UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21326
Cohen & Steers REIT and Preferred Income Fund, Inc.
(Exact name of registrant as specified in charter)
757 Third Avenue, New York, NY 10017
(Address of principal executive offices) (Zip code)
Robert H. Steers
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 832-3232
Date of fiscal year end: December 31
Date of reporting period: June 30, 2004
Item 1. Reports to Stockholders.
The registrant's semi-annual report to shareholders, for the period ended June
30, 2004 is included herein.
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures are
sufficient to ensure that information required to be disclosed by the registrant
in this Form N-CSR was recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange
Commission's rules and forms, based upon such officers' evaluation of these
controls and procedures as of a date within 90 days of the filing date of this
report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11. Exhibits.
(a) (2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) Certifications of chief executive officer and chief financial officer as
required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
By: /s/ Robert H. Steers
----------------------------
Name: Robert H. Steers
Title: Chairman
Date: August 25, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert H. Steers By: /s/ Martin Cohen
------------------------------- ---------------------------------------
Name: Robert H. Steers Name: Martin Cohen
Title: Chairman, Secretary Title: President, Treasurer
and principal executive officer and principal financial officer
Date: August 25, 2004
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
July 26, 2004
To Our Shareholders:
We are pleased to submit to you our report for the quarter and six months
ended June 30, 2004. The net asset value at that date was $26.20 per common
share. During the quarter, three monthly dividends were paid at the new dividend
rate of $0.175 per share to common shareholders (up from $0.17 in prior monthly
periods). In addition, during the quarter the fund announced its next three
monthly dividends of $0.175 to be paid to common shareholders on July 30, 2004,
August 31, 2004 and September 30, 2004.
INVESTMENT REVIEW
For the quarter, Cohen & Steers REIT and Preferred Income Fund had a total
return, based on income and change in net asset value, of -7.9%. This compares
with the NAREIT Equity REIT Index(a) total return of -5.8% and the Merrill Lynch
Fixed Rate Preferred Index(a) total return of -5.4%. For the six months ended
June 30, 2004, the fund's total return was 2.3%, compared to NAREIT's 5.5% and
the Merrill Lynch Fixed Rate Preferred Index's -2.8%. As we have indicated in
the past, the leverage that the fund employs tends to magnify the returns of the
fund relative to the returns on the securities in which it invests.
In the second quarter of 2004, there was a major turn of events for global
markets as strong U.S. employment reports finally made the economic recovery
that equity markets began to discount well over a year ago clear and undeniable,
even to the naysayers. With many tepid readings over prior quarters, the
strength of job creation evidenced in these reports took the bond market by
surprise, sending it reeling into its worst quarterly performance since 1994.
After 13 Fed rate cuts since 2001, there was also a turn in the monetary policy
cycle. On June 30, a widely expected hike in interest rates was announced by the
Federal Reserve Board.
Both asset classes of the fund -- REITs and preferreds -- initially reacted
quite negatively in April as bond yields gapped higher on the prospects of a
heating economy, but both rebounded to end the quarter well off their lows.
Weakness in preferreds, not surprisingly, largely mirrored that in the bond
market. As we have mentioned in previous letters, we have been expecting higher
rates and have positioned the fund's preferred portfolio defensively. Although
still down a little more than 4% over the quarter on a total return basis, the
fund's preferreds performed well relative to the broader preferred market
largely because of this portfolio position.
Whereas preferred weakness was understandable to us, we characterized the
decline in REITs early in the quarter as technical in nature and driven largely
by the valuation concerns of some investors. The very jobs report that presaged
the decline in REIT share prices, we believed, was likely to contribute to
improving real estate fundamentals and improving cash flow for REITs. We
believed the weakness presented an attractive investment
-------------------
(a) The NAREIT Equity REIT Index is an unmanaged, market capitalization weighted
index of all publicly traded REITs that invest predominantly in the equity
ownership of real estate. The index is designed to reflect the performance
of all publicly traded equity REITs as a whole. The Merrill Lynch Fixed
Rate Preferred Index is an unmanaged, market capitalization weighted index
composed of 287 members with an average credit rating of A3.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
opportunity, and in fact, after dropping 18% from their highs at the end of
March to their lows on May 10, REITs then swung decisively higher to record a
14% total return through the end of June.
The strong REIT returns of the past two months -- making REITs among the
best-performing asset classes over the period -- are certainly inconsistent with
the notion put forward by some that REITs tipped into a bear market in the
second quarter in sympathy with the bond market. In fact, if the first half of
2004 is a proper guide, REITs are on pace to deliver the low- to mid-teens total
return profile that is consistent with the sector's long-term average.
