-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IWHk3t2652j/8Agk6qcs/dBCIiz2d67ZWst1YGdk0UKOgFJd6rmNRe4xLIYfFsRR BdH71V8LzZ0NKzYiZkMSpw== 0000935069-04-001399.txt : 20040907 0000935069-04-001399.hdr.sgml : 20040906 20040907125411 ACCESSION NUMBER: 0000935069-04-001399 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040907 DATE AS OF CHANGE: 20040907 EFFECTIVENESS DATE: 20040907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIM HIGH YIELD SECURITIES CENTRAL INDEX KEY: 0000821466 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05328 FILM NUMBER: 041018289 BUSINESS ADDRESS: STREET 1: C/O CHANCELLOR TRUST COMPANY STREET 2: 1166 AVENUE OF THE AMERICAS 27TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2122789559 MAIL ADDRESS: STREET 1: C/O CHANCELLOR TRUST COMPANY STREET 2: 1166 AVENUE OF THE AMERICAS 27TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 N-CSRS 1 g11754cim_ncsr.txt CIM SAR 04 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-05328 --------- CIM High Yield Securities --------------------------------------------------------------- (Exact name of registrant as specified in charter) 400 W. Market Street, Suite 3300 Louisville, KY 40202 --------------------------------------------------------------- (Address of principal executive offices) (Zip code) Cindy Cameron INVESCO Institutional, (N.A.) Inc. 400 W. Market Street, Suite 3300 Louisville, KY 40202 --------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 502-561-3210 ------------ Date of fiscal year end: December 31, 2004 ----------------- Date of reporting period: June 30, 2004 ------------- ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. CIM ------------------------ HIGH YIELD SECURITIES Semi-Annual Report June 30, 2004 - -------------------------------------------------------------------------------- [Graphic Omitted] INVESCO CIM HIGH YIELD SECURITIES - 2004 SEMI-ANNUAL REPORT We are pleased to provide this semi-annual report for CIM High Yield Securities (the "Fund") as of June 30, 2004. The following pages contain a listing of the Fund's holdings as well as the financial statements for the six months ended June 30, 2004. MARKET REVIEW In general, our investment thesis at the beginning of the year was based upon improving economic environment, little room for further spread tightening and likely change in Fed monetary policy. While we positioned the Fund to reflect these beliefs and we remain steadfast in these tenets, it took longer than we expected for the Fund to benefit. Current US High Yield spreads are 449 basis points (bps), inside their long-term average of 550 bps, but remain above the average spread of 413 bps seen during 1992 through 1998. We believe that below average and still declining default rates justify current spread levels. Year-to-date, the Fund's return at net asset value was (0.11)% versus an average return of 3.63% for its peer group (Lipper High Current Yield Leverage Funds), while on a 3 year basis, the fund has returned 10.58% versus 10.11% for its peer group. On a market value basis, the Fund experienced a year-to-date return of 0.79% and 3 year return of 9.86% versus its peer group of 1.36% and 8.80%, (ML Master II). As always, past performance is not indicative of future results. Market value return is based on market price and assumes investment at market price at the beginning of the period referenced, reinvestment of all dividends for the period, and the sale of all shares at the closing common stock price at the end of period. OUTLOOK The fundamental backdrop in the market is still very strong, as many corporations were able to take advantage of lower interest rates to refinance existing debt over the last 18 months. We also see an improvement in the ratio of upgraded to downgraded issuers, and continued decline in default rates. In terms of fundamentals, the positive momentum of economic improvement also encourages us. Until now, much of the improvement in credit quality has been driven by balance sheet restructuring, but going forward improvement to earnings should be driven by actual revenue increases. As markets are closely correlated to company fundamental improvements, this bodes well for the market place. The one negative is that the technical picture remains mixed, with mutual fund outflows having a psychological impact on the market. We are optimistic about the reversal of these flows, as investors recognize the relative value of securities versus other fixed income asset classes, particularly in periods of rising rates. INVESCO Institutional (N.A.) Inc. - -------------------------------------------------------------------------------- INVESCO PRIVACY NOTICE At INVESCO(1), we recognize that you have entrusted with us your personal and financial data and we recognize our obligation to keep this information secure. Maintaining your privacy is important to us and we have established a policy to maintain the privacy of the information you share with us. PERSONAL INFORMATION WE COLLECT In the normal course of serving clients, we collect personal information about you, which may include: o Information we receive from you (such as your name and address) from your account application, investment management agreement or other documents you may deliver to us. o Information about your investment transactions with us. PERSONAL INFORMATION WE MAY DISCLOSE We do not sell any information to any third parties. However, we occasionally disclose nonpublic personal information about you to affiliates and non-affiliates only as permitted by law or regulation. Specifically, we may disclose nonpublic personal information including: o Information to service providers in order to process your account transactions. o Your name and address to companies that assist us with mailing statements to you. o Information in connection with legal proceedings, such as responding to a subpoena. The organizations that receive client information act on our behalf and use the information only to provide the services that we have asked them to perform for you and us. As emphasized above, we do not provide client or former client information including names, addresses, or client lists to outside companies except in furtherance of our business relationship with you, or as otherwise permitted by law. Access to nonpublic personal information is restricted to employees who need to access that information to provide products or services to clients. To guard our clients' nonpublic personal information, physical, electronic, and procedural safeguards are in place that comply with federal standards. A client's right to privacy extends to all forms of contact with us, including telephone, written correspondence, and electronic media. We consider privacy a fundamental right of clients and take seriously the obligation to safeguard client information. We will adhere to the policies and practices above for both current and former clients. (1) This Privacy Notice applies to members of INVESCO Institutional (N.A.), Inc. of AMVESCAP PLC's family of investment adviser subsidiaries: INVESCO Institutional (N.A.), Inc., INVESCO Private Capital, Inc., INVESCO Senior Secured Management, Inc., and INVESCO Global Asset Management (N.A.), Inc. CIM HIGH YIELD SECURITIES PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- 122.3% LODGING AND CASINOS -- 9.3% $ 200,000 Aztar Corp., Sr. Sub Notes, 7.875%, 06/15/14** ............................. $ 203,000 250,000 Felcor Lodging LP., Sr. Notes, 9.000%, 06/01/11 ............................ 