CURRENT INCOME SHARES, INC.
ANNUAL REPORT
DECEMBER 31, 1997
Investment Advisor:
PACIFIC ALLIANCE
THE INVESTMENT MANAGEMENT DIVISION OF
UNION BANK OF CALIFORNIA, N.A.
475 Sansome St.
Suite 1400
San Francisco, CA 94111
<PAGE>
CURRENT INCOME SHARES, INC.
- --------------------------------------------------------------------------------
PACIFIC ALLIANCE
January 26, 1998
Dear Shareholders:
We are pleased to report your company's financial results for the year
1997. During the twelve-month period, we paid total dividends of $0.85 per
share, consisting of quarterly dividends per share of 20 cents, 20.5 cents, 21.5
cents and 23 cents. The net asset value per share at December 31, 1997 was
$13.401, up from $13.052 at December 31, 1996. Including dividends, the total
return for Current Income Shares was 9.56% in 1997. The total return based on
market value was 15.33% in 1997.
The bond market as a whole posted a 9.7% return as measured by the Lehman
Bros. Bond Index. Most of the performance came from long-term Treasury bonds.
The 30-year U.S. Treasury bond returned more than 15% during the year. The
benchmark 10-year Treasury return posted an 11.3% increase, while shorter
maturities gained 6% to 8%. Corporate bonds posted somewhat lower returns than
government bonds.
The major economic story of 1997 was the demise of the Asian economic
"miracle." As currencies and stock markets throughout Asia began collapsing, the
Treasury market became the prime beneficiary as investors sought a safe haven.
In addition, they recognized that the global economy would slow, exerting
downward pressure on interest rates. Prior to the problems in Southeast Asia,
long-term bond yields were 6.5% amid concerns that rates were headed higher in
order to slow the rapid growth rate of the economy. By the end of the year,
long-term rates had fallen to 5.9%, boosting bond prices.
At the same time that demand for high-quality assets has increased
dramatically, the supply of government bonds has been shrinking. The reason: the
federal budget deficit is rapidly becoming a surplus, leading to a decline in
U.S. Treasury borrowing.
A flight to quality and a slowing economy are reasons why the U.S. Treasury
markets outperformed corporate bonds toward the end of 1997. Since corporate
bonds are issued by companies of varying credit quality, a weakening economy has
an adverse impact on this sector. That's the reason why the highest-quality
corporate bonds outperformed the lower quality bonds during the same period. Our
portfolio concentrates on higher quality corporate bonds, and we have no
exposure to issuers from Asia.
Corporate bonds, Treasury bonds --indeed, all fixed-income securities
continue to benefit from declining inflation. The Consumer Price Index has
slowed from more than 3% in 1996 to 1.8% in 1997. Since most economists,
including Alan Greenspan, chairman of the Federal Reserve Board, believe that
the CPI overstates inflation by about one percentage point, then the actual
inflation rate may already be very close to zero.
<PAGE>
- --------------------------------------------------------------------------------
During the 1950s and 1960s, when inflation averaged 2.4%, long-term bond
yields averaged only 3.8%, and it was not until the mid-1960s that bond yields
exceeded 5%. Therefore, we believe that it is very possible for interest rates
on long-term bonds to drop from their early 1998 levels of 5.7%. Our strategy
for 1998 is to keep credit quality high and to keep maturities long enough to
benefit from such a further drop in interest rates.
The audited financial statements for the year ending December 31, 1997,
together with the portfolio of investments owned on the same date, are presented
on the following pages.
Thank you for investing in Current Income Shares, Inc.
