<PAGE>
- --------------------------------------------------------------------------------
1
DEAR SHAREHOLDER:
We are pleased to provide this report for CIGNA Investment Securities, Inc. (the
"Company") covering the six months ended June 30, 1999. As you can see we have
changed our name to CIGNA Investment Securities, Inc. from INA Investment
Securities, Inc. Our ticker symbol on the New York Stock Exchange remains "IIS".
MARKET ACTIVITY
The themes which drove the bond market during the second quarter were continued
strong economic growth domestically and the recovering economies in many of the
emerging markets. Though reported inflation remains muted by historical
standards, the impact of a strong U.S. economy and oil price increases on fixed
income investors has been to increase inflation expectations. This has resulted
in steadily increasing interest rates and declining bond prices. April's
reported CPI of 0.7% and the Federal Reserve Board's (the "Fed") subsequent
policy shift to a monetary tightening bias set the stage for rates to move
higher. Overall, the Lehman Brothers Government/Corporate Bond Index (the
"Index") suffered a 1.10% decline for the quarter. Long Treasuries lost over
3.5% of their value, as interest rates on 10-year and 30-year U.S. Treasuries
rose 50 and 30 basis points respectively, ending the quarter at yields of 5.78%
and 5.96%, respectively.
The closing note of the quarter was the Fed's Open Market Committee decision to
raise the Federal Funds rate 0.25% - to 5.00%. Since April's worrisome CPI
release in mid-May, the May CPI release issued in mid-June reported zero
inflation in the aggregate.
The high yield market and emerging markets boasted the highest returns among
fixed income asset classes this quarter. All other spread sectors underperformed
duration-matched treasuries as spreads widened in sympathy with the shift in
Federal Reserve policy. In the minds of some investors, higher rates, followed
by a slowing economy, could negatively impact financial conditions of
corporations. In addition, the market began exhibiting concern about burgeoning
new supply in most spread sectors, in addition to concerns over the Fed's
raising rates.
INVESTMENT INFORMATION
The portfolio remains fully invested. On June 30, 1999, domestic corporate bonds
were approximately 48.2% of portfolio holdings, taxable municipal bonds 18.7%,
foreign bonds 8.9%, U.S. Government 14.8%, short-term obligations 7.6% and cash
and other assets 1.8%. Per share net asset value was $18.40, down from $18.84 on
March 31. An income dividend of $.28 was declared during the quarter.
PERFORMANCE
After deducting expenses and allowing for the reinvestment of dividends, based
on the net asset value of its underlying assets, the Company returned -0.85%
during the second quarter and -1.46% for the year-to-date. The Company returned
- -0.99% and -6.56%, respectively, for the quarter and year-to-date based on the
market value of its shares listed on the New York Stock Exchange. Company
performance was aided by its large percentage of holdings in non-U.S. Treasury
debt, particularly high yield and emerging market sectors. Performance was hurt
only modestly by a longer-than-benchmark duration.
OUTLOOK
The most important variable in the outlook right now is the future course of
Federal Reserve action. Additional monetary tightening seems necessary to slow
the economy down from a 4% real growth pace to a more desirable and sustainable
3% pace, which the Fed views as "non-inflationary". The second quarter growth
rate should slow from the first quarter's 4.3% pace on the basis of seasonal
factors, higher interest rates and oil price increases alone. With the
appropriate monetary response, the bond market is set up for reasonably solid
relative performance with long yields approaching 6%. We believe bonds offer
attractive relative value with implied real yields approaching 4%, assuming the
economy has achieved price stability. As non-Treasury spreads have widened
recently, potential risk-adjusted returns have become more favorable. The
Company intends to maintain an over-weighting relative to the Index in
non-Treasury sectors such as corporate bonds, taxable municipal debt,
mortgage-backed securities, and high yield bonds. Portfolio duration is modestly
longer than the Index, and will be opportunistically brought back to neutral
when the market improves.
