<PAGE> 1
INVESCO LOGO
CIM HIGH YIELD SECURITIES -- 1999 REVIEW & OUTLOOK
The total return for CIM High Yield Securities (the "Fund") was 4.40%
before Fund expenses and 3.28% after Fund expenses, based on the net asset value
(-18.89% total return based on market value), for the year ended December 31,
1999. The Fund's benchmark, the Credit Suisse First Boston Domestic Plus High
Yield Index, had a total return of 2.26% for the same period. Relative to other,
higher grade fixed income asset classes, high yield securities outperformed both
investment grade corporate securities (Lehman Corporate Index) and 10 year
Treasury securities, which returned -1.95% and -8.42%, respectively. Past
performance is not indicative of future results.
Market conditions for high yield securities were difficult during 1999.
After the release of the April Consumer Price Index in mid-May, the bond market
weakened as investors became cautious due to fear of interest rate tightening by
the Federal Reserve Bank. Furthermore, high yield mutual funds experienced net
outflows for the second half of the year and overall flow was slightly negative
for the full year (the last negative year being 1994). New issue supply dwindled
to approximately $100 billion versus $150 billion in 1998. Performance of the
high yield market for the year could have been worse if not for the purchasing
of Collateralized Bond Obligations (CBO's), which picked up some of the slack in
demand. High yield securities did not generate the expected level of excess
returns. Although yields in the high yield market increased almost 100 basis
points in 1999, spreads relative to Treasury securities were tighter by
approximately 80 basis points. This is largely due to the substantially higher
yield levels of the underlying Treasuries market.
The bond market during the year 2000 is expected to continue to be
volatile. The Federal Reserve raised the federal funds rate three times during
1999. It has already tightened once this year and we expect further tightening
throughout the year. Rates and risk premiums are still high which should limit
both supply and demand. Careful credit selection continues to be the main focus
in composing our portfolio. We will continue to favor issuers with strong cash
flow positions and demonstrated ability to access the capital markets to meet
their financing requirements, but we will not always be successful in avoiding
problem credits. We are trying especially to maintain liquidity throughout the
portfolio so that the Fund can be managed flexibly in volatile markets.
We wanted to let you know that the Fund traded at an average discount
greater than 10% from net asset value for the last twelve calendar weeks of
1999. Therefore, in accordance with the policy described in the prospectus for
the Fund's initial public offering, the Fund will submit to its shareholders at
the next annual meeting a proposal to convert the Fund to an open-end investment
company. The Fund's next annual meeting is to be held in October, 2000.
Conversion of the Fund to an open-end investment company requires the
affirmative vote of the holders of a majority of the shares entitled to vote on
the matter. The Board of Trustees of the Fund has not yet determined whether to
recommend that the shareholders of the Fund vote for or against such a proposal.
Thank you for your support during the year and we look forward to a
prosperous 2000.
INVESCO, Inc.
February 4, 2000
<PAGE> 2
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- ------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 126.5%
TELECOMMUNICATION -- 28.3%
$ 750,000 Adelphia Business Solutions, Inc., Sr. Discount Notes,
0/13.000%, 04/15/03**..................................... $ 669,375
1,300,000 Intermedia Communication, Sr. Notes, 9.500%, 03/01/09 ...... 1,257,750
1,000,000 Level 3 Communications, Sr. Notes, 9.125%, 05/01/08......... 945,000
700,000 MGC Communications, Inc., Sr. Notes, 13.000%, 10/01/04...... 707,000
1,000,000 NEXTLINK Communications, Inc., Sr. Notes, 10.750%,
11/15/08.................................................. 1,040,000
