<PAGE>
CIM HIGH YIELD SECURITIES--1995 REVIEW AND OUTLOOK
Dear Shareholder:
1995 proved to be an excellent year for the financial markets.
The yield on
the 10-year Treasury closed at 5.5%, a 225 basis point decline
from the prior
year, while stocks, as measured by the S&P 500, were up more than
37%. Taking
its cue from the strong Treasury rally the high yield market
performed well
but lagged governments, stocks and investment grade corporates. As
a result,
the spreads between high yield bonds and Treasuries were
approximately 100
basis points wider at year-end than at the beginning of the year.
We believe
the approximately 500 basis point differential at year-end makes
high yield
bonds an attractive alternative to other asset classes. We note
that the 17.2%
five year compounded average return of the high yield market is
approximately
600 basis points ahead of investment grade corporates, as measured
by Merrill
Lynch indices.
The total return for the CIM High Yield Securities (the "Fund")
for the year
ended December 31, 1995 was 15.5% based on net asset value (before
Fund
expenses) compared with 16.4% for the Lipper High Current Yield
universe for
the same time period. We believe the relative underperformance
this year was
due to the impressive returns in sectors in which the Fund does
not invest,
such as deferred interest securities (zero coupon securities) and
long
duration securities, which returned more than 25%. We are pleased
to report
that the Fund's three year and five year compounded annual returns
of 13.0%
and 20.7%, respectively, remain far in excess of the Lipper High
Current Yield
universe, which returned 10.2% and 16.7%, respectively.
Besides benefitting from falling interest rates, the high yield
market was
supported by strong technical factors. High yield mutual funds
attracted more
than $8.5 billion of net new cash investment in 1995. High yield
securities
are now perceived by more investors as a legitimate asset class in
a
diversified portfolio. Given that today's spreads are wider than
they were
last year, more investors are finding the market attractive.
Traditional
sources such as pension funds and insurance companies are also an
increasingly
important source of demand.
Fundamentally, we remain very positive on the high yield market
over the
long term. Default rates, while higher than 1994, are manageable,
demand is
growing, spreads to Treasuries are attractive, and issuer quality
remains
relatively high compared to certain past periods. While we do not
envision a
near term recession, many companies have structured their balance
sheets with
enough liquidity to endure economic pressures. We believe the high
yield
market is poised for a healthy 1996, particularly in the non-
cyclical segments
such as telecommunications; we continue to de-emphasize the
economically more
sensitive sectors such as steel and manufacturing.
Thank you for your continued support.
Sincerely,
Dan S. Baldwin, CFA
Portfolio Manager
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
---------
- -----------
<C> <S>
<C>
CORPORATE BONDS AND NOTES -- 117.2%
BROADCAST/RADIO/T.V. -- 15.9%
Act III Broadcasting, Inc.:
$1,000,000 Sr. Sub. Note, 9.625%, 12/15/2003.................
$ 1,041,250
500,000 Sr. Sub. Note, 10.250%, 12/15/2005................
511,250
Argyle Television, Inc., Sr. Sub. Note, 9.750%,
1,000,000 11/01/2005.......................................
1,007,500
Heritage Media Inc., Gtd. Sr. Secured Note,
750,000 11.000%, 06/15/2002..............................
803,438
Paxson Communication Corporation, Sr. Sub. Note,
1,250,000 11.625%, 10/01/2002***...........................
1,267,187
Sinclair Broadcasting Group, Sr. Sub. Note,
1,000,000 10.000%, 09/30/2005..............................
1,025,000
Univision Televison Group I, Sr. Sub. Note,
750,000 11.750%, 01/15/2001..............................
807,187
- -----------
6,462,812
- -----------
CABLE T.V. -- 12.4%
Cai Wireless System, Inc., Sr. Note, 12.250%,
1,250,000 02/01/2003.......................................
1,337,500
CF Cable TV, Inc., Sr. Secured Note, 11.625%,
1,250,000 02/15/2005.......................................
1,375,000
Galaxy Telecommunication L.P., Sr. Sub., Note,
1,250,000 12.375%, 10/01/2005..............................
1,256,250
Le Groupe Videotron, Ltd., Sr. Note, 10.625%,
1,000,000 02/15/2005.......................................
1,070,000
- -----------
5,038,750
- -----------
TELECOMMUNICATION -- 11.6%
Centennial Cellular Corporation, Sr. Note,
750,000 10.125%, 05/15/2005..............................
789,375
Fonorola Inc., Sr. Secured Note, 12.500%,
350,000 08/15/2002.......................................
369,250
Metrocall, Inc., Sr. Sub. Note, 10.375%,
750,000 10/01/2007.......................................
798,750
Mobile Telecommunication Technology, Sr. Note,
1,750,000 13.500%, 12/15/2002..............................
1,951,250
Paging Network, Inc., Sr. Sub. Note, 10.125%,
750,000 08/01/2007.......................................
816,563
- -----------
4,725,188
- -----------
OTHER RETAILERS -- 9.0%
Brylane Capital Corporation, Sr. Sub. Note, Series
1,000,000 B, 10.000%, 09/01/2003...........................
