 03/01/16
|
|
|
37
|
|
|
|
36,306
|
|
|
|
0.0
|
12
|
Constar International, Inc., Co Guar, VAR,
3.661%, 02/15/12
1,4,10
|
|
|
950
|
|
|
|
693,500
|
|
|
|
0.6
|
|
Packaging Dynamics Finance Corp., Private Placement, Sr Sub Nt, 10.000%, 05/01/16
2
|
|
|
424
|
|
|
|
435,130
|
|
|
|
0.4
|
|
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer Lu, Private Placement, Nt,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.500%, 05/15/18
2
|
|
|
400
|
|
|
|
402,000
|
|
|
|
0.4
|
|
9.000%, 04/15/19
2
|
|
|
125
|
|
|
|
129,531
|
|
|
|
0.1
|
|
Viskase Cos., Inc., Private Placement, Sr Nt,
9.875%, 01/15/18
2
|
|
|
350
|
|
|
|
364,875
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,337,730
|
|
|
|
3.0
|
|
METALS & MINING 1.4%
|
|
FMG Resources August 2006 Pty Ltd., Private Placement, (Australia), 7.000%, 11/01/15
2
|
|
|
150
|
|
|
|
153,750
|
|
|
|
0.1
|
|
Murray Energy Corp., Private Placement,
10.250%, 10/15/15
2
|
|
|
330
|
|
|
|
346,500
|
|
|
|
0.3
|
|
Noranda Aluminum Acquisition Corp., Sr Nt, PIK, 5.193%, 05/15/15
|
|
|
132
|
|
|
|
119,143
|
|
|
|
0.1
|
|
Novelis, Inc., Private Placement, Co Guar, (Canada),
|
|
|
|
|
|
|
|
|
|
|
|
|
8.375%, 12/15/17
2
|
|
|
300
|
|
|
|
310,500
|
|
|
|
0.3
|
|
8.750%, 12/15/20
2
|
|
|
225
|
|
|
|
233,437
|
|
|
|
0.2
|
|
Rain CII Carbon LLC and CII Carbon Corp., Private Placement, 8.000%, 12/01/18
2
|
|
|
75
|
|
|
|
76,875
|
|
|
|
0.1
|
|
Wolverine Tube, Inc., Sr Nt,
15.000%, 03/31/12
1,4
|
|
|
983
|
|
|
|
344,062
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,584,267
|
|
|
|
1.4
|
|
See Notes to Financial Statements.
13
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAPER & FOREST PRODUCTS 2.2%
|
|
ABI Escrow Corp., Private Placement,
10.250%, 10/15/18
2
|
|
$
|
480
|
|
|
$
|
525,600
|
|
|
|
0.5
|
%
|
Abitibi-Consolidated Co. of Canada, Escrow,
|
|
|
|
|
|
|
|
|
|
|
|
|
6.000%, 06/20/13
1,4
|
|
|
1,331
|
|
|
|
16,638
|
|
|
|
0.0
|
12
|
7.500%, 04/01/28
1,4
|
|
|
287
|
|
|
|
3,587
|
|
|
|
0.0
|
12
|
Abitibi-Consolidated Co. of Canada, Sr Nt, (Canada), Escrow,
|
|
|
|
|
|
|
|
|
|
|
|
|
7.750%, 06/15/11
1,4
|
|
|
479
|
|
|
|
5,988
|
|
|
|
0.0
|
12
|
8.375%, 04/01/15
1,4
|
|
|
2,485
|
|
|
|
31,062
|
|
|
|
0.0
|
12
|
8.850%, 08/01/30
1,4
|
|
|
102
|
|
|
|
1,275
|
|
|
|
0.0
|
12
|
Appleton Papers, Inc., Private Placement, Sr Secd Nt, 10.500%, 06/15/15
2
|
|
|
250
|
|
|
|
247,500
|
|
|
|
0.2
|
|
Bowater Canada Finance Corp., Nt, (Canada),
7.950%, 11/15/11
1,4
|
|
|
500
|
|
|
|
87,500
|
|
|
|
0.1
|
|
NewPage Corp., Sr Secd Nt, 11.375%, 12/31/14
|
|
|
1,500
|
|
|
|
1,410,000
|
|
|
|
1.3
|
|
Smurfit-Stone Container Corp., Sr Nt,
8.000%, 03/15/17
1,3,4,9
|
|
|
1,229
|
|
|
|
61,709
|
|
|
|
0.1
|
|
Smurfit-Stone Container Enterprises, Inc.,
8.375%, 07/01/12
1,3,4,9
|
|
|
448
|
|
|
|
22,495
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,413,354
|
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Materials
|
|
|
|
|
|
|
10,233,113
|
|
|
|
9.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TELECOMMUNICATION SERVICES 8.1%
|
|
DIVERSIFIED TELECOMMUNICATION SERVICES 4.5%
|
|
Cincinnati Bell, Inc., 8.750%, 03/15/18
|
|
|
120
|
|
|
|
112,500
|
|
|
|
0.1
|
|
Clearwire Communications LLC/Clearwire Finance, Inc., Private Placement,
|
|
|
|
|
|
|
|
|
|
|
|
|
12.000%, 12/01/15
2
|
|
|
113
|
|
|
|
122,040
|
|
|
|
0.1
|
|
12.000%, 12/01/15
2
|
|
|
1,387
|
|
|
|
1,494,493
|
|
|
|
1.3
|
|
12.000%, 12/01/17
2
|
|
|
65
|
|
|
|
67,275
|
|
|
|
0.1
|
|
Frontier Communications Corp., Sr Nt,
|
|
|
|
|
|
|
|
|
|
|
|
|
7.875%, 04/15/15
|
|
|
115
|
|
|
|
125,638
|
|
|
|
0.1
|
|
8.250%, 05/01/14
|
|
|
50
|
|
|
|
55,375
|
|
|
|
0.1
|
|
8.250%, 04/15/17
|
|
|
115
|
|
|
|
126,213
|
|
|
|
0.1
|
|
8.500%, 04/15/20
|
|
|
115
|
|
|
|
125,637
|
|
|
|
0.1
|
|
8.750%, 04/15/22
|
|
|
110
|
|
|
|
119,900
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVERSIFIED TELECOMMUNICATION SERVICES (continued)
|
|
Global Crossing Ltd., (Bermuda), 12.000%, 09/15/15
|
|
$
|
35
|
|
|
$
|
39,462
|
|
|
|
0.0
|
%
12
|
Level 3 Financing, Inc., 10.000%, 02/01/18
|
|
|
105
|
|
|
|
100,800
|
|
|
|
0.1
|
|
Level 3 Financing, Inc., Co. Guar,
9.250%, 11/01/14
10
|
|
|
1,000
|
|
|
|
992,500
|
|
|
|
0.9
|
|
PAETEC Holding Corp., Sr Secd Nt, 8.875%, 06/30/17
|
|
|
200
|
|
|
|
213,500
|
|
|
|
0.2
|
|
Qwest Communications International, Inc., Private Placement, Sr Secd Nt, 7.125%, 04/01/18
2
|
|
|
200
|
|
|
|
207,000
|
|
|
|
0.2
|
|
Qwest Corp., Sr Nt, 7.625%, 06/15/15
10
|
|
|
515
|
|
|
|
580,662
|
|
|
|
0.5
|
|
Windstream Corp.,
|
|
|
|
|
|
|
|
|
|
|
|
|
7.875%, 11/01/17
|
|
|
320
|
|
|
|
336,400
|
|
|
|
0.3
|
|
8.125%, 09/01/18
|
|
|
250
|
|
|
|
262,500
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,081,895
|
|
|
|
4.5
|
|
WIRELESS TELECOMMUNICATION SERVICES 3.6%
|
|
Cricket Communications, Inc., 7.750%, 05/15/16
|
|
|
180
|
|
|
|
186,750
|
|
|
|
0.2
|
|
Cricket Communications, Inc., Private Placement,
7.750%, 10/15/20
2
|
|
|
375
|
|
|
|
357,187
|
|
|
|
0.3
|
|
MetroPCS Wireless, Inc., 7.875%, 09/01/18
|
|
|
145
|
|
|
|
150,438
|
|
|
|
0.1
|
|
Nextel Communications, Inc.,
7.375%, 08/01/15
10
|
|
|
1,025
|
|
|
|
1,026,281
|
|
|
|
0.9
|
|
NII Capital Corp., Sr Nt,
|
|
|
|
|
|
|
|
|
|
|
|
|
8.875%, 12/15/19
|
|
|
315
|
|
|
|
339,413
|
|
|
|
0.3
|
|
10.000%, 08/15/16
|
|
|
135
|
|
|
|
149,512
|
|
|
|
0.2
|
|
Sprint Nextel Corp., Nt, 6.000%, 12/01/16
10
|
|
|
1,400
|
|
|
|
1,352,750
|
|
|
|
1.2
|
|
Wind Acquisition Finance S.A., Private Placement, (Luxembourg), 7.250%, 02/15/18
2
|
|
|
200
|
|
|
|
203,500
|
|
|
|
0.2
|
|
Wind Acquisition Holdings Finance S.A., Private Placement, Sr Secd Nt, (Luxembourg), PIK, 12.250%, 07/15/17
2
|
|
|
220
|
|
|
|
254,793
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,020,624
|
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunication Services
|
|
|
|
|
|
|
9,102,519
|
|
|
|
8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
14
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTILITIES 6.1%
|
|
ELECTRIC UTILITIES 0.1%
|
|
Homer City Funding LLC, 8.137%, 10/01/19
|
|
$
|
104
|
|
|
$
|
98,138
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAS UTILITIES 0.1%
|
|
Genesis Energy LP/Genesis Energy Finance Corp., Private Placement, 7.875%, 12/15/18
2
|
|
|
160
|
|
|
|
159,200
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 5.6%
|
|
Calpine Construction Finance Co. LP and CCFC Finance Corp., Private Placement, 8.000%, 06/01/16
2
|
|
|
200
|
|
|
|
212,500
|
|
|
|
0.2
|
|
Calpine Corp., Private Placement, Sr Nt,
7.250%, 10/15/17
2
|
|
|
354
|
|
|
|
354,000
|
|
|
|
0.3
|
|
Calpine Generating Co. LLC, Secd Nt,
0.000%, 04/01/11
1,4
|
|
|
1,000
|
|
|
|
102,500
|
|
|
|
0.1
|
|
Dynegy Holdings, Inc., Sr Unsecd Nt, 7.125%, 05/15/18
|
|
|
500
|
|
|
|
317,500
|
|
|
|
0.3
|
|
Dynegy Roseton/Danskammer Pass Through Trust, Sr Unsecd Nt, 7.670%, 11/08/16
|
|
|
1,000
|
|
|
|
940,000
|
|
|
|
0.8
|
|
Edison Mission Energy, 7.200%, 05/15/19
|
|
|
500
|
|
|
|
386,250
|
|
|
|
0.3
|
|
Edison Mission Energy, Sr Nt, 7.750%, 06/15/16
|
|
|
1,000
|
|
|
|
860,000
|
|
|
|
0.8
|
|
GenOn Escrow Corp., Private Placement,
9.875%, 10/15/20
2
|
|
|
290
|
|
|
|
287,825
|
|
|
|
0.3
|
|
Midwest Generation LLC, 8.560%, 01/02/16
|
|
|
243
|
|
|
|
245,395
|
|
|
|
0.2
|
|
Mirant Americas Generation LLC, Sr Nt, 8.500%, 10/01/21
|
|
|
500
|
|
|
|
500,000
|
|
|
|
0.4
|
|
NRG Energy, Inc., Sr Nt, 7.375%, 01/15/17
10
|
|
|
1,375
|
|
|
|
1,416,250
|
|
|
|
1.3
|
|
RRI Energy, Inc., 7.625%, 06/15/14
|
|
|
500
|
|
|
|
511,250
|
|
|
|
0.4
|
|
Texas Competitive Electric Holdings Co. LLC, Sr Nt, 10.250%, 11/01/15
|
|
|
350
|
|
|
|
197,750
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,331,220
|
|
|
|
5.6
|
|
MULTI-UTILITIES 0.3%
|
|
Energy Future Holdings Corp., 10.875%, 11/01/17
|
|
|
89
|
|
|
|
61,855
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MULTI-UTILITIES (continued)
|
|
Energy Future Intermediate Holding Co. LLC/EFIH Finance, Inc., 10.000%, 12/01/20
|
|
$
|
230
|
|
|
$
|
237,193
|
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
299,048
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Utilities
|
|
|
|
|
|
|
6,887,606
|
|
|
|
6.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Corporate Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $117,353,981)
|
|
|
|
|
|
|
118,579,305
|
|
|
|
105.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOAN PARTICIPATIONS & ASSIGNMENTS 18.9%
|
|
CONSUMER DISCRETIONARY 7.3%
|
|
AUTOMOBILES 0.5%
|
|
Ford Motor Co., Term Loan B,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 3.020%, 12/15/13
|
|
|
364
|
|
|
|
362,853
|
|
|
|
0.3
|
|
VAR, 3.020%, 12/15/13
|
|
|
30
|
|
|
|
30,414
|
|
|
|
0.0
|
12
|
VAR, 3.040%, 12/15/13
|
|
|
158
|
|
|
|
157,996
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
551,263
|
|
|
|
0.5
|
|
BROADCASTING & CABLE TV 0.1%
|
|
Bresnan Communications, Term Loan B, VAR, 4.500%, 12/15/17
|
|
|
150
|
|
|
|
150,665
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAMING 1.1%
|
|
Ceasars Entertainment Operating Co., Inc., Term B-2 Loan, VAR, 3.288%, 01/28/15
|
|
|
1,006
|
|
|
|
908,754
|
|
|
|
0.8
|
|
Suqarhouse HSP Gaming LP, Term Loan, VAR, 11.250%, 09/23/14
|
|
|
240
|
|
|
|
243,549
|
|
|
|
0.2
|
|
Suqarhouse HSP Gaming LP, Term Loan B, VAR, 11.250%, 09/23/14
|
|
|
23
|
|
|
|
23,506
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,175,809
|
|
|
|
1.1
|
|
HOTELS, RESTAURANTS & LEISURE 0.3%
|
|
Outback Steakhouse, Inc., Prefunded Revolving Commitment,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 0.122%, 06/14/13
|
|
|
1
|
|
|
|
1,122
|
|
|
|
0.0
|
12
|
VAR, 2.563%, 06/14/13
|
|
|
1
|
|
|
|
666
|
|
|
|
0.0
|
12
|
VAR, 2.563%, 06/14/13
|
|
|
3
|
|
|
|
3,331
|
|
|
|
0.0
|
12
|
Outback Steakhouse, Inc., Term Loan B, VAR, 2.625%, 06/14/14
|
|
|
391
|
|
|
|
372,443
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377,562
|
|
|
|
0.3
|
|
MEDIA 4.1%
|
|
Cengage Learning Acquisitions, Term Loan, VAR, 2.550%, 07/03/14
|
|
|
491
|
|
|
|
462,725
|
|
|
|
0.4
|
|
See Notes to Financial Statements.
