-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SYXHBmW+PMN4hgM/419Edw/2j5iLh2afanHndQzLEyxGdBib/O4j4UYSMq6akQus U08pSOtSFiPMFS3rriJ+Mw== 0001145443-04-001450.txt : 20040910 0001145443-04-001450.hdr.sgml : 20040910 20040910120223 ACCESSION NUMBER: 0001145443-04-001450 CONFORMED SUBMISSION TYPE: N-CSRS/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040910 DATE AS OF CHANGE: 20040910 EFFECTIVENESS DATE: 20040910 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIGNA HIGH INCOME SHARES CENTRAL INDEX KEY: 0000830474 IRS NUMBER: 042999956 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-05495 FILM NUMBER: 041024386 BUSINESS ADDRESS: STREET 1: 2223 WASHINGTON STREET STREET 2: 3 NEWTON EXECUTIVE PARK, SUITE 200 CITY: NEWTON STATE: MA ZIP: 02462 BUSINESS PHONE: 860.534.4700 MAIL ADDRESS: STREET 1: C\O TIMESSQUARE CAPITAL MANAGEMENT, INC. STREET 2: 280 TRUMBULL STREET, H16C CITY: HARTFORD STATE: CT ZIP: 06103 N-CSRS/A 1 d15334-ncsr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES 811-05495 (Investment Company Act file number) CIGNA High Income Shares (Exact name of registrant as specified in charter) 2223 Washington Street 3 Newton Executive Park Suite 200 Newton, MA 02462 (Address of principal executive offices) Mark Butler, 2223 Washington Street, 3 Newton Executive Park Suite 200, Newton, MA 02462 (Name and address of agent for service) (860) 534-5576 Registrants' telephone number, including area code Date of fiscal year end: December 31, 2004 Date of reporting period: June 30, 2004 Item 1. Reports to Stockholders. CIGNA HIGH INCOME SHARES - -------------------------------------------------------------------------------- Semiannual Report June 30, 2004 [LOGO](R) CIGNA [LOGO](R) ------------------ CIGNA PRESORTED STANDARD U.S. POSTAGE CIGNA High Income Shares PAID 3 Newton Executive Park SO. HACKENSACK, NJ Suite 200 PERMIT 750 Newton, MA 02462 ------------------ Printed on recycled paper CGACM-SAR-04 542776 6/04 - -------------------------------------------------------------------------------- 1 Dear Shareholders: Our commentary for CIGNA High Income Shares (the "Fund") covering the six months ended June 30, 2004 follows. Market Summary The high yield bond market exhibited multiple personalities in the first quarter. The first three weeks of January were exceptionally strong, a carryover from last year's robust strength. The combination of the NASDAQ trading off and a surge in lower quality new issues in late January and early February caused the high yield bond market to pull back in February. Given the lack of clear conviction in the market, yield spreads remained virtually unchanged in March and produced a "coupon clipping" return for the month. While deeply discounted triple-C and below rated bonds started off the year strongly, similar to last year, they faded in February and March. The second quarter was a challenging environment for fixed income investors. As a result of strong economic data and comments from the Federal Reserve Chairman Alan Greenspan, interest rates rose considerably during the quarter. On a relative basis, high yield bonds fared reasonably well. The high yield market rebounded in June after experiencing declines in the first two months of the second quarter. Equities and high yield bonds performed favorably in June, as investors became more comfortable that the U.S. economy could sustain meaningful growth and that inflation pressures could be contained with a moderate rise in interest rates. Industrial production posted its biggest gain in nearly six years, climbing by 1.1% in May. The index of leading economic indicators rose by 0.5% in May. Employment data in May confirmed the economy's emergence from the jobless recovery that had caused concern earlier in the year. Employers hired 235,000 new workers in May, while the unemployment rate held steady at 5.6%. Though job growth continued in June with payrolls expanding by 112,000, it was less than expected. The high yield market performed well in June for several reasons. First, the fundamentals of high yield issuers continued to strengthen on the heels of a robust U.S. economy. Default rates continued to decline monthly, dropping to 3.43% at the end of May from 5.24% at December 31, 2003. Second, supply and demand came better into balance. After approximately $4.0 billion in high yield mutual fund outflows in May, high yield funds had positive inflows in June. Lastly, after a meaningful upward movement in interest rates in April and May, rates stabilized in June. At June 30, 2004, the average maturity of the Fund was 7.6 years, shorter than the benchmark maturity of 8.2 years. The Fund's average coupon was 8.79% versus 8.51% for the benchmark. The Fund remains broadly diversified, with holdings in 213 issues in 31 different industries. The Fund's leverage during the quarter remained below 33% of assets and was 28% at June 30, 2004. Fund Performance The Fund returned -1.44% for the quarter and 0.25% for the year-to-date (based on its net asset value), compared with the Lehman Brothers High Yield Bond Index returns of -0.97% and 1.35%, respectively. The Fund's return for the quarter, based on the market value of its shares traded on the New York Stock Exchange, was -5.48%. By not deviating from investing in better quality, primarily single-B credits, the Fund underperformed early in the first quarter. Throughout the second quarter, our sub-advisor, Shenkman Capital Management, proactively pruned long duration positions in the portfolio. In addition, - -------------------------------------------------------------------------------- 2 exposure to the telecommunications sector, which has shown increased volatility this year, was reduced. The portfolio has not experienced any defaults for the year-to-date and is well positioned from a credit perspective. Outlook Our expectation is that rising interest rates should not pose a major impediment in the second half of the year, as we believe the magnitude of increases in short-term rates has already been discounted in the bond markets. A vibrant economy and a declining default rate trend are two key factors that will likely influence performance in the second half of the year. Sincerely, /s/ RICHARD H. FORDE Richard H. Forde Chairman of the Board and President CIGNA High Income Shares Note: This commentary is not part of the Semiannual Report to Shareholders. - -------------------------------------------------------------------------------- CIGNA High Income Shares Investments in Securities 3 June 30, 2004 (Unaudited)
