SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ] Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
..............................................CIM High Yield Securities........
(Name of Registrant as Specified In Its Charter)
..............................................Gail A. Hanson, Secretary.......
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CIM HIGH YIELD SECURITIES
101 Federal Street
Boston, Massachusetts 02110
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on October 11, 2000
To the Shareholders of CIM HIGH YIELD SECURITIES:
Notice is hereby given that the Annual Meeting of Shareholders of CIM
High Yield Securities (the "Fund"), a Massachusetts business trust, will be held
at the offices of Bingham Dana LLP, 150 Federal Street, 25th Floor, Boston,
Massachusetts 02110, on October 11, 2000, at 10:00 a.m., for the following
purposes:
1. To elect one (1) Trustee of the Fund (Proposal 1).
2. To ratify the selection of KPMG LLP as independent auditors
for the Fund for the fiscal year ending December 31, 2000
(Proposal 2).
3. To approve or disapprove the conversion of the Fund from a
closed-end fund to an open-end fund (Proposal 3).
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Trustees has fixed the close of business on August 14,
2000 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting.
By order of the Board of Trustees,
GAIL A. HANSON
Secretary
August 28, 2000
------------------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO
PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES. INSTRUCTIONS
FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
-------------------------------------------------------------------------------
<PAGE>
Instructions for Signing Proxy Cards
The following general rules for signing proxy cards may be of
assistance to you and avoid the time and expense to the Fund involved in
validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the registration
on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
should be indicated unless it is reflected in the form of registration. For
example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr., Executor
Telephone/Internet Voting
[Shares held through various brokerage firms may offer the convenience of voting
via telephone or the Internet. If available, instructions are included with this
Proxy Statement and proxy card.]
<PAGE>
-18-
CIM HIGH YIELD SECURITIES
101 Federal Street
Boston, Massachusetts 02110
---------------------------
ANNUAL MEETING OF SHAREHOLDERS
October 11, 2000
---------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of CIM High Yield Securities, a
Massachusetts business trust (the "Fund"), for use at the Annual Meeting of
Shareholders of the Fund to be held on October 11, 2000, at 10:00 a.m., at the
offices of Bingham Dana LLP, 150 Federal Street, 25th Floor, Boston,
Massachusetts 02110, and at any adjournments thereof (collectively, the
"Meeting"). A Notice of Annual Meeting of Shareholders and a proxy card
accompany this Proxy Statement.
Proxy solicitations will be made, [beginning on or about ____, 2000,]
primarily by mail, but such solicitations may also be made by telephone,
telegraph, [Internet] or personal interviews conducted by officers or employees
of the Fund; INVESCO, Inc. ("INVESCO" or the "Adviser"), the investment adviser
of the Fund; and PFPC Inc. (formerly known as First Data Investor Services
Group, Inc.), the administrator and transfer agent of the Fund [and a
wholly-owned subsidiary of PNC Bank], or any of their affiliates. [In addition,
the Fund has engaged/retained ____ to assist in the solicitation of proxies for
the Meeting. ____ will receive a fee of $____ for its solicitation services plus
reimbursement of out-of-pocket expenses.] The costs of proxy solicitation and
expenses incurred in connection with the preparation of this Proxy Statement and
its enclosures will be paid by the Fund. The Fund will also reimburse brokerage
firms and others for their expenses in forwarding solicitation material to the
beneficial owners of Fund shares.
The Fund's most recent annual and semi-annual reports are available
upon request, without charge, by writing to PFPC Inc., 101 Federal Street, 6th
Floor, Boston, Massachusetts 02110, or calling 1-800-331-1710. This Proxy
Statement and the enclosed proxy card will first be mailed to shareholders on or
about August 28, 2000.
If the enclosed proxy card is properly executed and returned in time to
be voted at the Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. If no instructions are marked
on the enclosed proxy card, shares represented thereby will be voted in the
discretion of the persons named on the proxy card. Accordingly, unless
instructions to the contrary are marked thereon, a proxy will be voted FOR the
election of the nominee as Trustee, FOR the selection of auditors, AGAINST
conversion of the Fund from a closed-end investment company to an open-end
investment company, and FOR any other matters deemed appropriate. Any
shareholder who has given a proxy has the right to revoke it at any time prior
to its exercise either by attending the Meeting and voting his or her shares in
person, or by submitting a letter of revocation or a later-dated proxy to the
Fund at the above address prior to the date of the Meeting.
Proxies that reflect abstentions or broker "non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or the persons entitled to vote and (ii) the broker
or nominee does not have discretionary voting power on a particular matter) will
be counted as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum. For this reason, abstentions
and broker "non-votes" will have the effect of a "no" vote for purposes of
obtaining the requisite approval of Proposals 1 through 3. Under the By-Laws of
the Fund, a quorum is constituted by the presence in person or by proxy of the
holders of more than 50% of the outstanding shares of the Fund entitled to vote
at the Meeting.