259,375 275,000 Global Cash Account Finance, Sr. Sub Notes, 8.750%, 03/15/12** ............. 287,375 100,000 Hard Rock Hotel, Inc., Sr. Notes, 8.875%, 06/01/13 ......................... 101,500 200,000 Host Marriott LP., Sr. Notes, 7.125%, 11/01/13 ............................. 197,000 200,000 Jacobs Entertainment, Sr. Notes, 11.875%, 02/01/09 ......................... 224,000 75,000 Majestic Star Casino LLC., Sr. Notes, 9.500%, 10/15/10 ..................... 75,750 175,000 OED Corp. /Diamond Jo, Sr. Notes, 8.750%, 04/15/12** ....................... 171,937 100,000 Prime Hospitality Corp., Sr. Sub. Notes, Series B, 8.375%, 05/01/12 ........ 103,750 150,000 Resort International Hotel/Casino, Sr. Notes, 11.500%, 03/15/09 ............ 170,250 75,000 River Rock Entertainment, Sr. Notes, 9.750%, 11/01/11 ...................... 82,125 140,000 Riviera Holdings Corp., Sr. Notes, 11.000%, 06/15/10 ....................... 153,650 225,000 Seneca Gaming Corp., Sr. Notes, 7.250%, 05/01/12** ......................... 225,844 200,000 Wheeling Island Gaming, Sr. Notes, 10.125%, 12/15/09 ....................... 213,000 ----------- 2,468,556 ----------- UTILITIES -- 8.3% 200,000 AES Corporation, Sr. Notes, 9.000%, 05/15/15** ............................. 215,250 104,000 AES Corporation, Sr. Notes, 8.750%, 06/15/08 ............................... 108,810 300,000 Allegheny Energy Supply, Sr. Notes, 8.750%, 04/15/12** ..................... 298,125 300,000 Aquila Inc., Sr. Notes, 9.950%, 02/01/11 ................................... 297,000 400,000 Calpine Corp., Sr. Notes, 8.500%, 07/15/10** ............................... 333,000 200,000 CMS Energy Corp., Sr. Notes, 9.875%, 10/15/07 .............................. 216,500 250,000 Dynegy Holding, Inc., Sr. Notes, 10.125%, 07/15/13** ....................... 271,875 100,000 Midwest Generation LLC., Sr. Notes., 8.750%, 05/01/34** .................... 101,500 50,000 Nevada Power (Sierra), Sr. Notes, Series E, 10.875%, 10/15/09 .............. 56,750 100,000 NRG Energy Inc., Sr. Notes, 8.000%, 12/15/13** ............................. 101,500 175,000 PSEG Energy Holding, Sr. Notes, 10.000%, 10/01/09 .......................... 198,625 ----------- 2,198,935 ----------- WIRELESS COMMUNICATIONS -- 7.5% 250,000 Alamosa Delaware, Inc., Sr. Notes, 8.500%, 01/31/12** ...................... 246,250 100,000 American Tower Corp., Sr. Notes, 7.500%, 05/01/12** ........................ 97,250 100,000 American Tower Corp., Sr. Notes, 7.250%, 12/01/11 .......................... 100,750 275,000 Crown Castle International Corp., Sr. Notes, 7.500%, 12/01/13 .............. 275,000 500,000 Nextel Communications, Sr. Notes, 7.375%, 08/01/15 ......................... 507,500 171,000 Nextel Partners, Inc., Sr. Notes, 12.500%, 11/15/09 ........................ 200,070 150,000 Nextel Partners, Inc., Sr. Notes, 8.125%, 07/01/11 ......................... 153,750 250,000 Rural Cellular Corp., Sr. Notes, 9.875%, 02/01/10 .......................... 249,375 150,000 Western Wireless Corp., Sr. Notes, 9.250%, 07/15/13 ........................ 155,250 ----------- 1,985,195 -----------
See Notes to Financial Statements. 3 CIM HIGH YIELD SECURITIES -- (CONTINUED) PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) CHEMICALS AND PLASTICS -- 6.8% $ 200,000 BCP Caylux Holdings Lux SCA., Sr. Sub. Notes, 9.625%, 06/15/14 ............. $ 208,250 275,000 Equistar Chemical Funding, Sr. Notes, 10.625%, 05/01/11 .................... 306,625 350,000 Huntsman ICI Chemicals Ltd., Sr. Sub. Notes, 10.125%, 07/01/09 ............. 358,750 350,000 Lyondell Chemical Co., Sr. Sub. Notes, 10.875%, 05/01/09 ................... 367,500 100,000 Nalco Company, Sr. Sub Notes, 8.875%, 11/15/13** ........................... 105,250 100,000 Polyone Corp., Sr. Notes, 10.625%, 05/15/10 ................................ 106,500 100,000 Rockwood Specialities GRP., Sr. Sub. Notes, 10.625%, 05/15/11 .............. 107,000 250,000 Sovereign Specialty Chemicals, Sr. Sub. Notes, 11.875%, 03/15/10 ........... 258,750 ----------- 1,818,625 ----------- CABLE AND SATELLITE TELEVISION -- 6.6% 250,000 Cablevision Systems Corp., Sr. Notes, 8.000%, 04/15/12** ................... 247,500 350,000 Charter Communications Holdings II, Sr. Notes, 10.250%, 09/15/10** ......... 354,375 200,000 Charter Communications Holdings, Sr. Notes, 10.750%, 10/01/09 .............. 169,000 350,000 Charter Communications Holdings, Sr. Notes, 10.250%, 01/15/10 .............. 290,500 100,000 CSC Holdings, Inc., Sr. Notes, 7.250%, 07/15/08 ............................ 101,500 125,000 Insight Midwest, Sr. Notes, 10.500%, 11/01/10 .............................. 136,875 150,000 Lodgenet Entertainment, Sr. Sub. Notes, 9.500%, 06/15/13 ................... 164,625 100,000 Mediacom LLC, Sr. Notes, 9.500%, 01/15/13 .................................. 97,000 200,000 NTL Cable PLC., Sr. Notes, 8.750%, 04/15/14** .............................. 206,000 ----------- 1,767,375 ----------- INDUSTRIAL MACHINERY/COMPONENTS -- 6.6% 200,000 Autocam Corp., Sr. Sub. Notes, 10.875%, 06/15/14** ......................... 195,000 200,000 Case New Holland Inc., Sr. Notes, 9.250%, 08/01/11** ....................... 211,000 150,000 Dresser, Inc., Sr. Sub. Notes, 9.375%, 04/15/11 ............................ 161,250 100,000 JLG Industries, Inc., Sr. Sub Notes, 8.375%, 06/15/12 ...................... 102,250 200,000 Polypore, Inc., Sr. Sub. Notes, 8.750%, 05/15/12** ......................... 209,500 200,000 Sensus Metering Systems, Sr. Sub. Notes, 8.625%, 12/15/13** ................ 193,000 150,000 Terex Corp., Sr. Sub. Notes, Series B, 10.375%, 04/01/11 ................... 