-----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, GbIYNkvIcvmS+z9d6qP41T67ykAyQEnGRl1U7jFVjJff5f0tfLKw0PyKs0r+G+vb tvzvGB+3M+eiVlZJ8TE2CA== 0000950135-98-004937.txt : 19980828 0000950135-98-004937.hdr.sgml : 19980828 ACCESSION NUMBER: 0000950135-98-004937 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980827 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIM HIGH YIELD SECURITIES CENTRAL INDEX KEY: 0000821466 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05328 FILM NUMBER: 98698772 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-30D 1 CIM HIGH YIELD SECURITIES SEMI A/R 6-30-1998 1 CIM HIGH YIELD SECURITIES SEMI-ANNUAL REVIEW AND OUTLOOK CIM High Yield Securities ("CIM") continued to perform competitively with its index for the first half of 1998. For the six months ended June 30, 1998, CIM returned 4.54% before expenses and 3.93% after expenses versus a total return for the Credit Suisse First Boston Index of 4.31%. The strong U.S. economy in the first half of 1998 created a favorable climate that allowed many companies to post solid year over year earnings growth. Also, low interest rates and a flat yield curve attracted allocations from other asset classes, boosting demand for high yield bonds. In addition to these favorable underpinnings, high yield market returns were further enhanced by early retirements of bonds, at premium prices, as companies repaid debt from initial public offerings or sought to reduce costs by early refinancing of debt. For the balance of this year we are taking a more cautious stance. In the middle of the second quarter the market began to focus on the possibility of slowing corporate earnings and the uncertainty surrounding the Asian economies. These issues have led to a recent increase in the volatility of the high yield market causing high yield spreads to widen. The spread of the high yield index over Treasuries at the beginning of the year was 386 basis points and had widened to 417 basis points by June 30, 1998. While it is difficult to predict the economy, we anticipate that a slowdown in Gross Domestic Product growth and increased imports from Asia will lead to lower corporate earnings and lower cash flows. Therefore, we are incorporating a more conservative strategy for the portfolio. Sectors emphasized will be those in which companies have the ability to reduce their debt levels, that have strong asset values or that are in industries considered defensive in nature. Sectors that will be reduced are those that we expect to be hurt most by commodity price deflation and rising U.S. imports. As is always the case, past performance is not indicative of future results. INVESCO (NY), Inc. August 17, 1998 2 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- 114.1% TELECOMMUNICATION -- 20.3% $ 750,000 Fonorola, Inc., Sr. Secured Notes, 12.500%, 08/15/02........ $ 838,125 325,000 Hermes Euro Railtel, Sr. Notes, 11.500%, 08/15/07........... 367,656 1,000,000 HighwayMaster Communications, Inc., Sr. Sub. Notes, 13.750%, 09/15/05.................................................. 750,000 750,000 Hyperion Telecommunications, Inc., Sr. Discount Notes, 0/13.000%, 04/15/03**..................................... 563,437 700,000 Iridium LLC Capital Corp., Sr. Sub. Notes, 11.250%, 07/15/05.................................................. 703,500 700,000 MGC Communications, Inc., Sr. Notes, 13.000%, 10/01/04...... 700,000 500,000 Omnipoint Corp., Sr. Notes, 11.625%, 08/15/06............... 528,750 2,000,000 PSINet, Inc., Sr. Notes, 10.000%, 02/15/05.................. 2,050,000 1,000,000 Primus Telecom Group, 11.750%, 08/01/04..................... 1,062,500 1,000,000 Source Media, 12.000%, 11/01/04............................. 996,250 750,000 Star Choice Communications, Sr. Secured Notes, 13.000%, 12/15/05.................................................. 767,813 ----------- 9,328,031 ----------- OIL AND GAS -- 9.9% 1,000,000 Chesapeake Energy Corp., Sr. Notes, 9.625%, 05/01/05***..... 1,000,000 750,000 Costilla Energy, Inc., Sr. Notes, 10.250%, 10/01/06......... 759,375 750,000 Gothic Production Corp., Sr. Secured Notes, 11.125%, 05/01/05***............................................... 718,125 500,000 Ocean Energy, Inc., Sr. Sub. Notes, 10.375%, 10/15/05....... 553,750 750,000 Snyder Oil Corp., 8.750%, 06/15/07.......................... 755,625 750,000 Vintage Petroleum, Inc., Sr. Sub. Notes, 9.000%, 12/15/05... 