While many observers have focused intently on the recent uncharacteristic
volatility of REIT share prices, the more interesting story, in our view, is a
rotation of sector leadership. The defensive issues, which had led the REIT
group since 2001, have ceded their market leadership to the more cyclically
inclined companies that will respond to the economic recovery most quickly and
most dramatically. The broad distribution of returns across sectors during the
quarter highlights in greater detail this leadership change, as well as the
above-average volatility experienced during the quarter. The best performing
sectors were apartment and hotel, which generated total returns of 2.2% and
-2.6% respectively. Conversely, the worst performing sectors during the
quarter were health care (-13.4% total return) and regional mall (-11.5%).
The obvious difference between the two groups is the short lease duration and
more variable demand patterns of the strong performing cyclical sectors versus
the long lease terms and relatively consistent demand profiles of the laggards,
which tend not to respond quickly to accelerating economic growth.
The best performing REIT investments during the quarter for the fund were in
the apartment and industrial sectors, which produced total returns of 0.5% and
-4.9% respectively, while the worst performing sector for the fund was the
healthcare sector, which had a -15.3% total return. Apartment companies AMLI
Residential Properties Trust and Mid-America Apartment Communities were the
fund's best performing holdings, contributing total returns of 5.7% and 3.9%
respectively. Laggards during the quarter included Health Care REIT, with a
total return of -18.5% and Glimcher Realty Trust, which generated a total
return of -16.6%.
The growing strength of the economy has had very different consequences for
preferreds. As fixed income instruments, rising bond yields associated with a
healthy economic expansion have pressured preferred prices. At the same time,
economic improvement has resulted in a much improved credit environment and
therefore enhanced the investment merits of many issues, including many
securities held by the fund. As a result, credit spreads have narrowed
significantly across most sectors in recent quarters. This spread tightening has
stemmed rationally from much healthier earnings, stronger balance sheets and
strong capital markets, all of which enhance credit quality. A high level of
investor demand relative to new supply has also played a role in credit spread
tightening and in good preferred performance.
With less room for credit spread performance to drive total return, and amid
high interest rate volatility, standout performers over the quarter generally
were more driven by structure than credit. Defensive issues generally performed
best, as we would expect in a rising interest rate environment. These include
high coupon issues, like the fund's 9.75% Astoria Financial holdings; callable
securities with limited call protection, such as the fund's
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Shaw Communications Inc. securities; and the fund's floating-rate preferred
investments. By contrast, the non-callable, institutionally traded issues of
Dominion Resources and Kinder Morgan were among the fund's larger laggards. We
believe that structure and relative value considerations, rather than material
credit issues, were responsible for the performance of lagging securities.
INVESTMENT OUTLOOK
In the wake of the REIT stock price decline in the second quarter, many
investors have asked us whether REITs can continue to perform well in what many
are concerned (overly so, in our view) may be a period of rising interest rates.
Our view continues to be that real estate fundamentals are the primary
driver of REIT returns over the long run. Still, we regularly examine the extent
to which REITs are correlated with other asset classes. We have found that REIT
share price behavior has not been statistically related in any material way to
the performance of bonds or interest rates over the long term. In other words,
over time, the performance of the bond market has explained virtually none of
the performance of REITs.
Over the short term, REITs may appear to correlate with interest rates, as
we have seen recently. However, although we can say with certainty that rising
rates result in poor returns for bonds, the REIT return equation cannot be
solved using interest rates as the only explanatory variable. Importantly, we
have also found that in the 12 months following periods of rising interest
rates, as the dampening effect of higher interest rates on security returns has
subsided and the acceleration of real estate fundamentals has kicked in, REIT
performance historically has been consistently very strong.
Nonetheless, we cannot ignore the fact that interest rates can have an
impact on REIT earnings and asset values. Higher interest rates will increase
the cost of REITs' debt capital over time, although the impact will be mitigated
by REITs' use of primarily long-term, fixed-rate debt. Higher interest rates may
also result in higher real estate capitalization rates, which would tend to
lower estimates of property values. However, we believe that if interest rates
are rising due to a stronger economy and attendant higher inflationary
expectations (which in the past have been favorable for real estate
fundamentals), this could serve to offset at least some of the impact that
higher interest rates would otherwise have on capitalization rates.
Our conclusion is that, although changes in interest rates have a varied
impact on REITs, the positive and negative impacts have historically tended to
offset one another, such that the overall impact on REIT returns has not
generally been material, thus, the historical lack of correlation. What remains
material is the supply and demand for real estate and how that impacts building
occupancies and rents. The most important thing to recognize about the prospects
for REIT returns, in our view, is that strong job growth is underway. With this
key economic driver in place, we believe the prospects for higher building
occupancies and rents, and thus for higher cash flows for REITs, are excellent.