Principal Value (000) (000) - ------------------------------------------------------------------------------------------- BONDS AND NOTES - 140.1% Aerospace - 5.8% Aviall, Inc., 7.63%, 2011 $ 1,750 $ 1,829 BE Aerospace, Inc., 8.00%, 2008 1,500 1,395 9.50%, 2008 1,000 965 Communications & Power Industries, Inc., 8.00%, 2012 500 500 Hexcel Corp., 9.75%, 2009 1,750 1,835 Sequa Corp., 8.88%, 2008 1,500 1,582 Titan Corp., 8.00%, 2011 (144A security acquired May 2003 for $506) (a) 500 507 -------- 8,613 -------- Auto/Trucks - 6.7% Accuride Corp., 9.25%, 2008 1,625 1,657 Dana Credit Corp., 8.38%, 2007 (144A security acquired May, July & Dec. 2002 for $1,770) (a) 1,850 1,998 Delco Remy International, Inc., 11.00%, 2009 500 527 9.38%, 2012 (144A security acquired April 2004 for $647) (a) 650 632 Dura Operating Corp., 8.63%, 2012 750 765 Tenneco Automotive, Inc., 11.63%, 2009 2,500 2,687 TRW Automotive, Inc., 9.38%, 2013 1,106 1,247 11.00%, 2013 273 322 -------- 9,835 -------- Beverages/Food - 5.9% American Seafoods Group LLC, 10.13%, 2010 640 765 Del Monte Corp., 8.63%, 2012 610 653 Dole Food, Inc., 7.25%, 2010 750 741 8.88%, 2011 1,000 1,058 Land O' Lakes, Inc., 8.75%, 2011 650 598 Michael Foods, Inc., 8.00%, 2013 (144A security acquired Nov. 2003 for $600) (a) 600 620 Pinnacle Foods Holding Corp., 8.25%, 2013 (144A security acquired Nov. & Dec. 2003 for $1,015) (a) 1,000 965 Premier International Foods PLC, 12.00%, 2009 2,100 2,252
Principal Value (000) (000) - ------------------------------------------------------------------------------------------- Beverages/Food (continued) Seminis Vegetable Seeds, Inc., 10.25%, 2013 $ 500 $ 544 Swift & Co., 12.50%, 2010 500 535 -------- 8,731 -------- Broadcasting & Media - 4.2% Allbritton Communications Co., 7.75%, 2012 1,370 1,349 Corus Entertainment, Inc., 8.75%, 2012 550 591 Emmis Operating Co., 6.88%, 2012 (144A security acquired June 2004 for $487) (a) 500 487 Gray Television, Inc., 9.25%, 2011 750 822 Panamsat Corp., 8.50%, 2012 420 477 Sinclair Broadcast Group, 8.75%, 2011 500 535 8.00%, 2012 1,400 1,432 Warner Music Group, 7.38%, 2014 (144A security acquired April 2004 for $509) (a) 500 482 -------- 6,175 -------- Building Materials - 2.0% Interface, Inc., 7.30%, 2008 800 797 10.38%, 2010 350 390 Jacuzzi Brands, Inc., 9.63%, 2010 500 535 Nortek Holdings, Inc., Step Coupon (0% to 11/15/07), 2011 (144A security acquired Nov. 2003 for $ 1,031) (a) 1,500 1,200 -------- 2,922 -------- Cable TV - 5.9% Charter Communications Holdings LLC, 10.25%, 2010 (144A security acquired Nov. 2003 for $1,276) (a) 1,250 1,259 8.38%, 2014 (144A security acquired April 2004 for $500) (a) 500 484 CSC Holdings, Inc., 10.50%, 2016 2,550 2,888 DirecTV Holdings LLC, 8.38%, 2013 1,000 1,106 Insight Midwest LP, 10.50%, 2010 500 545 Mediacom Broadband LLC, 11.00%, 2013 590 625 Mediacom LLC, 8.50%, 2008 1,750 1,768 -------- 8,675 --------
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares Investments in Securities 4 June 30, 2004 (Unaudited) (Continued)
Principal Value (000) (000) - ------------------------------------------------------------------------------------- Chemicals/Plastics - 4.0% Equistar Chemicals LP, 10.13%, 2008 $ 930 $ 1,018 10.63%, 2011 250 277 Huntsman ICI Chemicals, Inc., 10.13%, 2009 1,855 1,892 Koppers Industry, Inc., 9.88%, 2013 500 548 Lyondell Chemical Co., 10.88%, 2009 500 522 10.50%, 2013 1,500 1,631 -------- 5,888 -------- Consumer Products - 8.9% American Achievement Corp., 8.25%, 2012 (144A security acquired Mar. 2004 for $557) (a) 550 558 Elizabeth Arden, Inc., 7.75%, 2014 (144A security acquired April 2004 for $678) (a) 650 661 FTD, Inc., 7.75%, 2014 500 473 Jafra Cosmetics International, Inc., 10.75%, 2011 2,000 2,215 Jarden Corp., 9.75%, 2012 500 544 Jostens, Inc., 12.75%, 2010 1,380 1,539 Playtex Products, Inc., 8.00%, 2011 (144A security acquired June 2004 for $518) (a) 500 521 9.38%, 2011 1,000 973 Prestige Brands, Inc., 9.25%, 2012 (144A security acquired Mar. 2004 for $500) (a) 500 482 Samsonite Corp., 10.75%, 2008 2,000 2,073 8.88%, 2011 (144A security acquired May 2004 for $700) (a) 700 725 Sealy Mattress Co., 8.25%, 2014 (144A security acquired Mar. 2004 for $1,000) (a) 1,000 1,005 Simmons Co., 7.88%, 2014 (144A security acquired June 2004 for $251) (a) 250 255 United Industries Corp., 9.88%, 2009 1,085 1,128 -------- 13,152 -------- Containers & Packaging - 6.6% Crown Euro Holdings S.A., 9.50%, 2011 1,430 1,569 Graham Packaging Co., Inc., 8.75%, 2008 500 503 Step Coupon (10.75% to 1/15/09), 2009 910 936
