<PAGE>
DRAFT - 4/26/96
As filed with the Securities and Exchange Commission on May 2, 1996
Investment Company Act File No. 811-2357
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
/X/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/X/ Amendment No. 16
CURRENT INCOME SHARES, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
445 South Figueroa Street
Los Angeles, California 90071
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code (213) 236-7098
Jonathan A. Wright, Esq.
Secretary
445 South Figueroa Street
Los Angeles, California 90071
(Name and Address of Agent for Service)
<PAGE>
CURRENT INCOME SHARES, INC.
CROSS REFERENCE SHEET
FORM N-2 ITEM NO. LOCATION
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PART A - INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover *
Item 2. Inside Front and Outside Back Page *
Item 3. Fee Table Fee Table
Item 4. Financial Highlights *
Item 5. Plan of Distribution *
Item 6. Selling Shareholders *
Item 7. Use of Proceeds *
Item 8. General Description of the The Registrant, Investment
Registrant Objecttives and Policies,
Concentration, Investment
Limitations, Share Price
Information
Item 9. Management Board of Directors, The
Adviser, Compensation,
Custodian, Transfer Agent and
Dividend Disbursement Agent
Item 10. Capital Stock Control Persons and Principal
Holders of Securities (Part B),
Number of Holders of Common
Stock (Part B)
Item 11. Defaults and Arrears on Senior Defaults and Arrears on Senior
Securities Securities
Item 12. Legal Proceedings Pending Legal Proceedings
Item 13. Table of Contents of the Statement Table of Contents
of Additional Information
PART B - INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 14. Cover Page Cover Page
Item 15. Table of Contents Table of Contents
Item 16. General Information and History The Registrant (Part A)
Item 17. Investment Objectives and Policies Investment Objectives and
Policies (Part A and Part B),
Concentration (Part A),
Investment Limitations (Part A)
(i)
<PAGE>
Item 18. Management Management, Remuneration of
Directors and Officers, Board
of Directors (Part A), The
Adviser (Part A), Compensation
(Part A), Custodian, Transfer
Agent and Dividend Disbursement
Agent (Part A)
Item 19. Control Persons and Principal Number of Holders of Common
Holders of Securities Stock (Part C), Share Price
Information (Part A)
Item 20. Investment Advisory and Other The Adviser (Part A),
Services Custodian, Transfer Agent and
Dividend Disbursement Agent
(Part A)
Item 21. Brokerage Allocation and Other Capital Stock (Dividend
Parties Reinvestment Plan)
Item 22. Tax Status Taxes (Part A), Financial
Statements
Item 23. Financial Statements Capital Stock, Share Price
Information (Part A)
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits Financial Statements (Part B)
Item 25. Marketing Arrangements Marketing Arrangements (Part B)
Item 26. Other Expenses of Issuance and Other Expenses of Issuance and
Distribution Distribution (Part B)
Item 27. Persons Controlled by or Under Number of Holders of Common
Common Control with the Stock, Control Persons and
Company Principal Holders of
Securities (Part B)
Item 28. Number of Holders of Securities Persons Controlled by or Under
Common Control with the
Company, Control Persons and
Principal Holders of Securities
(Part B)
Item 29. Indemnification Indemnification
Item 30. Business and Other Connections of The Adviser (Part A),
Investment Adviser Investment Advisory
and Other Services (Part B)
Item 31. Location of Accounts and Records Services Provided by the
Adviser (Part A)
Item 32. Management Services Management Services (Part B)
Item 33. Undertakings *
* Not Applicable
(ii)
<PAGE>
PART A. INFORMATION REQUIRED IN A PROSPECTUS
ITEM 3. FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
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ANNUAL EXPENSES (as a percentage of net assets attributable to common shares)
Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50%
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40%
Total Annual Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 0.90%
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EXAMPLE 1 year 3 years 5 years 10 years
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You would pay the following expenses
on a $1,000 investment, assuming a
5% annual return: $9.00 $27.00 $48.00 $106.00
- --------------------------------------------------------------------------------
"OTHER EXPENSES" ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
THE PURPOSE OF THE FEE TABLE IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT AN INVESTOR IN THE COMPANY WILL BEAR DIRECTLY OR
INDIRECTLY. ADDITIONAL INFORMATION MAY BE FOUND UNDER "MANAGEMENT -- EXPENSES".
ITEM 8. GENERAL DESCRIPTION OF THE REGISTRANT
THE REGISTRANT
Current Income Shares, Inc., a Delaware corporation (the "Registrant" or
the "Company"), is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a closed-end diversified management investment
company. The Company was incorporated on November 15, 1972, and commenced
operations on March 27, 1973. Substantially all of the Company's net investment
income is distributed to shareholders in the form of dividends on the Company's
common stock.
INVESTMENT OBJECTIVES AND POLICIES
The Company's primary investment objective is to seek for its
shareholders a high level of current income, consistent with an investment in a
diversified portfolio in which high quality marketable debt securities will
predominate. To a lesser extent the Registrant may also invest in other debt
securities and in certain equity securities.
(1)
<PAGE>
The Company will invest at least 75% of its total assets in a
combination of one or more of the following types of interest-bearing debt
securities and in cash or cash equivalents:
(a) marketable straight debt securities which are rated at the time of
purchase within the four highest grades assigned by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P");
(b) securities issued or guaranteed by the United States Government,
its agencies or instrumentalities;
(c) marketable securities (payable in U.S. dollars) issued or
guaranteed by the Government of Canada or a Province of Canada or any
instrumentality or political subdivision thereof and acquired under
circumstances that would not subject the Registrant to payment of U.S.
Interest Equalization Tax, such securities not to exceed 25% of the
Registrant's total assets;
(d) obligations of, or guaranteed by, national or state banks or bank
holding companies, which obligations, although not rated as a matter of
policy by either Moody's or S&P, either are rated in the four highest
ratings assigned by Fitch Investors Service, Inc. ("Fitch") (AAA, AA, A
or BBB) or, if not rated by Fitch, are considered by the Adviser to have
investment quality comparable to securities which may be purchased under
item (a) above; and
(e) commercial paper rated Prime-1 or Prime-2 by Moody's, or A-l or
A-2 by S&P, or F-1 or F-2 by Fitch.
Up to 25% of the Company's total assets may consist of:
(i) straight debt securities not included in items (a) through (e)
above;
(ii) securities which may be convertible into or exchangeable for, or
carry warrants to purchase, common stock or other equity interests;
(iii) preferred stocks; and
(iv) common stocks which the Adviser considers to be of high quality
and likely to yield a relatively high degree of income in relation to cost.