The close of business on August 14, 2000 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Meeting and all adjournments thereof.
The Fund has one class of shares of beneficial interest, par value $.01
per share. On the record date, August 14, 2000, there were ______ shares
outstanding (the "Shares"). Each of such Shares is entitled to one vote at the
Meeting, and fractional Shares are entitled to proportionate shares of one vote.
To the knowledge of the Board of Trustees, as of August 14, 2000, no single
shareholder or "group" (as that term is used in Section 13(d) of the Securities
Exchange Act of 1934 (the "1934 Act")) beneficially owned more than 5% of the
Fund's outstanding Shares. Information as to beneficial ownership is based on
reports filed with the Securities and Exchange Commission ("SEC") by such
holders. As of August 14, 2000, Cede & Co., a nominee partnership of The
Depository Trust Company, located at 7 Hanover Square, New York, New York 10004,
held ______ or ____% of the Fund's Shares.
As of August 14, 2000, the Trustees and officers as a group owned less
than [1]% of the Fund's outstanding Shares.
In order that your Shares may be represented at the Meeting, you are
requested to:
-- indicate your instructions on the proxy card;
-- date and sign the proxy card;
-- mail the proxy card promptly in the enclosed envelope which
requires no postage if mailed in the continental United States;
and
-- allow sufficient time for the proxy to be received on or before 5:00 p.m., on
October 10, 1999.
PROPOSAL 1: ELECTION OF TRUSTEES.
At the Meeting, one (1) of the four Trustees of the Fund is to be
elected, to hold office for a period of three years and until his successor is
elected and qualified. The Board of Trustees is divided into three classes. Each
year the term of office of one class will expire. The nominee is currently a
Trustee of the Fund and has indicated that he will serve, if elected, but if he
should be unable to serve, the proxy will be voted FOR any other person
determined by the persons named in the proxy in accordance with their judgment.
[The business address of each Trustee is 1166 Avenue of the Americas, 27th
Floor, New York, NY 10036.]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name, Age, Principal Occupation Shares of the Fund
and Other Directorships* Served as a Beneficially Owned as of
During the Past Five Years Trustee Since August 14, 2000
-------------------------- ------------- ---------------
JOHN F. NICKOLL, age 65 1987 [6,196]
Trustee; Director, Chairman, President
And Chief Executive Officer of The
Foothill Group Inc., a commercial finance
and asset management company; Chairman
of Wells Fargo Business Credit.
The following Trustees of the Fund will continue to serve in such
capacity until their terms of office expire and the successors are elected and
qualified:
Name, Age, Principal Occupation Shares of the Fund
and Other Directorships* Served as a Beneficially Owned as of
During the Past Five Years Trustee Since August 14, 2000
-------------------------- ------------- ---------------
DR. BRUCE H. OLSON, age 64 1987 [1,656]
Trustee; Professor of Finance, Miami
University (Ohio); Trustee, Olde
Custodian Fund; Trustee, Summit
Investment Trust; term expires
2001.
DR. DONALD RATAJCZAK, age 57 1987 [17,340]
Chairman of the Board of Trustees;
Former Director, Economic Forecasting
Center, Georgia State University; Professor,
Georgia State University (retired
June 30, 2000); Director, Ruby Tuesday, Inc.;
Director, Morgan, Keegan &
Company; Director, TBC Corporation;
President, Auric Metals (a publicly traded
investment company); term expires 2002
* Directorships or Trusteeships of companies required to report to the SEC.
<PAGE>
Name, Age, Principal Occupation Shares of the Fund
and other Directorships* Served as a Beneficially Owned as of
During the Past Five Years Trustee Since August 14, 2000
-------------------------- ------------- ---------------
ROBERT G. WADE, JR., age 72** 1987 [2,984.597]
Trustee; Consultant to INVESCO, Inc.
from November 1996 to December 1998;
Chairman of the Board of Chancellor
Capital Management, Inc. and its
subsidiaries from January 1995 to
November 1996; President, Chief
Executive Officer and Chairman
of the Board of Chancellor
Capital Management, Inc. and its
subsidiaries from 1988 to January 1995;
term expires 2002.
* Directorships or Trusteeships of companies required to report to the SEC.
** "Interested person" of the Fund as defined in the Investment Company Act of 1940, as amended.
</TABLE>
The principal executive officers of the Fund are listed in the table
below, along with certain additional information. Each officer of the Fund will
hold such office until a successor has been elected by the Board of Trustees.
