-----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, P3yKw2fpFQ5jRc4k9J6QU67lSfp6Mkfdp2XbeSnD2xoZIAkdtIIsH/CFzDfQdJjz HtRbNcgA6pHtduMVC0+Lbw== 0000950135-00-001161.txt : 20000302 0000950135-00-001161.hdr.sgml : 20000302 ACCESSION NUMBER: 0000950135-00-001161 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000229 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: 557625 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 PFPC INC. 1 INVESCO LOGO CIM HIGH YIELD SECURITIES -- 1999 REVIEW & OUTLOOK The total return for CIM High Yield Securities (the "Fund") was 4.40% before Fund expenses and 3.28% after Fund expenses, based on the net asset value (-18.89% total return based on market value), for the year ended December 31, 1999. The Fund's benchmark, the Credit Suisse First Boston Domestic Plus High Yield Index, had a total return of 2.26% for the same period. Relative to other, higher grade fixed income asset classes, high yield securities outperformed both investment grade corporate securities (Lehman Corporate Index) and 10 year Treasury securities, which returned -1.95% and -8.42%, respectively. Past performance is not indicative of future results. Market conditions for high yield securities were difficult during 1999. After the release of the April Consumer Price Index in mid-May, the bond market weakened as investors became cautious due to fear of interest rate tightening by the Federal Reserve Bank. Furthermore, high yield mutual funds experienced net outflows for the second half of the year and overall flow was slightly negative for the full year (the last negative year being 1994). New issue supply dwindled to approximately $100 billion versus $150 billion in 1998. Performance of the high yield market for the year could have been worse if not for the purchasing of Collateralized Bond Obligations (CBO's), which picked up some of the slack in demand. High yield securities did not generate the expected level of excess returns. Although yields in the high yield market increased almost 100 basis points in 1999, spreads relative to Treasury securities were tighter by approximately 80 basis points. This is largely due to the substantially higher yield levels of the underlying Treasuries market. The bond market during the year 2000 is expected to continue to be volatile. The Federal Reserve raised the federal funds rate three times during 1999. It has already tightened once this year and we expect further tightening throughout the year. Rates and risk premiums are still high which should limit both supply and demand. Careful credit selection continues to be the main focus in composing our portfolio. We will continue to favor issuers with strong cash flow positions and demonstrated ability to access the capital markets to meet their financing requirements, but we will not always be successful in avoiding problem credits. We are trying especially to maintain liquidity throughout the portfolio so that the Fund can be managed flexibly in volatile markets. We wanted to let you know that the Fund traded at an average discount greater than 10% from net asset value for the last twelve calendar weeks of 1999. Therefore, in accordance with the policy described in the prospectus for the Fund's initial public offering, the Fund will submit to its shareholders at the next annual meeting a proposal to convert the Fund to an open-end investment company. The Fund's next annual meeting is to be held in October, 2000. Conversion of the Fund to an open-end investment company requires the affirmative vote of the holders of a majority of the shares entitled to vote on the matter. The Board of Trustees of the Fund has not yet determined whether to recommend that the shareholders of the Fund vote for or against such a proposal. Thank you for your support during the year and we look forward to a prosperous 2000. INVESCO, Inc. February 4, 2000 2 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS DECEMBER 31, 1999
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ------------ CORPORATE BONDS AND NOTES -- 126.5% TELECOMMUNICATION -- 28.3% $ 750,000 Adelphia Business Solutions, Inc., Sr. Discount Notes, 0/13.000%, 04/15/03**..................................... $ 669,375 1,300,000 Intermedia Communication, Sr. Notes, 9.500%, 03/01/09 ...... 1,257,750 1,000,000 Level 3 Communications, Sr. Notes, 9.125%, 05/01/08......... 945,000 700,000 MGC Communications, Inc., Sr. Notes, 13.000%, 10/01/04...... 707,000 1,000,000 NEXTLINK Communications, Inc., Sr. Notes, 10.750%, 11/15/08.................................................. 1,040,000 500,000 Omnipoint Corp., Sr. Notes, 11.625%, 08/15/06............... 533,750 1,000,000 PSINet, Inc., Sr. Notes, 11.000%, 08/01/09.................. 1,035,000 1,000,000 Primus Telecommunications Group, Sr. Notes, 11.750%, 08/01/04.................................................. 990,000 500,000 RCN Corp., Sr. Notes, 10.125%, 01/15/10..................... 