<PAGE>
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DEAR SHAREHOLDER:
We are pleased to provide this report for INA Investment Securities, Inc. cov-
ering the quarter ended March 31, 1996.
MARKET ADJUSTS TO STRENGTHENING ECONOMY IN FIRST QUARTER
The first quarter of 1996 opened with a continuation of the 1995 rally, ulti-
mately bringing the benchmark 30-year Treasury to under 6%. Investors reacted
positively -- perhaps too positively -- to signs of a weakening economy and
potential further easing by the Federal Reserve (Fed). However, weather-re-
lated dislocations soon reversed themselves, and investors were whipsawed by
unexpectedly strong economic data and sudden uncertainty concerning the future
direction of Fed policy. The 30-year Treasury moved abruptly to nearly 6.625%.
The bond market, as measured by the Lehman Brothers Government/Corporate Bond
Index, returned -2.34% for the quarter. Corporate and high yield bond sectors,
driven by strong investor demand, performed relatively well.
FUND PERFORMANCE
Performance compared favorably with the market index. The Fund returned -2.28%
after deduction of expenses and reinvestment of dividends, based on net asset
value of underlying Fund assets and-1.72% based on the market value of shares
listed on the New York Stock Exchange. Once again this quarter, the Fund was
well positioned to benefit from the strong performance of the corporate sec-
tor.
PORTFOLIO ACTIVITY
The portfolio remains fully invested. On March 31, 1996, corporate and foreign
bonds were approximately 67.0% of portfolio holdings, U.S. Government/Agency
securities 30.6%, and cash and other assets 2.4%. Per-share net asset value
was $18.73, down from $19.50 on December 31, 1995. A dividend of $0.33 was de-
clared during the first quarter.
OUTLOOK
The market will continue to adjust to signs of a strengthening economy, and to
the possibility that the Fed will reverse its course and shift into a tighten-
ing mode. Any indication of inflation will also spark a quick negative reac-
tion among investors. Trading will remain choppy over the next quarter as eco-
nomic data is closely scrutinized.
STRATEGY
The Fund will remain committed to a strategy of overweighting corporate bonds,
including high yield bonds, in order to maximize yield advantage over Treasur-
ies. Near term technicals and fundamentals remain strong for these sectors.
Sincerely,
/s/ R. Bruce Albro
R. Bruce Albro, Chairman
INA Investment Securities, Inc.
<PAGE>
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FINANCIAL SUMMARY
For the Three Months Ended March 31 (Unaudited)
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net investment income $ 1,601 $1,567
Net realized and unrealized gain (loss) (3,706) 2,529
Per share:
Net investment income $ 0.33 $ 0.33
Dividends from net investment income $ 0.33 $ 0.33
Net asset value at end of period $ 18.73 $18.08
</TABLE>
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME PER SHARE
For the three months ended March 31 (Unaudited)
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
$0.33 $0.33 $0.33 $0.36 $0.37
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996 (Unaudited)
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
ASSETS:
Investments at market value
(Cost -- $88,353,689) $88,492
Interest receivable 1,827
Investment for deferred compensation
(Cost -- $56,789) 69
Total assets 90,388
-------
LIABILITIES:
Distributions payable 392
Deferred directors' fees payable 116
Accrued advisory fees payable 43
Other accrued expenses (including $11,508 due to affiliate) 99
-------
Total liabilities 650
-------
NET ASSETS $89,738
=======
NET ASSET VALUE PER SHARE
Applicable to 4,792,215 shares of $.10 par value capital stock
outstanding (12,000,000 shares authorized) $18.73
======
</TABLE>
<PAGE>
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STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
For the Three Months Ended March 31, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 1,798
EXPENSES:
Investment advisory fees $ 120
Transfer agent fees 21
Custodian fees 19
Directors' fees 16
Administrative services 12
Shareholder reports 11
State taxes 7
Auditing & legal fees 6
Other 5 217
----- --------
NET INVESTMENT INCOME 1,581
NET REALIZED GAIN ON INVESTMENTS 336
UNREALIZED DEPRECIATION OF INVESTMENTS (4,042)
--------
NET DECREASE IN NET ASSETS FROM OPERATIONS (2,125)
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (1,581)
--------
NET DECREASE IN NET ASSETS (3,706)
NET ASSETS:
Beginning of period 93,444
--------
End of period (includes overdistributed net investment
income of $15,499) $89,738
========
</TABLE>
<PAGE>
INA Investment Securities is a closed-end, diversified management investment
company that invests primarily in debt securities. The investment adviser is
CIGNA Investments, Inc., Hartford, Connecticut 06152.
Shareholders may elect to have dividends automatically reinvested in additional
shares of INA Investment Securities by participating in the Automatic Dividend
Investment Plan. For a brochure describing this Plan or general inquiries about
your account, contact State Street Bank and Trust Company, Stock Transfer De-
partment, P.O. Box 8200, Boston, Massachusetts, 02266-8200, or call toll-free
1.800.426.5523.
<PAGE>
[LOGO OF CIGNA APPEARS HERE]
INA Investment Securities, Inc.
P. O. Box 13856
Philadelphia, PA 19101
[LOGO OF CIGNA APPEARS HERE]
INA Investment Securities, Inc.
First Quarter Report
March 31, 1996