Principal Value (000) (000) - ------------------------------------------------------------------------------------- Containers & Packaging (continued) Graphic Packaging International, Inc., 9.50%, 2013 $ 1,000 $ 1,085 Greif Brothers Corp., 8.88%, 2012 940 1,015 Owens-Brockway, 8.75%, 2012 1,850 2,016 8.25%, 2013 1,750 1,803 U.S. Can Corp., 10.88%, 2010 750 769 -------- 9,696 -------- Environmental - 1.2% Allied Waste North America, Inc., 6.13%, 2014 (144A security acquired Mar. 2004 for $588) (a) 600 552 7.38%, 2014 (144A security acquired April 2004 for $1,000) (a) 1,000 973 IESI Corp., 10.25%, 2012 250 273 -------- 1,798 -------- Gaming - 7.4% Aztar Corp., 7.88%, 2014 (144A security acquired June 2004 for $1,778) (a) 1,750 1,768 Boyd Gaming Corp., 7.75%, 2012 1,000 1,010 Caesars Entertainment, Inc., 7.88%, 2010 1,000 1,055 Hard Rock Hotel, Inc., 8.88%, 2013 1,000 1,010 Inn of the Mountain Gods Resort & Casino, 12.00%, 2010 (144A security acquired Oct. 2003 for $650) (a) 650 721 Isle of Capri Casinos, Inc., 7.00%, 2014 (144A security acquired Feb. 2004 for $1,500) (a) 1,500 1,391 Jacobs Entertainment, Inc., 11.88%, 2009 900 1,004 Pinnacle Entertainment, Inc., 9.25%, 2007 133 136 8.25%, 2012 (144A security acquired Feb. 2004 for $1,986) (a) 2,000 1,925 Station Casinos, Inc., 6.88%, 2016 1,000 962 -------- 10,982 -------- General Industrial - 3.0% Blount, Inc., 13.00%, 2009 1,500 1,607 Mueller Group, Inc., 10.00%, 2012 (144A security acquired April 2004 for $1,080) (a) 1,050 1,092
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares Investments in Securities 5 June 30, 2004 (Unaudited) (Continued)
Principal Value (000) (000) - ------------------------------------------------------------------------------------- General Industrial (continued) Norcross Safety Products LLC, 9.88%, 2011 $ 900 $ 972 Trimas Corp., 9.88%, 2012 730 777 -------- 4,448 -------- Grocery - 2.0% Pathmark Stores, Inc., 8.75%, 2012 1,500 1,500 Stater Brothers Holdings, Inc., 8.13%, 2012 (144A security acquired June 2004 for $1,502) (a) 1,500 1,506 -------- 3,006 -------- Health Care - 6.0% Alliance Imaging, Inc., 10.38%, 2011 172 180 Extendicare Health Services, Inc., 9.50%, 2010 1,100 1,221 Medex, Inc., 8.88%, 2013 1,000 1,055 NeighborCare, Inc., 6.88%, 2013 (144A security acquired Oct. 2003 for $750) (a) 750 795 Omega Healthcare Investors, Inc., 7.00%, 2014 (144A security acquired Mar. 2004 for $1,521) (a) 1,500 1,418 Province Healthcare Co., 7.50%, 2013 1,000 965 Select Medical Corp., 7.50%, 2013 500 492 Sybron Dental Specialties, Inc., 8.13%, 2012 250 267 Triad Hospitals, Inc., 7.00%, 2013 900 855 Vanguard Health Systems, Inc., 9.75%, 2011 1,025 1,110 VWR International, Inc., 8.00%, 2014 (144A security acquired April 2004 for $468) (a) 450 461 -------- 8,819 -------- Home Construction - 1.0% K. Hovnanian Enterprises, Inc., 7.75%, 2013 1,500 1,504 -------- Leasing - 2.7% H&E Equipment Services LLC, 11.13%, 2012 650 658 United Rentals, Inc., 7.75%, 2013 1,000 945 7.00%, 2014 (144A security acquired Jan. 2004 for $1,000) (a) 1,000 890 Williams Scotsman, Inc., 9.88%, 2007 1,520 1,509 -------- 4,002 --------
Principal Value (000) (000) - ------------------------------------------------------------------------------------- Leisure/Entertainment - 4.9% AMC Entertainment, Inc., 9.50%, 2011 $ 1,044 $ 1,086 AMF Bowling Worldwide, Inc., 10.00%, 2010 (144A security acquired Mar. 2004 for $521) (a) 500 512 Intrawest Corp., 10.50%, 2010 980 1,060 7.50%, 2013 1,000 977 Royal Caribbean Cruises Ltd., 6.88%, 2013 500 494 7.25%, 2018 1,250 1,213 Six Flags, Inc., 8.88%, 2010 750 742 Town Sports International, Inc., 9.63%, 2011 1,250 1,203 -------- 7,287 -------- Lodging/Hotels - 4.8% Felcor Lodging LP, 7.63%, 2007 500 510 10.00% (Coupon change based on rating), 2008 287 303 9.00% (Coupon change based on rating), 2011 820 847 Gaylord Entertainment Co., 8.00%, 2013 750 760 Hilton Hotels Corp., 3.38%, 2023 (convertible to 44.4444 shares at $18.55 until 4/15/23) 1,000 1,079 Host Marriott Corp., 9.25%, 2007 780 860 7.88%, 2008 668 686 7.13%, 2013 1,000 980 La Quinta Properties, Inc., 8.88%, 2011 1,000 1,075 -------- 7,100 -------- Manufacturing - 0.6% Polypore, Inc., 8.75%, 2012 (144A security acquired May 2004 for $850) (a) 850 886 -------- Metals - 0.6% Alpha Natural Resources LLC, 10.00%, 2012 (144A security acquired May 2004 for $900) (a) 900 945 -------- Oil & Gas - 5.8% Chesapeake Energy Corp., 7.75%, 2015 750 786 Continental Resources, Inc., 10.25%, 2008 500 516 Exco Resources, Inc., 7.25%, 2011 1,000 1,015 Ferrellgas Partners LP, 8.75%, 2012 810 865 Hornbeck Offshore Services, Inc., 10.63%, 2008 500 546
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares Investments in Securities 6 June 30, 2004 (Unaudited) (Continued)
Principal Value (000) (000) - ------------------------------------------------------------------------------------------ Oil & Gas (continued) Premcor Refining Group, Inc., 9.50%, 2013 $ 830 $ 957 Transmontaigne, Inc., 9.13%, 2010 1,750 1,767 Universal Compression, Inc., 7.25%, 2010 2,000 2,060 -------- 8,512 -------- Paper - 4.5% Abitibi-Consolidated, Inc., 6.00%, 2013 500 443 Ainsworth Lumber Co., Ltd., 6.75%, 2014 (144A security acquired Feb. 2004 for $1,004) (a) 1,000 938 Georgia-Pacific Corp., 8.00%, 2014 1,000 1,087 8.00%, 2024 (144A security acquired Dec. 2003 for $1,000) (a) 1,000 1,000 Jefferson Smurfit Corp., 7.50%, 2013 1,000 995 MDP Acquisitions PLC, 9.63%, 2012 1,600 1,776 Smurfit Capital Funding PLC, 7.50%, 2025 500 468 -------- 6,707 -------- Printing & Publishing - 8.3% American Media Operation, Inc., 10.25%, 2009 500 519 Dex Media East/West LLC, 9.88%, 2009 500 561 12.13%, 2012 980 1,144 8.00%, 2013 (144A security acquired Nov. 2003 for $750) (a) 750 720 9.88%, 2013 500 550 Goss Holdings, Inc., 12.25%, 2005 (b) (c) (d) 2,764 -- Houghton Mifflin Co., 8.25%, 2011 820 820 9.88%, 2013 410 410 Liberty Group, Inc., 9.38%, 2008 825 821 Mail Well I Corp., 7.88%, 2013 (144A security acquired Jan. 2004 for $1,000) (a) 1,000 910 Primedia, Inc., 8.88%, 2011 1,595 1,595 Quebecor Media Inc., 11.13%, 2011 1,485 1,695 RH Donnelley Finance Corp., I 10.88%, 2012 (144A security acquired Nov. 2002 for $760) (a) 760 882 Vertis, Inc., 9.75%, 2009 1,000 1,075 Von Hoffman Corp., 10.25%, 2009 500 514 -------- 12,216 --------