/S/Signature
Clark R. Gates
President
<PAGE>
CURRENT INCOME SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
ASSETS
Investments in securities at
market value:
Bonds (Cost $45,390,858) ...... $48,485,239
Cash ............................ 47,823
Interest receivable and
other assets 759,740
-----------
Total Assets .................. 49,292,802
-----------
LIABILITIES
Accrued expenses ................ 66,174
-----------
NET ASSETS ......................... $49,226,628
===========
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 losses (518,306)
Unrealized appreciation on
investments .................. 3,094,381
Overdistributed net investment
income ....................... (608)
-----------
NET ASSETS $49,226,628
===========
NET ASSET VALUE PER SHARE
($49,226,628 / 3,673,334 shares
of common stock outstanding) .. $13.40
======
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
INVESTMENT INCOME
Interest ................. $3,575,974
----------
Total Investment Income . $3,575,974
EXPENSES
Investment management
and advisory fees ....... 240,710
Custodian fees ........... 9,924
Transfer agent fees ...... 57,037
Directors' fees .......... 29,999
Printing ................. 39,858
Legal and auditing fees .. 43,755
Listing fees -- NYSE ...... 5,016
Insurance expense ........ 9,937
Taxes .................... 10,017
Other expenses ........... 10,672
----------
Total Expenses 456,925
----------
Net Investment
Income ............... 3,119,049
----------
REALIZED AND
UNREALIZED GAINS AND LOSSES
ON INVESTMENTS IN SECURITIES
Realized loss from
securities transactions:
Proceeds from sales ... 41,214,537
Cost of securities
sold .................(41,483,561)
-----------
Net realized loss on
investments sold (269,024)
Unrealized appreciation
of investments:
Beginning of period .... 1,538,055
End of period .......... 3,094,381
----------
Net unrealized
appreciation during
the period ......... 1,556,326
----------
Net realized and
unrealized gain on
investments ........ 1,287,302
----------
Net increase in net assets
resulting from operations $4,406,351
==========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
CURRENT INCOME SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------
1997 1996
----------- -----------
FROM INVESTMENT ACTIVITIES
<S> <C> <C>
Net investment income ......................................... $ 3,119,049 $ 3,036,480
Net realized loss on investments sold ......................... (269,024) (249,377)
Net unrealized appreciation/(depreciation) of investments
during the period .......................................... 1,556,326 (1,732,180)
----------- -----------
Net increase in net assets resulting from operations .......... 4,406,351 1,054,923
Dividends to shareholders from net investment income .......... (3,122,336) (3,232,533)
----------- -----------
Increase/(decrease) in net assets .......................... 1,284,015 (2,177,610)
NET ASSETS
Beginning of year ............................................. 47,942,613 50,120,223
----------- -----------
End of year [including (over)/underdistributed net investment
income of $(608) and $2,679 at December 31, 1997
and 1996, respectively] .................................... $49,226,628 $47,942,613
=========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CURRENT INCOME SHARES, INC.
PORTFOLIO OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------
Standard & Poor's Principal Market
Security Rating Amount Value
- ---------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- (13.20% of Net Assets)
<S> <C> <C> <C>
U.S. Treasury Bond 6.375%, 08/15/27 ............ AAA $1,140,000 $1,202,962
U.S. Treasury Note 5.625%, 01/31/98 ............ AAA 1,775,000 1,775,248
U.S. Treasury Note 5.75%, 09/30/99 ............. AAA 500,000 500,685
U.S. Treasury Note 7.5%, 11/15/01 .............. AAA 850,000 900,856
U.S. Treasury Note 6.625%, 05/15/07 ............ AAA 2,000,000 2,116,560
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $6,408,753) 6,496,311
- ---------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS -- (84.88%)
- ---------------------------------------------------------------------------------------------------------------------------
ASSET BACKED (1.84% of Net Assets)
Chase Manhattan Auto Grantor Trust,
Ser 1996-B, Cl A 6.61%, 09/15/02 ............. AAA 902,967 909,243
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ASSET BACKED (Cost $902,792) 909,243
- ---------------------------------------------------------------------------------------------------------------------------
BANKS (7.43% of Net Assets)
Bankers Trust 7.25%, 01/15/03 .................. A- 1,500,000 1,550,625
First Nationwide Holdings 10.625%, 10/01/03 .... B 500,000 558,750
Fleet Financial 7.125%, 04/15/06 ............... BBB+ 1,500,000 1,552,500
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL BANKS (Cost $3,506,719) 3,661,875
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRICAL UTILITIES (9.98% of Net Assets)
Chugach Electric 9.14%, 03/15/22 ............... A 1,000,000 1,170,000
Houston Industries 9.375%, 06/01/01 ............ BBB+ 2,000,000 2,187,500
