<PAGE> 1
Transamerica Income Shares, Inc.
INTERIM REPORT
JUNE 30, 1995
[LOGO]
REPORT TO SHAREHOLDERS
Economic growth slowed dramatically in the second quarter as a result of the
Federal Reserve's tight monetary policy over the past year. Both the stock and
bond markets continued to perform well due to the Fed's engineered "soft
landing."
Growth should accelerate again in the second half of the year to a more normal
2.5% to 3.0% rate primarily led by strong exports and capital goods spending.
Increased growth should not translate into higher inflation as worldwide
production capacity still exceeds worldwide demand. Therefore, long-term
treasury yields should remain in the 6.5% to 7.5% range.
The Company's net assets rose during the quarter to $155,886,376 or $24.67 per
share from $147,669,572 or $23.37 per share on March 31, 1995. The net asset
value of the Company's shares was $23.10 on June 30, 1994. Unaudited net
investment income for the Company's first quarter ended June 30, 1995 was
$3,050,681 or 48 cents per share which equals the net investment income of 48
cents per share for the comparable quarter of 1994. The dividend, which is
payable monthly, remains at 16 cents per share, for a current annual rate of
$1.92. The increase in the Company's net assets reflects the recent decline in
longer term interest rates, and the corresponding increase in the price of
bonds.
Highlights: For the three months ended June 30:
<TABLE>
<CAPTION>
Per Share: 1995 1994
<S> <C> <C>
Net investment income............ $ 0.48 $ 0.48
Income dividends paid............ 0.48 0.48
Net asset value.................. 24.67 23.10
</TABLE>
Dividends: For the fiscal years ended March 31:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C>
$1.99* $2.01* $2.01 $2.16 $2.16
</TABLE>
* Includes a 5.88235 and a 7 1/4 cent per share capital gain distribution in
1995 and 1994, respectively.
Quality: Ratings used are the highest by Moody's or Standard & Poor's for bonds
owned on June 30, 1995:
<TABLE>
<CAPTION>
LOWER OR
AAA AA A BBB NON-RATED
<S> <C> <C> <C> <C>
1.3% 9.8% 24.0% 56.3% 8.6%
</TABLE>
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF OPERATIONS
AND CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
Interest income.......... $ 3,299,100
Expenses:
Management fee........... $ 190,927
Transfer agent fee and
expenses............... 14,135
Postage.................. 4,500
Audit fee................ 8,310
Reports to
shareholders........... 7,500
Insurance................ 6,256
Custodian fee............ 4,916
Directors' fees and
expenses............... 3,256
Other.................... 8,619 248,419
----------- ------------
Net investment income...... 3,050,681
Dividends to shareholders... (3,033,010)
------------
Increase in undistributed
net investment income.... 17,671
Net Realized and
Unrealized Gain
on Securities:
Net realized gain from
security transactions
(excluding short-term
investments):
Proceeds from
securities sold...... 2,852,340
Cost of securities sold... 2,784,020
-----------
Net realized gain on se-
curity transactions.... 68,320
-----------
Unrealized appreciation
of securities:
Beginning of period.... 3,327,820
End of period.......... 11,458,633
-----------
Increase in unrealized
appreciation of securi-
ties................... 8,130,813
-----------
Net realized and unreal-
ized gain on
securities............... 8,199,133
------------
Increase in net assets de-
rived from investment
activities............... 8,216,804
Net Assets:
Beginning of period (in-
cludes undistributed
net investment income
of $207,323)........... 147,669,572
------------
End of period (includes
undistributed net in-
vestment income of
$224,994).............. $155,886,376
============
</TABLE>
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STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
ASSETS
<TABLE>
<S> <C>
Investment portfolio:
Securities at market value
(identified cost $141,185,672)... $152,644,305
Short-term investments (at cost
plus interest earned, which
approximates market value)....... 2,076,392
------------
154,720,697
Interest receivable.................. 4,315,390
Other assets......................... 40,383
------------
159,076,470
------------
LIABILITIES
Payable for:
Securities purchased............... 1,981,549
Income dividends declared.......... 1,011,003
Accrued expenses and other
liabilities........................ 197,542
------------
3,190,094
------------
Net Assets (equivalent to $24.67 per
share on 6,318,771 shares of $1 par
value Common Stock outstanding --
20,000,000 shares authorized)...... $155,886,376
============
</TABLE>
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MANAGER
Transamerica Investment Services, Inc.
Box 2438, Los Angeles, CA 90051
TRANSFER AGENT
Chemical Mellon Shareholder Services
111 Founders Plaza, Suite 1100
East Hartford, CT 06108
1-800-288-9541
For hearing and speech impaired (TDD)
1-800-231-5469
LISTED
New York Stock Exchange
Symbol: TAI
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TRANSAMERICA INCOME SHARES IS A CLOSED-END INVESTMENT COMPANY WHICH INVESTS
PRIMARILY IN DEBT SECURITIES. ITS OBJECTIVE IS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME.
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