Principal Value (000) (000) - ------------------------------------------------------------------------------------------ Restaurants - 0.5% Buffets, Inc., 11.25%, 2010 $ 400 $ 420 Dominos, Inc., 8.25%, 2011 250 265 -------- 685 -------- Retail - 7.7% Couche-Tard U.S. LP, 7.50%, 2013 750 750 CSK Auto, Inc., 7.00%, 2014 (144A security acquired Feb. 2004 for $501) (a) 500 476 General Nutrition Centers, Inc., 8.50% 2010 (144A security acquired Nov. 2003 & Feb. 2004 for $ 1,533) (a) 1,500 1,560 Petro Stopping Centers LP, 9.00%, 2012 (144A security acquired April 2004 for $580) (a) 550 545 Rent-A-Center, Inc., 7.50%, 2010 2,250 2,317 Rite Aid Corp., 8.13%, 2010 250 263 7.70%, 2027 2,750 2,448 Saks, Inc., 7.38%, 2019 2,000 1,920 WH Holdings Ltd., 9.50%, 2011 (144A security acquired Mar. 2004 for $1,004) (a) 1,000 1,040 -------- 11,319 -------- Service - 9.1% Affinity Group, Inc., 9.00%, 2012 (144A security acquired Mar. 2004 for $374) (a) 350 359 Alderwoods Group, Inc., 12.25%, 2009 2,075 2,293 Buhrmann US, Inc., 8.25%, 2014 (144A security acquired June 2004 for $997) (a) 1,000 998 Corrections Corp. of America, 7.50%, 2011 1,000 1,007 Iron Mountain, Inc., 7.75%, 2015 1,000 995 6.63%, 2016 1,000 910 Johnsondiversey Holdings, Inc., Step Coupon (0% to 5/15/07), 2013 1,000 775 Lodgenet Entertainment Corp., 9.50%, 2013 1,500 1,646 Nebraska Book Co., Inc., 8.63%, 2012 1,200 1,185 Service Corp. International, 7.70%, 2009 1,382 1,417 URS Corp., 11.50%, 2009 670 772 Wesco Distribution, Inc., 9.13%, 2008 1,010 1,039 -------- 13,396 --------
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares Investments in Securities 7 June 30, 2004 (Unaudited) (Continued)
Principal Value (000) (000) - ------------------------------------------------------------------------------------ Technology - 1.6% Amkor Technology, Inc., 10.50%, 2009 $ 500 $ 525 7.13%, 2011 (144A security acquired Mar. 2004 for $499) (a) 500 469 Lucent Technologies, Inc., 5.50%, 2008 250 236 6.45%, 2029 250 194 New ASAT Finance Ltd., 9.25%, 2011 (144A security acquired Jan. 2004 for $500) (a) 500 500 Xerox Corp., 7.63%, 2013 500 511 --------- 2,435 --------- Telecommunications - 8.5% American Tower Corp., 9.38%, 2009 2,250 2,413 Centennial Communications Corp., 10.13%, 2013 1,000 1,033 Cincinnati Bell, Inc., 7.25%, 2013 750 701 Crown Castle International Corp., 7.50%, 2013 1,250 1,244 Nextel Communications, Inc., 9.38%, 2009 685 732 5.25%, 2010 750 729 Nextel Partners, Inc., 8.13%, 2011 250 255 Poland Telecom Finance BV, 14.00%, 2007 (b) (c) (d) 3,000 -- Qwest Communications International, Inc., 7.00%, 2009 230 205 9.13%, 2012 (144A security acquired Aug. & Oct. 2002 for $1,208) (a) 1,390 1,526 7.50%, 2014 (144A security acquired April 2004 for $954) (a) 1,000 903 Rogers Wireless Communications, Inc. 9.63%, 2011 640 718 Rural Cellular Corp., 8.25%, 2012 (144A security acquired Mar. 2004 for $1,010) (a) 1,000 1,023 SBA Communications Corp., 10.25%, 2009 500 510 Spectrasite, Inc., 8.25%, 2010 500 515 --------- 12,507 --------- Textiles - 2.0% Philips-Van Heusen Corp. 8.13%, 2013 2,000 2,095 Warnaco, Inc., 8.88%, 2013 850 919 --------- 3,014 ---------
Principal Value (000) (000) - ------------------------------------------------------------------------------------ Utilities - 7.9% AES Corp., 9.50%, 2009 $ 250 $ 267 7.75%, 2014 1,500 1,442 Allegheney Energy Supply Co., 7.80%, 2011 500 489 Coastal Corp., 7.75%, 2010 1,000 911 Dynegy Holdings, Inc., 6.88%, 2011 250 214 Edison Mission Energy, 7.73%, 2009 500 489 El Paso Corp., 7.88%, 2012 1,270 1,143 Midland Funding II, 11.75%, 2005 2,474 2,573 NRG Energy, Inc., 8.00%, 2013 (144A security acquired Mar. & April 2004 for $1,031) (a) 1,000 1,010 Tennessee Gas Pipeline Co., 7.50%, 2017 1,500 1,485 Williams Cos., Inc., 8.13%, 2012 1,550 1,654 --------- 11,677 --------- Total Bonds and Notes (Cost - $207,076) 206,932 --------- Number of Shares --------- PREFERRED STOCK - 1.6% Broadcasting & Media - 0.3% Emmis Communications Corp., 6.25% 10,300 456 --------- Paper - 0.7% Smurfit-Stone Container Co., 7.00% 40,000 980 --------- Telecommunications - 0.3% Crown Castle International Corp., 6.25% 10,000 455 --------- Utilities - 0.3% Calpine Capital Trust II, 5.50% 10,000 473 --------- Total Preferred Stock (Cost - $2,315) 2,364 --------- WARRANTS - 0.0% Pliant Corp., Exp. 2010 (144A security acquired Sept. 2000 for $135) (a) (c) (d) 3,700 -- --------- Total Warrants (Cost - $135) -- --------- TOTAL INVESTMENTS IN SECURITIES - 141.7% (Total Cost - $209,526) (e) 209,296 Liabilities in excess of Cash and Other Assets - (41.7%) (61,641) --------- NET ASSETS - 100% $147,655 =========
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares Investments in Securities 8 June 30, 2004 (Unaudited) (Continued) - ------------------------------------------------------------------------ NOTES TO INVESTMENTS IN SECURITIES (a) Indicates restricted security; the aggregate value of restricted securities is $43,532,000 (aggregate cost $43,477,696), which is approximately 29.5% of net assets. Valuations have been furnished by brokers trading in the securities or a pricing service for all restricted securities. (b) Defaulted security due to bankruptcy. (c) Fair valued security. (d) Illiquid security. Tax Information (e) At June 30, 2004, the cost for federal income tax purposes was the same as for book purposes. - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Quality Ratings* of Long-Term Bonds and Notes (Unaudited) June 30, 2004 Market % of Value Market (000) Value - --------------------------------- Baa/BBB $ 1,079 0.5% Ba/BB 44,268 21.4 B/B 135,485 65.5 Below B 26,100 12.6 -------- ----- $206,932 100.0% ======== ===== *The higher of Moody's or Standard & Poor's Ratings. - --------------------------------------------------------------------------------