500,000 1,000,000 Source Media Inc., Sr. Notes, 12.000%, 11/01/04............. 600,000 500,000 Tele1 Europe BV, Sr. Notes, 13.000%, 05/15/09............... 515,000 1,000,000 Williams Communications Group, Inc., Sr. Notes, 10.875%, 10/01/09.................................................. 1,050,000 1,000,000 Worldwide Fiber, Inc., Sr. Notes, 12.000%, 08/01/09***...... 1,032,500 ------------ 10,875,375 ------------ ELECTRONICS -- 9.6% 700,000 Chippac International Ltd., Sr. Sub. Notes, 12.750%, 08/01/09***............................................... 728,000 675,000 Fairchild Semiconductor, 10.375%, 10/01/07.................. 691,875 650,000 Intersil Corp., 13.250%, 08/15/09***........................ 705,250 1,000,000 SCG Holding & Semiconductor Co., Sr. Sub. Notes, 12.000%, 08/01/09***............................................... 1,070,000 900,000 Viasystems Inc., Sr. Sub. Notes, 9.750%, 06/01/07........... 495,000 ------------ 3,690,125 ------------ BUILDING AND DEVELOPMENT -- 9.2% 1,000,000 American Plumbing & Mechanics, Sr. Sub. Notes, 11.625%, 10/15/08***............................................... 950,000 1,050,000 Atrium Companies, Inc., Sr. Sub. Notes, 10.500%, 05/01/09... 1,029,000 950,000 Desa International, Inc., Sr. Sub. Notes, 9.875%, expire 12/15/07, (11/21/97, cost $950,000)+................................ 684,000 900,000 Prison Realty Trust, Inc., Sr. Notes, 12.000%, 06/01/06..... 868,500 ------------ 3,531,500 ------------ HOTELS AND CASINOS -- 7.2% 525,000 Circus Circus Enterprise, 9.250%, 12/01/05 ................. 534,187 700,000 Florida Panther Holdings, 9.875%, 04/15/09.................. 680,750 1,000,000 Hollywood Casino Corp., Sr. Sub. Notes, 11.250%, 05/01/07 ................................................. 1,045,000 500,000 Lodgian Financing Corp., Sr. Sub. Notes, 12.250%, 07/15/09.................................................. 496,250 ------------ 2,756,187 ------------ OIL AND GAS -- 6.8% 750,000 Costilla Energy, Inc., Sr. Notes, 10.250%, expire 10/01/06, (10/03/96, cost $750,000)+(a)............................. 217,500 525,000 Frontier Oil Corp., Sr. Notes, 11.750%, 11/15/09............ 517,125 500,000 Pride International, Inc., 10.000%, 06/01/09................ 511,250 550,000 R & B Falcon Corp., 12.250%, 03/15/06....................... 609,125 750,000 Swift Energy Co., Sr. Sub.-Notes, 10.250%, 08/01/09......... 763,125 ------------ 2,618,125 ------------
See Notes to Financial Statements. 1 3 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS DECEMBER 31, 1999
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ------------ CORPORATE BONDS AND NOTES -- (CONTINUED) AUTOMOTIVE -- 6.4% $ 765,000 American Axle & Manufacturing, Inc., Sr. Sub. Notes, 9.750%, 03/01/09.................................................. $ 772,650 500,000 Exide Corp., Sr. Notes, 10.000%, 04/15/05................... 482,500 1,000,000 Safety Components, Sr. Sub. Notes, 10.125%, 07/15/07........ 620,000 550,000 Tenneco Automotive, Inc., Sr. Sub. Notes, 11.625%, 10/15/09***............................................... 563,063 ------------ 2,438,213 ------------ LEISURE -- 6.3% 1,000,000 Polaroid Corp., Sr. Notes, 11.500%, 02/15/06................ 975,000 1,000,000 Premier Parks, Inc., Sr. Notes, 9.750%, 06/15/07............ 1,000,000 500,000 Riddell Sports, Inc., Sr. Sub. Notes, 10.500%, 07/15/07..... 426,250 ------------ 2,401,250 ------------ CHEMICALS AND PLASTICS -- 5.4% 1,000,000 Lyondell Chemical Co., Sr. Sub. Notes, 10.875%, 05/01/09.... 1,040,000 1,000,000 ZSC Specialty Chemical PLC, 11.000%, 07/01/09***............ 1,040,000 ------------ 2,080,000 ------------ APPAREL/TEXTILES -- 4.1% 1,000,000 CMI Industries, Sr. Sub. Notes, 9.500%, 10/01/03............ 700,000 1,000,000 Pillowtex Corp., Sr. Sub. Notes, 10.000%, 11/15/06.......... 432,500 500,000 St. John Knits International, Inc., Sr. Sub. Notes, 12.500%, 07/01/09.................................................. 435,000 ------------ 1,567,500 ------------ CABLE T.V. -- 3.5% 1,250,000 Galaxy Telecommunication L.P., Sr. Sub. Notes, 12.375%, 10/01/05.................................................. 1,331,250 ------------ HOME FURNISHINGS -- 3.0% 650,000 O'Sullivan Industries, 13.375%, 10/15/09***................. 651,625 550,000 Winsloew Furniture, Inc., 12.750%, 08/15/07***.............. 511,500 ------------ 1,163,125 ------------ STEEL -- 2.9% 700,000 Acme Metals, Inc., Sr. Notes, 10.875%, 12/15/07(a).......... 119,000 600,000 LTV Corp., Sr. Notes, 11.750%, 11/15/09***.................. 627,000 500,000 Republic Technology/RTI Capital, 13.750%, 07/15/09***....... 350,000 ------------ 1,096,000 ------------ BUSINESS EQUIPMENT AND SERVICES -- 2.8% 1,000,000 Unisys Corp., Sr. Notes, 12.000%, 04/15/03.................. 1,070,000 ------------ PACKAGING AND CONTAINERS -- 2.6% 1,000,000 Stone Container Corp., Sr. Sub. Notes, 12.250%, 04/01/02 ... 1,005,000 ------------ OTHER RETAILERS -- 2.6% 1,000,000 Ames Department Stores, Sr. Notes, 10.000%, 04/15/06........ 990,000 ------------ FOOD PRODUCTS -- 2.5% 1,000,000 Vlasic Foods International, Inc., Sr. Sub. Notes, 10.250%, 07/01/09 ................................................. 956,250 ------------ CONGLOMERATES -- 2.4% 950,000 Fisher Scientific International, Inc., Sr. Sub. Notes, 9.000%, 02/01/08.......................................... 914,375 ------------