[The business address of each of these officers is 1166 Avenue of the Americas,
27th Floor, New York, NY 10036, except for Ms. Hanson, whose business address is
101 Federal Street, 6th Floor, Boston, Massachusetts 02110.]
<TABLE>
<CAPTION>
<S> <C> <C>
Name, Age, Principal Occupation
During the Past Five Years Office (Year First Elected)
MICHAEL S. HYLAND, age 54 President (2000)
Global Partner and Product Manager,
INVESCO, Inc. (since 1999); President
of Salomon Brothers Asset Management
(from 1989 to 1999);
Managing Director of Salomon
Brothers Inc. (from 1989 to 1999);
Managing Director, First Boston Corporation
from 1977 to 1989.
MARGARET RILEY, age 36 Treasurer (1997)
Chief Financial Officer, INVESCO, Inc.
(since September 1996); prior to
September, 1996 held various management
positions at Chancellor Capital
Management and its successor
corporations since 1989.
GAIL A. HANSON, age 58 Secretary (1997)
Vice President, PFPC Inc. (since December
1999); prior to December 1999, Counsel,
First Data Investor Services Group,
Inc.
</TABLE>
The Fund pays each Trustee not affiliated with the Adviser or its
affiliates an annual fee of $6,000 plus $1,000 as compensation for each board
meeting and each committee meeting attended. Each Trustee is reimbursed for
travel and out-of-pocket expenses associated with attending board and committee
meetings. The Board of Trustees held five meetings (three of which were held by
telephone conference call) during the 1999 fiscal year, and each of the Trustees
attended at least 75% of the meetings. The aggregate remuneration paid to
Trustees by the Fund for the fiscal year ended December 31, 1999 amounted to
$45,227 (including reimbursement for travel and out-of-pocket expenses).
The Board of Trustees has an Audit Committee consisting of Messrs.
Nickoll, Olson and Ratajczak. The Audit Committee met once during the fiscal
year ended December 31, 1999, and all member Trustees were present at the
meeting. The Audit Committee reviews the scope and results of the Fund's annual
audit with the Fund's independent auditors and recommends the engagement of such
independent auditors. The Board of Trustees performs the functions of a
nominating committee.
The following table sets forth certain information regarding the
compensation of the Fund's Trustees for the fiscal year ended December 31, 1999.
The officers of the Fund receive no compensation from the Fund for serving in
such capacity.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Compensation Table
Pension or Total Compensation
Aggregate Retirement Benefits From the Fund
Name of Person Compensation Accrued as Part of Complex Paid to
and Position From the Fund Fund Expenses Trustees
Dr. Donald Ratajczak, $11,000 $0 $11,000
Chairman of the Board
of Trustees
Dr. Bruce H. Olson, $11,000 $0 $11,000
Trustee
John F. Nickoll,
Trustee $11,000 $0 $11,000
Robert G. Wade, Jr.,
Trustee $10,000 $0 $10,000
</TABLE>
<PAGE>
Required Vote
Election of Mr. Nickoll for Trustee requires the affirmative vote of
the holders of a majority of the outstanding shares of the Fund represented at
the Meeting in person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL
1.
PROPOSAL 2: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS.
KPMG LLP ("KPMG"), 1600 Market Street, Philadelphia, Pennsylvania, has
served as independent auditors for the Fund since its commencement of operations
on November 18, 1987, and has been selected to serve in such capacity for the
Fund's fiscal year ending December 31, 2000 by the Trustees of the Fund,
including a majority of those members of the Board of Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Fund or INVESCO. KPMG
has informed the Fund that it has no direct or indirect material financial
interest in the Fund or INVESCO. [It is expected that representatives of KPMG
will not attend the Meeting, but will be available by telephone to respond to
appropriate questions/A representative of KPMG is expected to attend the Meeting
and to have the opportunity to make a statement and respond to appropriate
questions from the shareholders.]
Required Vote
Ratification of the selection of KPMG as independent auditors for the
Fund requires the affirmative vote of the holders of a majority of the
outstanding shares of the Fund represented at the Meeting in person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL
2.
PROPOSAL 3: TO CONVERT THE FUND FROM A CLOSED-END FUND TO AN OPEN-END FUND.
**THE BOARD OF TRUSTEES DOES NOT FAVOR THIS PROPOSAL AND RECOMMENDS THAT
SHAREHOLDERS VOTE AGAINST THIS PROPOSAL**
Introduction
The Fund has operated as a diversified, closed-end investment company
since the commencement of its investment operations on November 18, 1987. As a
closed-end fund, the Fund's shares are bought and sold on the American Stock
Exchange at prevailing prices, which may be equal to, less than, or greater than
its net asset value. The Fund's Prospectus provides that in each year, if the
Fund's shares have traded on the principal securities exchange where listed at
an average discount from net asset value of more than 10%, determined on the
basis of the average percentage discount from net asset value as of the end of
the last trading day in each week during the twelve calendar weeks preceding the
beginning of such year, the Fund will submit to its shareholders at the next
succeeding annual meeting of shareholders a proposal to convert the Fund from a
closed-end fund to an open-end fund.
