<PAGE>
________________________________________________________________________________
1
DEAR SHAREHOLDER:
We are pleased to provide this report for CIGNA Investment Securities, Inc. (the
"Fund") covering the six months ended June 30, 2000.
THE MARKET ENVIRONMENT
The growth of the U.S. economy appeared to slow significantly during the second
quarter, following six quarters of economic boom. Based on preliminary monthly
indicators of retail sales, housing, and employment, the growth in real GDP
(gross domestic product) seemed to slow to a rate of around 3%. This change was
a sudden and sharp deceleration from the 6% rate for the prior three quarters
and the 5% annualized rate of GDP over the prior six quarters.
It is safe to say that the rate of economic growth has slowed, but probably not
to the extent suggested by the most recent monthly Government economic reports.
The basic underlying fundamentals appear to support continued steady, albeit
less robust, growth for the remainder of the year.
The rate of inflation continued to drift moderately higher during the quarter,
and inflationary pressures are still evident. The Consumer Price Index (CPI) has
risen at a 3.1% rate over the past year, while the "core" CPI, which excludes
volatile food and energy components, has risen at a 2.3% annual rate. Labor
costs also remain in a steady accelerating trend, with recent total compensation
(wages and benefits) rising at close to a 5% annual rate. Energy prices surged
during the spring, with crude oil reaching $33 a barrel, while natural gas
prices rose to an all-time high.
Primarily in response to the tight labor market and concern over future wage
inflation, the Fed raised short-term interest rates during May to 6.50%, but
left rates unchanged at its June FOMC (Federal Open Market Committee) meeting.
The cumulative increase in the Fed's target interest rate during the past 12
months has been 1.75%.
STRATEGY
We increased our corporate bond allocation during the quarter and currently
carry a significant overweight in investment grade corporate bonds. We continue
to overweight Yankee bonds (e.g., Japanese and European banks) as well as
aerospace, defense and cable/media securities.
A major strategy was the purchase of high-quality, long-duration corporates.
Because of the yield curve inversion, market participants were unclear on what
benchmark to use to price long-maturity corporate bonds. This confusion caused
long corporate bonds to underperform shorter maturity corporate bonds by a wide
margin. We seized upon this buying opportunity to add high-quality, long
corporates at an attractive price level. As these trades started to meet our
profit targets, we rotated back into intermediate-duration securities. This
strategy proved positive, as performance for long corporates led the Index
during the latter part of the quarter.
PERFORMANCE
For the second quarter and year-to-date, the Fund's returns of 1.34% and 2.43%,
respectively, trailed the Lehman Brothers Aggregate Bond Index returns of 1.74%
and 3.99%, for comparable periods. However, the Fund's share price returned
3.60% and 9.29%, respectively, for the quarter and year-to-date, assuming
reinvestment of dividends.
OUTLOOK
We are positive on corporate bonds given current valuation levels. We believe
that corporate bonds offer value on an absolute basis and as an alternative to
other competing spread product. We continue to be cautious regarding `event
risk' and credit deterioration. We like high quality securities of large market
capitalization, solid businesses such as telecommunication companies,
sovereigns, and drug companies. In addition, as long-
<PAGE>
________________________________________________________________________________
2
maturity Treasury securities become scarcer, we believe that investors will be
forced to find long duration elsewhere, which would include high-quality
corporate issuers. As the Treasury buy-back and yield curve inversion create
opportunities regarding the credit curves of certain corporate bond issuers, we
expect to take positions in the most attractive part of the issuer curve.
We like Mortgage-backed Securities (MBS) versus U.S. Treasuries, but we do not
yet see the catalyst for substantial tightening of spreads. As a result, we are
maintaining our current MBS weight. We believe MBS offers very high quality and
excellent liquidity, with yield spreads wider than average. We would alter our
sector outlook if we perceived that the economy was stronger than consensus and
that the Fed would resume its tightening path. We believe that housing, while it
will continue to remain strong, has peaked and thus so have prepayments on
discount pass-throughs.
