<PAGE> 1
CIM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HIGH YIELD SECURITIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
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.
CIM 3192 8/99
<PAGE> 2
[INVESCO LOGO]
CIM HIGH YIELD SECURITIES -- SEMI-ANNUAL REVIEW AND OUTLOOK
The total return for CIM High Yield Securities (the "Fund") was 4.48% based
on the net asset value after Fund expenses for the six months ended June 30,
1999. The Fund outperformed its benchmark, the Credit Suisse First Boston High
Yield Index, which had a total return of 2.63% for the same period. Relative to
other, less risky fixed income asset classes, high yield securities outperformed
both investment grade corporate securities and 10 year Treasury securities,
which returned (2.26)% and (6.47)%, respectively for the same period. However,
please remember that past performance is not indicative of future results.
The high yield market exhibited a Jekyll and Hyde personality during the
first six months of the year. It performed well in the first quarter, as it
recovered from last year's emerging market related bear market, but gave up as
much of the gains in the second quarter on concerns of rising U.S. interest
rates. Much of the poor performance in the second quarter occurred in June as
investors grew anxious about interest rate hikes by the Federal Reserve Board
(Fed). The Fed did raise the federal funds rate by 0.25% at the end of June.
Investors also exhibited a higher sensitivity to credit fundamentals. Aggregate
default levels of high yield securities have risen over the last six months and
are now above long term historic levels. Trading in the high yield market
reflected this increased risk as bonds with strong credit characteristics were
in great demand. Conversely bonds that had any hint of credit uncertainty
required much higher risk premiums before investors showed any interest.
In our last report we reflected that we were cautiously positive that the
higher yield market would outperform other fixed income sectors, but volatility
would remain high especially relative to other less-risky asset classes. This
view has not changed and in the very short term the high yield market may become
more difficult for reasons related to Y2K. Companies are rushing to get all the
required financing completed before the fourth quarter of 1999 due to the fear
that Y2K related events will disrupt the credit markets. This potential deluge
of supply and a Federal Reserve Board that is biased towards raising rates will
increase uncertainty. However, we view this as short term in nature and an
opportunity to selectively buy companies with strong credit fundamentals. Given
the strength of the U.S. economy, the Fed will likely raise rates again.
However, other than a short-term blip, we do not expect inflation to be
materially stronger than current levels. This will likely limit the amount of
Fed rate increases to a total of 0.50%. In this scenario the economy will slow
but not plummet into a recession, an environment ideal for high yield bonds.
INVESCO (NY), Inc.
August 6, 1999
<PAGE> 3
<PAGE> 4
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- -----------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 121.8%
TELECOMMUNICATION -- 20.6%
$1,600,000 Crown Castle International Corp., 0/10.375%, 05/15/11**..... $ 936,000
750,000 Hyperion Telecommunications, Inc., Sr. Discount Notes,
0/13.000%, 04/15/03**..................................... 616,875
1,000,000 Intermedia Communication, 9.500%, 03/01/09.................. 1,261,000
1,000,000 Level 3 Communications, 9.125%, 05/01/08.................... 987,500