For the twelve calendar week period from October 11, 1999 through
December 31, 1999, the Fund's shares traded on the American Stock Exchange at an
average discount from net asset value of 16.44%, determined in accordance with
the provisions of the Fund's Prospectus. As a result, the Fund is required to
submit Proposal 3 for its shareholders' consideration at the Meeting.
Consideration and Recommendation of the Board of Trustees
At meetings held on April 5, 2000 and July 12, 2000, the Fund's Board
of Trustees reviewed detailed information concerning the legal and operational
differences between closed-end and open-end funds, the Fund's performance as a
closed-end fund, the historical relationship between the market price of the
Fund's shares and their net asset value and the possible effects of conversion
on the Fund. ALTHOUGH THE BOARD OF TRUSTEES RECOGNIZES THAT THIS PROPOSAL MUST
BE MADE, THE TRUSTEES HAVE UNANIMOUSLY DETERMINED NOT TO SUPPORT THIS PROPOSAL.
The Trustees believe that the Fund's status as a closed-end fund
provides significant investment benefits not available in an open-end fund.
Because the Fund's shares are not redeemable, the Fund is not required to
maintain short-term investments in anticipation of possible redemptions.
Therefore, the Fund's assets can be fully invested in pursuit of the Fund's
investment objectives. As an open-fund, the Fund's investment strategy may be
hampered as the Adviser will be more strictly limited in its ability to invest
in less liquid securities. Furthermore, as a closed-end fund, the Fund does not
experience the cash flows associated with sales and redemptions of open-end fund
shares. As a result, the Adviser does not have to invest additional cash from
new sales at times when market conditions are unfavorable or sell securities at
inopportune times to meet redemptions.
The Fund's operating expenses are expected to increase if the Fund is
converted to an open-end fund. As an open-end fund, the Fund would be required,
as a practical matter, to make a continuous public offering of its shares in
order to offset redemptions and maintain the economies of scale available at its
current size. All shareholders would bear the transactional costs associated
with purchases and sales of securities in response to the sale or redemption of
shares if the Fund were converted to an open-end fund (except to the extent that
the Trustees decide to impose a temporary redemption fee, as described below).
Furthermore, the Trustees may, following the conversion to an open-end fund,
recommend that shareholders approve the adoption of a distribution plan under
Rule 12b-1 of the 1940 Act. Under a Rule 12b-1 plan, the Fund would pay for the
distribution and marketing of its shares.
Open-end funds, since they continually issue new shares, have the
ability to increase in size. This growth could result in efficiencies as fixed
costs are spread over a larger pool of assets. Alternatively, since they also
continually redeem shares, open-end funds can also decrease in size. In that
case, expense ratios may increase. The Adviser has advised the
<PAGE>
Trustees that it is possible that the Fund might experience significant
redemptions following any conversion, thereby shrinking in size. Depending on
the size of the redemptions and any sales of new shares, increased expense
ratios could result.
The need to sell securities as an open-end fund to meet redemptions may
have adverse tax consequences to shareholders remaining in the Fund. If the Fund
sells securities to meet redemptions and realizes a gain for tax purposes, the
Fund will be required to allocate the tax gain to remaining shareholders. In
order to retain its qualification as a regulated investment company under the
Internal Revenue Code and thus be relieved of taxation at the investment company
level, the Fund is required to distribute net realized capital gains to its
shareholders who do not redeem their shares and remain shareholders of the Fund.
This would have two negative consequences. First, non-redeeming shareholders
would recognize and be required to pay taxes on a greater amount of capital gain
than would otherwise be the case. Secondly, the Fund may need to sell additional
portfolio securities in order to make the required distribution of realized
capital gains, thereby further reducing the size of the Fund and possibly
causing the realization of additional net capital gains. As of December 31,
1999, the Fund had a tax loss carry forward of $5,447,958. As of
[________,2000], the Fund had net unrealized depreciation of [$_______].