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares 9 Statement of Assets and Liabilities June 30, 2004 (Unaudited) (In Thousands) Assets: Investments in securities at value $209,296 Cash 757 Receivable for investments sold 722 Interest and dividends receivable 4,430 Investment for Trustees' deferred compensation plan 235 Other 28 -------- Total assets 215,468 -------- Liabilities: Loan payable 57,000 Payable for investments purchased 8,939 Dividend payable 1,243 Deferred Trustees' fees payable 235 Advisory fees payable 128 Accrued interest payable 122 Shareholder reports payable 41 Audit and legal fees payable 33 Custodian fees payable 25 Insurance expense payable 21 Administrative services fees payable 14 Transfer agent fees payable 12 -------- Total liabilities 67,813 -------- Net Assets (Equivalent to $2.73 per share based on 54,032 shares of beneficial interest outstanding; unlimited number of shares authorized) $147,655 ======== Components of Net Assets: Paid in capital $401,531 Undistributed net investment income 968 Accumulated net realized loss (254,614) Net unrealized depreciation of investments (230) -------- Net Assets $147,655 ======== Cost of Investments $209,526 ========
Statement of Operations For the Six Months Ended June 30, 2004 (Unaudited) (In Thousands) Investment Income: Income: Interest $9,272 Dividends 112 ------ Total income 9,384 Expenses: Investment advisory fees $ 789 Interest expense 519 Shareholder reports 70 Custodian fees 64 Audit and legal fees 37 Administrative services fees 33 Transfer agent fees 28 Stock exchange fees 27 Trustees' fees 21 Insurance expense 3 Other 1 ----- Total expenses 1,592 ----- Net Investment Income 7,792 ------ Realized and Unrealized Gain (Loss) on Investments: Net realized loss from investments (3,440) Net change in unrealized appreciation of investments (3,783) ------ Net Realized and Unrealized Loss on Investments (7,223) ------ Net Increase in Net Assets Resulting from Operations $ 569 ======
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares 10 Statements of Changes in Net Assets (In Thousands)
For the Six Months Ended For the Year June 30, Ended 2004 December 31, (Unaudited) 2003 -------------- ------------- Operations: Net investment income $ 7,792 $ 17,177 Net realized loss from investments (3,440) (21,529) Net change in unrealized appreciation (depreciation) on investments (3,783) 43,218 -------- --------- Net increase from operations 569 38,866 -------- --------- Dividends and Distributions: From net investment income (7,454) (15,126) -------- --------- Total dividends and distributions (7,454) (15,126) -------- --------- Capital Share Transactions: Net increase from 84 and 389 capital shares issued to shareholders in reinvestment of distributions, respectively 242 1,020 -------- --------- Net increase from Fund share transactions 242 1,020 -------- --------- Net Increase (Decrease) in Net Assets (6,643) 24,760 Net Assets: Beginning of period 154,298 129,538 -------- --------- End of period * $147,655 $154,298 ======== ========= * includes undistributed net investment income of: $ 968 $ 630 ======== =========
Statement of Cash Flows For the Six Months Ended June 30, 2004 (Unaudited) (In Thousands) Cash Provided (Used) by Financing Activities: Decrease in borrowing $(11,000) Dividends paid in cash (7,479) -------- Total amount used (18,479) -------- Cash Provided (Used) by Operations: Purchases of portfolio securities (57,671) Proceeds from sales of portfolio securities 66,051 -------- Total amount provided 8,380 -------- Net Investment Income (excludes net amortized discount and premium of $210) 7,582 Net change in receivables/payables related to operations 234 Net maturities of short-term investment securities 2,730 -------- Total other amounts 10,546 -------- Net increase in cash 447 Cash, beginning of period 310 -------- Cash, End of Period $ 757 ========
The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares 11 Financial Highlights - --------------------------------------------------------------------------------
For the Six Months Ended For the Year Ended December 31, June 30, 2004 ------------------------------------------------------------------ (Unaudited) 2003 2002 2001(c) 2000 1999 - ---------------------------------------------------------------------------------------------------------------------------------- Per Share Operating Performance: Net asset value, beginning of period $ 2.86 $ 2.42 $ 3.05 $ 3.88 $ 5.92 $ 6.39 Income from investment operations Net investment income (a) 0.14 0.32 0.36 0.55 0.68 0.81 Net realized and unrealized gain (loss) on investments (0.13) 0.40 (0.62) (0.81) (1.99) (0.46) ---------- -------- -------- ------- -------- -------- Total from investment operations 0.01 0.72 (0.26) (0.26) (1.31) 0.35 ---------- -------- -------- ------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.14) (0.28) (0.29) (0.57) (0.73) (0.82) Distributions from capital - - (0.08) - - - ---------- -------- -------- ------- -------- -------- Total dividends and distributions (0.14) (0.28) (0.37) (0.57) (0.73) (0.82) ---------- -------- -------- ------- -------- -------- Net asset value, end of period $ 2.73 $ 2.86 $ 2.42 $ 3.05 $ 3.88 $ 5.92 ========== ======== ======== ======= ======== ======== Market value, end of period $ 2.58 $ 2.87 $ 2.32 $ 3.36 $ 4.19 $ 5.38 ========== ======== ======== ======= ======== ======== Total Investment Return: Per share market value (5.48)%(d) 37.23% (21.23)% (6.85)% (10.05)% (16.18)% Per share net asset value (b) 0.25%(d) 31.25% ( 9.07)% (7.31)% (24.21)% 5.78% Ratios to Average Net Assets Expenses (includes interest expense) 2.11%(e) 2.21% 2.53% 3.43% 4.16% 3.40% Expenses (excludes interest expense) 1.42%(e) 1.46% 1.49% 1.26% 1.09% 1.02% Net investment income 10.31%(e) 11.99% 13.29% 15.56% 13.13% 13.05% Portfolio Turnover 31%(d) 93% 134% 82% 38% 49% Net Assets, End of Period (000 omitted) $ 147,655 $154,298 $129,538 $161,693 $202,401 $305,352