With reference to items (i)-(iv) above, the acquisition of common stock
by the conversion of convertible securities or by the exercise of warrants
previously acquired by the Company will not be prohibited by the 25% limitation;
however, if such acquisition results in the aggregate value of securities
(2)
<PAGE>
within such categories exceeding 25% of the Company's total assets, the Company
will, within a reasonable time, dispose of securities within such items
sufficient to reduce the current value thereof to 25% or less of the Company's
total assets. (Pending such reduction, any new acquisition, otherwise than by
conversion or the exercise of warrants, within such categories would be
prohibited.) If such conversion or exercise results in the acquisition of non-
income-producing common stock, the Company will dispose of such common stock
within a reasonable time. Any such disposition may be carried out in an orderly
manner to realize the best obtainable price and, if deemed advisable, may be
delayed for a period of six months in order to realize long-term capital gain.
Sales of securities to meet such requirements could be required at a time when
they would not otherwise be made and would be disadvantageous to the Company.
The foregoing investment policies are deemed matters of fundamental
policy and cannot be changed without approval of the holders of the lesser of
(a) 67% of the Registrant's voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (b) more than 50% of the Registrant's outstanding voting
securities.
SHORT-TERM TRADING
The Company has in the past and intends in the future to engage in
short-term trading of debt securities. For this purpose "short-term trading"
means selling securities held for a relatively brief time, usually less than
three months and not more than six months. Generally, short-term trading
would be used by the Company in two situations:
(a) Market Development. A security may be sold to avoid depreciation
in what the Registrant anticipates will be a market decline (a rise in
rates), or a security may be purchased in anticipation of a market rise (a
decline in interest rates) and later sold; and
(b) Yield Disparities. A security may be sold and another of
comparable quality purchased at approximately the same time in order to take
advantage of what the Registrant believes is a temporary disparity in the
normal yield relationship between the two securities (a "yield disparity").
The Company cannot accurately predict its annual portfolio turnover
rate, but it anticipates that the annual turnover rate (excluding turnover of
securities having a maturity of one year or less and U.S. Treasury
(3)
<PAGE>
obligations) will not exceed 200% as an average from year to year. A 200%
portfolio turnover rate would occur, for example, if all of the securities in
the Company's portfolio were replaced twice in one year. The Company intends to
quality for "pass-through" federal income tax treatment under the Internal
Revenue Code and accordingly intends to limit its short-term trading so that
less than 30% of the Company's gross income (including all dividend and interest
income and gross realized capital gains, both short and long term, without
offset for realized capital losses) will be derived from gross gains realized on
the sale or other disposition of securities held for less than three months.
This limitation, which must be met in order to obtain such federal tax
treatment, at certain times may prevent the Company from realizing capital gains
on some securities held for less than three months. See "Taxes."
To the extent that the Company engages in short-term trading, its
buying and selling activity may be greater than that of investment companies
which do not follow such policy. Such activity can result in greater costs of
operation than is the case with other investment companies, and risks of loss in
portfolio value could be greater. Accordingly, an investment in shares of the
Company may be more speculative than an investment in shares of an investment
company which does not engage in short-term trading. The Company's shareholders
will be taxed at ordinary income tax rates on distributions representing
realization of gains on securities held less than six months.
LEVERAGE AND BORROWING
The Company is authorized to borrow from banks or other funding
institutions in negotiated transactions and to issue, public or privately and
from time to time, bonds, debentures or notes, in series or otherwise, with such
interest rates and other terms and provisions, including conversion rights if
deemed advisable, as the Board of Directors of the Company may from time to time
determine. However, to date the Company has not borrowed money,and it has no
present intention of doing so. Additional information regarding authorized
borrowing is set forth in the Statement of Additional Information.
(4)
<PAGE>
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies of the
Registrant and cannot be changed without the approval of the shareholders of the
Registrant by the vote specified above under "Investment Policies." The
Registrant may not:
(1) issue any senior securities (as defined in the 1940 Act), except
insofar as any borrowing permitted by item (2) below might be considered to
be the issuance of senior securities;
(2) borrow money or issue securities representing indebtedness except
(a) as described under "Leverage and Borrowing" and (b) for loans from banks
for temporary or emergency purposes in an amount not exceeding 5% of the
value of the total assets of the Company;
(3) mortgage, pledge or hypothecate its assets, except as described
under "Leverage and Borrowing" or to secure temporary or emergency borrowing;
(4) acts as an underwriter, except to the extent that, in connection
with the disposition of portfolio securities, the Company may be deemed to be
an underwriter under applicable laws;
(5) purchase or sell real estate or invest in exploration or
development programs for oil, gas or other minerals, except that the Company
may purchase or sell securities (other than partnership interests) issued by
companies or other entities owning or developing real estate, minerals or
interests therein;
(6) purchase or sell commodities or commodity contracts;
(7) invest more than 5% of the value of its total assets in the
securities of any one issuer (other than cash items, or securities of the
United States Government or its agencies or instrumentalities) or purchase
more than 10% of any class of the outstanding voting securities of any one
issuer (for this purpose, the Company considers "cash items" to include
cash and cash equivalents, and considers "securities of the United States
Government or its agencies or instrumentalities" to include repurchase
agreements with respect to such securities);
(8) knowingly invest more than 10% of the value of its total assets in
securities subject to legal or contractual delays in or restrictions on
resale, including securities which may be sold publicly only if they are
registered under the Securities Act of 1933;
(9) concentrate its investments in any particular industry, except that
it may invest up to 25% of the value of its total assets in the securities of
issuers in any one industry (provided that neither utility companies, as a
group, nor finance companies, as a group, will be considered a single
industry, nor for this purpose does the Company consider the U.S. Government
or its agencies or instrumentalities to be an "industry");
(5)
<PAGE>
(10) invest 10% or more of its total assets in securities of foreign
issuers, exclusive of investments in Canadian Government securities to the
extent stated above under "Investment Objectives and Policies";
(11) purchase or retain the securities of any issuer, if, to the
Company's knowledge, those officers or directors of the Company or of its
investment adviser who individually own beneficially more than 0.5% of the
outstanding securities of such issuer together own beneficially more than 5%
of such securities;
(12) make loans to others, except for the purchase of debt securities by
private placement (restricted securities) and the lending of portfolio
securities to the extent each is permitted by the Company's investment
policies (a repurchase agreement is not considered a loan within this
prohibition);
(13) purchase securities on margin, except that it may obtain such
short-term credits as may be necessary for the clearance of purchases or
sales of securities and except as transactions described above under
"Leverage and Borrowing" may be deemed to constitute margin transactions;
(14) participate on a joint or a joint and several basis in any
securities trading account (the "bunching" of orders for the sale or purchase
of marketable portfolio securities with other accounts under the management
of the Adviser to save commissions or to average prices among them is not
deemed to result in a securities trading account);
(15) invest in puts, calls or combinations thereof, except that the
Company may acquire warrants or other rights to subscribe to securities of
companies issuing such warrants or rights, or of parents or subsidiaries of
such companies, if acquired as part of a unit with or attached to other
securities;
(16) make short sales, except for sales "against the box" (short sales
when the Company contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short);
(17) invest for the purpose of exercising control or management;
(18) purchase the securities of other registered investment companies;
or
(19) purchase securities issued by UnionBanCal Corporation, or by any
company which, at the time of such purchase, is an affiliate thereof, or by
any investment company (excluding the Company) or real estate investment
trust managed or advised by UnionBanCal Corporation or any of its
subsidiaries.