500,000 Omnipoint Corp., Sr. Notes, 11.625%, 08/15/06............... 533,750
1,000,000 PSINet, Inc., Sr. Notes, 11.000%, 08/01/09.................. 1,035,000
1,000,000 Primus Telecommunications Group, Sr. Notes, 11.750%,
08/01/04.................................................. 990,000
500,000 RCN Corp., Sr. Notes, 10.125%, 01/15/10..................... 500,000
1,000,000 Source Media Inc., Sr. Notes, 12.000%, 11/01/04............. 600,000
500,000 Tele1 Europe BV, Sr. Notes, 13.000%, 05/15/09............... 515,000
1,000,000 Williams Communications Group, Inc., Sr. Notes, 10.875%,
10/01/09.................................................. 1,050,000
1,000,000 Worldwide Fiber, Inc., Sr. Notes, 12.000%, 08/01/09***...... 1,032,500
------------
10,875,375
------------
ELECTRONICS -- 9.6%
700,000 Chippac International Ltd., Sr. Sub. Notes, 12.750%,
08/01/09***............................................... 728,000
675,000 Fairchild Semiconductor, 10.375%, 10/01/07.................. 691,875
650,000 Intersil Corp., 13.250%, 08/15/09***........................ 705,250
1,000,000 SCG Holding & Semiconductor Co., Sr. Sub. Notes, 12.000%,
08/01/09***............................................... 1,070,000
900,000 Viasystems Inc., Sr. Sub. Notes, 9.750%, 06/01/07........... 495,000
------------
3,690,125
------------
BUILDING AND DEVELOPMENT -- 9.2%
1,000,000 American Plumbing & Mechanics, Sr. Sub. Notes, 11.625%,
10/15/08***............................................... 950,000
1,050,000 Atrium Companies, Inc., Sr. Sub. Notes, 10.500%, 05/01/09... 1,029,000
950,000 Desa International, Inc., Sr. Sub. Notes, 9.875%, expire
12/15/07,
(11/21/97, cost $950,000)+................................ 684,000
900,000 Prison Realty Trust, Inc., Sr. Notes, 12.000%, 06/01/06..... 868,500
------------
3,531,500
------------
HOTELS AND CASINOS -- 7.2%
525,000 Circus Circus Enterprise, 9.250%, 12/01/05 ................. 534,187
700,000 Florida Panther Holdings, 9.875%, 04/15/09.................. 680,750
1,000,000 Hollywood Casino Corp., Sr. Sub. Notes, 11.250%,
05/01/07 ................................................. 1,045,000
500,000 Lodgian Financing Corp., Sr. Sub. Notes, 12.250%,
07/15/09.................................................. 496,250
------------
2,756,187
------------
OIL AND GAS -- 6.8%
750,000 Costilla Energy, Inc., Sr. Notes, 10.250%, expire 10/01/06,
(10/03/96, cost $750,000)+(a)............................. 217,500
525,000 Frontier Oil Corp., Sr. Notes, 11.750%, 11/15/09............ 517,125
500,000 Pride International, Inc., 10.000%, 06/01/09................ 511,250
550,000 R & B Falcon Corp., 12.250%, 03/15/06....................... 609,125
750,000 Swift Energy Co., Sr. Sub.-Notes, 10.250%, 08/01/09......... 763,125
------------
2,618,125
------------
</TABLE>
See Notes to Financial Statements.
1
<PAGE> 3
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- ------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
AUTOMOTIVE -- 6.4%
$ 765,000 American Axle & Manufacturing, Inc., Sr. Sub. Notes, 9.750%,
03/01/09.................................................. $ 772,650
500,000 Exide Corp., Sr. Notes, 10.000%, 04/15/05................... 482,500
1,000,000 Safety Components, Sr. Sub. Notes, 10.125%, 07/15/07........ 620,000
550,000 Tenneco Automotive, Inc., Sr. Sub. Notes, 11.625%,
10/15/09***............................................... 563,063
------------
2,438,213
------------
LEISURE -- 6.3%
1,000,000 Polaroid Corp., Sr. Notes, 11.500%, 02/15/06................ 975,000
1,000,000 Premier Parks, Inc., Sr. Notes, 9.750%, 06/15/07............ 1,000,000
500,000 Riddell Sports, Inc., Sr. Sub. Notes, 10.500%, 07/15/07..... 426,250
------------
2,401,250
------------
CHEMICALS AND PLASTICS -- 5.4%
1,000,000 Lyondell Chemical Co., Sr. Sub. Notes, 10.875%, 05/01/09.... 1,040,000
1,000,000 ZSC Specialty Chemical PLC, 11.000%, 07/01/09***............ 1,040,000
------------
2,080,000
------------
APPAREL/TEXTILES -- 4.1%
1,000,000 CMI Industries, Sr. Sub. Notes, 9.500%, 10/01/03............ 700,000