700,000 MGC Communications, Inc., Sr. Notes, 13.000%, 10/01/04...... 644,000
500,000 Omnipoint Corp., Sr. Notes, 11.625%, 08/15/06............... 517,500
1,000,000 PSINet, Inc., Sr. Notes, 10.000%, 02/15/05.................. 1,002,500
1,000,000 Primus Telecom Group, 11.750%, 08/01/04..................... 1,015,000
1,000,000 Source Media, 12.000%, 11/01/04............................. 797,500
500,000 Tele1 Europe BV Units, 13.000%, 05/15/09***................. 521,250
-----------
8,299,125
-----------
BUILDING AND DEVELOPMENT -- 9.5%
1,250,000 American Plumbing & Mechanics, 11.625%, 10/15/08***......... 1,206,250
1,000,000 Atrium Companies, Inc., 10.500%, 05/01/09***................ 985,000
950,000 Desa International, 9.875%, 12/15/07+....................... 731,500
900,000 Prison Realty Trust, Inc., 12.000%, 06/01/06................ 900,000
-----------
3,822,750
-----------
CABLE T.V. -- 8.7%
1,050,000 Charter Communication Holdings LLC, 11.250%, 03/15/06***.... 1,010,625
1,250,000 Galaxy Telecommunication L.P., Sr. Sub. Notes, 12.375%,
10/01/05.................................................. 1,385,938
1,000,000 Intermedia Capital Partners, Sr. Notes, 11.250%, 08/01/06... 1,110,000
-----------
3,506,563
-----------
OIL AND GAS -- 8.1%
1,000,000 Continental Resources, 10.250%, 08/01/08.................... 750,000
750,000 Costilla Energy, Inc., Sr. Notes, 10.250%, 10/01/06+........ 225,000
500,000 Ocean Energy, Inc., Sr. Sub. Notes, 10.375%, 10/15/05....... 527,500
500,000 Pride International, Inc., 10.000%, 06/01/09................ 511,250
500,000 R & B Falcon Corp., 12.250%, 03/15/06***.................... 511,875
750,000 Vintage Petroleum, Inc., Sr. Sub. Notes, 9.000%, 12/15/05... 742,500
-----------
3,268,125
-----------
HOTELS AND CASINOS -- 7.8%
500,000 Circus Circus Enterprise, 9.250%, 12/01/05.................. 508,750
700,000 Florida Panther Holdings, 9.875%, 04/15/09.................. 672,000
1,500,000 Hollywood Casino Corp., Sr. Sub. Notes, 11.250%,
05/01/07***............................................... 1,507,500
500,000 Park Place Entertainment, 7.875%, 12/15/05.................. 476,250
-----------
3,164,500
-----------
LEISURE -- 6.2%
1,000,000 Polaroid Corp., Sr. Sub. Notes, 11.500%, 02/15/06........... 1,050,000
1,000,000 Premier Parks, Inc., 9.750%, 06/15/07....................... 1,015,000
500,000 Riddell Sports, Inc., Sr. Notes, 10.500%, 07/15/07.......... 455,000
-----------
2,520,000
-----------
</TABLE>
See Notes to Financial Statements.
1
<PAGE> 5
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- -----------
<S> <C> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
BROADCAST/RADIO/T.V. -- 5.8%
$ 300,000 Chancellor Media Corp., 9.000%, 10/01/08.................... $ 306,750
1,000,000 LIN Television Corp., Sr. Sub. Notes, 8.375%, 03/01/08...... 962,500
976,000 SFX Broadcasting, Inc., Sr. Sub. Notes, 10.750%, 05/15/06... 1,077,260
-----------
2,346,510
-----------
ELECTRONICS -- 5.4%
650,000 Amkor Technologies, Inc., 10.500%, 05/01/09***.............. 624,000
675,000 Fairchild Semiconductor, 10.375%, 10/01/07***............... 669,938
1,000,000 Viasystems, Inc., 9.750%, 06/01/07.......................... 877,500
-----------
2,171,438
-----------
FOOD PRODUCTS -- 5.1%
1,000,000 International Home Foods, Inc., Sr. Sub. Notes, 10.375%,
11/01/06.................................................. 1,081,250
1,000,000 Vlasic Foods International, Inc., 10.250%, 07/01/09***...... 987,500
-----------
2,068,750
-----------
CHEMICALS AND PLASTICS -- 5.1%
1,000,000 Lyondell Chemical Co., 10.875%, 05/01/09***................. 1,042,500