Sincerely,
/s/ Richard H. Forde
Richard H. Forde
CHAIRMAN OF THE BOARD AND PRESIDENT
CIGNA INVESTMENT SECURITIES, INC.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. INVESTMENTS IN SECURITIES June 30, 1999
(Unaudited) 2
MARKET
PRINCIPAL VALUE
(000) (000)
- -----------------------------------------------------------------
LONG-TERM BONDS - 90.6%
CONSUMER AND RETAIL - 2.8%
Dayton Hudson Corp., 9.75%, 2002 $ 500 $ 546
Herff Jones, Inc., 11.0%, 2005 ( 144A
security acquired August, 1995 for
$300,000)* 300 320
May Department Stores Co.,
10.625%, 2010 435 561
Penney (J.C.), Inc., 7.4%, 2037 1,000 1,021
----------
2,448
----------
CONSUMER NON-CYCLICAL - 2.2%
MedPartners, Inc., 6.875%, 2000 1,000 935
Tenet Healthcare Corp., 7.875%, 2003 1,000 980
----------
1,915
----------
ENTERTAINMENT AND COMMUNICATIONS - 8.4%
Bell Telephone Co., 7.125%, 2012 730 741
Century Communications Corp., 9.5%, 2005 500 516
Grupo Iusacell, S.A. de C.V., 10%, 2004
(144A security acquired July, 1997 for
$500,000)* 500 458
IXC Communications, Inc., 9.0%, 2008 250 239
Mirage Resorts, Inc., 6.75%, 2007 400 373
Price Communications Wireless, Inc.,
11.75%, 2007 500 549
Southwestern Bell Telephone Co.,
7.375%, 2027 1,000 968
TKR Cable, Inc., 10.5%, 2007 500 533
Tele-Communications, Inc., 9.25%, 2002 500 538
Time Warner Entertainment Co.,
10.15%, 2012 1,750 2,152
Total Access Communications Public Co., Ltd.,
7.625%, 2001 (144A security acquired
Oct., 1996 for $499,855)* 500 400
----------
7,467
----------
FINANCIAL - 11.5%
American General Fin. Corp., 5.9%, 2003 900 883
Banco Nacional de Comercio Exterior, S.N.C.,
7.25%, 2004 500 452
Case Credit Corp., 6.0%, 2001 800 794
Corporacion Andina De Fome,
7.1%, 2003 200 195
First Union National Bank of Florida,
6.18%, 2036 1,000 957
General Motors Acceptance Corp.,
6.75%, 2002 1,000 1,016
Inter-American Development Bank,
8.875%, 2009 2,000 2,344
Merrill Lynch and Co., Inc., 7.26%, 2002 800 818
Middletown Trust, 11.75%, 2010 848 922
MARKET
PRINCIPAL VALUE
(000) (000)
- ---------------------------------------------------------------
FINANCIAL - (CONTINUED)
Western National Corp., 7.125%, 2004 $ 1,000 $ 1,018
World Financial Properties Tower,
6.95%, 2013 (144A security acquired
Nov, 1996 for $750,000)* 750 728
---------
10,127
---------
FOOD AND BEVERAGE - 3.1%
Bass America, Inc., 8.125%, 2002 1,500 1,553
ConAgra, Inc., 9.75%, 2021 1,000 1,242
---------
2,795
---------
FOREIGN GOVERNMENT - .8%
Panama, (Republic of), 7.875%, 2002
(144A security acquired Feb., 1997 for
$754,725)* 750 729
---------
INDUSTRIAL -7.1%
Air Products & Chems., Inc., 8.5%, 2006 1,500 1,582
Beckman Instruments, Inc., 7.1%, 2003 500 485
Domtar, Inc., 8.75%, 2006 400 408
Fisher Scientific International, Inc.,