15
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDIA (continued)
|
|
Clear Channel Communications, Inc., Term Loan B, VAR, 3.911%, 01/29/16
|
|
$
|
593
|
|
|
$
|
513,984
|
|
|
|
0.5
|
%
|
Dex Media West, New Term Loan,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 7.000%, 10/24/14
|
|
|
2
|
|
|
|
1,429
|
|
|
|
0.0
|
12
|
VAR, 7.000%, 10/24/14
|
|
|
13
|
|
|
|
11,665
|
|
|
|
0.0
|
12
|
VAR, 7.000%, 10/24/14
|
|
|
13
|
|
|
|
11,489
|
|
|
|
0.0
|
12
|
Entercom Radio LLC, Term Loan A,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 1.386%, 06/30/12
|
|
|
800
|
|
|
|
774,536
|
|
|
|
0.7
|
|
VAR, 3.375%, 06/30/12
|
|
|
20
|
|
|
|
19,503
|
|
|
|
0.0
|
12
|
High Plains Broadcasting Operating Co. LLC, Term Loan, VAR, 9.000%, 09/14/16
|
|
|
191
|
|
|
|
190,777
|
|
|
|
0.2
|
|
Newport Television LLC, Term Loan, VAR, 9.000%, 09/14/16
|
|
|
698
|
|
|
|
697,523
|
|
|
|
0.6
|
|
Newsday, Fixed Rate Term Loan, VAR, 10.500%, 08/01/13
|
|
|
250
|
|
|
|
266,875
|
|
|
|
0.3
|
|
R.H. Donnelley, Inc., Exit Term Loan,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 9.000%, 10/24/14
|
|
|
20
|
|
|
|
15,923
|
|
|
|
0.0
|
12
|
VAR, 9.000%, 10/24/14
|
|
|
213
|
|
|
|
167,884
|
|
|
|
0.2
|
|
VAR, 9.000%, 10/24/14
|
|
|
193
|
|
|
|
152,156
|
|
|
|
0.1
|
|
Univision Communications, Inc., 1st Lien Term Loan, VAR, 2.511%, 09/29/14
|
|
|
1,323
|
|
|
|
1,271,588
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,558,057
|
|
|
|
4.1
|
|
SPECIALTY RETAIL 0.4%
|
|
Burlington Coat Factory, Term Loan B,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 2.520%, 05/28/13
|
|
|
249
|
|
|
|
244,210
|
|
|
|
0.2
|
|
VAR, 2.540%, 05/28/13
|
|
|
251
|
|
|
|
246,830
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
491,040
|
|
|
|
0.4
|
|
TEXTILES, APPAREL & LUXURY GOODS 0.8%
|
|
Claires Stores, Term Loan B,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 3.038%, 05/29/14
|
|
|
142
|
|
|
|
130,455
|
|
|
|
0.1
|
|
VAR, 3.044%, 05/29/14
|
|
|
849
|
|
|
|
782,243
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
912,698
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
|
|
|
|
|
|
|
8,217,094
|
|
|
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 0.4%
|
|
FOOD & STAPLES RETAILING 0.4%
|
|
Rite Aid Corp., Term Loan 3, VAR, 6.000%, 06/04/14
|
|
|
490
|
|
|
|
486,094
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 0.1%
|
|
OIL, GAS & CONSUMABLE FUELS 0.1%
|
|
Big West Oil, Term Loan, VAR, 03/31/16^
|
|
$
|
150
|
|
|
$
|
151,500
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 1.8%
|
|
DIVERSIFIED FINANCIAL SERVICES 1.1%
|
|
Capmark Financial Group, U.S. Term Loan, VAR,
5.250%, 03/23/11
1,4
|
|
|
1,435
|
|
|
|
587,575
|
|
|
|
0.5
|
|
Capmark Financial Group, Unsecured Bridge Loan, VAR, 5.250%, 03/23/11
1,4
|
|
|
175
|
|
|
|
70,875
|
|
|
|
0.1
|
|
CIT Group, Inc., Tranche 3 Term Loan,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 6.250%, 07/27/15
|
|
|
125
|
|
|
|
127,897
|
|
|
|
0.1
|
|
VAR, 6.250%, 07/27/15
|
|
|
126
|
|
|
|
128,592
|
|
|
|
0.1
|
|
VAR, 6.250%, 07/27/15
|
|
|
16
|
|
|
|
16,738
|
|
|
|
0.0
|
12
|
VAR, 6.250%, 07/27/15
|
|
|
33
|
|
|
|
33,476
|
|
|
|
0.0
|
12
|
VAR, 6.250%, 07/27/15
|
|
|
30
|
|
|
|
30,480
|
|
|
|
0.0
|
12
|
VAR, 6.250%, 07/27/15
|
|
|
30
|
|
|
|
30,480
|
|
|
|
0.0
|
12
|
VAR, 6.250%, 07/27/15
|
|
|
54
|
|
|
|
54,640
|
|
|
|
0.1
|
|
VAR, 6.250%, 07/27/15
|
|
|
49
|
|
|
|
49,964
|
|
|
|
0.1
|
|
VAR, 6.250%, 07/27/15
|
|
|
41
|
|
|
|
42,084
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,172,801
|
|
|
|
1.1
|
|
INSURANCE 0.7%
|
|
HMSC Corp., 1st Lien Term Loan, VAR,
2.511%, 04/03/14
3,9
|
|
|
956
|
|
|
|
817,789
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Financials
|
|
|
|
|
|
|
1,990,590
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 2.3%
|
|
AIRLINES 0.9%
|
|
Delta Air Lines, Inc., 1st Lien Credit Linked Deposit,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 0.094%, 04/30/12
|
|
|
72
|
|
|
|
70,570
|
|
|
|
0.1
|
|
VAR, 2.289%, 04/30/12
|
|
|
413
|
|
|
|
407,005
|
|
|
|
0.3
|
|
Delta Air Lines, Inc., Term Loan B, VAR, 8.750%, 09/30/13
|
|
|
494
|
|
|
|
496,939
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
974,514
|
|
|
|
0.9
|
|
BUILDING PRODUCTS 0.8%
|
|
Jacuzzi Brands, Inc., 1st Lien Term Loan B, VAR, 2.538%, 02/07/14
|
|
|
892
|
|
|
|
725,051
|
|
|
|
0.6
|
|
Jacuzzi Brands, Inc., Synthetic Credit Facility, First Lien, VAR, 0.203%, 02/07/14
|
|
|
81
|
|
|
|
65,991
|
|
|
|
0.1
|
|
See Notes to Financial Statements.
16
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BUILDING PRODUCTS (continued)
|
|
Jacuzzi Luxco S.A.R.L., New Term Loan, VAR,
4.303%, 11/15/13
3,9
|
|
$
|
124
|
|
|
$
|
123,718
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
914,760
|
|
|
|
0.8
|
|
COMMERCIAL SERVICES & SUPPLIES 0.6%
|
|
Cenveo Corp., Term Loan, VAR, 6.250%, 12/21/16
|
|
|
200
|
|
|
|
201,416
|
|
|
|
0.2
|
|
Clarke American Corp., Term Loan B,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 2.761%, 06/30/14
|
|
|
71
|
|
|
|
64,199
|
|
|
|
0.1
|
|
VAR, 2.761%, 06/30/14
|
|
|
97
|
|
|
|
88,116
|
|
|
|
0.1
|
|
VAR, 2.803%, 06/30/14
|
|
|
101
|
|
|
|
91,640
|
|
|
|
0.1
|
|
VAR, 2.803%, 06/30/14
|
|
|
59
|
|
|
|
53,247
|
|
|
|
0.0
|
12
|
VAR, 2.803%, 06/30/14
|
|
|
155
|
|
|
|
140,104
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
638,722
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Industrials
|
|
|
|
|
|
|
2,527,996
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 2.6%
|
|
IT SERVICES 2.2%
|
|
Compucom Systems, Inc., Term Loan, VAR,
3.770%, 09/29/14
3,9
|
|
|
891
|
|
|
|
857,780
|
|
|
|
0.8
|
|
First Data Corp., Initial Tranche B-1 Term Loan, VAR, 3.011%, 09/24/14
|
|
|
373
|
|
|
|
344,298
|
|
|
|
0.3
|
|
First Data Corp., Initial Tranche B-3 Term Loan, VAR, 3.011%, 09/24/14
|
|
|
1,399
|
|
|
|
1,292,196
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,494,274
|
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.4%
|
|
Freescale Semiconductor, Inc., Extended Maturity Term Loan, VAR, 4.508%, 11/29/13
|
|
|
391
|
|
|
|
377,516
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Information Technology
|
|
|
|
|
|
|
2,871,790
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MATERIALS 2.5%
|
|
CHEMICALS 1.5%
|
|
AZ Chem U.S., Inc., U.S. Term Loan, VAR, 11/30/16^
|
|
|
135
|
|
|
|
136,477
|
|
|
|
0.1
|
|
Cristal Inorganic Chemicals (Millenium), 1st Lien Term Loan, VAR, 2.553%, 05/15/14
|
|
|
881
|
|
|
|
873,442
|
|
|
|
0.8
|
|
Cristal Inorganic Chemicals (Millenium), 2nd Lien Term Loan, VAR, 6.053%, 11/14/14
3,9
|
|
|
500
|
|
|
|
493,750
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Par (000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHEMICALS (continued)
|
|
Styron LLC, Term Loan, VAR, 7.500%, 06/17/16
|
|
$
|
122
|
|
|
$
|
123,551
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,627,220
|
|
|
|
1.5
|
|
DIVERSIFIED MANUFACTURING 1.0%
|
|
BOC Edwards, 1st Priority Lien Term Loan, VAR, 2.294%, 05/31/14
|
|
|
1,184
|
|
|
|
1,155,741
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Materials
|
|
|
|
|
|
|
2,782,961
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TELECOMMUNICATION SERVICES 0.4%
|
|
DIVERSIFIED TELECOMMUNICATION SERVICES 0.4%
|
|
Level 3 Communications, Tranche A Term Loan,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 2.539%, 03/13/14
|
|
|
179
|
|
|
|
168,695
|
|
|
|
0.1
|
|
VAR, 2.539%, 03/13/14
|
|
|
71
|
|
|
|
67,478
|
|
|
|
0.1
|
|
Level 3 Communications, Tranche B Term Loan, VAR, 11.500%, 03/13/14
|
|
|
250
|
|
|
|
269,532
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
505,705
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTILITIES 1.5%
|
|
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 1.5%
|
|
Calpine Corp., 1st Priority Lien Term Loan, VAR, 3.145%, 03/29/14
|
|
|
269
|
|
|
|
268,528
|
|
|
|
0.2
|
|
Texas Competitive Electric Holdings Co. LLC, Initial Tranche B-2 Term Loan,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 3.764%, 10/10/14
|
|
|
485
|
|
|
|
374,532
|
|
|
|
0.4
|
|
VAR, 3.764%, 10/10/14
|
|
|
483
|
|
|
|
372,862
|
|
|
|
0.3
|
|
Texas Competitive Electric Holdings Co. LLC, Initial Tranche B-3 Term Loan,
|
|
|
|
|
|
|
|
|
|
|
|
|
VAR, 3.764%, 10/10/14
|
|
|
242
|
|
|
|
186,868
|
|
|
|
0.2
|
|
VAR, 3.764%, 10/10/14
|
|
|
5
|
|
|
|
3,945
|
|
|
|
0.0
|
12
|
TPF Generation Holdings LLC, 2nd Lien Term Loan, VAR, 4.553%, 12/15/14
|
|
|
500
|
|
|
|
456,565
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,663,300
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loan Participations & Assignments
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $20,793,040)
|
|
|
|
|
|
|
21,197,030
|
|
|
|
18.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
17
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Shares/Par
(000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET-BACKED SECURITIES 1.3%
|
|
Countrywide Asset-Backed Certificates, Series 2004-13, Class MV8, VAR, 1.961%, 01/25/35
3,9
|
|
$
|
115
|
|
|
$
|
6,102
|
|
|
|
0.0
|
%
12
|
Long Beach Mortgage Loan Trust, Series 2004-5, Class M6, VAR, 2.761%, 09/25/34
3,9
|
|
|
56
|
|
|
|
7,175
|
|
|
|
0.0
|
12
|
Unipac IX LLC, 13.000%, 04/11/13
3,9
|
|
|
1,500
|
|
|
|
1,475,262
|
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Asset-Backed Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $1,639,747)
|
|
|
|
|
|
|
1,488,539
|
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fixed Income Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $139,786,768)
|
|
|
|
|
|
|
141,264,874
|
|
|
|
126.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCKS 7.1%
|
|
CONSUMER DISCRETIONARY 0.3%
|
|
AUTO COMPONENTS 0.0%
|
|
Glasstech, Inc., Class C
1,3,9
|
|
|
|
11
|
|
|
|
|
|
|
0.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BROADCASTING & CABLE TV 0.0%
12
|
|
Adelphia Recovery Trust
3,9
|
|
|
157
|
|
|
|
2
|
|
|
|
0.0
|
12
|
Adelphia Recovery Trust, Contingent Value
1
|
|
|
1,297
|
|
|
|
32,422
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,424
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEISURE EQUIPMENT & PRODUCTS 0.3%
|
|
True Temper Holdings, Inc. ADR
1,3,9
|
|
|
43
|
|
|
|
343,968
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TEXTILES, APPAREL & LUXURY GOODS 0.0%
|
|
Broder Brothers Co.
1,3,9
|
|
|
38
|
|
|
|
|
|
|
|
0.0
|
|
WestPoint International, Inc.
1,3,9
|
|
|
28
|
|
|
|
|
|
|
|
0.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
|
|
|
|
|
|
|
376,392
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 1.0%
|
|
FOOD PRODUCTS 0.2%
|
|
Eurofresh, Inc., ADR
1,3,9
|
|
|
106
|
|
|
|
219,182
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSEHOLD PRODUCTS 0.8%
|
|
Spectrum Brands Holdings, Inc.
1
|
|
|
28
|
|
|
|
872,666
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Staples
|
|
|
|
|
|
|
1,091,848
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 0.3%
|
|
AIRLINES
0.0%
12
|
|
Delta Air Lines, Inc.
1
|
|
|
4
|
|
|
|
50,728
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BUILDING PRODUCTS 0.2%
|
|
Jupiter Holding I Corp.
1,3,9
|
|
|
8
|
|
|
|
187,887
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Shares
(000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMERCIAL SERVICES & SUPPLIES 0.1%
|
|
Quad/Graphics, Inc.
1
|
|
|
3
|
|
|
$
|
131,619
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Industrials
|
|
|
|
|
|
|
370,234
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 1.0%
|
|
COMPUTERS & PERIPHERALS 0.0%
|
|
Stratus Technologies, Inc., ADR
1,3,9
|
|
|
8
|
|
|
|
|
|
|
|
0.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IT SERVICES 0.1%
|
|
Unisys Corp.
1
|
|
|
3
|
|
|
|
83,211
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.9%
|
|
MagnaChip Semiconductor S.A./MagnaChip Semiconductor Finance Co., (Luxembourg)
1,3,9
|
|
|
793
|
|
|
|
1,030,974
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Information Technology
|
|
|
|
|
|
|
1,114,185
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MATERIALS 4.1%
|
|
CHEMICALS 1.9%
|
|
LyondellBasell Industries N.V., (Netherlands), Class
A
1
|
|
|
61
|
|
|
|
2,101,221
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSTRUCTION MATERIALS 0.1%
|
|
U.S. Concrete, Inc.
1
|
|
|
10
|
|
|
|
76,761
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METALS & MINING
0.0%
12
|
|
Lexington Coal Co.
1,3,9
|
|
|
25
|
|
|
|
27,083
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAPER & FOREST PRODUCTS 2.1%
|
|
AbitibiBowater, Inc.
1
|
|
|
45
|
|
|
|
1,060,088
|
|
|
|
0.9
|
|
Smurfit-Stone Container Corp.
1
|
|
|
53
|
|
|
|
1,356,672
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,416,760
|
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Materials
|
|
|
|
|
|
|
4,621,825
|
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TELECOMMUNICATION SERVICES 0.4%
|
|
DIVERSIFIED TELECOMMUNICATION SERVICES 0.4%
|
|
AboveNet, Inc.
|
|
|
7
|
|
|
|
391,214
|
|
|
|
0.4
|
|
XO Holdings, Inc.
1
|
|
|
1
|
|
|
|
356
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
391,570
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UTILITIES
0.0%
12
|
|
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 0.0%
12
|
|
GenOn Energy, Inc.
1
|
|
|
3
|
|
|
|
10,085
|
|
|
|
0.0
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $9,029,787)
1
|
|
|
|
|
|
|
7,976,139
|
|
|
|
7.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
18
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (continued)
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Shares
(000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREFERRED STOCKS 2.7%
|
|
CONSUMER DISCRETIONARY 0.8%
|
|
AUTO COMPONENTS 0.0%
|
|
Glasstech, Inc., Pfd, Series C,
1,3,9
|
|
|
|
11
|
|
$
|
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUTOMOBILES 0.3%
|
|
General Motors Co., Series B,
4.750%, 12/01/13
1
|
|
|
5
|
|
|
|
270,550
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSEHOLD DURABLES 0.3%
|
|
M/I Homes, Inc., Pfd, Series A,
9.750%, 03/15/12
1,14
|
|
|
21
|
|
|
|
344,349
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDIA 0.2%
|
|
Spanish Broadcasting System, Inc., Pfd
1,3,9
|
|
|
481
|
|
|
|
3,224
|
|
|
|
0.0
|
12
|
Spanish Broadcasting System, Inc., Pfd, Series B, PIK, 10.750%, 03/11/10
1,3,9,14
|
|
|
|
11
|
|
|
203,010
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,234
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
|
|
|
|
|
|
|
821,133
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 0.1%
|
|
FOOD PRODUCTS 0.1%
|
|
Eurofresh, Inc., Pfd, ADR
1,3,9
|
|
|
|
11
|
|
|
147,688
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 1.8%
|
|
COMMERCIAL BANKS 1.4%
|
|
CoBank ACB, Pfd, Series D,
11.000%, 10/01/14
3,9,14
|
|
|
30
|
|
|
|
1,622,814
|
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER FINANCE 0.2%
|
|
Ally Financial, Inc., 7.000%, 12/31/11
2,14
|
|
|
|
11
|
|
|
236,289
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVERSIFIED FINANCIAL SERVICES 0.2%
|
|
Citi Group Capital XIII, VAR,
7.875%, 10/30/40
1
|
|
|
7
|
|
|
|
193,752
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Financials
|
|
|
|
|
|
|
2,052,855
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Shares
(000)
|
|
|
Value
|
|
|
Percent
of Net
Assets*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 0.0%
|
|
COMPUTERS & PERIPHERALS 0.0%
|
|
Stratus Technologies, Inc., ADR
1,3,9
|
|
|
2
|
|
|
$
|
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Preferred Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $3,614,737)
|
|
|
|
|
|
|
3,021,676
|
|
|
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $12,644,524)
|
|
|
|
|
|
|
10,997,815
|
|
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHORT-TERM INVESTMENT 0.9%
|
|
INVESTMENT COMPANY 0.9%
|
|
JPMorgan Prime Money Market Fund, Institutional Class Shares,
0.100%
5,13
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $1,053,355)
|
|
|
1,053
|
|
|
|
1,053,355
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
(Cost $153,484,647)
|
|
|
|
|
|
|
153,316,044
|
|
|
|
136.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock and Liabilities in Excess of Other Assets
|
|
|
|
|
|
|
(41,192,958
|
)
|
|
|
(36.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets Applicable to Common Stockholders
|
|
|
|
|
|
$
|
112,123,086
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
19
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Schedule of Portfolio Investments (concluded)
As of December 31, 2010
ADR
|
|
American Depositary Receipt
|
VAR
|
|
Variable Rate Security. The interest rate shown is the rate in effect as of December 31, 2010.
|
*
|
|
Applicable to common stockholders.
|
1
|
|
Non-income producing security.
|
2
|
|
Security is exempt from registration under Rule 144A of the Securities Act of 1933. Unless otherwise indicated, this security has been determined to be liquid
under procedures established by the Board of Directors and may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities amounted to $49,026,546 and 43.7% of net assets applicable to common
stockholders.
|
3
|
|
Fair valued security. These securities amounted to $11,178,306 and 10.0% of net assets applicable to common stockholders.
|
5
|
|
Investment in affiliate. Money market fund registered under the Investment Company Act of 1940, as amended, and advised by J.P. Morgan Investment Management Inc.
|
7
|
|
Step-up bond. Interest rate is effective rate as of December 31, 2010.
|
9
|
|
Security deemed to be illiquid. These securities amounted to $11,178,306 and 10.0% of net assets applicable to common stockholders.
|
10
|
|
All or a portion of the security is reserved for current or potential holdings of swaps, TBAs, when-issued securities and delayed delivery securities.
|
11
|
|
Amount rounds to less than one thousand (par or shares).
|
12
|
|
Amount rounds to less than 0.1%.
|
13
|
|
The rate shown is the current yield as of December 31, 2010.
|
14
|
|
Security is perpetual and, thus, does not have a predetermined maturity date. The coupon rate for this security is fixed for a period of time and may be
structured to adjust thereafter. The date shown reflects the next call date. The coupon rate shown is the rate in effect as of December 31, 2010.
|
^
|
|
Unsettled security, coupon rate is undetermined at December 31, 2010.
|
See Notes to Financial Statements.