168,000 200,000 Trimas Corp. Sr. Sub. Notes, 9.875%, 06/15/12 .............................. 213,000 300,000 Wesco Distribution, Inc., Sr. Sub. Notes, Series B, 9.125%, 06/01/08 ....... 310,125 ----------- 1,763,125 ----------- BUILDING AND DEVELOPMENT -- 6.3% 200,000 Associated Materials, Inc., Sr. Sub. Notes, 9.750%, 04/15/12 ............... 223,000 175,000 Atrium Companies, Inc., Sr. Sub. Notes, Series B, 10.500%, 05/01/09 ........ 184,187 100,000 Euramax International PLC., Sr. Sub. Notes, 8.500%, 08/15/11 ............... 104,500 275,000 Nortek Holdings, Inc., Sr. Sub. Notes, Series B, 9.875%, 06/15/11 .......... 314,875 200,000 Ply Gem Industries Inc., Sr. Sub Notes, 9.000%, 02/15/12** ................. 205,000 100,000 US Concrete Inc., Sr. Sub Notes, 8.375%, 04/01/14** ........................ 100,250 300,000 WCI Communities, Inc., Sr. Sub. Notes, 9.125%, 05/01/12 .................... 325,500 200,000 William Lyon Homes, Sr. Notes, 10.750%, 04/01/13 ........................... 222,000 ----------- 1,679,312 -----------
See Notes to Financial Statements. 4 CIM HIGH YIELD SECURITIES -- (CONTINUED) PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) AUTO PARTS & ACCESSORIES -- 6.2% $ 150,000 CSK Auto Inc., Sr. Notes, 7.000%, 01/15/14** ............................... $ 143,625 200,000 Delco Remy International, Inc., Sr. Sub. Notes, 11.000%, 05/01/09 .......... 212,000 100,000 Dura Operating Corp., Sr. Sub. Notes, Series B, 8.625%, 04/15/12 ........... 102,500 175,000 Dura Operating Corp., Sr. Sub. Notes, Series D, 9.000%, 05/01/09 ........... 172,375 275,000 Eagle Picher, Inc., Sr. Notes, 9.750%, 09/01/13 ............................ 297,000 150,000 Goodyear Tire & Rubber Sr. Notes, 7.857%, 08/15/11 ......................... 137,625 125,000 Navistar International, Sr. Notes, 7.500%, 06/15/11 ........................ 128,750 175,000 Tenneco Automotive, Inc., Sr. Notes, 10.250%, 07/15/13** ................... 198,625 125,000 Tenneco Automotive, Inc., Sr. Sub. Notes, Series B, 11.625%, 10/15/09 ...... 135,000 98,000 TRW Automotive, Inc., Sr. Sub. Notes, 11.000%, 02/15/13 .................... 116,130 200,000 Venture Holdings Trust, Sr. Notes, 11.000%, 06/01/07+ ...................... 6,000 ----------- 1,649,630 ----------- WIRELINE -- 5.8% 200,000 Cincinnati Bell, Inc., Sr. Sub. Notes, 8.375%, 01/15/14 .................... 179,000 250,000 Level 3 Communications, Sr. Notes, 11.250%, 03/15/10 ....................... 199,375 200,000 Qwest Capital Funding, Sr. Notes, 7.900%, 08/15/10 ......................... 178,000 675,000 Qwest Capital Funding, Sr. Notes, 7.000%, 08/03/09 ......................... 595,687 100,000 Qwest Communications International, Sr. Notes, 7.250%, 02/15/11** .......... 93,750 300,000 Time Warner Telecom Holdings, Sr Notes, 9.250%, 02/15/14** ................. 289,500 ----------- 1,535,312 ----------- PUBLISHING -- 5.07% 40,000 American Color Graphics, Sr. Notes, 10.000%, 06/15/10 ...................... 35,900 200,000 Dex Media Inc., Sr. Notes, 8.000%, 11/15/13** .............................. 193,000 150,000 Dex Media West, Sr. Sub Notes, Series B, 9.875%, 08/15/13 .................. 165,375 200,000 Houghton Mifflin Co., Sr. Sub. Notes, 9.875%, 02/01/13 ..................... 201,000 250,000 Mail Well I Corp., Sr. Sub. Notes, 7.875%, 12/01/13** ...................... 228,750 100,000 Mail Well I, Corp., Sr. Notes, 9.625%, 03/15/12 ............................ 108,000 250,000 Vertis, Inc., Sr. Notes, Series B, 10.875%, 06/15/09 ....................... 270,000 100,000 Von Hoffmann Corporation, Sr. Notes, 10.250%, 03/15/09 ..................... 103,375 ----------- 1,305,400 ----------- PIPE LINES/EX NATURAL GAS -- 4.7% 100,000 El Paso CGP. Co., Sr. Notes, 7.625%, 09/01/08 .............................. 93,000 450,000 El Paso Corp., Sr. Notes, 7.875%, 06/15/12 ................................. 406,125 200,000 El Paso Production Holding, Sr. Notes, 7.750%, 06/01/13 .................... 184,500 100,000 Gulfterra Energy Partner LP., Sr. Sub. Notes, Series B, 8.500%, 06/01/11 ... 108,750 150,000 Sonat, Inc., Sr. Notes, 7.625%, 07/15/11 ................................... 134,625 200,000 William Co., Inc., Sr. Notes, 8.125%, 03/15/12 ............................. 214,500 100,000 Williams Co. Credit Link, Sr. Notes, 6.750%, 04/15/09** .................... 98,750 ----------- 1,240,250 -----------
See Notes to Financial Statements. 5 CIM HIGH YIELD SECURITIES -- (CONTINUED) PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) OIL AND GAS -- 4.2% $ 250,000 Ferrellgas Partners L.P., Sr. Notes, 8.750%, 06/15/12 ...................... $ 268,125 250,000 Sesi LLC., Sr. Notes, 8.875%, 05/15/11 ..................................... 270,625 250,000 Swift Energy Co., Sr. Sub. Notes, 9.375%, 05/01/12 ......................... 268,125 300,000 Transmontaigne, Inc., Sr. Sub. Notes, 9.125%, 06/01/10 ..................... 310,500 ----------- 1,117,375 ----------- HEALTH CARE -- 4.2% 200,000 Alpharma, Inc., Sr. Notes, 8.625%, 05/01/11** .............................. 208,000 200,000 Iasis Healthcare Corp., Sr. Sub. Notes, 8.750%, 06/15/14** ................. 205,500 300,000 Insight Health Services, Sr. Sub. Notes, Series B, 9.875%, 11/01/11 ........ 322,500 175,000 Tenet Healthcare Corp., Sr. Notes, 9.875%, 07/01/14** ...................... 178,937 100,000 Triad Hospitals, Inc., Sr. Sub. Notes, 7.000%, 11/15/13 .................... 95,500 100,000 VWR International Inc., Sr. Sub Notes, 8.000%, 04/15/14** .................. 103,000 ----------- 1,113,437 ----------- FOOD/DRUG RETAILERS -- 4.0% 225,000 Di Giorgio Corp., Sr. Notes, Series B, 10.000%, 06/15/07 ................... 220,500 350,000 Great Atlantic & Pacific Tea Co., Sr. Notes, 9.125%, 12/15/11 .............. 299,250 100,000 Ingles Markets, Inc., Sr. Sub. Notes, 8.875%, 12/01/11 ..................... 103,250 150,000 Rite Aid Corp., Sr. Notes, 9.250%, 06/01/13 ................................ 158,250 100,000 Rite Aid Corp., Sr. Notes, 6.875%, 08/15/13 ................................ 92,500 200,000 Strater Bros Holdings, Inc., Sr. Notes, 8.125%, 06/15/12** ................. 201,750 ----------- 1,075,500 ----------- CONTAINERS/GLASS PRODUCTS -- 3.6% 200,000 Anchor Glass Container, Sr. Notes, 11.000%, 02/15/13 ....................... 229,750 200,000 Berry Plastic, Sr. Sub. Notes, 10.750%, 07/15/12 ........................... 223,000 50,000 Graham Packaging GPC., Sr. Sub Notes, Series B, 8.750%, 01/15/08 ........... 50,500 200,000 Plastipak Holdings, Inc., Sr. Notes, 10.750%, 09/01/11 ..................... 216,000 100,000 Solo Cup Company, Sr. Sub. Notes, 8.500%, 02/15/14** ....................... 93,500 150,000 Tekni-Plex, Inc., Sr. Sub. Notes, Series B, 12.750%, 06/15/10 .............. 144,750 ----------- 957,500 ----------- CONSUMER PRODUCTS -- 3.6% 250,000 Amscan Holdings Inc., Sr. Sub. Notes, 8.750%, 05/01/14** ................... 246,875 225,000 Playtex Products, Inc. Sr. Sub Notes, 9.375%, 06/01/11 ..................... 219,938 100,000 Rayovac Corp., Sr. Sub. Notes, 8.500%, 10/01/13 ............................ 105,500 225,000 Sealy Mattress Co., Sr. Sub. Notes, 8.250%, 06/15/14** ..................... 227,250 150,000 Simmons Co., Sr. Sub. Notes, 7.875%, 01/15/14** ............................ 153,750 ----------- 953,313 -----------
