-----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, C1EXCW6jO0oTu3rn0tmbRc5xTonVawXI49hUT2TFlbhWDVy5RpWx67XeDnIY8K5x N8fMAnlwWsCTBL2HvZ6ipQ== 0000900092-95-000302.txt : 19951030 0000900092-95-000302.hdr.sgml : 19951030 ACCESSION NUMBER: 0000900092-95-000302 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951027 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENIOR HIGH INCOME PORTFOLIO INC CENTRAL INDEX KEY: 0000896665 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07456 FILM NUMBER: 95584916 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822800 MAIL ADDRESS: STREET 1: PO BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 N-30D 1 SEMI-ANNUAL REPORT SENIOR HIGH INCOME PORTFOLIO, INC. FUND LOGO Semi-Annual Report August 31, 1995 This report, including the financial information herein, is transmitted to the shareholders of Senior High Income Portfolio, Inc. for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the report. Past performance results shown in this report should not be considered a representation of future performance. The Fund has leveraged its Common Stock to provide Common Stock shareholders with a potentially higher rate of return. Leverage creates risk for Common Stock shareholders, including the likelihood of greater volatility of net asset value and market price of Common Stock shares, and the risk that fluctuations in short-term interest rates may reduce the Common Stock's yield. Senior High Income Portfolio, Inc. Box 9011 Princeton, NJ 08543-9011 SENIOR HIGH INCOME PORTFOLIO, INC. The Benefits and Risks of Leveraging Senior High Income Portfolio, Inc. has the ability to utilize leverage through borrowings or issuance of short-term debt securities or shares of Preferred Stock. The concept of leveraging is based on the premise that the cost of assets to be obtained from leverage will be based on short-term interest rates, which normally will be lower than the return earned by the fund on its longer-term portfolio investments. Since the total assets of the fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the fund's Common Stock shareholders are the beneficiaries of the incremental yield. Should the differential between the underlying interest rates narrow, the incremental yield "pick up" will be reduced. Furthermore, if long-term interest rates rise, the Common Stock's net asset value will reflect the full decline in the entire portfolio holdings resulting therefrom since the assets obtained from leverage do not fluctuate. Leverage creates risks for holders of Common Stock including the likelihood of greater net asset value and market price volatility. In addition, there is the risk that fluctuations in interest rates on borrowings (or in the dividend rates on any Preferred Stock, if the fund were to issue the preferred stock) may reduce the Common Stock's yield and negatively impact its market price. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the fund's net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, the fund's net income will be less than if leverage had not been used, and therefore the amount available for distribution to Common Stock shareholders will be reduced. In this case, the fund may nevertheless decide to maintain its leveraged position in order to avoid capital losses on securities purchased with leverage. However, the fund will not generally utilize leverage if it anticipates that its leveraged capital structure would result in a lower rate of return for its Common Stock than would be obtained if the Common Stock were unleveraged for any significant amount of time. DEAR SHAREHOLDER Senior High Income Portfolio, Inc. seeks to provide shareholders with high current income by investing primarily in senior debt obligations of companies, including portions of corporate loans made by banks and other financial institutions and both privately placed and publicly offered corporate bonds and notes. These securities by and large are rated in the lower rating categories of the established agencies or are unrated, as is commonly the case with bank loans. For the six-month period ended August 31, 1995, Senior High Income Portfolio, Inc.'s total investment return was +6.69%, based on a change in per share net asset value from $8.94 to $9.06, and assuming reinvestment of $0.454 per share income dividends. During the same period, the net annualized yield of the Portfolio's Common Stock was 10.21%. Since inception (April 30, 1993) through August 31, 1995, the total investment return on the Portfolio's Common Stock was +18.63%, based on a change in per share net asset value from $9.50 to $9.06, and assuming reinvestment of $1.995 pershare income dividends. At the end of the August period the Portfolio was 22.6% leveraged, having borrowed $67 million of its $120 million line of credit available at an average borrowing cost of 5.28%. (For a complete explanation of the benefits and risks of leveraging, see page 1 of this report to shareholders.) As of August 31, 1995, the Portfolio paid out a regular monthly dividend at an annualized rate of 9.25% so that the Portfolio could maintain a more stable level of distributions. Monthly dividends are limited to the lesser of the targeted monthly dividend rate in effect and the amount of previously undistributed net investment income held by the Portfolio. For Federal income tax purposes, the Portfolio is required to distribute substantially all of its net investment income for each calendar year. All net realized long-term and short-term capital gains, if any, will be distributed to the Portfolio's shareholders annually. The