770,625 ----------- 4,557,500 ----------- CABLE T.V. -- 9.3% 1,000,000 Charter Communications International, Inc., Sr. Notes, 11.250%, 03/15/06......................................... 1,103,750 1,250,000 Galaxy Telecommunication L.P., Sr. Sub. Notes, 12.375%, 10/01/05.................................................. 1,393,750 1,000,000 Intermedia Capital Partners, Sr. Notes, 11.250%, 08/01/06... 1,121,250 600,000 James Cable Partners, 10.750%, 08/15/04..................... 642,000 ----------- 4,260,750 ----------- METALS AND MINERALS -- 6.1% 1,000,000 AEI Holding Company, Sr. Notes, 10.000%, 11/15/07***........ 990,000 1,250,000 Acme Metals, Inc., Sr. Notes, 10.875%, 12/15/07***.......... 1,018,750 750,000 Kaiser Aluminum & Chemical Corporation, Sr. Sub. Notes, 12.750%, 02/01/03......................................... 796,875 ----------- 2,805,625 ----------- HEALTHCARE -- 5.9% 600,000 Dade International, Inc., Sr. Sub. Notes, 11.125%, 05/01/06.................................................. 679,500 1,250,000 Magellan Health Services, Inc., Sr. Sub. Notes, 9.000%, 02/15/08***............................................... 1,240,625 700,000 Maxxim Medical, Inc., Sr. Secured Sub. Notes, 10.500%, 08/01/06.................................................. 771,750 ----------- 2,691,875 -----------
See Notes to Financial Statements. 1 3 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) OTHER RETAILERS -- 5.8% $ 800,000 Brylane Capital Corp., Series B, Sr. Sub. Notes, 10.000%, 09/01/03.................................................. $ 844,000 750,000 Central Tractor Farm & Country, Sr. Notes, 10.625%, 04/01/07.................................................. 796,875 1,000,000 Hills Stores Company, Sr. Notes, 12.500%, 07/01/03.......... 997,500 ----------- 2,638,375 ----------- SURFACE TRANSPORT -- 5.7% 500,000 American Commercial Lines, 10.250%, 06/30/08***............. 508,750 750,000 Ameritruck Distribution Corp., Sr. Sub. Notes, 12.250%, 11/15/05.................................................. 427,500 500,000 Hvide Marine, Inc., Sr. Notes, 8.375%, 02/15/08............. 477,500 600,000 Ryder TRS, Inc., Sr. Sub. Notes, 10.000%, 12/01/06.......... 697,500 500,000 Stena AB, Sr. Notes, 8.750%, 06/15/07....................... 510,000 ----------- 2,621,250 ----------- BUSINESS EQUIPMENT AND SERVICES -- 4.9% 600,000 Loomis Fargo & Company, Sr. Sub. Notes, 10.000%, 01/15/04... 601,500 1,000,000 Unisys Corp., Sr. Notes, 12.000%, 04/15/03.................. 1,136,250 500,000 Unisys Corp., Sr. Notes, 7.875%, 04/01/08................... 501,875 ----------- 2,239,625 ----------- HOME FURNISHINGS -- 4.4% 1,000,000 Lifestyle Furnishings, Inc., Sr. Sub. Notes, 10.875%, 08/01/06.................................................. 1,118,750 825,000 Shop Vac Corp., Sr. Secured Notes, 10.625%, 09/01/03........ 905,437 ----------- 2,024,187 ----------- HOTELS AND CASINOS -- 4.4% 1,000,000 Hollywood Park, Sr. Sub. Notes, 9.500%, 08/01/07............ 1,033,750 1,000,000 Trump Atlantic City Associates, 1st Mortgage Notes, 11.250%, 05/01/06.................................................. 975,000 ----------- 2,008,750 ----------- FOOD PRODUCTS -- 4.3% 1,000,000 International Home Foods, Inc., Sr. Sub. Notes, 10.375%, 11/01/06.................................................. 1,108,750 750,000 Van de Kamps, Inc., Sr. Sub. Notes, 12.000%, 09/15/05....... 839,063 ----------- 1,947,813 ----------- BUILDING AND DEVELOPMENT -- 4.1% 900,000 American Builders and Contractors, Sr. Sub. Notes, 10.625%, 05/15/07.................................................. 932,625 950,000 Desa International, 9.875%, 12/15/07***..................... 952,375 ----------- 1,885,000 ----------- APPAREL/TEXTILES -- 3.4% 1,000,000 CMI Industries, Sr. Sub. Notes, 9.500%, 10/01/03............ 1,050,000 500,000 Pillowtex Corp., 9.000%, 12/15/07........................... 515,000 ----------- 1,565,000 ----------- BEVERAGE AND TOBACCO -- 3.1% 500,000 Colorado Prime Corp., 12.500%, 05/01/04..................... 505,000 875,000 Delta Beverage Group, Inc., Sr. Notes, 9.750%, 12/15/03..... 918,750 ----------- 1,423,750 -----------
