<PAGE> 1
CIM HIGH YIELD SECURITIES
SEMI-ANNUAL REVIEW AND OUTLOOK
CIM High Yield Securities ("CIM") continued to perform competitively with
its index for the first half of 1998. For the six months ended June 30, 1998,
CIM returned 4.54% before expenses and 3.93% after expenses versus a total
return for the Credit Suisse First Boston Index of 4.31%.
The strong U.S. economy in the first half of 1998 created a favorable
climate that allowed many companies to post solid year over year earnings
growth. Also, low interest rates and a flat yield curve attracted allocations
from other asset classes, boosting demand for high yield bonds. In addition to
these favorable underpinnings, high yield market returns were further enhanced
by early retirements of bonds, at premium prices, as companies repaid debt from
initial public offerings or sought to reduce costs by early refinancing of debt.
For the balance of this year we are taking a more cautious stance. In the
middle of the second quarter the market began to focus on the possibility of
slowing corporate earnings and the uncertainty surrounding the Asian economies.
These issues have led to a recent increase in the volatility of the high yield
market causing high yield spreads to widen. The spread of the high yield index
over Treasuries at the beginning of the year was 386 basis points and had
widened to 417 basis points by June 30, 1998.
While it is difficult to predict the economy, we anticipate that a slowdown
in Gross Domestic Product growth and increased imports from Asia will lead to
lower corporate earnings and lower cash flows. Therefore, we are incorporating a
more conservative strategy for the portfolio. Sectors emphasized will be those
in which companies have the ability to reduce their debt levels, that have
strong asset values or that are in industries considered defensive in nature.
Sectors that will be reduced are those that we expect to be hurt most by
commodity price deflation and rising U.S. imports.
As is always the case, past performance is not indicative of future
results.
INVESCO (NY), Inc.
August 17, 1998
<PAGE> 2
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- -----------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 114.1%
TELECOMMUNICATION -- 20.3%
$ 750,000 Fonorola, Inc., Sr. Secured Notes, 12.500%, 08/15/02........ $ 838,125
325,000 Hermes Euro Railtel, Sr. Notes, 11.500%, 08/15/07........... 367,656
1,000,000 HighwayMaster Communications, Inc., Sr. Sub. Notes, 13.750%,
09/15/05.................................................. 750,000
750,000 Hyperion Telecommunications, Inc., Sr. Discount Notes,
0/13.000%, 04/15/03**..................................... 563,437
700,000 Iridium LLC Capital Corp., Sr. Sub. Notes, 11.250%,
07/15/05.................................................. 703,500
700,000 MGC Communications, Inc., Sr. Notes, 13.000%, 10/01/04...... 700,000
500,000 Omnipoint Corp., Sr. Notes, 11.625%, 08/15/06............... 528,750
2,000,000 PSINet, Inc., Sr. Notes, 10.000%, 02/15/05.................. 2,050,000
1,000,000 Primus Telecom Group, 11.750%, 08/01/04..................... 1,062,500
1,000,000 Source Media, 12.000%, 11/01/04............................. 996,250
750,000 Star Choice Communications, Sr. Secured Notes, 13.000%,
12/15/05.................................................. 767,813
-----------
9,328,031
-----------
OIL AND GAS -- 9.9%
1,000,000 Chesapeake Energy Corp., Sr. Notes, 9.625%, 05/01/05***..... 1,000,000
750,000 Costilla Energy, Inc., Sr. Notes, 10.250%, 10/01/06......... 759,375
750,000 Gothic Production Corp., Sr. Secured Notes, 11.125%,
05/01/05***............................................... 718,125
500,000 Ocean Energy, Inc., Sr. Sub. Notes, 10.375%, 10/15/05....... 553,750
750,000 Snyder Oil Corp., 8.750%, 06/15/07.......................... 755,625
750,000 Vintage Petroleum, Inc., Sr. Sub. Notes, 9.000%, 12/15/05... 770,625
-----------
4,557,500
-----------
CABLE T.V. -- 9.3%
1,000,000 Charter Communications International, Inc., Sr. Notes,
11.250%, 03/15/06......................................... 1,103,750