targeted monthly dividend rate has increased from 8.0% since September 1993. The Environment The six months ended August 31, 1995 were characterized by an interest-rate environment that proved a mixed blessing for the Portfolio's investments. The steady rise in interest rates, which ended with the Federal Reserve Board's monetary policy tightening in February, had a positive effect on the floating rate portion of the Portfolio while further eroding the values in the fixed-rate high- yield market in line with intermediate-term and long-term US Treasury securities. However, economic data released during the second quarter of 1995 showed evidence of a slowing economy. Gross domestic product growth for the first three months of 1995 was 2.7%, the weakest showing in the prior 18 months. Other signs of a sluggish economy included slowing growth in the manufacturing sector in May and June as well as three consecutive months of declines in the Index of Leading Economic Indicators, an occurrence that has often, but not always, forecast recessions. Therefore, by the end of the June quarter concerns had arisen that the economic soft landing could turn into an actual recession. With the financial markets trading for most of the second quarter on the assumption that interest rates were heading down, the Federal Reserve Board finally reduced the target Federal Funds rate by 25 basis points (0.25%) to 5.75% on July 6. This caused short-term interest rates, such as London Interbank Offered Rate (LIBOR), to fall. Portfolio Strategy In light of the current market environment, we continue to weigh the Portfolio just slightly toward senior secured floating-rate bank loans. Currently, 93% of the Portfolio's investments in corporate loans are currently accruing interest at a yield spread above LIBOR. LIBOR has historically tracked very closely with other short-term interest rates in the United States, particularly the Federal Funds rate. Since the average reset on the Portfolio's floating-rate investment is currently 51 days, the potential impact of any sustained increase or decrease on the yield of the Portfolio's floating-rate investments will not be fully realized for at least a comparable time period following any rate change. At August 31, 1995, floating-rate securities made up 51.0% of the market value of the Portfolio's investments, with an additional 47.1% invested in fixed-rate high-yield bonds. Liquidity in the loan market continued to be extremely strong throughout the reporting period. Demand for bank loans was strong, as banks competed for the fees and high spreads and agenting and investing in leveraged credits. Loan funds continued to see substantial inflows, enhancing already solid demand for funded term loans. In the loan market, both new and secondary issues continued to be well bid, providing strong liquidity at attractive prices. With the continued strength in stock prices and the amount of equity sponsor money presently being raised or sitting on the sidelines, it is likely that more buyout activity will be seen in the remainder of 1995 and into 1996. The August period, and July in particular, were good for the capital markets, including high-yield bonds. During July, the Federal Reserve Board eased monetary policy, recession fears disappeared because of stronger economic data releases, yield spreads tightened, and the Standard & Poor's 500 stock index gained more than 3.2%, boosted by another quarter of solid corporate earning results. Most sectors reported earnings strength, with technology and banking particularly strong. High-yield bonds rallied along with Treasury securities to close out the August period well above first-quarter levels. The Merrill Lynch Master High Yield Index has posted consecutive positive weekly returns thus far in 1995. With 14 consecutive weeks of inflows of at least $100 million per week into high-yield mutual funds and the absence of any real forward calendar until late in the August period, secondary market prices were bid up during the six months ending August 31, 1995. As more new issues were registered in May, secondary activity stalled and the rallying Treasury market left the high-yield bond market behind. The spread between the Merrill Lynch High Yield Master Index and ten-year Treasury securities widened to as much as 362 basis points by the end of August. Intramarket risk premiums also widened, with the BB/B spread increasing because of crossover buyers' interest in higher-quality issues and uncertainty about the direction of the economy. This tiering occurred as high- yield investors increasingly focused on credit quality. Defensive or solidly capitalized BB-rated credits were often several times oversubscribed at new issue and traded well in the secondary market. Cyclical and less well-capitalized B-rated credits often offered premium coupons, equity "kickers" and tighter covenants to attract some of the more aggressive buyers to new issues. There was some flight to less cyclical industries that are perceived to have healthier and more stable cash flows in a downturn. As a result, the cable, super-market and healthcare sectors all experienced tightening of spreads. Carrying over a common theme from 1994, investors treated issuers reporting disappointing performance harshly. This was particularly true of the retail segment where disappointing numbers for companies such as Color Tile Inc. sent their bonds down sharply. We continue to focus on buying higher-yielding, improving-quality cyclical credits. Fundamental support for these bonds should continue to be strong as long as there are signs