(6)
<PAGE>
If a percentage restriction on investments or utilization of assets set
forth above, or under "Investment Objectives and Policies", is adhered to at the
time an investment is made, a later change in percentage resulting from changing
values or a change in the rating of a portfolio security will not be considered
a departure from the Company's investment policies.
Additional investment limitations and information concerning the
foregoing investment limitations are set forth in the Statement of Additional
Information.
RISK FACTORS
FIXED INCOME SECURITIES
The market value of the fixed income investments in which the Registrant
invests will change in response to interest rate changes and other factors.
During periods of falling interest rates, the values of outstanding fixed income
securities generally rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Moreover, while securities
with longer maturities tend to produce higher yields, the prices of longer
maturity securities are also subject to greater market fluctuations as a result
of changes in interest rates. Changes by recognized agencies in the rating of
any fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of these securities will not necessarily affect cash income derived
from these securities but will affect the Registrant's net asset value.
The Company may invest in securities rated in the fourth highest
category by a rating agency (or bank securities which are not rated but are
considered by the Adviser to have comparable investment quality). Such
securities, while still investment grade, are considered to have speculative
characteristics, and changes in economic conditions or other circumstances
may be more likely to lead to a weakened capacity to pay principal and
interest than would be the case with higher rated securities. The Registrant
may also invest a portion of its assets in debt securities rated below
investment grade, or in unrated securities which are considered by the
Adviser to be of comparable quality. The Registrant is limited by its
Prospectus to investing no more than 25% of its net assets in such
securities, which are commonly referred to as "junk
(7)
<PAGE>
bonds" and are speculative and subject to greater market fluctuations and risk
of loss of income and principal than higher rated bonds.
EQUITY SECURITIES
Investments in equity securities in general are subject to market risks
and economic and other factors that cause their prices to fluctuate over time.
The value of convertible equity securities is also affected by prevailing
interest rates, the credit quality of the issuer and any call provisions.
Investment in warrants involves certain risks, including the possible lack of a
liquid market for resale, price fluctuations as a result of speculation or other
factors, and the failure of the price of the underlying security to reach a
level at which the warrant can be prudently exercised (in which even the warrant
may expire without being exercised, resulting in a loss of the Fund's
investment). Fluctuations in the value of equity securities in which the
Registrant invests will cause the net asset value of its portfolio to fluctuate.
SHARE PRICE INFORMATION
The Company's securities are publicly held and are listed and traded
on the New York Stock Exchange with the ticker symbol CUR. The following
table sets forth for the periods indicated the high and low net asset values
per share of Common Stock, par value $1.00 per share, of the Company (the
"Common Stock"), the high and low sale prices on the New York Stock Exchange
per share of Common Stock and the number of shares traded:
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<TABLE>
<CAPTION>
Net Asset
Values(1) Sales Prices
--------- ------------
Common Stock High Low High Low Shares Traded(2)
- ------------ ---- --- ---- --- ----------------
<S> <C> <C> <C> <C> <C>
1996
First Quarter $ 13.71 $ 12.90 $ 12 $ 11 1/4 254,200
</TABLE>
- --------------------------------
(1) Based on the Company's computations of the net asset value at the close
of business on the last trading day of each week.
(2) As reported by the New York Stock Exchange.
(8)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1995
First Quarter 12.92 12.46 11 3/4 11 249,100
Second Quarter 13.69 12.87 11 7/8 11 1/8 150,300
Third Quarter 13.75 13.36 12 11 5/8 159,000
Fourth Quarter 14.07 13.46 12 1/4 11 1/2 213,800
1994
First Quarter 14.54 13.58 13 1/8 11 3/4 193,200
Second Quarter 13.48 12.90 12 1/8 11 1/2 201,200
Third Quarter 13.13 12.62 11 3/4 10 3/4 273,400
Fourth Quarter 12.86 12.45 11 1/2 10 3/4 310,600
</TABLE>
As evidenced by the above table, the Company's Common Stock has
historically traded in the market at less than net asset value.
On April 19, 1996, the net asset value per share of Common Stock was $12.95
and the closing sales price was $11.00.
ITEM 9. MANAGEMENT
BOARD OF DIRECTORS
The business and affairs of the Company are managed by and under the
direction of its Board of Directors (the "Board"), which presently has six
members. Members of the Board serve one year terms of office and are elected
by the shareholders at the annual meeting of shareholders. The Board has
designated an Executive Committee which is made up of three directors of the
Company and has the power of the Board in the management of the business and
affairs of the Company, except the power to recommend to shareholders any
action requiring shareholder approval.
THE ADVISER
Union Bank of California, N.A. (the "Adviser"), 350 California Street,
San Francisco, California 94104, acts as the Company's investment adviser
under an advisory agreement (the "Advisory Agreement") with the Company. The
Adviser is a federally chartered national banking association and is subject to
regulation by the Office of the Comptroller of the Currency.
Prior to April 1, 1996, Union Bank acted as the Company's investment
adviser under an advisory agreement (the "Prior Agreement") with the Company.
As a result of the merger of Bank Cal Tri-State
(9)
<PAGE>
Corporation into Union Bank on April 1, 1996, Union Bank of California, N.A.
(formerly The Bank of California, N.A.) became the banking successor to Union
Bank, and the Prior Agreement was terminated. At December 31, 1995, the Bank of
California, N.A. had total assets of approximately $8.0 billion and shareholder
equity of approximately $.9 billion. On that date, Union Bank had total assets
of approximately $19.5 billion and shareholder equity of approximately $1.5
billion.