1,000,000 Pillowtex Corp., Sr. Sub. Notes, 10.000%, 11/15/06.......... 432,500
500,000 St. John Knits International, Inc., Sr. Sub. Notes, 12.500%,
07/01/09.................................................. 435,000
------------
1,567,500
------------
CABLE T.V. -- 3.5%
1,250,000 Galaxy Telecommunication L.P., Sr. Sub. Notes, 12.375%,
10/01/05.................................................. 1,331,250
------------
HOME FURNISHINGS -- 3.0%
650,000 O'Sullivan Industries, 13.375%, 10/15/09***................. 651,625
550,000 Winsloew Furniture, Inc., 12.750%, 08/15/07***.............. 511,500
------------
1,163,125
------------
STEEL -- 2.9%
700,000 Acme Metals, Inc., Sr. Notes, 10.875%, 12/15/07(a).......... 119,000
600,000 LTV Corp., Sr. Notes, 11.750%, 11/15/09***.................. 627,000
500,000 Republic Technology/RTI Capital, 13.750%, 07/15/09***....... 350,000
------------
1,096,000
------------
BUSINESS EQUIPMENT AND SERVICES -- 2.8%
1,000,000 Unisys Corp., Sr. Notes, 12.000%, 04/15/03.................. 1,070,000
------------
PACKAGING AND CONTAINERS -- 2.6%
1,000,000 Stone Container Corp., Sr. Sub. Notes, 12.250%, 04/01/02 ... 1,005,000
------------
OTHER RETAILERS -- 2.6%
1,000,000 Ames Department Stores, Sr. Notes, 10.000%, 04/15/06........ 990,000
------------
FOOD PRODUCTS -- 2.5%
1,000,000 Vlasic Foods International, Inc., Sr. Sub. Notes, 10.250%,
07/01/09 ................................................. 956,250
------------
CONGLOMERATES -- 2.4%
950,000 Fisher Scientific International, Inc., Sr. Sub. Notes,
9.000%, 02/01/08.......................................... 914,375
------------
</TABLE>
See Notes to Financial Statements.
2
<PAGE> 4
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------- ------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
FINANCIAL INTERMEDIARIES -- 2.3%
$ 900,000 AmeriCredit Corp., 9.875%, 04/15/06......................... $ 903,375
------------
ECOLOGICAL -- 2.3%
1,000,000 Allied Waste North American, Sr. Notes, 10.000%,
08/01/09***............................................... 895,000
------------
AEROSPACE -- 2.2%
1,000,000 Fairchild Corp., 10.750%, 04/15/09.......................... 856,250
------------
FOOD DRUG RETAILER -- 2.2%
850,000 Stater Brothers Holdings, Sr. Notes, 10.750%, 08/15/06...... 854,250
------------
INDUSTRIAL EQUIPMENT -- 2.1%
300,000 Blount, Inc., Sr. Sub. Notes, 13.000%, 08/01/09***.......... 316,500
500,000 Nationsrent, Inc., Sr. Sub. Notes, 10.375%, 12/15/08........ 493,750
------------
810,250
------------
FOOD SERVICE -- 2.0%
750,000 Sbarro, Inc., Sr. Notes, 11.000%, 09/15/09***............... 772,500
------------
COSMETICS/TOILETRIES -- 1.9%
775,000 Chattem, Inc., Sr. Sub. Notes, 8.875%, 04/01/08............. 730,437
------------
HEALTHCARE -- 1.9%
700,000 Triad Hospitals Holdings, Sr. Sub. Notes, 11.000%,
05/15/09.................................................. 729,750
------------
SURFACE TRANSPORTATION -- 1.4%
750,000 Ameritruck Distribution Corp., Sr. Sub. Notes, 12.250%,
11/15/05(a)............................................... 0
525,000 North American Van Lines, Sr. Sub. Notes, 13.375%,
12/01/09***............................................... 523,688
------------
523,688
------------
AIR TRANSPORTATION -- 1.4%
600,000 Northwest Airlines, Inc., 7.875%, 03/15/08.................. 521,250
------------
MANUFACTURING DIVERSIFIED -- 1.2%
500,000 WEC Co., Inc., Sr. Notes, 12.000%, 07/15/09................. 460,000
------------
TOTAL CORPORATE BONDS AND NOTES (Cost $52,674,184).......... 48,541,025
------------
UNITED STATES GOVERNMENT SECURITIES -- 1.6%
UNITED STATES TREASURY BILL:
619,000 5.346%++, 01/20/00.......................................... 617,298
------------
TOTAL UNITED STATES GOVERNMENT SECURITIES
(Cost $617,298)............................................. 617,298
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<C> <S> <C>
COMMON STOCK -- 0.0%
1,601 Harvest Foods, Inc., (02/20/1992, cost $36)**+.............. 1,601
-----------
TOTAL COMMON STOCK
(Cost $36)................................................ 1,601
-----------
</TABLE>
See Notes to Financial Statements.