See Notes to Financial Statements. 6 CIM HIGH YIELD SECURITIES -- (CONTINUED) PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) RAILROAD INDUSTRIES -- 3.0% $ 700,000 Railamerica Transport, Sr. Sub. Notes, 12.875%, 08/15/10 ................... $ 805,000 ----------- ELECTRONICS/ELECTRIC -- 2.9% 300,000 Amkor Technologies Inc., Sr. Notes, 7.125%, 03/15/11** ..................... 282,750 200,000 Celestica, Inc., Sr. Sub. Notes, 7.875%, 07/01/11 .......................... 205,000 175,000 New Asat Finance LTD., Sr. Notes, 9.250%, 02/01/11** ....................... 174,125 100,000 Viasystems Inc., Sr. Sub. Notes, 10.500%, 01/15/11** ....................... 105,500 ----------- 767,375 ----------- PAPER FOREST PRODUCTS -- 2.3% 175,000 Appleton Papers, Inc., Sr. Sub. Notes, 9.750%, 06/15/14** .................. 176,313 100,000 Graphic Packaging International Sr. Sub. Notes, 9.500%, 08/15/13 ........... 109,000 125,000 Millar Western Forest, Sr. Notes, 7.750%, 11/15/13 ......................... 126,250 100,000 Tembec Industries Inc., Sr. Notes, 8.625%, 06/30/09 ........................ 101,750 100,000 Tembec Industries, Inc., Sr. Notes, 8.500%, 02/01/11 ....................... 101,500 ----------- 614,813 ----------- FINANCIAL INTERMEDIARIES -- 2.2% 350,000 Americredit Corp., Sr. Notes, 9.250%, 05/01/09 ............................. 370,125 200,000 Western Financial Bank, Sr. Sub. Notes, 9.625%, 05/15/12 ................... 221,000 ----------- 591,125 ----------- FOOD SERVICE -- 2.0% 350,000 Buffets, Inc., Sr. Sub. Notes, 11.250%, 07/15/10 ........................... 367,500 175,000 Friendly Ice Cream Corp., Sr. Notes, 8.375%, 06/15/12** .................... 170,625 ----------- 538,125 ----------- AEROSPACE -- 2.0% 200,000 BE Aerospace, Sr. Sub. Notes, 9.500%, 11/01/08 ............................. 194,000 300,000 K & F Industries, Sr. Sub Notes, Series B, 9.625%, 12/15/10 ................ 330,375 ----------- 524,375 ----------- OFFICE/BUSINESS EQUIPMENT -- 1.8% 125,000 Danka Business Systems, Sr. Notes, 11.000%, 06/15/10 ....................... 130,625 300,000 Xerox Corp., Sr. Notes, 9.750%, 01/15/09 ................................... 342,750 ----------- 473,375 ----------- ECOLOGICAL SERVICES AND EQUIPMENT -- 1.7% 300,000 Allied Waste North America, Inc., Sr. Notes, Series B, 9.250%, 09/01/12 .... 337,500 100,000 Casella Waste Systems, Sr. Sub. Notes, 9.750%, 02/01/13 .................... 108,500 ----------- 446,000 -----------
See Notes to Financial Statements. 7 CIM HIGH YIELD SECURITIES -- (CONTINUED) PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) LEISURE GOODS, ACTIVITIES, MOVIE -- 1.3% $ 350,000 Six Flags, Inc., Sr. Notes, 9.625%, 06/01/14** ............................. $ 350,000 ----------- PROPERTY - CASUALTY INSURANCE -- 1.2% 300,000 Crum & Forster Holding Corp., Sr. Notes, 10.375%, 06/15/13 ................. 328,500 ----------- AIRLINES -- 1.2% 200,000 Continental Airlines, Inc., Sr. Notes, 8.000%, 12/15/05 .................... 177,500 100,000 Delta Airlines, Sr. Notes, 7.700%, 12/15/05 ................................ 67,500 100,000 Northwest Airlines, Inc., Sr. Notes, 9.875%, 03/15/07 ...................... 79,500 ----------- 324,500 ----------- EQUIPMENT LEASING -- 1.2% 200,000 United Rentals Inc., Sr. Sub. Notes, 7.000%, 02/15/14 ...................... 179,000 150,000 United Rentals N.A. Inc., Sr. Sub. Notes, 7.750%, 11/15/13 ................. 142,500 ----------- 321,500 ----------- STEEL -- 1.1% 100,000 Ak Steel Corp. Sr. Notes, 7.875%, 02/15/09 ................................. 94,000 200,000 International Steel Group, Sr. Notes, 6.500%, 04/15/14** ................... 188,500 ----------- 282,500 ----------- RETAIL -- 1.0% 175,000 Mothers Work, Inc., Sr. Notes, 11.250%, 08/01/10 ........................... 178,938 100,000 Petro Stopping Center., Sr. Notes, 9.000%, 02/15/12** ...................... 99,500 ----------- 278,438 ----------- BROADCASTING -- 1.0% 100,000 Emmis Operating Co., Sr. Sub. Notes, 6.875%, 05/15/12** .................... 98,500 150,000 Panamsat Corp., Sr. Notes, 8.500%, 02/01/12 ................................ 171,000 ----------- 269,500 ----------- INSURANCE -- 0.9% 250,000 Fairfax Financial Holding, Sr. Notes, 8.250%, 10/01/15 ..................... 236,250 ----------- AGRICULTURAL PRODUCTION - CROPS -- 0.8% 200,000 Hines Nurseries, Inc.. Sr. Notes, 10.250%, 10/01/11 ........................ 219,000 ----------- SOFTWARE/SERVICES -- 0.8% 200,000 UGS Corp., Sr. Sub. Notes, 10.000%, 06/01/12** ............................. 214,000 ----------- PERSONAL SERVICES -- 0.8% 100,000 Service Corp. International, Sr. Notes, 7.700%, 04/15/09 ................... 103,000 100,000 Service Corp. International, Sr. Notes, 7.700%, 04/15/09 ................... 103,000 ----------- 206,000 -----------
See Notes to Financial Statements. 8 CIM HIGH YIELD SECURITIES -- (CONTINUED) PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) MARINE TRANSPORTATION -- 0.4% $ 100,000 General Maritime, Sr. Notes, 10.000%, 03/15/13 ............................. $ 110,625 ----------- TOTAL CORPORATE BONDS AND NOTES (Cost $31,689,883) ...................................................... 32,529,841 ----------- FOREIGN BONDS -- 6.0% CHEMICALS AND PLASTICS -- 1.7% 150,000 Acetex Corp., Sr. Notes, 10.875%, 08/01/09 ................................. 165,000 375,000 Avecia Group PLC, Sr. Notes, 11.000%, 07/01/09 ............................. 286,875 ----------- 451,875 ----------- FOREST PRODUCTS & PAPER -- 1.2% 300,000 Kappa Beheer BV, Sr. Sub. Notes, 10.625%, 07/15/09 ......................... 315,000 ----------- CONTAINERS/GLASS PRODUCTS -- 1.0% 225,000 Crown Euro Holdings SA., Sr. Notes, 10.875%, 03/01/13 ...................... 257,625 ----------- ECOLOGICAL SERVICES AND EQUIPMENT -- 1.0% 250,000 Waste Services, Inc., Sr. Sub Notes, 9.500%, 04/15/14** .................... 