While conversion would eliminate the possibility of the Fund's shares
ever trading at a discount from net asset value, the Board of Trustees noted
that, from inception through December 31, 1999, the Fund's shares from time to
time have traded at a premium, and that, notwithstanding the more recent
discounts during the last 12 calendar weeks of 1999, the shares have traded from
inception through __________, 2000 at an average [premium/discount] discount of
___%. The Fund's average annual premium/discount by year is as follows:
---------------------------------- ----------------------------------
Year Premium/Discount
---------------------------------- -------------------------------
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1988 2.45%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1989 -3.87%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1990 -14.20%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1991 -7.06%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1992 -0.45%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1993 2.51%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1994 2.65%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1995 3.88%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1996 2.73%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1997 1.62%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1998 2.32%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
1999 -8.83%
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
2000 thru [_____, 2000] ___%
---------------------------------- ----------------------------------
[The Trustees also noted that, when compared to the Fund's peer group
(as defined by Lipper Analytical Services) the Fund's discount is in line with
the discounts at which the shares of its peer group trade.]
[Insert chart showing comparison.]
On __________, 2000, the closing price of a Fund share on the American
Stock Exchange was ___% below its net asset value.
In deciding whether to recommend the conversion of the Fund, the
Trustees noted that the performance of the Fund was an important factor to
consider. In light of the Fund's long-term performance, the Trustees do not
believe that eliminating the possibility of a discount justifies the fundamental
changes which would result from a conversion to an open-end fund, including the
loss of the investment advantages of a closed-end fund and the likelihood of
increased operating expenses and taxable gains.
The Fund leverages by borrowing funds from a bank and investing such
borrowed funds in high-yield fixed income securities. The Fund's use of leverage
has benefited shareholders because the average cost of such borrowed funds has
been less than the interest income of the high-yield securities. If the Fund
converts to an open-end fund it will be less practical to maintain the benefits
of leveraging. Because the net assets of an open-end fund change on a daily
basis, the Fund will have to increase or decrease its borrowings on a daily
basis to remain leveraged to the extent it is as a closed-end fund.
The Trustees believe that most shareholders of the Fund purchased their
shares with a long-term investment perspective that recognizes the special
advantages of the closed-end structure. In addition, many shareholders purchased
their Fund shares at a discount and have not been adversely affected by the
discount. Consequently, the Trustees do not believe that the recent history of
greater discounts, which may be temporary, should be viewed as grounds for
depriving shareholders of the advantages of the closed-end fund structure.
FOR ALL OF THE FOREGOING REASONS, THE TRUSTEES UNANIMOUSLY RECOMMEND THAT
SHAREHOLDERS VOTE AGAINST THIS PROPOSAL.
Differences Between Closed-End and Open-End Investment Companies
In evaluating this Proposal, shareholders may wish to consider the
following differences between closed-end and open-end funds:
CHANGES IN CAPITAL. Closed-end funds raise their capital through an
initial public offering and rights offerings and generally do not raise
additional capital after that time. Closed-end funds therefore have limited
opportunities to gain additional economies of scale through growth of assets. At
the same time, because shares of closed-end funds cannot be redeemed, the risk
of higher expense ratios resulting from a decline in assets is also limited.
Open-end funds, in contrast, generally engage in a continuous public
offering of their shares, which provides the opportunity for growth of assets
and reduced expense ratios. However, because shares of open-end funds are
generally redeemable at any time, such funds face the risk of higher expense
ratios if significant redemptions are not offset by sales of new shares.
If the Fund were to convert to an open-end fund, it is likely that the
Adviser would be subject to pressure to sell portfolio securities at times when
the Adviser believes that it should be investing, and to invest in new portfolio
securities when the Adviser believes that it should be reducing the Fund's
exposure to the market. As the manager of a closed-end fund, however, the
Adviser currently is able to ride through market swings without being pressured
to invest new money or liquidate portfolio holdings at inopportune times, and
can manage the Fund with a greater emphasis on long-term considerations.
As stated above, significant redemptions following a conversion would
require the Fund to sell portfolio securities, significantly reducing the asset
size of the Fund. These transactions involve costs and could result in the
recognition of capital gains for federal income tax purposes. Such costs and
liabilities would be borne by all remaining shareholders, except to the extent
that the Trustees decide to impose a temporary redemption fee, as described
below.
REDEMPTIONS OF SHARES. Shares of open-end funds may be redeemed at any
time at their net asset value (subject only to the right of the Fund to withhold
payment for up to seven days or to impose a temporary redemption fee or, with
the permission of the SEC, to suspend redemptions under emergency conditions).
In contrast, shares of closed-end funds are not redeemable and can generally be
bought and sold at current market prices on the exchanges on which such funds
are listed. The shares' current market price may reflect a discount (when shares
are trading below net asset value) or a premium (when shares are trading above
net asset value). Currently, the Fund's shares are trading at a discount to net
asset value. If the Fund is converted to an open-end fund, shareholders who wish
to realize the value of their shares would be able to do so by redeeming their
shares at net asset value (less any redemption fee imposed by the Trustees, as
discussed below). As a result, the discount from net asset value at which the
Fund's shares currently trade would be eliminated. Conversion would also
eliminate, however, the possibility that the Fund's shares might trade at a
premium in the future.