UnionBanCal Corporation (formerly Union Bank), a bank holding company,
owns approximately 94% of the total outstanding shares of common stock of
Union Bank of California, N.A.; Bank of Tokyo-Mitsubishi, Ltd. owns
approximately 81% of the total outstanding shares of common stock of
UnionBanCal Corporation, and approximately 6% of the total outstanding shares
of Union Bank of California, N.A.
SERVICES PROVIDED BY THE ADVISER
Pursuant to the terms of the Advisory Agreement, the Adviser advises the
Company on the composition of its investment portfolio and provides and bears
the costs of research, statistical analysis and supervision of the Company's
investment portfolio. The Adviser is authorized, subject to control by the
Board, to determine which securities are to be bought or sold and in what
amounts. The portfolio manager for the Company is James V. Atkinson. Mr.
Atkinson was a Vice President of Union Bank from January 1991 to March 1996 and
has been a Vice President of the Adviser since April 1996. He was previously a
Vice President and Sales Manager of Smith Barney Harris Upham, International.
The Adviser is required by the Advisory Agreement to pay for office space,
facilities, business equipment, and costs of keeping the Company's accounting
records. For further information see "Expenses" below.
For its services, the Adviser is entitled to a fee, which is calculated
weekly and payable monthly, at an annual rate of .50% of the average daily net
assets of the Company. For the year ended December 31, 1995, the Adviser
received fees of $245,070.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Bankers Trust Company, 16 Wall Street, New York, NY 10015, act as
custodian for the Company.
(10)
<PAGE>
Harris Trust Company of California, 601 South Figueroa Street,
Los Angeles, CA 90017, acts as transfer agent, registrar, dividend disbursement
agent and dividend reinvestment plan administrator for the Company.
EXPENSES
All costs and expenses incurred in the operation of the Company, other
than the expenses specifically assumed by the Adviser under the Advisory
Agreement, are borne by the Company. These costs and expenses include
brokerage commissions on portfolio transactions, fees and travel expenses of
directors and officers who are not also directors, officers or employees of
the Adviser, UnionBanCal Corporation or corporations affiliated with
UnionBanCal Corporation, interest, taxes, continuing stock exchange listing
costs, continuing transfer agent, registrar and custodian fees, auditing and
legal fees, costs of information used in valuing portfolio securities and the
costs of shareholder relations and proxy materials. The Adviser compensates
all personnel, officers and directors of the Company who are also
directors, officers or employees of the Adviser or other corporations
affiliated with the Adviser.
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 1-1/2% per year of the first $30 million of the average net asset
value of the Company plus 1% of the average net asset value of the Company
in excess of $30 million. The Adviser will pay such excess to the Company in
the manner provided in the Advisory Agreement, a copy of which has been filed as
an exhibit to this Registration Statement. The expenses incurred by the
Company for the year ended December 31, 1995, did not exceed the limitation
established by the Advisory Agreement.
ITEM 10. CAPITAL STOCK
The Company's authorized capital stock consists of 25,000,000 shares of
Common Stock, par value $1.00 per share. Each share has equal voting, dividend
and liquidation rights. The shares of Common Stock are not redeemable and have
no preemptive or conversion rights. The shares do not have cumulative voting
rights. The following table sets forth information about the outstanding
securities of the Company as of March 31, 1996:
(11)
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3) (4)
- ---------------------------------------------------------------------------------
Amounts Held by Amounts Outstanding
Title of Amount Registrant or Exclusive of Amount
Class Authorized for its Account Shown Under (3)
-------- ---------- --------------- -------------------
<S> <C> <C> <C>
Common Stock 25,000,000 None 3,673,334
- ---------------------------------------------------------------------------------
</TABLE>
The Company has no long-term debt and has no classes or series of
securities other than its Common Stock.
DIVIDEND REINVESTMENT PLAN
The Company's shareholders may elect to participate in the Company's
Dividend Reinvestment Plan (the "Plan"), which is made available through Harris
Trust Company of California (the "Agent"). Under the Plan, the Agent uses the
dividends and other cash distributions received from the Company on behalf of
shareholders who participate in the Plan ("Plan Participants") to purchase
additional shares of Common Stock of the Company in the open market. Plan
Participants may also make cash contributions in any amount between $25 and
$1,000 per month. Shares of Common Stock purchased through the Plan are
credited to each Participant's individual account maintained on the books of the
Agent.
Participation in the Plan and reinvestment of dividends does not relieve the
shareholders of liability for any income tax which may be payable on such
dividends. See "Taxes".
Brokerage commissions and transfer taxes with respect to shares of Common
Stock purchased and sold by the Agent under the Plan are charged to
Participants. The Company pays all other costs applicable to the Plan.
Shareholders may elect to participate in the Plan by completing and mailing
an authorization card to the Agent. Upon termination, a Participant may elect
to have the Agent sell the shares in his account and receive the sale proceeds,
less brokerage commissions and other costs of sale. Otherwise, the Agent will
deliver to the Participant certificates for the full number of shares in the
Account and cash for any fractional shares at the current market price at the
time of termination. A Participant in the Plan may terminate his account by
written notice to the Agent at least fifteen days prior to a dividend record
date. Additional information about
(12)
<PAGE>
the Plan may be obtained from the Agent, Harris Trust Company of California, 601
South Figueroa Street, 49th Floor, Los Angeles, California 90017 (telephone
213/239-0670).
TAXES
The Company meets, and presently intends to continue to meet, the
requirements for qualification as a "regulated investment company" under
Subchapter M of the Internal Revenue Code. As a regulated investment
company, the Company will not be subject to federal income tax on the portion
of its net investment income and net capital gains distributed to
shareholders. The Company presently intends to distribute substantially all
of its net investment income and net capital gains.
Dividends from net investment income and distributions of net short-term
capital gains paid to holders of Common Stock of Registrant, either in cash or
additional shares of Common Stock, are taxable to such shareholders as ordinary
income. Long-term capital gains distributions, if any, are taxable as long-term
capital gains.
The Company's current policy is to make four distributions each year,
payable in March, June, September and December.
ITEM 11. DEFAULTS AND ARREARS ON SENIOR SECURITIES.
None.
ITEM 12. PENDING LEGAL PROCEEDINGS
None.