Turning to preferreds, uncertainties associated with the pace of inflation
and the Fed tightening cycle are likely to keep some pressure on prices in the
near term. Nonetheless, several factors remain quite supportive of
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
value. Most importantly, although inflation has risen somewhat, it remains low,
and the Fed is certainly poised to keep it in check. As long as inflation
remains subdued, long-term fixed income investments like preferreds are not
likely to fall precipitously, and they can continue to present longer term
value. What is more, the positive credit momentum that has been achieved in
recent quarters continues to unfold with the expanding economy. We expect to see
more credit improvements and ratings upgrades in the fund's preferred portfolio
in coming months. In addition, whereas investor demand for income remains
profound, new supply of higher income instruments, including preferreds, remains
well below that of recent years.
There were also meaningful regulatory events over the quarter with positive
implications for the preferred market. One such event was the much-anticipated
release of a Federal Reserve proposal pertaining to the regulatory capital
treatment of hybrid preferred issues. The fund owns quite a number of these
instruments, notably the ubiquitous 'trust preferred' version. We are happy to
report that the new Fed proposal resoundingly supports the continued extension
of favorable regulatory capital treatment for outstanding and prospective
issues. The strength of its wording has dispelled any uncertainty surrounding
the long-term viability of these structures, which is favorable for market
liquidity and pricing.
In another important regulatory event, the National Association of Insurance
Commissioners has lowered the risk-based capital charges insurance companies
take against preferred investments, making them much more appealing assets. We
expect this to result in better demand for preferreds from this very meaningful
investor base.
Although many factors continue to support preferred prices, the potential
for interest rates to rise further has led us to seek more defensive structures,
such as high coupon issues. Further, given our constructive view on REIT
fundamentals, we intend to continue to manage the fund with a relatively lower
exposure to preferreds than to REITs. The fund's mandate allows us to have up to
60% of its investments in either of these asset classes (but no less than 40% in
each). We ended the quarter with approximately 56% of the fund assets in REITs,
43% in preferreds and bonds, and 1% in cash.
The fund continues to be well-positioned to deliver the current level of
income consistent with its investment objectives. We are also quite pleased with
the appreciation of the fund's net asset value over its first year in existence.
While both asset classes of the fund were unusually volatile over the past
quarter, we continue to believe
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
that the fund's balance of REITs and preferreds will help to temper the cycle of
each individual asset class and provide attractive long-term returns and
diversification benefits for our shareholders.
Sincerely,
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
GREG E. BROOKS WILLIAM F. SCAPELL
GREG E. BROOKS WILLIAM F. SCAPELL
Portfolio manager Portfolio manager
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Cohen & Steers is online at cohenandsteers.com
We have enhanced both the look and features of our Web site
to give you more information about our company, our funds
and the REIT market in general. Check out our interactive
Asset Allocation Tool, which allows you to hypothetically
add REITs to any portfolio to see how they impact expected
total returns and risk. Or try the Fund Performance
Calculator and see how our funds have performed versus the
S&P 500 Index or Nasdaq Composite. As always, you can also
get daily net asset values, fund fact sheets, portfolio
highlights, recent news articles and our overall insights on
the REIT market.
So visit us today at cohenandsteers.com
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
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OUR LEVERAGE STRATEGY (UNAUDITED)
While we do not attempt to predict what future interest
rates will be, it has been our philosophy to utilize
interest rate swap transactions to seek to reduce the
interest rate risk inherent in our utilization of leverage.
Our leverage strategy involves issuing auction market
preferred shares (AMPS) to raise additional capital for the
fund, with an objective of increasing the net income
available for shareholders. As of June 30, 2004, AMPS
represented 35% of the fund's managed net assets.
Considering that AMPS have variable dividend rates, we seek
to lock in the rate on a majority of this additional capital
through interest rate swap agreements (where we effectively
convert our variable rate obligation to a fixed rate
obligation for the term of the swap agreements).
Specifically, we have fixed the rate on 68% of our leverage
at an average interest rate of 3.7%, for an average
remaining period of 4.5 years (when we first entered into
the swaps, the average term was 5.3 years). By locking in a
large portion of our leveraging costs, we have endeavored to
adequately protect the dividend-paying ability of the fund,
which is one of the reasons the fund was recently able to
increase its monthly dividend. The use of leverage increases
the volatility of the fund's net asset value in both up and
down markets. However, we believe that locking in a portion
of the fund's leveraging costs for the term of the swap
agreements partially protects the fund from any impact that
an increase in short-term interest rates may have as a
result of the use of leverage. The swap contracts also
provide a modest NAV cushion, as they are assets of the fund
that are marked-to-market daily and will rise in value in a
rising rate environment.