See Notes to Financial Statements. 2 4 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ----------- CORPORATE BONDS AND NOTES -- (CONTINUED) BROADCAST/RADIO/T.V. -- 3.0% $ 250,000 LIN Television Corp., Sr. Sub. Notes, 8.375%, 03/01/08***... $ 255,625 1,000,000 SFX Broadcasting, Inc., Sr. Sub. Notes, 10.750%, 05/15/06... 1,112,500 ----------- 1,368,125 ----------- ECOLOGICAL -- 2.4% 1,000,000 Allied Waste North America, Sr. Sub. Notes, 10.250%, 12/01/06.................................................. 1,103,750 ----------- LEISURE -- 2.3% 500,000 Muzak LP Capital, Sr. Notes, 10.000%, 10/01/03.............. 520,625 500,000 Riddell Sports, Inc., Sr. Notes, 10.500%, 07/15/07.......... 523,750 ----------- 1,044,375 ----------- AUTOMOTIVE -- 2.3% 1,000,000 Safety Components, Sr. Sub. Notes, 10.125%, 07/15/07........ 1,040,000 ----------- PACKAGING AND CONTAINERS -- 2.2% 1,000,000 Stone Container Corp., Sr. Sub. Notes, 12.250%, 04/01/02.... 1,030,000 ----------- COSMETICS/TOILETRIES -- 2.1% 850,000 Chattem, Inc., Sr. Sub. Notes, 12.750%, 06/15/04............ 960,500 ----------- CHEMICALS AND PLASTICS -- 1.6% 750,000 Sterling Chemicals, Inc., Sr. Sub. Notes, 11.750%, 08/15/06.................................................. 748,125 ----------- CONGLOMERATES -- 1.6% 750,000 Fisher Scientific International, Inc., Sr. Sub. Notes, 9.000%, 02/01/08.......................................... 746,250 ----------- FOOD SERVICE -- 1.4% 700,000 CFP Holdings, Inc., Sr. Notes, 11.625%, 01/15/04............ 658,000 ----------- FINANCE -- 1.4% 600,000 Dollar Financial Group, Inc., Sr. Notes, 10.875%, 11/15/06.................................................. 648,000 ----------- UTILITIES -- 1.1% 500,000 Niagara Mohawk Power Corp., Sr. Notes, 7.750%, 10/01/08..... 513,750 ----------- ELECTRONICS -- 1.1% 500,000 Viasystems, Inc., Sr. Sub. Notes, 9.750%, 06/01/07.......... 491,250 ----------- TOTAL CORPORATE BONDS AND NOTES (cost $50,819,460).......... 52,349,656 ----------- UNITED STATES GOVERNMENT SECURITIES -- 10.2% UNITED STATES TREASURY BILLS: 3,866,000 4.71%++, 07/23/1998......................................... 3,854,888 830,000 4.85%++, 08/13/1998......................................... 825,145 ----------- TOTAL UNITED STATES GOVERNMENT SECURITIES (cost $4,680,033)............................................... 4,680,033 -----------
See Notes to Financial Statements. 3 5 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
VALUE SHARES (NOTE 1) ------ -------- COMMON STOCK -- 2.1% 30,000 Dr. Pepper Bottling Holdings, Class A**..................... $ 960,000 1,601 Harvest Foods, Inc., (02/20/1992, cost $36)** +............. 1,601 ----------- TOTAL COMMON STOCK (cost $27,036)........................... 961,601 ----------- WARRANTS -- 0.5% (cost $2,500) 1,250 Capital Gaming International, Inc., Warrants, expire 02/01/1999, (02/10/1994, cost $0)**+...................... 26 500 Colorado Prime Holdings, Warrants, expire 12/31/03, (07/23/1997, cost $0)**+***............................... 5,000 2,000 Globalstar Telecom, Warrants, expire 02/15/04, (02/13/1997, cost $0)**+***............................................ 110,000 1,000 HighwayMaster Communications, Inc., Warrants, expire 09/15/05, (06/12/1998, cost $2,500)**+***................. 3,750 700 MGC Communications, Inc., Warrants, expire 10/01/04, (01/1998, cost $0)**+***.................................. 42,000 1,000 Primus Telecom, Warrants, expire 08/01/04, (07/30/1997, cost $0)**+.................................................... 20,000 17,370 Star Choice Communications, Warrants, expire 12/15/05, (12/18/1997, cost $0)**+***............................... 43,425 ----------- 224,201 TOTAL INVESTMENTS (cost $55,529,029*).......................... 126.9% 58,215,491 OTHER ASSETS AND LIABILITIES (NET)............................. (26.9) (12,328,715) ----- ----------- NET ASSETS..................................................... 100.0% $45,886,776 ===== ===========
- --------------- * Aggregate cost for Federal income tax purposes. ** Non-income producing security. *** Security purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. + Securities for which market quotations are not readily available are valued by or at the direction of the Board of Trustees. Parenthetical disclosure includes the acquisition date and cost of the security. The total fair value of such securities at June 30, 1998 is $225,802 which represents 0.492% of total net assets. ++ Rate represents annualized yield at date of purchase. See Notes to Financial Statements. 