20
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Statement of Assets And Liabilities
As of December 31, 2010
|
|
|
|
|
ASSETS:
|
|
|
|
|
Investments in non-affiliates, at value
|
|
$
|
152,262,689
|
|
Investments in affiliates, at value
|
|
|
1,053,355
|
|
|
|
|
|
|
Total investment securities, at value
|
|
|
153,316,044
|
|
Cash
|
|
|
104,928
|
|
Receivables:
|
|
|
|
|
Investment securities sold
|
|
|
1,868,220
|
|
Interest and dividends
|
|
|
2,232,244
|
|
Securities lending income
|
|
|
50
|
|
Due from Administrator
|
|
|
33,722
|
|
|
|
|
|
|
Total Assets
|
|
|
157,555,208
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
Payables:
|
|
|
|
|
Dividends on preferred stock
|
|
|
987
|
|
Investment securities purchased
|
|
|
2,013,921
|
|
Outstanding swap contract, at value
|
|
|
93,260
|
|
Accrued liabilities:
|
|
|
|
|
Investment advisory fees
|
|
|
192,045
|
|
Administration fees
|
|
|
9,645
|
|
Custodian and accounting fees
|
|
|
1,028
|
|
Trustees and Chief Compliance Officers fees
|
|
|
1,048
|
|
Excise tax payable (Note 1.B.)
|
|
|
59,359
|
|
Other
|
|
|
60,829
|
|
|
|
|
|
|
Total Liabilities
|
|
|
2,432,122
|
|
Less: Outstanding Preferred Stock (1,720 shares at $25,000 per share) at liquidation value
|
|
|
43,000,000
|
|
|
|
|
|
|
Net Assets applicable to common stockholders
|
|
$
|
112,123,086
|
|
|
|
|
|
|
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
|
|
|
|
|
Common Stock, $0.01 par value; 49,996,320 shares authorized 12,956,618 shares issued and outstanding
|
|
$
|
129,566
|
|
Capital in excess of par
|
|
|
160,192,132
|
|
Undistributed net investment income
|
|
|
1,688,060
|
|
Accumulated net realized gains (losses)
|
|
|
(49,624,809
|
)
|
Net unrealized appreciation (depreciation)
|
|
|
(261,863
|
)
|
|
|
|
|
|
Total Net Assets applicable to common stockholders
|
|
$
|
112,123,086
|
|
|
|
|
|
|
Shares Outstanding
|
|
|
12,956,618
|
|
Net asset value per Common Share ($112,123,086/12,956,618)
|
|
$
|
8.65
|
|
Cost of investments in non-affiliates
|
|
$
|
152,431,292
|
|
Cost of investments in affiliates
|
|
|
1,053,355
|
|
See Notes to Financial Statements.
Statement of Operations
For the Year Ended December 31, 2010
|
|
|
|
|
INVESTMENT INCOME:
|
|
|
|
|
Interest income from non-affiliates
|
|
$
|
13,565,496
|
|
Dividend income from non-affiliates
|
|
|
661,964
|
|
Interest income from affiliates
|
|
|
59
|
|
Dividend income from affiliates
|
|
|
2,898
|
|
Income from securities lending (net)
|
|
|
22,025
|
|
|
|
|
|
|
Total investment income
|
|
|
14,252,442
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
Investment advisory fees (Note 6)
|
|
|
2,059,474
|
|
Administration fees (Note 6)
|
|
|
150,631
|
|
Custodian and accounting fees (Note 6)
|
|
|
35,056
|
|
Audit fees
|
|
|
62,113
|
|
Legal fees
|
|
|
37,033
|
|
Directors and Chief Compliance Officers fees
|
|
|
600
|
|
Printing and mailing costs
|
|
|
121,690
|
|
Transfer agent fees
|
|
|
12,461
|
|
Stock exchange listing fees
|
|
|
20,062
|
|
Excise tax expense
|
|
|
59,359
|
|
Insurance
|
|
|
3,859
|
|
|
|
|
|
|
Operating expenses
|
|
|
2,562,338
|
|
|
|
|
|
|
Commissions on auction rate preferred stock
|
|
|
91,265
|
|
|
|
|
|
|
Total expenses
|
|
|
2,653,603
|
|
|
|
|
|
|
Less amounts waived
|
|
|
(5,919
|
)
|
Less expense reimbursement
|
|
|
(33,722
|
)
|
|
|
|
|
|
Net expenses
|
|
|
2,613,962
|
|
|
|
|
|
|
Net investment income (loss)
|
|
|
11,638,480
|
|
|
|
|
|
|
REALIZED/UNREALIZED GAINS (LOSSES):
|
|
|
|
|
Net realized gain (loss) on transactions from:
|
|
|
|
|
Investments in non-affiliates
|
|
|
(2,782,201
|
)
|
Swaps
|
|
|
(556,181
|
)
|
|
|
|
|
|
Net realized gain (loss)
|
|
|
(3,338,382
|
)
|
|
|
|
|
|
Change in net unrealized appreciation (depreciation) of:
|
|
|
|
|
Investments in non-affiliates
|
|
|
14,345,729
|
|
Swaps
|
|
|
491,201
|
|
|
|
|
|
|
Change in net unrealized appreciation (depreciation)
|
|
|
14,836,930
|
|
|
|
|
|
|
Net realized/unrealized gains (losses)
|
|
|
11,498,548
|
|
|
|
|
|
|
Change in net assets resulting from operations
|
|
$
|
23,137,028
|
|
|
|
|
|
|
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS FROM NET INVESTMENT INCOME
|
|
|
(108,868
|
)
|
|
|
|
|
|
NET INCREASE/(DECREASE) IN NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS
RESULTING FROM OPERATIONS
|
|
$
|
23,028,160
|
|
|
|
|
|
|
See Notes to Financial Statements.
21
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Statement of Changes in Net Assets
For the Periods Indicated
|
|
|
|
|
|
|
|
|
|
|
Year Ended
12/31/2010
|
|
|
Year Ended
12/31/2009
|
|
INCREASE/(DECREASE) IN NET ASSETS:
|
|
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
Net investment income (loss)
|
|
$
|
11,638,480
|
|
|
$
|
9,804,535
|
|
Net realized gain (loss)
|
|
|
(3,338,382
|
)
|
|
|
(6,776,763
|
)
|
Change in net unrealized appreciation (depreciation)
|
|
|
14,836,930
|
|
|
|
52,986,626
|
|
Distributions to preferred stockholders from net investment income
|
|
|
(108,868
|
)
|
|
|
(115,456
|
)
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in net assets resulting from operations applicable to common stockholders
|
|
|
23,028,160
|
|
|
|
55,898,942
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS TO COMMON STOCKHOLDERS FROM:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(11,852,808
|
)
|
|
|
(8,547,460
|
)
|
|
|
|
|
|
|
|
|
|
Total distributions to common stockholders
|
|
|
(11,852,808
|
)
|
|
|
(8,547,460
|
)
|
|
|
|
|
|
|
|
|
|
FUND SHARE TRANSACTIONS (NOTE 2):
|
|
|
|
|
|
|
|
|
Value of 5,713 and 2,494 shares issued in reinvestment of dividends to common stockholders in 2010 and 2009, respectively
|
|
|
47,803
|
|
|
|
11,098
|
|
|
|
|
|
|
|
|
|
|
Total increase in net assets derived from fund share transactions
|
|
|
47,803
|
|
|
|
11,098
|
|
|
|
|
|
|
|
|
|
|
Total net increase/(decrease) in net assets applicable to common stockholders
|
|
|
11,223,155
|
|
|
|
47,362,580
|
|
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
100,899,931
|
|
|
|
53,537,351
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
112,123,086
|
|
|
$
|
100,899,931
|
|
|
|
|
|
|
|
|
|
|
Undistributed Net Investment Income
|
|
$
|
1,688,060
|
|
|
$
|
2,354,145
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
Statement of Cash Flows
For the
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
|
|
|
|
|
Cash flows provided (used) by operating activities:
|
|
|
|
|
Net increase/decrease in net assets from operations
|
|
$
|
23,137,028
|
|
Adjustments to reconcile net increase/decrease in net assets from operations to net cash provided (used) by operating
activities:
|
|
|
|
|
Purchase of investment securities
|
|
|
(87,203,219
|
)
|
Proceeds from disposition of investment securities
|
|
|
88,638,461
|
|
Proceeds from disposition of short-term investments, net
|
|
|
2,512,089
|
|
Proceeds from collateral for securities on loan, net
|
|
|
5,079,145
|
|
Unrealized appreciation/depreciation on swap contracts
|
|
|
(491,201
|
)
|
Unrealized appreciation/depreciation on investments
|
|
|
(14,345,729
|
)
|
Net realized gain/loss on investments
|
|
|
2,782,201
|
|
Net realized gain/loss on swap contracts
|
|
|
556,181
|
|
Decrease in due from Advisor and Affiliates
|
|
|
98,915
|
|
Increase in receivable for investments sold
|
|
|
(271,953
|
)
|
Increase in interest and dividends receivable
|
|
|
(76,766
|
)
|
Decrease in securities lending income receivable
|
|
|
3,216
|
|
Decrease in payable for investments purchased
|
|
|
(1,347,950
|
)
|
Decrease in collateral for securities lending payable
|
|
|
(5,079,145
|
)
|
Decrease in excise tax payable
|
|
|
(26,868
|
)
|
Decrease in accrued expenses and other liabilities
|
|
|
(813,684
|
)
|
Net (amortization)/accretion of income
|
|
|
(1,290,121
|
)
|
|
|
|
|
|
Net cash provided (used) by operating activities
|
|
|
11,860,600
|
|
|
|
|
|
|
Cash flows provided (used) by financing activities:
|
|
|
|
|
Cash distributions paid to shareholders (net of reinvestments of $47,803)
|
|
|
(11,805,005
|
)
|
Cash distributions paid to preferred stockholders
|
|
|
(108,289
|
)
|
|
|
|
|
|
Net cash provided (used) by financing activities
|
|
|
(11,913,294
|
)
|
|
|
|
|
|
Net increase/decrease in cash
|
|
|
(52,694
|
)
|
|
|
|
|
|
Cash:
|
|
|
|
|
Beginning of period
|
|
|
157,622
|
|
|
|
|
|
|
End of period
|
|
$
|
104,928
|
|
|
|
|
|
|
Supplemental information:
The Fund paid $84,457 in excise taxes.
For purposes of reporting the Statement of Cash Flows, the Fund considers all cash accounts that are not subject to withdrawal restrictions or penalties
to be cash equivalents.
See Notes to Financial
Statements.
22
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
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 calculated using average shares outstanding and market price data for the Funds shares.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
Net asset value, beginning of period
|
|
$
|
7.79
|
|
|
$
|
4.14
|
|
|
$
|
9.15
|
|
|
$
|
9.95
|
|
|
$
|
8.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.90
|
|
|
|
0.76
|
|
|
|
1.21
|
|
|
|
1.21
|
|
|
|
1.09
|
|
Net realized and unrealized gain/(loss) on investments .
|
|
|
0.89
|
|
|
|
3.56
|
|
|
|
(5.18
|
)
|
|
|
(0.84
|
)
|
|
|
1.07
|
|
Distributions to preferred stockholders from net investment income
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.16
|
)
|
|
|
(0.27
|
)
|
|
|
(0.25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in net asset value resulting from operations
|
|
|
1.78
|
|
|
|
4.31
|
|
|
|
(4.13
|
)
|
|
|
0.10
|
|
|
|
1.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Stockholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0 .92
|
)
|
|
|
(0 .66
|
)
|
|
|
(0 .88
|
)
|
|
|
(0 .90
|
)
|
|
|
(0 .90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to common stockholders
|
|
|
(0 .92
|
)
|
|
|
(0 .66
|
)
|
|
|
(0 .88
|
)
|
|
|
(0 .90
|
)
|
|
|
(0 .90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
8 .65
|
|
|
$
|
7 .79
|
|
|
$
|
4 .14
|
|
|
$
|
9 .15
|
|
|
$
|
9.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value per share, end of period
|
|
$
|
8 .45
|
|
|
$
|
7 .38
|
|
|
$
|
3 .68
|
|
|
$
|
8 .10
|
|
|
$
|
9 .80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENT RETURN:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on market value per common share(2)
|
|
|
27 .90
|
%
|
|
|
126 .57
|
%
|
|
|
(47.76
|
)%
|
|
|
(9 .01
|
)%
|
|
|
26 .78
|
%
|
Based on net asset value per common share(3)(4)
|
|
|
24 .03
|
%
|
|
|
112 .51
|
%
|
|
|
(47.98
|
)%
|
|
|
1 .24
|
%
|
|
|
22 .38
|
%
|
RATIOS TO AVERAGE NET ASSETS:(5)(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenses (including expenses related to leverage)(7)(8)
|
|
|
1.74
|
%
(11)
|
|
|
1.73
|
%
(11)
|
|
|
0.59
|
%
|
|
|
1.27
|
%
|
|
|
1.95
|
%
|
Applicable to common stockholders only(7)(9)
|
|
|
2.43
|
%
(12)
|
|
|
2.70
|
%
(12)
|
|
|
0.99
|
%
|
|
|
1.92
|
%
|
|
|
3.01
|
%
|
Net expenses (prior to expenses related to leverage)(7)(8)
|
|
|
1.67
|
%
(11)
|
|
|
1.64
|
%
(11)
|
|
|
0.49
|
%
|
|
|
1.18
|
%
|
|
|
1.86
|
%
|
Applicable to common stockholders only(7)(9)
|
|
|
2.34
|
%
(12)
|
|
|
2.56
|
%
(12)
|
|
|
0.82
|
%
|
|
|
1.79
|
%
|
|
|
2.87
|
%
|
Net investment income(9)
|
|
|
10 .81
|
%
|
|
|
12 .80
|
%
|
|
|
16 .22
|
%
|
|
|
12 .18
|
%
|
|
|
11 .61
|
%
|
SUPPLEMENTAL DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at end of period, net of preferred stock (000).
|
|
$
|
112,123
|
|
|
$
|
100,900
|
|
|
$
|
53,537
|
|
|
$
|
118,402
|
|
|
$
|
128,712
|
|
Portfolio turnover rate
|
|
|
58
|
%
|
|
|
63
|
%
|
|
|
36
|
%
|
|
|
64
|
%
|
|
|
75
|
%
|
SENIOR SECURITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of preferred shares outstanding at end of period
|
|
|
1,720
|
|
|
|
1,720
|
|
|
|
1,720
|
|
|
|
2,640
|
|
|
|
2,640
|
|
Asset coverage per share of preferred stock outstanding at end of period(10)
|
|
$
|
90,188
|
|
|
$
|
83,663
|
|
|
$
|
56,126
|
|
|
$
|
69,849
|
|
|
$
|
73,755
|
|
Involuntary liquidation preference and average market value per share of preferred stock
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
1
|
|
Total investment return excludes the effects of commissions. Dividends and distributions to common stockholders, if any, are assumed, for purposes of this
calculation, to be reinvested at prices obtained under the Funds 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.
|
2
|
|
Assumes an investment at the common share market value at the beginning of the period indicated and sale of all shares at the closing common share market value
at the end of the period indicated. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Funds dividend reinvestment plan.
|
3
|
|
Assumes an investment at the common share net asset value at the beginning of the period indicated and sale of all shares at the closing common share net asset
value at the end of the period indicated. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Funds dividend reinvestment plan.
|
4
|
|
Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial
reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns as reported in the shareholder letter contained in this report.
|
5
|
|
Ratios do not include the effect of dividends to preferred stock.
|
6
|
|
See Note 6 in the Notes to Financial Statements.
|
7
|
|
Includes earnings credits and interest expense, each of which is less than 0.01%, if applicable or unless otherwise noted.
|
8
|
|
Ratios calculated relative to the average net assets of both common and preferred stockholders.
|
9
|
|
Ratios calculated relative to the average net assets of common stockholders only.
|
10
|
|
Calculated by subtracting the Funds total liabilities (not including the preferred stock) from the Funds total assets, and dividing this by the
number of preferred shares outstanding.
|
11
|
|
The Advisor and Administrator voluntarily agreed to waive/reimburse fees during the years ended December 31, 2010 and 2009. Without these waivers/reimbursements,
the ratios would have been higher by less than 0.03% and 0.17%, respectively.
|
12
|
|
The Advisor and Administrator voluntarily agreed to waive/reimburse fees during the years ended December 31, 2010 and 2009. Without these waivers/reimbursements,
the ratios would have been higher by 0.04% and 0.27%, respectively.
|
See Notes to Financial Statements.