LEVERAGE FACTS
Leverage (as % of managed net assets)................... 35%
% Fixed Rate............................................ 68%
% Variable Rate......................................... 32%
Average Rate on Swaps................................... 3.7%
Average Term on Swaps................................... 4.5 years
Current Rate on AMPS.................................... 1.5%
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- --------------- ------------
COMMON STOCK 85.13%(b)
DIVERSIFIED 7.03%
Colonial Properties Trust.......... 300,000 $ 11,559,000 6.96%
Crescent Real Estate Equities Co... 1,490,500 24,026,860 9.31
iStar Financial.................... 990,000 39,600,000 6.98
Vornado Realty Trust............... 239,100 13,655,001 4.97
---------------
88,840,861
---------------
HEALTH CARE 12.66%
Health Care Property Investors..... 2,900,600 69,730,424 6.95
Health Care REIT................... 1,745,600 56,732,000 7.38
Nationwide Health Properties....... 1,362,200 25,745,580 7.83
Ventas............................. 335,000 7,822,250 5.57
---------------
160,030,254
---------------
HOTEL 1.82%
Hospitality Properties Trust....... 545,200 23,061,960 6.81
---------------
INDUSTRIAL 4.29%
First Industrial Realty Trust...... 1,472,200 54,294,736 7.43
---------------
MORTGAGE 2.43%
Newcastle Investment Corp.......... 1,024,274 30,677,006 8.01
---------------
-------------------
(a) Dividend yield is computed by dividing the security's current annual
dividend rate by the last sale price on the principal exchange, or market,
on which such security trades.
(b) Percentages indicated are based on the net assets of the fund.
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
----------- --------------- ------------
OFFICE 24.58%
Arden Realty....................... 1,488,700 $ 43,782,667 6.87%
Brandywine Realty Trust............ 787,800 21,420,282 6.47
CarrAmerica Realty Corp............ 942,300 28,485,729 6.62
CRT Properties Inc. ............... 290,000 6,704,800 6.06
Equity Office Properties Trust..... 2,943,300 80,057,760 7.35
Highwoods Properties............... 910,200 21,389,700 7.23
HRPT Properties Trust.............. 1,228,400 12,296,284 7.99
Mack-Cali Realty Corp.............. 1,259,500 52,118,110 6.09
Maguire Properties................. 1,286,100 31,856,697 6.46
Prentiss Properties Trust.......... 374,900 12,566,648 6.68
---------------
310,678,677
---------------
OFFICE/INDUSTRIAL 4.73%
Liberty Property Trust............. 1,143,300 45,972,093 6.02
Mission West Properties............ 939,500 11,377,345 7.93
Reckson Associates Realty Corp..... 87,500 2,402,750 6.18
---------------
59,752,188
---------------
RESIDENTIAL -- APARTMENT 13.45%
AMLI Residential Properties
Trust........................... 590,400 17,322,336 6.54
Archstone-Smith Trust.............. 2,324,000 68,162,920 5.86
Camden Property Trust.............. 581,800 26,646,440 5.55
Gables Residential Trust........... 1,186,100 40,303,678 7.09
Mid-America Apartment
Communities..................... 349,000 13,223,610 6.18
Town & Country Trust............... 173,400 4,376,616 6.81
---------------
170,035,600
---------------
SELF STORAGE 0.67%
Sovran Self Storage................ 222,200 8,483,596 6.31
---------------
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
----------- --------------- ------------
SHOPPING CENTER 13.47%
COMMUNITY CENTER 8.24%
Cedar Shopping Centers............. 400,000 $ 4,596,000 7.83%
Heritage Property Investment
Trust........................... 2,002,300 54,182,238 7.76
New Plan Excel Realty Trust........ 1,538,100 35,930,016 7.06
Ramco-Gershenson Properties
Trust........................... 390,000 9,449,700 6.93
---------------
104,157,954
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REGIONAL MALL 5.23%
Glimcher Realty Trust.............. 2,121,600 46,929,792 8.69
Macerich Co........................ 215,200 10,301,624 5.10
Mills Corp......................... 190,200 8,882,340 5.10
---------------
66,113,756
---------------
TOTAL SHOPPING CENTER.............. 170,271,710
---------------
TOTAL COMMON STOCK
(Identified
cost -- $946,243,100)....... 1,076,126,588
---------------
PREFERRED SECURITIES --
$25 PAR VALUE 26.60%
AGRICULTURAL CHEMICALS 0.21%
Agrium, 8.00% (COPrS).............. 107,600 2,657,720 8.10
---------------
AUTOMOTIVE 1.21%