1,250,000 Galaxy Telecommunication L.P., Sr. Sub. Notes, 12.375%,
10/01/05.................................................. 1,393,750
1,000,000 Intermedia Capital Partners, Sr. Notes, 11.250%, 08/01/06... 1,121,250
600,000 James Cable Partners, 10.750%, 08/15/04..................... 642,000
-----------
4,260,750
-----------
METALS AND MINERALS -- 6.1%
1,000,000 AEI Holding Company, Sr. Notes, 10.000%, 11/15/07***........ 990,000
1,250,000 Acme Metals, Inc., Sr. Notes, 10.875%, 12/15/07***.......... 1,018,750
750,000 Kaiser Aluminum & Chemical Corporation, Sr. Sub. Notes,
12.750%, 02/01/03......................................... 796,875
-----------
2,805,625
-----------
HEALTHCARE -- 5.9%
600,000 Dade International, Inc., Sr. Sub. Notes, 11.125%,
05/01/06.................................................. 679,500
1,250,000 Magellan Health Services, Inc., Sr. Sub. Notes, 9.000%,
02/15/08***............................................... 1,240,625
700,000 Maxxim Medical, Inc., Sr. Secured Sub. Notes, 10.500%,
08/01/06.................................................. 771,750
-----------
2,691,875
-----------
</TABLE>
See Notes to Financial Statements.
1
<PAGE> 3
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- -----------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
OTHER RETAILERS -- 5.8%
$ 800,000 Brylane Capital Corp., Series B, Sr. Sub. Notes, 10.000%,
09/01/03.................................................. $ 844,000
750,000 Central Tractor Farm & Country, Sr. Notes, 10.625%,
04/01/07.................................................. 796,875
1,000,000 Hills Stores Company, Sr. Notes, 12.500%, 07/01/03.......... 997,500
-----------
2,638,375
-----------
SURFACE TRANSPORT -- 5.7%
500,000 American Commercial Lines, 10.250%, 06/30/08***............. 508,750
750,000 Ameritruck Distribution Corp., Sr. Sub. Notes, 12.250%,
11/15/05.................................................. 427,500
500,000 Hvide Marine, Inc., Sr. Notes, 8.375%, 02/15/08............. 477,500
600,000 Ryder TRS, Inc., Sr. Sub. Notes, 10.000%, 12/01/06.......... 697,500
500,000 Stena AB, Sr. Notes, 8.750%, 06/15/07....................... 510,000
-----------
2,621,250
-----------
BUSINESS EQUIPMENT AND SERVICES -- 4.9%
600,000 Loomis Fargo & Company, Sr. Sub. Notes, 10.000%, 01/15/04... 601,500
1,000,000 Unisys Corp., Sr. Notes, 12.000%, 04/15/03.................. 1,136,250
500,000 Unisys Corp., Sr. Notes, 7.875%, 04/01/08................... 501,875
-----------
2,239,625
-----------
HOME FURNISHINGS -- 4.4%
1,000,000 Lifestyle Furnishings, Inc., Sr. Sub. Notes, 10.875%,
08/01/06.................................................. 1,118,750
825,000 Shop Vac Corp., Sr. Secured Notes, 10.625%, 09/01/03........ 905,437
-----------
2,024,187
-----------
HOTELS AND CASINOS -- 4.4%
1,000,000 Hollywood Park, Sr. Sub. Notes, 9.500%, 08/01/07............ 1,033,750
1,000,000 Trump Atlantic City Associates, 1st Mortgage Notes, 11.250%,
05/01/06.................................................. 975,000
-----------
2,008,750
-----------
FOOD PRODUCTS -- 4.3%
1,000,000 International Home Foods, Inc., Sr. Sub. Notes, 10.375%,
11/01/06.................................................. 1,108,750
750,000 Van de Kamps, Inc., Sr. Sub. Notes, 12.000%, 09/15/05....... 839,063
-----------
1,947,813
-----------
BUILDING AND DEVELOPMENT -- 4.1%
900,000 American Builders and Contractors, Sr. Sub. Notes, 10.625%,
05/15/07.................................................. 932,625
950,000 Desa International, 9.875%, 12/15/07***..................... 952,375
-----------
1,885,000
-----------
APPAREL/TEXTILES -- 3.4%
1,000,000 CMI Industries, Sr. Sub. Notes, 9.500%, 10/01/03............ 1,050,000
500,000 Pillowtex Corp., 9.000%, 12/15/07........................... 515,000
-----------
1,565,000
-----------
BEVERAGE AND TOBACCO -- 3.1%
500,000 Colorado Prime Corp., 12.500%, 05/01/04..................... 505,000
875,000 Delta Beverage Group, Inc., Sr. Notes, 9.750%, 12/15/03..... 918,750
-----------
1,423,750
-----------
</TABLE>
See Notes to Financial Statements.