903,750
Loehmanns Holdings Inc., Sr. Secured Note,
1,000,000 10.500%, 10/01/1997..............................
1,000,000
Pamida Holdings Inc., Sr. Sub. Note, 11.750%,
1,000,000 03/15/2003.......................................
790,000
Specialty Retailers, Inc., Sr. Sub. Note, Series
1,000,000 B, 11.000%, 08/15/2003...........................
946,250
- -----------
3,640,000
- -----------
STEEL -- 8.0%
Acme Metals, Inc., Sr. Secured Note, 12.500%,
500,000 08/01/2002.......................................
501,250
Florida Steel Corporation, 1st Mortgage Note,
1,000,000 11.500%, 12/15/2000..............................
990,000
1,000(a) NS Group, Inc., 13.500%, 07/15/2003...............
880,000
Republic Engineered Steels, Mortgage, 9.875%,
1,000,000 12/15/2001.......................................
900,000
- -----------
3,271,250
- -----------
OIL AND GAS -- 7.1%
Crown Petroleum Corporation, Sr. Note, 10.875%,
1,000,000 02/01/2005.......................................
1,055,000
Gulf Canada Resources Ltd., Sr. Sub. Note, 9.625%,
1,250,000 07/01/2005.......................................
1,312,500
United Meridian Corporation, Sr. Sub. Note,
500,000 10.375%, 10/15/2005..............................
527,500
- -----------
2,895,000
- -----------
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
---------
- -----------
<C> <S>
<C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
CONTAINERS AND FOREST PRODUCTS -- 5.6%
APP International Finance Company, Gtd. Secured Note,
$1,000,000 11.750%, 10/01/2005.................................
$ 980,000
Gaylord Container Corporation, Sr. Note, 11.500%,
1,250,000 05/15/2001..........................................
1,287,500
- -----------
2,267,500
- -----------
HEALTHCARE -- 5.3%
Paracelsus Healthcare Corporation, Sr. Sub. Note,
1,000,000 9.875%, 10/15/2003..................................
1,012,500
Waters Corporation, Sr. Sub. Note, Series B, 12.750%,
1,000,000 09/30/2004..........................................
1,132,500
- -----------
2,145,000
- -----------
AUTOMOTIVE -- 4.9%
Foamex Capital Corporation, Sr. Note, 11.250%,
1,000,000 10/01/2002 .........................................
997,500
JPS Automotive Products Corporation, Sr. Note,
1,000,000 11.125%, 06/15/2001.................................
1,011,250
- -----------
2,008,750
- -----------
FOOD SERVICE -- 4.9%
1,250,000 Carrols Corporation, Sr. Note, 11.500%, 08/15/2003...
1,265,625
Flagstar Corporation, Sr. Sub. Deb., 11.250%,
1,000,000 11/01/2002...........................................
717,500
- -----------
1,983,125
- -----------
FOOD/DRUG RETAILERS -- 4.7%
Homeland Stores, Inc., Series C, Sr. Secured Note,
594,000 12.250%, 03/01/1999..................................
262,103
400,000 Penn Traffic Company, Sr. Note, 10.250%, 02/15/2002..
377,000
Ralphs Supermarkets Company, Sr. Note, 10.450%,
1,250,000 06/15/2004...........................................
1,271,875
- -----------
1,910,978
- -----------
HOTELS AND CASINOS -- 4.4%
Harrahs Jazz Company, 1st Mortgage Note, 14.250%,
750,000 11/15/2001 (In Default)..............................
210,000
1,000,000 Host Marriott Corporation Acquisition Properties,
Inc., Sr. Note,
9.000% 12/15/2007***.................................
1,012,500
MGM Grand Hotel Finance Company, 1st Mortgage Note,
500,000 12.000%, 05/01/2002..................................
550,000
- -----------
1,772,500
- -----------
SURFACE TRANSPORT -- 3.7%
Ameritruck Distribution Corporation, Sr. Sub. Note,
750,000 12.250%, 11/15/2005*** ..............................
743,437
750,000 Trism Inc., Gtd. Sr. Sub. Note, 10.750%, 12/15/2000..
742,500
- -----------
1,485,937
- -----------
INSURANCE -- 2.7%
American Annuity Group Inc., Sr. Sub. Note, 11.125%,
1,000,000 02/01/2003...........................................
1,081,250
- -----------
ECOLOGICAL -- 2.5%
Mid-American Waste Systems Incorporated, Sr. Sub.
1,000,000 Note, 12.250%, 02/15/2003............................
1,035,000
- -----------
RAIL INDUSTRIES -- 2.2%
Johnstown American Industries, Inc., Sr. Sub. Note,
1,000,000 11.750%, 08/15/2005..................................
910,000
- -----------
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
---------
- -----------
<C> <S>
<C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
METALS AND MINERALS -- 2.0%
Kaiser Aluminum & Chemical Corporation, Sr. Sub.
$ 750,000 Note, 12.750%, 02/01/2003............................
$ 826,875
- -----------
APPAREL/TEXTILES -- 2.0%
CMI Industries Corporation, Sr. Sub. Note, 9.500%,
1,000,000 10/01/2003...........................................