of moderate growth and little inflation. Our investments in the building products com- panies reflect this philosophy as well as our emphasis on the retail, shipping, steel, chemicals and paper industries. These strategies benefited the total return of the Portfolio for the August period. We continue to focus on those issues with a maturity of 10 years or fewer that generally have five-year call protection. At August 31, 1995, cash equivalents totaled 1.7% of total assets. The Portfolio's average stated maturity was 6.7 years, but was expected to have a much shorter real average life because of the typically shorter average life of bank loans which are freely prepayable without call protection. The Portfolio is diversified in the floating-rate portion in 29 investments across 18 industries, and in the fixed-rate portion with 63 investments across 33 industries. The largest industry concentrations are in paper (12.4% of total assets), broadcast/media (8.1%), retail specialty (8.1%), metals (6.6%), and aerospace (4.8%). Stronger companies are taking advantage of attractive public debt and equity markets to improve their balance sheets. These trends translated into continued low default rates in both the bank loan and bond markets, although default rates have been higher than in 1994. Therefore, our primary strategy for the Portfolio was and will continue to be focusing on those companies that we believe are undervalued by the market or are generating improved earnings trends. The industry focus is on companies that have leading market shares, strong management and good cash flows. This strategy is reflected in our holdings of such cyclicals as Jefferson Smurfit/Container Corp. of America, Stone Container Corp., Algoma Steel, Inc., Bruno's Supermarkets, Continental Cablevision, Inc., and Host Marriott Corp. Instead of looking for yield in the bank loan market, we will consider lower-coupon issues that could become investment grade in a relatively short time frame and provide liquidity in the interim. When neither attractive bank loan nor high- yield bond investment opportunities are available, the excess cash was and will continue to be used to reduce the Portfolio's leverage facility. Sincerely, (Arthur Zeikel) Arthur Zeikel President (R. Douglas Henderson) R. Douglas Henderson Vice President and Portfolio Manager October 17, 1995 SCHEDULE OF INVESTMENTS
S&P Moody's Face Value INDUSTRIES Rating Rating Amount Corporate Debt Obligations Cost (Note 1b) Advertising--2.2% B+ B1 $ 5,000,000 Lamar Advertising Co., Senior Secured Notes, 11% due 5/15/2003 $ 5,056,250 $ 5,050,000 Aerospace--6.2% Aviall, Inc., Term Loan, Tranche B, due 11/30/2000:* NR++ NR++ 176,471 9.13% to 9/07/1995 176,471 176,471 NR++ NR++ 1,266,653 9.75% to 9/07/1995 1,266,653 1,266,653 NR++ NR++ 3,529,412 9.25% to 10/10/1995 3,529,412 3,529,412 NR++ NR++ 4,500,000 Gulfstream Delaware Corp., Term Loan, due 3/31/1998, 9% to 9/08/1995* 4,500,000 4,500,000 B B2 2,000,000 Talley Manufacturing & Technology, Inc., Senior Discount Debentures, 10.75% due 10/15/2003 2,030,000 2,020,000 BB- B1 3,000,000 UNC, Inc., Senior Notes, 9.125% due 7/15/2003 3,000,000 2,868,750 ------------ ------------ 14,502,536 14,361,286 Agricultural B B3 2,000,000 Fresh Del Monte Produce N.V., Series A, Products--0.7% Senior Notes, 10% due 5/01/2003 2,025,000 1,600,000 Airlines--1.9% NR++ NR++ 4,463,919 Northwest Airlines, Term Loan, due 6/15/1997, 9.125% to 10/20/1995* 4,463,919 4,463,919 Automotive Harvard Industries, Inc., Senior Notes: Products--2.0% B B2 1,500,000 12% due 7/15/2004 1,500,000 1,578,750 B+ B3 1,000,000 11.125% due 8/01/2005*** 1,000,000 1,012,500 NR++ Ba3 2,000,000 Walbro Corp., Senior Notes, 9.875% due 7/15/2005*** 1,996,520 1,990,000 ------------ ------------ 4,496,520 4,581,250 Broadcast/ American Media, Term Loan B, due Media--9.6% 9/30/2002:* NR++ Ba2 25,000 10.25% to 9/30/1995 25,000 25,000 NR++ Ba2 4,950,000 8.44% to 11/22/1995 4,950,000 4,950,000 NR++ B2 1,500,000 Benedek Broadcasting, 11.875% due 3/01/2005*** 1,500,000 1,567,500 Continental Cablevision, Inc., Senior Notes: BB+ Ba2 2,500,000 8.625% due 8/15/2003 2,500,000 2,500,000 BB- B1 2,500,000 9.125% due 11/01/2004*** 2,500,000 2,500,000 NR++ B3 2,000,000 Granite Broadcasting Corp., 10.375% due 5/15/2005*** 2,000,000 2,027,500 NR++ NR++ 2,500,000 Marcus Cable Co., Term Loan B, due 4/30/2004, 10.25% to 9/30/1995* 2,500,000 2,500,000 U.S. Radio Inc., Term Loan A, due 12/31/2001:* NR++ NR++ 865,477 9.4375% to 9/29/1995 865,477 865,477 NR++ NR++ 822,203 8.875% to 10/30/1995 822,203 822,203 U.S. Radio Inc., Term Loan B, due 9/23/2003:* NR++ NR++ 1,130,109 10.4375% to 9/29/1995 1,130,109 1,130,109 NR++ NR++ 1,138,937 9.875% to 10/30/1995 1,138,937 1,138,937 B B2 2,000,000 Young Broadcasting Corp., 10.125% due 2/15/2005*** 2,000,000 2,080,000 ------------ ------------ 21,931,726 22,106,726 Building & B+ Ba3 2,250,000 US Homes Corp., Senior Notes, 9.75% Construction due 6/15/2003 2,250,000 2,216,250 - --0.9% Building BB- Ba3 1,000,000 Schuller International Group, 10.875% Products--0.5% due 12/15/2004 1,000,000 1,097,500 Carbon & NR++ NR++ 2,436,892 UCAR International Inc., Term Loan B, Graphite due 1/31/2003, 8.875% to 9/08/1995* 2,436,892 2,436,892 Products--2.2% NR++ NR++ 1,275,601 UCAR International Inc., Term Loan C, due 7/31/2003, 9.375% to 9/08/1995* 1,275,601 1,275,601 NR++ NR++ 1,275,601 UCAR International Inc., Term Loan D, due 2/02/2004, 10.0625% to 11/08/1995* 1,275,601 1,275,601 ------------ ------------ 4,988,094 4,988,094 Casinos-- 5.0% B+ B2 4,500,000 GB Property Funding Corp., First Mortgage Notes, 10.875% due 