See Notes to Financial Statements. 2 4 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS DECEMBER 31, 1999
PRINCIPAL VALUE AMOUNT (NOTE 1) - --------- ------------ CORPORATE BONDS AND NOTES -- (CONTINUED) FINANCIAL INTERMEDIARIES -- 2.3% $ 900,000 AmeriCredit Corp., 9.875%, 04/15/06......................... $ 903,375 ------------ ECOLOGICAL -- 2.3% 1,000,000 Allied Waste North American, Sr. Notes, 10.000%, 08/01/09***............................................... 895,000 ------------ AEROSPACE -- 2.2% 1,000,000 Fairchild Corp., 10.750%, 04/15/09.......................... 856,250 ------------ FOOD DRUG RETAILER -- 2.2% 850,000 Stater Brothers Holdings, Sr. Notes, 10.750%, 08/15/06...... 854,250 ------------ INDUSTRIAL EQUIPMENT -- 2.1% 300,000 Blount, Inc., Sr. Sub. Notes, 13.000%, 08/01/09***.......... 316,500 500,000 Nationsrent, Inc., Sr. Sub. Notes, 10.375%, 12/15/08........ 493,750 ------------ 810,250 ------------ FOOD SERVICE -- 2.0% 750,000 Sbarro, Inc., Sr. Notes, 11.000%, 09/15/09***............... 772,500 ------------ COSMETICS/TOILETRIES -- 1.9% 775,000 Chattem, Inc., Sr. Sub. Notes, 8.875%, 04/01/08............. 730,437 ------------ HEALTHCARE -- 1.9% 700,000 Triad Hospitals Holdings, Sr. Sub. Notes, 11.000%, 05/15/09.................................................. 729,750 ------------ SURFACE TRANSPORTATION -- 1.4% 750,000 Ameritruck Distribution Corp., Sr. Sub. Notes, 12.250%, 11/15/05(a)............................................... 0 525,000 North American Van Lines, Sr. Sub. Notes, 13.375%, 12/01/09***............................................... 523,688 ------------ 523,688 ------------ AIR TRANSPORTATION -- 1.4% 600,000 Northwest Airlines, Inc., 7.875%, 03/15/08.................. 521,250 ------------ MANUFACTURING DIVERSIFIED -- 1.2% 500,000 WEC Co., Inc., Sr. Notes, 12.000%, 07/15/09................. 460,000 ------------ TOTAL CORPORATE BONDS AND NOTES (Cost $52,674,184).......... 48,541,025 ------------ UNITED STATES GOVERNMENT SECURITIES -- 1.6% UNITED STATES TREASURY BILL: 619,000 5.346%++, 01/20/00.......................................... 617,298 ------------ TOTAL UNITED STATES GOVERNMENT SECURITIES (Cost $617,298)............................................. 617,298 ------------
SHARES ------ COMMON STOCK -- 0.0% 1,601 Harvest Foods, Inc., (02/20/1992, cost $36)**+.............. 1,601 ----------- TOTAL COMMON STOCK (Cost $36)................................................ 1,601 -----------
See Notes to Financial Statements. 3 5 CIM HIGH YIELD SECURITIES STATEMENT OF INVESTMENTS DECEMBER 31, 1999
VALUE SHARES (NOTE 1) ------ -------- WARRANTS -- 1.3% 1,000 Globalstar Telecom, Warrants, expire 02/15/04, (02/19/1997, cost $0)**+***............................................ $ 125,000 650 Intersils Corp., Warrants, expire 08/15/09, (08/09/1999, cost $0)**+***............................................ 97,500 700 MGC Communications, Inc., Warrants, expire 10/01/04, (09/24/1997, cost $0)**+***............................... 122,500 1,000 Primus Telecom, Warrants, expire 08/01/04, (08/04/1997, cost $0)**+.................................................... 50,000 17,370 Star Choice Communications, Warrants, expire 12/15/05, (12/18/1997, cost $0)**+.................................. 0 500 Tele1 Europe B V, Warrants, expire 05/15/09, (05/12/1999, cost $0)**+***............................................ 85,000 550 Winsloew Furniture, Inc., Warrants, expire 08/15/07, (08/24/1999, cost $0)**+***............................... 27,500 ----------- 507,500 -----------
TOTAL INVESTMENTS (Cost $53,291,518*)....................... 129.4% 49,667,424 OTHER ASSETS AND LIABILITIES (NET).......................... (29.4) (11,278,676) ----- ------------ NET ASSETS.................................................. 100.0% $ 38,388,748 ===== ============
- --------------- * Aggregate cost for Federal income tax purposes. ** Non-income producing security. *** Security purchased in a transaction exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. + Securities for which market quotations are not readily available are valued by or at the direction of the Board of Trustees. Parenthetical disclosure includes the acquisition date and cost of the security. The total fair value of such securities at December 31, 1999 is $1,410,601 which represents 3.675% of total net assets. ++ Rate represents annualized yield at date of purchase. (a) Issuer in default.
