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SHENKMAN CAPITAL MANAGEMENT, INC.
STATEMENT OF POLICIES AND PROCEDURES
RELATING TO PROXY VOTING
As of August 1, 2003
Set forth below are the policies and procedures of Shenkman Capital
Management, Inc. ("Shenkman Capital") with respect to proxy voting. This
Statement does not attempt to describe every regulatory and compliance
requirement applicable to proxy voting, but rather summarizes some of the
issues involved and establishes general rules and procedures. Although this
Statement expressly addresses proxy voting, the policies and procedures set
forth herein apply to any solicitation of votes with respect to securities
held in a fully discretionary client account, such as, for example, the
solicitation of the consent of the holders of fixed income securities to a
proposed restructuring.
I. Policy
Proxy voting is an important right of shareholders and reasonable care and
diligence must be undertaken to ensure that such rights are properly and
timely exercised. When Shenkman Capital has discretion to vote the proxies
of its clients, it will vote those proxies in the best interest of its
clients and in accordance with this Statement.
II. Proxy Voting Procedures
(a) Shenkman Capital will instruct each custodian for a discretionary
client account to deliver to Shenkman Capital all proxy solicitation
materials received with respect to the account. Shenkman Capital will
review the securities held in its discretionary client accounts on a
regular basis to confirm that it receives copies of all proxy solicitation
materials concerning such securities. Shenkman Capital will vote all
proxies on behalf of discretionary client accounts after carefully
considering all proxy solicitation materials and other information and
facts it deems relevant. A Portfolio Manager will make all voting decisions
on behalf of a discretionary client account based solely on his/her
determination of the best interests of that account. Shenkman Capital will
use reasonable efforts to respond to each proxy solicitation by the
deadline for such response.
(b) All proxies received by Shenkman Capital will be sent to the Portfolio
Administration Department for processing as follows:
(1) Maintain a record of each proxy received;
(2) Determine which accounts managed by Shenkman Capital hold the
security to which the proxy relates;
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(3) Forward the proxy to a Portfolio Manager together with a list of
accounts that hold the security, the number of votes each account
controls (reconciling any duplications), and the date by which
Shenkman Capital must vote the proxy in order to allow enough
time for the completed proxy to be returned to the issuer via the
custodian prior to the vote taking place.
(4) Absent material conflicts (see Section IV), a Portfolio Manager
will determine how Shenkman Capital should vote the proxy. The
Portfolio Manager will send its decision on how Shenkman Capital
will vote a proxy to the Portfolio Administration Department,
which will be responsible for making sure the proxy has been
completed and returning it to issuer and/or the custodian in a
timely and appropriate manner.
Shenkman Capital's General Counsel shall monitor the firm's processing of
proxy statements to assure that all proxy statements are handled and
processed in accordance with this Statement. The General Counsel will
designate one or more employees of the firm to be responsible for insuring
that all proxy statements are received and that Shenkman Capital responds
to them in a timely manner.
III. Voting Guidelines
Shenkman Capital will review all proxy solicitation materials it receives
concerning securities held in a discretionary client account. Shenkman
Capital will evaluate all such information and may seek additional
information from the party soliciting the proxy and independent
corroboration of such information when Shenkman Capital considers it
appropriate and when it is reasonably available.
In the absence of specific voting guidelines from the client, Shenkman
Capital will vote proxies in the best interests of each particular client,
which may result in different voting results for proxies for the same
issuer. Shenkman Capital believes that voting proxies in accordance with
the following guidelines is in the best interests of its clients.
Generally, Shenkman Capital will vote FOR a proposal when it believes that
the proposal serves the best interests of the discretionary client account
whose proxy is solicited because, on balance, the following factors
predominate:
(i) the proposal has a positive economic effect on shareholder value;
(ii) the proposal poses no threat to existing rights or shareholders;
(iii) the dilution, if any, of existing shares that would result from
approval of the proposal is warranted by the benefits of the
proposal; and
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(iv) the proposal does not limit or impair accountability to shareholders
on the part of management and the board of directors.