(a) Net investment income per share has been calculated in accordance with SEC requirements, with the exception that end-of-the-year accumulated undistributed/ (overdistributed) net investment income has not been adjusted to reflect current-year permanent differences between financial and tax accounting. (b) Total investment return based on per share net asset value reflects the effects of changes in net asset value on the performance of the Fund during each period, and assumes distributions were reinvested at net asset value. These percentages may not correspond with the performance of a shareholder's investment in the Fund based on market value, since the relationship between the market price of the stock and net asset value varied during each period. (c) Effective January 1, 2001, the Fund was required to start amortizing premium and discount on all debt securities. The effect of this change on net investment income per share was an increase of $0.03 per share. The effect to the ratio of net investment income to average net assets was an increase of 0.77%. Per share, ratios and supplemental data for periods prior to January 1, 2001, have not been restated to reflect this change in accounting principle. (d) Not annualized. (e) Annualized. The Notes to Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- CIGNA High Income Shares Notes to Financial Statements 12 (Unaudited) 1. Significant Accounting Policies. CIGNA High Income Shares (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Fund's primary objective is to provide the highest current income attainable, consistent with reasonable risk as determined by the Fund's investment adviser, through investment in a professionally managed, diversified portfolio of high yield, high-risk fixed income securities (commonly referred to as "junk bonds"). As a secondary objective, the Fund seeks capital appreciation, but only when consistent with its primary objective. Normally, the Fund will invest at least 80% of its assets in high yield, below investment-grade bonds. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. A. Security Valuation -- Debt securities traded in the over-the-counter market, including listed securities whose primary markets are believed to be over-the-counter, are valued on the basis of valuations furnished by brokers trading in the securities or a pricing service, which determines valuations for normal, institutional-size trading units of such securities using market information, transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders. Short-term investments with remaining maturities of up to and including 60 days are valued at amortized cost, which approximates market. Short-term investments that mature in more than 60 days are valued at current market quotations. Other securities and assets of the Fund are appraised at fair value, as determined in good faith by, or under the authority of, the Fund's Board of Trustees. The Fund's Board of Trustees has designated the Pricing Committee of TimesSquare Capital Management, Inc. to make, pursuant to procedures approved by the Board and under the Board's supervision, all necessary determinations of fair value for the portfolio securities for which market quotations are not readily available. When fair valuing securities, the Pricing Committee takes into account factors such as fundamental and analytical information about the security, the nature and duration of any restrictions on disposition of the security, market information (including, for example, factors such as historical price relationships and valuations for securities with similar characteristics), and evaluation of significant market events. If events occurring after the close of the principal market in which securities are traded (but before the close of regular trading on the NYSE) are believed to materially affect the value of those securities, such securities are valued at their fair value, taking such events into account. B. Foreign Investments -- The Fund may invest in securities of foreign countries and governments, which involve certain risks in addition to those inherent in domestic investments. Such risks generally include, among others, currency risk (fluctuations in currency exchange rates), information risk (key information may be inaccurate or unavailable) and political risk (expropriation, nationalization or the imposition of capital or currency controls or punitive taxes). Other risks of investing in foreign securities include inadequate accounting controls, liquidity and valuation risks. C. High Yield Bonds -- The Fund invests in high yield bonds -- i.e., fixed income securities rated below investment grade. While the market values of these securities tend to react less to - -------------------------------------------------------------------------------- CIGNA High Income Shares Notes To Financial Statements 13 (Unaudited) (Continued) fluctuations in interest rate levels than do those of investment-grade securities, the market values of certain of these securities also tend to be more sensitive to individual corporate developments and changes in economic conditions than investment-grade securities. In addition, the issuers of these securities are often highly leveraged and may not have more traditional methods of