257,500 ----------- UTILITIES -- 0.7% 300,000 Calpine Corp., Sr. Notes, 8.500%, 05/01/08 ................................. 199,500 ----------- CABLE AND SATELLITE TELEVISION -- 0.4% 200,000 Telewest Communications PLC, Sr. Notes, 11.250%, 11/01/08+ ................. 118,000 ----------- TOTAL FOREIGN BONDS (Cost $1,744,272) ....................................................... 1,599,500 ----------- FOREIGN GOVERNMENT SECURITIES -- 1.8% FOREIGN SOVEREIGN -- 1.8% 105,549 Republic of Brazil, Series C, 8.000%, 04/15/14 ............................. 96,944 70,000 Republic of Brazil, 12.250%, 03/06/30 ...................................... 73,150 120,000 Republic of Colombia, 9.750%, 04/23/09 ..................................... 128,400 70,000 Republic of Peru, 4.500%, 03/07/17 ......................................... 56,851 100,000 Republic of Turkey, 10.500%, 01/13/08 ...................................... 108,250 ----------- 463,595 ----------- TOTAL FOREIGN GOVERNMENT SECURITIES (Cost $441,109) ......................................................... 463,595 -----------
See Notes to Financial Statements. 9 CIM HIGH YIELD SECURITIES -- (CONTINUED) PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- SHORT TERM OBLIGATIONS -- 0.0% $ 5,000 United States Treasury Bill, 0.900%***, 07/01/04 ........................... $ 5,000 ----------- TOTAL SHORT TERM OBLIGATIONS (Cost $5,000) ........................................................... 5,000 ----------- TOTAL INVESTMENTS (Cost $33,880,264*) .......................................... 130.1% 34,597,936 LIABILITIES LESS OTHER ASSETS (NET) ............................................ (30.1)% (8,000,739) ----- ----------- NET ASSETS ..................................................................... 100.0% $26,597,197 ===== ===========
* Aggregate cost for Federal income tax purposes. ** 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. The market value of these securities is $9,561,656. *** Rate represents annualized yield at date of purchase. + Securities in default. At June 30, 2004, the Fund's credit quality allocation was as follows: STANDARD & POOR'S CREDIT RATING (UNAUDITED) ------------------------------- BB ............................................................... 11.18% B ................................................................ 69.93% CCC .............................................................. 15.96% CC ............................................................... 0.58% C ................................................................ 0.34% Not Rated ........................................................ 2.01% See Notes to Financial Statements. 10 CIM HIGH YIELD SECURITIES STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2004 (UNAUDITED) ASSETS: Investments, at value (Cost $33,880,264) ............................ $ 34,597,936 Receivable for investments sold ..................................... 173,567 Interest receivable ................................................. 769,951 Prepaid expenses .................................................... 12,635 ------------ Total Assets ..................................................... 35,554,089 ------------ LIABILITIES: Notes payable (including accrued interest of $40,220) ............... $8,930,220 Cash overdraft ...................................................... 8,177 Investment advisory fee payable ..................................... 11,021 Administration fee payable .......................................... 3,435 Custodian fees payable .............................................. 3,376 Accrued expenses and other payables ................................. 663 ---------- Total Liabilities ................................................ 8,956,892 ------------ NET ASSETS ............................................................. $ 26,597,197 ============ NET ASSETS consist of: Shares of beneficial interest, $0.01 per share par value, issued and outstanding 6,116,775 (unlimited shares authorized) .......... $ 61,168 Paid-in capital in excess of par value .............................. 45,498,674 Accumulated undistributed net investment income ..................... 11,327 Accumulated net realized loss on investments sold ................... (19,691,644) Unrealized appreciation of investments .............................. 717,672 ------------ Total Net Assets ................................................. $ 26,597,197 ============ NET ASSET VALUE PER SHARE ($26,597,197 / 6,116,775 shares of beneficial interest outstanding) ..................................................... $ 4.35 ============ MARKET VALUE PER SHARE ................................................. $ 4.15 ============
See Notes to Financial Statements. 11 CIM HIGH YIELD SECURITIES STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED) INVESTMENT INCOME: Interest ......................................................... $ 1,678,591 ----------- EXPENSES: Interest expense .................................................... $81,297 Investment advisory fee ............................................. 67,765 Miscellaneous ....................................................... 39,652 Legal and audit fees ................................................ 39,060 Trustees' fees and expenses ......................................... 23,544 Administration fee .................................................. 20,040 Shareholder servicing agent fees .................................... 15,386 Custodian fees ...................................................... 9,926 ------- Total Expenses ................................................... 296,670 ----------- NET INVESTMENT INCOME .................................................. 1,381,921 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments sold during the period ............. 204,113 Net change in unrealized depreciation of investments during the period ........................................................... (1,610,180) ----------- (1,406,068) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................... $ (24,146) ===========