1,000,000 ZSC Specialty Chemical PLC, 11.000%, 07/01/09***............ 1,010,000
-----------
2,052,500
-----------
APPAREL/TEXTILES -- 4.7%
1,000,000 CMI Industries, 9.500%, 10/01/03............................ 952,500
950,000 Pillowtex Corp., 10.000%, 11/15/06.......................... 961,875
-----------
1,914,375
-----------
BUSINESS EQUIPMENT AND SERVICES -- 4.7%
1,000,000 Unisys Corp., Sr. Notes, 12.000%, 04/15/03.................. 1,092,500
820,000 United Stationers Supply, 8.375%, 04/15/08.................. 789,250
-----------
1,881,750
-----------
AUTOMOTIVE -- 4.1%
750,000 American Axle & Manufacturing, Inc., 9.750%, 03/01/09....... 751,875
1,000,000 Safety Components, Sr. Sub. Notes, 10.125%, 07/15/07........ 900,000
-----------
1,651,875
-----------
MANUFACTURING DIVERSIFIED -- 3.3%
700,000 Fairfield Manufacturing Co., Inc., 9.625%, 10/15/08***...... 699,125
650,000 Park Ohio Industries, Inc., 9.250%, 12/01/07***............. 645,125
-----------
1,344,250
-----------
CONGLOMERATES -- 2.9%
1,250,000 Fisher Scientific International, Inc., Sr. Sub. Notes,
9.000%, 02/01/08.......................................... 1,187,500
-----------
PACKAGING AND CONTAINERS -- 2.5%
1,000,000 Stone Container Corp., Sr. Sub. Notes, 12.250%, 04/01/02.... 1,003,750
-----------
AEROSPACE -- 2.4%
1,000,000 Fairchild Corp., 10.750%, 04/15/09***....................... 985,000
-----------
</TABLE>
See Notes to Financial Statements.
2
<PAGE> 6
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- -----------
<S> <C> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
OTHER RETAILERS -- 2.4%
$1,000,000 Ames Department Stores, 10.000%, 04/15/06***................ $ 980,000
-----------
FINANCIAL INTERMEDIARIES -- 2.3%
900,000 AmeriCredit Corp., 9.875%, 04/15/06***...................... 927,000
-----------
HOME FURNISHINGS -- 2.3%
825,000 Shop Vac Corp., Sr. Secured Notes, 10.625%, 09/01/03........ 910,594
-----------
METALS AND MINERALS -- 2.0%
825,000 Oglebay Norton Co., 10.000%, 02/01/09....................... 796,125
-----------
COSMETICS/TOILETRIES -- 1.9%
775,000 Chattem, Inc., Sr. Sub. Notes, 8.875%, 04/01/08............. 767,250
-----------
AIR TRANSPORTATION -- 1.3%
600,000 Northwest Airlines, Inc., 7.875%, 03/15/08.................. 537,750
-----------
SURFACE TRANSPORT -- 1.3%
750,000 Ameritruck Distribution Corp., Sr. Sub. Notes, 12.250%,
11/15/05.................................................. 45,000
500,000 Stena AB, Sr. Notes, 8.750%, 06/15/07....................... 463,125
-----------
508,125
-----------
FOOD DRUG RETAILER -- 0.6%
250,000 Duane Reade, Inc., 9.250%, 02/15/08......................... 250,625
-----------
BEVERAGE AND TOBACCO -- 0.6%
250,000 Eagle Family Foods, Sr. Sub. Notes, 8.750%, 01/15/08........ 228,750
-----------
STEEL -- 0.2%
700,000 Acme Metals, Inc., Sr. Notes, 10.875%, 12/15/07............. 79,625
-----------
TOTAL CORPORATE BONDS AND NOTES (Cost $51,605,756).......... 49,174,604
-----------
UNITED STATES GOVERNMENT SECURITIES -- 4.1%
UNITED STATES TREASURY BILL:
1,639,000 3.29%++, 07/08/99........................................... 1,638,032
-----------
TOTAL UNITED STATES GOVERNMENT SECURITIES
(Cost $1,638,032)........................................... 1,638,032
-----------
SHARES
------
COMMON STOCK -- 2.4%
30,000 Dr. Pepper Bottling Holdings, Class A (11/01/1998, cost
$27,000)**+............................................... 960,000
1,601 Harvest Foods, Inc. (02/20/1992, cost $36)**+............... 1,601
-----------
TOTAL COMMON STOCK
(Cost $27,036)............................................ 961,601
-----------
</TABLE>
See Notes to Financial Statements.