23
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements
1.
|
|
SIGNIFICANT ACCOUNTING POLICIES
Pacholder High Yield Fund, Inc. (the Fund) is a closed-end, diversified
management investment company with a leveraged capital structure. The Funds investment objective is to provide a high level of total return through current income and capital appreciation. Under normal circumstances, the Fund invests at least
80% of the value of its assets in high yield debt securities. The Fund invests primarily in 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. The policies are in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.
|
A.
|
|
SECURITY
VALUATIONS
Fixed
income securities (other than certain short-term investments maturing in less than 61 days) are valued each day based on quotations received from third party broker-dealers of comparable securities or independent or affiliated pricing services
approved by the Board of Directors. The broker-dealers or pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the broker-dealer or pricing services may utilize a
market-based approach through which quotes from market makers are used to determine fair value. In instances, where sufficient market activity may not exist or is limited, the broker-dealers or pricing services also utilize proprietary valuation
models which may consider market characteristics such as benchmark yield curves, option-adjusted spreads, credit spreads, estimated default rates, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique
security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Generally, short-term investments of sufficient credit quality maturing in less than 61 days are valued at amortized cost, which
approximates market value. Certain investments of the Fund may, depending upon market conditions, trade in relatively thin markets and/or in markets that experience significant volatility. As a result of these conditions, the prices used by the Fund
to value securities may differ from the value that would be realized if these securities were sold, and the differences could be material. Futures and options shall generally be valued on the basis of available market quotations. Swaps and other
derivatives are valued daily, primarily using independent or affiliated pricing services approved by the Board of Directors. If valuations are not available from such services or values received are deemed not representative of market value,
values will be obtained from a third party broker-dealer or counterparty. Investments in other open-end investment companies are valued at such investment companys current day closing net asset value per share. Equity securities listed
on a North American, Central American, South American or Caribbean securities exchange shall generally be valued at the last sale price on the exchange on which the security is principally traded that is reported before the time when the net assets
of the Fund are valued. The value of securities listed on The NASDAQ Stock Market LLC shall generally be the NASDAQ Official Closing Price.
|
Securities or other assets for which market quotations are not readily available or for which market quotations do not represent the value at the
time of pricing (including certain illiquid securities) are fair valued in accordance with procedures established by and under the supervision and responsibility of the Board of Directors. Under these procedures, the Fund primarily employs a
market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. The Fund may also
use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the
investments. It is possible that the estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and such differences could be material. At December 31, 2010, $11,261,517
of the Funds investments were fair valued.
Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer related events
after the report date and prior to issuance of the report are not reflected herein.
The various inputs that are used in determining the fair value of the Funds investments are summarized into the three broad levels listed below.
|
|
|
Level 1 quoted prices in active markets for identical securities
|
|
|
|
Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk,
etc.)
|
|
|
|
Level 3 significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments)
|
A financial instruments level
within the fair value heirachy is based on the lowest level of any input both individually and in aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of
the risk associated with investing in those securities.
24
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
The following table represents each valuation input by sector as presented in the Schedule of Portfolio Investments (SOI):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
Quoted prices
|
|
|
Level 2
Other significant
observable inputs
|
|
|
Level 3
Significant
unobservable inputs
|
|
|
Total
|
|
Investments in Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
$
|
|
|
|
$
|
32,422
|
|
|
$
|
343,970
|
|
|
$
|
376,392
|
|
Consumer Staples
|
|
|
872,666
|
|
|
|
|
|
|
|
219,182
|
|
|
|
1,091,848
|
|
Industrials
|
|
|
182,347
|
|
|
|
|
|
|
|
187,887
|
|
|
|
370,234
|
|
Information Technology
|
|
|
83,211
|
|
|
|
|
|
|
|
1,030,974
|
|
|
|
1,114,185
|
|
Materials
|
|
|
4,594,742
|
|
|
|
|
|
|
|
27,083
|
|
|
|
4,621,825
|
|
Telecommunication Services
|
|
|
391,570
|
|
|
|
|
|
|
|
|
|
|
|
391,570
|
|
Utilities
|
|
|
10,085
|
|
|
|
|
|
|
|
|
|
|
|
10,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks
|
|
|
6,134,621
|
|
|
|
32,422
|
|
|
|
1,809,096
|
|
|
|
7,976,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
|
|
|
|
|
614,899
|
|
|
|
206,234
|
|
|
|
821,133
|
|
Consumer Staples
|
|
|
|
|
|
|
|
|
|
|
147,688
|
|
|
|
147,688
|
|
Financials
|
|
|
193,752
|
|
|
|
236,289
|
|
|
|
1,622,814
|
|
|
|
2,052,855
|
|
Information Technology
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Preferred Stocks
|
|
|
193,752
|
|
|
|
851,188
|
|
|
|
1,976,736
|
|
|
|
3,021,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-Backed Securities
|
|
|
|
|
|
|
|
|
|
|
1,488,539
|
|
|
|
1,488,539
|
|
Corporate Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
|
|
|
|
|
36,581,622
|
|
|
|
424,142
|
|
|
|
37,005,764
|
|
Consumer Staples
|
|
|
|
|
|
|
4,585,190
|
|
|
|
406,725
|
|
|
|
4,991,915
|
|
Energy
|
|
|
|
|
|
|
12,391,951
|
|
|
|
|
|
|
|
12,391,951
|
|
Financials
|
|
|
|
|
|
|
12,826,468
|
|
|
|
880,000
|
|
|
|
13,706,468
|
|
Health Care
|
|
|
|
|
|
|
4,082,538
|
|
|
|
932,291
|
|
|
|
5,014,829
|
|
Industrials
|
|
|
|
|
|
|
12,884,866
|
|
|
|
465,443
|
|
|
|
13,350,309
|
|
Information Technology
|
|
|
|
|
|
|
5,476,738
|
|
|
|
418,093
|
|
|
|
5,894,831
|
|
Materials
|
|
|
|
|
|
|
10,148,909
|
|
|
|
84,204
|
|
|
|
10,233,113
|
|
Telecommunication Services
|
|
|
|
|
|
|
9,102,519
|
|
|
|
|
|
|
|
9,102,519
|
|
Utilities
|
|
|
|
|
|
|
6,887,606
|
|
|
|
|
|
|
|
6,887,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Corporate Bonds
|
|
|
|
|
|
|
114,968,407
|
|
|
|
3,610,898
|
|
|
|
118,579,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Participations & Assignments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
|
|
|
|
|
8,217,094
|
|
|
|
|
|
|
|
8,217,094
|
|
Consumer Staples
|
|
|
|
|
|
|
486,094
|
|
|
|
|
|
|
|
486,094
|
|
Energy
|
|
|
|
|
|
|
151,500
|
|
|
|
|
|
|
|
151,500
|
|
Financials
|
|
|
|
|
|
|
1,172,801
|
|
|
|
817,789
|
|
|
|
1,990,590
|
|
Industrials
|
|
|
|
|
|
|
2,404,278
|
|
|
|
123,718
|
|
|
|
2,527,996
|
|
Information Technology
|
|
|
|
|
|
|
2,014,010
|
|
|
|
857,780
|
|
|
|
2,871,790
|
|
Materials
|
|
|
|
|
|
|
2,289,211
|
|
|
|
493,750
|
|
|
|
2,782,961
|
|
Telecommunication Services
|
|
|
|
|
|
|
505,705
|
|
|
|
|
|
|
|
505,705
|
|
Utilities
|
|
|
|
|
|
|
1,663,300
|
|
|
|
|
|
|
|
1,663,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loan Participations & Assignments
|
|
|
|
|
|
|
18,903,993
|
|
|
|
2,293,037
|
|
|
|
21,197,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
Quoted prices
|
|
|
Level 2
Other significant
observable inputs
|
|
|
Level 3
Significant
unobservable inputs
|
|
|
Total
|
|
Short-Term Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Companies
|
|
$
|
1,053,355
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,053,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Securities
|
|
$
|
7,381,728
|
|
|
$
|
134,756,010
|
|
|
$
|
11,178,306
|
|
|
$
|
153,316,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation in Other Financial Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swaps
|
|
$
|
|
|
|
$
|
(93,260
|
)
|
|
$
|
|
|
|
$
|
(93,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Security has a zero value.
|
There were no significant transfers between Levels 1 and 2 during the year ended December 31, 2010.
The following is a summary of investments for which significant unobservable inputs (Level 3) were used in determining fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of
12/31/09
|
|
|
Realized
gain
(loss)
|
|
|
Change in
unrealized
appreciation
(depreciation)
|
|
|
Net
amortization
(accretion)
|
|
|
Net
purchases
(sales)
|
|
|
Transfers
into
Level 3
|
|
|
Transfers
out of
Level 3
|
|
|
Balance
as of
12/31/10
|
|
Investments in Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-Backed Securities
|
|
$
|
1,475,849
|
|
|
$
|
|
|
|
$
|
10,756
|
|
|
$
|
8,609
|
|
|
$
|
(6,675
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,488,539
|
|
Common Stocks Consumer Discretionary
|
|
|
300,973
|
|
|
|
|
|
|
|
42,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
343,970
|
|
Common Stocks Consumer Staples
|
|
|
52,943
|
|
|
|
|
|
|
|
1,802,214
|
|
|
|
|
|
|
|
(1,635,975
|
)
|
|
|
|
|
|
|
|
|
|
|
219,182
|
|
Common Stocks Industrials
|
|
|
828,416
|
|
|
|
878,484
|
|
|
|
(442,336
|
)
|
|
|
|
|
|
|
(1,076,677
|
)
|
|
|
|
|
|
|
|
|
|
|
187,887
|
|
Common Stocks Information Technology
|
|
|
111,036
|
|
|
|
|
|
|
|
919,938
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
1,030,974
|
|
Common Stocks Materials
|
|
|
89,183
|
|
|
|
(208,800
|
)
|
|
|
191,700
|
|
|
|
|
|
|
|
(45,000
|
)
|
|
|
|
|
|
|
|
|
|
|
27,083
|
|
Corporate Bonds Consumer Discretionary
|
|
|
291,226
|
|
|
|
|
|
|
|
72,023
|
|
|
|
(1,192
|
)
|
|
|
62,085
|
|
|
|
|
|
|
|
|
|
|
|
424,142
|
|
Corporate Bonds Consumer Staples
|
|
|
2,518,525
|
|
|
|
(826,583
|
)
|
|
|
864,839
|
|
|
|
3,303
|
|
|
|
(2,153,359
|
)
|
|
|
|
|
|
|
|
|
|
|
406,725
|
|
Corporate Bonds Financials
|
|
|
730,000
|
|
|
|
|
|
|
|
150,398
|
|
|
|
(398
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
880,000
|
|
Corporate Bonds Health Care
|
|
|
950,328
|
|
|
|
|
|
|
|
(298,590
|
)
|
|
|
(150
|
)
|
|
|
280,703
|
|
|
|
|
|
|
|
|
|
|
|
932,291
|
|
Corporate Bonds Industrials
|
|
|
1,873,259
|
|
|
|
(2,591,222
|
)
|
|
|
3,012,177
|
|
|
|
(26,050
|
)
|
|
|
(2,328,382
|
)
|
|
|
600,000
|
|
|
|
(74,339
|
)
|
|
|
465,443
|
|
Corporate Bonds Information Technology
|
|
|
405,358
|
|
|
|
|
|
|
|
12,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
418,093
|
|
Corporate Bonds Materials
|
|
|
871,033
|
|
|
|
|
|
|
|
(953,770
|
)
|
|
|
|
|
|
|
|
|
|
|
1,037,974
|
|
|
|
(871,033
|
)
|
|
|
84,204
|
|
Loan Participations & Assignments Financials
|
|
|
|
|
|
|
|
|
|
|
44,236
|
|
|
|
|
|
|
|
(6,285
|
)
|
|
|
779,838
|
|
|
|
|
|
|
|
817,789
|
|
Loan Participations & Assignments Industrials
|
|
|
828,353
|
|
|
|
(1,059,640
|
)
|
|
|
996,925
|
|
|
|
|
|
|
|
27,590
|
|
|
|
|
|
|
|
(669,510
|
)
|
|
|
123,718
|
|
Loan Participations & Assignments Information Technology
|
|
|
2,046,167
|
|
|
|
|
|
|
|
510,993
|
|
|
|
4,813
|
|
|
|
(1,704,193
|
)
|
|
|
|
|
|
|
|
|
|
|
857,780
|
|
26
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of
12/31/09
|
|
|
Realized
gain
(loss)
|
|
|
Change in
unrealized
appreciation
(depreciation)
|
|
|
Net
amortization
(accretion)
|
|
|
Net
purchases
(sales)
|
|
|
Transfers
into
Level 3
|
|
|
Transfers
out of
Level 3
|
|
|
Balance
as of
12/31/10
|
|
Loan Participations & Assignments Materials
|
|
$
|
1,185,084
|
|
|
$
|
|
|
|
$
|
98,750
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(790,084
|
)
|
|
$
|
493,750
|
|
Preferred Stocks Consumer Discretionary
|
|
|
77,723
|
|
|
|
|
|
|
|
128,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,234
|
|
Preferred Stocks Consumer Staples
|
|
|
139,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,688
|
|
|
|
|
|
|
|
|
|
|
|
147,688
|
|
Preferred Stocks Financials
|
|
|
421,800
|
|
|
|
49,843
|
|
|
|
101,710
|
|
|
|
(85
|
)
|
|
|
(443,893
|
)
|
|
|
1,493,439
|
|
|
|
|
|
|
|
1,622,814
|
|
Preferred Stocks Information Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Warrants Industrials
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants Telecommunication Services
|
|
|
41,530
|
|
|
|
(18,792
|
)
|
|
|
167,070
|
|
|
|
|
|
|
|
(189,808
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
15,237,786
|
|
|
$
|
(3,776,710
|
)
|
|
$
|
7,433,276
|
|
|
$
|
(11,150
|
)
|
|
$
|
(9,211,181
|
)
|
|
$
|
3,911,251
|
|
|
$
|
(2,404,966
|
)
|
|
$
|
11,178,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Security has zero value.
|
Transfers into, and out of, Level 3 are valued utilizing values as of the beginning of the period.
Transfers from Level 2 to Level 3 or from Level 3 to Level 2 are due to
a decline or an increase in market activity (e.g. frequency of trades), which resulted in a lack of or increase in available market inputs to determine price.
The change in unrealized appreciation (depreciation) attributable to securities owned at December 31, 2010, which were valued using significant
unobservable inputs (Level 3) amounted to $3,314,999. This amount is included in Change in net unrealized appreciation (depreciation) of investments in non-affiliates on the Statement of Operations.
|
B.
|
|
FEDERAL TAXES
It is the Funds policy to make distributions to stockholders of net investment income and net realized capital gains to comply with
the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies.
|
The Fund intends to continue to qualify as a regulated investment company by complying with the appropriate provisions of the Internal Revenue Code
and to distribute to stockholders each year substantially all of its taxable income, if any, including realized gains on investments.
The Fund reserves the right to retain investment company taxable income and/or net capital gains. As such, excise taxes may be recognized and paid
on undistributed income and capital gain amounts. For the tax year ended 2010, the Fund retained approximately $1,712,162 in income and incurred an excise tax of $59,359.
Distributions paid by the Fund are subject to recharacterization for
tax purposes. A portion of dividends paid may consist of net realized gains. To the extent that capital loss carryforwards are available to offset the distribution of capital gains but are not utilized at the end of the Funds fiscal year, such
capital gain distributions may be taxable to stockholders as ordinary income.
The amount of dividends and distributions from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. To the extent these book/tax differences are permanent in nature (i.e., that they result from other than timing of recognition temporary differences), such
amounts are reclassified within the capital accounts based on their Federal tax-basis treatment.
27
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
The following amounts were reclassified within the capital accounts:
|
|
|
|
|
|
|
|
|
Capital in Excess
of Par Value
|
|
Accumulated
Undistributed/
(Overdistributed)
Net Investment
Income
|
|
|
Accumulated
Net Realized
Gain/Loss From
Security
Transactions
|
|
$(8,194,832)
|
|
$
|
(342,889
|
)
|
|
$
|
8,537,721
|
|
The reclassification for the Fund relates primarily to expiration of capital loss carryforwards.
The tax character of distributions paid during the years ended December 31, 2010 and 2009 was as follows:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
Common Stockholder Ordinary Income
|
|
$
|
11,852,808
|
|
|
$
|
8,547,460
|
|
Preferred Stockholder Ordinary Income
|
|
$
|
108,868
|
|
|
$
|
115,456
|
|
The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits or losses will significantly change in the next twelve months. However, the
Funds conclusions may be subject to future review based on changes in, or the interpretation of, the accounting standards or tax laws and regulations. The Funds federal tax returns for the prior three fiscal years remain subject to
examination by the Internal Revenue Service.
|
C.
|
|
SECURITIES TRANSACTIONS AND INVESTMENT
INCOME
Investment 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 income is determined on the basis of coupon interest accrued using the effective interest method
adjusted for amortization of premiums and accretion of discounts. Dividend income is recorded on the ex-dividend date.
|
|
D.
|
|
SECURITIES LENDING
The Fund may lend securities to brokers approved by J.P. Morgan Investment Management Inc. (JPMIM or the Advisor)
in order to generate additional income. JPMorgan Chase Bank, N.A. (JPMCB), an affiliate of the Fund, serves as lending agent for the Fund pursuant to an Amended and Restated Securities Lending Agreement effective February 9, 2010
(Securities Lending Agreement). Securities loaned are collateralized by cash, which is invested in Capital Shares of the JPMorgan Prime Money Market Fund. Upon termination of a loan, the Fund is required to return to the borrower the
posted cash collateral. Loans are subject to termination by the Fund or the borrower at any time.
|
Securities lending income is comprised of income earned on cash collateral investments (Collateral Investments), net of a rebate
received from or paid to borrowers for use of cash collateral and lending agent fees. This amount is recorded as Income from securities lending (net) on the Statement of Operations. The Fund also receives payments from the borrower during the period
of the loan, equivalent to dividends and interest earned on the securities loaned, which are recorded as Dividend or Interest income, respectively, on the Statement of Operations. For the year ended December 31, 2010, the Fund earned $5,060
from the investment of cash collateral, prior to rebates or fees, from an investment in an affiliated fund as described below.
At the inception of a loan, securities are exchanged for cash collateral equal to at least 102% of the value of loaned U.S. dollar-denominated
securities, plus accrued interest, and 105% of the value of loaned non-dollar denominated securities, plus accrued interest. The Securities Lending Agreement requires that the loaned securities be marked to market on a daily basis and additional
cash collateral is requested from borrowers when the cash received from borrowers becomes less than 102% and 105% of the value of loaned U.S. dollar-denominated and non-dollar denominated securities, respectively, subject to certain
de
minimis
guidelines.
The value of the cash collateral
received is recorded as a liability on the Statement of Assets and Liabilities and details of Collateral Investments are disclosed in the SOI. At December 31, 2010, the Fund did not have any outstanding securities on loan.