7.125%, 2005 500 463
ICF International, Inc., 13.0%, 2003 500 335
Laidlaw, Inc., 6.65%, 2004 1,300 1,230
Pindo Deli Finance Mauritius Ltd.,
10.75%, 2007 500 342
Smurfit Capital Funding PLC, 6.75%, 2005 1,000 972
Tjiwi Kimia International Finance,
13.25%, 2001 500 420
---------
6,237
---------
OIL & GAS - 4.4%
Coastal Corp., 6.5%, 2008 1,000 957
Gulf Canada Resources Ltd., 8.35%, 2006 1,000 974
Imexsa Export Trust, 10.125%, 2003
(144A security acquired May, 1996
for $690,723)* 628 597
Louis Dreyfus National Gas Corp.,
9.25%, 2004 1,000 1,063
Sonat, Inc., 9.0%, 2001 250 260
---------
3,851
---------
STRUCTURED SECURITIES - 5.6%
CitiCorp. Mtg. Securities, Inc.,
6.75%, 2028 1,000 971
First Union Commercial Mortgage Trust,
6.07%, 2008 600 565
General Electric Capital Mtg. Services, Inc.,
6.5%, 2023 750 737
6.75%, 2028 1,000 951
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. INVESTMENTS IN SECURITIES June 30, 1999
(Unaudited) (Continued) 3
MARKET
PRINCIPAL VALUE
(000) (000)
- -----------------------------------------------------------------
STRUCTURED SECURITIES - (CONTINUED)
Iroquois Trust, 6.752%, 2007 (144A security
Mar, 1998 for $730,891)* $ 725 $ 726
Residential Asset Securitization Trust,
6.75%, 2028 1,000 964
----------
4,914
----------
TAXABLE MUNICIPALS - 18.7%
Dallas Texas Revenue, 6.625%, 2027 1,000 928
Decatur Texas Hospital Authority,
7.75%, 2029 400 394
Elmhurst Ill Sales Tax Revenue, 6.75%, 2006 465 468
Energy Acquisition Corp., 6.19%, 2002 900 898
Huntsville Solid Waste, 5.85%, 2002 1,000 987
Mendocino Cty. CA Pension Oblig.,
6.89%, 2006 2,070 2,101
6.97%, 2008 700 712
Norfolk VA Redevelopment & Housing
Authority, 8.0%, 2015 500 506
Oakland CA Pension Oblig., 6.38%, 2000 500 504
Oklahoma City Oklahoma Airport
Trust, 6.55%, 2006 1,000 989
Orange County CA Pension Obligations,
Zero Coupon, 2014 4,000 1,338
Phoenix AZ Civic Imp. Corp., 6.15%, 2005 500 489
Phoenix AZ Civic Plaza Bldg., 6.75%, 2006 700 697
Residential Funding Mortgage Securities, Inc.,
6.75%, 2028 1,250 1,222
St. Louis MO Municipal Finance Corp.,
6.45%, 2007 800 779
Shreveport LA Certificate of Indebtedness,
6.23%, 2002 500 498
Trinity County Calif. Pension Oblig.,
6.35%, 2011 1,000 946
Wilkes Barre, PA, 6.4%, 2009 1,500 1,440
Wyandotte County/Kansas City University,
6.75%, 2027 705 638
---------
16,534
---------
TRANSPORTATION - 5.8%
AMR Corp., 9.2%, 2012 505 561
CSX Corp.,
7.25%, 2027 800 802
Delta Air Lines, Inc.,
9.45%, 2006 946 1,029
10.14%, 2012 (144A security acquired
July, 1995 for $1,112,260)* 1,000 1,205
Hertz Corp., 7.0%, 2003 500 506
MARKET
PRINCIPAL VALUE
(000) (000)
- ---------------------------------------------------------------
TRANSPORTATION - (CONTINUED)