While it seems clear that the U.S. economy is no longer in an economic boom and
the rate of economic growth has peaked for the cycle, we nonetheless believe
that the most recent Government data exaggerates the magnitude of the slowdown.
It is most likely that the second quarter witnessed a temporary pause, to be
followed by a moderate re-acceleration in economic growth during the second half
of the year.
We expect the domestic economy to expand at a 4% annual rate during the
remainder of the year, a growth rate above current market and consensus
expectations. The implications of this forecast are very significant. In the
context of a fully employed economy, a 4% rate of growth is simply too rapid to
alleviate inflationary pressures. Consequently, the Fed will likely continue to
tighten monetary conditions during the remainder of this year. As the year 2001
unfolds, we expect the domestic economy to exhibit a pattern of progressive
weakness with increasing recession risk.
The primary influence on the markets will be the need for continued monetary
restraint by the Fed in order to counter the emerging inflation risk, which
inevitably exerts downward pressure on the price of all financial assets. The
big unknown is the intensity of these opposing forces, specifically the duration
and severity of the monetary tightening necessary to effectively reduce economic
growth to a non-inflationary rate.
On a short-term basis, we continue to believe that fixed income markets are
better positioned than equity markets to withstand the economic and financial
pressures that lie ahead.
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, 2000 3
(Unaudited)
MARKET
PRINCIPAL VALUE
(000) (000)
--------------------------------------------------------------
LONG-TERM BONDS - 90.7%
CONSUMER AND RETAIL - 1.3%
Rite-Aid Corp., 7.7%, 2027 $ 605 $ 266
Wal-Mart Stores, Inc., 6.875%, 2009 850 830
----------
1,096
----------
ENTERTAINMENT AND COMMUNICATIONS - 10.5%
Deutsche Telekom Intl Fin., 8.25%, 2030 840 853
ITT Corp., 7.40%, 2025 425 363
Lensfest Communications, Inc., 8.25%,
2008 1,160 1,143
Loral Corp., 9.125%, 2022 920 993
Nextel Communications Inc.,
Step Coupon (0% to 9/15/02), 2007 405 318
NTL Communications Corp.,
Step Coupon (0% to 10/01/03), 2008 250 164
Orange PLC, 9.00%, 2009 810 818
Sun Microsystems, Inc., 7.50%, 2006 1,310 1,307
Time Warner Entertainment Co., 10.15%,
2012 750 861
U S West Communications, Inc.,7.20%, 2004 725 712
Vodafone Airtouch PLC,
7.75%, 2010 (144A security acquired
February 2000 for $927)* 925 902
Winstar Communications Inc., 0%, 2010 985 453
(144A security acq. June 2000 for $539) ----------
8,887
----------
FINANCIAL - 16.2%
Abbey Natl Cap, 8.963%, 2049 1,630 1,619
Banc One Corp.,
7.75%, 2025 520 485
6.00%, 2009 320 278
Bank Tokyo Mitsubishi Ltd., 8.4%, 2010 440 445
BSCH Issuances Ltd., 7.625%, 2009 650 646
Fertinitro Fin Inc.,
8.29%, 2020 (144A security acquired
