<PAGE>
- --------------------------------------------------------------------------------
1
DEAR SHAREHOLDER:
We are pleased to provide this report for INA Investment Securities, Inc.
covering the six months ended June 30, 1997.
THE MARKET ENVIRONMENT
The second quarter of 1997 saw a reversal of market psychology, as economic
growth eased from the heady first quarter pace and inflation remained benign.
Heartened by more modest growth and tame inflation expected in the later stages
of drawn-out business cycle, investors returned to the market in force.
The benchmark 30-year Treasury bond rallied from 7.10% to 6.78% by the quarter's
end. With the Federal Reserve (Fed) at last temporarily on the sidelines, even
the two-year Treasury was able to rally from 6.48% to 6.08%. There has been
little market concern that the Fed would further tighten monetary conditions.
The bond market, as measured by the Lehman Brothers Government/Corporate Bong
Index, returned 3.64% during the second quarter and 2.74% year-to-date.
FUND ACTIVITY
The portfolio remains fully invested. On June 30, 1997, corporate and foreign
bonds were approximately 69.8% of portfolio holdings, U.S. Government/agency
securities 24.5%, and cash and other assets 5.7%. Per share net asset value was
$18.67, up from $18.30 on March 31. A dividend of $.31 was declared during the
quarter.
FUND PERFORMANCE
After deduction of expenses and reinvestment of dividends, INA Investment
Securities, Inc. returned 3.74% and 2.95%, respectively, for the quarter and
year-to-date, based on net asset value of its underlying assets.
The favorable result compared with the Index (which does not deduct expenses
from its performance) was primarily due to the Company's substantial weighting
in non-Treasury holdings, including high yield securities. The Company returned
1.93% and 2.28%, respectively, for the quarter and year-to-date based on the
underlying market value of the shares listed on the New York Stock Exchange.
OUTLOOK
The heated pace of the economy during the first quarter prompted a preemptive
tightening move by the Fed. Growth cooled considerably as we moved into the
second quarter. While the Fed is still concerned about the tight labor market
and possible wage inflation, the current slowdown as allowed a "wait-and-see"
approach.
The current expansion has been remarkable for its duration and relative lack of
inflationary pressures. To a large degree, current market levels seem to have
fully factored in this good news. This could leave the market vulnerable to any
setbacks resulting from stronger growth or accelerating inflation.
Corporate bonds have performed well in this environment of relatively strong
growth and solid corporate earnings. The Company remains overweighted in
non-Treasury securities to capture their yield advantage, while maintaining a
maximum weighting in high-yield securities.
Sincerely,
/s/ R. Bruce Albro
R. Bruce Albro, Chairman of the Board and
President
INA INVESTMENT SECURITIES, INC.
<PAGE>
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INA INVESTMENT SECURITIES, INC. INVESTMENTS IN SECURITIES June 30, 1997
(Unaudited) 2
MARKET
PRINCIPAL VALUE
(000) (000)
- ---------------------------------------------------------------
LONG-TERM BONDS - 94.3%
CONSUMER AND RETAIL - 2.7%
Dayton Hudson Corp., 9.75%, 2002 $ 500 $ 558
Herff Jones, Inc., 11.0%, 2005 ( 144A
Security acquired August, 1995 for
$300,000)* 300 324
Penney (J.C.) Inc., 7.4%, 2037 1,000 1,029
Ralphs Grocery Co., 10.45%, 2004 500 535
----------
2,446
----------
CONSUMER NON-CYCLICAL - 2.2%
MedPartners, Inc., 7.375%, 2006 1,000 1,002
Tenet Healthcare Corp., 7.875%, 2003 1,000 1,003
----------
2,005
----------
ENTERTAINMENT AND COMMUNICATIONS - 10.6%
Casino America, Inc.,12.5%, 2003 500 516
Century Communications Corp., 9.5%, 2005 500 513
Disney (Walt) Co., 1.5%, 1999 2,000 1,794
Rogers Communications, Inc.,
10.875%, 2004 500 524
TKR Cable, Inc., 10.5%, 2007 500 551
Tele-Communications, Inc., 9.25%, 2002 500 537
360 Communications Co., 7.125%, 2003 1,400 1,392
Time Warner Entertainment Co.,
10.15%, 2012 1,750 2,123
Total Access Communications Public Co., Ltd.,
7.625%, 2001 (144A security acquired
Oct., 1996 for $499,855)* 500 489
Vanguard Cellular System, Inc., 9.375,
2006 500 505
Viacom International, Inc., 9.125%, 1999 500 513
----------
9,457
----------
FINANCIAL - 17.0%
Abbey National PLC, 7.35%, 2049 750 752
Banco Nacional de Comercio Exterior, S.N.C.
