<PAGE>
CIM HIGH YIELD SECURITIES--FIRST HALF 1996 REVIEW AND
OUTLOOK
Dear Shareholder:
Fear of inflationary growth sent U.S. Treasury prices plummeting
during the
second quarter of 1996. From the beginning of the year through
June 30, 1996,
10-year Treasury yields have risen from 5.57% to 6.74%, an
increase of 117
basis points. With the rise in Treasury yields, higher rated,
longer duration
and deferred interest high yield securities underperformed the
broad high yield
market. These were the outperforming sectors of the high yield
market in 1995.
The total return for the high yield market, as measured by the CS
First Boston
High Yield Index, was 3.8% for the six months ended June 30, 1996.
This
compares very favorably with the total return of the 10-year
Treasury of (4.4)%
for the same period.
The total return performance for CIM High Yield Securities (the
"Fund") was
5.26% based on net asset value (before Fund expenses) and 4.69%
(after Fund
expenses) for the six months ended June 30, 1996, which compares
very favorably
with the CS First Boston High Yield Index return cited above for
the same
period. The Fund's relative outperformance was due to the lack of
exposure to
underperforming sectors such as zero coupon securities and long
duration
instruments. Several individual securities in the Fund also
experienced
significant price improvement and a favorable economic outlook
pushed the
cyclical sector higher.
The high yield market has performed very well considering the
extraordinary
Treasury volatility and continues to be supported by favorable
technical
factors. High yield mutual funds for the period saw net cash
inflows greater
than in 1995. This flow has supported strong new issuance of high
yield
securities since the beginning of the year, particularly in the
media and
communications sector. As a result of strong demand, spreads
between the high
yield markets and the Treasury benchmarks have narrowed since the
beginning of
the year.
Fundamentally, we remain very positive on the high yield market
over the long
term. Issuer quality remains high relative to historical
experience. Barring
significant downturns in other asset categories, we believe the
high yield
market is poised for a healthy 1996 relative to other fixed income
segments.
Investors are increasingly finding the high yield market
attractive given the
superior returns to other fixed income classes, lower default
rates than in
some previous periods and shorter duration and lower volatility
relative to
other asset classes.
Thank you for your continued support.
Sincerely,
/s/ Dan Baldwin
Dan S. Baldwin, CFA
Portfolio Manager
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
---------
- ------------
<C> <S>
<C>
CORPORATE BONDS AND NOTES -- 117.4%
CABLE T.V. -- 16.6%
Cai Wireless System, Inc., Sr. Secured Note,
$1,250,000 12.250%, 02/01/2003.............................
$ 1,312,500
CF Cable TV, Inc., Sr. Secured Note, 11.625%,
1,250,000 02/15/2005......................................
1,370,312
Charter Communications International, Inc., Sr.
1,000,000 Note, 11.250%, 03/15/2006.......................
1,006,250
Galaxy Telecommunication L.P., Sr. Sub. Note,
1,250,000 12.375%, 10/01/2005.............................
1,296,875
Le Groupe Videotron, Ltd., Sr. Note, 10.625%,
750,000 02/15/2005......................................
787,500
Rifkin Acquision Partners, Sr. Sub. Note,
1,000,000 11.125%, 01/15/2006.............................
987,500
- ------------
6,760,937
- ------------
BROADCAST/RADIO/T.V. -- 13.9%
Argyle Television, Inc., Sr. Sub. Note, 9.750%,
750,000 11/01/2005......................................
709,688
Chancellor Broadcasting Company, Sr. Sub. Note,
1,000,000 9.375%, 10/01/2004..............................
947,500
Granite Broadcasting Corporation, Sr. Sub Note,
750,000 9.375%, 12/01/2005..............................
686,250
Heritage Media Inc., Gtd. Sr. Secured Note,
750,000 11.000%, 06/15/2002.............................
795,937
Paxson Communication Corporation, Sr. Sub. Note,
1,000,000 11.625%, 10/01/2002***..........................
1,040,000
SFX Broadcasting, Inc. Sr. Sub. Note, 10.750%,
1,000,000 05/15/2006......................................
997,500
Sullivan Broadcasting, Sr. Sub. Note, 10.250%,
500,000 12/15/2005......................................
481,250
- ------------
5,658,125
- ------------
TELECOMMUNICATION -- 11.0%
Fonorola Inc., Sr. Secured Note, 12.500%,
750,000 08/15/2002......................................