DaimlerChrysler, 7.25% (CBTCS)..... 23,708 596,730 7.20
DaimlerChrysler, 7.50% (CBTCS)..... 37,300 919,445 7.61
Delphi Trust I, 8.25%, due
10/15/33, Series A.............. 456,100 11,676,160 8.06
Ford Motor Co., 8.00% (CORTS)...... 85,000 2,169,200 7.84
---------------
15,361,535
---------------
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
----------- --------------- ------------
BANK 2.54%
ASBC Capital I, 7.625%, Series A
(TOPrS)......................... 75,500 $ 1,931,290 7.45%
Cobank ACB, 7.00%, 144A(a)......... 200,000 10,160,760 6.89
Colonial Capital Trust IV,
7.875%.......................... 310,000 8,029,000 7.60
Countrywide Capital IV, 6.75%...... 71,100 1,693,602 7.08
First Republic Bank, 6.70%......... 200,000 4,736,000 7.09
Fleet Capital Trust VII, 7.20%
Series.......................... 94,800 2,403,180 7.10
Fleet Capital Trust VIII, 7.20%
Series.......................... 87,900 2,224,749 7.11
Old Second Bancorp Capital Trust I,
7.80%........................... 90,000 936,000 7.50
---------------
32,114,581
---------------
BANK -- FOREIGN 1.48%
Abbey National PLC, 7.375%,
Series B........................ 105,700 2,764,055 7.05
Abbey National PLC, 7.375%,
Series C........................ 493,264 12,647,289 7.19
Royal Bank of Scotland Group,
7.25%, Series H................. 132,800 3,316,016 7.26
---------------
18,727,360
---------------
ELECTRIC -- INTEGRATED 1.47%
DTE Energy Trust I, 7.80%,
due 2/01/32, Series............. 6,000 153,900 7.60
EIX Trust I, 7.875%, due 7/26/29,
Series.......................... 104,100 2,610,828 7.85
Energy East Capital Trust I,
8.25%........................... 61,000 1,592,100 7.90
Entergy Louisiana, 7.60%........... 3,700 94,757 7.42
Enterprise Capital Trust, 7.44%.... 59,400 1,468,368 7.52
Northern States Power Co., 8.00%,
Notes (PINES)................... 41,700 1,090,455 7.65
Penelec Capital Trust, 7.34%
(TOPrS)......................... 32,900 823,487 7.33
PSEG Funding Trust II, 8.75%
Series.......................... 199,900 5,405,296 8.06
Puget Sound Energy Capital Trust
II, 8.40% (TOPrS)............... 95,800 2,469,724 8.15
Southern California Edison, 7.23%,
due 4/30/07, Series M........... 12,300 1,219,238 7.29
Virginia Power Capital Trust II,
7.375%, (TruPS)................. 62,061 1,593,726 7.18
---------------
18,521,879
---------------
-------------------
(a) The fund prices this security at fair value using procedures approved by the
fund's board of directors.
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
----------- --------------- ------------
FINANCE 0.92%
CREDIT CARD 0.82%
MBNA Capital, 8.125%, Series D
(TruPS)......................... 234,100 $ 6,016,370 7.90%
MBNA Capital, 8.10%, Series E
(TOPrs)......................... 166,300 4,323,800 7.78
---------------
10,340,170
---------------
DIVERSIFIED FINANCIAL SERVICES 0.10%
National Rural Utilities, 7.40%
(QUICS)......................... 48,300 1,237,929 7.22
---------------
TOTAL FINANCE...................... 11,578,099
---------------
GAS -- DISTRIBUTION 3.70%
Dominion CNG Capital, 8.40%........ 78,700 2,014,720 7.62
Laclede Capital Trust I, 7.70%
(TOPrS)......................... 56,300 1,477,875 7.33
Southern Union Co., 7.55%,
Series C........................ 1,040,000 27,456,000 7.15
Southwest Gas Capital Trust II,
7.70%........................... 600,000 15,780,000 7.34
---------------
46,728,595
---------------
INSURANCE 2.25%
LIFE/HEALTH INSURANCE 0.21%
Lincoln National Capital V, 7.65%,
Series E (TruPS)................ 63,700 1,620,528 7.52
Torchmark Capital Trust I, 7.75%... 41,000 1,072,150 7.41
---------------
2,692,678
---------------
MULTI-LINE 0.82%
ING Groep NV, 7.05% Series......... 241,600 6,110,064 6.97
ING Groep NV, 7.20% Series......... 165,700 4,223,693 7.08
---------------
10,333,757
---------------
PROPERTY/CASUALTY 1.03%
ACE Ltd., 7.80%, Series C.......... 380,400 10,042,560 7.39
St. Paul Capital Trust I, 7.60%
(TruPS)......................... 115,130 2,964,598 7.38
---------------
13,007,158
---------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
11
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
----------- --------------- ------------
REINSURANCE -- FOREIGN 0.19%
RenaissanceRE Holdings Ltd., 8.10%,
Series A........................ 30,900 $ 803,400 7.79%
RenaissanceRE Holdings Ltd., 7.30%,
Series B........................ 65,900 1,660,680 7.24