Kitty Hawk, Inc., 9.95%, 2004 $ 500 $ 493
Norfolk Southern Corp., 7.05%, 2037 500 508
---------
5,104
---------
UTILITIES - 5.4%
AES Corp., 9.5%, 2009 250 257
California Maritime Infrastructure,
6.63%, 2009 500 474
Endesa-Chile Overseas Co., 7.2%, 2006 1,000 911
Niagara Mohawk Power Co., 7.625%, 2005 500 503
Public Service Company of Colorado,
8.125%, 2004 290 308
Toll Road Investment Partnership,
Zero Coupon, 2013 (144A security
acquired June, 1999 for $940,345)* 2,500 889
Toll Road Investment Partnership,
Zero Coupon, 2016 (144A security
acquired June, 1999 for $1,508,686)* 5,000 1,394
---------
4,736
---------
U.S. GOVERNMENT & AGENCIES - 14.8%
Federal National Mortgage Assoc.,
6.375%, 2009 $ 950 $ 942
Zero Coupon, 2019 500 133
6.5%, 2028 762 735
6.5%, 2028 936 903
United States Treasury Bonds,
8.125%, 2021 5,000 6,096
6.5%, 2026 200 208
United States Treasury Bonds
Stripped-Principal Only,
Zero Coupon, 2008 1,400 821
Zero Coupon, 2016 5,525 1,904
United States Treasury Notes,
6.625%, 2007 1,300 1,354
----------
13,096
----------
TOTAL LONG-TERM BONDS
(Cost - $81,961,590) 79,953
----------
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. INVESTMENTS IN SECURITIES June 30, 1999
(Unaudited) (Continued) 4
MARKET
PRINCIPAL VALUE
(000) (000)
- -----------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 7.6%
COMMERCIAL PAPER - 2.4%
Exxon Asset Mgt. Co., 5.66%, 7/1/99 2,107 2,107
---------
BONDS - 5.2%
Disney (Walt) Co., 1.5%, 10/20/99 $ 2,000 $ 1,970
Heller Financial, Inc., 9.125%, 8/1/99 500 501
Salton Sea Funding Corp., 7.02%, 5/30/00 98 98
Sonat, Inc., 9.5%, 8/15/99 1,000 1,005
United Post Office Investments,
7.75%, 8/27/99 1,000 1,000
---------
4,574
---------
TOTAL SHORT-TERM OBLIGATIONS
(Cost - $6,588,495) 6,681
---------
TOTAL INVESTMENTS IN SECURITIES - 98.2%
(Total Cost - $88,550,085) 86,634
Cash and Other Assets Less Liabilities - 1.8% 1,562
---------
NET ASSETS - 100.0% $ 88,196
=========
- ---------------
* Indicates restricted security; the aggregate value of restricted
securities is $7,444,513 (aggregate cost $7,741,148) which is approximately
8.4% of net assets. Valuations have been furnished by brokers trading in the
securities or a pricing service for all restricted securities.
----------------------------------------------------------------
PORTFOLIO COMPOSITION (UNAUDITED)
June 30, 1999
MARKET % OF
QUALITY RATINGS* OF VALUE MARKET
BONDS (000) VALUE
------------------------------------------------------------
$
Aaa/AAA 34,322 40.6%
Aa/AA 7,518 8.9%
A/A 13,952 16.5%
Baa/BBB 15,426 18.2%
Ba/BB 7,357 8.7%
B/B 3,855 4.6%
Below B 1,097 1.3%
Not Rated 1,000 1.2%
========== ==========
$ 84,527 100.0%
========== ==========
*The higher of Moody's or Standard & Poor Ratings.