805,000
- -----------
PUBLISHING -- 2.0%
Bell & Howell Company, Sr. Sub. Note, 10.750%,
750,000 10/01/2002...........................................
803,437
- -----------
FOOD PRODUCTS -- 1.9%
Van de Kamps Inc., Sr. Sub. Note, 12.000%,
750,000 09/15/2005...........................................
780,000
- -----------
AEROSPACE -- 1.9%
K & F Industries, Sr. Secured Note, 11.875%,
700,000 12/01/2003...........................................
753,375
- -----------
CONGLOMERATES -- 1.8%
Maxxam Group Inc., Sr. Secured Note, 11.250%,
750,000 08/01/2003...........................................
745,312
- -----------
HOME FURNISHINGS -- 0.7%
Levitz Furniture Corporation, Sr. Sub. Note, 9.625%,
500,000 07/15/2003...........................................
265,000
- -----------
TOTAL CORPORATE BONDS AND NOTES (Cost $48,220,507)...
47,612,039
- -----------
UNITED STATES GOVERNMENT SECURITIES -- 9.9%
UNITED STATES TREASURY BILLS:
339,000 4.080%,++ 01/11/1996.................................
338,502
993,000 4.950%,++ 02/08/1996.................................
987,430
300,000 4.310%,++ 02/29/1996.................................
297,787
2,422,000 4.650%,++ 03/07/1996.................................
2,400,598
- -----------
TOTAL UNITED STATES GOVERNMENT SECURITIES
(Cost $4,024,317)...................................
4,024,317
- -----------
<CAPTION>
SHARES
------
<C> <S>
<C>
PREFERRED STOCK -- 1.3% (Cost $500,000)
K-III Communications Corporation, Sr. Exchangeable
20,000 Preferred Note, 11.500%..............................
545,000
- -----------
COMMON STOCK -- 0.7%
40,000 Dr. Pepper Bottling Holdings, Class A**..............
200,000
1,601 Harvest Foods Inc., (02/20/1992, cost $36)**+........
9,606
Homeland Stores Inc., Class A (11/27/1987, cost
43,505 $69,042)**+..........................................
32,629
1,000 Taj Mahal Holding Corporation, Class A**.............
19,000
972 Thermadyne Holdings Corporation, New**...............
17,617
- -----------
TOTAL COMMON STOCK (Cost $107,091)...................
278,852
- -----------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES
(NOTE 1)
------
- ------------
<C> <S>
<C>
WARRANTS -- 0.0%# (Cost $0.00)
1,250 Capital Gaming International Incorporated, Warrants,
expire 02/01/1999**.....................................
$ 13
- ------------
</TABLE>
<TABLE>
<S> <C>
<C>
TOTAL INVESTMENTS (Cost $52,851,915*)...................... 129.1%
52,460,221
OTHER ASSETS AND LIABILITIES (NET)......................... (29.1)
(11,824,037)
-----
- ------------
NET ASSETS................................................. 100.0%
$ 40,636,184
=====
============
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** Non-income producing security.
*** Security exempt from registration under Rule 144A of the
Securities Act of
1933. These securities may be resold in transactions exempt
from
registration, normally to qualified institutional buyers.
+ Restricted securities are valued by or at the direction of the
Board of
Trustees. Parenthetical disclosure includes the acquisition
date and cost
of the security. The total fair value of restricted securities
at December
31, 1995 is $42,235, which represents 0.10% of total net
assets.
++ Rate represents annualized yield at date of purchase.
# Amount represents less than 0.1% of total net assets.
(a) Units.
See Notes to Financial Statements.
4
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
<C>
ASSETS:
Investments, at value (Cost $52,851,915)(Note 1)
See accompanying statement.........................
$52,460,221
Cash................................................
2,342
Interest receivable.................................
1,324,061
Prepaid expenses....................................
15,726
- -----------
Total Assets......................................
53,802,350
LIABILITIES:
Notes payable (including accrued interest of
$229,840) (Note 5)................................. $12,729,840
Dividends payable................................... 361,077
Investment advisory fee payable (Note 2)............ 17,292
Accrued Trustees' fees and expenses (Note 2)........ 7,500
Custodian fees payable (Note 2)..................... 4,000
Administration fee payable (Note 2)................. 3,333
Shareholder servicing agent fees payable (Note 2)... 1,000
Accrued expenses and other payables................. 42,124
-----------
Total Liabilities.................................
13,166,166
- -----------
NET ASSETS............................................
$40,636,184
===========
NET ASSETS consist of:
Distributions in excess of net investment income....
$ (109,322)
Accumulated net realized loss on investments sold...
(6,862,602)
Unrealized depreciation of investments..............
(391,694)
Shares of beneficial interest, $0.01 per share par
value,
issued and outstanding 5,555,032...................
55,550
Paid-in capital in excess of par value..............
47,944,252
- -----------
Total Net Assets..................................
$40,636,184
===========
NET ASSET VALUE PER SHARE
($40,636,184 / 5,555,032 shares of beneficial
interest outstanding)................................
$ 7.32
===========
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
<C>
INVESTMENT INCOME:
Interest.............................................
$ 5,588,980
Dividends............................................
57,500
- -----------
Total Investment Income............................