REGULATORY REQUIREMENTS. Both closed-end and open-end funds are
registered with the SEC under the Investment Company Act of 1940, as amended
(the "1940 Act") and, with certain differences relating largely to the sale and
redemption of shares, are generally subject to the same regulatory requirements
of that Act. The Fund's shares are listed for trading on the American Stock
Exchange. That listing would be terminated in the event of a conversion to an
open-end fund. Since open-end funds generally engage in a continuous public
offering of their shares, they are required to maintain current registrations
under federal and state securities laws, which involve additional costs.
ANNUAL SHAREHOLDER MEETINGS. The Fund is currently required by the
rules of the American Stock Exchange to hold annual meetings of shareholders for
the purpose of electing Trustees and ratifying the selection of auditors. As
noted above, conversion of the Fund to an open-end fund would result in
termination of the Fund's listing on the American Stock Exchange with the result
that the Fund would no longer be required to hold annual meetings. In such
event, the Fund expects that shareholder meetings would be held only on an
as-needed basis.
By not having to hold annual shareholder meetings, the Fund would save
the costs of preparing proxy materials and soliciting shareholder votes on the
proposals contained therein. Based on the number of outstanding shares and
shareholders of the Fund as of the record date, such costs aggregate
approximately [$_________] per year. These savings, however, would not be
expected to materially affect the Fund's expense ratio. Under the 1940 Act, the
Fund would be required to hold a shareholder meeting if, among other reasons,
the number of Trustees elected by the shareholders were less than a majority of
the total number of Trustees or if changes were sought in the fundamental
investment policies of the Fund. In addition, holders of at least 10% of the
Fund's outstanding shares may require the Fund to hold a shareholder meeting for
the purpose of voting on the removal of any Trustee or for any other purpose.
INVESTMENT FLEXIBILITY. As noted above, the cash flows associated with
sales and redemptions of open-end fund shares, as well as the need to maintain
cash reserves in anticipation of possible redemptions, tend to reduce the
investment flexibility of open-end funds.
LEVERAGE. Closed-end funds are permitted to issue senior securities
representing debt (i.e. bonds, debentures, notes and other similar securities)
or preferred stock, subject to certain conditions. In the case of debt, a
closed-end fund must have asset coverage of 300% immediately after such
issuance, and no dividends on shares may be paid unless the debt generally has
an asset coverage of 300% at that time. A closed-end fund is not limited to
borrowing from banks. Open-end funds are prohibited by the 1940 Act from issuing
senior securities representing debt, other than indebtedness to banks when there
is asset coverage of at least 300% for all borrowings, and may not issue
preferred stock. At present, a fundamental investment policy of the Fund
prevents the Fund from borrowing amounts in excess of 25% of its gross assets.
SHAREHOLDER PRIVILEGES. Shareholders of the Fund currently have the
option of participating in the Fund's Dividend Reinvestment Plan, under which
cash distributions paid by the Fund are generally reinvested through the
purchase of additional Fund shares at market prices (which currently reflect a
discount from net asset value). At times when the Fund's shares are trading at a
premium over their net asset value, such reinvestments are made at the higher of
net asset value or 95% of market value. For the three year period ending
December 1999, 19.47% of the Fund's shareholders have re-invested their
distributions and are purchasing more than a dollar of net assets for every
dollar re-invested while paying no brokerage commission. If the Fund were to
convert to an open-end fund, shareholders would no longer be able to reinvest
dividends at a price below net asset value per share.
<PAGE>
Measures to be Adopted in the Event Shareholders Vote to Convert the Fund to an
Open-End Fund
In the event that shareholders vote to convert the Fund from a
closed-end fund to an open-end fund, a number of additional actions would need
to be taken not only to effect the conversion of the Fund to an open-end fund
but also to allow the Fund to operate effectively as an open-end fund.
REDEMPTION FEE. In order to reduce the number of redemptions of the
Fund's shares immediately following conversion (thereby reducing any disruption
of the Fund's normal portfolio management), and to offset the costs of such
redemptions, the Trustees are likely to approve the implementation of a fee of
up to [_____]% of the redemption proceeds payable by the Fund on all redemptions
(whether in cash or in kind) for a certain period following the Fund's
conversion. The Trustees will approve the imposition of this fee if they believe
that immediately following conversion to an open-end fund, significant
redemptions of shares would disrupt long-term portfolio management of the Fund
and dilute the interests of the remaining shareholders. Any imposition of a
redemption fee will be intended to deter certain redemptions and compensate
remaining long-term shareholders for the costs of the liquidation of a
significant percentage of the Fund's portfolio.