ITEM 13. TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The contents of the Statement of Additional Information are as follows:
Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . B-1
General Information and History . . . . . . . . . . . . . . . . B-2
Investment Objectives and Policies. . . . . . . . . . . . . . . B-2
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . B-5
Control Persons and Principal Holders of Securities . . . . . . B-9
(13)
<PAGE>
Investment Advisory and Other Services. . . . . . . . . . . . . B-9
Brokerage Allocation and Other Practices. . . . . . . . . . . . B-9
Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . .B-10
Financial Statements. . . . . . . . . . . . . . . . . . . . . .B-10
(14)
<PAGE>
PART B: STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus. It
provides information about the activities and operations of Current Income
Shares, Inc. (the "Registrant" or the "Company") in addition to the information
provided in Part A of this Amendment to Registration Statement (the
"Amendment").
ITEM 15: TABLE OF CONTENTS
Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
General Information and History . . . . . . . . . . . . . . . . B-2
Investment Objectives and Policies. . . . . . . . . . . . . . . B-2
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . B-5
Control Persons and Principal Holders of Securities . . . . . . B-9
Investment Advisory and Other Services. . . . . . . . . . . . . B-9
Brokerage Allocation and Other Practices. . . . . . . . . . . . B-9
Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . .B-10
Financial Statements. . . . . . . . . . . . . . . . . . . . . .B-10
May 2, 1996
B-1
<PAGE>
ITEM 16: GENERAL INFORMATION AND HISTORY
Reference is made to information in Part A of this Amendment under the
heading "The Registrant" for general information regarding the Registrant and
its history.
ITEM 17: INVESTMENT OBJECTIVES AND POLICIES
A general discussion of the Company's investment objectives and
policies may be found in Part A of this Amendment. Additional information
concerning the Registrant's policies is set forth below.
LEVERAGE AND BORROWING
The Company is authorized to borrow from banks or other lending
institutions in negotiated transactions and may issue, publicly or privately and
from time to time, bonds, debentures or notes, in series or otherwise, with such
interest rates and other terms and provisions, including conversion rights if
deemed advisable, as the Board of Directors of the Company may from time to time
determine, provided that immediately after any such borrowing or issuance the
Company's senior securities representing indebtedness (as defined in the 1940
Act) will have an asset coverage of at least 300% and that all other applicable
requirements of the 1940 Act are met. The amount borrowed may not exceed
33-1/3% of the value of the Company's assets (including the amount borrowed)
less its liabilities (not including any borrowings but including the fair market
value at the time of computation of any securities with respect to which there
are open short positions). Maximum use of authorized borrowing power would
result in leverage equal to 50% of the Company's net worth. Subject to such
limitations as may be specified in applicable margin regulations of the Board of
Governors of the Federal Reserve System, amounts so borrowed and securities so
issued by the Company may be secured by a pledge or mortgage, provided that as a
result not more than 15% of the value of the Company's total assets would be
subject in the aggregate to such pledges and mortgages.
Borrowings may be for long or short term, and, subject to compliance
with applicable legal requirements, may be evidenced by documented discount
notes or other short-term notes of the Company generally referred to as
"commercial paper". If deemed advisable by the Board of Directors of the
Company, amounts borrowed may be repayable on demand. Should demand obligations
be incurred, the possibility exists that demand for payment could be made at a
time when sales by the Company of portfolio securities
B-2
<PAGE>
would be required in order to make the required payment and when such sales
would disadvantageous. A similar condition would exist in the case of other
borrowings to the extent that the Company might be unable to renew or refund
such borrowings at maturity or might have to reduce borrowings by prepayment to
avoid the consequences of a decline in asset coverage below statutory
requirements, which would prohibit distributions to shareholders by the Company
so long as a deficiency in such coverage existed.
The extent to which the Company borrows will depend in some measure on
the cost of borrowing compared with the estimated benefit to the Company. If
the Company uses borrowed funds to make additional investments, any income
derived from the additional funds in excess of the interest which the Company
will have to pay thereon will cause the Company's net income to rise more
rapidly than if borrowing were not used. Conversely, if the income from the
securities purchased with the borrowed funds is not sufficient to cover the cost
of borrowing, the net income of the Company will decline more rapidly than if
borrowing were not used.
The Company will not borrow funds from the Adviser, Union Bank of
California, N.A.
REPURCHASE AGREEMENTS
The Company may on occasion enter into repurchase agreements, in
which it purchases securities and the seller agrees to repurchase them at a
mutually agreed upon time and price. The period of maturity is usually
overnight or a fixed date, although it may extend to 30 days. The
repurchase price reflects an agreed-upon rate of return for the period. The
Custodian or its agents will hold the security as collateral for the
repurchase agreement. Collateral must be maintained at a value at least equal
to 102% of the repurchase price. The Fund bears a risk of loss in the event
the other party defaults on its obligations and the Fund is delayed or
prevented from its rights to dispose of the collateral securities or if the
Fund realizes a loss on the sale of the collateral securities.
ZERO COUPON SECURITIES
The Company may invest in "zero coupon" securities. Such securities
are sold at a substantial discount from face value and redeemed at face value at
their maturity date without interim cash payments of
B-3
<PAGE>
interest and principal. The discount is amortized over the life of the
security. Such securities may be subject to greater volatility as a result of
changes in prevailing interest rates than interest paying investments.
SHORT-TERM TRADING
Short-term trading to take advantage of a yield disparity may be
undertaken even if levels of interest rates remain unchanged. Yield disparities
occur frequently for reasons not directly related to the investment quality of
the respective issues or the general movement of interest rates, but may result
from changes in the overall demand for or supply of various types of bonds,
changes in the investment objectives or cash requirements of investors, and the
requirements of dealers to correct long or short inventory positions.
Generally, short-term trading techniques would be used principally in
connection with higher quality, non-convertible debt securities, which are
often better suited for short-term trading because the market in such
securities is generally of greater depth and offers greater liquidity than
the market in debt securities of lower quality. It is anticipated that
short-term trading will be less applicable to convertible securities, since
such securities will usually be purchased when the Company believes that the
market value of the underlying equity security is likely to appreciate over a
period of time.
The Company will engage in short-term trading if it believes the
transactions, net of costs (including commissions, if any), will result in
improving the appreciation potential or income of its portfolio. Whether any
improvement will be realized by short-term trading will depend upon the ability
of the Company to evaluate particular securities and anticipate relevant market
factors, including interest rate trends and variations from such trends. Short-
term trading such as that contemplated by the Company places a premium upon the
ability of the Company to obtain relevant information, evaluate it promptly, and
take advantage of its evaluation by completing transactions on a favorable
basis.