2
<PAGE> 4
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- -----------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
BROADCAST/RADIO/T.V. -- 3.0%
$ 250,000 LIN Television Corp., Sr. Sub. Notes, 8.375%, 03/01/08***... $ 255,625
1,000,000 SFX Broadcasting, Inc., Sr. Sub. Notes, 10.750%, 05/15/06... 1,112,500
-----------
1,368,125
-----------
ECOLOGICAL -- 2.4%
1,000,000 Allied Waste North America, Sr. Sub. Notes, 10.250%,
12/01/06.................................................. 1,103,750
-----------
LEISURE -- 2.3%
500,000 Muzak LP Capital, Sr. Notes, 10.000%, 10/01/03.............. 520,625
500,000 Riddell Sports, Inc., Sr. Notes, 10.500%, 07/15/07.......... 523,750
-----------
1,044,375
-----------
AUTOMOTIVE -- 2.3%
1,000,000 Safety Components, Sr. Sub. Notes, 10.125%, 07/15/07........ 1,040,000
-----------
PACKAGING AND CONTAINERS -- 2.2%
1,000,000 Stone Container Corp., Sr. Sub. Notes, 12.250%, 04/01/02.... 1,030,000
-----------
COSMETICS/TOILETRIES -- 2.1%
850,000 Chattem, Inc., Sr. Sub. Notes, 12.750%, 06/15/04............ 960,500
-----------
CHEMICALS AND PLASTICS -- 1.6%
750,000 Sterling Chemicals, Inc., Sr. Sub. Notes, 11.750%,
08/15/06.................................................. 748,125
-----------
CONGLOMERATES -- 1.6%
750,000 Fisher Scientific International, Inc., Sr. Sub. Notes,
9.000%, 02/01/08.......................................... 746,250
-----------
FOOD SERVICE -- 1.4%
700,000 CFP Holdings, Inc., Sr. Notes, 11.625%, 01/15/04............ 658,000
-----------
FINANCE -- 1.4%
600,000 Dollar Financial Group, Inc., Sr. Notes, 10.875%,
11/15/06.................................................. 648,000
-----------
UTILITIES -- 1.1%
500,000 Niagara Mohawk Power Corp., Sr. Notes, 7.750%, 10/01/08..... 513,750
-----------
ELECTRONICS -- 1.1%
500,000 Viasystems, Inc., Sr. Sub. Notes, 9.750%, 06/01/07.......... 491,250
-----------
TOTAL CORPORATE BONDS AND NOTES (cost $50,819,460).......... 52,349,656
-----------
UNITED STATES GOVERNMENT SECURITIES -- 10.2%
UNITED STATES TREASURY BILLS:
3,866,000 4.71%++, 07/23/1998......................................... 3,854,888
830,000 4.85%++, 08/13/1998......................................... 825,145
-----------
TOTAL UNITED STATES GOVERNMENT SECURITIES (cost
$4,680,033)............................................... 4,680,033
-----------
</TABLE>
See Notes to Financial Statements.
3
<PAGE> 5
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ --------
<C> <S> <C>
COMMON STOCK -- 2.1%
30,000 Dr. Pepper Bottling Holdings, Class A**..................... $ 960,000
1,601 Harvest Foods, Inc., (02/20/1992, cost $36)** +............. 1,601
-----------
TOTAL COMMON STOCK (cost $27,036)........................... 961,601
-----------
WARRANTS -- 0.5% (cost $2,500)
1,250 Capital Gaming International, Inc., Warrants, expire
02/01/1999, (02/10/1994, cost $0)**+...................... 26
500 Colorado Prime Holdings, Warrants, expire 12/31/03,
(07/23/1997, cost $0)**+***............................... 5,000
2,000 Globalstar Telecom, Warrants, expire 02/15/04, (02/13/1997,
cost $0)**+***............................................ 110,000
1,000 HighwayMaster Communications, Inc., Warrants, expire
09/15/05, (06/12/1998, cost $2,500)**+***................. 3,750
700 MGC Communications, Inc., Warrants, expire 10/01/04,
(01/1998, cost $0)**+***.................................. 42,000
1,000 Primus Telecom, Warrants, expire 08/01/04, (07/30/1997, cost
$0)**+.................................................... 20,000
17,370 Star Choice Communications, Warrants, expire 12/15/05,
(12/18/1997, cost $0)**+***............................... 43,425
-----------
224,201
TOTAL INVESTMENTS (cost $55,529,029*).......................... 126.9% 58,215,491
OTHER ASSETS AND LIABILITIES (NET)............................. (26.9) (12,328,715)
----- -----------
NET ASSETS..................................................... 100.0% $45,886,776
===== ===========
</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, 1998 is $225,802 which
represents 0.492% of total net assets.
++ Rate represents annualized yield at date of purchase.
See Notes to Financial Statements.
4
<PAGE> 6
CIM HIGH YIELD SECURITIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $55,529,029) (Note 1)
See accompanying statement.......................................... $58,215,491
Cash.................................................................. 2,164
Receivable for investment securities sold............................. 1,787,923
Interest receivable................................................... 1,369,797
Prepaid expenses...................................................... 13,047
-----------
Total Assets..................................................... 61,388,422
LIABILITIES:
Notes payable (including accrued interest of $222,647) (Note 5)....... $12,722,647
Payable for investment securities purchased........................... 2,286,352
Dividends payable..................................................... 363,449
Investment advisory fee payable (Note 2).............................. 19,652
Accrued Trustees' fees and expenses (Note 2).......................... 7,500
Shareholder servicing agent fees payable (Note 2)..................... 3,660
Administration fee payable (Note 2)................................... 4,140
Custodian fees payable (Note 2)....................................... 2,427
Accrued expenses and other payables................................... 91,819
-----------
Total Liabilities................................................ 15,501,646
-----------
NET ASSETS................................................................. $45,886,776
===========
NET ASSETS consist of:
Undistributed net investment income................................... $ 9,670
Accumulated net realized loss on investments sold..................... (6,557,555)
Unrealized appreciation of investments................................ 2,686,462
Shares of beneficial interest, $0.01 per share par value, issued and
outstanding 5,815,424............................................... 58,154
Paid-in capital in excess of par value................................ 49,690,045
-----------
Total Net Assets................................................. $45,886,776
===========
NET ASSET VALUE PER SHARE
($45,886,776 / 5,815,424 shares of beneficial interest outstanding)...... $ 7.89
===========
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 7
CIM HIGH YIELD SECURITIES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................... $2,840,862
Miscellaneous income................................... 32,785
----------
Total Investment Income........................... 2,873,647
EXPENSES:
Interest expense (Note 5).............................. $440,276
Investment advisory fee (Note 2)....................... 114,993
Legal and audit fees................................... 28,682
Administration fee (Note 2)............................ 21,644
Trustees' fees and expenses (Note 2)................... 18,325
Shareholder servicing agent fees (Note 2).............. 11,818
Custodian fees (Note 2)................................ 8,631
Miscellaneous.......................................... 43,687
--------
Total Expenses.................................... 688,056
----------
NET INVESTMENT INCOME....................................... 2,185,591
----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 3):
Net realized loss on investments sold during the
period................................................ (751,918)
Net change in unrealized appreciation of investments
during the period..................................... 351,575
----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. (400,343)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $1,785,248
==========
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 8
CIM HIGH YIELD SECURITIES
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
NET INCREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received........................ $ 2,485,429
Operating expenses paid................................ (229,620)
------------
Net cash provided by operating activities................... $ 2,255,809
Cash flows from investing activities:
Decrease in short-term securities, net................. (4,003,814)
Purchases of long-term securities...................... (15,523,055)
Proceeds from sales of long-term securities............ 19,709,063
------------
Net cash provided by investing activities................... 182,194
-----------
Net cash provided by operating and investing activities..... 2,438,003
Cash flows from financing activities:
Interest payments on notes payable..................... (220,703)
Cash dividends paid*................................... (2,218,203)
------------
Net cash used in financing activities....................... (2,438,906)
-----------
Net decrease in cash........................................ (903)
Cash -- beginning of period................................. 3,067
-----------
Cash -- end of period....................................... $ 2,164
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH
PROVIDED BY OPERATING AND INVESTING ACTIVITIES:
Net increase in net assets resulting from operations........ $ 1,785,248
Interest expense....................................... $ 440,276
Increase in investments................................ (392,359)
Increase in receivables for investment securities
sold................................................. (1,787,923)
Decrease in interest and dividends receivable.......... 88,247
Increase in payables for investment securities
purchased............................................ 2,286,352
Increase in accrued expenses and liabilities........... 18,162
------------
Total adjustments............................ 652,755
-----------
Net cash provided by operating and investing activities..... $ 2,438,003
===========
</TABLE>
- ---------------
*Non cash financing activities include reinvestments of dividends of $429,794.
See Notes to Financial Statements.
7
<PAGE> 9
CIM HIGH YIELD SECURITIES
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Net investment income....................................... $ 2,185,591 $ 4,459,941
Net realized gain/(loss) on investments sold during the
year...................................................... (751,918) 1,294,580
Net (change in) unrealized appreciation of investments
during the year........................................... 351,575 412,056
----------- -----------
Net increase in net assets resulting from operations........ 1,785,248 6,166,577
Distributions to shareholders from net investment income.... (2,175,921) (4,485,703)
Distributions to shareholders in excess of net investment
income.................................................... 0 (149,068)
Net increase in net assets from Fund share transactions
(Note 4).................................................. 429,794 820,897
----------- -----------
Net increase in net assets.................................. 39,121 2,352,703
NET ASSETS:
Beginning of period......................................... 45,847,655 43,494,952
----------- -----------
End of period (including undistributed net investment income
of $9,670 and $0, respectively)........................... $45,886,776 $45,847,655
=========== ===========
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 10
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 YEAR
6/30/98 ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90
----------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning
of period................ $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10 $ 5.65 $ 7.38
------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income..... 0.40 0.78 0.78 0.77 0.82 0.87 0.83 0.84 0.86
Net realized and
unrealized gain/(loss) on
investments.............. (0.07) 0.30 0.36 0.23 (0.89) 0.71 0.46 1.44 (1.72)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase/(decrease) in
net assets resulting from
investment operations.... 0.33 1.08 1.14 1.00 (0.07) 1.58 1.29 2.28 (0.86)
Change in net asset value
from Fund share
transaction.............. -- -- -- -- -- (0.31) -- -- --
Distributions:
Dividends from net
investment income........ (0.40) (0.78) (0.77) (0.79) (0.84) (0.83) (0.81) (0.83) (0.87)
Dividends in excess of net
investment income........ -- (0.03) -- -- -- -- -- -- --
Distributions from net
realized capital gains... -- -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
distributions............ (0.40) (0.81) (0.77) (0.79) (0.84) (0.83) (0.81) (0.83) (0.87)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period................... $ 7.89 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10 $ 5.65
====== ====== ====== ====== ====== ====== ====== ====== ======
Market value, end of
period................... $8.063 $8.313 $8.125 $7.875 $7.125 $7.875 $7.500 $6.625 $4.750
====== ====== ====== ====== ====== ====== ====== ====== ======
Total investment return... 3.93% 13.31% 14.38% 22.72% 0.99% 16.55%(3) 25.70% 58.61% (20.89)%
====== ====== ====== ====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental data:
Net assets, end of period
(in 000's)............... $45,887 $45,848 $43,495 $40,636 $38,678 $42,901 $30,024 $28,015 $22,283
Ratio of net investment
income to average net
assets................... 9.50%+ 10.08% 10.46% 10.32% 10.82% 11.17% 11.00% 12.59% 13.00%
Ratio of operating
expenses to average net
assets................... 1.08%(2)+ 1.06%(2) 1.10%(2) 1.14%(2) 0.95%(2) 1.09%(2) 1.65%(2) 2.46% 2.35%
Portfolio turnover
rate(1).................. 32.1% 154.5% 172.2% 79.9% 50.6% 114.3% 40.6% 51.2% 34.9%
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/89 12/31/88*
-------- ---------
<S> <C> <C>
Operating performance:
Net asset value, beginning
of period................ $ 9.41 $ 9.35
------ -------
Net investment income..... 1.13 1.16
Net realized and
unrealized gain/(loss) on
investments.............. (1.96) 0.12
------ -------
Net increase/(decrease) in
net assets resulting from
investment operations.... (0.83) 1.28
Change in net asset value
from Fund share
transaction.............. -- --
Distributions:
Dividends from net
investment income........ (1.15) (1.13)
Dividends in excess of net
investment income........ -- --
Distributions from net
realized capital gains... (0.05) (0.09)
------ -------
Total from
distributions............ (1.20) (1.22)
------ -------
Net asset value, end of
period................... $ 7.38 $ 9.41
====== =======
Market value, end of
period................... $7.000 $ 9.500
====== =======
Total investment return... (15.18)% 11.67%
====== =======
Ratios to average net
assets/supplemental data:
Net assets, end of period
(in 000's)............... $29,122 $36,394
Ratio of net investment
income to average net
assets................... 12.78% 12.07%
Ratio of operating
expenses to average net
assets................... 2.28% 2.36%
Portfolio turnover
rate(1).................. 77.4% 209.6%
</TABLE>
- ---------------
* Chancellor Trust Company became the Fund's investment adviser effective
September 30, 1988. On October 31, 1996 the Fund entered into a new
investment advisory agreement with Chancellor LGT Asset Management, Inc. due
to the acquisition of Chancellor Capital Management, Inc. the corporate
parent of Chancellor Trust Company, by Liechenstein Global Trust, AG. On May
29, 1998 the Fund entered into a new investment advisory agreement with
INVESCO (NY), Inc. due to the acquisition of Chancellor LGT Asset
Management, Inc. by AMVESCAP PLC.
(1) 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 year, excluding short-term securities.
(2) The annualized operating expense ratio excludes interest expense. The
annualized ratios including interest expense were 2.99%, 3.06%, 3.19%,
3.52%, 2.80%, 2.63% and 2.06% for the six months ended June 30, 1998 and the
years ended December 31, 1997, 1996, 1995, 1994, 1993, and 1992,
respectively.
(3) 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> 11
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
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, including, where applicable,
amortization of premium and accretion of discount on investments, is recorded on
the accrual basis.
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.
Cash flow information: Cash, as used in the Statement of Cash Flows, is the
amount reported in the Statement of Assets and Liabilities. The Fund invests in
securities and distributes dividends from net investment income and net realized
gains (which are either paid in cash or reinvested at the discretion of
shareholders). These activities are reported in the Statement of Changes in Net
Assets. Information on cash payments is presented in the Statement of Cash
Flows. Accounting practices that do not affect reporting activities on a cash
basis include unrealized gain or loss on investment securities and accretion
income recognized on investment securities.
10
<PAGE> 12
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 INVESCO (NY), Inc. (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.
The Fund has also entered into an Administration and Support Agreement with
First Data Investor Services Group, Inc., ("Investor Services Group") a
wholly-owned subsidiary of First Data Corporation, to provide all administrative
services to the Fund other than those related to the investment decisions.
Investor Services Group 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. Investor Services Group
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, 1998,
amounted to $17,752,917 and $22,277,902, respectively.
At June 30, 1998, aggregate gross unrealized appreciation for all
securities (other than restricted securities), in which there is an excess of
value over tax costs amounted to $3,233,740, 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 $500,650.
At June 30, 1998, aggregate gross unrealized appreciation for restricted
securities in which there is an excess of value over tax costs amounted to
$219,010, and the aggregate gross unrealized depreciation for restricted
securities in which there is an excess of tax cost over value amounted to
$265,638.
11
<PAGE> 13
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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, 1998 DECEMBER 31, 1997
----------------- ------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued as reinvestment of dividends................... 53,190 $429,794 104,665 $820,897
------ -------- ------- --------
Net increase.......................................... 53,190 $429,794 104,665 $820,897
====== ======== ======= ========
</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. 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, 1998, the Fund had
borrowings of $12,500,000 outstanding under this Agreement. During the six
months ended June 30, 1998, the Fund had an average outstanding daily balance of
$12,500,000 with interest rates ranging from 6.9688% to 7.0625% and average debt
per share of $2.17. For the six months ended June 30, 1998, interest expense
totaled $440,276 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, 1997, the Fund had available for Federal tax purposes
unused capital loss carryforwards of $2,716,656, $1,552,171, $330,065, $679,423
and $253,172 expiring in 1999, 2000, 2002, 2003, and 2004, 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 (below
investment-grade bonds). 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.
12
<PAGE> 14
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
8. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<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>
1998 -- QUARTER ENDED
March 31, 1998........... $1,580 $0.27 $1,235 $0.21 $ 1,062 $ 0.18 $2,297 $ 0.39
June 30, 1998............ 1,293 0.22 951 0.16 (1,462) (0.25) (511) (0.09)
1997 -- QUARTER ENDED
March 31, 1997........... 1,389 0.24 1,059 0.19 (236) (0.04) 822 0.14
June 30, 1997............ 1,465 0.26 1,122 0.20 1,145 0.20 2,267 0.40
September 30, 1997....... 1,474 0.26 1,128 0.20 1,295 0.22 2,243 0.44
December 31, 1997........ 1,484 0.26 1,151 0.20 (497) (0.09) 654 0.11
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)
September 30, 1996....... 1,433 0.26 1,098 0.20 1,648 0.29 2,746 0.49
December 31, 1996........ 1,462 0.26 1,121 0.20 634 0.11 1,755 0.31
</TABLE>
9. SHAREHOLDER VOTING RESULTS
At a Special Meeting of Shareholders, held on May 27, 1998, the following
matter was voted on and approved:
Approval of a new Investment Advisory Agreement between the Fund and
Chancellor LGT Asset Management, Inc. (whose name was changed to INVESCO
(NY), Inc., effective June 1, 1998):
FOR AGAINST ABSTAINED
--- ------- ---------
4,927,844* 94,590 85,348
* Represents 84.88% of the outstanding shares of the Fund
13
<PAGE> 15
CIM
- --------------------------------------------------------------------------------
HIGH YIELD SECURITIES
SEMI-ANNUAL REPORT
JUNE 30, 1998
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.