Generally, Shenkman Capital will vote AGAINST a proposal if it believes
that, on balance, the following factors predominate:
(i) the proposal has an adverse economic effect on shareholder value;
(ii) the proposal limits the rights or shareholders in a manner or to an
extent that is not warranted by the benefits of the proposal;
(iii) the proposal causes significant dilution of shares that is not
warranted by the benefits of the proposal;
(iv) the proposal limits or impairs accountability to the shareholders on
the part of management or the board of directors; or
(v) the proposal is a shareholder initiative that Shenkman Capital
believes wastes time and resources of the company or reflects the
grievance of one individual.
Shenkman Capital will ABSTAIN from voting proxies when it believes that it
is appropriate. Usually, this occurs when Shenkman Capital believes that a
proposal will not have a material effect on the investment strategy it
pursues for its discretionary client accounts.
IV. Conflicts of Interest
Due to the size and nature of Shenkman Capital's operations and its limited
affiliations in the securities industry, Shenkman Capital does not expect
that material conflicts of interest will arise between it and a
discretionary client account over proxy voting. Shenkman Capital
recognizes, however, that such conflicts may arise from time to time, such
as, for example, when Shenkman Capital or one of its affiliates has a
business arrangement that could be affected by the outcome of a proxy vote
or has a personal or business relationship with a person seeking
appointment or re-appointment as a director of a company. If a material
conflict of interest arises, Shenkman Capital will determine whether voting
in accordance with the voting guidelines and factors described above is in
the best interests of the client. Under no circumstances will Shenkman
Capital place its own interests ahead of the interests of its discretionary
client accounts in voting proxies.
If Shenkman Capital determines that the proxy voting policies do not
adequately address a material conflict or interest related to a proxy,
Shenkman Capital will provide the affected client with copies of all proxy
solicitation materials received by Shenkman Capital with respect to that
proxy, notify that client of the actual or potential conflict of interest,
and of Shenkman Capital's intended response to the proxy request (which
response will be in accordance with the policies set forth in this
Statement), and request
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that the client consent to Shenkman Capital's intended response. If the
client consents to Shenkman Capital's intended response or fails to respond
to the notice within a reasonable period of time specified in the notice,
Shenkman Capital will vote the proxy as described in the notice. If the
client objects to Shenkman Capital's intended response, Shenkman Capital
will vote the proxy as directed by the client.
V. Disclosure
(a) Shenkman Capital will disclose in its Form ADV, Part II that clients
may contact Shenkman Capital (via e-mail or telephone) in order to
obtain information on how Shenkman Capital voted such client's
proxies, and to request a copy of this Statement. If a client requests
this information, Shenkman Capital will prepare a written response to
the client that lists, with respect to each voted proxy that the
client has inquired about, (1) the name of the issuer; (2) the
proposal voted upon, and (3) how Shenkman Capital voted the client's
proxy.
(b) A concise summary of this Statement will be included in Shenkman
Capital's Form ADV, Part II, and will be updated whenever these
policies and procedures are updated. Shenkman Capital will arrange for
a copy of this summary to be sent to all existing clients as part of
its annual distribution of its Form ADV, Part II.
VI. Recordkeeping
Shenkman Capital will maintain files relating to its proxy voting
procedures in an easily accessible place. Records will be maintained and
preserved for five years from the end of the fiscal year during which the
last entry was made on a record, with records for the first two years kept
in the offices of Shenkman Capital. Records of the following will be
included in the files:
(a) Copies of these proxy voting policies and procedures, and any
amendments thereto.
(b) A copy of each proxy statement that it receives; provided, however,
that Shenkman Capital may rely on obtaining a copy of proxy statements
from the SEC's EDGAR system for those proxy statements that are so
available.
(c) A record of each vote that Shenkman Capital casts.
(d) A copy of any document Shenkman Capital created that was material to
making a decision how to vote proxies, or that memorializes that
decision.
(e) A copy of each written client request for information on how Shenkman
Capital voted such client's proxies, and a copy of any written
response to any (written or oral) client request for information on
how Shenkman Capital voted its proxies.
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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
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Alfred A. Bingham III, Vice President and Treasurer
Date: February 24, 2005
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
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Richard H. Forde, Chairman of the Board and President
Date: February 24, 2005
By (Signature and Title) /s/ Alfred A. Bingham III
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Alfred A. Bingham III, Vice President and Treasurer
Date: February 24, 2005