See Notes to Financial Statements. 4 6 CIM HIGH YIELD SECURITIES STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1999 ASSETS: Investments, at value (Cost $53,291,518) (Note 1) See accompanying statement.......................................... $49,667,424 Cash.................................................................. 1,344 Interest receivable................................................... 1,462,160 Prepaid expenses...................................................... 2,146 ----------- Total Assets..................................................... 51,133,074 LIABILITIES: Notes payable (including accrued interest of $177,084) (Note 5)....... $12,677,084 Investment advisory fee payable (Note 2).............................. 17,891 Shareholder servicing agent fees payable (Note 2)..................... 2,220 Administration fee payable (Note 2)................................... 3,333 Custodian fees payable (Note 2)....................................... 2,378 Accrued expenses and other payables................................... 41,420 ----------- Total Liabilities................................................ 12,744,326 ----------- NET ASSETS................................................................. $38,388,748 =========== NET ASSETS consist of: Accumulated net realized loss on investments sold..................... $(5,460,096) Unrealized depreciation of investments................................ (3,624,094) Shares of beneficial interest, $0.01 per share par value, issued and outstanding 5,878,325............................................... 58,783 Paid-in capital in excess of par value................................ 47,414,155 ----------- Total Net Assets................................................. $38,388,748 =========== NET ASSET VALUE PER SHARE ($38,388,748 / 5,878,325 shares of beneficial interest outstanding)...... $ 6.53 ===========
See Notes to Financial Statements. 5 7 CIM HIGH YIELD SECURITIES STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 INVESTMENT INCOME: Interest............................................... $ 5,480,423 ----------- Total Investment Income........................... 5,480,423 EXPENSES: Interest expense (Note 5).............................. $832,446 Investment advisory fee (Note 2)....................... 198,951 Miscellaneous.......................................... 49,511 Legal and audit fees................................... 48,000 Trustees' fees and expenses (Note 2)................... 45,227 Administration fee (Note 2)............................ 40,035 Custodian fees (Note 2)................................ 14,846 Shareholder servicing agent fees (Note 2).............. 5,003 -------- Total Expenses.................................... 1,234,019 ----------- NET INVESTMENT INCOME....................................... 4,246,404 ----------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS (Notes 1 and 3): Net realized loss on investments sold during the year.................................................. (355,116) Net unrealized depreciation of investments during the year.................................................. (1,968,740) ----------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. (2,323,856) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 1,922,548 ===========
See Notes to Financial Statements. 6 8 CIM HIGH YIELD SECURITIES STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999 NET INCREASE IN CASH: Cash flows from operating activities: Interest received...................................... $ 5,348,778 Operating expenses paid................................ (413,192) ------------ Net cash provided by operating activities................... $ 4,935,586 Cash flows from investing activities: Decrease in short-term securities, net................. 748,763 Purchases of long-term securities...................... (49,343,438) Proceeds from sales of long-term securities............ 48,559,659 ------------ Net cash used in investing activities....................... (35,016) ----------- Net cash provided by operating and investing activities..... 4,900,570 Cash flows from financing activities: Interest payments on notes payable..................... (799,360) Cash dividends paid*................................... (4,100,399) ------------ Net cash used in financing activities....................... (4,899,759) ----------- Net increase in cash........................................ 811 Cash -- beginning of year................................... 533 ----------- Cash -- end of year......................................... $ 1,344 =========== RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES: Net increase in net assets resulting from operations........ $ 1,922,548 Interest expense....................................... 832,446 Decrease in investments................................ 2,280,947 Increase in interest receivable........................ (131,646) Decrease in prepaid expenses........................... 7,892 Increase in investment advisory fee payable............ 606 Decrease in shareholder servicing agent fees payable... (7,530) Increase in custodian fee payable...................... 1,374 Decrease in accrued expenses and other payables........ (6,067) ------------ Total adjustments............................ 2,978,022 ----------- Net cash provided by operating and investing activities..... $ 4,900,570 ===========
