<PAGE>
DIRECTORS
Lorenzo D. Courtright* Clark R. Gates
Morris A. Densmore* William R. Howell*
Stephen J. Dunn* Michael L. Noel*
Richard H. Earnest Kevin A. Rogers
*Serve as members of the Audit Committee
OFFICERS
Morris A. Densmore CHAIRMAN
Clark R. Gates PRESIDENT
James V. Atkinson VICE PRESIDENT AND
PORTFOLIO MANAGER
Richard H. Earnest VICE PRESIDENT
Richard J. Dunchak TREASURER
Jonathan A. Wright SECRETARY
AUDITORS
Arthur Andersen LLP
701 "B" Street (1600)
San Diego, CA 92101
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, N.Y. 10015
TRANSFER AGENT/DIVIDEND
REINVESTMENT PLAN AGENT
Harris Trust Company of California
601 South Figueroa St., 49th Floor
Los Angeles, California 90017
(213) 239-0670
MAILING ADDRESS
Current Income Shares, Inc.
P.O. Box 30151
Terminal Annex
Los Angeles, California 90030
TELEPHONE
(800) 634-6521
NYSE SYMBOL
"CUR"
CURRENT INCOME SHARES, INC.
ANNUAL REPORT FOR
DECEMBER 31, 1995
Investment Adviser:
UNION CAPITAL ADVISORS-REGISTERED TRADEMARK-
A DIVISION OF UNION BANK
445 South Figueroa Street
Los Angeles, California 90071
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to report the results of the operation of your Company for
1995. For the year net investment income was $3,239,415 of which 88.5 cents per
share was distributed. In addition to this, the Fund paid a special capital gain
dividend of 59.18 cents per share for a total payout per share of $1.48. During
the year, net assets increased $4,381,723 to $50,120,223 at December 31, 1995.
Net asset value per share increased during the year from $12.45 to $13.64.
1995 proved to be one of the most prosperous years ever for investors. The
year ended with stocks climbing to historic highs, bond yields declining
dramatically, the dollar strengthening, and agreement that the Federal Reserve
had succeeded in engineering its "soft landing" (slow economic growth with
moderate inflation).
The combination of slowing economic growth and low inflation is often an
ideal scenario for interest rate reductions and that is exactly what the federal
reserve did in fourth quarter 1995. On December 19 the Federal Open Market
Committee voted to cut its target for the Federal Funds rate-for the second time
in six months-by 25 basis points to 5.5%, citing better than expected inflation
and falling inflationary expectations as its justification. Prior to this action
the real Fed funds rate (the nominal rate minus the inflation rate) was near
levels generally indicative of a restrictive monetary policy and considered
inappropriate for an economy experiencing decelerating growth. At year end the
real Fed Funds rate stood at 3.0% (5.5% minus 2.5% inflation) which is still
higher than the 10 year fed funds average of 2.25%. The latter is considered to
be the equilibrium fed funds rate, i.e. the rate that is consistent with
sustained noninflationary growth. Pressure for lower short term rates should
continue and a 1996 year-end Fed Funds target of between 4.5 and 5% now seems
possible.
In spite of the unemployment rate falling to levels which have historically
been associated with rising price pressures, inflation remained modest with
underlying cost pressures remaining benign. The most recent data on consumer
prices showed inflation up two tenths of one percent. Overall, inflation has
averaged less than 2.5% for the past two years, due primarily to well controlled
labor costs at the corporate level, and a cautious consumer.
Plunging interest rates caused the bond market to soar and deliver
stock-like returns during 1995. The Lehman Brothers long term treasury bond
index soared 31%. Long term rates dropped from 7.9% in January of 1995 to finish
the year at 5.9%, while the intermediate 5 year note declined from 7.8% to 5.4%.
Although declines in long bond interest rates reduce coupon dividends in the
Fund, the increases in bond values enabled the Fund to realize capital gains as
a way to capture additional current income.
Corporate bonds as a whole did better than Governments and Mortgages for the
year.
<PAGE>
- --------------------------------------------------------------------------------
In part that is due to the fact that longer average maturities in the corporate
index benefit to a greater degree from a declining interest rate environment. In
1995 yields on 30 year bonds, for example, declined 200 basis points, which
resulted in a market value increase of approximately 27% per bond. Additionally,
corporate bond spreads to comparable U.S. Treasuries narrowed, while mortgage
pass-through yields widened to Treasuries, thereby penalizing the latter's
performance.
Going into the first quarter of 1996, economic growth in the U.S. and around
the world continues to be sluggish with little in the way of inflationary
pressures. As long as these conditions prevail, we feel that bonds at current
rates (i.e. 30 yr. U.S. Treasuries at 6% and 10 yr. at 5 5/8%) represent value.
The audited financial statements for the period ended December 31, 1995,
together with the portfolio of investments owned on the same date, are presented
on the following pages. The table below reflects the year-end portfolio
distribution according to the rating grades assigned by Standard & Poor's.
<TABLE>
<CAPTION>
As a Percent of
Total Investments
Grade in Securities
- ------------------------------ -----------------
<S> <C>
AAA........................... 36.3%
A............................. 20.6%
BBB........................... 25.5%
-------
Subtotal................ 82.4%
BB............................ 15.2%
A-1........................... 2.4%
-------
100.00%
-------
-------
</TABLE>
If you have any questions regarding Current Income Shares, Inc., please
contact us or our transfer agent, Harris Trust Company of California, at the
addresses or phone numbers presented on the cover of this report.
[SIGNATURE]
Clark R. Gates
President
January 31, 1996
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
DECEMBER 31, 1995 FOR THE YEAR ENDED DECEMBER 31, 1995
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities at
market value:
Bonds (Cost $46,063,377)...................................... $ 49,333,612
Cash............................................................ 44,472
Interest receivable............................................. 794,906
------------
Total Assets.................................................. 50,172,990
------------
LIABILITIES
Accrued expenses................................................ 52,767
------------
NET ASSETS........................................................ $ 50,120,223
------------
------------
Net assets are represented by:
Capital stock, $1 par, 25,000,000
shares authorized, 3,673,334
shares issued and outstanding............................... $ 3,673,334
Paid-in capital in excess of par
value....................................................... 42,977,827
Accumulated net realized gains................................ 204,331
Unrealized appreciation on
investments................................................. 3,270,235
Overdistributed net investment income......................... (5,504)
------------
NET ASSETS........................................................ $ 50,120,223
------------
------------
NET ASSET VALUE PER SHARE
($50,120,223 DIVIDED BY 3,673,334 shares
of common stock outstanding).................................. $13.64
</TABLE>
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest......................................... $ 3,687,621
--------------
Total Investment Income........................ $ 3,687,621
EXPENSES
Investment management
and advisory fees.............................. 245,070
Custodian fees................................... 10,780
Transfer agent fees.............................. 45,598
Directors' fees and
shareholders expenses.......................... 35,499
Printing......................................... 29,008
Legal and auditing fees.......................... 48,526
Listing fees -- NYSE............................. 5,001
Insurance expense................................ 21,764
Taxes............................................ 5,471
Other expenses................................... 1,489
--------------
Total Expenses................................. 448,206
-----------
Net Investment
Income..................................... $ 3,239,415
-----------
REALIZED AND
UNREALIZED GAINS AND LOSSES
ON INVESTMENTS IN SECURITIES
Realized gain from
securities transactions:
Proceeds from sales............................ $ 116,322,332
Cost of securities
sold.......................................... (113,591,668)
--------------
Net realized gain on
investments sold........................... 2,730,664
Unrealized appreciation
of investments:
Beginning of period............................ (566,191)
End of period.................................. 3,270,235
--------------
Net unrealized
appreciation during the period............ $ 3,836,426
-----------
Net realized and
unrealized gains on
investments............................... $ 6,567,090
-----------
Net increase in net assets resulting from
operations...................................... $ 9,806,505
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income.......................................... $ 3,239,415 $ 3,469,688
Net realized gain/(loss) on investments sold................... 2,730,664 (119,355)
Net unrealized appreciation/(depreciation) of investments
during
the period................................................... 3,836,426 (6,295,600)
------------ -----------
Net increase/(decrease) in net assets resulting from
operations................................................... 9,806,505 (2,945,267)
Dividends to shareholders from net investment income........... (5,424,782) (3,452,935)
------------ -----------
Increase/(decrease) in net assets............................ 4,381,723 (6,398,202)
NET ASSETS
Beginning of year.............................................. 45,738,500 52,136,702
------------ -----------
End of year [including under/(over)distributed net investment
income of ($5,504) and $5,984, respectively]................. $ 50,120,223 $45,738,500
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard & Poor's Principal Market
Security Rating Amount Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
BONDS -- (98.43%)
- -------------------------------------------------------------------------------------------------------------------
ASSET BACKED (4.09% OF NET ASSETS)
Standard Credit Card 95-9A 6.55%, 10/07/07......................... AAA $2,000,000 $ 2,048,401
- -------------------------------------------------------------------------------------------------------------------
TOTAL ASSET BACKED (Cost $1,998,527) 2,048,401
- -------------------------------------------------------------------------------------------------------------------
BANKS (8.65% OF NET ASSETS)
Bankers Trust Co. 7.25%, 01/15/03.................................. A 1,500,000 1,575,000
First Bank of Puerto Rico 7.625%, 12/15/05......................... BB+ 1,000,000 1,008,750
NationsBank Corporation 7.75%, 08/15/15............................ A- 1,600,000 1,756,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL BANKS (Cost $4,139,497) 4,339,750
- -------------------------------------------------------------------------------------------------------------------
CANADIANS (5.28% OF NET ASSETS)
Nova Scotia Province 8.75%, 04/01/22............................... A- 1,100,000 1,337,875
Saskatchewan Province Deb. 9.375%, 12/15/20........................ BBB+ 1,000,000 1,307,500
- -------------------------------------------------------------------------------------------------------------------
TOTAL CANADIANS (Cost $2,187,420) 2,645,375
- -------------------------------------------------------------------------------------------------------------------
CONSUMER (4.32% OF NET ASSETS)
Ralston Purina Company 7.75%, 10/01/15............................. A- 2,000,000 2,165,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL CONSUMER (Cost $2,089,867) 2,165,000
- -------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES (15.72% OF NET ASSETS)
Houston Industries, Inc. 9.375%, 06/01/01.......................... BBB 2,000,000 2,297,500
Niagara Mohawk Power Corporation 9.75%, 11/01/05................... BB 1,500,000 1,550,625
Union Oil Co. of California 9.125%, 02/15/06....................... BBB 2,000,000 2,407,500
UtiliCorp United 8.45%, 11/15/99................................... BBB 1,500,000 1,623,750
- -------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES (Cost $7,188,267) 7,879,375
- -------------------------------------------------------------------------------------------------------------------
GAS (7.13% OF NET ASSETS)
Coastal Corporation 9.625%, 05/15/12............................... BB+ 2,000,000 2,467,500
Panhandle Eastern Corporation 7.875%, 08/15/04..................... BBB 1,000,000 1,103,750
- -------------------------------------------------------------------------------------------------------------------
TOTAL GAS (Cost $3,046,594) 3,571,250
- -------------------------------------------------------------------------------------------------------------------
MANUFACTURING (5.48% OF NET ASSETS)
Georgia Pacific Corporation 7.7%, 06/15/15......................... BBB- 1,500,000 1,597,500
Westvaco Corporation 10.125%, 06/01/19............................. A 1,000,000 1,150,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL MANUFACTURING (Cost $2,514,465) 2,747,500
- -------------------------------------------------------------------------------------------------------------------
TOTAL OTHER FINANCE (4.45% OF NET ASSETS)
Ford Motor Credit Corporation 5.61%, 01/05/96...................... A-1 1,200,000 1,200,000
U.S. West Capital Funding, Inc. 6.75%, 10/01/05.................... A+ 1,000,000 1,032,500
- -------------------------------------------------------------------------------------------------------------------
TOTAL OTHER FINANCE (Cost $2,200,499) $ 2,232,500
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- 4 -
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
PORTFOLIO OF INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard & Poor's Principal Market
Security Rating Amount Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
SECURITIES BROKERS (2.26% OF NET ASSETS)
Lehman Brothers Holdings, Inc. Note 8.75%, 03/15/05...................... A $1,000,000 $ 1,132,500
- -------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES BROKERS (Cost $994,031) 1,132,500
- -------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (4.48% OF NET ASSETS)
GTE Corporation 10.3%, 11/15/17.......................................... BBB+ 2,000,000 2,245,000
- -------------------------------------------------------------------------------------------------------------------------
TOTAL TELECOMMUNICATIONS (Cost $2,305,808) 2,245,000
- -------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (4.96% OF NET ASSETS)
AMR Corporation Deb 10%, 04/15/21........................................ BB+ 2,000,000 2,487,500
- -------------------------------------------------------------------------------------------------------------------------
TOTAL TRANSPORTATION (Cost $1,960,729) 2,487,500
- -------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT (31.6% OF NET ASSETS)
U.S. Treasury Note 6.25%, 05/31/00....................................... AAA 2,500,000 2,583,975
U.S. Treasury Note 6.125%, 09/30/00...................................... AAA 2,500,000 2,575,275
U.S. Treasury Note 7.5%, 11/15/01........................................ AAA 1,000,000 1,102,130
U.S. Treasury Note 6.375%, 08/15/02...................................... AAA 5,100,000 5,352,704
U.S. Treasury Note 6.5%, 08/15/05........................................ AAA 3,000,000 3,196,560
U.S. Treasury Bond 7.125%, 02/15/23...................................... AAA 900,000 1,028,817
- -------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT (Cost $15,437,673) 15,839,461
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (98.43% OF NET ASSETS)
(COST $46,063,377) 49,333,612
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET
(1.57% of Net Assets) 786,611
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100.00% OF NET ASSETS) $50,120,223
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 5 -
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Current Income Shares, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended, as a diversified, closed-end management
investment company. The Company was incorporated on November 15, 1972, and
commenced operations on March 27, 1973. The primary investment objective of the
Company is to seek a high level of current income for its shareholders
consistent with investment in a diversified portfolio in which marketable debt
securities considered by management to be of high quality will predominate. To a
lesser extent the Company may also invest in other debt securities and in
certain equities.
The following is a summary of significant accounting policies followed by the
Company in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
(a) Security valuation -- Portfolio securities listed or traded on a national
securities exchange are valued at the last reported sales price;
securities traded in the over-the-counter market and listed securities for
which no sales were reported on that date are valued at the most recent
bid price.
(b) Federal income taxes -- It is the Company's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income, and net
capital gains to its shareholders. Accordingly, no Federal income tax
provision is required.
(c) Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of income and
expenses during the reporting period. Actual results could differ from
those estimates.
(d) Other -- Security transactions are accounted for on the trade date the
securities are purchased or sold. Purchased discounts and premiums on
securities held are accreted or amortized to interest income over the life
of each security using a method which approximates the effective interest
method. Interest income is recognized on the accrual basis of accounting.
Realized gains and losses are computed using the specific cost of the
securities sold.
2. Purchases and Sales of Securities
Purchases and proceeds of securities other than short-term securities and U.S.
Government obligations aggregated $32,463,321 and $52,024,449, respectively.
Purchases and redemptions of U.S. Government obligations aggregated $26,901,703
and $18,453,094, respectively.
As of December 31, 1995, unrealized appreciation for Federal income tax
purposes aggregated $3,270,235 of which $3,331,043 related to appreciated
securities and $60,808 related to depreciated securities. The aggregate cost for
Federal income tax purposes was not materially different from amounts reported
for financial reporting purposes.
3. Transactions with Affiliates
Union Bank (the "Adviser") received fees of $245,070 during the year ended
December 31, 1995 for providing investment management and advisory services to
the Company. The fee is based on an annual rate of 0.5% of the Company's average
net assets.
The Advisory Agreement provides that the Adviser reimburse the Company for
expenses (excluding interest, taxes, the expenses of any offering of the
Company's securities and brokerage commissions) incurred by the Company in
excess of one and one-half percent (1 1/2%) per year of the first $30 million of
average net assets of the Company and one percent (1%) of average net assets in
excess of $30 million. The expenses incurred by the Company for the year ended
December 31, 1995, did not exceed the limitation established by the Advisory
Agreement.
- 6 -
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
4. Agreements with Service Providers
Harris Trust Company of California provides transfer agent and dividend
reinvestment plan services and Bankers Trust Company provides custodial services
for the Company.