5,646,480
EXPENSES:
Interest expense (Note 5)............................ $ 968,620
Investment advisory fee (Note 2)..................... 204,006
Legal and audit fees................................. 61,600
Administration fee (Note 2).......................... 40,000
Trustees' fees and expenses (Note 2)................. 36,057
Shareholder servicing agent fees (Note 2)............ 32,300
Custodian fees (Note 2).............................. 15,840
Miscellaneous........................................ 77,265
---------
Total Expenses.....................................
1,435,688
- -----------
NET INVESTMENT INCOME..................................
4,210,792
- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 3):
Net realized loss on investments sold during the
year................................................
(526,841)
Net unrealized appreciation of investments during the
year................................................
1,706,331
- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........
1,179,490
- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...
$ 5,390,282
===========
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
<C>
NET INCREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received.................. $ 5,575,471
Operating expenses paid.......................... (451,926)
------------
Net cash provided by operating activities..........
$ 5,123,545
Cash flows from investing activities:
Decrease in short-term securities, net........... (3,092,139)
Purchases of long-term securities................ (40,263,353)
Proceeds from sales of long-term securities...... 42,643,959
------------
Net cash used in investing activities..............
(711,533)
- -----------
Net cash provided by operating and investing activ-
ities.............................................
4,412,012
Cash flows from financing activities:
Interest payments on notes payable............... (958,962)
Cash dividends paid*............................. (3,451,288)
------------
Net cash used in financing activities..............
(4,410,250)
- -----------
Net increase in cash...............................
1,762
Cash--beginning of year............................
580
- -----------
Cash--end of year..................................
$ 2,342
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATING AND INVESTING
ACTIVITIES:
Net increase in net assets resulting from opera-
tions.............................................
$ 5,390,282
Interest expense................................. $ 968,620
Increase in investments.......................... (2,001,377)
Decrease in interest and dividends receivable.... 39,345
Decrease in other assets......................... 274
Increase in accrued expenses and liabilities..... 14,868
------------
Total adjustments..............................
(978,270)
- -----------
Net cash provided by operating and investing activ-
ities.............................................
$ 4,412,012
===========
</TABLE>
- --------
* Non cash financing activities include reinvestments of dividends
of $860,594.
See Notes to Financial Statements.
7
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR
YEAR
ENDED
ENDED
DECEMBER 31, 1995
DECEMBER 31, 1994
----------------- ----
- -------------
<S> <C> <C>
Net investment income...................... $ 4,210,792 $
4,418,654
Net realized loss on investments sold dur-
ing the year.............................. (526,841)
(481,873)
Net unrealized appreciation/(depreciation)
of investments
during the year........................... 1,706,331
(4,324,836)
----------- -
- ----------
Net increase/(decrease) in net assets re-
sulting from operations................... 5,390,282
(388,055)
Distributions to shareholders from net in-
vestment income........................... (4,292,260)
(4,522,963)
Net increase in net assets from Fund share
transactions
(Note 4).................................. 860,594
687,493
----------- -
- ----------
Net increase/(decrease) in net assets...... 1,958,616
(4,223,525)
NET ASSETS:
Beginning of year.......................... 38,677,568
42,901,093
----------- -
- ----------
End of year (including distributions in
excess of net investment income of
$(109,322) and $(27,854), respectively)... $40,636,184
$38,677,568
===========
===========
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
CIM HIGH YIELD SECURITIES
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR YEAR YEAR
YEAR
ENDED ENDED ENDED
ENDED
12/31/95 12/31/94 12/31/93
12/31/92
-------- -------- -------- -
- -------
<S> <C> <C> <C>
<C>
Operating performance:
Net asset value,
beginning of year...... $ 7.11 $ 8.02 $ 7.58 $
7.10
------- ------- ------- -
- ------
Net investment income... 0.77 0.82 0.87
0.83
Net realized and
unrealized gain/ (loss)
on investments......... 0.23 (0.89) 0.71
0.46
------- ------- ------- -
- ------
Net increase/(decrease)
in net assets resulting
from investment
operations............. 1.00 (0.07) 1.58
1.29
Change in net asset
value from Fund share
transaction............ -- -- (0.31)
- --
Distributions:
Dividends from net
investment income...... (0.79) (0.84) (0.83)
(0.81)
Distributions from net
realized capital gains. -- -- --
- --
------- ------- ------- -
- ------
Total from
distributions.......... (0.79) (0.84) (0.83)
(0.81)
------- ------- ------- -
- ------
Net asset value, end of
year................... $ 7.32 $ 7.11 $ 8.02 $
7.58
======= ======= =======
=======
Market value, end of
year................... $ 7.875 $ 7.125 $ 7.875 $
7.500
======= ======= =======
=======
Total investment return. 22.72% 0.99% 16.55%(4)
25.70%
======= ======= =======
=======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $40,636 $38,678 $42,901
$30,024
Ratio of net investment
income to average net
assets................. 10.32% 10.82% 11.17%
11.00%
Ratio of operating
expenses to average net
assets................. 1.14%(3) 0.95%(3) 1.09%(3)