BONDS RATED BELOW INVESTMENT GRADE
As described in Part A of this Amendment, the Company may invest a
portion (less than 25%) of its net assets in bonds rated below investment
grade. Such securities are commonly referred to as "junk bonds" and are
generally considered to be speculative with respect to the issuer's capacity
to pay interest and repay principal, which may in any case decline during
sustained periods of deteriorating economic conditions or rising interest
rates. Junk bonds are
B-4
<PAGE>
generally considered to be subject to wider market and yield fluctuations
than higher-rated securities. The market for such securities may be thinner
and less active than that for higher-rated securities, which can adversely
affect the prices at which the securities can be sold and may create
difficulty in valuing such securities. Legislation has been and could be
adopted limiting the use, or tax and other advantages, of junk bonds, which
could adversely affect their value. The Company will not purchase debt
securities rated below "C" by Moody's or S&P, or the equivalent as determined
by the Adviser.
Credit ratings evaluate the safety of principal and interest payments of
securities, not their market value. As credit rating agencies may fail to
timely change credit ratings of securities to reflect subsequent events, the
Adviser will also monitor the issuers of such securities. If the rating of a
debt security held by the Company is downgraded below "C" or an equivalent
rating, or if the Adviser determines that an unrated security is of
comparable quality, the Adviser will determine whether it is in the best
interest of the Fund to continue to hold such security.
FOREIGN SECURITIES
The Company is authorized to purchase securities of foreign companies
and governments as described in Part A. There are special risks associated with
investment in such securities, including fluctuations in foreign exchange rates,
political or economic instability in the country of issue, and the possible
imposition of exchange controls or other laws or restrictions. In addition,
securities prices in foreign markets are generally subject to different
economic, financial, political and social factors than are the prices of
securities in U.S. markets. With respect to some foreign countries there may be
the possibility of expropriation or confiscatory taxation, and limitations on
liquidity of securities. Moreover, there is likely to be less publicly
available information concerning certain foreign issuers than is available
concerning U.S. issuers. Foreign companies are also generally not subject to
uniform accounting, auditing and financial reporting standards comparable to
those applicable to U.S. companies.
B-5
<PAGE>
DELAYED ACTIVITY AND WHEN-ISSUED TRANSACTIONS
The Company may purchase securities on a delayed delivery or
"when-issued" basis and enter into firm commitment agreements (transactions in
which the payment obligation and interest rate are fixed at the time of the
transaction but the settlement is delayed, typically 15 to 45 days). There is a
risk in these transactions that the value of the securities at settlement may be
more or less than the agreed upon price, or that the other party may not perform
its commitment. The Company will segregate liquid assets such as cash, U.S.
Government securities and other liquid, high quality debt securities in an
amount sufficient to meet its payment obligations with respect to such
transactions.
RESTRICTED SECURITIES
The Company may acquire restricted securities up to 10% of its total
assets. Restricted securities can be sold by the Company only in privately
negotiated transactions to a limited number of purchasers or in public
offerings made pursuant to an effective registration statement under the
Securities Act of 1933. Private or public sales of such securities by the
Company may involve significant delays and expense. Private sales require
negotiations with one or more purchasers and generally produce less favorable
prices than the sale of comparable unrestricted securities. Public sales
generally involve the time and expense of preparing and processing a
registration statement under the Securities Act of 1933 and may involve the
payment of underwriting commissions; accordingly, the proceeds may be less
than the proceeds from the sale of similar securities which are not
restricted. Some restricted securities may be considered illiquid and as such
would be subject to the 15% limitation for illiquid securities.
SECURITY LOANS
The Company may enter into security loan agreements with certain
brokers. Pursuant to these agreements the Company receives cash collateral
in exchange for the securities loaned. The Company will invest such cash
collateral in short-term money market instruments, and will continue to
receive interest or dividends on the securities loaned. The Company's loan
agreements with brokers will be on a demand basis and will permit the return
of the loaned securities to the Company at any time on not more than 5 days'
notice.
B-6
<PAGE>
Such loans involve risks of delay in receiving additional collateral or in
recovering securities loaned (or even loss of rights in the collateral) should
the borrower of the securities fail financially.
REPURCHASE OF SHARES
Although the Company differs from an open-end investment company in that
it is not required to redeem its shares, it is permitted to repurchase its
shares, subject to compliance with applicable securities and other laws. Under
the Investment Company Act of 1940, the Company must meet certain notice
requirements prior to such purchases, and, if shares are purchased other than on
a securities exchange, would also be required, among other things, to purchase
at the lesser of market value or net asset value. Such purchases will only
be made if deemed advisable by the Board of Directors of the Company.
PORTFOLIO TURNOVER
The Company's portfolio turnover rates for the fiscal years ended
December 31, 1994 and 1995 were 42.21% and 118.52% respectively.
ITEM 18: MANAGEMENT
The following table sets forth information concerning the directors and
officers of the Company, and the composition of the Company's Audit and
Executive Committees. Except as otherwise indicated, the address of each such
person is 445 South Figueroa Street, Los Angeles, California 90071.
B-7
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3)
Position Held Principal Occupations
Name and Address With Registrant During the Past Five Years
- ---------------- --------------- --------------------------
<S> <C> <C>
James V. Atkinson(3) Vice President and Vice President, Union
530 "B" Street Portfolio Manager Bank of California,
San Diego, CA 92101 N.A., since April
1996; Vice President,
Union Bank, from 1991
to March 1996.
Lorenzo D. Courtright(1)(2)(4) Director since May 1981; Partner of Ernst &
Chairman of the Whinney, in charge of
Audit Committee management consulting
services, Western
Region, and audit
partner, until
retirement in 1980;
Financial Reponing
Adviser to the
Commonwealth of Puerto
Rico from 1981 to 1984;
Treasurer, City of
Rolling Hills.
Morris A. Densmore(1)(2)(4) Chairman of the President, Weingart
Board since Foundation (a
May 1985; Director charitable foundation),
since May 1980 from 1983 to 1988;
Executive Vice
President, Union Bank,
from 1971 until
retirement in 1983;
Chairman of the Board
of Unionbanc Investment
Management Company (the
"Former Adviser"), the
investment adviser to the
Company until May, 1980.
Richard Dunchak(3) Treasurer Vice President
of Union Bank of
California, N.A.,
Trust Investment
Group, since April
1996; Vice President
and Controller of Union
Bank, Trust Investment
Group, from 1978 to
March 1996; Trust
Administration,
Security Pacific
National Bank, from
1973 to 1978
Stephen J. Dunn(1)(4) Director since May 1986 Vice President, Union
Bank from June, 1983
until retirement in
1991; Vice President
and Portfolio Manager
of the Company from
1983 to 1991; Bond
Trader and Portfolio
Adviser with Thomson
McKinnon from 1981 to
1983.