REDEMPTIONS IN KIND. The Board of Trustees may reserve the right to
meet redemptions occurring during the first year following the Fund's conversion
to an open-end fund by delivering the Fund's portfolio securities to the
redeeming shareholder in kind, rather than paying cash. Such redemptions in kind
would shift the cost of liquidating the portfolio securities from the Fund to
the redeeming shareholder, and, to the extent appreciated securities were
delivered, would avoid the recognition of capital gains by the Fund.
MINIMUM INVESTMENT AND INVOLUNTARY REDEMPTIONS. If the Fund is
converted to an open-end investment company, it will adopt requirements that an
initial investment in Fund shares and any subsequent investment must be in a
specified minimum amount in order to reduce the administrative burdens and costs
incurred in monitoring numerous small accounts. The Fund expects that the
minimum initial investment requirement will be [$____] and the minimum
subsequent investment requirement will be [$____]. The Fund also would reserve
the right to redeem, upon notice, the shares of any shareholder whose account
has a net asset value of less than [$____], other than an account which is an
IRA or other tax-deferred retirement plan.
UNDERWRITING AND DISTRIBUTION. If conversion to an open-end fund is
approved, the Board of Trustees will consider the details of and enter into an
appropriate distribution agreement for the distribution of the Fund's shares.
Pursuant to any such distribution agreement, Fund shares will be offered and
sold directly by the distributor itself and other broker-dealers which have
entered into selling agreements with the distributor. There is no assurance
however, that the distributor or any such broker-dealer would be able to
generate sufficient sales of Fund shares to offset redemptions, particularly
during the initial months following conversion.
The distribution and marketing of open-end funds involve additional
costs. These costs may be paid either by purchasers (in the case of a front-end
sales charge) or by current shareholders (in the case of a plan of distribution
adopted under Rule 12b-1 of the 1940 Act), which would require the approval of
shareholders. In the event that conversion to an open-end fund is approved by
Fund shareholders, it is expected that the Board of Trustees will consider the
implementation of a Rule 12b-1 plan providing for payments by the Fund for the
distribution and marketing of its shares at an annual rate of .25% of the Fund's
average net assets.
AMENDMENT OF THE FUND'S DECLARATION OF TRUST. Conversion of the Fund
from a closed-end fund to an open-end fund will require certain changes to the
Fund's Declaration of Trust. The Declaration of Trust would be amended to
require the Fund to purchase all shares offered to it for redemption at a price
equal to the net asset value of the shares next determined, less any redemption
charge fixed by the Trustees. Notwithstanding this provision, all shares would
be redeemable at a shareholder's option.
The Declaration of Trust would also be amended to include provisions
commonly found in the governing documents of open-end funds. Specifically, the
Declaration of Trust would be amended to authorize the issuance of additional
series of shares and classes thereof from time to time as the Trustees in their
discretion may determine. Each series would have its own investment objective,
policies and restrictions and shares of each series would represent interests in
separate investment portfolios, each of which would be accounted for separately
on the books of the Fund with respect to income, earnings, profits, proceeds,
assets and liabilities attributable to that series. Shares of each series would
be entitled to vote separately to approve investment advisory agreements,
changes in fundamental investment restrictions and distribution plans, but
shares of all series would vote together on the election of Trustees and the
ratification of the selection of accountants. Classes of a series would have
such preferences or special or relative rights, and privileges as the Trustees
may determine, and each class would vote separately on issues that relate
exclusively to that class.
The Fund's Declaration of Trust would also be amended to declassify the
Board of Trustees. Currently, the Fund's Declaration of Trust provide that the
Board of Trustees be divided into three classes of Trustees. Each Trustee serves
for three years with one class being elected each year. The classified Board was
intended, in part, to reduce the Fund's vulnerability to an unsolicited takeover
proposal or similar action that does not contemplate an acquisition of all
outstanding shares of the Fund by making it more difficult and time-consuming to
change majority control of the Board of Trustees without its consent.
Finally, the Trustees would also make certain technical and
non-material changes to the Declaration of Trust and conforming changes to the
Fund's By-Laws if the shareholders vote in favor of the conversion of the Fund
to an open-end fund.
Therefore, a vote in favor of converting the Fund to an open-end fund
would also authorize the Trustees to amend the Fund's Declaration of Trust to
reflect such changes.
AMENDMENT TO MANAGEMENT AGREEMENT. If Proposal 3 is approved, the
Fund's Investment Advisory Agreement with INVESCO would be amended to delete
certain expenses payable by the Fund which are inapplicable to an open-end fund,
such as those relating to listing the Fund's common stock on the American Stock
Exchange and administering the Fund's Dividend Reinvestment Plan.