7.25%, 2004 500 466
Case Equipment Loan Trust 1996-A,
5.5%, 2003 1,433 1,431
Corporacion Andina De Fome,
7.1%, 2003 200 201
First Union National Bank of Florida,
6.18%, 2036 1,000 946
Fleet Mortgage Group, Inc., 6.5%, 2000 1,000 997
Heller Financial, Inc., 6.56%, 1999 1,000 1,004
Inter-American Development Bank,
8.875%, 2009 $ 4,000 $ 4,640
Merrill Lynch and Co. Inc., 7.26%, 2002 800 806
Middletown Trust, 10.875%, 1998 265 273
The Money Store Home Equity Loan
Trust, 6.65%, 2017 929 910
Structured Coupon Receipts, (Stripped-
Interest Only),
10.203%**, 1997 (144A security
acquired June 1993, amortized
cost $4,644)* 5,314 3
United Post Office Investments,
7.75%, 1999 1,000 1,020
Western National Corp., 7.125%, 2004 1,000 998
World Financial Properties Tower,
6.95%, 2013 (144A security acquired
Nov. 1996 for $750,999)* 750 736
----------
15,183
----------
FOOD AND BEVERAGE - 3.1%
Bass America, Inc., 8.125%, 2002 1,500 1,584
ConAgra, Inc., 9.75%, 2021 1,000 1,209
----------
2,793
----------
FOREIGN GOVERNMENT - 2.0%
Mexico (United Mexican States),
7.875%, 2001 (144A security acquired
July, 1996 for $995,000)* 1,000 1,002
Panama, (Republic of), 7.875%, 2002
(144A security acquired Feb., 1997 for
$754,725)* 750 745
----------
1,747
----------
INDUSTRIAL -11.3%
AK Steel Corp., 9.125%, 2006 500 510
Air Products & Chemicals, Inc., 8.5%,
2006 2,000 2,152
Domtar, Inc., 8.75%, 2006 400 414
Fisher Scientific International, Inc.,
7.125%, 2005 500 490
ICF Kaiser International, Inc., 13.0%,
2003 500 505
LaRoche Industries, Inc., 13.0%, 2004 500 553
Newport News Shipbuilding and Dry
Dock Co., 8.625%, 2006 500 516
NOVA Chemicals Ltd., 7.0%, 2026 1,000 1,005
Smurfit Capital Funding PLC, 6.75%, 2005 1,000 973
Tjiwi Kimia International Finance,
13.25%, 2001 500 568
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
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INA INVESTMENT SECURITIES, INC. INVESTMENTS IN SECURITIES June 30, 1997
(Unaudited) (Continued) 3
MARKET
PRINCIPAL VALUE
(000) (000)
- ---------------------------------------------------------------
Xerox Corp., 5.9%, 2037 $ 1,000 $ 1,005
Waste Management, Inc., Zero Coupon,
(Lyon), 2012 (Annual Put) 2,250 897
West Point Stevens, Inc., 9.375%, 2005 500 523
----------
10,111
----------
OIL & GAS - 8.9%
Ashland Oil, Inc., 11.125%, 2017 2,000 2,135
Gulf Canada Resources Ltd., 8.35%, 2006 1,000 1,052
Imexsa Export Trust, 10.125%, 2003
(144A security acquired May, 1996
for $750,000)* 750 789
Louis Dreyfus National Gas Corp.,
9.25%, 2004 1,000 1,080
Sonat, Inc.,
9.5%, 1999 1,000 1,053
9.0%, 2001 250 266
Transcontinental Gas Pipe Line Corp.,
9.125%, 2017 1,475 1,579
----------
7,954
----------
TRANSPORTATION - 5.0%
CSX Corp., 7.25%,
2027 (144A security acquired May, 1997
for $1,795,518)* 1,800 1,878
Delta Air Lines, Inc., 10.14%, 2012 1,000 1,171
Hertz Corp., 7.0%, 2003 500 499