Richard H. Earnest(3) Vice President Vice President, Union
Bank of California,
N.A., since April
1996; Vice President,
Union Bank, from 1971
to March 1996.
</TABLE>
B-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Clark R. Gates(2)(3) Director since May Senior Vice President,
1991; President Union Bank of
California, N.A.,
since April 1996;
Senior Vice President,
Union Bank from October
1991 to March 1996; Vice
President, Union Bank
from January 1990 to
October, 1991; Managing
Director, Pacific
Century Advisors from
1986 to 1989; Vice
President and Director,
Dreyfus Service Company
from 1981 to 1986.
William R. Howell(1)(4) Director since May 1980 Director, Stepstone
Funds since November
1990; Vice Chairman,
Union Bank, from 1976
until retirement in
1982; Executive Vice
President, Union Bank,
from 1969 to 1976;
Director of the Company
from 1973 to 1977;
Director of Municipal
Fund for California
Investors since 1983.
Michael L. Noel(1)(4) Director since May, 1981 Independent financial
consultant from January,
1995; Executive Vice
President, Mission Land
Company until
retirement in December,
1994; Senior Vice
President, Chief
Financial Officer and
Director, Mission
Energy Company, from
February, 1992 to
January 1994; Senior
Vice President,
Southern California
Edison Company, April,
1991 to February, 1992;
Vice President,
Treasurer and Chief
Financial Officer,
Southern California
Edison Company, from
October, 1990 to April,
1991; Director, Hancock
Savings Bank since
1986; Director,
Software Toolworks,
Inc., from July, 1989
to April, 1994;
Director, Stepstone
Funds since November,
1990.
Kevin R. Rogers(3) Vice President Vice President and
Managing Director of
Investment Management,
Union Bank of California,
N.A, since April 1996;
Vice President and
Managing Director of
Investment Management,
Union Bank, from 1994
to March 1996; Vice
President and Senior
Fixed Income Portfolio
Manager, Analytic
Investment Management,
Inc. from 1991 to 1994.
Jonathan A. Wright(3) Secretary Vice President and
Managing Senior Counsel
with Union Bank of
California, N.A., since
April 1996; Vice
President and Managing
Senior Counsel with
Union Bank from 1982 to
March 1996.
</TABLE>
B-9
<PAGE>
NOTES:
(1) Member of the Audit Committee. The function of the Audit Committee, which
met two times in 1995, is to review the financial statements and control
procedures with the officers of the Company and the independent public
accountants, with a view to assessing and improving the Company's control
procedures, determining the adequacy of the audit and understanding the
factors which influenced the Company's performance. Results of these
reviews are reported to the Board. The Audit Committee also has the
responsibility of recommending independent public accountants for selection
by the Board.
(2) Member of the Executive Committee. The Executive Committee has the power
of the Board in the management of the business and affairs of the Company
except the power to recommend to shareholders any action requiring
shareholder approval.
(3) Messrs. Atkinson, Dunchak, Earnest, Gates, Rogers and Wright are
"interested persons" of the Registrant within the meaning of the 1940 Act,
because each is an officer of Union Bank of California, N.A., the Adviser.
(4) Member of the Nominating Committee. The function of the Nominating
Committee is to nominate candidates for membership on the Board of
Directors who are not "interested persons" of the Company within
the meaning of the 1940 Act.
REMUNERATION OF DIRECTORS AND OFFICERS
Each Director who is not a director, officer or employee of the Adviser
or of a corporation affiliated with the Adviser receives a Director's fee of
$6,000 per year for his services, which includes fees for attending regular
meetings. In addition, such Directors receive $250 for each special meeting
attended and are reimbursed for their travel and other out-of-pocket expenses
incurred in connection with attending Directors' and Executive Committee
meetings.
The following table sets forth the aggregate compensation paid by the
Company for the fiscal year ended December 31, 1995, to the directors who are
not affiliated with the Adviser, as well as the aggregate compensation paid to
such directors for service on the Boards of all other registered companies
advised by the Adviser or its affiliates (the "Adviser Complex"):
B-10
<PAGE>
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Aggregate Benefits Annual From Company
Compensation Accrued as Benefits And Adviser
From Part of Company Upon Complex Paid
Name Company Expenses Retirement To Director
---- --------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
L. D. Courtright . . . . . $6,000 -0- -0- $ 6,000(*1)
M. A. Densmore . . . . . . $6,000 -0- -0- $ 6,000(*1)
S. J. Dunn . . . . . . . . $6,000 -0- -0- $ 6,000(*1)
W. R. Howell . . . . . . . $6,000 -0- -0- $13,000(**14)
M. L. Noel . . . . . . . . $6,000 -0- -0- $13,000(**14)
</TABLE>
- ---------------
* Indicates the Company only.
** Indicates total number of funds in Adviser Complex, plus the Company.
The Company does not compensate its officers or employees for their
services to the Company, which expenses are borne by the Adviser. Reference is
made to information in Part A of this Amendment under the heading "Management --
Expenses" for a discussion of expenses paid by the Adviser.
ITEM 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
No persons directly or indirectly control, are controlled by, or are
under common control with the Company.
The following table sets forth as of March 31, 1996 certain information
as to the Common Stock owned beneficially by each person who is known to the
Company to own more than 5% of the outstanding Stock and all executive officers
and directors as a group.
- --------------------------------------------------------------------------------
(1) (2) (3)
Name and Address Shares Percentage of
of Beneficial Owner Beneficially Owned Outstanding Shares
------------------- ------------------ ------------------
All executive officers and 2,589 0.07%
directors as a group
- --------------------------------------------------------------------------------
B-11
<PAGE>
ITEM 20. INVESTMENT ADVISORY AND OTHER SERVICES
Reference is made to information in Part A of this Amendment under the
heading "Management -- The Adviser" for information regarding the Adviser and
other service providers to the Company. In addition Arthur Andersen LLP, 701
"B" Street, San Diego, California 92101, is the independent public accountant to
the Company.
ITEM 21. BROKERAGE ALLOCATION AND OTHER PRACTICES
The Adviser, subject to the supervision of the Board, purchases and
sells securities for the Company's portfolio through those brokers or dealers
who execute such orders promptly and at prices and under conditions believed to
be the most favorable to the Company.