1.65%(3)
Portfolio turnover rate
(2).................... 79.9% 50.6% 114.3%
40.6%
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
12/31/91 12/31/90 12/31/89 12/31/88**
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Operating performance:
Net asset value,
beginning of year...... $ 5.65 $ 7.38 $ 9.41 $ 9.35
------- ------- ------- -------
Net investment income... 0.84 0.86 1.13 1.16
Net realized and
unrealized gain/ (loss)
on investments......... 1.44 (1.72) (1.96) 0.12
------- ------- ------- -------
Net increase/(decrease)
in net assets resulting
from investment
operations............. 2.28 (0.86) (0.83) 1.28
Change in net asset
value from Fund share
transaction............ -- -- -- --
Distributions:
Dividends from net
investment income...... (0.83) (0.87) (1.15) (1.13)
Distributions from net
realized capital gains. -- -- (0.05) (0.09)
------- ------- ------- -------
Total from
distributions.......... (0.83) (0.87) (1.20) (1.22)
------- ------- ------- -------
Net asset value, end of
year................... $ 7.10 $ 5.65 $ 7.38 $ 9.41
======= ======= ======= =======
Market value, end of
year................... $ 6.625 $ 4.750 $ 7.000 $ 9.500
======= ======= ======= =======
Total investment return. 58.61% (20.89)% (15.18)% 11.67%
======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $28,015 $22,283 $29,122 $36,394
Ratio of net investment
income to average net
assets................. 12.59% 13.00% 12.78% 12.07%
Ratio of operating
expenses to average net
assets................. 2.46% 2.35% 2.28% 2.36%
Portfolio turnover rate
(2).................... 51.2% 34.9% 77.4% 209.6%
<CAPTION>
PERIOD
ENDED
12/31/87*
---------
<S> <C>
Operating performance:
Net asset value,
beginning of year...... $ 9.33
---------
Net investment income... 0.08
Net realized and
unrealized gain/ (loss)
on investments......... 0.03
---------
Net increase/(decrease)
in net assets resulting
from investment
operations............. 0.11
Change in net asset
value from Fund share
transaction............ --
Distributions:
Dividends from net
investment income...... (0.09)
Distributions from net
realized capital gains. --
---------
Total from
distributions.......... (0.09)
---------
Net asset value, end of
year................... $ 9.35
=========
Market value, end of
year................... $ 9.625
=========
Total investment return. (2.76)%
=========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $34,220
Ratio of net investment
income to average net
assets................. 6.41%(1)+
Ratio of operating
expenses to average net
assets................. 2.18%(1)+
Portfolio turnover rate
(2).................... 6.0%
</TABLE>
- -------
* For the period from November 18, 1987 (commencement of
operations) to
December 31, 1987.
** Chancellor Trust Company became the Fund's investment adviser
effective
September 30, 1988.
(1) During the period ended December 31, 1987, the adviser waived
$10,026 of
fees. If these fees had not been waived, the ratio of
operating expenses
to average net assets would have been 2.40%, and the ratio of
net
investment income to average net assets would have been 6.19%.
(2) This rate is, in general, the percentage computed by taking
the lesser of
the cost of purchases or proceeds from the sales of portfolio
securities
for a year and dividing it by the monthly average value of
such securities
during the year, excluding short-term securities.
(3) The operating expense ratio excludes interest expense. The
annualized
ratios including interest expense were 3.52%, 2.80%, 2.63% and
2.06% for
the years ended December 31, 1995, 1994, 1993, and 1992,
respectively.
(4) The total return for the year ended December 31, 1993,
adjusted for the
dilutive effect of the rights offering completed in August of
1993, is
21.07%.
+ Annualized.
See Notes to Financial Statements.
9
<PAGE>
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
CIM High Yield Securities (the "Fund") was organized under the
laws of the
Commonwealth of Massachusetts on September 11, 1987 and is
registered with the
Securities and Exchange Commission under the Investment Company
Act of 1940,
as amended (the "1940 Act"), as a diversified, closed-end
management
investment company. The following is a summary of significant
accounting
policies consistently followed by the Fund in the preparation of
its financial
statements.
Portfolio valuation: Fixed-income securities (other than short-
term
obligations, but including listed issues) are valued based on
prices obtained
by one or more independent pricing services approved by the Board
of Trustees.
Securities (other than fixed-income securities) for which the
principal
market is one or more securities exchanges are valued at the last
reported
sale price (or if there has been no current sale, at the closing
bid price) on
the primary exchange on which such securities are traded. If a
securities
exchange is not the principal market for a security, such security
will, if
market quotations are readily available, be valued at the closing
bid price in
the over-the-counter market (or the last sale price in the case of
securities
reported on the NASDAQ national market system for which any sales
occurred
during the day). Portfolio securities for which there are no such
valuations
are valued at fair value as determined in good faith by or at the
direction of
the Board of Trustees. Short-term obligations with maturities of
less than 60
days are valued at amortized cost which approximates market value.
Securities transactions and investment income: Securities
transactions are
recorded as of the trade date. Realized gains and losses from
securities
transactions are recorded on the identified cost basis. Dividend
income is
recorded on the ex-dividend date. Interest income is recorded on
the accrual
basis. Short term investments that have a maturity of 60 days or
less are
valued at amortized cost.