---------------
2,464,080
---------------
TOTAL INSURANCE.................... 28,497,673
---------------
MEDIA 2.17%
CABLE TELEVISION 1.31%
Shaw Communications, 8.45%,
Series A (COPrS)................ 199,092 4,997,209 8.42
Shaw Communications, 8.50%,
Series B (COPrS)................ 459,700 11,529,276 8.47
---------------
16,526,485
---------------
DIVERSIFIED SERVICES 0.86%
AOL Time Warner, 7.625%,
Series A-1 (CABCO).............. 109,900 2,758,490 7.59
Liberty Media Corp., 8.75%
(CBTCS)......................... 198,500 5,272,160 8.24
Liberty Media Corp., 8.75%
(PPLUS)......................... 108,745 2,914,366 8.19
---------------
10,945,016
---------------
TOTAL MEDIA........................ 27,471,501
---------------
MEDICAL -- HMO 0.07%
Aetna, 8.50%, Senior Notes......... 32,000 848,960 8.01
---------------
OIL -- EXPLORATION 1.23%
Nexen, 7.35%, due 11/1/43,
Series B........................ 608,660 15,557,350 7.19
---------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
12
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
----------- --------------- ------------
REAL ESTATE 7.44%
Apartment Investment and Management
Co., 8.00%, Series T............ 93,700 $ 2,260,044 8.29%
Cousins Properties, 7.75%,
Series A........................ 457,500 11,529,000 7.69
Developers Diversified Realty
Corp., 8.00%, Series G.......... 38,700 982,980 7.87
Forest City Enterprises, 7.375%,
Senior Notes.................... 50,000 1,165,000 7.91
Glimcher Realty Trust, 8.75%,
Series F........................ 280,000 7,084,000 8.65
Glimcher Realty Trust, 8.125%,
Series G........................ 240,000 5,700,000 8.55
Health Care REIT, 7.875%,
Series D........................ 100,000 2,505,000 7.86
Innkeepers USA Trust, 8.00%,
Series C........................ 88,000 2,120,800 8.30
iStar Financial, 7.875%,
Series E........................ 400,000 9,900,000 7.95
iStar Financial, 7.80%, Series F... 292,400 6,929,880 8.23
iStar Financial, 7.65%, Series G... 80,000 1,938,000 7.90
Kilroy Realty Corp, 7.80%,
Series E........................ 100,000 2,460,000 7.93
Maguire Properties, 7.625%,
Series A........................ 288,900 6,976,935 7.89
Mid-America Apartment Communities,
8.30%, Series H................. 690,600 17,368,590 8.25
Mills Corp., 8.75%, Series E....... 197,600 5,179,096 8.35
Omega Healthcare Investors, 8.375%,
Series D........................ 200,000 5,020,000 8.34
Saul Centers, 8.00%, Series A...... 94,400 2,407,200 7.84
SL Green Realty Corp., 7.625%,
Series C........................ 100,000 2,500,000 7.63
---------------
94,026,525
---------------
TELECOMMUNICATION SERVICES 1.91%
Centaur Funding Corp., 9.08%(a).... 13,908 16,673,332 7.57
Telephone & Data Systems, 7.60%,
Series A........................ 197,800 4,958,846 7.58
United States Cellular Corp.,
7.50%, due 6/15/34, Series...... 100,000 2,494,000 7.52
---------------
24,126,178
---------------
TOTAL PREFERRED SECURITIES -- $25
PAR VALUE (Identified
cost -- $335,912,988)........... 336,217,956
---------------
-------------------
(a) The fund prices this security at fair value using procedures approved by the
fund's board of directors.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
13
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
VALUE DIVIDEND
PAR VALUE (NOTE 1) YIELD
----------- --------------- ------------
PREFERRED SECURITIES -- CAPITAL
TRUST 33.61%
BANK 7.31%
AgFirst Farm Credit Bank, 7.30%,
due 10/14/49, 144A.............. $29,100,000 $ 29,086,992 7.30%
Astoria Capital Trust I, 9.75%, due
11/1/29, Series B............... 13,500,000 15,862,500 8.30
BankBoston Capital Trust II, 7.75%,
due 12/15/26.................... 1,500,000 1,589,492 7.31
BT Preferred Capital Trust II,
7.875%, due 2/25/27............. 5,000,000 5,350,755 7.36
Great Western Financial Trust II,
8.206%, due 2/1/27, Series A.... 5,232,000 5,697,543 7.54
ML Capital Trust I, 9.875%, due
3/1/27, Series B................ 1,800,000 2,038,862 8.72
Republic New York Capital I, 7.75%,
due 11/15/26 (TruPS)............ 1,000,000 1,073,464 7.22
Roslyn Preferred Trust FRN, 4.78%,
due 4/1/32, 144A................ 10,000,000 10,150,000 4.69
Roslyn Real Estate Asset Corp. FRN,
4.813%, due 9/30/08, Series D... 100 10,150,000 4.69
Sky Financial Capital Trust I,
9.75%, due 5/1/30, Series B..... 3,000,000 3,277,500 8.55
Webster Capital Trust I, 9.36%,
due 1/29/27, 144A............... 7,300,000 8,131,820 8.40
---------------
92,408,928
---------------
BANK -- FOREIGN 8.19%
BNP Paribas Capital Trust V,
7.20%........................... 19,550,000 19,902,760 7.07
CA Preferred Fund Trust, 7.00%
(Eurobond)...................... 25,200,000 25,411,277 6.94
HBOS Capital Funding LP, 6.85%..... 24,000,000 23,986,392 6.85
HSBC Capital Funding LP, 10.176%... 9,680,000 13,518,856 7.29
RBS Capital Trust B, 6.80%......... 20,700,000 20,663,258 6.81
---------------
103,482,543
---------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
14
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
VALUE DIVIDEND
PAR VALUE (NOTE 1) YIELD
----------- --------------- ------------
ELECTRIC -- INTEGRATED 2.23%
Dominion Resources Capital Trust
III, 8.40%, due 1/15/31......... $21,732,000 $ 25,262,472 7.23%
DPL Capital Trust, 8.125%, due
9/1/31.......................... 3,000,000 2,906,250 8.39
---------------
28,168,722
---------------
FINANCE 5.22%
CREDIT CARD 0.53%
MBNA Capital, 8.278%, due 12/1/26,
Series A........................ 6,200,000 6,670,078 7.69
---------------
DIVERSIFIED FINANCIAL SERVICES 1.96%
Old Mutual Capital Funding, 8.00%
(Eurobond)...................... 25,000,000 24,747,525 8.08
---------------
INVESTMENT BANKER/BROKER 1.72%
Chase Capital I, 7.67%, due
12/1/06......................... 2,519,000 2,652,638 7.28
JPM Capital Trust I, 7.54%, due
1/15/27......................... 3,925,000 4,168,468 7.10
JPM Capital Trust II, 7.95%, due
2/27/07......................... 6,400,000 6,901,766 7.37
NBP Capital Trust III, 7.375%...... 7,900,000 7,997,052 7.29
---------------
21,719,924
---------------
MORTGAGE LOAN/BROKER 1.01%
Countrywide Capital III, 8.05%, due
6/15/27, Series B (SKIS)........ 11,285,000 12,798,161 7.10
---------------
TOTAL FINANCE...................... 65,935,688
---------------
FOOD -- DAIRY PRODUCTS 0.82%
Dairy Farmers of America, 7.875%,
144A(a)......................... 105,000 10,337,775 8.00
---------------
INSURANCE 7.87%
BROKERS 0.17%
Aon Capital Trust A, 8.205%, due
1/1/27.......................... 2,000,000 2,196,334 7.47
---------------
-----------------------
(a) The fund prices this security at fair value using procedures approved by the
fund's board of directors.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
15
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
VALUE DIVIDEND
PAR VALUE (NOTE 1) YIELD
----------- --------------- ------------
LIFE/HEALTH 0.33%
AmerUS Capital, 8.85%, due 2/1/27,
Series A........................ $ 4,000,000 $ 4,155,952 8.52%
---------------
MULTI-LINE 6.10%
AFC Capital Trust I, 8.207%, due
02/03/27, Series B.............. 5,000,000 4,650,000 8.82
AXA, 7.10% (Eurobond).............. 26,500,000 26,690,800 7.05
GenAmerica Capital I, 8.525%, due
6/30/27......................... 14,000,000 15,662,066 7.62
USF&G Capital, 8.312%, due
7/1/46.......................... 2,000,000 2,209,716 7.52
Zurich Capital Trust I, 8.376%, due
6/1/37.......................... 25,212,000 27,929,324 7.56
---------------
77,141,906
---------------
PROPERTY/CASUALTY 1.27%
W.R. Berkley Capital Trust, 8.197%,
due 12/15/45.................... 15,100,000 16,052,674 7.71
---------------
TOTAL INSURANCE.................... 99,546,866
---------------
PIPELINES 1.97%
K N Capital Trust I, 8.56%, due
4/15/27 (TruPS)................. 9,513,000 10,787,333 7.55
K N Capital Trust III, 7.63%, due
4/15/28 (TruPS)................. 13,330,000 14,150,941 7.19
---------------
24,938,274
---------------
TOTAL PREFERRED
SECURITIES -- CAPITAL TRUST
(Identified cost --
$424,992,662)................. 424,818,796
---------------
PRINCIPAL
AMOUNT
-----------
CORPORATE BOND 5.94%
AUTOMOTIVE 4.44%
Ford Holdings, 9.30%, due 3/1/30............ $ 2,500,000 2,761,870
Ford Motor Co., 9.98%, due 2/15/47.......... 14,400,000 17,053,934
General Motors Corp., 7.375%, due 5/23/48... 24,377,000 22,820,260
General Motors Corp., 8.25%, due 7/15/23.... 13,000,000 13,647,465
--------------
56,283,529
--------------
DIVERSIFIED FINANCIAL SERVICES 0.39%
BF Saul Real Estate Investment Trust, 7.50%,
due 3/1/14, 144A......................... 5,000,000 4,975,000
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
16
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
MEDIA -- DIVERSIFIED SERVICES 1.11%