806,250
Metrocall, Inc., Sr. Sub. Note, 10.375%,
750,000 10/01/2007......................................
706,875
Nextlink Communications, Sr. Note, 12.500%,
1,000,000 04/15/2006......................................
1,000,000
Paging Network, Inc., Sr. Sub. Note, 10.125%,
750,000 08/01/2007......................................
742,500
500,000 ProNet, Inc., Sr. Sub. Note, 10.875%, 09/15/2006.
487,500
Rogers Cantel Mobile Communications, Sr. Sub.
750,000 Note, 9.375%, 06/01/2008........................
735,938
- ------------
4,479,063
- ------------
STEEL -- 7.8%
750,000 Algoma Steel Inc., 12.375%, 07/15/2005...........
735,000
Florida Steel Corporation, 1st Mortgage Note,
1,000,000 11.500%, 12/15/2000.............................
1,011,250
1,000(a) NS Group, Inc., 13.500%, 07/15/2003..............
963,750
500,000 Weirton Steel Corporation, 11.375%, 07/01/2004...
493,125
- ------------
3,203,125
- ------------
OTHER RETAILERS -- 6.7%
Brylane Capital Corporation, Sr. Sub. Note,
1,250,000 Series B, 10.000%, 09/01/2003...................
1,204,688
Hills Stores Company, Sr. Note, 12.500%,
650,000 07/01/2003......................................
638,625
Pamida Holdings Inc., Sr. Sub. Note, 11.750%,
1,000,000 03/15/2003......................................
873,750
- ------------
2,717,063
- ------------
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
---------
- ------------
<C> <S>
<C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
HEALTHCARE -- 6.3%
Dade International, Inc., Sr. Sub. Note, 11.125%,
$ 600,000 05/01/2006.........................................
$ 624,000
800,000 Grancare, Inc., Sr. Sub. Note, 9.375%, 09/15/2005...
770,000
Owens & Minor, Inc., Sr. Sub. Note, 10.875%,
150,000 06/01/2006.........................................
152,625
Paracelsus Healthcare Corporation, Sr. Sub. Note,
1,000,000 9.875%, 10/15/2003.................................
1,007,500
- ------------
2,554,125
- ------------
OIL AND GAS -- 5.8%
Crown Petroleum Corporation, Sr. Note, 10.875%,
1,000,000 02/01/2005.........................................
1,017,500
325,000 Mesa Operating Company, Note, 10.625%, 07/01/2006...
331,500
TransTexas Gas Corporation, Sr. Note, 11.500%,
500,000 06/15/2002.........................................
501,250
United Meridian Corporation, Sr. Sub. Note, 10.375%,
500,000 10/15/2005.........................................
515,625
- ------------
2,365,875
- ------------
APPAREL/TEXTILES -- 5.2%
CMI Industries Corporation, Sr. Sub. Note, 9.500%,
1,000,000 10/01/2003.........................................
865,000
Polysindo International Finance, Note, 11.375%,
500,000 06/15/2006.........................................
508,125
750,000 Tultex Corporation, Sr. Note, 10.625%, 03/15/2005...
764,063
- ------------
2,137,188
- ------------
MANUFACTURING -- DIVERSIFIED -- 5.0%
Foamex Capital Corporation, Sr. Note, 11.250%,
1,000,000 10/01/2002.........................................
1,035,000
Interlake Corporation, Sr. Sub. Debenture, 12.125%,
1,000,000 03/01/2002.........................................
1,006,250
- ------------
2,041,250
- ------------
BUSINESS EQUIPMENT AND SERVICES -- 5.0%
1,000,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 03/15/2006.....
1,018,750
1,000,000 Unisys Corporation, Sr. Note, 12.000%, 04/15/2003...
1,018,750
- ------------
2,037,500
- ------------
HOTELS AND CASINOS -- 4.8%
Harrahs Jazz Company, 1st Mortgage Note, 14.250%,
750,000 11/15/2001 (In Default)............................
395,625
MGM Grand Hotel Finance Company, 1st Mortgage,
500,000 12.000%, 05/01/2002................................
548,125
Trump Atlantic City Associates, 1st Mortgage,
1,000,000 11.250%, 05/01/2006................................
1,007,500
- ------------
1,951,250
- ------------
FOOD SERVICE -- 4.1%
1,000,000 Carrols Corporation, Sr. Note, 11.500%, 08/15/2003..