1/15/2004 4,500,000 3,915,000 Harrah's Jazz Co., Term Loan B, due 9/30/1999:* NR++ NR++ 2,500,000 9.125% to 10/23/1995 2,500,000 2,500,000 NR++ NR++ 5,000,000 9.1875% to 12/21/1995 5,000,000 5,000,000 ------------ ------------ 12,000,000 11,415,000 Chemicals--2.8% BB+ Ba2 1,000,000 Borden Chemicals and Plastic, L.P., 9.50% due 5/01/2005 1,000,000 1,005,000 BB- B1 1,000,000 Huntsman Chemical Corp., Senior Notes, 11% due 4/15/2004 1,015,000 1,082,500 NR++ NR++ 4,311,326 Inspec Chemical Corp., Term Loan B, due 12/02/2000, 8.50% to 9/29/1995* 4,311,326 4,311,326 ------------ ------------ 6,326,326 6,398,826 Computers--1.0% BB- Ba3 2,100,000 Dell Computer Corp., Senior Notes, 11% due 8/15/2000 2,118,375 2,304,750 Consumer NR++ NR++ 5,000,000 CHF/Ebel USA Inc., Term Loan B, Products--3.3% due 9/30/2001, 9.1328% to 10/30/1995* 5,000,000 5,000,000 B+ Ba3 2,000,000 Coty Inc., 10.25% due 5/01/2005 2,000,000 2,060,000 B+ B2 1,000,000 Drypers Corp., Series B, Senior Notes, 12.50% due 11/01/2002 1,050,000 450,000 ------------ ------------ 8,050,000 7,510,000 Containers--1.7% B+ Ba3 4,000,000 Sweetheart Cup Co., Senior Secured Notes, 9.625% due 9/01/2000 4,000,000 3,940,000 Diversified--4.7% B+ B1 3,000,000 Essex Group Inc., 10% due 5/01/2003 3,041,250 2,940,000 NR++ NR++ 2,119,370 Figgie International, Fixed Rate Loan, due 1/01/1996, 10.75% to 9/30/1995* 2,119,370 2,119,370 B+ B2 1,000,000 J.B. Poindexter & Co., 12.50% due 5/15/2004 973,963 940,000 NR++ NR++ 4,813,625 Thermadyne Co., Term Loan B, due 2/01/2001, 8.875% to 9/07/1995* 4,813,625 4,813,625 ------------ ------------ 10,948,208 10,812,995 Drug NR++ NR++ 4,047,107 Duane Reade Co., Term Loan A, due Stores--4.6% 9/30/1997, 8.875% to 11/30/1995* 4,047,107 4,047,107 NR++ NR++ 1,500,000 Duane Reade Co., Term Loan B, due 9/30/1999, 9.375% to 11/30/1995* 1,500,000 1,500,000 BA3 Ba3 4,962,312 Thrifty Payless Inc., Term Loan B, due 9/30/2001, 9.0625% to 9/22/1995* 4,962,312 4,962,312 ------------ ------------ 10,509,419 10,509,419 Educational B B3 5,000,000 La Petite Holdings Corp., Senior Services--2.0% Secured Notes, 9.625% due 8/01/2001 5,000,000 4,550,000
SCHEDULE OF INVESTMENTS (continued)
S&P Moody's Face Value INDUSTRIES Rating Rating Amount Corporate Debt Obligations Cost (Note 1b) Electrical Berg Electronics Inc., Term Loan B, Instruments due 3/31/2001:* - --0.9% NR++ NR++ $ 8,333 8.94% to 9/29/1995 $ 8,333 $ 8,333 NR++ NR++ 1,966,667 8.94% to 11/27/1995 1,966,667 1,966,667 ------------ ------------ 1,975,000 1,975,000 Energy--1.1% BB- B1 2,500,000 Ferrellgas Partners, L.P., Series B, Floating Rate Senior Notes, 9% due 8/01/200 12,489,039 2,493,750 Fertilizer--2.1% BB- B1 3,750,000 Sherritt Gordon Ltd., Senior Notes, 9.75% due 4/01/2003 3,762,500 3,787,500 BB- B1 1,000,000 Sherritt, Inc., USD Debentures, 10.50% due 3/31/2014 1,000,000 1,015,000 ------------ ------------ 4,762,500 4,802,500 Food & NR++ NR++ 4,000,000 G. Heileman Brewing Co., Term Loan B, Beverage--5.9% due 12/31/2000, 9.6875% to 10/13/1995* 4,000,000 4,000,000 B+ B1 5,000,000 Royal Crown Corp., Senior Secured Notes, 9.75% due 8/01/2000 5,000,000 4,650,000 Specialty Foods Corp., Term Loan B, due 4/30/2001:* NR++ NR++ 1,666,667 8.1875% to 9/21/1995 1,666,667 1,666,667 NR++ NR++ 1,666,667 8.125% to 10/20/1995 1,666,667 1,666,667 NR++ NR++ 1,666,667 8.0625% to 1/22/1996 1,666,667 1,666,667 ------------ ------------ 14,000,001 13,650,001 Forest BB- Ba3 1,000,000 Mallette Inc., Senior Secured Notes, Products--2.3% 12.25% due 7/15/2004 1,000,000 1,110,000 BB- Ba3 2,000,000 Rainy River Forest Products, 10.75% due 10/15/2001 1,995,574 2,140,000 BB B1 2,000,000 Tembec Finance Corp., 9.875% due 9/30/2005 2,000,000 2,000,000 ------------ ------------ 4,995,574 5,250,000 Grocery--6.0% B- B3 4,000,000 Bruno's Supermarkets, 10.50% due 8/01/2005 4,000,000 3,890,000 B+ NR++ 1,979,000 Homeland Stores, Inc., Series D, Floating Rate Senior Secured Notes, 9.062% due 2/28/1997 (1) 1,979,000 1,959,210 NR++ Ba3 4,151,701 Pathmark Stores, Inc., Term Loan B, due 10/31/1999, 8.9375% to 11/30/1995* 4,151,701 4,151,701 BB- Ba3 1,000,000 The Penn Traffic Company, Senior Notes, 8.625% due 12/15/2003 1,000,000 855,000 B- B2 2,000,000 Pueblo Xtra International, Inc., Senior Notes, 9.50% due 8/01/2003 2,000,000 1,860,000 B+ B3 1,000,000 Stater Brothers Holdings, Inc., Senior Notes, 11% due 3/01/2001 1,000,000 985,000 ------------ ------------ 14,130,701 13,700,911 Health B B2 2,500,000 Charter Medical Corp., Senior Sub- Services--3.7% ordinated Notes, 11.25% due 4/15/2004 2,500,000 2,681,250 B B2 1,000,000 Integrated Health Services, Inc., Senior Subordinated Notes, 10.75% due 7/15/2004 1,000,000 1,065,000 B B1 5,200,000 MEDIQ/PRN Life Support Services, Inc., Senior Secured Notes, 11.125% due 7/01/1999 5,409,000 4,836,000 ------------ ------------ 8,909,000 8,582,250 Hotels--0.8% NR++ NR++ 2,000,000 Four Seasons Hotels Inc., Notes, 9.125% due 7/01/2000*** 1,934,018 1,940,000 Leasing & Rental B- B2 2,000,000 Cort Furniture Rental Corp., Senior Services--3.9% Notes, 12% due 9/01/2000 1,999,397 1,950,000 Prime Acquisition, Term Loan, due 12/31/2000:* NR++ NR++ 1,600,000 9.0625% to 9/05/1995 1,600,000 1,600,000 NR++ NR++ 1,780,000 9.0313% to 10/03/1995 1,780,000 1,780,000 NR++ NR++ 1,600,000 8.875% to 11/06/1995 1,600,000 1,600,000 BB- B1 2,000,000 The Scotsman Group, Inc., Senior Secured Notes, 9.50% due 12/15/2000 2,000,000 1,965,000 ------------ ------------ 8,979,397 8,895,000 Leisure & B- B3 1,500,000 Alliance Entertainment Corp., Entertain- 11.25% due 7/15/2005*** 1,500,000 1,492,500 ment--0.6% Manufacturing B- B3 1,000,000 Crain Industries Inc., 13.50% due - --2.0% 8/15/2005*** 1,000,000 1,005,000 B+ B1 3,623,000 Foamex L.P., Senior Secured Notes, 9.50% due 6/01/2000 3,643,000 3,532,425 ------------ ------------ 4,643,000 4,537,425 Marking B+ B2 1,000,000 Monarch Acquisition Corp., 12.50% due Devices--0.4% 7/01/2003*** 1,000,000 1,015,000 Metals--8.3% B B1 1,000,000 Algoma Steel, Inc.,12.375% due 7/15/2005 902,167 920,000 B B2 3,000,000 Bayou Steel Corp., First Mortgage Notes, 10.25% due 3/01/2001 3,000,000 2,835,000 B B1 1,000,000 Gulf States Steel Corp., 13.50% due 4/15/2003*** 989,286 970,000 NR++ NR++ 2,000,000 Renco Metals, Inc., 12% due 7/15/2000 1,971,999 2,100,000 B+ B2 2,000,000 Republic Engineered Steel, Inc., First Mortgage Notes, 9.875% due 12/15/2001 2,000,000 1,860,000 B- B3 5,000,000 Russell Metals, 10.25% due 6/15/2000 5,011,250 4,637,500 B+ B1 3,000,000 WCI Steel Inc., Senior Notes, 10.50% due 3/01/2002 3,000,000 2,940,000 B B2 3,000,000 Weirton Steel Corp., Senior Notes, 10.75% due 6/01/2005*** 2,955,558 2,760,000 ------------ ------------ 19,830,260 19,022,500 Musical NR++ B3 1,000,000 Selmer Co. Inc., 11% due 5/15/2005*** 1,000,000 960,000 Instruments - --0.4% Paper--16.3% Fort Howard Corp., Term Loan B, due 12/31/2002:* NR++ Ba3 5,000,000 9% to 9/19/1995 5,000,000 5,000,000 NR++ Ba3 5,000,000 8.88% to 12/19/1995 5,000,000 5,000,000 B B3 1,000,000 Gaylord Container Corp., Senior Notes, 11.50% due 5/15/2001 1,000,000 1,052,500 Jefferson Smurfit/Container Corp. of America, Term Loan B, due 4/30/2002:* NR++ B1 375,000 9.4375% to 9/25/1995 375,000 375,000 NR++ B1 1,633,333 8.9375% to 10/20/1995 1,633,333 1,633,333 6,833,333 9.375% to 10/24/1995 6,833,333 6,833,333 Repap New Brunswick Inc.: BB- Ba3 2,000,000 9.50% due 7/15/2000 2,027,500 1,995,000 BB- Ba3 1,000,000 9.875% due 7/15/2000 1,000,000 1,000,000 NR++ Ba2 7,500,000 S.D. Warren Co., Term Loan B, due 12/19/2002, 8.94% to 9/25/1995* 7,500,000 7,500,000 Stone Container Corp., Canadian Tender Loan, due 4/01/2000:* NR++ Ba3 3,450,000 9% to 9/18/1995 3,450,000 3,450,000 NR++ Ba3 3,712,500 9% to 10/16/1995 3,712,500 3,712,500 ------------ ------------ 37,531,666 37,551,666
SCHEDULE OF INVESTMENTS (concluded)
S&P Moody's Face Value INDUSTRIES Rating Rating Amount Corporate Debt Obligations Cost (Note 1b) Printing & NR++ NR++ $2,496,728 Ziff Davis Acquisition Corp., Term Publishing--2.1% Loan B, due 12/31/2001, 9.4375% to 9/28/1995* $ 2,496,728 $ 2,496,728 NR++ NR++ 2,351,725 Ziff Davis Acquisition Corp., Term Loan C, due 12/31/2002, 9.9375% to 9/28/1995* 2,351,725 2,351,725 ------------ ------------ 4,848,453 4,848,453 Restaurant--1.7% BB- B1 4,000,000 Host Marriott Corp., 9.50% due 5/15/2005*** 3,895,573 3,830,000 Retail-- CCC+ B2 2,500,000 Color Tile Inc., Senior Notes, 10.75% Specialty--9.9% due 12/15/2001 2,500,000 1,000,000 Federated Department Stores, Inc., Term Loan, due 3/31/2000:* NR++ Ba1 3,125,000 7.4375% to 9/25/1995 3,125,000 3,125,000 NR++ Ba1 1,875,000 7% to 9/29/1995 1,875,000 1,875,000 Music Acquisition Corp., Term Loan B, due 2/28/2001:* NR++ NR++ 1,812,500 8.875% to 9/18/1995 1,812,500 1,812,500 NR++ NR++ 3,062,500 8.9375% to 9/21/1995 3,062,500 3,062,500 NR++ NR++ 9,912,700 Saks & Co., Term Loan, Tranche B, due 6/30/2000, 9.25% to 11/09/1995* 9,912,700 9,912,700 B+ B1 2,000,000 Specialty Retailers, Inc., Series A, Senior Notes, 10% due 8/15/2000 2,000,000 1,930,000 ------------ ------------ 24,287,700 22,717,700 Security NR++ NR++ 4,194,740 Alert Centre Inc., Term Loan, due Systems--1.8% 8/01/2001, 8.875% to 9/05/1995* 4,194,740 4,194,740 Shipping--1.0% BB- Ba2 1,000,000 Eletson Holdings, Inc., 9.25% due 11/15/2003 915,978 960,000 B- B3 1,500,000 OMI Corp., Senior Notes, 10.25% due 11/01/2003 1,500,000 1,275,000 ------------ ------------ 2,415,978 2,235,000 Utilities--2.5% B+ B1 2,000,000 Beaver Valley Funding, 8.625% due 6/01/2007 1,698,283 1,751,080 BB Ba2 2,000,000 Cleveland Electric Illuminating, Inc., 9.50% due 5/15/2005 1,996,229 2,002,800 B Ba3 2,000,000 Public Service Company of New Mexico, 10.30% due 1/15/2014 2,020,000 2,059,500 ------------ ------------ 5,714,512 5,813,380 Warehousing & D Caa 2,000,000 Americold Corp., First Mortgage Bonds, Storage--2.8% Series B, 11.50% due 3/01/2005 2,045,000 1,940,000 NR++ NR++ 4,581,250 Pierce Leahy Corp., Term Loan, Tranche A, due 6/30/2001, 9.125% to 9/29/1995* 4,581,250 4,581,250 ------------ ------------ 6,626,250 6,521,250 Total Corporate Debt Obligations--127.8% 299,329,735 293,935,041 Shares Held Warrants Leasing & Rental NR++ NR++ 66,000 Cort Furniture Rental Corp. (a) 760 82,500 Services--0.0% Metals--0.0% NR++ NR++ 1,000 Gulf States Steel Corp. (a) 11,000 1,500 Total Warrants--0.0% 11,760 84,000 Face Amount Short-Term Securities Commercial $ 178,000 General Electric Capital Corp., Paper**--0.1% 5.82% due 9/01/1995 178,000 178,000 Total Short-Term Securities--0.1% 178,000 178,000 Total Investments--127.9% $299,519,495 294,197,041 ============ Liabilities in Excess of Other Assets--(27.9%) (64,183,003) ------------ Net Assets--100.0% $230,014,038 ============ (1)Interest rate resets quarterly and is based on the three month LIBOR (London Interbank Offered Rate), plus an interest rate spread of three hundred basis points. (a)Warrants entitle the fund to purchase a predetermined number of shares of common stock/face amount of bonds. The purchase price and number of shares/face amount are subject to adjustments under certain conditions until the expiration date. ++Not Rated. *Floating or Variable Rate Corporate Loans--The interest rates on floating or variable rate corporate loans are subject to change periodically based on the change in the