Japan Air Lines Co. Ltd., 11.0%, 1997 390 398
Norfolk Southern Corp., 7.05%, 2037 500 507
----------
4,453
----------
UTILITIES - 7.0%
Big Rivers Electric Corp., 10.7%, 2017 1,500 1,592
Cajun Electric Power Co-op.,
8.92%, 2019 500 542
9.52%, 2019 1,000 1,068
Chesapeake Energy Corp., 8.5%, 2012 500 466
El Paso Electric Co., 7.25%, 1999 500 501
Endesa-Chile Overseas Co., 7.2%, 2006 1,000 994
Public Service Company of Colorado,
8.125%, 2004 290 305
Salton Sea Funding Corp., 7.02%, 2000 815 825
----------
6,293
----------
U.S. GOVERNMENT & AGENCIES - 24.5%
Federal Farm Credit Banks, 6.2%, 2008 $ 350 $ 330
Federal National Mortgage Assoc.,
6.5%, 2008 1,017 1,003
6.5%, 2009 328 324
United States Treasury Bonds,
10.75%, 2005 1,370 1,728
12.0%, 2013 1,085 1,527
11.25%, 2015 2,565 3,725
7.125%, 2023 2,000 2,060
6.625%, 2027 2,775 2,715
United States Treasury Notes,
7.125%, 1999 10 10
7.5%, 1999 1,000 1,028
7.75%, 1999 415 430
5.5%, 2000 1,300 1,267
6.375%, 2000 1,200 1,204
6.5%, 2001 1,845 1,855
6.375%, 2001 600 600
6.25%, 2007 2,000 1,957
6.625%, 2007 140 141
----------
21,904
----------
TOTAL LONG-TERM BONDS (Cost $82,908,679) 84,346
----------
PREFERRED STOCK - 0.8%
(Cost $667,500)
Morgan Stanley Group, Inc. 15 703
----------
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
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INA INVESTMENT SECURITIES, INC. INVESTMENTS IN SECURITIES June 30, 1997
(Unaudited) (Continued) 4
MARKET
PRINCIPAL VALUE
(000) (000)
- ---------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 5.2%
COMMERCIAL PAPER - 5.2%
Motorola, Inc., 5.52%, 7/10/97 $ 2,408 $ 2,405
PACCAR Financial Corp., 5.55%, 7/16/97 435 434
PepsiCo, Inc., 5.55%, 7/21/97 882 879
Southern New England Telecomm. Corp.,
5.58%, 7/7/97 947 946
----------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $4,664,071) 4,664
----------
TOTAL INVESTMENTS IN SECURITIES - 100.3%
(Total Cost $88,240,250) 89,713
Liabilities Less Cash and Other Assets - (.3%) (228)
----------
NET ASSETS - 100.0%
(equivalent to $18.67 per share based on
4,792,215 shares outstanding) $89,485
==========
* Indicates restricted security; the aggregate value of restricted securities
is $5,965,755 (aggregate cost $5,849,742) which is approximately 6.7% of net
assets. Valuations have been furnished by brokers trading in the securities
or a pricing service for all restricted securities.
** Effective yield as of purchase date.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION (UNAUDITED)
June 30, 1997
QUALITY RATINGS* OF MARKET % OF
LONG-TERM BONDS VALUE MARKET
AND PREFERRED STOCK (000) VALUE
- ---------------------------------------------------------------
Aaa/AAA $33,193 39.0%
Aa/AA 2,997 3.5%
A/A 15,522 18.2%
Baa/BBB 20,218 23.8%
Ba/BB 10,175 12.0%
B/B 2,944 3.5%
========= ==========
$85,049 100.0%
========= ==========
*The higher of Moody's or Standard & Poor Ratings.
