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
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CIM High Yield Securities
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(Exact name of registrant as specified in charter)
400 W. Market Street, Suite 3300
Louisville, KY 40202
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(Address of principal executive offices) (Zip code)
Cindy Cameron
INVESCO Institutional, (N.A.) Inc.
400 W. Market Street, Suite 3300
Louisville, KY 40202
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(Name and address of agent for service)
Registrant's telephone number, including area code: 502-561-3210
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Date of fiscal year end: December 31, 2004
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Date of reporting period: June 30, 2004
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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
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1,985,195
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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
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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
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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
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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
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Month #2 N/A N/A N/A N/A
2/1/04-2/29/04
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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
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Month #6 N/A N/A N/A N/A
6/1/04-6/30/04
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Total N/A N/A N/A N/A
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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
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By (Signature and Title)* /s/ George Baumann
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George Baumann, President
(principal executive officer)
Date September 2, 2004
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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
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By (Signature and Title)* /s/ Cindy Cameron
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Cindy Cameron, Treasurer
(principal financial officer)
Date September 2, 2004
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* Print the name and title of each signing officer under his or her signature.