February 2000 for $323)* 450 278
Finova Cap Corp., 7.625%, 2009 210 175
Ford Motor Credit Co.,
7.875%, 2010 1,700 1,700
5.8%, 2009 290 252
Korea Development Bank,
7.625%, 2002 (144A security acquired
September 1999 for $887)* 890 883
Merrill Lynch and Co., Inc., 6.00%, 2009 480 428
Middletown Trust, 11.75%, 2010 848 882
National Westminister Bank PLC, 7.375%,
2009 325 316
Prudential Ins Co Amer, 6.875%, 2003 1,190 1,174
Sanwa Finance Aruba AEC, 8.35%, 2009 430 428
MARKET
PRINCIPAL VALUE
(000) (000)
----------------------------------------------------------------
FINANCIAL - (CONTINUED)
Shinhan Bank, 7.25%, 2002 $ 1,325 $ 1,274
Skandinaviska Enskilda, 6.625%, 2049 375 369
Sumitomo Bank Int'l. NV, 8.5%, 2009 430 433
Wells Fargo & Co., 7.2%, 2003 965 961
World Financial Properties Tower,
6.95%, 2013 (144A security acquired
Nov. 1996 for $750)* 750 693
---------
13,719
---------
FOREIGN GOVERNMENT - 4.8%
Brazil (Fed Rep of), 7.375%, 2024 485 383
Poland (Government of), Step Coupon
(4% to 10/27/00), 2024 1,760 1,135
Quebec Province, 7.5%, 2023 1,320 1,301
Russia, 2.25%, 2030 470 177
United Mexican States, 9.875%, 2010 885 925
Venezuela (Rep of), 7.875%, 2007 178 145
---------
4,066
---------
INDUSTRIAL - 4.3%
Allied Waste North Amer, Inc.,
10.0%, 2009 280 234
ICF International, Inc., 13.0%, 2003 500 225
Lockheed Martin Corp., 8.5%, 2029 390 398
Merck & Co. Inc., 6.3%, 2026 630 550
Raytheon Co.,
8.2%, 2006 (144A security acquired
March 2000 for $841)* 840 852
Reliance Inds Ltd.,
10.5%, 2046 (144A security acquired
February 2000 for $497)* 500 449
TFM S. A. DE C V, Step Coupon 1,345 921
(0% to 6/15/02, 2009) ---------
3,629
---------
OIL & GAS - 2.3%
Conoco Inc., 6.95%, 2029 1,050 954
Louis Dreyfus National Gas Corp.,
9.25%, 2004 1,000 1,002
---------
1,956
---------
SERVICES 0.4%
Laidlaw Inc., ** 7.875%, 2005 1,140 331
---------
331
---------
STRUCTURED SECURITIES - 10.2%
Citibank Credit Card Master Trust, 5.8%,
2005 2,190 2,117
Commercial Mortgage Asset 6.64%, 2010 590 557
First Union Lehman Bros. Bank, Ser. 1998,
Interest Only, 2028 22,792 727
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
________________________________________________________________________________
CIGNA INVESTMENT SECURITIES, INC. INVESTMENTS IN SECURITIES June 30, 2000 4
(Unaudited) (Continued)
MARKET
PRINCIPAL VALUE
(000) (000)
--------------------------------------------------------------
STRUCTURED SECURITIES - (CONTINUED)
General Ele. Cap. Corp. Mtn., 7.375%,
2010 $ 850 $ 860
General Elec. Cap. Corp. Mtn., 7.5%,
2005 460 465
IMC Home Equity Loan 1% 2029 800 738
Iroquois Trust, 6.752%, 2007 (144A security
acquired March 1998 for $456)* 408 399
MBNA Master Credit Card Trust,
6.4%, 2005 2,175 2,146
Nationslink Funding Corp., 7.030%,
2008 609 601
----------
8,610
----------
TRANSPORTATION - 3.2%
Burlington Northern Santa Fe 6.125%,
2009 220 196
Delta Air Lines, Inc.,
9.45%, 2006 887 917
10.14%, 2012 (144A Ser 1991B acq.