- --------------------------------------------------------------------------------
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
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INA INVESTMENT SECURITIES, INC. 5
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (Unaudited)
(IN THOUSANDS)
--------------
ASSETS:
Investments at market value
(Cost - $88,240,250) $ 89,713
Cash 49
Receivable for investments sold 777
Interest receivable 1,725
Investment for deferred compensation plan 102
(Cost - $87,463)
Other 4
------------
TOTAL ASSETS 92,370
------------
LIABILITIES:
Payable for investments purchased 2,665
Deferred directors' fees payable 102
Accrued advisory fees payable 42
Other accrued expenses (including $24,601
due to affiliate) 76
------------
TOTAL LIABILITIES 2,885
------------
NET ASSETS (equivalent to $18.67 per share
based on 4,792,215 shares outstanding;
12,000,000 shares of $.10 par value
authorized) $ 89,485
============
COMPONENTS OF NET ASSETS:
Paid-in capital $ 89,822
Overdistributed net investment income (52)
Unrealized appreciation of investments 1,488
Accumulated net realized loss (1,773)
------------
NET ASSETS $ 89,485
============
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
(IN THOUSANDS)
INVESTMENT INCOME
INCOME:
Interest $ 3,384
EXPENSES:
Investment advisory fees $ 232
Custodian fees 37
Administrative services 32
Transfer agent fees 27
Shareholder reports 26
Auditing and legal fees 20
Directors' fees 18
State taxes 13
Other 11 416
-------- -----------
NET INVESTMENT INCOME 2,968
-----------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Net realized gain from investments 209
Unrealized depreciation of investments (586)
-----------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS (377)
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,591
===========
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
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INA INVESTMENT SECURITIES, INC. 6
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1997 1996
------------- --------------
(IN THOUSANDS)
-----------------------------
OPERATIONS:
Net investment income $ 2,968 $ 6,099
Net realized gain (loss) from
investments 209 (1,378)
Unrealized depreciation on
investments (586) (2,118)
------------- --------------
Net increase in net assets
from operations 2,591 2,603
------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($.62
and $1.29 per share, respectively) (2,971) (6,182)
------------- --------------
NET DECREASE IN NET ASSETS (380) (3,579)
NET ASSETS:
Beginning of period 89,865 93,444
------------- --------------
End of period (including overdstributed
net investment income of $52,527
and $48,985, respectively) $ 89,485 $ 89,865
============= ==============
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
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INA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 7
1. SIGNIFICANT ACCOUNTING POLICIES. INA Investment Securities, Inc. (the
"Company") is registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end management investment company. The fund's objective
is to generate income and obtain capital appreciation by investing at least 85%
of its total assets in investment grade debt securities and preferred stocks.
The perparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Company in the
preparation of its financial statements.
A. SECURITY VALUATION - Debt securities traded in the over-the-counter market,
including listed securities whose primary markets are believed to be
over-the-counter, are valued on the basis of valuations furnished by brokers
trading in the securities or a pricing service, which determines valuations for
normal, institutional-size trading units of such securities using market
information, transactions for comparable securities and various relationships
between securities which are generally recognized by institutional traders.
Short-term investments with remaining maturities of up to and including 60 days
are valued at amortized cost, which approximates market. Short-term investments
that mature in more than 60 days are valued at current market quotations. Other
securities and assets of the Company are appraised at fair value as determined
in good faith by, or under the authority of, the Company's Board of Directors.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the trade date (date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis. The Company does not amortize premiums or
discounts for book purposes, except for original issue discounts which are
amortized over the life of the respective securities. Securities gains or losses
are determined on the basis of identified cost.
C. FEDERAL TAXES - It is the Company's policy to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income or capital gains, if any,
to its shareholders. Therefore, no Federal income or excise taxes on realized
income have been accrued.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions are
recorded by the Company on the ex-dividend date. Payments in excess of financial
accounting income due to differences between financial and tax accounting, to
meet the distribution requirements for tax basis income, are deducted from
paid-in capital when such differences are determined to be permanent.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES. Investment
advisory fees were paid or accrued to CIGNA Investments, Inc. (CII), certain
officers and directors of which are affiliated with the Company. Such advisory
fees are based on an annual rate of 0.55% of the first $75 million of average
weekly net asset value and 0.4% thereafter.
The Company reimburses CII for a portion of the compensation and related
expenses of the Company's Treasurer and Secretary and certain persons who assist
in carrying out the responsibilities of those offices. For the six months ended
June 30, 1997, the Company paid or accrued $32,479.
<PAGE>
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INA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Continued) 8
CII is an indirect, wholly-owned subsidiary of CIGNA Corporation.
3. DIRECTORS' FEES. Directors' fees represent remuneration paid or accrued to
directors who are not employees of CIGNA Corporation or any of its affiliates.