4 6 CIM HIGH YIELD SECURITIES STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED) ASSETS: Investments, at value (Cost $55,529,029) (Note 1) See accompanying statement.......................................... $58,215,491 Cash.................................................................. 2,164 Receivable for investment securities sold............................. 1,787,923 Interest receivable................................................... 1,369,797 Prepaid expenses...................................................... 13,047 ----------- Total Assets..................................................... 61,388,422 LIABILITIES: Notes payable (including accrued interest of $222,647) (Note 5)....... $12,722,647 Payable for investment securities purchased........................... 2,286,352 Dividends payable..................................................... 363,449 Investment advisory fee payable (Note 2).............................. 19,652 Accrued Trustees' fees and expenses (Note 2).......................... 7,500 Shareholder servicing agent fees payable (Note 2)..................... 3,660 Administration fee payable (Note 2)................................... 4,140 Custodian fees payable (Note 2)....................................... 2,427 Accrued expenses and other payables................................... 91,819 ----------- Total Liabilities................................................ 15,501,646 ----------- NET ASSETS................................................................. $45,886,776 =========== NET ASSETS consist of: Undistributed net investment income................................... $ 9,670 Accumulated net realized loss on investments sold..................... (6,557,555) Unrealized appreciation of investments................................ 2,686,462 Shares of beneficial interest, $0.01 per share par value, issued and outstanding 5,815,424............................................... 58,154 Paid-in capital in excess of par value................................ 49,690,045 ----------- Total Net Assets................................................. $45,886,776 =========== NET ASSET VALUE PER SHARE ($45,886,776 / 5,815,424 shares of beneficial interest outstanding)...... $ 7.89 ===========
See Notes to Financial Statements. 5 7 CIM HIGH YIELD SECURITIES STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) INVESTMENT INCOME: Interest............................................... $2,840,862 Miscellaneous income................................... 32,785 ---------- Total Investment Income........................... 2,873,647 EXPENSES: Interest expense (Note 5).............................. $440,276 Investment advisory fee (Note 2)....................... 114,993 Legal and audit fees................................... 28,682 Administration fee (Note 2)............................ 21,644 Trustees' fees and expenses (Note 2)................... 18,325 Shareholder servicing agent fees (Note 2).............. 11,818 Custodian fees (Note 2)................................ 8,631 Miscellaneous.......................................... 43,687 -------- Total Expenses.................................... 688,056 ---------- NET INVESTMENT INCOME....................................... 2,185,591 ---------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (Notes 1 and 3): Net realized loss on investments sold during the period................................................ (751,918) Net change in unrealized appreciation of investments during the period..................................... 351,575 ---------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. (400,343) ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $1,785,248 ==========
See Notes to Financial Statements. 6 8 CIM HIGH YIELD SECURITIES STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) NET INCREASE IN CASH: Cash flows from operating activities: Interest and dividends received........................ $ 2,485,429 Operating expenses paid................................ (229,620) ------------ Net cash provided by operating activities................... $ 2,255,809 Cash flows from investing activities: Decrease in short-term securities, net................. (4,003,814) Purchases of long-term securities...................... (15,523,055) Proceeds from sales of long-term securities............ 19,709,063 ------------ Net cash provided by investing activities................... 182,194 ----------- Net cash provided by operating and investing activities..... 