CHANGING CERTAIN FUNDAMENTAL INVESTMENT POLICIES. If Proposal 3 is
approved, the Fund's investment objective, which is to provide current income
while protecting its shareholders' capital to the extent possible, will remain
unchanged. However, if the proposal to convert the Fund to an open-end fund is
approved it is likely that shareholders will be asked to approve certain other
changes to the Fund's fundamental investment policies. Some of the changes to
the Fund's fundamental investment policies (like the policy regarding borrowing
as described above) will be necessitated by certain requirements for open-end
funds under the 1940 Act. Other changes will be recommended so that the Fund
will have the full flexibility permitted by applicable law.
If the Conversion is Not Approved
In the event that shareholders do not approve the conversion of the
Fund to an open-end fund, the Fund will continue as a closed-end fund and no
changes will be made to the Fund's Declaration of Trust.
THE TRUSTEES BELIEVE THAT THE CONTINUED OPERATION OF THE FUND AS A CLOSED-END
FUND IS IN THE BEST LONG-TERM INTERESTS OF SHAREHOLDERS, AND UNANIMOUSLY
RECOMMEND A VOTE AGAINST THE CONVERSION OF THE FUND TO AN OPEN-END FUND AT THIS
TIME.
Required Vote
Approval of the conversion of the Fund to an open-end fund and approval
of the related amendments to the Fund's Declaration of Trust each requires the
affirmative vote of the holders of a majority of the outstanding shares of the
Fund.
If such conversion is approved, the conversion would become effective
following compliance with all necessary regulatory requirements under federal
and state law. The Fund would seek to complete this process as soon as
reasonably practicable, but it is estimated that this process may require at
least several months.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST
PROPOSAL 3.
DATE TO SUBMIT SHAREHOLDER PROPOSALS
All proposals by shareholders that are intended to be presented at the
Fund's next Annual Meeting of Shareholders to be held in 2001 must be received
by the Fund on or before [April 25, 2001], in order to be considered for
inclusion in the Fund's proxy statement and form of proxy relating to that
meeting.
<PAGE>
ADDITIONAL INFORMATION
Investment Adviser and Administrator
INVESCO, Inc. serves as the Fund's investment adviser and its business
address is 1166 Avenue of the Americas, 27th Floor, New York, NY 10036. PFPC
acts as the Fund's administrator and is located at 101 Federal Street, 6th
Floor, Boston, Massachusetts 02110. [PFPC is a leading provider of full service
mutual fund shareholder and record keeping services. In addition to its mutual
fund transfer agent and record keeping service, PFPC provides complimentary
services through its own subsidiary business units.]
Compliance with the 1934 Act
Section 16(a) of the 1934 Act requires the Fund's officers and
Trustees, certain persons affiliated with INVESCO, Inc. and persons who
beneficially own more than 10% of the Fund's shares to file reports of ownership
and changes of ownership with the SEC and the American Stock Exchange, Inc. [and
to furnish the Fund with copies of all Section 16(a) forms they file.] Based
solely upon its review of the copies of such forms received by it and written
representations from certain of such persons, the Fund believes that during its
fiscal year ended December 31, 1999, all such filing requirements applicable to
such persons were [complied with/met.]
OTHER MATTERS TO COME BEFORE THE MEETING
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote thereon
according to their best judgment in the interests of the Fund.
August 28, 2000
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
-------------------------------------------------------------------------------
<PAGE>
CIM HIGH YIELD SECURITIES
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints Margaret Riley and Gail A. Hanson, and
each of them, attorneys and proxies for the undersigned, with full power of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of CIM High Yield Securities which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of the Fund to be held
at the offices of Bingham Dana LLP, 150 Federal Street, 25th Floor, Boston,
Massachusetts 02110 on October 11, 2000, at 10:00 a.m., and any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice of Meeting
and Proxy Statement, and hereby instructs said attorneys and proxies to vote
said shares as indicated hereon. In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
<PAGE>
X Please mark votes as in this example.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF THE NOMINEE AS TRUSTEE AND FOR PROPOSAL 2, BUT AGAINST PROPOSAL 3.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. ELECTION OF TRUSTEE:
Nominee:
John F. Nickoll ___ FOR ___ WITHHELD
2. To ratify the selection of KPMG LLP
as independent auditors for the Fund. ___ FOR ___ AGAINST ___ ABSTAIN
3. To approve the conversion of the Fund
from a closed-end fund to an open-end fund ___ FOR ___ AGAINST ___ ABSTAIN
</TABLE>
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW ______
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: Date:
Signature: Date:
