-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EG/Qz4Jy2DelEn1xLTVJ+G0G5DJiDVPziiouLaNYSVMDT4uNkKfZNGJffW469zVE MUEbt9w9RI3U/LBjVzbocQ== /in/edgar/work/0000049975-00-500002/0000049975-00-500002.txt : 20001120 0000049975-00-500002.hdr.sgml : 20001120 ACCESSION NUMBER: 0000049975-00-500002 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20001117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIGNA INVESTMENT SECURITIES INC CENTRAL INDEX KEY: 0000049975 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 231886274 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-02299 FILM NUMBER: 772361 BUSINESS ADDRESS: STREET 1: 950 WINTER STREET STREET 2: SUITE 1200 CITY: WALTHAM STATE: MA ZIP: 02154 MAIL ADDRESS: STREET 1: C\O TIMESSQUARE CAPITAL MANAGEMENT, INC. STREET 2: 900 COTTAGE GROVE ROAD, S-215 CITY: HARTFORD STATE: CT ZIP: 06152-2215 FORMER COMPANY: FORMER CONFORMED NAME: INA INCOME & CONVERTIBLE FUND DATE OF NAME CHANGE: 19730426 N-30B-2 1 cis3q00.txt THIRD QUARTER REPORT TO SHAREHOLDERS ________________________________________________________________________________ DEAR SHAREHOLDERS: We are pleased to provide this report for CIGNA Investment Securities, Inc. (the "Fund") covering the nine months ended September 30, 2000. THE ECONOMY Gross domestic product (GDP) growth appeared to slow significantly during the third quarter, following robust growth during the first half of the year. Surging energy prices, slower personal income growth, a build-up of excess inventories at the retail level, and the lagged effect of the six Fed interest rate hikes all contributed to the slowdown. We estimate that GDP expanded at only a 2.5% annual rate during the quarter, less than half the 5.6% growth of the second quarter and well below the 4.5% growth rate of the past five-year period. Excluding energy, we estimate that the "core" rate of inflation averaged approximately 2.5% during the quarter. MARKET REVIEW Domestic bonds again outperformed domestic equities during the quarter, as fixed income markets benefited from widespread signs of economic slowdown, moderating inflation, a strong U.S. dollar, and evidence that investors are becoming more risk averse. The Lehman Brothers Aggregate Bond Index gained 3.01% in the period, while the S&P 500 Index fell by 0.97% and the NASDAQ Composite Index declined by 7.39%. For the full nine-month period, the Lehman Brothers Aggregate Bond Index at 7.12 % was comfortably ahead of the 1.39 % loss for the S&P 500 Index. STRATEGY Our decision to underweight the U.S. Government Agency sector during the third quarter had a negative impact on portfolio performance, as Agencies were one of the leading performers in the Lehman Aggregate Index. Valuations have been driven by politics, as congressional hearings were held regarding regulations affecting Government-sponsored Agencies. We continue to be overweight in our corporate bond allocation, but we took advantage of some pricing opportunities and reduced our exposure in order to reallocate some proceeds to mortgage-backed securities (MBS). Our small High Yield weighting is a conservative, defensive weight. We trimmed our emerging market debt exposure during the late part of the third quarter, as the emerging markets approached tight year-to-date spread levels. Going forward, we will be opportunistically looking to pick-up assets in those emerging market countries we feel have stronger economic fundamentals and upgrade potential such as Brazil, Mexico, and Russia. (continued on panel 4) 1 ________________________________________________________________________________ CIGNA INVESTMENT SECURITIES, INC. FINANCIAL SUMMARY For the Nine Months Ended September 30 (Unaudited) (In Thousands) - -------------------------------------------------------------------------------- 2000 1999 ---- ---- Net investment income $4,196 $4,228 Net realized and unrealized gain (loss) 214 (5,441) Per share: Net investment income $0.88 $0.88 Dividends from net investment income $0.84 $0.84 Net asset value at end of period $17.87 $18.15 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME PER SHARE For the Nine Months Ended September 30 (Unaudited) - -------------------------------------------------------------------------------- 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- $0.88 $0.88 $0.90 $0.93 $0.96 - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES September 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- (IN THOUSANDS) -------------- ASSETS: Investments at market value (Cost - $84,670) $ 84,385 Cash 5 Receivable for investments sold 4,000 Interest receivable 1,286 Investment for Directors' deferred compensation plan 177 ------------ Total assets 89,853 ------------ LIABILITIES: Payable for investments purchased 3,946 Deferred Directors' fees payable 177 Accrued advisory fees payable 39 Other accrued expenses (including $3 due to affiliate) 74 ------------ Total liabilities 4,237 ------------ NET ASSETS $ 85,616 ============ NET ASSET VALUE PER SHARE Applicable to 4,792 shares of $0.10 par value capital stock outstanding (12,000 shares authorized) $ 17.87 ============ 2 ________________________________________________________________________________ CIGNA INVESTMENT SECURITIES, INC. STATEMENT OF OPERATIONS AND CHANGE IN NET ASSETS For the Nine Months Ended September 30, 2000 (Unaudited) - --------------------------------------------------------------------------------
(IN THOUSANDS) -------------- INVESTMENT INCOME: Interest $4,791 EXPENSES: Investment advisory fees $337 Custodian fees 60 Transfer agent 43 Shareholder reports 38 Administrative services 34 Auditing and legal fees 29 Directors' fees 20 State taxes 18 Other 16 595 ------------ ----------------- NET INVESTMENT INCOME 4,196 NET REALIZED GAIN/LOSS: Investments (2,096) Futures 54 Currency transactions 54 UNREALIZED APPRECIATION/DEPRECIATION: Investments 2,264 Futures (56) Currency transactions (6) ----------------- NET INCREASE IN NET ASSETS FROM OPERATIONS 4,410 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (4,024) ----------------- NET INCREASE IN NET ASSETS 386 NET ASSETS: Beginning of period 85,230 ----------------- End of period (includes undistributed net investment income of $282) $85,616 =================
3 ________________________________________________________________________________ PERFORMANCE The Fund returned 2.85% for the third quarter of 2000 (based on its underlying net asset value) and 5.82% for the year-to-date. The Fund's share price returned 3.98% for the quarter and 13.64% for the year-to-date. OUTLOOK It is unlikely that the economy will return to the 5% growth pace of the previous two-year period during the remainder of this economic expansion. The rate of inflation appears to have stabilized at the 2 to 2.5 % level, and is unlikely to move significantly higher without a resurgence in consumer spending. Should the economy weaken unexpectedly, Government monetary and fiscal policies are poised to move to a more stimulative phase. Because of the growing dependence of economic activity on corporate earnings and cash flow, the outlook for corporate profits is the single biggest risk to our continued moderate and sustained economic expansion scenario. As a broad generalization, U.S. economic fundamental conditions remain more supportive of bonds relative to equities. Within fixed income markets, high-grade non-government debt is likely to outperform the Treasury sector, primarily a function of valuation. Both high-grade corporates and mortgage-backed securities are priced at spreads that are well above normal levels. They also provide investors with attractive inflation-adjusted current income returns and opportunity for solid, longer-term capital gains. Sincerely, /s/ Richard H. Forde Richard H. Forde CHAIRMAN OF THE BOARD AND PRESIDENT CIGNA INVESTMENT SECURITIES, INC. 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. 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, Stock Transfer Department, P.O. Box 8200, Boston, MA, 02266-8200, or call 1.800.426.5523. 4 [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 THIRD QUARTER REPORT PAID SEPTEMBER 30, 2000 SO. HACKENSACK, NJ PERMIT 750 - -------------------- PRINTED ON RECYCLED PAPER 542775 9/00 INACM Q3-9/00 [CIGNA TREE LOGO GRAPHIC APPEARS HERE /R/] -----END PRIVACY-ENHANCED MESSAGE-----