2,438,003 Cash flows from financing activities: Interest payments on notes payable..................... (220,703) Cash dividends paid*................................... (2,218,203) ------------ Net cash used in financing activities....................... (2,438,906) ----------- Net decrease in cash........................................ (903) Cash -- beginning of period................................. 3,067 ----------- Cash -- end of period....................................... $ 2,164 =========== RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES: Net increase in net assets resulting from operations........ $ 1,785,248 Interest expense....................................... $ 440,276 Increase in investments................................ (392,359) Increase in receivables for investment securities sold................................................. (1,787,923) Decrease in interest and dividends receivable.......... 88,247 Increase in payables for investment securities purchased............................................ 2,286,352 Increase in accrued expenses and liabilities........... 18,162 ------------ Total adjustments............................ 652,755 ----------- Net cash provided by operating and investing activities..... $ 2,438,003 ===========
- --------------- *Non cash financing activities include reinvestments of dividends of $429,794. See Notes to Financial Statements. 7 9 CIM HIGH YIELD SECURITIES STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, 1998 YEAR ENDED (UNAUDITED) DECEMBER 31, 1997 ------------- ----------------- Net investment income....................................... $ 2,185,591 $ 4,459,941 Net realized gain/(loss) on investments sold during the year...................................................... (751,918) 1,294,580 Net (change in) unrealized appreciation of investments during the year........................................... 351,575 412,056 ----------- ----------- Net increase in net assets resulting from operations........ 1,785,248 6,166,577 Distributions to shareholders from net investment income.... (2,175,921) (4,485,703) Distributions to shareholders in excess of net investment income.................................................... 0 (149,068) Net increase in net assets from Fund share transactions (Note 4).................................................. 429,794 820,897 ----------- ----------- Net increase in net assets.................................. 39,121 2,352,703 NET ASSETS: Beginning of period......................................... 45,847,655 43,494,952 ----------- ----------- End of period (including undistributed net investment income of $9,670 and $0, respectively)........................... $45,886,776 $45,847,655 =========== ===========
See Notes to Financial Statements. 8 10 CIM HIGH YIELD SECURITIES FINANCIAL HIGHLIGHTS FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
SIX MONTHS ENDED YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR 6/30/98 ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 ----------- -------- -------- -------- -------- -------- -------- -------- -------- Operating performance: Net asset value, beginning of period................ $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10 $ 5.65 $ 7.38 ------ ------ ------ ------ ------ ------ ------ ------ ------ Net investment income..... 0.40 0.78 0.78 0.77 0.82 0.87 0.83 0.84 0.86 Net realized and unrealized gain/(loss) on investments.............. (0.07) 0.30 0.36 0.23 (0.89) 0.71 0.46 1.44 (1.72) ------ ------ ------ ------ ------ ------ ------ ------ ------ Net increase/(decrease) in net assets resulting from investment operations.... 0.33 1.08 1.14 1.00 (0.07) 1.58 1.29 2.28 (0.86) Change in net asset value from Fund share transaction.............. -- -- -- -- -- (0.31) -- -- -- Distributions: Dividends from net investment income........ (0.40) (0.78) (0.77) (0.79) (0.84) (0.83) (0.81) (0.83) (0.87) Dividends in excess of net investment income........ -- (0.03) -- -- -- -- -- -- -- Distributions from net realized capital gains... -- -- -- -- -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ ------ Total from distributions............ (0.40) (0.81) (0.77) (0.79) (0.84) (0.83) (0.81) (0.83) (0.87) ------ ------ ------ ------ ------ ------ ------ ------ ------ Net asset value, end of period................... $ 7.89 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10 $ 5.65 ====== ====== ====== ====== ====== ====== ====== ====== ====== Market value, end of period................... $8.063 $8.313 $8.125 $7.875 $7.125 $7.875 $7.500 $6.625 $4.750 ====== ====== ====== ====== ====== ====== ====== ====== ====== Total investment return... 