----------------------------------------------------------------
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. 5
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
(IN THOUSANDS)
--------------
ASSETS:
Investments at market value
(Cost $88,550,085) $ 86,634
Interest receivable 1,703
Investment for directors' deferred
compensation plan 192
------------
TOTAL ASSETS 88,529
------------
LIABILITIES:
Deferred directors' fees payable 192
Shareholder reports payable 15
Accrued advisory fees payable 41
Audit and legal fees payable 21
Transfer agent fees payable 30
Other accrued expenses (including $20,604
due to affiliate) 34
------------
TOTAL LIABILITIES 333
------------
NET ASSETS (equivalent to $18.40 per share
based on 4,792,215 shares outstanding;
12,000,000 shares of $.10 par value
authorized) $ 88,196
============
COMPONENTS OF NET ASSETS:
Paid-in capital $ 89,877
Undistributed net investment income 104
Unrealized depreciation of investments (1,916)
Accumulated net realized gain 131
------------
NET ASSETS $ 88,196
============
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
(IN THOUSANDS)
--------------
INVESTMENT INCOME
INCOME:
Interest $ 3,242
EXPENSES:
Investment advisory fees $235
Custodian fees 43
Transfer agent fees 40
Administrative services 27
Auditing and legal fees 20
Directors' fees 14
State taxes 12
Other 11 402
-------- -----------
NET INVESTMENT INCOME 2,840
-----------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Net realized gain from investments -
Unrealized depreciation of investments (4,165)
-----------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS (4,165)
-----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (1,325)
===========
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. 6
STATEMENT OF CHANGES IN NET ASSETS
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, YEAR ENDED
1999 DECEMBER 31,
(UNAUDITED) 1998
------------- -------------
(IN THOUSANDS)
-----------------------------
OPERATIONS:
Net investment income $ 2,840 $ 5,722
Net realized gain from investments - 1,826
Unrealized depreciation on
investments (4,165) (1,145)
------------- -------------
Net increase (decrease) in net assets
from operations (1,325) 6,403
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($0.56
and $1.20 per share, respectively) (2,681) (5,750)
From net realized gain (.0575 per share) - (276)
------------- -------------
Total distributions to shareholders (2,681) (6,026)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS (4,006) 377
NET ASSETS:
Beginning of period 92,202 91,825
------------- -------------
End of period (including undistributed
net investment income of $104,477
and overdistributed net
investment income of $53,990) $ 88,196 $ 92,202
============= =============
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 7
1. SIGNIFICANT ACCOUNTING POLICIES. CIGNA 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 Company'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 preparation 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, 1999, the Company paid or accrued $27,179.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA 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, 1999 were as follows (excluding short-term
obligations):
PROCEEDS
COST OF FROM
SECURITIES SECURITIES
PURCHASED SOLD
---------------------- ---------------------
Bonds $ 6,322,784 $ 7,640,030
U.S. Government Obligations 19,072,990 18,203,098
====================== =====================
$ 25,395,774 $ 25,843,128
====================== =====================
As of June 30, 1999, the cost of securities for Federal Income tax purposes was
$88,589,731. At June 30, 1999, net unrealized depreciation for Federal income
tax purposes aggregated $1,955,671 of which $1,381,414 related to appreciated
securities and $3,337,085 related to depreciated securities.
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Continued) 9
5. FINANCIAL HIGHLIGHTS. The following table includes data, ratios and
supplemental data for a share outstanding throughout each period and other
performance information:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $19.24 $19.16 $18.75 $ 19.50 $17.56 $19.72
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income (1) 0.59 1.18 1.22 1.27 1.32 1.39
Net realized and unrealized gain (loss) (0.87) 0.16 0.43 (0.73) 1.94 (2.00)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.28) 1.34 1.65 0.54 3.26 (0.61)
------ ----- ----- ----- ----- ------
LESS DISTRIBUTIONS:
From net investment income (0.56) (1.20) (1.24) (1.29) (1.32) (1.35)
From capital gains - (0.06) - - - (0.20)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.56) (1.26) (1.24) (1.29) (1.32) (1.55)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $18.40 $19.24 $19.16 $18.75 $19.50 $17.56
====== ====== ====== ====== ====== ======
MARKET VALUE, END OF PERIOD $15.63 $17.31 $17.38 $16.13 $17.38 $15.25
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN:
Per share market value (6.56)% 6.95% 16.08% 0.28% 23.07% (8.34)%
Per share net asset value (2) (1.46)% 7.22% 9.16% 3.01% 19.17% (3.13)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $88,196 $92,202 $91,825 $89,865 $93,444 $84,131
Ratio of operating expenses to average net
assets 0.88% * 0.92% 0.99% 0.91% 1.00% 0.96%
Ratio of net investment income to average
net assets 6.33% * 6.14% 6.49% 6.80% 7.10% 7.42%
Portfolio turnover 29% 81% 80% 89% 158% 86%
(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.