See Notes to Financial Statements. 12 CIM HIGH YIELD SECURITIES STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED) NET DECREASE IN CASH: Cash flows from operating activities: Interest received ................................................... $ 1,435,686 Dividends received .................................................. 11,750 Operating expenses paid ............................................. (271,322) Increase in short-term securities, net .............................. 436,226 Purchases of long-term securities ................................... (10,134,377) Proceeds from sales of long-term securities ......................... 10,222,840 Interest payments on notes payable .................................. (81,146) ------------ Net cash provided by operating activities .............................. $ 1,619,657 ----------- Cash flows from financing activities: Principal payments on loan .......................................... (370,000) Distributions paid .................................................. (1,474,454) ------------ Net cash used in financing activities .................................. (1,844,454) ----------- Net decrease in cash ................................................... (224,797) Cash -- beginning of period ............................................ 216,620 ----------- Cash -- end of period .................................................. $ (8,177) =========== RECONCILIATION OF NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net decrease in net assets resulting from operations ................... $ (24,146) Decrease in interest receivable ..................................... 50,100 Decrease in dividend receivable ..................................... 5,875 Increase in prepaid expenses ........................................ (11,313) Decrease in accrued interest ........................................ 150 Decrease in investment advisory fee payable ......................... (968) Increase in administration fee payable .............................. 22 Increase in custodian fee payable ................................... 4,076 Decrease in accrued expenses and other payables ..................... (47,765) Decrease in distributions payable ................................... (213,217) Amortization of discount/premium .................................... (73,913) Decrease in short-term securities, net .............................. 436,226 Purchases of long-term securities ................................... (10,134,377) Proceeds from sales of long-term securities ......................... 10,222,840 Net realized gain on investments sold ............................... (204,113) Net change in unrealized appreciation/depreciation of investments ................................................... 1,610,180 ------------ Total adjustments ................................................ 1,643,803 ----------- Net cash provided by operating activities .............................. $ 1,619,657 ===========
See Notes to Financial Statements. 13 CIM HIGH YIELD SECURITIES STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, 2004 YEAR ENDED (UNAUDITED) DECEMBER 31, 2003 ------------- ----------------- Increase/(decrease) in net assets from operations: Net investment income .................................................. $ 1,381,921 $ 2,896,080 Net realized gain on investments sold during the period ................ 204,113 41,526 Net change in unrealized appreciation/(depreciation) of investments during the period ....................................... (1,610,180) 5,412,063 ----------- ----------- Net increase/(decrease) in net assets resulting from operations ........ (24,146) 8,349,669 ----------- ----------- Distributions to shareholders from: Net investment income ............................................... (1,374,837) (2,891,837) Return of capital ................................................... -- -- ----------- ----------- Total distributions .............................................. (1,374,837) (2,891,837) ----------- ----------- Fund share transactions: Shares issued as reinvestment of dividends .......................... 113,600 313,493 ----------- ----------- Net increase in net assets from Fund share transactions ................ 113,600 313,493 ----------- ----------- Net increase/(decrease) in net assets .................................. (1,285,383) 5,771,325 NET ASSETS: Beginning of period .................................................... 27,882,580 22,111,255 ----------- ----------- End of period .......................................................... $26,597,197 $27,882,580 =========== ===========
See Notes to Financial Statements. 14 CIM HIGH YIELD SECURITIES FINANCIAL HIGHLIGHTS FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
SIX MONTHS ENDED YEAR YEAR YEAR YEAR YEAR 6/30/04 ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 ----------- -------- -------- -------- -------- -------- Operating performance: Net asset value, beginning of period ............... $ 4.58 $ 3.68 $ 4.25 $ 4.71 $ 6.53 $ 6.91 ------- ------- ------- ------- ------- ------- Net investment income ...... 0.23 0.48 0.48 0.51 0.69 0.72 Net realized and unrealized gain/(loss) on investments ............. (0.23) 0.90 (0.57) (0.46) (1.82) (0.39) ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from investment operations .............. -- 1.38 (0.09) 0.05 (1.13) 0.33 Distributions: Dividends from net investment income ....... (0.23) (0.48) (0.48) (0.51) (0.63) (0.71) Return of capital .......... -- -- --# --# (0.06) -- ------- ------- ------- ------- ------- ------- Total from distributions ... (0.23) (0.48) (0.48) (0.51) (0.69) (0.71) ------- ------- ------- ------- ------- ------- Net asset value, end of period .................. $ 4.35 $ 4.58 $ 3.68 $ 4.25 $ 4.71 $ 6.53 ======= ======= ======= ======= ======= ======= Market value, end of period .................. $ 4.15 $ 4.77 $ 3.64 $ 4.29 $ 4.87 $ 5.25 ======= ======= ======= ======= ======= ======= Total investment return (net asset value) ....... (0.11)% 39.39% (2.06)% 0.72% (18.76)% 4.93% ======= ======= ======= ======= ======= ======= Total investment return (market value) .......... (8.45)% 46.15% (4.12)% (1.78)% 4.58% (18.89)% ======= ======= ======= ======= ======= ======= Ratios to average net assets/supplemental data: Net assets, end of period (in 000's) .............. $27,255 $27,883 $22,111 $25,293 $27,707 $38,389 Ratio of net investment income to average net assets .................. 10.17% 11.47% 12.22% 11.11% 11.10% 10.76% Ratio of operating expenses to average net assets (2) 1.58% 1.58% 1.55% 1.44% 1.22% 1.02% Portfolio turnover rate (1) 28.0% 70.1% 40.2% 75.2% 118.8% 98.0% YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 12/31/98* 12/31/97 12/31/96 12/31/95 12/31/94 --------- -------- -------- -------- -------- Operating performance: Net asset value, beginning of period ............... $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 ------- ------- ------- ------- ------- Net investment income ...... 