3.93% 13.31% 14.38% 22.72% 0.99% 16.55%(3) 25.70% 58.61% (20.89)% ====== ====== ====== ====== ====== ====== ====== ====== ====== Ratios to average net assets/supplemental data: Net assets, end of period (in 000's)............... $45,887 $45,848 $43,495 $40,636 $38,678 $42,901 $30,024 $28,015 $22,283 Ratio of net investment income to average net assets................... 9.50%+ 10.08% 10.46% 10.32% 10.82% 11.17% 11.00% 12.59% 13.00% Ratio of operating expenses to average net assets................... 1.08%(2)+ 1.06%(2) 1.10%(2) 1.14%(2) 0.95%(2) 1.09%(2) 1.65%(2) 2.46% 2.35% Portfolio turnover rate(1).................. 32.1% 154.5% 172.2% 79.9% 50.6% 114.3% 40.6% 51.2% 34.9% YEAR YEAR ENDED ENDED 12/31/89 12/31/88* -------- --------- Operating performance: Net asset value, beginning of period................ $ 9.41 $ 9.35 ------ ------- Net investment income..... 1.13 1.16 Net realized and unrealized gain/(loss) on investments.............. (1.96) 0.12 ------ ------- Net increase/(decrease) in net assets resulting from investment operations.... (0.83) 1.28 Change in net asset value from Fund share transaction.............. -- -- Distributions: Dividends from net investment income........ (1.15) (1.13) Dividends in excess of net investment income........ -- -- Distributions from net realized capital gains... (0.05) (0.09) ------ ------- Total from distributions............ (1.20) (1.22) ------ ------- Net asset value, end of period................... $ 7.38 $ 9.41 ====== ======= Market value, end of period................... $7.000 $ 9.500 ====== ======= Total investment return... (15.18)% 11.67% ====== ======= Ratios to average net assets/supplemental data: Net assets, end of period (in 000's)............... $29,122 $36,394 Ratio of net investment income to average net assets................... 12.78% 12.07% Ratio of operating expenses to average net assets................... 2.28% 2.36% Portfolio turnover rate(1).................. 77.4% 209.6%
- --------------- * Chancellor Trust Company became the Fund's investment adviser effective September 30, 1988. On October 31, 1996 the Fund entered into a new investment advisory agreement with Chancellor LGT Asset Management, Inc. due to the acquisition of Chancellor Capital Management, Inc. the corporate parent of Chancellor Trust Company, by Liechenstein Global Trust, AG. On May 29, 1998 the Fund entered into a new investment advisory agreement with INVESCO (NY), Inc. due to the acquisition of Chancellor LGT Asset Management, Inc. by AMVESCAP PLC. (1) This rate is, in general, the percentage computed by taking the lesser of the cost of purchases or proceeds from the sales of portfolio securities for a period and dividing it by the monthly average value of such securities during the year, excluding short-term securities. (2) The annualized operating expense ratio excludes interest expense. The annualized ratios including interest expense were 2.99%, 3.06%, 3.19%, 3.52%, 2.80%, 2.63% and 2.06% for the six months ended June 30, 1998 and the years ended December 31, 1997, 1996, 1995, 1994, 1993, and 1992, respectively. (3) The total return for the year ended December 31, 1993, adjusted for the dilutive effect of the rights offering completed in August of 1993, is 21.07%. + Annualized See Notes to Financial Statements. 9 11 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1998 1. SIGNIFICANT ACCOUNTING POLICIES CIM High Yield Securities (the "Fund") was organized under the laws of the Commonwealth of Massachusetts on September 11, 1987 and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end management investment company. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. Portfolio valuation: Fixed-income securities (other than short-term obligations, but including listed issues) are valued based on prices obtained by one or more independent pricing services approved by the Board of Trustees. Securities (other than fixed-income securities) for which the principal market is one or more securities exchanges are valued at the last reported sale price (or if there has been no current sale, at the closing bid price) on the primary exchange on which such securities are traded. If a securities exchange is not the principal market for a security, such security will, if market quotations are readily available, be valued at the closing bid price in the