3
<PAGE> 5
CIM HIGH YIELD SECURITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ --------
<C> <S> <C>
WARRANTS -- 1.3%
1,000 Globalstar Telecom, Warrants, expire 02/15/04, (02/19/1997,
cost $0)**+***............................................ $ 125,000
650 Intersils Corp., Warrants, expire 08/15/09, (08/09/1999,
cost $0)**+***............................................ 97,500
700 MGC Communications, Inc., Warrants, expire 10/01/04,
(09/24/1997, cost $0)**+***............................... 122,500
1,000 Primus Telecom, Warrants, expire 08/01/04, (08/04/1997, cost
$0)**+.................................................... 50,000
17,370 Star Choice Communications, Warrants, expire 12/15/05,
(12/18/1997, cost $0)**+.................................. 0
500 Tele1 Europe B V, Warrants, expire 05/15/09, (05/12/1999,
cost $0)**+***............................................ 85,000
550 Winsloew Furniture, Inc., Warrants, expire 08/15/07,
(08/24/1999, cost $0)**+***............................... 27,500
-----------
507,500
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $53,291,518*)....................... 129.4% 49,667,424
OTHER ASSETS AND LIABILITIES (NET).......................... (29.4) (11,278,676)
----- ------------
NET ASSETS.................................................. 100.0% $ 38,388,748
===== ============
</TABLE>
- ---------------
<TABLE>
<C> <S>
* 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 December 31, 1999 is $1,410,601 which
represents 3.675% of total net assets.
++ Rate represents annualized yield at date of purchase.
(a) Issuer in default.
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 6
CIM HIGH YIELD SECURITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $53,291,518) (Note 1)
See accompanying statement.......................................... $49,667,424
Cash.................................................................. 1,344
Interest receivable................................................... 1,462,160
Prepaid expenses...................................................... 2,146
-----------
Total Assets..................................................... 51,133,074
LIABILITIES:
Notes payable (including accrued interest of $177,084) (Note 5)....... $12,677,084
Investment advisory fee payable (Note 2).............................. 17,891
Shareholder servicing agent fees payable (Note 2)..................... 2,220
Administration fee payable (Note 2)................................... 3,333
Custodian fees payable (Note 2)....................................... 2,378
Accrued expenses and other payables................................... 41,420
-----------
Total Liabilities................................................ 12,744,326
-----------
NET ASSETS................................................................. $38,388,748
===========
NET ASSETS consist of:
Accumulated net realized loss on investments sold..................... $(5,460,096)
Unrealized depreciation of investments................................ (3,624,094)
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................................ 47,414,155
-----------
Total Net Assets................................................. $38,388,748
===========
NET ASSET VALUE PER SHARE
($38,388,748 / 5,878,325 shares of beneficial interest outstanding)...... $ 6.53
===========
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 7
CIM HIGH YIELD SECURITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................... $ 5,480,423
-----------
Total Investment Income........................... 5,480,423
EXPENSES:
Interest expense (Note 5).............................. $832,446
Investment advisory fee (Note 2)....................... 198,951
Miscellaneous.......................................... 49,511
Legal and audit fees................................... 48,000
Trustees' fees and expenses (Note 2)................... 45,227
Administration fee (Note 2)............................ 40,035
Custodian fees (Note 2)................................ 14,846
Shareholder servicing agent fees (Note 2).............. 5,003
--------
Total Expenses.................................... 1,234,019
-----------
NET INVESTMENT INCOME....................................... 4,246,404
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
(Notes 1 and 3):
Net realized loss on investments sold during the
year.................................................. (355,116)
Net unrealized depreciation of investments during the
year.................................................. (1,968,740)
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. (2,323,856)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 1,922,548