1,013,750
Flagstar Corporation, Sr. Sub. Deb., 11.250%,
1,000,000 11/01/2002.........................................
662,500
- ------------
1,676,250
- ------------
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
---------
- ------------
<C> <S>
<C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
FOOD/DRUG RETAILERS -- 4.1%
$1,000,000 Penn Traffic Company, Sr. Note, 10.250%, 02/15/2002.
$ 912,500
Smiths Food & Drug Centers, Inc., Sr. Sub. Note,
750,000 11.250%, 05/15/2007................................
761,250
- ------------
1,673,750
- ------------
PAPER PRODUCTS -- 3.6%
APP International Finance Company, Gtd. Secured
1,000,000 Note, 11.750%, 10/01/2005..........................
1,032,500
Florida Coast Paper LLC, 1st Mortgage, 12.750%,
400,000 06/01/2003.........................................
417,000
- ------------
1,449,500
- ------------
SURFACE TRANSPORT -- 3.5%
Ameritruck Distribution Corporation, Sr. Sub. Note,
750,000 12.250%, 11/15/2005***.............................
739,687
750,000 Trism Inc., Gtd. Sr. Sub. Note, 10.750%, 12/15/2000.
708,750
- ------------
1,448,437
- ------------
CHEMICALS AND PLASTICS -- 3.0%
NL Industries, Inc., Sr. Secured Note, 11.750%,
750,000 10/15/2003.........................................
769,688
Texas Petrochemical Corporation, Sr. Note, 11.125%,
425,000 07/01/2006.........................................
435,625
- ------------
1,205,313
- ------------
FOOD PRODUCTS -- 2.0%
Van de Kamps Inc., Sr. Sub. Note, 12.000%,
750,000 09/15/2005.........................................
804,375
- ------------
METALS AND MINERALS -- 1.9%
750,000 Kaiser Aluminum & Chemical Corporation, Sr. Sub.
Note,
12.750%, 02/01/2003................................
793,125
- ------------
CONGLOMERATES -- 1.8%
Maxxam Group Inc., Sr. Secured Note, 11.250%,
750,000 08/01/2003.........................................
754,688
- ------------
AEROSPACE -- 1.8%
K & F Industries, Sr. Secured Note, 11.875%,
700,000 12/01/2003.........................................
754,250
- ------------
BUILDING MATERIALS -- 1.8%
750,000 Southdown, Inc., Sr. Sub. Note, 10.000%, 03/01/2006.
740,625
- ------------
RAIL INDUSTRIES -- 1.7%
Johnstown American Industries, Inc., Sr. Sub. Note,
750,000 11.750%, 08/15/2005................................
703,125
- ------------
TOTAL CORPORATE BONDS AND NOTES (Cost $48,381,091)..
47,908,939
- ------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
VALUE
AMOUNT
(NOTE 1)
---------
- ------------
<C> <S>
<C>
UNITED STATES GOVERNMENT SECURITIES -- 11.6%
UNITED STATES TREASURY BILLS:
$ 27,000 5.120%++, 07/11/1996................................
$ 26,962
3,505,000 5.170%++, 08/08/1996................................
3,486,988
1,237,000 5.110%++, 08/22/1996................................
1,228,147
- ------------
TOTAL UNITED STATES GOVERNMENT SECURITIES
(Cost $4,742,099)..................................
4,742,097
- ------------
<CAPTION>
SHARES
------
<C> <S>
<C>
PREFERRED STOCK -- 1.3% (Cost $500,000)
K-III Communications Corporation, Sr. Exchangeable
20,000 Preferred Note, 11,500%.............................
527,500
- ------------
COMMON STOCK -- 0.6%
40,000 Dr. Pepper Bottling Holdings, Class A**.............
200,000
1,601 Harvest Foods Inc., (02/20/1992, cost $36)**+.......
8,005
972 Thermadyne Holdings Corporation, New**..............
20,898
- ------------
TOTAL COMMON STOCK (Cost $36,331)...................
228,903
- ------------
WARRANTS -- 0.0%# (Cost $0.00)
Capital Gaming International Incorporated, Warrants,
1,250 expire 02/01/1999**.................................
63
- ------------
</TABLE>
<TABLE>
<S> <C>
<C>
TOTAL INVESTMENTS (Cost $53,659,521*)...................... 130.9%
53,407,502
OTHER ASSETS AND LIABILITIES (NET)......................... (30.9)
(12,603,854)
-----
- ------------
NET ASSETS................................................. 100.0%
$ 40,803,648
=====
============
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** Non-income producing security.
*** Security purchased in a transaction 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.
+ Securities for which market quotations are not readily
available 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 such securities at June 30, 1996 is
$8,005, which
represents 0.02% 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
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
<C>
ASSETS:
Investments, at value (Cost $53,659,521) (Note 1)
See accompanying statement........................
$53,407,502
Cash...............................................
27,332
Receivable for investment securities sold..........
1,405,010
Interest receivable................................
1,352,270
Prepaid expenses...................................
610
- -----------
Total Assets.....................................
56,192,724
LIABILITIES:
Notes payable (including accrued interest of
$208,984) (Note 5)................................ $ 12,708,984
Payable for investment securities purchased........ 2,240,440
Dividends payable.................................. 364,777
Investment advisory fee payable (Note 2)........... 16,770
Accrued Trustees' fees and expenses (Note 2)....... 5,000
Shareholder servicing agent fees payable (Note 2).. 4,500
Administration fee payable (Note 2)................ 3,333
Custodian fees payable (Note 2).................... 2,600
Accrued expenses and other payables................ 42,672
------------
Total Liabilities................................
15,389,076
- -----------
NET ASSETS...........................................
$40,803,648
===========
NET ASSETS consist of:
Distributions in excess of net investment income...
$ (154,072)
Accumulated net realized loss on investments sold..
(7,211,937)
Unrealized depreciation of investments.............
(252,019)
Shares of beneficial interest, $0.01 per share par
value,
issued and outstanding 5,611,955..................
56,120
Paid-in capital in excess of par value.............
48,365,556
- -----------
Total Net Assets.................................
$40,803,648
===========
NET ASSET VALUE PER SHARE
($40,803,648 / 5,611,955 shares of beneficial
interest outstanding)...............................
$ 7.27
===========
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
<C>
INVESTMENT INCOME:
Interest...............................................
$2,758,136
Dividends..............................................
28,750
- ----------
Total Investment Income..............................
2,786,886
EXPENSES:
Interest expense (Note 5)..............................
$431,575
Investment advisory fee (Note 2).......................
101,941
Legal and audit fees...................................
31,237
Administration fee (Note 2)............................
20,000
Trustees' fees and expenses (Note 2)...................
17,134
Shareholder servicing agent fees (Note 2)..............
13,511
Custodian fees (Note 2)................................
9,211
Miscellaneous..........................................
27,670
-------
- -
Total Expenses.......................................
652,279
- ----------
NET INVESTMENT INCOME....................................
2,134,607
- ----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (Notes
1 and 3):
Net realized loss on investments sold during the
period................................................
(349,335)
Net unrealized appreciation of investments during the
period................................................
139,675
- ----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS..........
(209,660)
- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.....
$1,924,947
==========
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
<C>
NET INCREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received.................. $ 2,686,353
Operating expenses paid.......................... (205,962)
------------
Net cash provided by operating activities..........
$ 2,480,391
Cash flows from investing activities:
Decrease in short-term securities, net........... (645,785)
Purchases of long-term securities................ (42,526,630)
Proceeds from sales of long-term securities...... 42,923,228
------------
Net cash used in investing activities..............
(249,187)
- -----------
Net cash provided by operating and investing
activities........................................
2,231,204
Cash flows from financing activities:
Interest payments on notes payable............... (452,431)
Cash dividends paid*............................. (1,753,783)
------------
Net cash used in financing activities..............
(2,206,214)
- -----------
Net increase in cash...............................
24,990
Cash--beginning of period..........................
2,342
- -----------
Cash--end of period................................
$ 27,332
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET
CASH PROVIDED BY OPERATING AND INVESTING
ACTIVITIES:
Net increase in net assets resulting from
operations........................................
$ 1,924,947
Interest expense................................. $ 431,575
Increase in investments.......................... (947,281)
Decrease in receivables for investments sold..... 2,240,440
Increase in receivables for investments sold..... (1,405,010)
Increase in interest and dividends receivable.... (28,209)
Increase in other assets......................... (374)
Increase in accrued expenses and liabilities..... 15,116
------------
Total adjustments..............................
306,257
- -----------
Net cash provided by operating and investing
activities........................................
$ 2,231,204
===========
</TABLE>
- --------
* Non cash financing activities include reinvestments of dividends
of $421,874.
See Notes to Financial Statements.
7
<PAGE>
CIM HIGH YIELD SECURITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR
JUNE 30, 1996
ENDED
(UNAUDITED)
DECEMBER 31, 1995
------------- ----
- -------------
<S> <C> <C>
Net investment income.......................... $ 2,134,607 $
4,210,792
Net realized loss on investments sold during
the period.................................... (349,335)
(526,841)
Net unrealized appreciation of investments
during the period............................. 139,675
1,706,331
----------- -
- ----------
Net increase in net assets resulting from
operations.................................... 1,924,947
5,390,282
Distributions to shareholders from net
investment income............................. (2,179,357)
(4,292,260)
Net increase in net assets from Fund share
transactions (Note 4)......................... 421,874
860,594
----------- -
- ----------
Net increase in net assets..................... 167,464
1,958,616
NET ASSETS:
Beginning of period............................ 40,636,184
38,677,568
----------- -
- ----------
End of period (including distributions in
excess of net investment income of $(154,072)
and $(109,322), respectively)................. $40,803,648
$40,636,184
===========
===========
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
CIM HIGH YIELD SECURITIES
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR
YEAR YEAR YEAR YEAR YEAR
6/30/96 ENDED ENDED
ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/95 12/31/94
12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
----------- -------- -------- --
- ------ -------- -------- -------- --------
<S> <C> <C> <C>
<C> <C> <C> <C> <C>
Operating
performance:
Net asset value,
beginning of period. $ 7.32 $ 7.11 $ 8.02 $
7.58 $ 7.10 $ 5.65 $ 7.38 $ 9.41
------- ------- ------- --
- ----- ------- ------- ------- -------
Net investment
income.............. 0.38 0.77 0.82
0.87 0.83 0.84 0.86 1.13
Net realized and
unrealized
gain/(loss) on
investments......... (0.04) 0.23 (0.89)
0.71 0.46 1.44 (1.72) (1.96)
------- ------- ------- --
- ----- ------- ------- ------- -------
Net
increase/(decrease)
in net assets
resulting from
investment
operations.......... 0.34 1.00 (0.07)
1.58 1.29 2.28 (0.86) (0.83)
Change in net asset
value from Fund
share transaction... -- -- --
(0.31) -- -- -- --
Distributions:
Dividends from net
investment income... (0.39) (0.79) (0.84)
(0.83) (0.81) (0.83) (0.87) (1.15)
Distributions from
net realized capital
gains............... -- -- --
- -- -- -- -- (0.05)
------- ------- ------- --
- ----- ------- ------- ------- -------
Total from
distributions....... (0.39) (0.79) (0.84)
(0.83) (0.81) (0.83) (0.87) (1.20)
------- ------- ------- --
- ----- ------- ------- ------- -------
Net asset value,
end of period....... $ 7.27 $ 7.32 $ 7.11 $
8.02 $ 7.58 $ 7.10 $ 5.65 $ 7.38
======= ======= =======
======= ======= ======= ======= =======
Market value, end of
period.............. $ 7.688 $ 7.875 $ 7.125 $
7.875 $ 7.500 $ 6.625 $ 4.750 $ 7.000
======= ======= =======
======= ======= ======= ======= =======
Total investment
return.............. 2.90% 22.72% 0.99%
16.55%(4) 25.70% 58.61% (20.89)% (15.18)%
======= ======= =======
======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)... $40,804 $40,636 $38,678
$42,901 $30,024 $28,015 $22,283 $29,122
Ratio of net
investment income to
average net assets.. 10.57%+ 10.32% 10.82%
11.17% 11.00% 12.59% 13.00% 12.78%
Ratio of operating
expenses to average
net assets.......... 1.09%(3)+ 1.14%(3) 0.95%(3)
1.09%(3) 1.65%(3) 2.46% 2.35% 2.28%
Portfolio turnover
rate (2)............ 90.0% 79.9% 50.6%
114.3% 40.6% 51.2% 34.9% 77.4%
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/88** 12/31/87*
---------- -------------
<S> <C> <C>
Operating
performance:
Net asset value,
beginning of period. $ 9.35 $ 9.33
---------- -------------
Net investment
income.............. 1.16 0.08
Net realized and
unrealized
gain/(loss) on
investments......... 0.12 0.03
---------- -------------
Net
increase/(decrease)
in net assets
resulting from
investment
operations.......... 1.28 0.11
Change in net asset
value from Fund
share transaction... -- --
Distributions:
Dividends from net
investment income... (1.13) (0.09)
Distributions from
net realized capital
gains............... (0.09) --
---------- -------------
Total from
distributions....... (1.22) (0.09)
---------- -------------
Net asset value,
end of period....... $ 9.41 $ 9.35
========== =============
Market value, end of
period.............. $ 9.500 $ 9.625
========== =============
Total investment
return.............. 11.67% (2.76)%
========== =============
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)... $36,394 $34,220
Ratio of net
investment income to
average net assets.. 12.07% 6.41%(1)+
Ratio of operating
expenses to average
net assets.......... 2.36% 2.18%(1)+
Portfolio turnover
rate (2)............ 209.6% 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 period and dividing it by the monthly average value of
such
securities during the six months, excluding short-term
securities.