- --------------- *Non cash financing activities include reinvestments of dividends of $72,647. See Notes to Financial Statements. 7 9 CIM HIGH YIELD SECURITIES STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------- ----------------- Net investment income...................................... $ 4,246,404 $ 4,148,881 Net realized loss on investments sold during the year...... (355,116) (2,248,607) Net unrealized depreciation of investments during the year..................................................... (1,968,740) (3,990,241) ----------- ----------- Net increase/(decrease) in net assets resulting from operations............................................... 1,922,548 (2,089,967) Distributions to shareholders from net investment income... (4,173,046) (4,000,621) Net increase in net assets from Fund share transactions (Note 4)................................................. 72,647 809,532 ----------- ----------- Net decrease in net assets................................. (2,177,851) (5,281,056) NET ASSETS: Beginning of year.......................................... 40,566,599 45,847,655 ----------- ----------- End of year (including undistributed net investment income of $0 and $125,504, respectively)........................ $38,388,748 $40,566,599 =========== ===========
See Notes to Financial Statements. 8 10 CIM HIGH YIELD SECURITIES FINANCIAL HIGHLIGHTS FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED 12/31/99 12/31/98* 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 -------- --------- -------- -------- -------- -------- -------- -------- Operating performance: Net asset value, beginning of year...... $ 6.91 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 $ 7.10 ------- ------- ------- ------- ------- ------- ------- ------- Net investment income................... 0.72 0.71 0.78 0.78 0.77 0.82 0.87 0.83 Net realized and unrealized gain/(loss) on investments......................... (0.39) (1.07) 0.30 0.36 0.23 (0.89) 0.71 0.46 ------- ------- ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from investment operations... 0.33 (0.36) 1.08 1.14 1.00 (0.07) 1.58 1.29 Change in net asset value from Fund share transaction...................... -- -- -- -- -- -- (0.31) -- Distributions: Dividends from net investment income.... (0.71) (0.69) (0.78) (0.77) (0.79) (0.84) (0.83) (0.81) Dividends in excess of net investment income................................. -- -- (0.03) -- -- -- -- -- Total from distributions................ (0.71) (0.69) (0.81) (0.77) (0.79) (0.84) (0.83) (0.81) ------- ------- ------- ------- ------- ------- ------- ------- Net asset value, end of year............ $ 6.53 $ 6.91 $ 7.96 $ 7.69 $ 7.32 $ 7.11 $ 8.02 $ 7.58 ======= ======= ======= ======= ======= ======= ======= ======= Market value, end of year............... $ 5.250 $ 7.190 $ 8.313 $ 8.125 $ 7.875 $ 7.125 $ 7.875 $ 7.500 ======= ======= ======= ======= ======= ======= ======= ======= Total investment return................. (18.89)% (5.45)% 13.31% 14.38% 22.72% 0.99% 16.55%(3) 25.70% ======= ======= ======= ======= ======= ======= ======= ======= Ratios to average net assets/supplemental data: Net assets, end of year (in 000's)...... $38,389 $40,567 $45,848 $43,495 $40,636 $38,678 $42,901 $30,024 Ratio of net investment income to average net assets..................... 10.76% 9.37% 10.08% 10.46% 10.32% 10.82% 11.17% 11.00% Ratio of operating expenses to average net assets............................. 1.02%(2) 1.02%(2) 1.06%(2) 1.10%(2) 1.14%(2) 0.95%(2) 1.09%(2) 1.65%(2) Portfolio turnover rate(1).............. 98.0% 62.4% 154.5% 172.2% 79.9% 50.6% 114.3% 40.6% YEAR YEAR ENDED ENDED 12/31/91 12/31/90 -------- -------- Operating performance: Net asset value, beginning of year...... $ 5.65 $ 7.38 ------- ------- Net investment income................... 0.84 0.86 Net realized and unrealized gain/(loss) on investments......................... 1.44 (1.72) ------- ------- Net increase/(decrease) in net assets resulting from investment operations... 2.28 (0.86) Change in net asset value from Fund share transaction...................... -- -- Distributions: Dividends from net investment income.... (0.83) (0.87) Dividends in excess of net investment income................................. -- -- Total from distributions................ (0.83) (0.87) ------- ------- Net asset value, end of year............ $ 7.10 $ 5.65 ======= ======= Market value, end of year............... $ 6.625 $ 4.750 ======= ======= Total investment return................. 58.61% (20.89)% ======= ======= Ratios to average net assets/supplemental data: Net assets, end of year (in 000's)...... $28,015 $22,283 Ratio of net investment income to average net assets..................... 12.59% 13.00% Ratio of operating expenses to average net assets............................. 2.46% 2.35% Portfolio turnover rate(1).............. 51.2% 34.9%
- --------------- * On May 29, 1998 the Fund entered into a new investment advisory agreement with INVESCO (NY), Inc. (now known as INVESCO, Inc.) due to the acquisition of Chancellor LGT Asset Management, Inc. by AMVESCAP PLC. (1) This rate is, in general, the percentage computed by taking the lesser of the cost of purchases or proceeds from the sales portfolio securities for a period and dividing it by the monthly average value of such securities during the year, excluding short term securities. (2) The annualized operating expense ratio excludes interest expense. The annualized ratios including interest expense were 3.13%, 2.98%, 3.06%, 3.19%, 3.52%, 2.80%, 2.63% and 2.06% for the years ended December 31, 1999, 1998, 1997, 1996, 1995, 1994, 1993, and 1992, respectively. (3) The total return for the year ended December 31, 1993, adjusted for the dilutive effect of the rights offering completed in August of 1993, is 21.07%. See Notes to Financial Statements. 9 11 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES CIM High Yield Securities (the "Fund") was organized under the laws of the Commonwealth of Massachusetts on September 11, 1987 and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end management investment company. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. Portfolio valuation: Fixed-income securities (other than short-term obligations, but including listed issues) are valued based on prices obtained by one or more independent pricing services approved by the Board of Trustees. Securities (other than fixed-income securities) for which the principal market is one or more securities exchanges are valued at the last reported sale price (or if there has been no current sale, at the closing bid price) on the primary exchange on which such securities are traded. If a securities exchange is not the principal market for a security, such security will, if market quotations are readily available, be valued at the closing bid price in the over-the-counter market (or the last sale price in the case of securities reported on the NASDAQ national market system for which any sales occurred during the day). Portfolio securities for which there are no such valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees. Short-term obligations with maturities of less than 60 days are valued at amortized cost which approximates market value. Securities transactions and investment income: Securities transactions are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including, where applicable, amortization of premium and accretion of discount on investments, is recorded on the accrual basis. Dividends and distributions to shareholders: The Fund distributes monthly to shareholders substantially all of its net investment income. Capital gains, if any, net of capital losses, are distributed annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Fund, timing differences and differing characterization of distributions made by the Fund. Federal income taxes: It is the Fund's policy to comply with the requirements of the Internal Revenue Service applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax should be payable by the Fund. Cash flow information: Cash, as used in the Statement of Cash Flows, is the amount reported in the Statement of Assets and Liabilities. The Fund invests in securities and distributes dividends from net investment income and net realized gains (which are either paid in cash or reinvested at the discretion of shareholders). These activities are reported in the Statement of Changes in Net Assets. Information on cash payments is presented in the Statement of Cash Flows. Accounting practices that do not affect 10 12 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) reporting activities on a cash basis include unrealized gain or loss on investment securities and accretion income recognized on investment securities. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Actual results could differ from those estimates. 2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY TRANSACTIONS The Fund has entered into an investment advisory agreement (the "Advisory Agreement") with INVESCO, Inc. (the "Adviser"). The Advisory Agreement provides that the Fund will pay the Adviser a fee, computed and payable monthly, at the annual rate of .50% of the Fund's average weekly net assets. INVESCO (NY), Inc. was the Fund's investment adviser until January 1, 2000, when through a series of corporate transactions, INVESCO (NY), Inc. was merged into INVESCO, Inc. No "assignment" of the Advisory Agreement resulted from these transactions. The Fund has also entered into an Administration and Support Agreement with PFPC Inc. (formerly First Data Investor Services Group, Inc.) ("PFPC"), to provide all administrative services to the Fund other than those related to the investment decisions. PFPC is paid a fee computed and payable monthly at an annual rate of .09% of the Fund's average weekly net assets, but no less than $40,000 per annum. The Fund pays each Trustee not affiliated with the Adviser $6,000 per year plus $1,000 per meeting and committee meeting attended, and reimburses each such Trustee for travel and out-of-pocket expenses relating to their attendance at such meetings. The Fund pays the actual out-of-pocket expenses of the Trustees affiliated with the Adviser relating to their attendance at such meetings. Boston Safe Deposit & Trust Company, an indirect wholly-owned subsidiary of Mellon Bank Corporation, serves as the Fund's custodian. PFPC serves as the Fund's shareholder servicing agent (transfer agent). 3. PURCHASE AND SALES OF SECURITIES Cost of purchases and proceeds from sales of investment securities, excluding short-term investments, during the year ended December 31, 1999, amounted to $49,343,438 and $48,559,659, respectively. At December 31, 1999, aggregate gross unrealized appreciation for all securities (other than restricted securities), in which there is an excess of value over tax cost amounted to $807,019, and the aggregate gross unrealized depreciation for all securities (other than restricted securities) in which there is an excess of tax cost over value amounted to $4,718,599. At December 31, 1999, aggregate gross unrealized appreciation for restricted securities in which there is an excess of value over tax cost amounted to $645,376, and the aggregate gross unrealized depreciation for restricted securities in which there is an excess of tax cost over value amounted to $357,890. 11 13 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. FUND SHARES The Fund has one class of shares of beneficial interest, par value $0.01 per share, of which an unlimited number of shares are authorized. Transactions in shares of beneficial interest were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------- ------------------- SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Issued as reinvestment of dividends................. 10,529 $72,647 105,562 $809,532 ------ ------- ------- -------- Net increase........................................ 10,529 $72,647 105,562 $809,532 ====== ======= ======= ========