5. Financial Highlights
Selected data for each share of capital stock outstanding throughout each
year follows:
<TABLE>
<CAPTION>
01/01/95 TO 01/01/94 to 01/01/93 to 01/01/92 to 01/01/91 to
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Investment Income....................................... $ 1.00 $ 1.06 $ 1.09 $ 1.10 $ 1.19
Expenses................................................ 0.12 0.12 0.12 0.12 0.12
------------ ------------ ------------ ------------ ------------
Net Investment income................................... 0.88 0.94 0.97 0.98 1.07
Dividends distributed from net Investment
Income and realized gain on investments............... (1.48) (0.94) (0.97) (1.03) (1.09)
Net realized and unrealized gain (loss) on
investments........................................... 1.79 (1.74) 0.86 0.22 1.38
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net asset value.............. 1.19 (1.74) 0.86 0.17 1.36
Net asset value:
Beginning of period................................... 12.45 14.19 13.33 13.16 11.80
------------ ------------ ------------ ------------ ------------
End of period......................................... $ 13.64 $ 12.45 $ 14.19 $ 13.33 $ 13.16
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Per share market value:
End of period......................................... $ 11.875 $ 11.000 $ 13.00 $ 12.625 $ 13.25
Total investment return*................................ 22.25% (8.33)% 10.53% 3.22% 20.51%
RATIOS AND SUPPLEMENTAL DATA
Ratio of expenses to average net assets................. 0.9% 0.9% 0.8% 0.9% 0.9%
Ratio of net investment income to average net assets.... 6.6% 7.2% 6.9% 7.5% 8.6%
Portfolio turnover rate................................. 118.52% 42.21% 24.15% 87.08% 82.38%
Net assets, end of period (000)......................... $ 50,120 $ 45,739 $ 52,137 $ 48,967 $ 48,359
</TABLE>
* Excluding the effect of shareholders' brokerage commissions, if any.
- 7 -
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
6. Unaudited Quarterly Results of Operations
The following is a summary of unaudited quarterly results of operations:
<TABLE>
<CAPTION>
Net Realized and
Unrealized Gain (Loss)
Net Investment Income on Investments
Investment ------------------------ ---------------------------
Income Amount Per Share Amount Per Share
----------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Three months ended:
March 31, 1995....................................... $ 918,292 $ 818,261 $ 0.22 $ 1,548,456 $ 0.42
June 30, 1995........................................ 958,845 854,814 0.23 2,635,465 0.72
September 30, 1995................................... 922,945 815,939 0.22 503,217 0.14
December 31, 1995.................................... 887,539 750,401 0.21 1,879,952 0.51
March 31, 1994....................................... $ 977,404 $ 870,976 $ 0.24 $ (2,596,646) $ (0.71)
June 30, 1994........................................ 967,888 864,517 0.23 (2,429,527) (0.66)
September 30, 1994................................... 980,816 877,637 0.23 (812,300) (0.22)
December 31, 1994.................................... 962,818 856,558 0.24 (576,482) (0.15)
</TABLE>
7. Dividend Reinvestment Plan
The Company maintains a Dividend Reinvestment Plan in which shareholders may
participate. The Plan is offered through Harris Trust Company of California (the
"Agent"). Under the Plan the Agent uses dividends and other cash distributions
from the Company to purchase additional shares of Company common stock in the
open market for Plan participants. Participants may also make certain cash
contributions to the Plan. Further information regarding the Plan may be
obtained by writing to the Agent at: Harris Trust Company of California, 601
South Figueroa Street, Los Angeles, CA 90017.
- 8 -
<PAGE>
- --------------------------------------------------------------------------------
CURRENT INCOME SHARES, INC.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders
of Current Income Shares, Inc.:
We have audited the accompanying statement of assets and liabilities of
Current Income Shares, Inc., including the portfolio of investments in
securities as of December 31, 1995, and the related statement of operations for
the year then ended, statements of changes in net assets for each of the two
years in the period then ended, and financial highlights, disclosed in note 5,
for each of the four years in the period then ended. These financial statements
and financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the year
ended December 31, 1991, were audited by other auditors whose report dated
January 30, 1992, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Current Income Shares, Inc. as of December 31, 1995, the results of its
operations for the year then ended, changes in its net assets for each of the
two years in the period then ended, and financial highlights for each of the
three years in the period then ended, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
San Diego, CA
February 7, 1996