6/00 )* 1,000 1,058
Ford Motor Co. 7.45%, 2031 590 558
----------
2,729
----------
UTILITIES - 2.9%
Cleveland Electric Illuminating
Co.,7.67%, 2004 55 54
Empressa Nacional De Electri, 8.125%,
2097 395 306
Korea Electric Power Corp., 6.375%, 2003 370 351
Niagara Mohawk Power Co.,
7.625%, 2005 378 372
7.375%, 2003 150 148
Public Service Co of Colorado, 8.125%,
2004 290 295
Toledo Edison Co, 7.875%, 2004 920 899
----------
2,425
----------
U.S. GOVERNMENT & AGENCIES - 34.6%
Federal Home Loan Mortgage Corp.,
6.50%, 2026 1,860 1,721
7.5%, 2030 1,750 1,723
Federal National Mortgage Assoc.,
7%, 2029 3,205 3,094
6.5%, 2029 5,386 5,083
7.5%, 2030 616 608
7.5%, 2030 2,250 2,217
8.5%, 2030 2,508 2,555
8.5%, 2030 2,496 2,542
GNMA
7.5%, 2030 1,691 1,672
8.5%, 2030 2,075 2,124
7.5%, 2029 976 969
MARKET
PRINCIPAL VALUE
(000) (000)
----------------------------------------------------------------
U.S. GOVERNMENT & AGENCIES - (CONTINUED)
United States Treasury Bonds, 8.75%,
2017*** $ 1,350 $ 1,700
United States Treasury Notes,
6.625%, 2007*** 3,200 3,267
---------
29,275
---------
TOTAL LONG-TERM BONDS
(Cost - $77,683) 76,723
---------
SHORT-TERM OBLIGATIONS - 7.1%
COMMERCIAL PAPER 2.7%
Household Finance Corp., 6.88%,
07/03/2000 2,286 2,286
---------
2,286
---------
BONDS - 4.4%
Germany (Fed Rep of), 9.00%, 10/20/2000 1,690 1,633
Hughes Electronic Corp., 7.451%, 10/23/00
(144A security acquired Oct. 1999 for
$738)* 740 741
MedPartners, Inc., 6.875%, 9/1/00 1,000 980
Sonat Inc., 9.00%, 05/01/2001 250 253
US Treasury, 6.06%, 02/01/2001*** 96 96
---------
3,703
---------
TOTAL SHORT-TERM OBLIGATIONS
(Cost - $6,015) 5,989
---------
TOTAL INVESTMENTS IN SECURITIES - 98.2%
(Total Cost - $83,698) 82,712
Cash and Other Assets Less Liabilities - 2.2% 1,847
---------
NET ASSETS - 100.0% $84,559
=========
__________________
* Indicates restricted security; the aggregate value of restricted
securities is $6,256,763 (aggregate cost $6,461,045) which is
approximately 7.4% of net assets. Valuations have been furnished by
brokers trading in the securities or a pricing service for all restricted
securities.
** Indicates defaulted security
*** Pledged as collateral for Financial Futures Contracts. At June 30, 2000,
the fund was long 36 5-year, short 40 10-year Treasury Notes futures
contracts and long 15 30-year U.S. Treasury Bonds. All expiring in
September 2000. Unrealized gain amounted to $23,010. Underlying face
values of the long and short positions were $4,952,719 and ($3,920,385),
respectively, and underlying market values were $5,024,719 and
($3,969,375), respectively.