The Fund bears the risk of loss associated with the Collateral
Investments and is not entitled to additional collateral from the borrower to cover any such losses. To the extent that the value of the Collateral Investments declines below the amount owed to a borrower, the Fund may incur losses that exceed the
amount it earned on lending the security. Upon termination of a loan, the Fund may use leverage (borrow money) to repay the borrower for cash collateral posted, if the Advisor does not believe that it is prudent to sell the Collateral Investments to
fund the payment of this liability.
28
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
Securities lending also involves counterparty risks, including the risk that the loaned securities may not be returned in
a timely manner or at all. Subject to certain conditions, JPMCB has agreed to indemnify the Fund from losses resulting from a borrowers failure to return a loaned security.
The Advisor waived fees associated with the Funds investment in
JPMorgan Prime Money Market Fund in the amount of $3,197 for the year ended December 31, 2010. This amount offsets the administration fees and shareholder servicing fees incurred by JPMorgan Prime Money Market Fund related to the Funds
investment in such fund. A portion of the waiver is voluntary.
Under the Securities Lending Agreement, JPMCB is entitled to a fee paid monthly in arrears equal to: (i) 0.03% of the average dollar value of the loans of U.S. dollar-denominated securities outstanding during
a given month; and (ii) 0.09% of the average dollar value of loans of non-dollar-denominated securities outstanding during a given month.
The Fund incurred lending agent fees to JPMCB in the amount of $1,082 for the year ended December 31, 2010.
|
E.
|
|
EXPENSES AND DISTRIBUTIONS
Expenses are accrued as incurred. Dividends to common 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 stockholders are accrued daily based on a variable interest rate set at weekly auctions or, in the absence of a successful auction, at a maximum rate as calculated in
accordance with the Funds Articles Supplementary for Auction Rate Cumulative Preferred Stock and are paid weekly from net investment income. Distributions are determined in accordance with federal income tax regulations which may differ from
generally accepted accounting principles.
|
|
F.
|
|
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 liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis begin earning interest on the settlement
date.
|
The Fund had no when-issued or
delayed-delivery purchase commitments as of December 31, 2010.
|
G.
|
|
LOAN PARTICIPATIONS AND ASSIGNMENTS
The Fund may invest in loan participations and assignments of all or a portion of the loans. When the Fund purchases a loan participation, the
Fund typically enters into a contractual relationship with the lender or third party selling such participations (Selling Participant), but not the borrower. In contrast, the Fund has direct rights against the borrower on a loan when it
purchases an assignment; provided, however, that the Funds rights may be more limited than the lender from which it acquired the assignment and the Fund may be able to enforce its rights only through an administrative agent. As a result, the
Fund assumes the credit risk of the Borrower and the Selling Participant and any other persons interpositioned between the Fund and the Borrower (Intermediate Participants). Although certain loan assignments or participations are secured
by collateral, the Fund could experience delays or limitations in realizing on such collateral or have its interest subordinated to other indebtedness of the obligor. In addition, loan assignments and participations are vulnerable to market
conditions such that economic conditions or other events may reduce the demand for loan assignments and participations and certain loan assignments and participations which were liquid, when purchased, may become illiquid.
|
The Fund segregates sufficient liquid assets for unfunded and funded
commitments that will settle on future dates.
|
H.
|
|
UNFUNDED COMMITMENTS
The Fund may enter into commitments to buy and sell investments including
commitments to buy loan assignments and participations to settle on future dates as part of its normal investment activities. Unfunded commitments are generally traded and priced as part of a related loan participation or assignment (Note
1G). The value of the unfunded portion of the investment is determined using a pro-rata allocation, based on its par value relative to the par value of the entire investment. The unrealized appreciation/depreciation from unfunded commitments is
reported in the Statement of Assets and Liabilities. Credit risks exist on these commitments to the extent of any difference between the sales price and current value of the underlying securities sold. Market risk exists on these commitments to buy
to the same extent as if the securities were owned on a settled basis and gains and losses are recorded and reported in the same manner. However, during the commitment period, these investments earn no interest or dividends.
|
At December 31, 2010, the Fund did not
have any outstanding unfunded loan commitments.
29
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
2.
|
|
COMMON STOCK
At December 31, 2010, there were 49,996,320 shares of common stock with a $.01 par value authorized and 12,956,618 shares
outstanding. During the year ended December 31, 2010, and the year ended December 31, 2009, the Fund issued 5,713 and 2,494 shares of common stock, respectively, in connection with its dividend reinvestment plan.
|
3.
|
|
PREFERRED STOCK
On June 29, 2001, the Fund issued shares of Series W Auction Rate Cumulative Preferred Stock (ARPS) at an offering price
of $25,000 per share. Dividends on these shares are paid weekly at an annual rate determined by a weekly auction or, in the absence of a successful auction, at a maximum rate as calculated in accordance with the Funds Articles Supplementary
for Auction Rate Cumulative Preferred Stock. In general, the holders of the ARPS and the common stock vote together as a single class, except that the ARPS stockholders, as a separate class, vote to elect two members of the Board of Directors. The
ARPS has a liquidation value of $25,000 per share, plus accumulated and unpaid dividends. At December 31, 2010, accrued ARPS dividends were $987.
|
The Fund is subject to certain limitations and restrictions associated
with outstanding shares of ARPS, including maintaining an asset coverage ratio of 200% for such shares. Failure to comply with these limitations and restrictions could preclude the Fund from declaring any dividends or distributions to common
stockholders or repurchasing common shares and/or could trigger the mandatory redemption of Preferred Stock at their liquidation value.
The weekly auction for the ARPS issued by the Fund has failed since February 13, 2008, due to insufficient demand (bids to buy shares) to meet
supply (shares offered for sale) at the auction. Holders of preferred shares who wish to sell will not be able to do so until there is a successful auction with sufficient demand for the shares. Failed auctions are not considered a default by the
Fund and do not alter the credit quality of the ARPS. However, failed auctions may increase the cost of the Funds leverage and decrease the income available for common stockholders. ARPS holders have continued to receive dividends at the
maximum rate set on the date of the failed auction, and the redemption price of $25,000 per share (plus accumulated but unpaid dividends, if any) is unaffected. Based on the rating assigned to the Funds ARPS, the maximum rate may
range from 150%-275% of the AA Financial Composite Commercial Paper Rate as of a given auction date. The maximum rate incurred during the year ended December 31, 2010, ranged from 0.120% to 0.452%. The maximum rate as of the
February 16, 2011 auction was 0.26%, which is 150% of the AA Financial Composite Commercial Paper Rate on that date.
See Footnote 4 for discussion of interest rate swaps used to partially hedge the ARPS dividend payment obligations.
4.
|
|
INTEREST RATE SWAPS
Interest rate swaps are agreements between the counterparties to exchange periodic interest payments based on interest rates. One cash flow
stream will typically be a floating rate payment based upon a specified interest rate while the other is typically a fixed interest rate.
|
The Fund entered into interest payment swap arrangements with Citibank, N.A. New York (Citibank) for the purpose of partially hedging
its dividend payment obligations with respect to the ARPS.
The Fund may be subject to various risks from the use of interest rate swaps including: (i) the risk that changes in the value of an interest
rate swap may not correlate perfectly with the underlying asset, rate or index; (ii) counterparty credit risk related to the failure, by the counterparty to the swap, to perform under the terms of the contract; (iii) liquidity risk related
to the lack of a liquid market for these contracts allowing the Fund to close out its position(s); and, (iv) documentation risk relating to disagreement over contract terms. Investing in swaps also results in a form of leverage and as such, the
Funds risk of loss associated with these instruments may exceed their value, as recorded in the Statement of Assets and Liabilities.
The table below discloses the volume of the Funds derivatives activities during the year ended December 31, 2010:
|
|
|
|
|
Interest Rate Swap Contracts:
|
|
|
|
Average Notional Balance Long
|
|
$
|
11,923,077
|
|
Ending Notional Balance Long
|
|
|
5,000,000
|
|
Pursuant to each of the swap arrangements, the Fund makes payments to Citibank on a monthly basis at fixed annual rates. In exchange for such payments Citibank makes payments to the Fund on a monthly basis at a
variable rate determined with reference to the one month London Interbank Offered Rate (LIBOR). The variable rates ranged from 0.228% to 0.354% during the year ended December 31, 2010.
30
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
The effective date, upfront premiums, notional contract amount, maturity, fixed and floating annual rates and unrealized
appreciation/depreciation of the swaps at December 31, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Date
|
|
Upfront
Premiums
(Paid)/
Received
|
|
|
Notional
Contract
Amount
|
|
|
Maturity
|
|
|
Payments
Made by the
Fund
|
|
|
Payments Received by
the Fund
|
|
|
Floating
Annual
Rate*
|
|
|
Unrealized
Appreciation/
(Depreciation)
|
|
11/30/2007
|
|
|
|
|
|
$
|
5 Million
|
|
|
|
06/01/11
|
|
|
|
4.000% monthly
|
|
|
|
1 month LIBOR monthly
|
|
|
|
0.261
|
%
|
|
$
|
(93,260
|
)
|
*
|
|
Represents rate in effect at December 31, 2010.
|
For the year ended December 31, 2010, the Funds receipts under the swap agreements were less than the amount paid and accrued to Citibank
by $556,181 and are shown in net realized gain (loss) in the accompanying Statement of Operations.
The estimated fair value of the interest rate swap agreement at December 31, 2010, amounted to approximately $93,260 in net unrealized depreciation and is included in the accompanying Statement of Assets and
Liabilities.
5.
|
|
PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the year ended December 31, 2010, aggregated $87,203,219 and
$88,638,461, respectively. During the year ended December 31, 2010, there were no purchases or sales of U.S. Government securities.
|
6.
|
|
TRANSACTIONS WITH INVESTMENT ADVISOR, ADMINISTRATOR, ACCOUNTING SERVICES AGENT AND CUSTODIAN
JPMIM, an indirect, wholly-owned subsidiary of JPMorgan Chase & Co., serves
as investment advisor to the Fund under an Investment Advisory Agreement (the Advisory Agreement), which was approved by shareholders at the Annual Meeting held on April 22, 2009 and which became effective on May 1, 2009. Under
the Advisory Agreement, JPMIM is entitled to receive an annual investment advisory fee (the Performance Fee), computed and paid monthly after the end of each calendar month, at a rate that increases or decreases from a fulcrum
fee of 0.90% of the Funds average net assets over a rolling 12-month period. The increase or decrease is calculated by comparing the total return investment performance of the Fund (net of all fees and expenses, including the advisory
fee) for the prior 12-month period (the Fund Return) to the percentage change in the Credit Suisse First Boston High Yield Index, Developed Countries Only (the Index) for the same period. The fee rate is 0.90% of the
Funds average net assets if the performance of the Fund Return equals the Index Return. The fee rate increases or decreases from the 0.90% fulcrum fee by 10% of the difference between the Fund Return and the Index Return, up to the
maximum fee rate of 1.40% or down to the minimum fee rate of 0.40%. The fee rate is calculated monthly based on the performance of the Fund compared to the Index during the rolling twelve month period. This rate is applied to the average net assets
(defined as the total assets of the Fund minus liabilities other than the principal amount of any outstanding senior securities representing indebtedness and the liquidation preference of the ARPS) during the entire 12-month period. The compensation
due to the Advisor after the end of each month shall be equal to 1/12th of the amount of the advisory fee calculated as stated above.
|
During the 12-month period immediately following May 1, 2009 (the Transition Period), the Fund paid JPMIM the minimum fee payable
under the Advisory Agreement and paid JPMIM any balance due based on the Funds investment performance during the Transition Period upon completion of such period.
The effective advisory fee rate calculated for the annual period ended
December 31, 2010, was an annual effective rate of 1.40%. Advisory fees calculated for the annual period ended December 31, 2010, resulted in a net expense to the Fund of $2,059,474.
The Fund has an administrative services agreement with JPMorgan Funds Management, Inc. (the Administrator or
JPMFM) (an affiliate of JPMIM) pursuant to which the Administrator provides administrative services to the Fund. Under the agreement, the Administrator 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, 2010, accrued administrative fees were $9,645.
Effective January 2008, JPMFM and JPMIM have agreed that JPMFM will not increase the 10 basis point fee payable under the Funds administrative
services contract through December 31, 2012.
31
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
J.P. Morgan Investor Services, Co. (JPMIS), an indirect, wholly-owned subsidiary of JPMorgan Chase &
Co., is the Funds sub-administrator. For its services as sub-administrator, JPMIS receives a portion of the fees payable to the Administrator.
The Fund has a Global Custody and Fund Accounting Agreement (the Agreement) with JPMCB. For providing custody services under the
Agreement, JPMCB is entitled to a fee from the Fund, accrued weekly and paid monthly. The amounts paid directly to JPMCB by the Fund for custody and accounting services are included in Custodian and accounting fees in the Statement of Operations.
The custodian fees may be reduced by credits earned by the Fund, based on uninvested cash balances held by the custodian. Such earnings credits are presented separately in the Statement of Operations.
Interest expense, if any, paid to the custodian related to cash
overdrafts is included in Interest expense to affiliates in the Statement of Operations.
For the year ended December 31, 2010, the Administrator voluntarily reimbursed fees in the amount of $33,722. The Administrator does not expect the Fund to repay such reimbursed fees in future years.
In addition, effective January 2008, JPMFM and JPMIM have agreed to cap
director compensation expenses and legal fees payable by the Fund through December 31, 2012, at the amount of such compensation and fees for 2007 (exclusive of extraordinary director compensation and legal fees attributable to the 2008 Board
consolidation whereby the former Board of Directors was elected). The agreed-upon cap does not apply to director compensation expenses for special meetings or to legal fees incurred with respect to matters not in the ordinary course of the
Funds business.
In addition to investing cash
collateral from securities lending in a J.P. Morgan money market fund, the Fund may invest in one or more money market funds advised by the Advisor or its affiliates. The Advisor and Administrator waive fees in an amount sufficient to offset the
advisory, administration and shareholder servicing fees each charged to the affiliated money market fund on the Funds investment in such affiliated money market fund. A portion of the waiver is voluntary.
The amount of waivers resulting from investments in the money market
funds for the year ended December 31, 2010, (excluding the waiver disclosed in Note 1.D. regarding cash collateral for securities lending invested in JPMorgan Prime Money Market Fund) was $5,919.
Certain officers of the Fund are affiliated with the Advisor, the
Administrator and the Distributor. Such officers, with the exception of the Chief Compliance Officer, receive no compensation from the Fund for serving in their respective roles.
The Board of Directors appointed a Chief Compliance Officer to the Fund
in accordance with federal securities regulations. The Fund, along with other affiliated funds, makes reimbursement payments, on a pro-rata basis, to the Administrator for a portion of the fees associated with the Office of the Chief Compliance
Officer. Such fees are included in Directors and Chief Compliance Officers fees in the Statement of Operations.
The Fund adopted a Directors Deferred Compensation Plan (the Plan) which allows the Independent Directors to defer the receipt of
all or a portion of compensation related to performance of their duties as a Director. The deferred fees are invested in various J.P. Morgan Funds until distribution in accordance with the Plan.
7.
|
|
COMPONENTS OF ACCUMULATED EARNINGS (LOSSES)
At December 31, 2010, the components of net assets applicable to common stockholders (excluding paid in capital) on a tax basis were
as follows:
|
|
|
|
|
|
|
|
December 31,
2010
|
|
Gross unrealized appreciation on investments
|
|
$
|
11,268,756
|
|
Gross unrealized depreciation on investments
|
|
|
(11,486,277
|
)
|
|
|
|
|
|
Net unrealized appreciation/(depreciation) on investments
|
|
$
|
(217,521
|
)
|
|
|
|
|
|
Cost of investments for Federal Tax purposes
|
|
$
|
153,533,565
|
|
The difference between the book-basis and tax basis unrealized appreciation/(depreciation) is attributable primarily to wash sale loss deferrals.
At December 31, 2010, the components of net assets (excluding paid
in capital) on a tax basis were as follows:
|
|
|
|
|
Current
Distributable
Ordinary
Income
|
|
Current
Distributable
Long Term
Capital Gain or
(Tax Basis
Capital
Loss Carryover)
|
|
Unrealized
Appreciation
(Depreciation)
|
$1,845,274
|
|
$(48,159,051)
|
|
$(295,239)
|
The cumulative timing differences primarily consist of swap interest accruals, post-October loss deferrals and defaulted bond interest.
32
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (continued)
Net capital losses incurred after October 31 and within the taxable year are deemed to arise on the first business
day of the Funds next taxable year. For the year ended December 31, 2010, the Fund deferred to January 1, 2011 post October capital losses of $1,454,305.
At December 31, 2010, the Fund had available a capital loss
carryforward of $48,159,051, of which $20,873,746 expires in 2011, $2,030,683 expires in 2012, $6,916,560 expires in 2013, $416,016 expires in 2015, $1,876,547 expires in 2016, $14,493,773 expires in 2017 and $1,551,726 expires in 2018, to offset
any future net capital gains.
During the year ended
December 31, 2010, $8,135,473 of the Funds capital loss carryovers expired.
8.
|
|
ILLIQUID SECURITIES
Certain securities held by the Fund may be subject to legal or contractual restrictions on resale or are illiquid. An illiquid security is
a security which cannot be disposed of promptly (within seven days) and in the usual course of business at approximately its fair value and includes, but is not limited to, repurchase agreements maturing in excess of seven days, time deposits with a
withdrawal penalty, non-negotiable instruments and instruments for which no market exists. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at the current valuation may be difficult. At
December 31, 2010, the Fund held illiquid securities representing 10.0% of net assets applicable to common stockholders.
|
9.
|
|
RISKS, CONCENTRATIONS AND INDEMNIFICATIONS
The Fund invests at least 80% of its assets in high yield debt securities. Investments in lower-rated securities or unrated securities of
comparable quality tend to be more sensitive to economic conditions than higher rated securities. These securities involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other
creditors claims.
|
The ability of the
issuers of debt and asset-backed securities, including sub-prime securities, along with counterparties to swap agreements, to meet their obligations may be affected by the economic and political developments in a specific industry or region. The
value of asset-backed securities, including sub-prime securities, can be significantly affected by changes in interest rates or rapid principal payments including prepayments.
The Funds officers and directors are indemnified against certain
liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Funds maximum
exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Fund expects the risk of loss to be remote.
The Fund is party to a derivative contract governed by International
Swaps and Derivatives Association Master Agreements (ISDA agreements) with a counterparty. The Funds ISDA agreement, which is separately negotiated with the dealer counterparty, may contain provisions allowing, absent other
considerations, the counterparty to exercise rights, to the extent not otherwise waived, against the Fund in the event the Funds net assets decline over time by a pre-determined percentage or fall below a pre-determined floor. Such rights
often include the ability to terminate (i.e., close out) open contracts at prices which may favor the counterparty, which could have an adverse impact on the Fund.
Citigroup and Morgan Stanley are beneficial owners of a significant
portion of the Funds outstanding ARPS and based on such ownership, could each be deemed to be an affiliate of the Fund. Both Citigroup and Morgan Stanley have informed the Fund that they intend to comply with a No Action Letter that enables
them not to be deemed affiliates of the Fund. These parties could have an impact on matters that affect the Funds shareholders due to the voting rights associated with the ARPS, as detailed in the Preferred Stock note, included in
this report.
As of December 31, 2010, the Fund is a
party to interest rate swaps, and certain securities loans and loan participations and assignments that were transacted with either Citigroup or Morgan Stanley in the normal course of business.
The Fund is subject to interest rate and credit risk. The value of debt
securities may decline as interest rates increase. The Fund could lose money if the issuer of a fixed income security is unable to pay interest or repay principal when it is due. The ability of the issuers of debt to meet their obligations may be
affected by the economic and political developments in a specific industry or region.
The Fund is also subject to counterparty credit risk, which is the risk that a counterparty fails to perform on agreements with the Fund such as swap contracts.
33
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Notes to Financial Statements (concluded)
The Fund is subject to risks associated with asset-backed and mortgage-related securities such as collateralized mortgage
obligations backed by sub-prime mortgage loans. The value, liquidity and related income of these securities are sensitive to changes in economic conditions, including real estate value, prepayments, delinquencies and/or defaults, and may be
adversely affected by shifts in the markets perception of the issuers and changes in interest rates.
The Fund is subject to the risk that should the Fund decide to sell an illiquid investment when a ready buyer is not available at a price the Fund
deems representative of its value, the value of the Funds net assets could be adversely affected.
34
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Report of Independent Registered Public
Accounting Firm
To the Board of Directors and Shareholders of Pacholder High Yield Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including the
schedule of portfolio investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Pacholder High Yield Fund, Inc.
(hereafter referred to as the Fund) at December 31, 2010, the results of its operations and cash flows 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 accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as
financial statements) are the responsibility of the Funds management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
March 1, 2011
35
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Tax Letter (Unaudited)
Certain tax information for the Fund is required to be provided to shareholders based upon the Funds income and distributions for the taxable year ended December 31, 2010. The information and distributions
reported is this letter may differ from the information and taxable distributions reported to the shareholders for the calendar year ending December 31, 2010. The information necessary to complete your income tax returns for the calendar year ending
December 31, 2010 will be received under separate cover.
Dividends Received Deductions (DRD)
5.21% of ordinary income distributions qualified for the 70% dividends received deduction for corporate shareholders for the Funds fiscal year ended December
31, 2010.
36
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Directors (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Name (Year of Birth);
Positions With
the
Fund
(1)
|
|
Length of Time Served
|
|
Principal Occupations
During Past
5 Years
|
|
Number of
Portfolios in Fund
Complex Overseen
by
Director
(2)
|
|
|
Other Directorships Held
Outside Fund
Complex
|
|
Independent Directors
|
|
|
|
|
|
|
|
|
|
|
|
William J. Armstrong (1941); Director of Fund since 2009; Trustee of heritage J.P. Morgan Funds since 1987.
|
|
Elected at 2009 Shareholder Meeting
|
|
Retired; CFO and Consultant, EduNeering, Inc. (internet business education supplier) (2000-2001); Vice President and Treasurer, Ingersoll-Rand Company (manufacturer of industrial equipment)
(1972-2000).
|
|
|
145
|
|
|
None.
|
|
|
|
|
|
John F. Finn (1947); Director of Fund since 2009; Director of heritage One Group Mutual Funds since 1998.
|
|
Elected at 2009 Shareholder Meeting
|
|
Chairman (1985-present), President and Chief Executive Officer, Gardner, Inc. (supply chain management company serving industrial and consumer markets) (1974-present).
|
|
|
145
|
|
|
Director, Cardinal Health, Inc. (CAH) (1994-present); Director, Greif, Inc. (GEF) (industrial package products and services) (2007-present).
|
|
|
|
|
|
Dr. Matthew Goldstein (1941); Director of Fund since 2009; Director of heritage J.P. Morgan Funds since 2003.
|
|
Elected at 2009 Shareholder Meeting
|
|
Chancellor, City University of New York (1999-present); President, Adelphi University (New York) (1998-1999).
|
|
|
145
|
|
|
Director, New Plan Excel (NXL) (1999-2005); Director, National Financial Partners (NFP) (2003-2005); Director, Bronx-Lebanon Hospital Center; Director, United Way of New York City
(2002-present).
|
|
|
|
|
|
Robert J. Higgins (1945); Director of Fund since 2009; Director of heritage J.P. Morgan Funds since 2002.
|
|
Elected at 2009 Shareholder Meeting
|
|
Retired; Director of Administration of the State of Rhode Island (2003-2004); President Consumer Banking and Investment Services, Fleet Boston Financial (1971-2001).
|
|
|
145
|
|
|
None.
|
|
|
|
|
|
Peter C. Marshall (1942); Director of Fund since 2009; Director of heritage One Group Mutual Funds since 1985.
|
|
Elected at 2009 Shareholder Meeting
|
|
Self-employed business consultant (2002-Present).
|
|
|
145
|
|
|
Director, Center for Communication, Hearing and Deafness (1990-present).
|
|
|
|
|
|
Marilyn McCoy* (1948); Director of Fund since 2009; Director of heritage One Group Mutual Funds since 1999.
|
|
Elected at 2009 Shareholder Meeting
|
|
Vice President of Administration and Planning, Northwestern University (1985-present).
|
|
|
145
|
|
|
Trustee, Carleton College (2003-present).
|
37
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Directors (Unaudited) (continued)
|
|
|
|
|
|
|
|
|
|
|
Name (Year of Birth);
Positions With
the
Fund
(1)
|
|
Length of Time Served
|
|
Principal Occupations
During Past
5 Years
|
|
Number of
Portfolios in Fund
Complex Overseen
by
Director
(2)
|
|
|
Other Directorships Held
Outside Fund
Complex
|
|
Independent Directors (continued)
|
|
|
|
|
|
|
|
William G. Morton, Jr. (1937); Director of Fund since 2009; Director of heritage J.P. Morgan Funds since 2003.
|
|
Elected at 2009 Shareholder Meeting
|
|
Retired; Chairman Emeritus (2001-2002), and Chairman and Chief Executive Officer, Boston Stock Exchange (1985-2001).
|
|
|
145
|
|
|
Director, Radio Shack Corp. (1987-2008); Trustee, Stratton Mountain School (2001-present).
|
|
|
|
|
|
Robert A. Oden, Jr. (1946); Director of Fund since 2009; Director of heritage One Group Mutual Funds since 1997.
|
|
Elected at 2009 Shareholder Meeting
|
|
Retired; President, Carleton College (2002-2010); President, Kenyon College (1995-2002).
|
|
|
145
|
|
|
Trustee, American University in Cairo (1999-present); Trustee, Carleton College (2002-2010).
|
|
|
|
|
|
Fergus Reid, III (1932); Director of Fund (Chairman) since 2009; Director (Chairman) of heritage J.P. Morgan Funds since 1987.
|
|
Elected at 2009 Shareholder Meeting
|
|
Chairman, Joe Pietryka, Inc. (formerly Lumelite Corporation) (plastics manufacturing) (2003-present); Chairman and Chief Executive Officer, Lumelite Corporation (1985-2002).
|
|
|
145
|
|
|
Trustee, Morgan Stanley Funds (105 portfolios) (1992-present).
|
|
|
|
|
|
Frederick W. Ruebeck (1939); Director of Fund since 2009; Director of heritage One Group Mutual Funds since 1994.
|
|
Elected at 2009 Shareholder Meeting
|
|
Consultant (2000-present); Advisor, JP Greene & Associates, LLC (broker-dealer) (2000-2009); Chief Investment Officer, Wabash College (2004-present); Director of Investments, Eli Lilly
and Company (pharmaceuticals) (1988-1999).
|
|
|
145
|
|
|
Trustee, Wabash College (1988-present); Chairman, Indianapolis Symphony Orchestra Foundation (1994-present).
|
|
|
|
|
|
James J. Schonbachler (1943); Director of Fund since 2009; Director of heritage J.P. Morgan Funds since 2001.
|
|
Elected at 2009 Shareholder Meeting
|
|
Retired; Managing Director of Bankers Trust Company (financial services) (1968-1998).
|
|
|
145
|
|
|
None.
|
38
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Directors (Unaudited) (continued)
|
|
|
|
|
|
|
|
|
|
|
Name (Year of Birth);
Positions With
the
Fund
(1)
|
|
Length of Time Served
|
|
Principal Occupations
During Past
5 Years
|
|
Number of
Portfolios in Fund
Complex Overseen
by
Director
(2)
|
|
|
Other Directorships Held
Outside Fund
Complex
|
|
Interested Directors
|
|
|
|
|
|
|
|
Frankie D. Hughes** (1952), Director of Fund since 2009; Trust of J.P. Morgan Funds since 2008.
|
|
Elected at 2009 Shareholder Meeting
|
|
Principal and Chief Investment Officer, Hughes Capital Management, Inc. (fixed income asset management) (1993-present).
|
|
|
145
|
|
|
Trustee, The Victory Portfolios (2000-2008).
|
|
|
|
|
|
Leonard M. Spalding, Jr.*** (1935); Director of Fund since 2009; Director of heritage J.P. Morgan Funds since 1998.
|
|
Elected at 2009 Shareholder Meeting
|
|
Retired; Chief Executive Officer, Chase Mutual Funds (investment company) (1989-1998); President and Chief Executive Officer, Vista Capital Management (investment management) (1990-1998);
Chief Investment Executive, Chase Manhattan Private Bank (investment management) (1990-1998).
|
|
|
145
|
|
|
Director, Glenview Trust Company, LLC (2001-present); Trustee, St. Catharine College (1998-present); Trustee, Bellarmine University (2000-present); Director, Springfield-Washington County
Economic Development Authority (1997-present); Trustee, Catholic Education Foundation (2005-present).
|
(1)
|
|
Each Director serves for an indefinite term, subject to the Funds current retirement policy, which is age 75 for all Directors, except that the Board has
determined Messrs. Reid and Spalding should continue to serve until December 31, 2012.
|
(2)
|
|
A Fund Complex means two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment and
investor services or have a common investment advisor or have an investment advisor that is an affiliated person of the investment advisor of any of the other registered investment companies. The J.P. Morgan Funds Complex for which the Board of
Directors serves currently includes ten registered investment companies (145 funds).
|
*
|
|
Ms. McCoy has served as Vice President of Administration and Planning for Northwestern University since 1985. William M. Daley was the Head of Corporate Responsibility for
JPMorgan Chase & Co. prior to January 2011 and served as a member of the Board of Trustees of Northwestern University from 2005 through 2010. JPMIM, the Funds investment adviser, is a wholly-owned subsidiary of JPMorgan
Chase & Co. Three other members of the Board of Trustees of Northwestern University are executive officers of registered investment advisers (not affiliated with JPMorgan) that are under common control with subadvisers to certain J.P.
Morgan Funds.
|
**
|
|
Ms. Hughes is treated as an interested person based on the portfolio holdings of clients of Hughes Capital Management, Inc.
|
***
|
|
Mr. Spalding is treated as an interested person due to his ownership of JPMorgan Chase stock.
|
The contact address for each of the Directors is 245 Park Avenue, New York, NY 10167.
39
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Officers (Unaudited)
|
|
|
Name (Year of Birth),
Positions Held with
the Fund (Since)
|
|
Principal Occupations During Past 5 Years
|
|
Patricia A. Maleski (1960),
President and
Principal Executive Officer
(Position held since 2010)
|
|
Vice President of the Fund from 2007 to 2010; Chief Administrative Officer and Treasurer of the Fund from 2008 to 2010; Managing Director, J.P. Morgan Investment Management Inc. and Chief
Administrative Officer, J.P. Morgan Funds and Institutional Pooled Vehicles since 2010; previously, Head of Funds Administration and Board Liaison, J.P. Morgan Funds prior to 2010. Ms. Maleski has been with JPMorgan Chase & Co.
since 2001.
|
|
|
Joy C. Dowd (1972),
Treasurer and Principal
Financial Officer
(Position held since 2010)
|
|
Assistant Treasurer of the Fund from 2009 to 2010; Vice President, JPMorgan Funds Management, Inc. since December 2008; prior to joining JPMorgan Chase, Ms. Dowd worked in MetLifes
investments audit group from 2005 through 2008, and Vice President of Credit Suisse, in the audit area from 1999 through 2005.
|
|
|
Frank J. Nasta (1964),
Secretary
(Position held since 2009)
|
|
Managing Director and Associate General Counsel, JPMorgan Chase since 2008; Previously, Director, Managing Director, General Counsel and Corporate Secretary, J. & W. Seligman & Co.
Incorporated; Secretary of each of the investment companies of the Seligman Group of Funds and Seligman Data Corp.; Director and Corporate Secretary, Seligman Advisors, Inc. and Seligman Services, Inc.
|
|
|
Stephen M. Ungerman (1953),
Chief Compliance
Officer
(Position held since 2008)
|
|
Managing Director, JPMorgan Chase & Co.; Mr. Ungerman was head of Fund Administration Pooled Vehicles from 2000 to 2004. Mr. Ungerman has been with JPMorgan Chase & Co. since
2000.
|
The
|
|
contact address for each of the officers, unless otherwise noted, is 245 Park Avenue, New York, NY 10167.
|
40
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Board Approval of Investment Advisory Agreement
The Board of Directors meets regularly throughout the year and considers factors that are relevant to its annual consideration of investment advisory agreements at each meeting. The Board of Directors has
established various standing committees, composed of Directors with diverse backgrounds, to which the Board of Directors has assigned specific subject matter responsibilities to further enhance the effectiveness of the Boards oversight and
decision making. The Board of Directors and its investment subcommittees (money market and alternative products, equity, and fixed income) also meet as needed for the specific purpose of considering advisory contract annual renewals. The Board of
Directors held meetings in person in June and August 2010, at which the Directors considered the continuation of the investment advisory agreement for the Fund (the Advisory Agreement). At the June meeting, the Boards investment
subcommittees met to review and consider performance, expense and related information for the Fund and other J.P. Morgan Funds. Each investment subcommittee reported to the full Board, which then considered the investment subcommittees
preliminary findings. At the August meeting, the Directors continued their review and consideration. The Directors, including a majority of the Directors who are not interested persons (as defined in the 1940 Act) of any party to the
Advisory Agreement or any of their affiliates, approved the continuation of the Advisory Agreement on August 18, 2010.
The Directors, as part of their review of the investment advisory arrangements for the J.P. Morgan Funds, considered and reviewed performance and other information
received from the Advisor, on a regular basis over the course of the year, as well as information specifically prepared for their annual review. This information included the Funds performance compared to the performance of the Funds
peers and benchmarks and analyses by the Advisor of the Funds performance. The Advisor also periodically provides comparative information regarding the Funds expense ratios and those of the peer groups. In addition, in preparation for
the June and August meetings, the Directors requested, received and evaluated extensive materials from the Advisor, including, with respect to certain J.P. Morgan Funds, performance and expense information compiled by Lipper Inc.
(Lipper), an independent provider of investment company data. Prior to voting, the Directors reviewed the proposed approval of the Advisory Agreement with representatives of the Advisor and with counsels to the Fund and independent
Directors and received a memorandum from independent counsel to the Directors discussing the legal standards for their consideration of the proposed approval. The Directors also discussed the proposed approvals in executive sessions with counsels to
the Fund and independent Directors at which no representatives of the Advisor were present. Set forth below is a summary of the material factors evaluated by the Directors in determining whether to approve the Advisory Agreement.
In their deliberations, there was a comprehensive consideration of the information
received by the Directors. Each Director attributed different weights to the various factors and no factor alone was considered determinative. From year to year, the Directors consider and place emphasis on relevant information in light of changing
circumstances in market and economic conditions. The Directors determined that the compensation to be received by the Advisor from the Fund under the Advisory Agreement was fair and reasonable and that the continuance of the investment advisory
contract was in the best interests of the Fund and its shareholders.
The
factors summarized below were considered and discussed by the Directors in reaching their conclusions:
Nature, Extent and Quality of Services Provided by the Advisor
The Directors received and considered information regarding the nature, extent and quality of the services provided to the Fund under the Advisory Agreement. The
Directors took into account information furnished throughout the year at Board meetings, as well as the materials furnished specifically in connection with this annual review process. The Directors considered the background and experience of the
Advisors senior management and the expertise of, and the amount of attention given to the Fund by, investment personnel of the Advisor. In addition, the Directors reviewed the qualifications, backgrounds and responsibilities of the portfolio
management team primarily responsible for the day-to-day management of the Fund and the infrastructure supporting the team. The Directors also reviewed information relating to enhancements to the Advisors risk governance model in light of
recent market turbulence and reports showing that the Advisor has consistently complied with the investment policies and restrictions of the Fund. The quality of the administrative services provided by JPMorgan Funds Management, Inc.
(JPMFM), an affiliate of the Advisor, was also considered.