3
<PAGE> 7
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES
------
WARRANTS -- 0.5% VALUE
(NOTE 1)
-----------
<S> <C> <C>
1,000 Globalstar Telecom, Warrants, expire 02/15/04 (02/19/1997,
cost $0)**+***............................................ $ 55,000
700 MGC Communications, Inc., Warrants, expire 10/01/04
(09/24/1997, cost $0)**+***............................... 81,200
1,000 Primus Telecom, Warrants, expire 08/01/04 (08/04/1997, cost
$0)**+.................................................... 20,000
17,370 Star Choice Communications, Warrants, expire 12/15/05
(12/18/1997, cost $0)**+.................................. 41,862
-----------
198,062
-----------
TOTAL INVESTMENTS (cost $53,270,824*)........................... 128.8% 51,972,298
OTHER ASSETS AND LIABILITIES (NET).............................. (28.8) (11,616,276)
----- -----------
NET ASSETS...................................................... 100.0% $40,356,022
===== ===========
</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, 1999 is $2,116,163 which
represents 5.244% of total net assets.
++ Rate represents annualized yield at date of purchase.
See Notes to Financial Statements.
4
<PAGE> 8
CIM HIGH YIELD SECURITIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $53,270,824) (Note 1)
See accompanying statement.......................................... $51,972,298
Cash.................................................................. 4,929
Interest receivable................................................... 1,089,725
Prepaid expenses...................................................... 931
-----------
Total Assets..................................................... 53,067,883
LIABILITIES:
Notes payable (including accrued interest of $140,946) (Note 5)....... $12,640,946
Investment advisory fee payable (Note 2).............................. 16,356
Shareholder servicing agent fees payable (Note 2)..................... 16,327
Administration fee payable (Note 2)................................... 3,192
Custodian fees payable (Note 2)....................................... 151
Accrued expenses and other payables................................... 34,889
-----------
Total Liabilities................................................ 12,711,861
-----------
NET ASSETS................................................................. $40,356,022
===========
NET ASSETS consist of:
Accumulated undistributed net investment income....................... $ 242,983
Accumulated net realized loss on investments sold..................... (8,789,019)
Unrealized depreciation of investments................................ (1,298,526)
Shares of beneficial interest, $0.01 per share par value, issued and
outstanding 5,878,325............................................... 58,783
Paid-in capital in excess of par value................................ 50,141,801
-----------
Total Net Assets................................................. $40,356,022
===========
NET ASSET VALUE PER SHARE
($40,356,022 / 5,878,325 shares of beneficial interest outstanding)...... $ 6.87
===========
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 9
CIM HIGH YIELD SECURITIES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................... $2,744,648
----------
Total Investment Income........................... 2,744,648
EXPENSES:
Interest expense (Note 5).............................. $392,458
Investment advisory fee (Note 2)....................... 101,008
Legal and audit fees................................... 20,698
Administration fee (Note 2)............................ 19,859
Trustees' fees and expenses (Note 2)................... 20,329
Shareholder servicing agent fees (Note 2).............. 14,557
Custodian fees (Note 2)................................ 6,526
Miscellaneous.......................................... 24,300
--------
Total Expenses.................................... 599,735
----------
NET INVESTMENT INCOME....................................... 2,144,913
----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 3):
Net realized loss on investments sold during the
period................................................ (757,531)
Net unrealized appreciation of investments during the
period................................................ 356,828
----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. (400,703)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $1,744,210
==========
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 10
CIM HIGH YIELD SECURITIES
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
NET INCREASE IN CASH:
Cash flows from operating activities:
Interest and dividends received........................ $ 2,985,437
Operating expenses paid................................ (206,114)
------------
Net cash provided by operating activities................... $ 2,779,323
Cash flows from investing activities:
Increase in short-term securities, net................. (357,578)
Purchases of long-term securities...................... (30,433,883)
Proceeds from sales of long-term securities............ 30,366,830
------------
Net cash used in investing activities....................... (424,631)
-----------
Net cash provided by operating and investing activities..... 2,354,692
Cash flows from financing activities:
Interest payments on notes payable..................... (395,510)
Cash dividends paid*................................... (1,954,786)
------------
Net cash used in financing activities....................... (2,350,296)
-----------
Net increase in cash........................................ 4,396
Cash -- beginning of year................................... 533
-----------
Cash -- end of year......................................... $ 4,929
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH
PROVIDED BY OPERATING AND INVESTING ACTIVITIES:
Net increase in net assets resulting from operations........ $ 1,744,210
Interest expense....................................... 392,458
Increase in investments................................ (23,927)
Decrease in interest receivable........................ 240,789
Decrease in prepaid expenses........................... 9,107
Decrease in investment advisory fee payable............ (929)
Decrease in accrued Trustee's fees payable............. (3,417)
Increase in shareholder servicing agent fees payable... 6,577
Decrease in administration fee payable................. (141)
Decrease in custodian fee payable...................... (854)
Decrease in accrued expenses and other payables........ (9,181)
------------
Total adjustments............................ 610,482
-----------
Net cash provided by operating and investing activities..... $ 2,354,692
===========
</TABLE>
- ---------------
*Non cash financing activities include reinvestments of dividends of $72,647.