UtiliCorp United 8.45%, 11/15/99 ............... BBB 1,500,000 1,554,375
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ELECTRICAL UTILITIES (Cost $4,597,921) 4,911,875
- ---------------------------------------------------------------------------------------------------------------------------
ENERGY (7.92% of Net Assets)
Union Oil of California 9.125%, 02/15/06 ....... BBB+ 2,000,000 2,337,500
Union Pacific Resources 7%, 10/15/06 ........... A 1,500,000 1,560,000
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ENERGY (Cost $3,634,992) 3,897,500
- ---------------------------------------------------------------------------------------------------------------------------
GAS (7.32% of Net Assets)
Coastal 9.625%, 05/15/12 ........................ BBB- 2,000,000 2,530,000
Panhandle Eastern 7.875%, 08/15/04 .............. A- 1,000,000 1,073,750
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL GAS (Cost $3,043,797) 3,603,750
- ---------------------------------------------------------------------------------------------------------------------------
MANUFACTURING (8.28% of Net Assets)
Lockheed Martin 7.7%, 06/15/08 .................. BBB+ 1,500,000 1,642,500
Owens-Illinois 8.1%, 05/15/07 ................... BB+ 1,250,000 1,337,500
Westvaco 10.125%, 06/01/19 ...................... A 1,000,000 1,098,750
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL MANUFACTURING (Cost $3,808,736) 4,078,750
- ---------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CURRENT INCOME SHARES, INC.
PORTFOLIO OF INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------
Standard & Poor's Principal Market
Security Rating Amount Value
- ---------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS (14.07% of Net Assets)
<S> <C> <C> <C>
GNMA Pool# 439463 8%, 12/15/26 ................ AAA $ 6,678,903 $ 6,925,154
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS (Cost $6,807,278) 6,925,154
- ---------------------------------------------------------------------------------------------------------------------------
RETAIL (3.13% of Net Assets)
Staples 7.125%, 08/15/07 ...................... BB+ 1,500,000 1,539,375
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETAIL (Cost $1,496,725) 1,539,375
- ---------------------------------------------------------------------------------------------------------------------------
SECURITIES BROKER (2.21% of Net Assets)
Lehman Brothers Holding 8.75%, 05/15/02 ........ A 1,000,000 1,087,500
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES BROKER (Cost $1,064,649) 1,087,500
- ---------------------------------------------------------------------------------------------------------------------------
SERVICE (3.22% of Net Assets)
Loewen Group International 8.25%, 04/15/03 ..... BB+ 1,500,000 1,584,375
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SERVICE (Cost $1,498,468) 1,584,375
- ---------------------------------------------------------------------------------------------------------------------------
SOVEREIGN & SUPRANATIONAL (5.50% of Net Assets)
Province of Nova Scotia 8.750%, 04/01/22 ....... A- 1,100,000 1,386,000
Province of Saskatchewan 9.375%, 12/15/20 ...... A- 1,000,000 1,322,500
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN & SUPRANATIONAL (Cost $2,185,302) 2,708,500
- ---------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (4.40% of Net Assets)
WorldCom 9.375%, 01/15/04 ...................... BBB- 522,000 555,930
WorldCom 7.75%, 04/01/07 ....................... BBB- 1,500,000 1,608,750
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL TELECOMMUNICATIONS (Cost $2,159,932) 2,164,680
- ---------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (9.58% of Net Assets)
AMR 10%, 04/15/21 .............................. BBB- 1,500,000 1,989,375
General Motors 8.95%, 07/02/09 ................. A- 1,500,000 1,668,495
Norfolk Southern 7.05%, 05/01/37 ............... BBB+ 1,000,000 1,058,750
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL TRANSPORTATION (Cost $4,075,063) 4,716,620
- ---------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- (0.41% of Net Assets)
- ---------------------------------------------------------------------------------------------------------------------------
Merrill Lynch 0.000%, 01/09/98 ................. A-1+ 200,000 199,731
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $199,731) 199,731
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (98.49% of Net Assets)
(Cost $45,390,858) 48,485,239
- ---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET
(1.51% of Net Assets) 741,389
NET ASSETS (100.0% of Net Assets) $49,226,628
===========================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
CURRENT INCOME SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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 sales of investment securities other than short-term securities
and U.S. Government obligations aggregated $11,661,633 and $15,436,113,
respectively. Purchases and sales of U.S. Government obligations aggregated
$13,999,247 and $12,202,538, respectively.