0.71 0.78 0.78 0.77 0.82 Net realized and unrealized gain/(loss) on investments ............. (1.07) 0.30 0.36 0.23 (0.89) ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from investment operations .............. (0.36) 1.08 1.14 1.00 (0.07) Distributions: Dividends from net investment income ....... (0.69) (0.78) (0.77) (0.79) (0.84) Return of capital .......... -- (0.03) -- -- -- ------- ------- ------- ------- ------- Total from distributions ... (0.69) (0.81) (0.77) (0.79) (0.84) ------- ------- ------- ------- ------- Net asset value, end of period .................. $ 6.91 $ 7.96 $ 7.69 $ 7.32 $ 7.11 ======= ======= ======= ======= ======= Market value, end of period .................. $ 7.19 $ 8.31 $ 8.12 $ 7.87 $ 7.12 ======= ======= ======= ======= ======= Total investment return (net asset value) ....... (4.95)% 14.50% 16.46% 14.31% (0.86) ======= ======= ======= ======= ======= Total investment return (market value) .......... (5.45)% 13.31% 14.38% 22.72% 0.99% ======= ======= ======= ======= ======= Ratios to average net assets/supplemental data: Net assets, end of period (in 000's) .............. $40,567 $45,848 $43,495 $40,636 $38,678 Ratio of net investment income to average net assets .................. 9.37% 10.08% 10.46% 10.32% 10.82% Ratio of operating expenses to average net assets (2) 1.02% 1.06% 1.10% 1.14% 0.95% Portfolio turnover rate (1) 62.4% 154.5% 172.2% 79.9% 50.6%
- ---------- (1) This rate is, in general, the percentage computed by taking the lesser of the cost of purchases or proceeds from the sales of portfolio securities for a period and dividing it by the monthly average value of such securities during the last 13 months, excluding short term securities. (2) The annualized operating expense ratio excludes interest expense. The annualized ratios including interest expense were 2.18%, 2.21%, 2.37%, 3.17%, 3.89%, 3.13%, 2.98%, 3.06%, 3.19%, 3.52% and 2.80% for the six months ended June 30, 2004 and the years ended December 31, 2003, 2002, 2001, 2000, 1999, 1998, 1997, 1996, 1995 and 1994, respectively. * On May 29, 1998 the Fund entered into a new investment advisory agreement with INVESCO (NY), Inc. (now known as INVESCO Institutional (N.A.), Inc.) due to the acquisition of Chancellor LGT Asset Management, Inc. by AMVESCAP PLC. # Amount rounds to less than $0.005 per share. See Notes to Financial Statements. 15 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 2004 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 of the independent pricing services approved by the Board of Trustees. Such securities are valued at the mean of the closing bid and closing ask prices on the exchange where primarily traded. 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 NASDAQ Official Closing 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. 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 accounting principles generally accepted in the United States. 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 Code 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 Statements of Changes in Net Assets. Information on cash payments is presented in the Statement of Cash Flows. Accounting practices that do not affect reporting activities on a cash basis include unrealized gain or loss on investment securities and accretion income recognized on investment securities. 16 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 Institutional (N.A.), 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 0.50% of the Fund's average weekly net assets. The Fund has also entered into an Administration and Support Agreement with PFPC 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 0.09% 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 board 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 U.S. Government and short-term investments, for the period ended June 30, 2004, amounted to $11,069,046 and $9,877,384, respectively. As of June 30, 2004, net unrealized appreciation was $717,692, of which $1,623,686 related to unrealized appreciation of investments and $914,104 related to unrealized depreciation of investments. The cost of securities on a federal tax basis at June 30, 2004 was $33,888,354. The difference between book-basis and tax-basis unrealized depreciation is attributable to the tax deferral of losses on wash sales. 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: PERIOD ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, 2003 ----------------- ----------------- SHARES AMOUNT SHARES AMOUNT ------ -------- ------ -------- Issued as reinvestment of dividends .... 24,851 $113,600 75,542 $313,493 ------ -------- ------ -------- Net increase ........................... 24,851 $113,600 75,542 $313,493 ====== ======== ====== ======== 17 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. NOTES PAYABLE The Fund currently has an $11 million ("commitment amount") line of credit provided by Fleet National Bank (the "Bank") under an Amended and Restated Credit Agreement (the "Agreement") dated as of September 18, 1992 and amended and restated as of May 23, 2002, as amended, primarily to leverage its investment portfolio. Under this Agreement, the Fund may borrow up to the lesser of $11 million or 25% of its total assets. Interest is payable at either the federal funds rate plus 0.75% or its applicable LIBOR rate plus 0.75%, as selected by the Fund from time to time in its loan requests. The Fund is charged a commitment fee of one tenth of one percent per annum of the average daily unused commitment amount. At June 30, 2004, the Fund had borrowings of $8,890,000 outstanding under this Agreement. During the period ended June 30, 2004, the Fund had an average outstanding daily balance of $9,135,714 with interest rates ranging from 1.69% to 2.25% and average debt per share of $1.50. For the period ended June 30, 2004, interest expense totaled $81,297 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, 2003, the Fund had available for Federal tax purposes unused capital loss carryforwards of $253,172, $2,499,736, $133,391, $4,838,652, $7,509,786, $4,573,327 and $87,693 expiring in 2004, 2006, 2007, 2008, 2009, 2010 and 2011, respectively. 7. RISK FACTORS 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 will provide notice to shareholders at least 60 days prior to any change in its policy of investing primarily (at least 80% of its total assets under normal circumstances) in "high yield", high risk fixed income securities. The Fund's use of leverage also increases exposure to capital risk. The Fund may invest 2-3% of its assets in emerging markets. Emerging markets may be subject to a substantially greater degree of social, political, and economic instability than is the case in domestic markets. 8. DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions paid for the period ended June 30, 2004 and year ended 2003 are as follows: 2004 2003 ---------- ---------- DISTRIBUTIONS PAID FROM: Ordinary income ...................................... $1,374,837 $2,891,837 ---------- ---------- Total ................................................ $1,374,837 $2,891,837 ========== ========== 18 CIM HIGH YIELD SECURITIES ADDITIONAL INFORMATION 1. No later than November 29, 2004, the Fund will file its complete schedule of portfolio holdings with the Securities and Exchange Commission (the "SEC") for the third quarter of 2004 on Form N-Q. The Fund will thereafter file its complete schedule of portfolio holdings for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q will be available on the SEC's website at http://www.sec.gov. The Fund's form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 2. A description of the policies and procedures that INVESCO uses to determine how to vote proxies relating to the Fund's portfolio securities is available without charge, upon request, by calling 1-800-331-1710 and on the SEC's website at http://www.sec.gov. 3. Information regarding how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 is available without charge, upon request, by calling 1-800-331-1710 and on the SEC's website at http://www.sec.gov. 19 - -------------------------------------------------------------------------------- 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 any securities mentioned in the report. For Additional Information about CIM High Yield Securities Call 1-800-331-1710. CIM 3192 6/04 ITEM 2. CODE OF ETHICS. Not applicable for semi-annual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable for semi-annual reports. ITEM 6. SCHEDULE OF INVESTMENTS Not applicable at this time [Applicable for periods ending on or after July 9, 2004.]. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable for semi-annual reports. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. REGISTRANT PURCHASES OF EQUITY SECURITIES
- ----------------------------------------------------------------------------------------------------------------------------------- (C) TOTAL NUMBER OF SHARES (OR (D) MAXIMUM NUMBER (OR (A) TOTAL NUMBER (B) AVERAGE UNITS) PURCHASED AS PART OF APPROXIMATE DOLLAR VALUE) OF SHARES OF SHARES (OR PRICE PAID PER PUBLICLY ANNOUNCED PLANS OR (OR UNITS) THAT MAY YET BE PURCHASED PERIOD UNITS) PURCHASED SHARE (OR UNIT) PROGRAMS UNDER THE PLANS OR PROGRAMS - ----------------------------------------------------------------------------------------------------------------------------------- Month #1 N/A N/A N/A N/A 1/1/04-1/31/04 - ----------------------------------------------------------------------------------------------------------------------------------- Month #2 N/A N/A N/A N/A 2/1/04-2/29/04 - ----------------------------------------------------------------------------------------------------------------------------------- Month #3 N/A N/A N/A N/A 3/1/04-3/31/04 - ----------------------------------------------------------------------------------------------------------------------------------- Month #4 N/A N/A N/A N/A 4/1/04-4/30/04 - ----------------------------------------------------------------------------------------------------------------------------------- Month #5 N/A N/A N/A N/A 5/1/04-5/31/04 - ----------------------------------------------------------------------------------------------------------------------------------- Month #6 N/A N/A N/A N/A 6/1/04-6/30/04 - ----------------------------------------------------------------------------------------------------------------------------------- Total N/A N/A N/A N/A - -----------------------------------------------------------------------------------------------------------------------------------
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective to provide reasonable assurance that the information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, as of a date within 90 days of the filing date of this report, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Not applicable. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) CIM High Yield Securities ------------------------------------------------------------------- By (Signature and Title)* /s/ George Baumann ------------------------------------------------------- George Baumann, President (principal executive officer) Date September 2, 2004 ---------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ George Baumann ------------------------------------------------------- George Baumann, President (principal executive officer) Date September 2, 2004 ---------------------------------------------------------------------------- By (Signature and Title)* /s/ Cindy Cameron ------------------------------------------------------- Cindy Cameron, Treasurer (principal financial officer) Date September 2, 2004 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 g11754cim_cert.txt CERTIFICATION 302 CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, George Baumann, certify that: 1. I have reviewed this report on Form N-CSR of CIM High Yield Securities; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 2, 2004 /s/ George Baumann ---------------------- ------------------------------------ George Baumann, President (principal executive officer) CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Cindy Cameron , certify that: 1. I have reviewed this report on Form N-CSR of CIM High Yield Securities; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 2, 2004 /s/ Cindy Cameron ---------------------- ------------------------------------ Cindy Cameron, Treasurer (principal financial officer) EX-99.CERT906 3 g11754cim_cert906.txt CERTIFICATION 906 CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT I, George Baumann, President of CIM High Yield Securities (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: September 2, 2004 /s/ George Baumann ---------------------- ------------------------------------ George Baumann, President (principal executive officer) I, Cindy Cameron, Treasurer of CIM High Yield Securities (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: September 2, 2004 /s/ Cindy Cameron ---------------------- --------------------------- Cindy Cameron, Treasurer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----