The
Board of Directors also considered its knowledge of the nature and quality of the services provided by the Advisor to the Fund gained from their experience as Directors of the other J.P. Morgan Funds. In addition, they considered the overall
reputation and capabilities of the Advisor and its affiliates, the commitment of the Advisor to provide high quality service to the Fund, their overall confidence in the Advisors integrity and the Advisors responsiveness to concerns
raised by them, including the Advisors willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the Fund.
Based on these considerations and other factors, the Directors concluded that they were
satisfied with the nature, extent and quality of the investment advisory services provided to the Fund by the Advisor.
41
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Board Approval of Investment Advisory Agreement
(continued)
Costs of Services Provided and Profitability to the Advisor and its
Affiliates
The Directors received and considered information regarding
the profitability to the Advisor and its affiliates in providing services to the Fund. The Directors reviewed and discussed this data. The Directors recognized that this data is not audited and represents the Advisors determination of its and
its affiliates revenues from the contractual services provided to the Fund, less expenses of providing such services. Expenses include direct and indirect costs and are calculated using an allocation methodology developed by the Advisor. The
Directors also recognized that it is difficult to make comparisons of profitability from fund investment advisory contracts because comparative information is not generally publicly available and is affected by numerous factors, including the
structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the fact that publicly-traded fund managers operating profits and net income are net of distribution and
marketing expenses. Based on their review, the Directors concluded that the profitability to the Advisor of the Advisory Agreement was not unreasonable in light of the services and benefits provided to the Fund.
Fall-Out Benefits
The Directors reviewed information regarding potential fallout or
ancillary benefits received by the Advisor and its affiliates as a result of their relationship with the Fund. The Directors also considered that JPMFM, an affiliate of the Advisor, earns fees from the Fund for providing administrative services.
These fees were shown separately in the profitability analysis presented to the Directors. The Directors also considered the fees paid to JPMorgan Chase Bank, NA (JPMCB) for custody and fund accounting, securities lending, and other
related services.
Economies of Scale
The Directors also considered possible economies of scale. The Directors noted
managements agreement to not increase administration fees and certain expenses for the Fund prior to December 31, 2012. The Directors also considered managements investment in the business and that certain fees are negotiated on a
complex-wide basis, permitting the Fund to share in the scale of the organization.
In light of all of the foregoing and under the circumstances, the Board concluded that there was an acceptable sharing of any economies of scale at the present time.
Independent Written Evaluation of the Funds Chief Compliance
Officer
The Directors noted that, upon their direction, the Chief
Compliance Officer for the Fund had prepared an independent written evaluation in order to assist the Directors in determining the reasonableness of the proposed management fees. The Directors considered the written evaluation in determining whether
to continue the Advisory Agreement.
Fees Relative to
Advisors Other Clients
The Directors received and considered
information about the nature and extent of investment advisory services and fee rates offered to other clients of the Advisor for investment management styles substantially similar to that of the Fund. The Directors also considered the complexity of
investment management for the Fund relative to the Advisors other clients and the differences in the nature and extent of the services provided to the different clients. The Directors concluded that the fee rates charged to the Fund in
comparison to those charged to the Advisors other clients were reasonable.
Investment Performance
The Directors received and considered absolute and/or relative performance for the Fund in a report prepared by Lipper. The Directors considered the total return performance information, which included the ranking
of the Fund within a performance universe made up of funds with the same Lipper investment classification and objective (the Universe Group) by total return for applicable one-, three- and five-year periods. The Directors reviewed a
description of Lippers methodology for selecting closed end funds in the Funds peer group and Universe Group. The Lipper performance data noted by the Directors as part of their review and the determinations made by the Directors with
respect to the Funds performance are summarized below:
The Directors
noted that the Funds performance was in the first quintile for the one-, three-, five- and ten year periods ended December 31, 2009. The Directors discussed the performance and investment strategy of the Fund with the Advisor and, based
upon this discussion and other factors, concluded that the performance was reasonable.
Advisory Fees and Total Expense
With respect to advisory fee and total expenses, the Board considered that actual advisory fees are in the first quintile and total expenses are in the third quintile. The Board also found that the Performance Fee
was effective to align the Advisers interests with the interests of Fund shareholders, and to provide a level of compensation tied to investment performance.
42
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Board Approval of Investment Advisory Agreement
(concluded)
The Board noted that the investment advisory fee schedule for the Fund does not contain
breakpoints. The Board found that based on the size of the Fund, breakpoints were not yet warranted for the Fund. The Board considered that, although the Adviser manages other high yield accounts, the Adviser does not manage other funds or accounts
in the same style as the Fund. The Board also noted that the Funds fee rate is higher than the Advisers published fee schedule for high yield assets by virtue of the performance based fee; but, at the lowest fee rate, the Funds fee
is approximately the same as the published fee schedule. The Directors also considered that management had agreed that the administration fee and certain expenses will not increase prior to December 31, 2012 and that management continues to
invest significantly in the business.
Based on the foregoing, the Directors
concluded that after giving effect to expense caps and within the context of their deliberations about the Funds advisory arrangement, the proposed advisory fee of the Fund was reasonable.
43
P
ACHOLDER
H
IGH
Y
IELD
F
UND,
I
NC.
Supplemental Information (Unaudited)
Portfolio Holdings Information
No sooner than 10 days after the end of each month, the Funds uncertified complete schedule of its portfolio holdings as well as certain other fund facts and statistical information will be available on our
website (www.phf-hy.com). In addition, the Fund files its certified, complete schedule of its portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The
Funds Form N-Qs are available, without charge, on the SECs website at www.sec.gov. The Funds Form N-Qs may be reviewed and copied at the SECs Public Reference Room in Washington, DC. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
No sooner than 10
calendar days after the end of each month, the Funds top 10 holdings as of the last day of each month as well as certain other fund facts and statistical information will also be available on the Funds website.
Proxy Voting
A description of the policies and procedures used by the Fund to vote proxies relating
to portfolio securities, as well as information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available (i) without charge, on the Funds website at
www.phf-hy.com and (ii) on the SECs website at www.sec.gov.
Dividend Reinvestment Plan
The Funds Dividend Reinvestment Plan (the Plan) offers Common Stockholders (Shareholders) a convenient way to invest their income dividends and capital gain distributions in additional
shares of the Funds common stock.
Shareholders who participate in the
Plan will have all income dividends and capital gain distributions automatically reinvested by Computershare Investor Services LLC (the Plan Agent) pursuant to the Plan. When a dividend is declared, Shareholders who do not participate in
the Plan will receive all distributions in cash, paid by check, mailed directly to the Shareholder of record (or if the shares are held in street name or nominee name, then to the nominee) by the Plan Agent, which serves as agent for the
Shareholders in administering the Plan. Shareholders who participate in the Plan will receive the equivalent in shares of the Fund valued at the lower of market price or net asset valued as described below. (i) If the shares are trading at net
asset value or at a premium above net asset value on the payment date, the Fund will issue new shares at the greater of net asset value or 95% of the current market price. (ii) If the shares are trading at a discount from net asset value on
payment date, the Plan Agent will receive the dividend or distribution in cash and apply it to the purchase of the Funds shares in the open market, on the NYSE Amex or elsewhere, for the participants accounts. If before the Plan Agent
has completed its purchases, the market price exceeds the net asset value per share, the average purchase price per share paid by the Plan Agent may exceed the exceed the net asset value of the Funds shares, resulting in the acquisition of
fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. If the purchases have not been made prior to 30 days after the payment date, the Plan Agent may receive the uninvested portion in newly issued shares.
The Plan Agents fees for handling the reinvestment of Dividends will
be paid by the Fund. There will be no brokerage charge to Shareholders for shares issued directly by the Fund as a result of dividends or distributions payable either in stock or cash. Each Shareholder who participates in the Plan, however will pay
pro rate share of brokerage commissions incurred with respect to the Plan Agents open-market-purchases in connection with the reinvestment of dividends or distributions.
The automatic reinvestment of income dividends and capital gain distributions will not
relieve a Shareholder of any federal, state or local income tax that may be payable on such dividends. Therefore, income and capital gains may still be realized even though Shareholders do not receive cash.
A Shareholder may terminate his/her account under the Plan by notifying the Plan Agent
in writing. Upon termination, a shareholder can either receive a certificate for the number of full shares held in the Plan and a check for fractional shares or have shares sold by the Plan Agent and the proceeds sent to the shareholder, less a
transaction fee of $15 plus $0.07 per share.
The Fund reserves the right to
amend or terminate the Plan. All correspondence concerning the Plan should be directed to the Plan Agent at Computershare Trust Company, N.A. Dividend Reinvestment Services, P.O. Box A3309, Chicago, IL 60690-3309, by calling 888-294-8217 or
www.computershare.com.
44
Rev. January 2011
|
|
|
FACTS
|
|
WHAT DOES PACHOLDER HIGH YIELD FUND, INC. DO WITH YOUR PERSONAL
INFORMATION?
|
|
|
|
Why?
|
|
Financial companies choose how they share your personal information.
Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we
do.
|
|
|
|
What?
|
|
The types of personal
information we collect and share depend on the product or service you have with us. This information can include:
n
Social Security number and account balances
n
transaction history and account transactions
n
checking account information and wire transfer instructions
When you are
no longer
our customer, we continue to share your information as described in this notice.
|
|
|
|
How?
|
|
All financial companies need to share customers personal
information to run their everyday business. In the section below, we list the reasons financial companies can share their customers personal information; the reasons Pacholder High Yield Fund, Inc. chooses to share; and whether you can limit
this sharing.
|
|
|
|
|
|
Reasons we can share your personal information
|
|
Does Pacholder
High Yield Fund,
Inc. share?
|
|
Can you limit this
sharing?
|
For our everyday business purposes
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit
bureaus
|
|
Yes
|
|
No
|
For marketing purposes
to offer our products and services to you
|
|
Yes
|
|
No
|
For joint marketing with other financial companies
|
|
No
|
|
We dont share
|
For our affiliates everyday
business purposes
information about your transactions and experiences
|
|
No
|
|
We dont share
|
For our affiliates everyday
business purposes
information about your creditworthiness
|
|
No
|
|
We dont share
|
For nonaffiliates to market to you
|
|
No
|
|
We dont share
|
|
|
|
|
|
Questions?
|
|
Call 1-877-217-9502 or go to www.pacholder.com
|
|
|
|
Who we are
|
Who is providing this notice?
|
|
Pacholder High Yield Fund, Inc.
|
|
|
|
What we do
|
How does Pacholder High Yield Fund, Inc. protect my
personal information?
|
|
To protect your personal information from unauthorized access and use, we use security measures
that comply with federal law. These measures include computer safeguards and secured files and buildings. We authorize our employees to access your information only when they need it to do their work and we require companies that work for us to
protect your information.
|
How does Pacholder High Yield Fund, Inc. collect my
personal information?
|
|
We collect your personal information, for example,
when you:
n
open an account or provide account information
n
give us your account information or pay us by check
n
make a wire transfer
We also collect your personal information from others, such as credit bureaus, affiliates and other companies.
|
Why cant I limit all sharing?
|
|
Federal law gives you the right to limit
only
n
sharing for affiliates everyday business purposes information about your
creditworthiness
n
affiliates from using your information to market to you
n
sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit
sharing.
|
|
|
|
Definitions
|
Affiliates
|
|
Companies related by common ownership or control.
They can be financial and nonfinancial companies.
n
Pacholder High Yield Fund,
Inc. does not share with our affiliates.
|
Nonaffiliates
|
|
Companies not related by common ownership or
control. They can be financial and nonfinancial companies.
n
Pacholder High Yield Fund,
Inc. does not share with nonaffiliates so they can market to you.
|
Joint Marketing
|
|
A formal agreement between nonaffiliated financial
companies that together market financial products or services to you.
n
Pacholder High Yield Fund,
Inc. doesnt jointly market.
|
ITEM 2. CODE OF ETHICS.
Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrants principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain
why it has not done so.
The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a
provision of its code of ethics that applies to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant
to Item 12(a)(1), unless the registrant has elected to satisfy paragraph (f) of this Item by positing its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any
person without charge, upon request, pursuant to paragraph (f)(3) of this Item.
If the registrant has, during the period covered by the
report, granted a waiver, including an implicit waiver, from a provision of the code of ethics that applies to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these individuals are employed by the registrant or third party, that relates to one or more items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of
the waiver, the name of the person to whom the waiver was granted, and the date of the waiver.
The Registrant has adopted a code of ethics
that applies to the Registrants principal executive officer and principal financial officer. There were no amendments to the code of ethics or waivers granted with respect to the code of ethics in the period covered by the report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrants board of directors has determined that the registrant either:
(i) Has at least one audit committee financial expert serving on its audit committee; or
(ii) Does not have an audit committee financial expert serving on its audit committee.
The
Registrants Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its audit committee. The Securities and Exchange Commission has stated that the designation or identification of a
person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liabilities that are greater than the duties, obligations and liabilities imposed on such person as a
member of the Audit Committee and the Board of Trustees in the absence of such designation or identification.
(2) If the
registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is independent. In order to be considered independent
for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or
(ii) Be an interested person of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C.
80a-2(a)(19)).
The audit committee financial expert is William Armstrong. He is not an interested person of the Registrant and
is also independent as defined by the U.S. Securities and Exchange Commission for purposes of audit committee financial expert determinations.
(3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the
principal accountant for the audit of the registrants annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
AUDIT FEES
2010 $70,000
2009 $42,500
(b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by
the principal accountant that are reasonably related to the performance of the audit of the registrants financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
AUDIT-RELATED FEES
2010 $20,900
2009 $13,900
The audit-related fees consist of aggregate fees billed for
assurance and related services by the independent registered public accounting firm to the Registrant that were reasonably related to the performance of the annual audit of the Registrants financial statements.
(c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
TAX FEES
2010 $9,400
2009 $4,500
The tax fees consist of fees billed in connection with preparing the federal regulated investment company income tax returns for the Registrant for
the tax years ended December 31, 2010 and 2009, respectively.
For the last fiscal year, no tax fees were
required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(d) Disclose, under the caption All Other Fees,
the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the
nature of the services comprising the fees disclosed under this category.
ALL OTHER FEES
2010 Not applicable
2009 Not applicable
(e) (1) Disclose the audit committees pre-approval
policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to the Registrants Audit Committee
Charter and written policies and procedures for the pre-approval of audit and non-audit services (the Pre-approval Policy), the Audit Committee pre-approves all audit and non-audit services performed by the Registrants independent
public registered accounting firm for the Registrant. In addition, the Audit Committee pre-approves the auditors engagement for non-audit services with the Registrants investment adviser (not including a sub-adviser whose role is
primarily portfolio management and is sub-contracted or overseen by another investment adviser) and any Service Affiliate in accordance with paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, if the
engagement relates directly to the operations and financial reporting of the Registrant. Proposed services may be pre-approved either 1) without consideration of specific case-by-case services or
2) require the specific pre-approval of the Audit Committee. Therefore, initially the Pre-approval Policy listed a number of audit and non-audit services that have been approved by the Audit Committee, or which were not subject to pre-approval under
the transition provisions of Sarbanes-Oxley Act of 2002 (the Pre-approval List). The Audit Committee annually reviews and pre-approves the services included on the Pre-approval List that may be provided by the independent public
registered accounting firm without obtaining additional specific pre-approval of individual services from the Audit Committee. The Audit Committee adds to, or subtracts from, the list of general pre-approved services from time to time, based on
subsequent determinations. All other audit and non-audit services not on the Pre-approval List must be specifically pre-approved by the Audit Committee.
One or more members of the Audit Committee may be appointed as the Committees delegate for the purposes of considering whether to approve such services. Any pre-approvals granted by the delegate
will be reported, for informational purposes only, to the Audit Committee at its next scheduled meeting. The Audit Committees responsibilities to pre-approve services performed by the independent public registered accounting firm are not
delegated to management.
(2) Disclose the percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
2010 0.0%
2009 0.0%
(f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountants engagement to audit the registrants
financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountants full-time, permanent employees.
None.
(g) Disclose the aggregate non-audit fees billed by the registrants
accountant for services rendered to the registrant, and rendered to the registrants investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant.
The aggregate non-audit fees billed by the independent registered public accounting firm for services rendered to the Registrant, and rendered to
Service Affiliates, for the last two calendar year ends were:
2010 - $31.8 million
2009 - $25.8 million
(h) Disclose whether the registrants audit committee of the board of directors has considered whether the provision of non-audit services that were
rendered to the registrants investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under
common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountants
independence.
The Registrants Audit Committee has considered whether the provision of the non-audit services that were rendered to
Service Affiliates that were not pre-approved (not requiring pre-approval) is compatible with maintaining the independent public registered accounting firms independence. All services provided by the independent public registered accounting
firm to the Registrant or to Service Affiliates that were required to be pre-approved were pre-approved as required.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the
registrants audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state.
The Registrant has a separately-designated standing Audit Committee established by the Board of Directors of the Registrant in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. It is composed of the following Directors, each of whom is not an interested person as defined in the Investment Company Act of 1940, as amended:
William J. Armstrong
John F. Finn
Robert J. Higgins
Frederick W. Ruebeck
James J. Schonbachler
(b) If
applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
File Schedule I Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in
Section 210.12-12 of Regulation S-X, unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form.
Included in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a
vote presents a conflict between the interests of its shareholders, on the one hand, and those of the companys investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a) (3) of the Investment
Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the companys investment adviser, or any other
third party, that the company uses, or that are used on the companys behalf, to determine how to vote proxies relating to portfolio securities.
The Registrant has adopted proxy voting policies and procedures, as defined in Item 7 of Form N-CSR. A copy of the policies and procedures is filed as Exhibit 12(a)(3) to this Form. The Board of
Directors has delegated to the Funds investment adviser (the Adviser), proxy voting authority with respect to the Funds portfolio securities. To ensure that the proxies of portfolio companies are voted in the best interests
of the Fund, the Funds Board of Directors has adopted the Advisers detailed proxy voting procedures (the Procedures) that incorporate guidelines (Guidelines) for voting proxies on specific types of issues.