* Annualized.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Continued) 10
6. QUARTERLY RESULTS (UNAUDITED). The following is a summary of quarterly
results of operations (in thousands except for per share amounts):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
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, 1997 1,718 .36 1,507 .32 (2,188) (.46) (2,166) (.45)
June 30, 1997 1,666 .35 1,461 .30 1,811 .38 1,786 .37
September 30, 1997 1,689 .35 1,482 .31 1,435 .30 1,432 .30
December 31, 1997 1,665 .35 1,400 .29 994 .21 908 .19
March 31, 1998 1,658 .35 1,447 .31 4 .00 (35) (.01)
June 30, 1998 1,662 .35 1,454 .30 524 .11 493 .11
September 30, 1998 1,631 .34 1,414 .29 1,134 .24 1,159 .24
December 31, 1998 1,617 .34 1,353 .28 (927) (.19) (1,240) (.26)
March 31, 1999 1,588 .33 1,389 .29 (1,983) (.41) (1,936) (.40)
June 30, 1999 1,654 .35 1,451 .30 (2,182) (.46) (2,070) (.44)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CIGNA INVESTMENT SECURITIES, INC. 11
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
<S> <C> <C>
Hugh R. Beath Thomas C. Jones Richard H. Forde
ADVISORY DIRECTOR, PRESIDENT, CIGNA INVESTMENT CHAIRMAN OF THE BOARD AND
ADMEDIA CORPORATE ADVISORS, INC. MANAGEMENT AND CIGNA PRESIDENT
INVESTMENTS, INC.
Paul J. McDonald
Richard H. Forde SENIOR EXECUTIVE VICE PRESIDENT
SENIOR MANAGING DIRECTOR, AND CHIEF FINANCIAL OFFICER, Alfred A. Bingham III
CIGNA INVESTMENTS, INC. FRIENDLY ICE CREAM CORPORATION VICE PRESIDENT AND TREASURER
Russell H. Jones
VICE PRESIDENT AND TREASURER Jeffrey S. Winer
KAMAN CORPORATION VICE PRESIDENT AND SECRETARY
</TABLE>
- --------------------------------------------------------------------------------
CIGNA 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 invested in additional
shares of CIGNA 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 1.800.426.5523.
- --------------------------------------------------------------------------------
MATTERS SUBMITTED TO A VOTE OF SHAREHOLDERS
The Annual Meeting of the Shareholders of INA Investment Securities, Inc. (now
known as CIGNA Investment Securities, Inc.) (the "Fund") was held on Tuesday,
May 18, 1999 at 9:30 a.m., Eastern Time.
Five Directors were elected by a vote of shareholders to serve as members of the
Board of the Fund until the next Annual Meeting of Shareholders or until the
election and qualification of their successors. Shareholders of the Fund voted
to elect the following Directors:
FOR VOTE WITHHELD
--- -------------
Hugh R. Beath 3,610,304.781 80,072.005
Richard H. Forde 3,614,200.305 76,176.481
Russell H. Jones 3,616,876.241 73,500.545
Thomas C. Jones 3,615,504.221 74,872.565
Paul J. McDonald 3,617,295.737 73,081.049
The appointment of PricewaterhouseCoopers LLP to serve as independent
accountants for the fiscal year ending December 31, 1999 was ratified by a vote
of shareholders of the Fund as follows:
FOR AGAINST ABSTAIN
--- ------- -------
3,654,188.323 13,562.420 22,918.623
An amendment to the Fund's Certificate of Incorporation to change the name of
the Fund to CIGNA Investment Securities, Inc. was approved by the Fund's
shareholders:
FOR AGAINST ABSTAIN
--- ------- -------
3,561,798.657 66,789.798 62,079.911
There were no broker non-votes with respect to the matters submitted to a vote
of shareholders of the Fund.
No other business was transacted at the meeting.
<PAGE>
[CIGNA TREE LOGO GRAPHIC APPEARS HERE]
CIGNA Investment Securities, Inc.
P.O. Box 13856 [CIGNA TREE LOGO GRAPHIC APPEARS HERE]
Philadelphia, PA 19101
CIGNA INVESTMENT SECURITIES, INC.
- --------------------
BULK RATE
U.S. POSTAGE
PAID
SO. HACKENSACK, NJ SEMIANNUAL REPORT
PERMIT 750
- --------------------
JUNE 30, 1999
[CIGNA TREE LEAVES GRAPHIC APPEARS IN BACKGROUND OF COVER]