financing available to them so that their ability to service their debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired. D. Security Transactions and Related Investment Income -- Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Dividend income is recorded on the ex-dividend date, and interest income, which includes amortization of premium and accrual of discount, is recorded on the accrual basis. Securities gains and losses are determined on the basis of identified cost. E. Federal Taxes -- It is the Fund's policy to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and capital gains to its shareholders. Therefore, no federal income or excise taxes on realized income have been accrued. Distributions reported in the Statement of Changes in Net Assets from net investment income, including short-term gains, and capital gains are treated as ordinary income and long-term capital gains, respectively, for federal income tax purposes. F. Dividends and Distributions to Shareholders -- Dividends from net investment income are declared and distributed monthly and distributions from net capital gains, to the extent such gains would otherwise be taxable to the Fund, are declared and distributed at least annually. Dividends and distributions are recorded by the Fund on the ex-dividend date. The timing and characterization of certain income and capital gains distributions are determined in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing book and tax treatment of premium amortization, deferred compensation, capital loss carryforwards, deferral losses due to wash sales, interest on defaulted securities, and excise tax regulations. To the extent that such differences are permanent, a reclassification to the Components of Net Assets may be required. As a result, at December 31, 2003, the Fund decreased undistributed net investment income by $1,118,056 and decreased accumulated net realized loss by $2,871,198 and decreased paid in capital by $1,753,142. G. Cash Flow Information -- Cash, as used in the Statement of Cash Flows, is the amount reported in the Statement of Assets and Liabilities. The Fund issues its shares, invests in securities, and distributes dividends from net investment income (which are either paid in cash or reinvested at the discretion of shareholders). These activities are reported in the Statement of Changes in Net Assets. Information on cash payments is presented in the Statement of Cash Flows. Accounting practices that do not affect reporting activities on a cash basis include unrealized gains or losses on investment securities and amortization of premium and discount. 2. Loan. The Fund has a revolving credit agreement (the "Agreement") with an unrelated third party lender (the "Lender"), which will enable the Fund to borrow up to the lesser of: (A) $80,000,000; or (B) one-third of the Fund's total assets; or (C) 100% of the borrowing base eligible assets, as determined under the terms of the Agreement. The Agreement expires on October 31, 2006. Prior to expiration of the Agreement, principal is repayable in whole or in - -------------------------------------------------------------------------------- CIGNA High Income Shares Notes To Financial Statements 14 (Unaudited) (Continued) part at the option of the Fund. To secure the loan, the Fund has pledged investment securities in accordance with the terms of the Agreement. Borrowings under this Agreement bear interest at a variable rate tied to the lender's average daily cost of funds or at fixed rates, as may be agreed to between the Fund and the lender. The average borrowings outstanding during the six months ended June 30, 2004, were $63,947,802, at an average annual interest rate of approximately 1.63%. As of June 30, 2004, the Fund was paying interest at an annual rate of 1.63% on its outstanding borrowings. 3. Investment Advisory Fees and Other Transactions with Affiliates. Investment advisory fees were paid or accrued to TimesSquare Capital Management, Inc. ("TimesSquare"), certain officers and directors of which are affiliated with the Fund. Such advisory fees are based on an annual rate of 0.75% of the first $200 million of the Fund's average weekly total asset value and 0.50% thereafter. TimesSquare, in turn, pays Shenkman Capital Management, Inc. its sub-advisory fee. For administrative services, the Fund reimburses TimesSquare for a portion of the compensation and related expenses of the Fund's Treasurer and Secretary and certain persons who assist in carrying out the responsibilities of those offices. For the six months ended June 30, 2004, the Fund paid or accrued $33,041. TimesSquare is an indirect, wholly-owned subsidiary of CIGNA Corporation. 4. Trustees' Fees. Trustees' fees represent remuneration paid or accrued to Trustees who are not employees of CIGNA Corporation or any of its affiliates. Trustees may elect to defer receipt of all or a portion of their fees, which are invested in mutual fund shares in accordance with a deferred compensation plan. 5. Purchases and Sales of Securities. Purchases and sales of securities (excluding short-term obligations) for the six months ended June 30, 2004, were $66,610,203 and $66,773,083, respectively. 