===========
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 8
CIM HIGH YIELD SECURITIES
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
NET INCREASE IN CASH:
Cash flows from operating activities:
Interest received...................................... $ 5,348,778
Operating expenses paid................................ (413,192)
------------
Net cash provided by operating activities................... $ 4,935,586
Cash flows from investing activities:
Decrease in short-term securities, net................. 748,763
Purchases of long-term securities...................... (49,343,438)
Proceeds from sales of long-term securities............ 48,559,659
------------
Net cash used in investing activities....................... (35,016)
-----------
Net cash provided by operating and investing activities..... 4,900,570
Cash flows from financing activities:
Interest payments on notes payable..................... (799,360)
Cash dividends paid*................................... (4,100,399)
------------
Net cash used in financing activities....................... (4,899,759)
-----------
Net increase in cash........................................ 811
Cash -- beginning of year................................... 533
-----------
Cash -- end of year......................................... $ 1,344
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH PROVIDED BY OPERATING AND INVESTING
ACTIVITIES:
Net increase in net assets resulting from operations........ $ 1,922,548
Interest expense....................................... 832,446
Decrease in investments................................ 2,280,947
Increase in interest receivable........................ (131,646)
Decrease in prepaid expenses........................... 7,892
Increase in investment advisory fee payable............ 606
Decrease in shareholder servicing agent fees payable... (7,530)
Increase in custodian fee payable...................... 1,374
Decrease in accrued expenses and other payables........ (6,067)
------------
Total adjustments............................ 2,978,022
-----------
Net cash provided by operating and investing activities..... $ 4,900,570
===========
</TABLE>
- ---------------
*Non cash financing activities include reinvestments of dividends of $72,647.
See Notes to Financial Statements.
7
<PAGE> 9
CIM HIGH YIELD SECURITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
Net investment income...................................... $ 4,246,404 $ 4,148,881
Net realized loss on investments sold during the year...... (355,116) (2,248,607)
Net unrealized depreciation of investments during the
year..................................................... (1,968,740) (3,990,241)
----------- -----------
Net increase/(decrease) in net assets resulting from
operations............................................... 1,922,548 (2,089,967)
Distributions to shareholders from net investment income... (4,173,046) (4,000,621)
Net increase in net assets from Fund share transactions
(Note 4)................................................. 72,647 809,532
----------- -----------
Net decrease in net assets................................. (2,177,851) (5,281,056)
NET ASSETS:
Beginning of year.......................................... 40,566,599 45,847,655
----------- -----------
End of year (including undistributed net investment income
of $0 and $125,504, respectively)........................ $38,388,748 $40,566,599
=========== ===========
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 10
CIM HIGH YIELD SECURITIES
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/99 12/31/98* 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
-------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year...... $ 6.91 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10
------- ------- ------- ------- ------- ------- ------- -------
Net investment income................... 0.72 0.71 0.78 0.78 0.77 0.82 0.87 0.83
Net realized and unrealized gain/(loss)
on investments......................... (0.39) (1.07) 0.30 0.36 0.23 (0.89) 0.71 0.46
------- ------- ------- ------- ------- ------- ------- -------
Net increase/(decrease) in net assets
resulting from investment operations... 0.33 (0.36) 1.08 1.14 1.00 (0.07) 1.58 1.29
Change in net asset value from Fund
share transaction...................... -- -- -- -- -- -- (0.31) --
Distributions:
Dividends from net investment income.... (0.71) (0.69) (0.78) (0.77) (0.79) (0.84) (0.83) (0.81)
Dividends in excess of net investment
income................................. -- -- (0.03) -- -- -- -- --