As of December 31, 1997, unrealized appreciation for Federal income tax
purposes aggregated $3,094,381 of which $3,096,012 related to appreciated
securities and $1,631 related to depreciated securities. The aggregate cost for
Federal income tax purposes was not materially different from amounts reported
for financial reporting purposes.
Subsequent to October 31, 1997, the Company recognized net capital losses
that have been deferred to 1998 for tax purposes and can be used to offset
future capital gains at December 31, 1998. The company also had capital loss
carryforwards at December 31, 1997, that can be used to offset future capital
gains.
Post Capital Loss Capital Loss
10/31/1997 Carryovers Carryovers
Loss Deferral Expiring 2004 Expiring 2005
-------------- ------------- --------------
172,187 249,377 96,836
6
<PAGE>
CURRENT INCOME SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
3. Transactions with Affiliates
Pacific Alliance, the investment management division of Union Bank of
California, (the "Advisor") received fees of $240,710 during the year ended
December 31, 1997 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 requires that the Advisor reimburse the Company for
expenses (excluding interest, taxes, and the expenses of any offering of the
Company's securities and brokers 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, 1997 did not exceed the limitation established by the Advisory
Agreement.
4. Agreements with Service Providers
Harris Trust Company of California provides Transfer Agent and Dividend
Reinvestment Plan services.
Bankers Trust Company provided custodial services for the Company up to
December 18, 1997. On December 18, 1997, the Union Bank of California, N.A.
began providing custodial services for the Company.
5. Financial Highlights
Selected data for each share of capital stock outstanding throughout each
period follows:
<TABLE>
<CAPTION>
01/01/97 to 01/01/96 to 01/01/95 to 01/01/94 to 01/01/93 to
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
----------- ----------- ----------- ----------- -----------
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C>
Investment Income ............................. $ 0.97 $ 0.95 $ 1.00 $ 1.06 $ 1.09
Expenses ...................................... (0.12) (0.12) (0.12) (0.12) (0.12)
-------- -------- -------- -------- --------
Net Investment Income ........................ 0.85 0.83 0.88 0.94 0.97
Dividends distributed from net
Investment Income ........................... (0.85) (0.88) (1.48) (0.94) (0.97)
Net realized and unrealized gain
(loss) on investments ....................... 0.35 (0.54) 1.79 (1.74) 0.86
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ... 0.35 (0.59) 1.19 (1.74) 0.86
Net asset value:
Beginning of period ......................... 13.05 13.64 12.45 14.19 13.33
-------- -------- -------- -------- --------
End of period ................................ $ 13.40 $ 13.05 $ 13.64 $ 12.45 $ 14.19
======== ======== ======== ======== ========
Per share market value:
End of period ............................... $12.1875 $ 11.375 $ 11.875 $ 11.000 $ 13.00
Total investment return* ...................... 15.33% 3.54% 22.25% (8.33)% 10.53%
RATIOS AND SUPPLEMENTAL DATA
Ratio of expenses to average net assets ....... 0.95% 1.0% 0.9% 0.9% 0.8%
Ratio of net investment income to
average net assets .......................... 6.5% 6.3% 6.6% 7.2% 6.9%
Portfolio turnover rate ....................... 52.10% 62.86% 118.52% 42.21% 24.15%
Net assets, end of period (000) ............... $ 49,227 $ 47,943 $ 50,120 $ 45,739 $ 52,137
<FN>
*Does not reflect the brokerage commission.