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, 2000 (UNAUDITED)
(IN THOUSANDS)
ASSETS:
Investments at market value
(Cost $83,698) $ 82,712
Cash 15
Receivable for investments sold 7,172
Interest receivable 1,336
Investment for Directors' deferred
compensation plan 177
------------
TOTAL ASSETS 91,412
------------
LIABILITIES:
Payable for investments purchased 6,585
Deferred Directors' fees payable 177
Advisory fees payable 39
Custodian fee payable 20
Other accrued expenses (including $16
due to affiliate) 32
------------
TOTAL LIABILITIES 6,853
------------
NET ASSETS (equivalent to $17.65 per share
based on 4,792 shares outstanding;
12,000 shares of $0.10 par value
authorized) $ 84,559
============
COMPONENTS OF NET ASSETS:
Paid-in capital $ 89,893
Undistributed net investment income 228
Unrealized depreciation of investments (963)
Accumulated net realized loss (4,599)
------------
NET ASSETS $ 84,559
============
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
(IN THOUSANDS)
INVESTMENT INCOME
INCOME:
Interest $ 3,194
EXPENSES:
Investment advisory fees $224
Custodian fees 41
Transfer agent fees 30
Administrative services 22
Auditing and legal fees 21
Directors' fees 15
State taxes 12
Shareholder report 26
Other 2 393
-------- -----------
NET INVESTMENT INCOME 2,801
-----------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Net realized loss from investments (2,416)
Net realized gain from futures contracts 41
Unrealized appreciation of investments 1,563
Unrealized appreciation of futures contracts 23
-----------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS (789)
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,012
===========
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
________________________________________________________________________________
CIGNA INVESTMENT SECURITIES, INC. 6
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
(IN THOUSANDS)
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31
2000 1999
------------- --------------
OPERATIONS:
Net investment income $ 2,801 $ 5,644
Net realized gain (loss) from investments (2,416) (2,006)
Net realized gain (loss) from futures contracts 41 -
Net unrealized appreciation (depreciation) on
investments 1,563 (4,797)
Net unrealized appreciation on
futures contracts 23 -
------------- --------------
Net increase (decrease) in net assets
from operations 2,012 (1,159)
------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($0.56
and $1.18 per share, respectively) (2,683) (5,676)
From net realized gain ($.0285 per share) - (137)
------------- --------------
Total distributions to shareholders (2,683) (5,813)
------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS (671) (6,972)
NET ASSETS:
Beginning of period 85,230 92,202
------------- --------------
End of period (including undistributed
net investment income of $228
and $110) $ 84,559 $ 85,230
============= ==============
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
"Fund") 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, under normal
market conditions, at least 65% of its total assets in investment grade debt
securities and preferred stocks. The preparation of financial statements in
accordance with accounting principles generally accepted in the United States
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 Fund 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.
Prices are taken from the primary market in which the security trades.
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 Fund are appraised at fair value as determined in
good faith by, or under the authority of, the Fund'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 Fund does not amortize or accrete 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 Fund'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 Fund 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.
E. CURRENCY TRANSLATION AND FORWARD CURRENCY CONTRACTS - Foreign currency
amounts are translated into U.S. dollars at the prevailing exchange rates as
follows: assets and liabilities at the rate of exchange at the end of the
period, purchases and sales of securities and expenses at the rate of exchange
prevailing on the dates of such transactions. The Fund from time to time may
enter into foreign currency transactions to convert to and from different
foreign currencies and to convert foreign currencies to and from the U.S.
dollar. The Fund enters into these transactions either on a spot basis at the
spot rate prevailing in the foreign currency exchange market or uses forward
currency exchange contracts to purchase or sell foreign currencies. Realized and
unrealized gains and losses on foreign currency transactions represent foreign
exchange gains and losses arising from the sale of holdings of foreign
curren-
<PAGE>
________________________________________________________________________________
CIGNA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 8
(Continued)
cies, foreign currency exchange rate fluctuations between trade dates and
settlement dates on securities transactions, and the difference between the
amounts of interest and dividends recorded on the books of the Fund and the
amount actually received.
F. FUTURES CONTRACTS - The Fund may purchase financial futures contracts. Upon
entering into a futures contract, the Fund is required to pledge to the broker
an amount of cash and/or securities equal to the initial margin requirements.
During the period a futures contract is open, changes in the value of a contract
are recognized as unrealized gains or losses by "marking to market" on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Daily variation margin payments are received or made, depending on
whether there were unrealized gains or losses. When a contract is closed, the
Fund records a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time it was
closed. Futures contracts include the risk that a change in the value of the
contract may not correlate with the value of the underlying securities.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES. Investment
advisory fees were paid or accrued to TimesSquare Capital Management, Inc.
("TimesSquare"), certain officers and directors of which are affiliated with the
Fund. 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. TimesSquare is an
indirect, wholly-owned subsidiary of CIGNA Corporation.