Brokerage commission rates for equity securities are established
pursuant to negotiation with brokers or dealers based on the quality or quantity
of services provided in light of generally prevailing rates, and while the
Adviser generally seeks reasonably competitive commission rates, the Adviser may
effect transactions through brokers who provide research services to the Adviser
and the Fund does not necessarily pay the lowest commissions available. Fixed
income securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes an amount of
compensation to the underwriter. On occasion, certain money market instruments
and agency securities may be purchased directly from the issuer, in which case
no commissions or discounts are paid.
ITEM 22. TAX STATUS
During 1995, the Company used its entire capital loss carryforward to
offset capital gains realized during the year.
ITEM 23. FINANCIAL STATEMENTS
The financial information set forth in the Company's 1995 annual
report to shareholders is incorporated herein by reference. The Company will
furnish a copy of such annual report, without charge,
B-12
<PAGE>
upon request to Current Income Shares, 445 South Figueroa Street, 5th Floor, Los
Angeles, California 90071 (telephone 800/634-6521).
B-13
<PAGE>
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
Financial statements and exhibits filed as part of the Registration
Statement:
(1) Financial Statements:
The Company's Statement of Assets and Liabilities/Statement of
Operations as of December 31, 1995, and Statement of Changes in Net
Assets for the years ended December 31, 1995 and 1994, including
Arthur Andersen LLP's report thereon, are incorporated by reference
in the Statement of Additional Information.
(2) Exhibits:
(A) Company's Certificate of Incorporation -- filed as Exhibit (A)
to Amendment No. 14 to the Registrant's Form N-2 Registration
Statement on April 29, 1994 (the "Registration Statement") and
incorporated herein by reference.
(B) Company's Bylaws -- filed as Exhibit (B) to the Registration
Statement and incorporated herein by reference.
(E) Company's Dividend Reinvestment Plan -- filed as Exhibit (E)
to the Registration Statement and incorporated herein by
reference.
(G) Form of Management and Investment Advisory Agreement between
the Company and Union Bank of California, N.A. -- filed as
Exhibit A to the Proxy Statement of the Registrant with
respect to its Annual Meeting of Shareholders to be held on
March 14, 1996, and incorporated herein by reference.
(J) Custodian Agreement between the Company and Bankers Trust
Company -- filed as Exhibit (J) to the Registration Statement
and incorporated herein by reference.
(R) Financial Data Schedule -- filed as Exhibit to the Company's
Form N-SAR on March 31, 1996 and incorporated herein by
reference.
ITEM 25. MONTHLY ARRANGEMENTS
None.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
None.
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE COMPANY
None.
C-1
<PAGE>
ITEM 28. NUMBER OF HOLDERS OF COMMON STOCK
As of March 31, 1996, the Company's Common Stock was held by the number
of persons set forth below:
(1) (2)
Title of Number of
Class Record Holders
-------------- --------------
Common Stock 2,133
ITEM 29. INDEMNIFICATION
Under Article XXVI of the Bylaws of Company each director, officer,
employee or agent of the Company, and each person serving at the request of the
Company as director, officer, employee or agent of another corporation or
enterprise, is indemnified against certain costs and expenses in connection with
any claim or action against that person by reason of being or having been a
director, officer, employee or agent, to the fullest extent permitted by the
revised Delaware General Corporation Law and the Investment Company Act of 1940,
which does not permit indemnification for willful misfeasance, bad faith, gross
negligence or reckless disregard of duties involved in the conduct of office.
The Company has entered into Indemnity Agreements with its Directors
requiring the Company to pay on their behalf, to the extent permitted by the
Investment Company Act of 1940 and the Company's charter and bylaws, any amount
which a Director is obligated to pay because of any claim in connection with any
act, omission, neglect or breach of duty.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Union Bank of California, N.A. is the Adviser to the Company and is
primarily engaged in the commercial banking business. It also acts as
investment adviser to the Stepstone Funds and the Highmark Funds, registered
investment companies. Messrs. Atkinson, Dunchak, Earnest, Gates, and Wright are
officers and/or directors of the Company and Union Bank of California as
discussed more fully in the Statement of Additional Information.
C-2
<PAGE>
The principal executive officer of the Adviser, Union Bank of
California, N.A., is Kanetaka Yoshida, the President. Set forth below is a list
of the directors of Union Bank of California, N.A., as of March 31, 1996,
together with an indication of the principal occupation of each. The address of
each of these persons is in care of Union Bank of California, N.A., 350
California Street, San Francisco, California 94104.
Alexander D. Calhoun
Of Counsel
Graham & James Attorneys at Law
Richard D. Farman
Chief Executive Officer
Southern California Gas Company
Stanley F. Farrar
Partner
Sullivan & Cromwell
Herman E. Gallegos
Independent Management
Consultant
John L. Hancock
Director
Union Bank of California, N.A.
Richard C. Hartnack
Vice Chairman of the Board
Union Bank of California, N.A.
Roy A. Henderson
Chairman
LoPresti Flight Concepts
Harry W. Low (Hon.)
Judicial Arbitration & Mediation
Services, Inc.
Mary S. Metz (Dr.)
Dean, University Extension
University of California, Berkeley
Rayment E. Miles
Professor, Haas School of Business
University of California, Berkeley
J. Fernando Niebla
Chief Executive Officer
Infotec Development, Inc.
Hiroo Nozawa
Chief Operating Officer
Union Bank of California, N.A.
Sidney R. Petersen
Chairman & CEO (retired),
Getty Oil Company
Carl W. Robertson
Managing Director
Warland Investments Company
Charles R. Scott
Chairman and Chief Executive Officer
Leadership Centers USA
Paul W. Steere
Member
Bogle & Gates, P.L.L.C.
Henry T. Swigert
Chairman
ESCO Corporation
Robert M. Walker
Vice Chairman of the Board
Union Bank of California, N.A.
Brenda J. Wilson
President
California State University, Northridge
Kanetaka Yoshida
President and Chief Executive Officer
Union Bank of California, N.A.
C-3
<PAGE>
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The persons maintaining accounts and records required by Section 31(a)
of the 1940 Act and the rules promulgated thereunder are as follows: Union Bank
of California, N.A., 445 South Figueroa Street, Los Angeles, California 90071,
and 530 "B" Street, San Diego, California 92101.
ITEM 32. MANAGEMENT SERVICES
None.
ITEM 33. UNDERTAKINGS
Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Los Angeles, and State of California, on May 1, 1996.
Current Income Shares, Inc.
--------------------------------
(Registrant)
By: s/ Jonathan A. Wright
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Jonathan A. Wright
Secretary
C-5