6. Tax Information. As of December 31, 2003, the components of distributable earnings (excluding unrealized appreciation/(depreciation) disclosed in the Notes to Investments in Securities) on a tax basis consisted of undistributed ordinary income of $315,596 and a capital loss carryover of $250,975,546, of which $28,686,393, $35,363,213, $55,878,285, $102,576,339 and $28,471,316 will expire in 2007, 2008, 2009, 2010 and 2011, respectively. For 2003, the Fund had no post-October loss. Under current tax law, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following year. - -------------------------------------------------------------------------------- CIGNA High Income Shares 15 (Unaudited) Trustees Russell H. Jones Senior Vice President, Chief Investment Officer, and Treasurer, Kaman Corporation Paul J. McDonald Special Advisor to the Board of Directors, Friendly Ice Cream Corporation Richard H. Forde Chief Investment Officer, CIGNA Investment Management Marnie Wagstaff Mueller Diocesan Consultant, Episcopal Diocese of Connecticut Carol Ann Hayes Director and Chair of Audit Committee, Reed and Barton Corporation Officers Richard H. Forde Chairman of the Board and President Alfred A. Bingham III Vice President and Treasurer Jeffrey S. Winer Vice President and Secretary - -------------------------------------------------------------------------------- Matters Submitted to a Vote of Shareholders The Annual Meeting of the Shareholders of CIGNA High Income Shares (the "Trust") was held on Tuesday, April 27, 2004 at 12:00 p.m., Eastern Time. Six Trustees were elected by a vote of shareholders to serve as members of the Board of the Trust until the next Annual Meeting of Shareholders or until the election and qualification of their successors. Shareholders of the Trust voted to elect the following Trustees:
For Vote Withheld ---------- ------------- Richard H. Forde 48,727,437 885,482 Carol Ann Hayes 48,708,588 904,332 Russell H. Jones 48,747,845 865,075 David P. Marks 48,732,169 880,750 Paul J. McDonald 48,737,395 875,525 Marnie W. Mueller 49,631,763 981,157
There were no broker non-votes with respect to the matters submitted to a vote of shareholders of the Trust. No other business was transacted at the meeting. - -------------------------------------------------------------------------------- CIGNA High Income Shares is a closed-end, diversified management investment company that invests primarily in high yield, fixed income securities. The investment adviser is TimesSquare Capital Management, Inc., 280 Trumbull Street, Hartford, Connecticut 06103. Shenkman Capital Management, Inc. is the Fund's sub-adviser. Shareholders may elect to have dividends automatically invested in additional shares of CIGNA High Income Shares by participating in the Automatic Dividend Investment Plan ("the Plan"). For a brochure describing this Plan or general inquiries about your account, contact EquiServe, P.O. Box 43011, Providence, RI 02940-3011 or you may call toll free 1-800-426-5523. - -------------------------------------------------------------------------------- Item 2. Code of Ethics. Not applicable Item 3. Audit Committee Financial Expert. Not applicable Item 4. Principal Accountant Fees and Services. Not applicable Item 5. Audit Committee Listed Registrants. Not applicable. Item 6. Schedule of Investments. See report to shareholders filed under Item 1 of this Form. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. Not applicable. Item 10. Controls and Procedures. (a) Based on an evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer concluded that the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis. (b) There were no significant changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a)(1) Not applicable (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940. (a)(3) Not applicable (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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. (Registrant) CIGNA High Income Shares By: /s/ Alfred A. Bingham III ---------------------------------------- Alfred A. Bingham III, Vice President and Treasurer Date: August 30, 2004. 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 (Signature and Title) /s/ Richard H. Forde ------------------------------------------------------- Richard H. Forde, Chairman of the Board and President Date: August 30, 2004. By (Signature and Title) /s/ Alfred A. Bingham III ------------------------------------------------------- Alfred A. Bingham III, Vice President and Treasurer Date: August 30, 2004 EX-99.A2 2 d15334-99a_2.txt CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Richard H. Forde, certify that: 1. I have reviewed this report on Form N-CSR of CIGNA High Income Shares; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: August 30, 2004 /s/ Richard H. Forde ----------------------------------- Chairman of the Board and President CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Alfred A. Bingham III, certify that: 1. I have reviewed this report on Form N-CSR of CIGNA High Income Shares; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonally likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: August 30, 2004 /s/ Alfred A. Bingham III ------------------------------ Vice President and Treasurer EX-99.B 3 d15334-99b.txt Certification Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) In connection with the attached Report of CIGNA High Income Shares (the "Trust") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the Trust does hereby certify that, to the best of such officer's knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respect, the financial condition and results of operations of the Trust as of, and for, the periods presented in the Report. Dated: August 30, 2004 /s/ Richard H. Forde - ----------------------------------- Richard H. Forde Chairman of the Board and President Dated: August 30, 2004 /s/ Alfred A. Bingham III - ----------------------------------- Alfred A. Bingham III Vice President and Treasurer A signed original of this written statement required by Section 906 has been provided to the Trust and will be retained by the Trust and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Report or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----