Total from distributions................ (0.71) (0.69) (0.81) (0.77) (0.79) (0.84) (0.83) (0.81)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year............ $ 6.53 $ 6.91 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58
======= ======= ======= ======= ======= ======= ======= =======
Market value, end of year............... $ 5.250 $ 7.190 $ 8.313 $ 8.125 $ 7.875 $ 7.125 $ 7.875 $ 7.500
======= ======= ======= ======= ======= ======= ======= =======
Total investment return................. (18.89)% (5.45)% 13.31% 14.38% 22.72% 0.99% 16.55%(3) 25.70%
======= ======= ======= ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental data:
Net assets, end of year (in 000's)...... $38,389 $40,567 $45,848 $43,495 $40,636 $38,678 $42,901 $30,024
Ratio of net investment income to
average net assets..................... 10.76% 9.37% 10.08% 10.46% 10.32% 10.82% 11.17% 11.00%
Ratio of operating expenses to average
net assets............................. 1.02%(2) 1.02%(2) 1.06%(2) 1.10%(2) 1.14%(2) 0.95%(2) 1.09%(2) 1.65%(2)
Portfolio turnover rate(1).............. 98.0% 62.4% 154.5% 172.2% 79.9% 50.6% 114.3% 40.6%
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/91 12/31/90
-------- --------
<S> <C> <C>
Operating performance:
Net asset value, beginning of year...... $ 5.65 $ 7.38
------- -------
Net investment income................... 0.84 0.86
Net realized and unrealized gain/(loss)
on investments......................... 1.44 (1.72)
------- -------
Net increase/(decrease) in net assets
resulting from investment operations... 2.28 (0.86)
Change in net asset value from Fund
share transaction...................... -- --
Distributions:
Dividends from net investment income.... (0.83) (0.87)
Dividends in excess of net investment
income................................. -- --
Total from distributions................ (0.83) (0.87)
------- -------
Net asset value, end of year............ $ 7.10 $ 5.65
======= =======
Market value, end of year............... $ 6.625 $ 4.750
======= =======
Total investment return................. 58.61% (20.89)%
======= =======
Ratios to average net
assets/supplemental data:
Net assets, end of year (in 000's)...... $28,015 $22,283
Ratio of net investment income to
average net assets..................... 12.59% 13.00%
Ratio of operating expenses to average
net assets............................. 2.46% 2.35%
Portfolio turnover rate(1).............. 51.2% 34.9%
</TABLE>
- ---------------
* On May 29, 1998 the Fund entered into a new investment advisory agreement
with INVESCO (NY), Inc. (now known as INVESCO, 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 year, excluding short term securities.
(2) The annualized operating expense ratio excludes interest expense. The
annualized ratios including interest expense were 3.13%, 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> 11
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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
10
<PAGE> 12
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
reporting activities on a cash basis include unrealized gain or loss on
investment securities and accretion income recognized on investment securities.
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, 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. INVESCO (NY), Inc.
was the Fund's investment adviser until January 1, 2000, when through a series
of corporate transactions, INVESCO (NY), Inc. was merged into INVESCO, Inc. No
"assignment" of the Advisory Agreement resulted from these transactions.
The Fund has also entered into an Administration and Support Agreement with
PFPC Inc. (formerly First Data Investor Services Group, Inc.) ("PFPC"), to
provide all administrative services to the Fund other than those related to the
investment decisions. PFPC 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. PFPC serves as the
Fund's shareholder servicing agent (transfer agent).
3. PURCHASE AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities,
excluding short-term investments, during the year ended December 31, 1999,
amounted to $49,343,438 and $48,559,659, respectively.
At December 31, 1999, aggregate gross unrealized appreciation for all
securities (other than restricted securities), in which there is an excess of
value over tax cost amounted to $807,019, 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 $4,718,599.
At December 31, 1999, aggregate gross unrealized appreciation for
restricted securities in which there is an excess of value over tax cost
amounted to $645,376, and the aggregate gross unrealized depreciation for
restricted securities in which there is an excess of tax cost over value
amounted to $357,890.