over-the-counter market (or the last sale price in the case of securities reported on the NASDAQ national market system for which any sales occurred during the day). Portfolio securities for which there are no such valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees. Short-term obligations with maturities of less than 60 days are valued at amortized cost which approximates market value. Securities transactions and investment income: Securities transactions are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including, where applicable, amortization of premium and accretion of discount on investments, is recorded on the accrual basis. Dividends and distributions to shareholders: The Fund distributes monthly to shareholders substantially all of its net investment income. Capital gains, if any, net of capital losses, are distributed annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Fund, timing differences and differing characterization of distributions made by the Fund. Federal income taxes: It is the Fund's policy to comply with the requirements of the Internal Revenue Service applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax should be payable by the Fund. Cash flow information: Cash, as used in the Statement of Cash Flows, is the amount reported in the Statement of Assets and Liabilities. The Fund invests in securities and distributes dividends from net investment income and net realized gains (which are either paid in cash or reinvested at the discretion of shareholders). These activities are reported in the Statement of Changes in Net Assets. Information on cash payments is presented in the Statement of Cash Flows. Accounting practices that do not affect reporting activities on a cash basis include unrealized gain or loss on investment securities and accretion income recognized on investment securities. 10 12 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Actual results could differ from those estimates. 2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY TRANSACTIONS The Fund has entered into an investment advisory agreement (the "Advisory Agreement") with INVESCO (NY), Inc. (the "Adviser"). The Advisory Agreement provides that the Fund will pay the Adviser a fee, computed and payable monthly, at the annual rate of .50% of the Fund's average weekly net assets. The Fund has also entered into an Administration and Support Agreement with First Data Investor Services Group, Inc., ("Investor Services Group") a wholly-owned subsidiary of First Data Corporation, to provide all administrative services to the Fund other than those related to the investment decisions. Investor Services Group is paid a fee computed and payable monthly at an annual rate of .09% of the Fund's average weekly net assets, but no less than $40,000 per annum. The Fund pays each Trustee not affiliated with the Adviser $6,000 per year plus $1,000 per meeting and committee meeting attended, and reimburses each such Trustee for travel and out-of-pocket expenses relating to their attendance at such meetings. The Fund pays the actual out-of-pocket expenses of the Trustees affiliated with the Adviser relating to their attendance at such meetings. Boston Safe Deposit & Trust Company, an indirect wholly-owned subsidiary of Mellon Bank Corporation, serves as the Fund's custodian. Investor Services Group serves as the Fund's shareholder servicing agent (transfer agent). 3. PURCHASE AND SALES OF SECURITIES Cost of purchases and proceeds from sales of investment securities, excluding short-term investments, during the six months ended June 30, 1998, amounted to $17,752,917 and $22,277,902, respectively. At June 30, 1998, aggregate gross unrealized appreciation for all securities (other than restricted securities), in which there is an excess of value over tax costs amounted to $3,233,740, and the aggregate gross unrealized depreciation for all securities (other than restricted securities) in which there is an excess of tax cost over value amounted to $500,650. At June 30, 1998, aggregate gross unrealized appreciation for restricted securities in which there is an excess of value over tax costs amounted to $219,010, and the aggregate gross unrealized depreciation for restricted securities in which there is an excess of tax cost over value amounted to $265,638. 11 13 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 4. FUND SHARES The Fund has one class of shares of beneficial interest, par value $0.01 per share, of which an unlimited number of shares are authorized. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 ----------------- ------------------ SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Issued as reinvestment of dividends................... 53,190 $429,794 104,665 $820,897 ------ -------- ------- -------- Net increase.......................................... 53,190 $429,794 104,665 $820,897 ====== ======== ======= ========