For administrative services, the Fund reimburses TimesSquare for a portion of
the compensation and related expenses of the Fund's Treasurer and Secretary and
certain persons who assist in carrying out the responsibilities of those
offices. For the six months ended June 30, 2000, the Fund paid or accrued
$21,621.
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, 2000 were as follows (excluding short-term
obligations):
(IN THOUSANDS)
--------------
PROCEEDS
COST OF FROM
SECURITIES SECURITIES
PURCHASED SOLD
---------------------- ----------------------
Bonds $ 47,775 $ 68,972
U.S. Government Obligations 94,708 74,966
---------------------- ----------------------
$ 42,483 $ 143,938
====================== ======================
As of June 30, 2000, the cost of securities for federal income tax purposes was
$83,884,431. Net unrealized depreciation for federal income tax purposes
aggregated $1,171,801, of which $284,528 related to appreciated securities and
$1,456,329 related to depreciated securities.
<PAGE>
________________________________________________________________________________
CIGNA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 9
(Continued)
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)
6 MOS. ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.79 $ 19.24 $ 19.16 $ 18.75 $ 19.50 $ 17.56
Income from investment operations
Net investment income (3) 0.58 1.18 1.18 1.22 1.27 1.32
Net realized and unrealized gain (loss) (0.16) (1.42) 0.16 0.43 (0.73) 1.94
--------- ---------- ---------- ---------- ----------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.42 (0.24) 1.34 1.65 0.54 3.26
--------- ---------- ---------- ---------- ----------- ----------
LESS DISTRIBUTIONS:
From net investment income (0.56) (1.18) (1.20) (1.24) (1.29) (1.32)
From capital gains - (0.03) (0.06) - - -
--------- ---------- ---------- ---------- ------ ----------
TOTAL DISTRIBUTIONS (0.56) (1.21) (1.26) (1.24) (1.29) (1.32)
--------- ---------- ---------- ---------- ------ ----------
NET ASSET VALUE, END OF PERIOD $ 17.65 $ 17.79 $ 19.24 $ 19.16 $ 18.75 $ 19.50
========== ========== ========== ========== ========== ==========
MARKET VALUE, END OF PERIOD $ 14.94 $ 14.19 $ 17.31 $ 17.38 $ 16.13 $ 17.38
========== ========== ========== ========== ========== ==========
TOTAL INVESTMENT RETURN:
Per share market value 9.29% (1) (11.41)% 6.95% 16.08% 0.28% 23.07%
Per share net asset value (4) 2.43% (1) (1.23)% 7.22% 9.16% 3.01% 19.17%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 84,559 $ 85,230 $ 92,202 $ 91,825 $ 89,865 $ 93,444
Ratio of operating expenses to average net assets 0.91% (2) 0.91% 0.92% 0.99% 0.91% 1.00%
Ratio of net investment income to average net
assets 6.67% (2) 6.36% 6.14% 6.49% 6.80% 7.10%
Portfolio turnover 175% (1) 110% 81% 80% 89% 158%
</TABLE>
(1) Unannualized.
(2) Annualized.
(3) Net investment income per share has been calculated in accordance with SEC
requirements, with the exception that end of the year accumulated
undistributed/(overdistributed) net investment income has not been adjusted
to reflect current year permanent differences between financial and tax
accounting.
(4) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund 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 Fund based on market value since the relationship between
the market price of the stock and net asset value varied during each
period.