prime rate of a US Bank, LIBOR (London Interbank Offered Rate), or, in some cases, another base lending rate. The interest rates shown are those in effect at August 31, 1994. **Commercial Paper is traded on a discount basis; the interest rate shown is the discount rate paid at the time of purchase by the fund. ***Restricted securities as to resale. The value of the fund's investment in restricted securities was $25,150,000, representing 10.93% of net assets. Acquisition Value Issue Dates Cost (Note 1b) Alliance Entertainment Corp., 11.25% due 7/15/2005 7/25/1995 $ 1,500,000 $ 1,492,500 Benedek Broadcasting, 11.875% due 3/01/2005 3/03/1995 1,500,000 1,567,500 Continental Cablevision, Inc., Senior Notes, 9.125% due 11/01/2004 7/20/1995 2,500,000 2,500,000 Crain Industries Inc., 13.50% due 8/15/2005 8/29/1995 1,000,000 1,005,000 Four Seasons Hotels Inc., Notes, 9.125% due 7/01/2000 1/25/1994 1,934,018 1,940,000 Granite Broadcasting Corp., 10.375% due 5/15/2005 5/12/1995 2,000,000 2,027,500 Gulf States Steel Corp., 13.50% due 4/15/2003 8/08/1995 989,286 970,000 Harvard Industries, Inc., Senior Notes, 11.125% due 8/01/2005 7/28/1995 1,000,000 1,012,500 Host Marriott Corp., 5/18/1995 to 9.50% due 5/15/2005 7/31/1995 3,895,573 3,830,000 Monarch Acquisition Corp., 12.50% due 7/01/2003 6/23/1995 1,000,000 1,015,000 Selmer Co. Inc., 11% due 5/15/2005 5/25/1995 1,000,000 960,000 Weirton Steel Corp., Senior Notes, 10.75% due 6/01/2005 6/05/1995 2,955,558 2,760,000 Walbro Corp., Senior Notes, 7/27/1995 to 9.875% due 7/15/2005 8/08/1995 1,996,520 1,990,000 Young Broadcasting Corp., 10.125% due 2/15/2005 6/07/1995 2,000,000 2,080,000 Total $25,270,955 $25,150,000 =========== =========== See Notes to Financial Statements.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of August 31, 1995 Assets: Investments, at value (identified cost--$299,519,495) (Note 1b) $294,197,041 Cash 308,236 Receivables: Interest $ 4,889,035 Securities sold 1,039,632 5,928,667 ------------ Deferred facility expenses (Note 6) 43,829 Deferred organization expenses (Note 1f) 69,749 Prepaid expenses and other assets 1,142 ------------ Total assets 300,548,664 ------------ Liabilities: Payables: Loans (Note 6) 67,000,000 Dividends to shareholders (Note 1g) 666,472 Interest on loans (Note 6) 318,544 Investment adviser (Note 2) 121,906 Commitment fees 18,910 68,125,832 ------------ Deferred income (Note 1e) 2,293,186 Accrued expenses and other liabilities 115,608 Total liabilities 70,534,626 ------------ Net Assets: Net assets $230,014,038 ============ Capital: Common Stock, par value $.10 per share; 200,000,000 shares authorized (25,388,292 shares issued and outstanding) $ 2,538,829 Paid-in capital in excess of par 238,288,358 Undistributed investment income--net 4,711,731 Accumulated realized capital losses on investments--net (Note 7) (10,202,426) Unrealized depreciation on investments--net (5,322,454) ------------ Total capital--Equivalent to $9.06 net asset value per share of Common Stock (market price--$9.00) $230,014,038 ============ See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the Six Months Ended August 31, 1995 Investment Income Interest and discount earned $ 15,412,894 (Note 1e): Facility and other fees 443,347 ------------ Total income 15,856,241 ------------ Expenses: Loan interest expense fees (Note 6) 2,449,893 Investment advisory fees (Note 2) 753,069 Professional fees 53,399 Accounting services (Note 2) 50,796 Borrowing costs (Note 6) 48,452 Facility fee amortization (Note 6) 43,101 Transfer agent fees (Note 2) 35,688 Printing and shareholder reports 33,690 Amortization of organization expenses (Note 1f) 18,997 Custodian fees 16,716 Directors' fees and expenses 13,241 Pricing services 3,660 Listing fees 136 Other 18,562 ------------ Total expenses 3,539,400 ------------ Investment income--net 12,316,841 ------------ Realized & Realized loss on investments--net (1,408,602) Unrealized Gain Change in unrealized depreciation on investments--net 3,627,410 (Loss) on ------------ Investments Net Increase in Net Assets Resulting from Operations $ 14,535,649 - --Net (Notes ============ 1c, 1e & 3): See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the Months Ended Year Ended August 31, February 28, Increase (Decrease) in Net Assets: 1995 1995 Operations: Investment income--net $ 12,316,841 $ 22,904,509 Realized loss on investments--net (1,408,602) (8,793,344) Change in unrealized appreciation(depreciation) on investments--net 3,627,410 (13,013,937) ------------ ------------ Net increase in net assets resulting from operations 14,535,649 1,097,228 ------------ ------------ Dividends & Investment income--net (11,528,645) (21,343,397) Distributions to Realized gain on investments--net -- (1,784,188) Shareholders ------------ ------------ (Note 1g): Net decrease in net assets resulting from dividends and distributions to shareholders (11,528,645) (23,127,585) ------------ ------------ Capital Share Offering costs resulting from the issuance of Common Stock -- (85,747) Transactions Value of shares issued to Common Stock shareholders in (Note 4): reinvestment of dividends and distributions -- 781,304 ------------ ------------ Net increase in net assets resulting from capital share transactions -- 695,557 ------------ ------------ Net Assets: Total increase (decrease) in net assets 3,007,004 (21,334,800) Beginning of period 227,007,034 248,341,834 ------------ ------------ End of period* $230,014,038 $227,007,034 ============ ============ *Undistributed investment income--net $ 4,711,731 $ 3,923,535 ============ ============ See Notes to Financial Statements.