See Notes to Financial Statements.
7
<PAGE> 11
CIM HIGH YIELD SECURITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
------------- -----------------
<S> <C> <C>
Net investment income....................................... $ 2,144,913 $ 4,148,881
Net realized loss on investments sold during the period..... (757,531) (2,248,607)
Net unrealized appreciation/(depreciation) of investments
during the period......................................... 356,828 (3,990,241)
----------- -----------
Net increase/(decrease) in net assets resulting from
operations................................................ 1,744,210 (2,089,967)
Distributions to shareholders from net investment income.... (2,027,434) (4,000,621)
Net increase in net assets from Fund share transactions
(Note 4).................................................. 72,647 809,532
----------- -----------
Net decrease in net assets.................................. (210,577) (5,281,056)
NET ASSETS:
Beginning of period......................................... 40,566,599 45,847,655
----------- -----------
End of period (including undistributed net investment income
of $242,983 and $125,504, respectively)................... $40,356,022 $40,566,599
=========== ===========
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 12
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
6/30/99 ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/98* 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
----------- --------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning
of period................ $ 6.91 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10 $ 5.65
------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income..... 0.37 0.71 0.78 0.78 0.77 0.82 0.87 0.83 0.84
Net realized and
unrealized gain/(loss) on
investments.............. (0.06) (1.07) 0.30 0.36 0.23 (0.89) 0.71 0.46 1.44
------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase/(decrease) in
net assets resulting from
investment operations.... 0.31 (0.36) 1.08 1.14 1.00 (0.07) 1.58 1.29 2.28
Change in net asset value
from Fund share
transaction.............. -- -- -- -- -- -- (0.31) -- --
Distributions:
Dividends from net
investment income........ (0.35) (0.69) (0.78) (0.77) (0.79) (0.84) (0.83) (0.81) (0.83)
Dividends in excess of net
investment income........ -- -- (0.03) -- -- -- -- -- --
Distributions from net
realized capital gains... -- -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
distributions............ (0.35) (0.69) (0.81) (0.77) (0.79) (0.84) (0.83) (0.81) (0.83)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period................... $ 6.87 $ 6.91 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10
====== ====== ====== ====== ====== ====== ====== ====== ======
Market value, end of
period................... $6.500 $7.190 $8.313 $8.125 $7.875 $7.125 $7.875 $7.500 $6.625
====== ====== ====== ====== ====== ====== ====== ====== ======
Total investment return... (4.96)% (5.45)% 13.31% 14.38% 22.72% 0.99% 16.55%(3) 25.70% 58.61%
====== ====== ====== ====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental data:
Net assets, end of period
(in 000's)............... $40,356 $40,567 $45,848 $43,495 $40,636 $38,678 $42,901 $30,024 $28,015
Ratio of net investment
income to average net
assets................... 10.62% 9.37% 10.08% 10.46% 10.32% 10.82% 11.17% 11.00% 12.59%
Ratio of operating
expenses to average net
assets................... 1.03% 1.02%(2) 1.06%(2) 1.10%(2) 1.14%(2) 0.95%(2) 1.09%(2) 1.65%(2) 2.4%
Portfolio turnover
rate(1).................. 61.7% 62.4% 154.5% 172.2% 79.9% 50.6% 114.3% 40.6% 51.2%
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/90 12/31/89
-------- --------
<S> <C> <C>
Operating performance:
Net asset value, beginning
of period................ $ 7.38 $ 9.41
------ ------
Net investment income..... 0.86 1.13
Net realized and
unrealized gain/(loss) on
investments.............. (1.72) (1.96)
------ ------
Net increase/(decrease) in
net assets resulting from
investment operations.... (0.86) (0.83)
Change in net asset value
from Fund share
transaction.............. -- --
Distributions:
Dividends from net
investment income........ (0.87) (1.15)
Dividends in excess of net
investment income........ -- --
Distributions from net
realized capital gains... -- (0.05)
------ ------
Total from
distributions............ (0.87) (1.20)
------ ------
Net asset value, end of
period................... $ 5.65 $ 7.38
====== ======
Market value, end of
period................... $4.750 $7.000
====== ======
Total investment return... (20.89)% (15.18)%
====== ======
Ratios to average net
assets/supplemental data:
Net assets, end of period
(in 000's)............... $22,283 $29,122
Ratio of net investment
income to average net
assets................... 13.00% 12.78%
Ratio of operating
expenses to average net
assets................... 2.35% 2.28%
Portfolio turnover
rate(1).................. 34.9% 77.4%
</TABLE>
- ---------------
* 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 portfolio securities for a
period and dividing it by the monthly average value of such securities
during the period, excluding short term securities.
(2) The annualized operating expense ratio excludes interest expense. The
annualized ratios including interest expense were 2.97%, 2.98%, 3.06%,
3.19%, 3.52%, 2.80%, 2.63% and 2.06% for the years ended December 31, 1999,
1998, 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%.
See Notes to Financial Statements.
9
<PAGE> 13
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1999
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> 14
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., 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, 1999,
amounted to $30,433,833 and $30,366,830, respectively.
At June 30, 1999, aggregate gross unrealized appreciation for all
securities (other than restricted securities), in which there is an excess of
value over tax costs amounted to $1,781,252, 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 $3,225,611.
At June 30, 1999, aggregate gross unrealized appreciation for restricted
securities in which there is an excess of value over tax costs amounted to
$251,645, and the aggregate gross unrealized depreciation for restricted
securities in which there is an excess of tax cost over value amounted to
$105,812.
11
<PAGE> 15
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, 1999 DECEMBER 31, 1998
----------------- -------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued as reinvestment of dividends................. 10,529 $72,647 105,562 $809,532
------ ------- ------- --------
Net increase........................................ 10,529 $72,647 105,562 $809,532
====== ======= ======= ========
</TABLE>
5. NOTES PAYABLE
The Fund currently has a $12.5 million ("commitment amount") line of credit
provided by BankBoston, N.A. (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, 1999, the Fund had borrowings of $12,500,000
outstanding under this Agreement. During the six months ended June 30, 1999, the
Fund had an average outstanding daily balance of $12,500,000 with interest rates
ranging from 6.1875% to 6.4688% and average debt per share of $2.13. For the six
months ended June 30, 1999, interest expense totaled $392,458 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, 1998, 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, and $2,499,736 expiring in 1999, 2000, 2002, 2003, 2004, and 2006
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> 16
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>
1999 -- QUARTER ENDED
March 31, 1999.......... $1,415 $0.24 $1,109 $0.19 $(1,307) $(0.22) $ (198) $(0.03)
June 30, 1999........... 1,330 0.23 1,036 0.18 906 0.16 1,942 0.33
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)
September 30, 1998...... 1,419 0.24 1,075 0.18 (3,239) (0.56) (2,164) (0.37)
December 31, 1998....... 1,176 0.20 887 0.15 (2,600) (0.44) (1,713) (0.29)
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>
13