The Adviser and its affiliated advisers are part of a global asset management organization with the capability to invest in securities
of issuers located around the globe. Because the regulatory framework and the business cultures and practices vary from region to region, the Guidelines are customized for each region to take into account such variations. Separate Guidelines cover
the regions of (1) North America, (2) Europe, Middle East, Africa, Central America and South America, (3) Asia (ex-Japan) and (4) Japan, respectively.
Notwithstanding the variations among the Guidelines, all of the Guidelines have been designed with the
uniform objective of encouraging corporate action that enhances shareholder value. As a general rule, in voting proxies of a particular security, the Adviser will apply the Guidelines of the region in which the issuer of such security is organized.
Except as noted below, proxy voting decisions will be made in accordance with the Guidelines covering a multitude of both routine and non-routine matters that the Adviser and its affiliated advisers have encountered globally, based on many years of
collective investment management experience.
To oversee and monitor the proxy-voting process, the Adviser has established a proxy
committee and appointed a proxy administrator in each global location where proxies are voted. The primary function of each proxy committee is to review periodically general proxy-voting matters, review and approve the Guidelines annually, and
provide advice and recommendations on general proxy-voting matters as well as on specific voting issues. The procedures permit an independent voting service, currently Institutional Shareholder Services, Inc. (ISS) in the United States,
to perform certain services otherwise carried out or coordinated by the proxy administrator.
Although for many matters the Guidelines
specify the votes to be cast, for many others, the Guidelines contemplate case-by-case determinations. In addition, there will undoubtedly be proxy matters that are not contemplated by the Guidelines. For both of these categories of matters and to
override the Guidelines, the Procedures require a certification and review process to be completed before the vote is cast. That process is designed to identify actual or potential material conflicts of interest (between the Fund on the one hand,
and the Funds investment adviser or an affiliate of any of the foregoing, on the other hand) and ensure that the proxy vote is cast in the best interests of the Fund. When a potential material conflict of interest has been identified, the
proxy administrator and a subgroup of proxy committee members (composed of a member from the Investment Department and one or more members from the Legal, Compliance or Risk Management Departments) will evaluate the potential conflict of interest
and determine whether such conflict actually exists, and if so, will recommend how the Adviser will vote the proxy. In addressing any material conflict, the Adviser may take one or more of the following measures (or other appropriate action):
removing or walling off from the proxy voting process certain Adviser personnel with knowledge of the conflict, voting in accordance with any applicable Guideline if the application of the Guideline would objectively result in the
casting of a proxy vote in a predetermined manner, or deferring the vote to ISS, which will vote in accordance with its own recommendation.
The following summarizes some of the more noteworthy types of proxy voting policies of the non-U.S. Guidelines:
|
|
|
Corporate governance procedures differ among the countries. Because of time constraints and local customs, it is not always possible for the Adviser
to receive and review all proxy materials in connection with each item submitted for a vote. Many proxy statements are in foreign languages. Proxy materials are generally mailed by the issuer to the sub-custodian which holds the securities for the
client in the country where the portfolio company is organized, and there may not be sufficient time for such materials to be transmitted to the Adviser in time for a vote to be cast. In some countries, proxy statements are not mailed at all, and in
some locations, the deadline for voting is two to four days after the initial announcement that a vote is to be solicited. The Adviser also considers the cost of voting in light of the expected benefit of the vote.
|
|
|
|
Where proxy issues concern corporate governance, takeover defense measures, compensation plans, capital structure changes and so forth, the
Adviser pays particular attention to managements arguments for promoting the prospective change. The Advisers sole criterion in determining its voting stance is whether such changes will be to the economic benefit of the beneficial
owners of the shares.
|
|
|
|
The Adviser is in favor of a unitary board structure of the type found in the United Kingdom as opposed to tiered board structures. Thus, the
Adviser will generally vote to encourage the gradual phasing out of tiered board structures, in favor of unitary boards. However, since tiered boards are still very prevalent in markets outside of the United Kingdom, local market practice will
always be taken into account.
|
|
|
|
The Adviser will use its voting powers to encourage appropriate levels of board independence, taking into account local market practice.
|
|
|
|
The Adviser will usually vote against discharging the board from responsibility in cases of pending litigation, or if there is evidence of
wrongdoing for which the board must be held accountable.
|
|
|
|
The Adviser will vote in favor of increases in capital which enhance a companys long-term prospects. The Adviser will also vote
in favor of the partial suspension of preemptive rights if they are for purely technical
|
|
reasons (e.g., rights offers which may not be legally offered to shareholders in certain jurisdictions). However, the Adviser will vote against increases in capital which would allow the company
to adopt poison pill takeover defense tactics, or where the increase in authorized capital would dilute shareholder value in the long term.
|
|
|
|
The Adviser will vote in favor of proposals which will enhance a companys long-term prospects. The Adviser will vote against an
increase in bank borrowing powers which would result in the company reaching an unacceptable level of financial leverage, where such borrowing is expressly intended as part of a takeover defense, or where there is a material reduction in shareholder
value.
|
|
|
|
The Adviser reviews shareholder rights plans and poison pill proposals on a case-by-case basis; however, the Adviser will generally vote
against such proposals and vote for revoking existing plans.
|
|
|
|
Where social or environmental issues are the subject of a proxy vote, the Adviser will consider the issue on a case-by-case basis, keeping in
mind at all times the best economic interests of its clients.
|
|
|
|
With respect to Asia, for routine proxies (e.g., in respect of voting at the Annual General Meeting of Shareholders) the Advisers
position is to neither vote in favor or against. For Extraordinary General Meetings of Shareholders, however, where specific issues are put to a shareholder vote, these issues are analyzed by the respective country specialist concerned. A decision
is then made based on his or her judgment.
|
The following summarizes some of the more noteworthy types of proxy
voting policies of the U.S. Guidelines:
|
|
|
The Adviser considers votes on director nominees on a case-by-case basis. Votes generally will be withheld from directors who:
(a) attend less than 75% of board and committee meetings without a valid excuse; (b) implement or renew a dead-hand poison pill; (c) are affiliated directors who serve on audit, compensation or nominating committees or are affiliated
directors and the full board serves on such committees or the company does not have such committees; or (d) ignore a shareholder proposal that is approved for two consecutive years by a majority of either the shares outstanding or the votes
cast.
|
|
|
|
The Adviser votes proposals to classify boards on a case-by-case basis, but will vote in favor of such proposal if the issuers
governing documents contain each of eight enumerated safeguards (for example, a majority of the board is composed of independent directors and the nominating committee is composed solely of such directors).
|
|
|
|
The Adviser also considers management poison pill proposals on a case-by-case basis, looking for shareholder-friendly provisions before
voting in favor.
|
|
|
|
The Adviser votes against proposals for a super-majority vote to approve a merger.
|
|
|
|
The Adviser considers proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan on a
case-by-case basis, taking into account the extent of dilution and whether the transaction will result in a change in control.
|
|
|
|
The Adviser votes proposals on a stock option plan based primarily on a detailed, quantitative analysis that takes into account factors such
as estimated dilution to shareholders equity and dilution to voting power. The Adviser generally considers other management compensation proposals on a case-by-case basis.
|
|
|
|
The Adviser also considers on a case-by-case basis proposals to change an issuers state of incorporation, mergers and acquisitions and
other corporate restructuring proposals and certain social and environmental issue proposals.
|
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
PORTFOLIO MANAGEMENT TEAM
The
portfolio management team for the Fund is led by William J. Morgan, Managing Director. Mr. Morgan has been the lead portfolio manager for the Fund since June 2000 and has been part of the team responsible for management of the Fund since its
inception. Currently, Mr. Morgan is a high-yield team leader and the portfolio manager for accounts in the high yield, aggressive income high yield, and insurance asset BB styles. Mr. Morgan earned a B.A. from Kenyon College and an M.B.A.
from Xavier University. James P. Shanahan, Jr., Managing Director, also serves as portfolio manager for the Fund focusing primarily on investments in distressed debt. Mr. Shanahan has been part of the team responsible for the management of the
Fund since 1988. Mr. Shanahan holds a B.A. from Xavier University and a J.D. from the University of Cincinnati College of Law. James E. Gibson, Vice President, is primarily responsible for trading on behalf of the Fund and has been part of the
portfolio management team for the Fund since 1988. Mr. Gibson is one of the principal high yield traders in the Advisers U.S. Fixed Income Group. Mr. Gibson holds a B.S. from the University of Cincinnati College of Business
Administration in finance. Mr. Morgan, Mr. Shanahan, and Mr. Gibson were officers of the Funds former adviser, Pacholder & Company, LLC, since its inception in 1998 and have been officers of and/or associated with the
Adviser since March 1, 2005.
OTHER ACCOUNTS MANAGED
As of December 31, 2010, Mr. Morgan was part of the portfolio management team for six other mutual funds with a total of approximately $10 billion in assets; nine pooled investment vehicles
with a total of approximately $6.5 billion in assets; 13 other accounts with non-performance based fees and a total of approximately $898 million in assets and one other account with a performance based fee and approximately $270 million in assets.
As of December 31, 2010, Mr. Shanahan was part of the portfolio management team for eight other mutual funds with a total of approximately $14 billion in assets; seven pooled investment vehicles with a total of approximately $2.2 billion
in assets; eleven other accounts with non-performance based fees and a total of approximately $1.6 billion in assets and one other account with a performance based fee and approximately $270 million in assets. As of December 31, 2010,
Mr. Gibson was part of the portfolio management team for four other mutual funds with a total of approximately $9.8 billion in assets. The Adviser is not paid a performance based fee in connection with the other mutual funds, or the pooled
investment vehicles.
POTENTIAL CONFLICTS OF INTEREST
The potential for conflicts of interest exists when a portfolio manager manages other accounts with similar investment objectives and strategies as the Fund (Similar Accounts). Potential
conflicts may include, for example, conflicts between investment strategies and conflicts in the allocation of investment opportunities.
Responsibility for managing the Advisers and its affiliates clients portfolios is organized according to investment strategies
within asset classes. Generally, client portfolios with similar strategies are managed by portfolio managers in the same portfolio management group using the same objectives, approach and philosophy. Underlying sectors or strategy allocations within
a larger portfolio are likewise managed by portfolio managers who use the same approach and philosophy as similarly managed portfolios. Therefore, portfolio holdings, relative position sizes and industry and sector exposures tend to be similar
across similar portfolios and strategies, which minimizes the potential for conflicts of interest.
The Adviser and/or its affiliates
may receive more compensation with respect to certain Similar Accounts than that received with respect to the Fund or may receive compensation based in part on the performance of certain Similar Accounts. This may create a potential conflict of
interest for the Adviser and its affiliates or a portfolio manager by providing an incentive to favor these Similar Accounts when, for example, placing securities transactions. In addition, the Adviser or its affiliates could be viewed as having a
conflict of interest to the extent that the Adviser or an affiliate has a proprietary investment in Similar Accounts, a portfolio manager has personal investments in Similar Accounts or the Similar Accounts are investment options in the
Advisers or its affiliates employee benefit plans. Potential conflicts of interest may arise with both the aggregation and allocation of securities transactions and allocation of investment opportunities because of market factors or
investment restrictions imposed upon the Adviser and its affiliates by law, regulation, contract or internal policies. Allocations of aggregated trades, particularly trade orders that were only partially completed due to limited availability and
allocation of investment opportunities generally, could raise a potential conflict of interest, as the Adviser or its affiliates may have an incentive to allocate securities that are expected to increase in value to favored accounts. Initial public
offerings, in particular, are frequently of very limited availability. The Adviser and its affiliates may be perceived as causing accounts they manage to participate in an offering to increase the Advisers and its affiliates overall
allocation of securities in that offering. A potential conflict of interest also may be perceived to arise if transactions in one account closely follow related transactions in a different account, such as when a purchase increases the value of
securities previously purchased by another account, or when a sale in one account lowers the sale price received in
a sale by a second account. If the Adviser or its affiliates manage accounts that engage in short sales of securities of the type in which the Fund invests, the Adviser or its affiliates could be
seen as harming the performance of the Fund for the benefit of the accounts engaging in short sales if the short sales cause the market value of the securities to fall.
As an internal policy matter, the Adviser or its affiliates may from time to time maintain certain overall investment limitations on the securities positions or positions in other financial instruments
the Adviser or its affiliates will take on behalf of its various clients due to, among other things, liquidity concerns and regulatory restrictions. Such policies may preclude the Fund from purchasing particular securities or financial instruments,
even if such securities or financial instruments would otherwise meet the Funds objectives.
The goal of the
Adviser and its affiliates is to meet their fiduciary obligation with respect to all clients. The Adviser and its affiliates have policies and procedures that seek to manage conflicts. The Adviser and its affiliates monitor a variety of areas,
including compliance with fund guidelines, review of allocation decisions and compliance with the Advisers Codes of Ethics and JPMorgan Chase & Co.s Code of Conduct. With respect to the allocation of investment opportunities,
the Adviser and its affiliates also have certain policies designed to achieve fair and equitable allocation of investment opportunities among its clients over time. For example:
Orders for the same equity security traded through a single trading desk or system are aggregated on a continual basis throughout each
trading day consistent with the Advisers and its affiliates duty of best execution for its clients. If aggregated trades are fully executed, accounts participating in the trade will be allocated their pro rata share on an average price
basis. Partially completed orders generally will be allocated among the participating accounts on a pro-rata average price basis, subject to certain limited exceptions. For example, accounts that would receive a
de minimis
allocation relative to their size may be excluded from the order. Another exception may occur when thin markets or price volatility require that an aggregated order be completed in multiple executions over several days. If partial completion of the
order would result in an uneconomic allocation to an account due to fixed transaction or custody costs, the Adviser and its affiliates may exclude small orders until 50% of the total order is completed. Then the small orders will be executed.
Following this procedure, small orders will lag in the early execution of the order, but will be completed before completion of the total order.
Purchases of money market instruments and fixed income securities cannot always be allocated pro-rata across the accounts with the same investment strategy and objective. However, the Adviser and its
affiliates attempt to mitigate any potential unfairness by basing non-pro rata allocations traded through a single trading desk or system upon an objective predetermined criteria for the selection of investments and a disciplined process for
allocating securities with similar duration, credit quality and liquidity in the good faith judgment of the Adviser or its affiliates so that fair and equitable allocation will occur over time.
PORTFOLIO MANAGER COMPENSATION
The
portfolio managers total compensation program includes a base salary fixed from year to year and a variable performance bonus consisting of cash incentives and restricted stock and may include mandatory notional investments (as described
below) in selected funds advised by the Adviser or its affiliates. These elements reflect individual performance and the performance of the Advisers business as a whole.
The portfolio managers performance is formally evaluated annually based on a variety of factors including the aggregate size and blended performance of the portfolios a portfolio manager manages.
Individual contribution relative to client goals carries the highest impact. Portfolio manager compensation is primarily driven by meeting or exceeding clients risk and return objectives, relative performance to competitors or competitive
indices and compliance with firm policies and regulatory requirements. In evaluating a portfolio managers performance with respect to the funds he manages, the funds pre-tax performance is compared to the appropriate market peer group
and to each funds benchmark over one, three and five year periods (or such shorter time as the portfolio manager has managed a fund). Investment performance is generally more heavily weighted to the long-term.
Awards of restricted stock are granted as part of an employees annual performance bonus and comprise from 0% to 35% of a portfolio
managers total bonus. As the level of incentive compensation increases, the percentage of compensation awarded in restricted stock also increases. Up to 50% of the restricted stock portion of a portfolio managers bonus may instead be
subject to mandatory notional investment in selected mutual funds advised by the Adviser or its affiliates. When these awards vest over time, the portfolio manager receives cash equal to the market value of the notional investment in the selected
funds.
SECURITIES OWNERSHIP OF PORTFOLIO MANAGEMENT TEAM
Information concerning ownership of securities of the Fund owned by Mr. Morgan, Mr. Shanahan and Mr. Gibson as of December 31, 2010
is set forth below:
William J. Morgan: $500,001 - $1,000,000
James P. Shanahan, Jr.: $100,001 - $500,000
James E. Gibson: $100,001 - $500,000
ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a) If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to
any purchase made by or on behalf of the registrant or any affiliated purchaser, as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrants equity
securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 78
1
).
There were no
purchases covered by this Item during the period covered by this report.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
Describe any material changes to the procedures by which shareholders may recommend nominees to the registrants board of
directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item.
No material changes to report.
ITEM 11. CONTROLS AND PROCEDURES.
(a)
Disclose the conclusions of the registrants principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrants disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule
30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).
The Registrants principal executive and principal financial officers have concluded, based on their evaluation of the Registrants
disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrants disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the
Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and
communicated to the Registrants management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) Disclose any change in the registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the registrants second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial
reporting.
There were no changes in the Registrants internal control over financial reporting that occurred during the last fiscal
quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrants internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through
filing of an exhibit.
Code of Ethics applicable to its Principal Executive and Principal Financial Officers pursuant to Section 406
of the Sarbanes-Oxley Act of 2002 attached hereto.
The Registrant has adopted proxy voting policies and procedures, as defined in Item
7 of Form N-CSR. A copy of the policies and procedures is filed as Exhibit 12(a)(3) to this Form.
(a)(2) A separate
certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2).
Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 are attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or
more persons.
Not applicable.
(b) A separate or combined certification for each principal executive officer and principal officer of the registrant as required by Rule 30a-2(b) under the Act of 1940.
Certifications pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Pacholder High Yield Fund, Inc.
|
|
|
By:
|
|
/s/
|
|
|
Patricia A. Maleski
|
|
|
President and Principal Executive Officer
March 10, 2011
|
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
By:
|
|
/s/
|
|
|
Patricia A. Maleski
|
|
|
President and Principal Executive Officer
March 10, 2011
|
|
|
By:
|
|
/s/
|
|
|
Joy C. Dowd
|
|
|
Treasurer and Principal Financial Officer
March 10, 2011
|
Pacholder HI Yld (AMEX:PHF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Pacholder HI Yld (AMEX:PHF)
Historical Stock Chart
From Jul 2023 to Jul 2024