Directors may elect to defer receipt of all or a portion of their fees which are
invested in mutual fund shares in accordance with a deferred compensation plan.
4. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities for
the six months ended June 30, 1997 were as follows (excluding short-term
obligations):
PROCEEDS
COST OF FROM
SECURITIES SECURITIES
PURCHASED SOLD
--------------------- ---------------------
Bonds $ 14,332,458 $ 15,269,559
U.S. Government Obligations 28,003,860 25,666,178
--------------------- ---------------------
$ 42,336,318 $ 40,935,737
===================== =====================
As of June 30, 1997, the cost of securities for Federal Income tax purposes was
$88,327,015. At June 30, 1997, unrealized appreciation for Federal income tax
purposes aggregated $1,386,044 of which $1,984,308 related to appreciated
securities and $598,264 related to depreciated securities.
5. CAPITAL LOSS CARRYOVER. At December 31, 1996, the Company had a capital
loss carryover for Federal income tax purposes of $1,947,232 ($306,433 expires
in 2002 and $1,640,799 expires in 2004).
<PAGE>
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INA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Continued) 9
<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS. The following table includes data, ratios and
supplemental data for a share outstanding throughout each period and other
performance information:
- --------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
SIX MOS.
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.75 $ 19.50 $ 17.56 $ 19.72 $ 18.75 $ 18.85
INCOME FROM INVESTMENT OPERATIONS
Net investment income (1) 0.62 1.27 1.32 1.39 1.39 1.49
Net realized and unrealized gain (loss) (0.08) (0.73) 1.94 (2.00) 1.01 (0.11)
------ ------ ----- ------ ----- ------
TOTAL FROM INVESTMENT OPERATIONS 0.54 0.54 3.26 (0.61) 2.40 1.38
----- ----- ----- ------ ----- ----
LESS DISTRIBUTIONS:
From net investment income (0.62) (1.29) (1.32) (1.35) (1.43) (1.48)
From capital gains - - - (0.20) - -
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.62) (1.29) (1.32) (1.55) (1.43) (1.48)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 18.67 $ 18.75 $ 19.50 $ 17.56 $ 19.72 $ 18.75
====== ====== ====== ====== ======= ======
MARKET VALUE, END OF PERIOD $ 15.88 $ 16.13 $ 17.38 $ 15.25 $ 18.25 $ 17.25
====== ====== ====== ====== ======= ======
TOTAL INVESTMENT RETURN:
Per share market value 2.28% 0.28% 23.07% (8.34)% 14.21% 5.39%
Per share net asset value (2) 2.95% 3.01% 19.17% (3.13)% 13.03% 7.64%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 89,485 $ 89,865 $ 93,444 $ 84,131 $ 94,482 $ 89,839
Ratio of operating expenses to average net assets 0.47% 0.91% 1.00% 0.96% 0.96% 0.90%
Ratio of net investment income to average net assets 3.33% 6.80% 7.10% 7.42% 7.03% 7.96%
Portfolio turnover 49% 89% 158% 86% 159% 41%
</TABLE>
(1) Net investment income per share has been calculated in accordance with SEC
requirements, with the exception that end of year accumulated
undistributed/(overdistributed) net investment income has not been adjusted
to reflect current year permanent differences between financial and tax
accounting.
(2) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Company
during each period, and assumes distributions were reinvested at net asset
value. These percentages do not correspond with the performance of a
shareholder's investment in the Company based on market value since the
relationship between the market price of the stock and net asset value
varied during each period.
<PAGE>
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INA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Continued) 10
<TABLE>
<CAPTION>
7. QUARTERLY RESULTS (UNAUDITED). The following is a summary of quarterly results of operations (in thousands except for per share
amounts):
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
INVESTMENT INCOME NET INVESTMENT INCOME ON INVESTMENTS INCR. (DECR.) IN NET ASSETS
PERIOD ENDED TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1995 $1,782 $.37 $1,567 $.33 $2,529 $.53 $2,515 $.52
June 30, 1995 1,821 .38 1,600 .33 3,603 .75 3,622 .76
September 30, 1995 1,820 .38 1,599 .33 709 .15 726 .15
December 31, 1995 1,813 .38 1,582 .33 2,450 .51 2,450 .51
March 31, 1996 1,798 .38 1,581 .33 (3,706) (.77) (3,706) (.77)
June 30, 1996 1,718 .36 1,510 .32 (1,300) (.27) (1,372) (.29)
September 30, 1996 1,695 .35 1,490 .31 422 .09 378 .08
December 31, 1996 1,703 .35 1,518 .31 1,088 .22 1,121 .23
March 31, 1997 1,718 .36 1,507 .31 (2,188) (.46) (2,166) (.45)
June 30, 1997 1,666 .35 1,461 .31 1,811 .38 1,786 .37
</TABLE>
<PAGE>
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INA INVESTMENT SECURITIES, INC.