(3) The annualized operating expense ratio excludes interest
expense. The
annualized ratios including interest expense were 3.23%,
3.52%, 2.80%,
2.63% and 2.06% for the six months ended June 30, 1996 and 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 (UNAUDITED)
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 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. 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.
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 (UNAUDITED) (CONTINUED)
The Fund has also entered into an Administration and Support
Agreement with
First Data Investor 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 six months ended June
30, 1996
amounted to $44,767,070 and $44,328,238, respectively.
At June 30, 1996, aggregate gross unrealized appreciation for
all securities
(other than restricted securities), in which there is an excess of
value over
tax costs amounted to $1,142,120, 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 $1,402,108.
At June 30, 1996, the aggregate gross unrealized appreciation
for restricted
securities in which there is an excess of value over tax cost
amounted to
$7,969.
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>
SIX MONTHS ENDED
YEAR ENDED
JUNE 30, 1996
DECEMBER 31, 1995
----------------- ----
- --------------
SHARES AMOUNT
SHARES AMOUNT
----------------- ----
- ---- ---------
<S> <C> <C> <C>
<C>
Issued as reinvestment of dividends........ 56,923 $ 421,874
116,463 $ 860,594
------- --------- ----
- ---- ---------
Net increase............................... 56,923 $ 421,874
116,463 $ 860,594
======= =========
======== =========
</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 (UNAUDITED) (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 June
30, 1996, the Fund had borrowings of $12,500,000 outstanding under
this
Agreement. During the six months ended June 30, 1996, the Fund had
an average
outstanding daily balance of $12,500,000 with interest rates
ranging from
6.688% to 6.875%. For the six months ended June 30, 1996, interest
expense
totaled $431,575 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
<TABLE>
<CAPTION>
NET INCREASE/
NET REALIZED
AND (DECREASE)
NET UNREALIZED
IN NET ASSETS
INVESTMENT INVESTMENT GAIN/(LOSS)
RESULTING FROM
INCOME INCOME ON INVESTMENTS
OPERATIONS
------------ ------------ ---------------
- --- ----------------
TOTAL PER TOTAL PER TOTAL PER
TOTAL PER
(000) SHARE (000) SHARE (000)
SHARE (000) SHARE
------ ----- ------ ----- -------- -----
- --- ------- -------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
1996 -- QUARTER ENDED
March 31, 1996.......... $1,419 $0.25 $1,100 $0.20 $ 1,406 $
0.25 $ 2,506 $ 0.45
June 30, 1996........... 1,368 0.24 1,035 0.18 (1,616)
(0.29) (581) (0.11)
1995 -- QUARTER ENDED
March 31, 1995.......... 1,435 0.26 1,092 0.20 1,203
0.22 2,295 0.42
June 30, 1995........... 1,422 0.26 1,028 0.19 1,073
0.19 2,101 0.38
September 30, 1995...... 1,410 0.26 1,072 0.20 (254)
(0.04) 818 0.16
December 31, 1995....... 1,379 0.25 1,019 0.18 (843)
(0.14) 176 0.04
1994 -- QUARTER ENDED
March 31, 1994.......... 1,376 0.26 1,119 0.21 (1,561)
(0.28) (441) (0.07)
June 30, 1994........... 1,398 0.26 1,138 0.21 (1,331)
(0.25) (194) (0.04)
September 30, 1994...... 1,388 0.26 1,083 0.20 (660)
(0.12) 423 0.08
December 31, 1994....... 1,402 0.26 1,078 0.20 (1,255)
(0.24) (177) (0.04)
</TABLE>
12
<PAGE>
CIM
HIGH YIELD SECURITIES
SEMI-
ANNUAL REPORT
JUNE 30, 1996
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.