</FN>
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
CURRENT INCOME SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------
6. Unaudited Quarterly Results of Operations
The following is a summary of unaudited quarterly results of operations:
Net Realized and
Unrealized Gain (Loss)
Net Investment Income on Investments
Investment ----------------------- ---------------------
Income Amount Per Share Amount Per Share
--------- --------- --------- --------- ---------
Three months ended:
<S> <C> <C> <C> <C> <C>
March 31, 1997 $877,206 $761,816 $0.21 $(1,163,210) $(0.31)
June 30, 1997 898,633 781,504 0.21 891,395 0.24
September 30, 1997 908,688 796,883 0.22 880,366 0.24
December 31, 1997 891,447 778,846 0.21 678,751 0.18
March 31, 1996 $862,729 $747,568 $0.20* $(2,274,615) $(0.62)
June 30, 1996 871,085 760,129 0.21 (637,224) (0.17)
September 30, 1996 880,365 771,119 0.21 60,387 0.02
December 31, 1996 882,933 757,664 0.21 869,895 0.24
<FN>
* On February 8, 1996, a distribution of $.20 per share totalling $734,688 was declared. Of these amounts,
$0.0556 per share, or $204,237, related to net realized gains from investment transactions during 1995.
The dividend was paid March 15, 1996, to shareholders of record on February 28, 1996.
</FN>
</TABLE>
7. Dividend Reinvestment Plan
The Company maintains a Dividend Reinvestment Plan (the "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, 311 West Monroe Street (11th Floor), Chicago, IL 60606.
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. (the "Company"), including the portfolio of
investments in securities, as of December 31, 1997, and the related statement of
operations, statement of changes in net assets and the selected per share data
and ratios for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The Company's
statement of changes in net assets for the year ended December 31, 1996, and the
selected per share data and ratios for each of the four years in the period then
ended, were audited by other auditors whose report dated January 31, 1997,
expressed an unqualified opinion on those statements.
We conducted our audit 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 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, 1997, 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 audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Current Income Shares, Inc. as of December
31, 1997, the related statement of operations, statement of changes in net
assets, and selected per share data and ratios for the year then ended in
conformity with generally accepted accounting principles.
/S/Signature
Deloitte & Touche LLP
San Francisco, CA
January 16, 1998
<PAGE>
DIRECTORS
Willard H. Altman* Clark R. Gates
Morris A. Densmore* William R. Howell*
Stephen J. Dunn* Michael L. Noel*
*Serve as members of the Audit Committee
OFFICERS
Morris A. Densmore CHAIRMAN
Clark R. Gates PRESIDENT
James J. Atkinson VICE PRESIDENT AND
PORTFOLIO MANAGER
Richard H. Earnest VICE PRESIDENT
Kevin A. Rogers VICE PRESIDENT
Paul Mastin TREASURER
Jonathan A. Wright SECRETARY
Olga J. Sanchez ASSISTANT SECRETARY
AUDITORS
Deloitte & Touche LLP
50 Fremont St.
San Francisco, CA 94105
CUSTODIAN
Union Bank of California
475 Sansome St. (15th Floor)
San Francisco, CA 94111
TRANSFER & DIVIDEND
REINVESTMENT PLAN AGENT
Harris Trust Company of California
311 West Monroe St. (11th Floor)
Chicago, IL 60606
(800) 554-3406
COMPANY MAILING ADDRESS
Current Income Shares, Inc.
445 South Figueroa St., (3rd Floor)
Los Angeles, California 90071
COMPANY TELEPHONE
(888) 465-2825
NYSE Symbol
"CUR"
83352-97