<TABLE>
<CAPTION>
DIRECTORS OFFICERS
<S> <C> <C>
R. Bruce Albro Paul J. McDonald R. Bruce Albro
Senior Managing Director, Senior Executive Vice President Chairman of the Board and
CIGNA Investments, Inc. and Chief Administrative Officer, President
Friendly Ice Cream Corporation
Hugh R. Beath Alfred A. Bingham III
Advisory Director, Arthur C. Reeds, III Vice President and Treasurer
AdMedia Corporate Advisors, Inc. President, CIGNA Investment
Management and CIGNA Jeffrey S. Winer
Russell H. Jones Investments, Inc. Vice President and Secretary
Vice President and Treasurer
Kaman Corporation
</TABLE>
- -------------------------------------------------------------------------------
INA Investment Securities, Inc. is a closed-end, diversified management
investment company that invests primarily in debt securities. The investment
adviser is CIGNA Investments, Inc., 900 Cottage Grove Road, Hartford,
Connecticut 06152.
Shareholders may elect to have dividends automatically reinvested in additional
shares of INA Investment Securities, Inc. by participating in the Automatic
Dividend Investment Plan (the "Plan"). For a brochure describing this Plan or
general inquiries about your account, contact State Street Bank and Trust
Company, Stock Transfer Department, P.O. Box 8200, Boston, Massachusetts,
02266-8200, or call toll-free 1.800.426.5523.
Effective December 1, 1997, State Street Bank and Trust Company will also allow
you, at no additional cost, to deposit with it, for safekeeping and in "book
entry form," any stock certificates for the Fund's shares you may have in your
possession. You may elect to have these shares held within or outside of the
Plan. Whether or not you participate in the Plan, you may elect by notice to
State Street to have State Street sell you book entry shares. State Street will
deduct from the sales proceeds of $2.50 per transaction plus.
$.15 per share and remit the balance of proceeds to you.
- -------------------------------------------------------------------------------
MATTERS SUBMITTED TO A VOTE OF SHAREHOLDERS
An Annual Meeting of the Shareholders of INA Investment Securities, Inc. (the
"Company") was held on Tuesday, April 29, 1997 at 1:30 p.m., Eastern Time.
Five Directors were elected by a vote of shareholders to serve as members of the
Board of the Company until the next Annual Meeting of Shareholders or until the
election and qualification of their successors. Shareholders of the Company
voted to elect the following Directors:
FOR VOTE WITHHELD
--- -------------
R. Bruce Albro 3,616,904.623 71,905.174
Hugh R. Beath 3,616,235.852 72,573.945
Russell H. Jones 3,619,248.567 69,561.280
Paul J. McDonald 3,618,677.567 70,132.230
Arthurs C. Reeds, III 3,619,160.380 69,649.417
The appointment of Price Waterhouse LLP to serve as independent accountants for
the fiscal year ending December 31, 1997 was ratified by a vote of shareholders
of the Company as follows:
FOR AGAINST ABSTAIN
--- ------- -------
3,619,477.845 24,026.944 45,305.008
There were no broker non-votes with respect to the matters submitted to a vote
of shareholders of the Company.
No other business was transacted at the meeting.
<PAGE>
[LOGO OF CIGNA APPEARS HERE]
INA Investment Securities, Inc.
P.O. Box 13856 [LOGO OF CIGNA APPEARS HERE]
Philadelphia, PA 19101
INA INVESTMENT SECURITIES, INC.
- --------------------
BULK RATE
U.S. POSTAGE
PAID
SO. HACKENSACK, NJ Semiannual Report
PERMIT 750
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June 30, 1997