5. NOTES PAYABLE The Fund currently has a $12.5 million ("commitment amount") line of credit provided by The First National Bank of Boston (the "Bank") under an Amended Credit Agreement (the "Agreement") dated September 18, 1992, primarily to leverage its investment portfolio. Under this Agreement the Fund may borrow up to the lesser of $12.5 million or 25% of its gross assets. Interest is payable at either the Bank's Base Rate or its applicable Money Market Rate, as selected by the Fund from time to time in its loan requests. The Fund is charged a commitment fee of one quarter of one percent per annum of the average daily unused commitment amount. The Agreement requires, among other provisions, that the percentage obtained by dividing total indebtedness for money borrowed by total assets of the Fund shall not exceed 30%. At June 30, 1998, the Fund had borrowings of $12,500,000 outstanding under this Agreement. During the six months ended June 30, 1998, the Fund had an average outstanding daily balance of $12,500,000 with interest rates ranging from 6.9688% to 7.0625% and average debt per share of $2.17. For the six months ended June 30, 1998, interest expense totaled $440,276 under this Agreement. 6. CAPITAL LOSS CARRYFORWARD Capital loss carryforwards are available to offset future realized capital gains. To the extent that these carryforwards are used to offset future capital gains, it is probable that the amount which is offset will not be distributed to shareholders. At December 31, 1997, the Fund had available for Federal tax purposes unused capital loss carryforwards of $2,716,656, $1,552,171, $330,065, $679,423 and $253,172 expiring in 1999, 2000, 2002, 2003, and 2004, respectively. 7. CONCENTRATION OF RISK The Fund invests in securities offering high current income which generally will be in the lower rating categories of recognized ratings agencies (below investment-grade bonds). These securities generally involve more credit risk than securities in the higher rating categories. In addition, the trading market for high yield securities may be relatively less liquid than the market for higher-rated securities. The Fund's use of leverage also increases exposure to capital risk. 12 14 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 8. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
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 ----- ----- ----- ----- ----- ----- ----- ----- 1998 -- QUARTER ENDED March 31, 1998........... $1,580 $0.27 $1,235 $0.21 $ 1,062 $ 0.18 $2,297 $ 0.39 June 30, 1998............ 1,293 0.22 951 0.16 (1,462) (0.25) (511) (0.09) 1997 -- QUARTER ENDED March 31, 1997........... 1,389 0.24 1,059 0.19 (236) (0.04) 822 0.14 June 30, 1997............ 1,465 0.26 1,122 0.20 1,145 0.20 2,267 0.40 September 30, 1997....... 1,474 0.26 1,128 0.20 1,295 0.22 2,243 0.44 December 31, 1997........ 1,484 0.26 1,151 0.20 (497) (0.09) 654 0.11 1996 -- QUARTER ENDED March 31, 1996........... 1,419 0.25 1,100 0.20 1,406 0.25 2,506 0.45 June 30, 1996............ 1,368 0.24 1,035 0.18 (1,616) (0.29) (581) (0.11) September 30, 1996....... 1,433 0.26 1,098 0.20 1,648 0.29 2,746 0.49 December 31, 1996........ 1,462 0.26 1,121 0.20 634 0.11 1,755 0.31
9. SHAREHOLDER VOTING RESULTS At a Special Meeting of Shareholders, held on May 27, 1998, the following matter was voted on and approved: Approval of a new Investment Advisory Agreement between the Fund and Chancellor LGT Asset Management, Inc. (whose name was changed to INVESCO (NY), Inc., effective June 1, 1998): FOR AGAINST ABSTAINED --- ------- --------- 4,927,844* 94,590 85,348 * Represents 84.88% of the outstanding shares of the Fund 13 15 CIM - -------------------------------------------------------------------------------- HIGH YIELD SECURITIES SEMI-ANNUAL REPORT JUNE 30, 1998 This report is sent to shareholders of CIM High Yield Securities for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in the report. -----END PRIVACY-ENHANCED MESSAGE-----