<PAGE>
________________________________________________________________________________
CIGNA INVESTMENT SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 10
(Continued)
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, 1998 $1,658 $0.35 $1,447 $0.31 $ 4 $ - $ (35) $ (0.01)
June 30, 1998 1,662 0.35 1,454 0.30 524 0.11 493 0.11
September 30, 1998 1,631 0.34 1,414 0.29 1,134 0.24 1,159 0.24
December 31, 1998 1,617 0.34 1,353 0.28 (927) (0.19) (1,240) (0.26)
March 31, 1999 1,588 0.33 1,389 0.29 (1,983) (0.41) (1,936) (0.40)
June 30, 1999 1,654 0.35 1,451 0.30 (2,182) (0.46) (2,070) (0.43)
September 30, 1999 1,574 0.33 1,388 0.29 (1,276) (0.27) (1,230) (0.26)
December 31, 1999 1,639 0.34 1,416 0.30 (1,362) (0.28) (1,736) (0.36)
March 31, 2000 1,589 0.33 1,346 0.28 (389) (0.08) (384) (0.08)
June 30, 2000 1,605 0.34 1,447 0.30 (400) (0.08) (287) (0.06)
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</TABLE>
MATTERS SUBMITTED TO A VOTE OF SHAREHOLDERS
The Annual Meeting of the Shareholders of CIGNA Investment Securities, Inc. (the
"Fund") was held on Monday, April 24, 2000 at 1:00 p.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 3,830,471.347 56,887.551
Richard H. Forde 3,832,854.399 54,504.499
Russell H. Jones 3,831,655.771 55,703.127
Thomas C. Jones 3,830,908.732 56,450.166
Paul J. McDonald 3,830,722.507 56,636.391
The appointment of PricewaterhouseCoopers LLP to serve as independent
accountants for the fiscal year ending December 31, 2000 was ratified by a vote
of shareholders of the Fund as follows:
FOR AGAINST ABSTAIN
--- ------- -------
3,855,922.864 13,585.050 17,850.984
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>
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________________
CIGNA INVESTMENT SECURITIES, INC.
TRUSTEES OFFICERS
<S> <C> <C>
Thomas C. Jones
Hugh R. Beath PRESIDENT, CIGNA RETIREMENT & INVESTMENT Richard H. Forde
ADVISORY DIRECTOR SERVICES AND CHAIRMAN OF THE BOARD, CHAIRMAN OF THE BOARD
ADMEDIA CORPORATE ADVISORS, INC. TIMESSQUARE CAPITAL MANAGEMENT, INC. AND PRESIDENT
Paul J. McDonald
Richard H. Forde SPECIAL ADVISOR TO THE BOARD OF
SENIOR MANAGING DIRECTOR DIRECTORS Alfred A. Bingham III
TIMESSQUARE CAPITAL MANAGEMENT, 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 TimesSquare Capital Management, Inc., 900 Cottage Grove Road,
Hartford, Connecticut 06152.
________________________________________________________________________________
--------------------------------------------------------------
PORTFOLIO COMPOSITION (UNAUDITED)
June 30, 2000
MARKET % OF
QUALITY RATINGS* OF VALUE MARKET
BONDS (000) VALUE
-------------------------------------------------------------
Aaa/AAA $ 37,834 49.3%
Aa/AA 3,228 4.2%
A/A 10,503 13.7%
Baa/BBB 12,756 16.6%
Ba/BB 4,641 6.0%
B/B 2,309 3.0%
Below B 597 0.8%
Not Rated 4,855 6.3%
----------- ---------
$ 76,723 100.0%
=========== =========
----------------------------------------------------------------
*The higher of Moody's or Standard & Poor's Ratings.
<PAGE>
[CIGNA TREE LOGO GRAPHIC APPEARS HERE/R/]
CIGNA Investment Securities, Inc. [CIGNA TREE LEAVES GRAPHIC APPEARS HERE]
P.O. Box 13856
Philadelphia, PA 19101
CIGNA INVESTMENT
SECURITIES, INC.
-------------------- ________________________________________
BULK RATE
U.S. POSTAGE SEMIANNUAL REPORT
PAID JUNE 30, 2000
SO. HACKENSACK, NJ
PERMIT 750
--------------------
[CIGNA TREE LOGO GRAPHIC APPEARS HERE /R/]