Dividends and distributions to shareholders: The Fund
distributes monthly to
shareholders substantially all of its net investment income.
Capital gains, if
any, net of capital losses, are distributed annually. Income
distributions and
capital gain distributions are determined in accordance with
income tax
regulations which may differ from generally accepted accounting
principles.
These differences are primarily due to differing treatments of
income and
gains on various investment securities held by the Fund, timing
differences
and differing characterization of distributions made by the Fund.
Federal income taxes: It is the Fund's policy to comply with the
requirements of the Internal Revenue Service applicable to
regulated
investment companies and to distribute substantially all of its
taxable income
to its shareholders. Therefore, no Federal income tax should be
payable by the
Fund.
Use of Estimates: The preparation of financial statements in
conformity with
generally accepted accounting principles requires management to
make estimates
and assumptions that affect the reported amounts of assets and
liabilities and
disclosure of contingent assets and liabilities at the date of the
financial
statements and the reported amounts of income and expenses during
the reported
period. Actual results could differ from those estimates.
2. Investment Advisory Fee, Administration Fee and Other Related
Party
Transactions
The Fund has entered into an investment advisory agreement (the
"Advisory
Agreement") with Chancellor Trust Company ("CTC"), a New York
State chartered
trust company (the "Adviser"). The Advisory Agreement provides
that the Fund
will pay the Adviser a fee, computed and payable monthly, at the
annual rate
of .50% of the Fund's average weekly net assets.
10
<PAGE>
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has also entered into an Administration and Support
Agreement with
First Data Investor Services Group, Inc. (formerly, The
Shareholder Services
Group, Inc.), a wholly-owned subsidiary of First Data Corporation,
to provide
all administrative services to the Fund other than those related
to the
investment decisions. First Data Investor Services Group, Inc. is
paid a fee
computed and payable monthly at an annual rate of .09% of the
Fund's average
weekly net assets, but no less than $40,000 per annum.
The Fund pays each Trustee not affiliated with the Adviser
$6,000 per year
plus $1,000 per meeting and committee meeting attended, and
reimburses each
such Trustee for travel and out-of-pocket expenses relating to
their
attendance at such meetings. The Fund pays the actual out-of-
pocket expenses
of the Trustees affiliated with the Adviser relating to their
attendance at
such meetings.
Boston Safe Deposit & Trust Company, an indirect wholly-owned
subsidiary of
Mellon Bank Corporation, serves as the Fund's custodian. First
Data Investor
Services Group, Inc. serves as the Fund's shareholder servicing
agent
(transfer agent).
3. Purchase and Sales of Securities
Cost of purchases and proceeds from sales of investment
securities,
excluding short-term investments, during the year ended December
31, 1995
amounted to $40,269,120 and $42,643,959, respectively.
At December 31, 1995, aggregate gross unrealized appreciation
for all
securities (other than restricted securities), in which there is
an excess of
value over tax costs amounted to $1,903,017, and the aggregate
gross
unrealized depreciation for all securities (other than restricted
securities)
in which there is an excess of tax cost over value amounted to
$2,267,868.
At December 31, 1995, the aggregate gross unrealized
appreciation for
restricted securities in which there is an excess of value over
tax cost
amounted to $9,570, and the aggregate gross unrealized
depreciation for
restricted securities in which there is an excess of tax cost over
value
amounted to $36,413.
4. Fund Shares
The Fund has one class of shares of beneficial interest, par
value $0.01 per
share, of which an unlimited number of shares are authorized.
Transactions in
shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED
DECEMBER 31, 1995
DECEMBER 31, 1994
------------------ ---
- --------------
SHARES AMOUNT
SHARES AMOUNT
-------- --------- ---
- --------------
<S> <C> <C> <C>
<C>
Issued as reinvestment of dividends........ 116,463 $ 860,594
91,704 $ 687,493
-------- --------- ---
- ---- ---------
Net increase............................... 116,463 $ 860,594
91,704 $ 687,493
======== =========
======= =========
</TABLE>
5. Notes Payable
The Fund currently has a $12.5 million ("commitment amount")
line of credit
provided by The First National Bank of Boston (the "Bank") under
an Amended
Credit Agreement (the "Agreement") dated September 18, 1992,
primarily to
leverage its investment portfolio. Under this Agreement the Fund
may borrow up
to the lesser of $12.5 million or 25% of its gross assets.
Interest is payable
at either the Bank's Base Rate or its applicable Money Market
Rate, as
selected by the Fund from time to time in its loan requests.
11
<PAGE>
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
The Fund is charged a commitment fee of one quarter of one percent
per annum
of the average daily unused commitment amount. The Agreement
requires, among
other provisions, that the percentage obtained by dividing total
indebtedness
for money borrowed by total assets of the Fund shall not exceed
30%. At
December 31, 1995, the Fund had borrowings of $12,500,000 million
outstanding
under this Agreement. During the year ended December 31, 1995, the
Fund had an
average outstanding daily balance of $12,500,000 with interest
rates ranging
from 7.125% to 7.813% and average debt per share of $2.27. For the
year ended
December 31, 1995, interest expense totaled $968,620 under this
Agreement.
6. Capital Loss Carryforward
Capital loss carryforwards are available to offset future
realized capital
gains. To the extent that these carryforwards are used to offset
future
capital gains, it is probable that the amount which is offset will
not be
distributed to shareholders.
At December 31, 1995, the Fund had available for Federal tax
purposes unused
capital loss carryforwards of $984,970, $3,316,747, $1,552,171,
$330,065 and
$678,649 expiring in 1998, 1999, 2000, 2002 and 2003,
respectively.
7. Concentration of Risk
The Fund invests in securities offering high current income
which generally
will be in the lower rating categories of recognized ratings
agencies. These
securities generally involve more credit risk than securities in
the higher
rating categories. In addition, the trading market for high yield
securities
may be relatively less liquid than the market for higher-rated
securities. The
Fund's use of leverage also increases exposure to capital risk.
8. Quarterly Results of Operations (Unaudited)
<TABLE>
<CAPTION>
NET REALIZED
AND
NET UNREALIZED
INVESTMENT INVESTMENT GAIN/(LOSS)
INCOME INCOME ON INVESTMENTS
------------ ------------ ---------------
- ---
TOTAL PER TOTAL PER TOTAL PER
(000) SHARE (000) SHARE (000)
SHARE
------ ----- ------ ----- -------- -----
- ---
<S> <C> <C> <C> <C> <C> <C>
1995 -- QUARTER ENDED
March 31, 1995.......... $1,435 $0.26 $1,092 $0.20 $ 1,203 $
0.22
June 30, 1995........... 1,422 0.26 1,028 0.19 1,073
0.19
September 30, 1995...... 1,410 0.26 1,072 0.20 (254)
(0.04)
December 31, 1995....... 1,379 0.25 1,019 0.18 (843)
(0.14)
1994 -- QUARTER ENDED
March 31, 1994.......... 1,376 0.26 1,119 0.21 (1,561)
(0.28)
June 30, 1994........... 1,398 0.26 1,138 0.21 (1,331)
(0.25)
September 30, 1994...... 1,388 0.26 1,083 0.20 (660)
(0.12)
December 31, 1994....... 1,402 0.26 1,078 0.20 (1,255)
(0.24)
<CAPTION>
NET INCREASE/
(DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS
----------------
TOTAL PER
(000) SHARE
------- -------
<S> <C> <C>
1995 -- QUARTER ENDED
March 31, 1995.......... $ 2,295 $ 0.42
June 30, 1995........... 2,101 0.38
September 30, 1995...... 818 0.16
December 31, 1995....... 176 0.04
1994 -- QUARTER ENDED
March 31, 1994.......... (441) (0.07)
June 30, 1994........... (194) (0.04)
September 30, 1994...... 423 0.08
December 31, 1994....... (177) (0.04)
</TABLE>
12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Shareholders and Board of Trustees
of CIM High Yield Securities:
We have audited the accompanying statement of assets and
liabilities of CIM
High Yield Securities, including the statement of investments, as
of December
31, 1995, and the related statements of operations and cash flows
for the year
then ended, the statements of changes in net assets for each of
the years in
the two year period then ended and financial highlights for each
of the years
in the eight year period then ended and for the period from
November 18, 1987
(commencement of operations) to December 31, 1987. These financial
statements
and financial highlights are the responsibility of the Fund's
management. Our
responsibility is to express an opinion on these financial
statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audit to
obtain reasonable assurance about whether the financial statements
and
financial highlights are free of material misstatement. An audit
includes
examining, on a test basis, evidence supporting the amounts and
disclosures in
the financial statements. Our procedures included confirmation of
securities
owned as of December 31, 1995 by correspondence with the custodian
and
brokers. An audit also includes assessing the accounting
principles used, and
significant estimates made by management, as well as evaluating
the overall
financial statement presentation. We believe that our audits
provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred
to above present fairly, in all material respects, the financial
position of
CIM High Yield Securities as of December 31, 1995, the results of
its
operations and its cash flows for the year then ended, the changes
in its net
assets for each of the years in the two-year period then ended and
financial
highlights for each of the years in the eight year period then
ended and for
the period from November 18, 1987 (commencement of operations) to
December 31,
1987, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
February 2, 1996
13
<PAGE>
CIM HIGH YIELD SECURITIES
To Shareholders of CIM High Yield Securities (the "Fund")
About the Fund's Dividend Reinvestment Plan (unaudited)
Pursuant to the Fund's Dividend Reinvestment Plan (the "Plan"),
shareholders
of the Fund ("Shareholders") whose shares are registered in their
own name
will automatically have all dividends and other distributions
reinvested in
additional shares of the Fund by First Data Investor Services
Group, Inc. (the
"Agent") as agent under the Plan, unless such Shareholder
terminates
participation in the Plan as provided below. Shareholders whose
shares are
registered in the name of a broker-dealer or other nominee (i.e.,
in "Street
Name") will not participate in the Plan unless the requisite
election is made
by the broker-dealer and only if such a service is provided by the
broker-
dealer. Shareholders who own Fund shares registered in Street Name
and who
desire that their distributions be reinvested should consult their
broker-
dealers. Shareholders who do not participate in the Plan will
receive all
distributions by check mailed directly to the shareholder by the
Agent.
Whenever the Fund declares a capital gains distribution or an
income
dividend payable in shares or cash, participating Shareholders
will take such
distribution or dividend entirely in shares and the Agent shall
automatically
receive such shares, including fractions, for the shareholder's
account,
except in circumstances described in the paragraph below.
Whenever the market price of the shares on the record date for
the dividend
or distribution is equal to or exceeds their net asset value,
participants
will be issued shares of the Fund at the higher of net asset value
or 95% of
the market price. This discount reflects savings in underwriting
or other
costs which the Fund would otherwise be required to incur to raise
additional
capital. If net asset value exceeds the market price of Fund
shares at such
time or if the Fund should declare a dividend or other
distribution payable
only in cash, the Agent will buy fund shares in the open market,
on the
American Stock Exchange (the "Exchange") or elsewhere, for the
Shareholder's
account. If before the Agent has completed its purchases, the
market price
exceeds the net asset value of the Fund's shares, the average per
share
purchase price paid by the Agent may exceed the net asset value of
the Fund's
shares, resulting in the acquisition of fewer shares than if the
dividend or
distribution had been paid in shares issued by the Fund.
For all purposes of the Plan: (a) the market price of the Fund
shares on a
particular date shall be the last sales price on the Exchange on
the close of
the previous trading day or, if there is no sale on the Exchange
on that date,
then the mean between the closing bid and asked quotations for
such stock on
the Exchange on such date and (b) net asset value per Fund share
on a
particular date shall be as determined by or on behalf of the
Fund.
The Fund will not charge participants for reinvesting dividends
or
distributions. The Agent's service fee for handling capital gains
distributions or income dividends will be paid by the Fund. There
will be no
brokerage commissions charged with respect to shares issued
directly by the
Fund. However, Shareholders will be charged a pro rata share of
brokerage
commissions incurred by the Agent on all open market purchases. In
addition,
Shareholders requesting certificates or redeeming shares issued
under the Plan
will be charged a $5.00 service fee by the Agent.
The automatic reinvestment of dividends and capital gains
distributions does
not relieve Plan participants of any income tax that may be
payable on the
dividends or capital gains distributions. Distributions of net
14
<PAGE>
investment income and net realized capital gains will be taxable,
whether
received in cash or reinvested in shares under the Plan. When
distributions
are received in the form of shares issued by the Fund (as opposed
to purchased
on the open market) under such Plan, however, the amount of the
distribution
deemed to have been received by participating Shareholders is the
fair market
value of the shares received rather than the amount of cash which
would
otherwise have been received. In such case, participating
Shareholders will
have a basis for federal income tax purposes in each share
received from the
Fund equal to the fair market value of such share on the payment
date.
A Shareholder may terminate participation in the Plan at any
time by
notifying the Agent in writing. Such termination will become
effective
immediately if notice is received by the Agent not less than 10
business days
before the next following dividend or distribution record date.
Otherwise, the
termination will be effective, with respect to any subsequent
dividend or
distributions, on the first trading day after the dividend paid
for such
record date has been credited to the Shareholder's account. Upon
any
termination the Agent will, upon the request of the Shareholder,
cause a
certificate or certificates for the full shares held for the
Shareholder under
the Plan and cash adjustment for any fraction to be delivered to
her or him.
If, upon termination, the Shareholder requests a certificate for
shares held
in the account, a $5.00 service fee will be charged to the
Shareholder by the
Agent. If the Shareholder elects by notice to the Agent in writing
in advance
of such termination to have the Agent sell part or all of her or
his shares
and remit the proceeds to her or him, the agent is authorized to
deduct a
$5.00 fee plus brokerage commissions for this transaction from the
proceeds.
The Fund reserves the right to amend or terminate the Plan as
applied to any
dividend or distribution for which the record date is at least 90
days after
written notice of the change is sent to the participants in the
Plan.
Information concerning the Plan may be obtained by calling First
Data
Investor Services Group, Inc. at 1-800-331-1710, or by writing the
Fund, c/o
First Data Investor Services Group, Inc., P.O. Box 1376, Boston,
MA 02104.
- ------------------------------------------------------------------
- -------------
Shareholder Voting Results
At the Annual Meeting of Shareholders, held on October 5, 1995,
shareholders
re-elected Dr. Bruce H. Olson as a Trustee, by a vote of 5,017,454
shares in
favor, representing 99.01% of shares voting at the Meeting. By a
vote of
5,017,526 shares in favor, representing 99.01% of shares voting at
the
Meeting, shareholders ratified and approved the appointment of
KPMG Peat
Marwick LLP, as independent accountants for the Fund.
15
<PAGE>
- ------------------------------------------------------------------
- --------------
CIM
- ------------------------------------------------------------------
- --------------
- ------------------------------------------------------------------
- --------------
HIGH
YIELD SECURITIES
ANNUAL REPORT
DECEMBER 31, 1995
This report is
sent to
shareholders of
CIM High Yield
Securities for
their information.
It is not a
Prospectus,circular or
representation
intended for use
in the purchase or
sale of shares
of the Fund or of
any securities
mentioned in the
report.
- ------------------------------------------------------------------
- --------------