STATEMENT OF CASH FLOWS For the Six Months Ended August 31, 1995 Cash Provided by Net increase in net assets resulting from operations $ 14,535,649 Operating Adjustments to reconcile net increase in net assets resulting Activities: from operations to net cash provided by operating activities: Decrease in receivables 447,796 Increase in other assets (1,042) Decrease in other liabilities (138,530) Realized and unrealized loss on investments--net (2,218,808) Amortization of premium and discount (638,588) ------------ Net cash provided by operating activities 11,986,477 ------------ Cash Provided by Proceeds from sales of long-term investments 99,530,806 Investing Purchases of long-term investments (88,993,018) Activities: Purchases of short-term investments (114,374,230) Proceeds from sales and maturities of short-term investments 118,304,000 ------------ Net cash provided by investing activities 14,467,558 ------------ Cash Used for Short-term borrowings (15,000,000) Financing Dividends paid to shareholders (11,569,681) Activities: ------------ Net cash used for financing activities (26,569,681) ------------ Cash: Net increase in cash (115,646) Cash at beginning of period 423,882 ------------ Cash at end of period $ 308,236 ============ Cash Flow Cash paid for interest $ 2,566,471 Information: ============ See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived from information provided in the financial For the Six For the For the Period statements. Months Ended Year Ended April 30, 1993++ August 31, Feb. 28, to Feb. 28, Increase (Decrease) in Net Asset Value: 1995++++ 1995++++ 1994 Per Share Net asset value, beginning of period $ 8.94 $ 9.82 $ 9.50 Operating ------------ ------------ ------------ Performance: Investment income--net .49 .90 .70 Realized and unrealized gain (loss) on invest- ments--net .08 (.87) .25 ------------ ------------ ------------ Total from investment operations .57 .03 .95 ------------ ------------ ------------ Less dividends and distributions from: Investment income--net (.45) (.84) (.61) Realized gain on investments--net -- (.07) (.02) ------------ ------------ ------------ Total dividends and distributions (.45) (.91) (.63) ------------ ------------ ------------ Net asset value, end of period $ 9.06 $ 8.94 $ 9.82 ============ ============ ============ Market price per share, end of period $ 9.00 $ 8.625 $ 9.375 ============ ============ ============ Total Investment Based on net asset value per share 6.69%+++ .82% 10.28%+++ Return:** ============ ============ ============ Based on market price per share 9.85%+++ 1.87% .02%+++ ============ ============ ============ Ratios to Average Expenses, net of reimbursement and excluding Net Assets: interest expense .94%* .80% .67%* ============ ============ ============ Expenses, net of reimbursement 3.05%* 2.46% 1.61%* ============ ============ ============ Expenses 3.05%* 2.46% 1.75%* ============ ============ ============ Investment income--net 10.61%* 7.07% 7.33%* ============ ============ ============ Supplemental Net assets, end of period (in thousands) $ 230,014 $ 227,007 $ 248,342 Data: ============ ============ ============ Portfolio turnover 29.99% 44.81% 52.73% ============ ============ ============ V *Annualized. **Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, result in substantially different returns. Total investment returns exclude the effects of sales loads. ++Commencement of Operations. ++++Based on average shares outstanding during the period. +++Aggregate total investment return. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: Senior High Income Portfolio, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. These unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period represented. All such adjustments are of a normal recurring nature. The Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis. The Fund's Common Stock is listed on the New York Stock Exchange under the symbol ARK. (a) Corporate debt obligations--The Fund invests principally in senior debt obligations ("Senior Debt") of companies, including corporate loans made by banks and other financial institutions and both privately and publicly offered corporate bonds and notes. Because agents and intermediaries are primarily commercial banks, the Fund's investment in corporate loans could be considered concentrated in financial institutions. (b) Valuation of investments--Portfolio securities are valued on the basis of prices furnished by one or more pricing services, which determine prices for normal, institutional-size trading units. In certain circumstances, portfolio securities are valued at the last sale price on the exchange that is the primary market for such securities, or the last quoted bid price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales during the day. The value of interest rate swaps, caps, and floors is determined in accordance with a formula and then confirmed periodically by obtaining a bank quotation. Positions in options are valued at the last sale price on the market where any such option is principally traded. Securities for which there exist no price quotations or valuations and all other assets are valued at fair value as determined in good faith by or on behalf of the Board of Directors of the Fund. Since corporate loans are purchased and sold primarily at par value, the Fund values the loans at par, unless Fund Asset Management, L.P. ("FAM") determines par does not represent fair value. In the event such a determination is made, fair value will be determined in accordance with guidelines approved by the Fund's Board of Directors. Obligations with remaining maturities of sixty days or less are valued at amortized cost unless this method no longer produces fair valuations. (c) Derivative financial instruments--The Fund may engage in various portfolio strategies to seek to increase its return by hedging its portfolio against adverse movements in the debt markets. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. * Financial futures contracts--The Fund may purchase or sell interest rate futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. * Options--The Fund is authorized to write and purchase call and put options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction is less than or exceeds the premiums paid or received). Written and purchased options are non-income producing investments. NOTES TO FINANCIAL STATEMENTS (concluded) * Interest rate transactions--The Fund is authorized to enter into interest rate swaps and purchase or sell interest rate caps and floors. In an interest rate swap, the Fund exchanges with another party their respective commitments to pay or receive interest on a specified notional principal amount. The purchase of an interest rate cap (or floor) entitles the purchaser, to the extent that a specified index exceeds (or falls below), a predetermined interest rate, to receive payments of interest equal to the difference between the index and the predetermined rate on a notional principal amount from the party selling such interest rate cap (or floor). (d) Income taxes--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. (e) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Interest income is recognized on the accrual basis. Realized gains and losses on security transactions are determined on the identified cost basis. Facility fees are accreted to income over the term of the related loan. (f) Deferred organization expenses--Deferred organization expenses are amortized on a straight-line basis over a five-year period. (g) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The Fund may at times pay out less than the entire amount of net investment income earned in any particular period and may at times pay out such accumulated undistributed income in other periods to permit the Fund to maintain a more stable level of distributions. 2. Investment Advisory Agreement with Affiliates: The Fund has entered into an Investment Advisory Agreement with FAM. The general partner of FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited partner. FAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate of 0.50% of the Fund's average weekly net assets plus the proceeds of any outstanding borrowings used for leverage. Accounting services are provided to the Fund by FAM at cost. During the six months ended August 31, 1995, the Fund paid Merrill Lynch Security Pricing Service, an affiliate of Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), $719 for security price quotations to compute the net asset value of the Fund. Certain officers and/or directors of the Fund are officers and/or directors of FAM, PSI, MLPF&S, and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended August 31, 1995 were $88,993,018 and $100,570,438, respectively. Net realized and unrealized losses as of August 31, 1995 were as follows: Realized Unrealized Losses Losses Long-term investments $(1,408,602) $(5,322,454) ----------- ----------- Total $(1,408,602) $(5,322,454) =========== =========== As of August 31, 1995, net unrealized depreciation for financial reporting and Federal income tax purposes aggregated $5,322,454, of which $1,676,959 related to appreciated securities and $6,999,413 related to depreciated securities. The aggregate cost of investments at August 31, 1995 for Federal income tax purposes was $299,519,495. 4. Capital Share Transaction: The Fund is authorized to issue 200,000,000 shares of capital stock par value $.10, all of which are initially classified as Common Stock. The Board of Directors is authorized, however, to classify and reclassify any unissued shares of capital stock without approval of the holders of Common Stock. For the six months ended August 31, 1995, shares issued and outstanding remained constant at 25,388,292. At August 31, 1995, total paid-in capital amounted to $240,827,187. 5. Unfunded Loan Interests: As of August 31, 1995, the Fund had unfunded loan commitments of $2,500,000, which would be extended at the option of the borrower, pursuant to the following loan agreements: Unfunded Commitment Borrower (in thousands) Marcus Cable Co. $2,500 6. Short-Term Borrowings: On June 16, 1993, the Fund entered into a credit facility with a syndicate of banks led by The Bank of New York consisting of a one- year $55,000,000 revolving credit facility bearing interest on outstanding balances at an alternate base rate plus 0.25% and/or LIBOR plus 1.25%, and of a two-year $25,000,000 term loan facility bearing interest on outstanding balances at an alternate base rate plus 0.50% and/or LIBOR plus 1.375%. On June 10, 1994, this credit facility and all outstanding balances thereunder were refinanced by a one-year $120,000,000 revolving credit facility extended by a syndicate of banks led by The Bank of New York and bearing interest on outstanding balances at the Federal Funds rate plus 1.125% and/or an alternate base rate plus 0.125% and/or LIBOR plus 1.125%. On June 9, 1995, the existing credit facility was extended for an additional year and amended to reduce applicable interest rates on outstanding balances to Federal Funds rate plus 0.75% and/or alternate base rate plus 0% and/or LIBOR plus 0.75%. For the six months ended August 31, 1995, the maximum amount borrowed was $86,000,000, the average amount borrowed was approximately $69,200,000, and the daily weighted average interest rate was 6.89%. For the year ended August 31, 1995, facility and commitment fees aggregated approximately $91,553. 7. Capital Loss Carryforward: At February 28, 1995, the Fund had a net capital loss carryforward of approximately $5,318,000, all of which expires in 2003. This amount will be available to offset like amounts of any future taxable gains. PER SHARE INFORMATION Per Share Selected Quarterly Financial Data*
Dividends/Distributions Net Realized Unrealized Investment Gains Gains Net Investment Capital For the Quarter Income (Losses) (Losses) Income Gains September 1, 1993 to November 30, 1993 $.22 $ .04 $ .06 $.20 -- December 1, 1993 to February 28, 1994 .24 .04 .06 .24 $.02 March 1, 1994 to May 31, 1994 .22 (.03) (.49) .20 -- June 1, 1994 to August 31, 1994 .23 (.14) (.05) .21 -- September 1, 1994 to November 30, 1994 .22 (.09) (.17) .21 -- December 1, 1994 to February 28, 1995 .23 (.09) .19 .22 .07 March 1, 1995 to May 31, 1995 .24 (.02) .20 .22 -- June 1, 1995 to August 31, 1995 .25 (.04) (.06) .23 -- Net Asset Value Market Price** For the Quarter High Low High Low Volume*** September 1, 1993 to November 30, 1993 $9.77 $9.54 $10.125 $9.375 1,881 December 1, 1993 to February 28, 1994 9.89 9.70 9.875 9.125 1,990 March 1, 1994 to May 31, 1994 9.80 9.28 9.625 8.75 2,557 June 1, 1994 to August 31, 1994 9.40 9.13 9.29 8.25 3,034 September 1, 1994 to November 30, 1994 9.17 8.90 9.125 7.75 3,252 December 1, 1994 to February 28, 1995 8.94 8.74 8.875 8.375 2,284 March 1, 1995 to May 31, 1995 9.16 8.95 8.875 8.125 3,147 June 1, 1995 to August 31, 1995 9.17 9.04 9.125 8.50 3,279 *Calculations are based upon shares of Common Stock outstanding at the end of each quarter. **As reported in the consolidated transaction reporting system. ***In thousands.
OFFICERS AND DIRECTORS Arthur Zeikel, President and Director Ronald W. Forbes, Director Cynthia A. Montgomery, Director Charles C. Reilly, Director Kevin A. Ryan, Director Richard R. West, Director Terry K. Glenn, Executive Vice President N. John Hewitt, Senior Vice President Donald C. Burke, Vice President John W. Fraser, Vice President R. Douglas Henderson, Vice President Gerald M. Richard, Treasurer Patrick D. Sweeney, Secretary Custodian and Transfer Agent The Bank of New York 110 Washington Street New York, New York 10286 NYSE Symbol ARK -----END PRIVACY-ENHANCED MESSAGE-----