11
<PAGE> 13
CIM HIGH YIELD SECURITIES
NOTES TO FINANCIAL STATEMENTS (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>
YEAR ENDED YEAR ENDED
DECEMBER 31, 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 December 31, 1999, the Fund had borrowings of $12,500,000
outstanding under this Agreement. During the year ended December 31, 1999, the
Fund had an average outstanding daily balance of $12,500,000 with interest rates
ranging from 6.1875% to 6.6250% and average debt per share of $2.13. For the
year ended December 31, 1999, interest expense totaled $832,446 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, 1999, the Fund had available for Federal tax purposes
unused capital loss carryforwards of $1,552,171, $330,065, $679,423, $253,172,
$2,499,736 and $133,391 expiring in 2000, 2002, 2003, 2004, 2006, and 2007,
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 (CONTINUED)
8. PORTFOLIO MANAGER CHANGES (UNAUDITED)
From September, 1998 through April, 1999 the Portfolio Manager was
Cheng-Hock Lau of INVESCO, Inc. In April, 1999, John Fenn became the Portfolio
Manager for the Fund. Prior to joining INVESCO, Inc., Mr. Fenn was a Senior
Vice-President and Portfolio Manager for General Electric Capital Corporation.
9. QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET INCREASE/
NET REALIZED AND (DECREASE)
NET UNREALIZED IN NET ASSETS
INVESTMENT INVESTMENT GAIN/(LOSS) RESULTING FROM
INCOME INCOME ON INVESTMENTS OPERATIONS
-------------- -------------- ---------------- ----------------
TOTAL PER TOTAL PER TOTAL PER TOTAL PER
(000) SHARE (000) SHARE (000) SHARE (000) SHARE
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 0.34
September 30, 1999...... 1,341 0.23 1,036 0.18 (3,500) (0.60) (2,464) (0.42)
December 31, 1999....... 1,394 0.24 1,065 0.18 1,578 0.27 2,643 0.45
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)
</TABLE>
13
<PAGE> 15
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Trustee
of CIM High Yield Securities:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments of CIM High Yield Securities, as of
December 31, 1999 and the related statements of operations and cash flows for
the year then ended, the statements of changes in net assets for each of the
years in the two year period then ended and financial highlights for each of the
years in the ten year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999 by correspondence with the custodian. An audit also includes
assessing the accounting principles used, and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of CIM
High Yield Securities as of December 31, 1999, the results of its operations and
its cash flows for the year then ended, the changes in its net assets for each
of the years in the two year period then ended and financial highlights for each
of the years in the ten year period then ended, in conformity with generally
accepted accounting principles.
/s/ KPG LLP
Philadelphia, Pennsylvania
February 4, 2000
14
<PAGE> 16
To Shareholders of CIM High Yield Securities (the "Fund")
About the Fund's Dividend Reinvestment Plan
Pursuant to the Fund's Dividend Reinvestment Plan (the "Plan"),
shareholders of the Fund ("Shareholders") whose shares are registered in their
own name will automatically have all dividends and other distributions
reinvested in additional shares of the Fund by PFPC (the "Agent") as agent under
the Plan, unless such shareholder terminates participation in the Plan as
provided below. Shareholders whose shares are registered in the name of a
broker-dealer or other nominee (i.e., in "Street Name") will not participate in
the Plan unless the requisite election is made by the broker-dealer and only if
such a service is provided by the broker-dealer. Shareholders who own Fund
shares registered in Street Name and who desire that their distributions be
reinvested should consult their broker-dealers. Shareholders who do not
participate in the Plan will receive all distributions by check mailed directly
to the shareholder by the Agent.
Whenever the Fund declares a capital gains distribution or an income
dividend payable in shares or cash, participating Shareholders will take such
distribution or dividend entirely in shares and the Agent shall automatically
receive such shares, including fractions, for the shareholder's account, except
in the circumstances described in the paragraph below.
Whenever the market price of the shares on the record date for the dividend
or distribution is equal to or exceeds their net asset value, participants will
be issued shares of the Fund at the higher of net asset value or 95% of the
market price. This discount reflects savings in underwriting or other costs
which the Fund would otherwise be required to incur to raise additional capital.
If net asset value exceeds the market price of Fund shares at such time or if
the Fund should declare a dividend or other distribution payable only in cash,
the Agent will buy Fund shares in the open market, on the American Stock
Exchange (the "Exchange") or elsewhere, for the Shareholder's account. If before
the Agent has completed its purchases, the market price exceeds the net asset
value of the Fund's shares, the average per share purchase price paid by the
Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund.