5. NOTES PAYABLE The Fund currently has a $12.5 million ("commitment amount") line of credit provided by BankBoston, N.A. (the "Bank") under an Amended Credit Agreement (the "Agreement") dated September 18, 1992, primarily to leverage its investment portfolio. Under this Agreement, the Fund may borrow up to the lesser of $12.5 million or 25% of its gross assets. Interest is payable at either the Bank's Base Rate or its applicable Money Market Rate, as selected by the Fund from time to time in its loan requests. The Fund is charged a commitment fee of one quarter of one percent per annum of the average daily unused commitment amount. The Agreement requires, among other provisions, that the percentage obtained by dividing total indebtedness for money borrowed by total assets of the Fund shall not exceed 30%. At December 31, 1999, the Fund had borrowings of $12,500,000 outstanding under this Agreement. During the year ended December 31, 1999, the Fund had an average outstanding daily balance of $12,500,000 with interest rates ranging from 6.1875% to 6.6250% and average debt per share of $2.13. For the year ended December 31, 1999, interest expense totaled $832,446 under this Agreement. 6. CAPITAL LOSS CARRYFORWARD Capital loss carryforwards are available to offset future realized capital gains. To the extent that these carryforwards are used to offset future capital gains, it is probable that the amount which is offset will not be distributed to shareholders. At December 31, 1999, the Fund had available for Federal tax purposes unused capital loss carryforwards of $1,552,171, $330,065, $679,423, $253,172, $2,499,736 and $133,391 expiring in 2000, 2002, 2003, 2004, 2006, and 2007, respectively. 7. CONCENTRATION OF RISK The Fund invests in securities offering high current income which generally will be in the lower rating categories of recognized ratings agencies (below investment-grade bonds). These securities generally involve more credit risk than securities in the higher rating categories. In addition, the trading market for high yield securities may be relatively less liquid than the market for higher-rated securities. The Fund's use of leverage also increases exposure to capital risk. 12 14 CIM HIGH YIELD SECURITIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. PORTFOLIO MANAGER CHANGES (UNAUDITED) From September, 1998 through April, 1999 the Portfolio Manager was Cheng-Hock Lau of INVESCO, Inc. In April, 1999, John Fenn became the Portfolio Manager for the Fund. Prior to joining INVESCO, Inc., Mr. Fenn was a Senior Vice-President and Portfolio Manager for General Electric Capital Corporation. 9. QUARTERLY RESULTS OF OPERATIONS
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 ----- ----- ----- ----- ----- ----- ----- ----- 1999 -- QUARTER ENDED March 31, 1999.......... $1,415 $0.24 $1,109 $0.19 $(1,307) $(0.22) $ (198) $(0.03) June 30, 1999........... 1,330 0.23 1,036 0.18 906 0.16 1,942 0.34 September 30, 1999...... 1,341 0.23 1,036 0.18 (3,500) (0.60) (2,464) (0.42) December 31, 1999....... 1,394 0.24 1,065 0.18 1,578 0.27 2,643 0.45 1998 -- QUARTER ENDED March 31, 1998.......... $1,580 $0.27 $1,235 $0.21 $ 1,062 $ 0.18 $ 2,297 $ 0.39 June 30, 1998........... 1,293 0.22 951 0.16 (1,462) (0.25) (511) (0.09) September 30, 1998...... 1,419 0.24 1,075 0.18 (3,239) (0.56) (2,164) (0.37) December 31, 1998....... 1,176 0.20 887 0.15 (2,600) (0.44) (1,713) (0.29)
13 15 INDEPENDENT AUDITOR'S REPORT To the Shareholders and Board of Trustee of CIM High Yield Securities: We have audited the accompanying statement of assets and liabilities, including the statement of investments of CIM High Yield Securities, as of December 31, 1999 and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the years in the two year period then ended and financial highlights for each of the years in the ten year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1999 by correspondence with the custodian. An audit also includes assessing the accounting principles used, and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of CIM High Yield Securities as of December 31, 1999, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the years in the two year period then ended and financial highlights for each of the years in the ten year period then ended, in conformity with generally accepted accounting principles. /s/ KPG LLP Philadelphia, Pennsylvania February 4, 2000 14 16 To Shareholders of CIM High Yield Securities (the "Fund") About the Fund's Dividend Reinvestment Plan Pursuant to the Fund's Dividend Reinvestment Plan (the "Plan"), shareholders of the Fund ("Shareholders") whose shares are registered in their own name will automatically have all dividends and other distributions reinvested in additional shares of the Fund by PFPC (the "Agent") as agent under the Plan, unless such shareholder terminates participation in the Plan as provided below. Shareholders whose shares are registered in the name of a broker-dealer or other nominee (i.e., in "Street Name") will not participate in the Plan unless the requisite election is made by the broker-dealer and only if such a service is provided by the broker-dealer. Shareholders who own Fund shares registered in Street Name and who desire that their distributions be reinvested should consult their broker-dealers. Shareholders who do not participate in the Plan will receive all distributions by check mailed directly to the shareholder by the Agent. Whenever the Fund declares a capital gains distribution or an income dividend payable in shares or cash, participating Shareholders will take such distribution or dividend entirely in shares and