For all purposes of the Plan: (a) the market price of the Fund shares on a
particular date shall be the last sales price on the Exchange on the close of
the previous trading day or, if there is no sale on the Exchange on that date,
then the mean between the closing bid and asked quotations for such stock on the
Exchange on such date and (b) net asset value per Fund shares on a particular
date shall be as determined by or on behalf of the Fund.
The Fund will not charge participants for reinvesting dividends or
distributions. The Agent's service fee for handling capital gains distributions
or income dividends will be paid by the Fund. There will be no brokerage
commissions charged with respect to shares issued directly by the Fund. However,
Shareholders will be charged a pro rata share of brokerage commissions incurred
by the Agent on all open market purchases. In addition, Shareholders requesting
certificates or redeeming shares issued under the Plan will be charged a $5.00
service fee by the Agent.
The automatic reinvestment of dividends and capital gains distributions
does not relieve Plan participants of any income tax that may be payable on the
dividends or capital gains distributions. Distributions of net investment income
and net realized capital gains, if any, will be taxable, whether received in
cash or reinvested in shares under the Plan. When distributions are received in
the form of shares issued by the Fund (as opposed to purchased on the open
market) under such Plan, however, the amount of the distribution deemed to have
been received by participating Shareholders is the fair
15
<PAGE> 17
market value of the shares received rather than the amount of cash which would
otherwise have been received. In such case, participating Shareholders will have
a basis for federal income tax purposes in each share received from the Fund
equal to the fair market value of such share on the payment date.
A Shareholder may terminate participation in the Plan at any time by
notifying the Agent in writing. Such termination will become effective
immediately if notice is received by the Agent not less than 10 business days
before the next following dividend or distribution record date. Otherwise, the
termination will be effective, with respect to any subsequent dividend or
distributions, on the first trading day after the dividend paid for such record
date has been credited to the Shareholder's account. Upon any termination the
Agent will, upon the request of the Shareholder, cause a certificate or
certificates for the full shares held for the Shareholder under the Plan and
cash adjustment for any fraction to be delivered to her or him. If, upon
termination, the Shareholder requests a certificate for shares held in the
account, a $5.00 service fee will be charged to the Shareholder by the Agent. If
the Shareholder elects by notice to the Agent in writing in advance of such
termination to have the Agent sell part or all of her or his shares and remit
the proceeds to her or him, the Agent is authorized to deduct a $5.00 fee plus
brokerage commissions for this transaction from the proceeds.
The Fund reserves the right to amend or terminate the Plan as applied to
any dividend or distribution for which the record date is at least 90 days after
written notice of the change is sent to the participants in the Plan.
Information concerning the Plan may be obtained by calling PFPC Inc. at
1-800-331-1710, or by writing the Fund, c/o PFPC Inc., 101 Federal Street,
Boston, MA 02110.
16
<PAGE> 18
CIM HIGH YIELD SECURITIES
SHAREHOLDER VOTING RESULTS
At the Annual Meeting of Shareholders, held on October 6, 1999, the
following matters were voted on and approved:
PROPOSAL NO. 1
The election of the following Trustees:
<TABLE>
<CAPTION>
TRUSTEE FOR WITHHELD UNVOTED
------- --- -------- -------
<S> <C> <C> <C>
Dr. Donald Ratajczak 5,100,404* 68,428 709,492
Robert G. Wade 5,072,094** 96,738 709,492
</TABLE>
*Represents 86.77% of the outstanding shares of the Fund.
**Represents 86.28% of the outstanding shares of the Fund.
PROPOSAL NO. 2
To ratify the election of KPMG LLP as the Fund's independent auditors:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED UNVOTED
--- ------- --------- -------
<S> <C> <C> <C>
5,075,142*** 36,824 56,865 709,493
</TABLE>
***Represents 86.37% of the outstanding shares of the Fund.
17
<PAGE> 19
CIM
- --------------------------------------------------------------------------------
HIGH YIELD SECURITIES
ANNUAL REPORT
DECEMBER 31, 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.
For Additional Information about
CIM High Yield Securities
Call 1-800-331-1710
CIM 3192 2/00