the Agent shall automatically receive such shares, including fractions, for the shareholder's account, except in the circumstances described in the paragraph below. Whenever the market price of the shares on the record date for the dividend or distribution is equal to or exceeds their net asset value, participants will be issued shares of the Fund at the higher of net asset value or 95% of the market price. This discount reflects savings in underwriting or other costs which the Fund would otherwise be required to incur to raise additional capital. If net asset value exceeds the market price of Fund shares at such time or if the Fund should declare a dividend or other distribution payable only in cash, the Agent will buy Fund shares in the open market, on the American Stock Exchange (the "Exchange") or elsewhere, for the Shareholder's account. If before the Agent has completed its purchases, the market price exceeds the net asset value of the Fund's shares, the average per share purchase price paid by the Agent may exceed the net asset value of the Fund's shares, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. For all purposes of the Plan: (a) the market price of the Fund shares on a particular date shall be the last sales price on the Exchange on the close of the previous trading day or, if there is no sale on the Exchange on that date, then the mean between the closing bid and asked quotations for such stock on the Exchange on such date and (b) net asset value per Fund shares on a particular date shall be as determined by or on behalf of the Fund. The Fund will not charge participants for reinvesting dividends or distributions. The Agent's service fee for handling capital gains distributions or income dividends will be paid by the Fund. There will be no brokerage commissions charged with respect to shares issued directly by the Fund. However, Shareholders will be charged a pro rata share of brokerage commissions incurred by the Agent on all open market purchases. In addition, Shareholders requesting certificates or redeeming shares issued under the Plan will be charged a $5.00 service fee by the Agent. The automatic reinvestment of dividends and capital gains distributions does not relieve Plan participants of any income tax that may be payable on the dividends or capital gains distributions. Distributions of net investment income and net realized capital gains, if any, will be taxable, whether received in cash or reinvested in shares under the Plan. When distributions are received in the form of shares issued by the Fund (as opposed to purchased on the open market) under such Plan, however, the amount of the distribution deemed to have been received by participating Shareholders is the fair 15 17 market value of the shares received rather than the amount of cash which would otherwise have been received. In such case, participating Shareholders will have a basis for federal income tax purposes in each share received from the Fund equal to the fair market value of such share on the payment date. A Shareholder may terminate participation in the Plan at any time by notifying the Agent in writing. Such termination will become effective immediately if notice is received by the Agent not less than 10 business days before the next following dividend or distribution record date. Otherwise, the termination will be effective, with respect to any subsequent dividend or distributions, on the first trading day after the dividend paid for such record date has been credited to the Shareholder's account. Upon any termination the Agent will, upon the request of the Shareholder, cause a certificate or certificates for the full shares held for the Shareholder under the Plan and cash adjustment for any fraction to be delivered to her or him. If, upon termination, the Shareholder requests a certificate for shares held in the account, a $5.00 service fee will be charged to the Shareholder by the Agent. If the Shareholder elects by notice to the Agent in writing in advance of such termination to have the Agent sell part or all of her or his shares and remit the proceeds to her or him, the Agent is authorized to deduct a $5.00 fee plus brokerage commissions for this transaction from the proceeds. The Fund reserves the right to amend or terminate the Plan as applied to any dividend or distribution for which the record date is at least 90 days after written notice of the change is sent to the participants in the Plan. Information concerning the Plan may be obtained by calling PFPC Inc. at 1-800-331-1710, or by writing the Fund, c/o PFPC Inc., 101 Federal Street, Boston, MA 02110. 16 18 CIM HIGH YIELD SECURITIES SHAREHOLDER VOTING RESULTS At the Annual Meeting of Shareholders, held on October 6, 1999, the following matters were voted on and approved: PROPOSAL NO. 1 The election of the following Trustees:
TRUSTEE FOR WITHHELD UNVOTED ------- --- -------- ------- Dr. Donald Ratajczak 5,100,404* 68,428 709,492 Robert G. Wade 5,072,094** 96,738 709,492
*Represents 86.77% of the outstanding shares of the Fund. **Represents 86.28% of the outstanding shares of the Fund. PROPOSAL NO. 2 To ratify the election of KPMG LLP as the Fund's independent auditors:
FOR AGAINST ABSTAINED UNVOTED --- ------- --------- ------- 5,075,142*** 36,824 56,865 709,493
***Represents 86.37% of the outstanding shares of the Fund. 17 19 CIM - -------------------------------------------------------------------------------- HIGH YIELD SECURITIES ANNUAL REPORT DECEMBER 31, 1999 This report is sent to shareholders of CIM High Yield Securities for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in the report. For Additional Information about CIM High Yield Securities Call 1-800-331-1710 CIM 3192 2/00 -----END PRIVACY-ENHANCED MESSAGE-----