Liberty Media Corp., 8.25%, due 2/1/30...... $12,250,000 $ 13,997,083
--------------
TOTAL CORPORATE BOND (Identified
cost -- $71,791,994)..................... 75,255,612
--------------
COMMERCIAL PAPER 0.31%
State Street Corp., 1.10%, due 7/01/04
(Identified cost -- $3,896,000).......... 3,896,000 3,896,000
--------------
TOTAL INVESTMENTS
(Identified cost -- $1,782,836,744). 151.59% 1,916,314,952
OTHER ASSETS IN EXCESS OF
LIABILITIES....................... 1.49% 18,825,648
LIQUIDATION VALUE OF AUCTION MARKET
PREFERRED SHARES: SERIES M7,
SERIES T7, SERIES W7, SERIES TH7,
SERIES F7 (Equivalent to $25,000
per share based on 3,280 shares
outstanding per class), SERIES
W28A, SERIES W28B, SERIES W28C
(Equivalent to $25,000 per share
based on 2,800 shares outstanding
per class), AND SERIES T28
(Equivalent to $25,000 per share
based on 2,040 shares outstanding
per class)........................ (53.08)% (671,000,000)
------ --------------
NET ASSETS APPLICABLE TO COMMON
SHARES (Equivalent to $26.20 per
share based on 48,251,666 shares
of capital stock outstanding)..... 100.00% $1,264,140,600
====== ==============
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
17
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2004 (UNAUDITED)
GLOSSARY OF PORTFOLIO ABBREVIATIONS
-----------------------------------------------------------
CABCO Corporate Asset Backed Corporation
CBTCS Corporate Backed Trust Certificates
COPrS Canadian Origin Preferred Securities
CORTS Corporate Backed Trust Securities
FRN Floating Rate Note
PINES Public Income Notes
PPLUS Preferred Plus Trust
QUICS Quarterly Income Capital Securities
SKIS Subordinated Capital Income Securities
TOPrS Trust Originated Preferred Securities
TruPS Trust Preferred Securities
-----------------------------------------------------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
18
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
ASSETS:
Investments in securities, at value (Identified
cost -- $1,782,836,744) (Note 1)...................... $1,916,314,952
Cash.................................................... 807
Dividends and interest receivable....................... 16,637,849
Unrealized appreciation on interest rate swap
transactions (Notes 1 and 6).......................... 5,060,624
Other assets............................................ 66,901
--------------
Total Assets........................................ 1,938,081,133
--------------
LIABILITIES:
Payable for dividends declared on common shares......... 1,060,083
Payable to investment manager........................... 1,020,303
Payable for dividends declared on preferred shares...... 521,359
Payable for investment securities purchased............. 60,288
Payable for preferred organization costs................ 3,766
Other liabilities....................................... 274,734
--------------
Total Liabilities................................... 2,940,533
--------------
LIQUIDATION VALUE OF PREFERRED SHARES:
Auction market preferred shares, Series M7, ($25,000
liquidation value, $0.001 par value, 3,280 shares
issued and outstanding) (Notes 1 and 5)............... 82,000,000
Auction market preferred shares, Series T7, ($25,000
liquidation value, $0.001 par value, 3,280 shares
issued and outstanding) (Notes 1 and 5)............... 82,000,000
Auction market preferred shares, Series W7, ($25,000
liquidation value, $0.001 par value, 3,280 shares
issued and outstanding) (Notes 1 and 5)............... 82,000,000
Auction market preferred shares, Series TH7, ($25,000
liquidation value, $0.001 par value, 3,280 shares
issued and outstanding) (Notes 1 and 5)............... 82,000,000
Auction market preferred shares, Series F7, ($25,000
liquidation value, $0.001 par value, 3,280 shares
issued and outstanding) (Notes 1 and 5)............... 82,000,000
Auction market preferred shares, Series W28A, ($25,000
liquidation value, $0.001 par value, 2,800 shares
issued and outstanding) (Notes 1 and 5)............... 70,000,000
Auction market preferred shares, Series W28B, ($25,000
liquidation value, $0.001 par value, 2,800 shares
issued and outstanding) (Notes 1 and 5)............... 70,000,000
Auction market preferred shares, Series W28C, ($25,000
liquidation value, $0.001 par value, 2,800 shares
issued and outstanding) (Notes 1 and 5)............... 70,000,000
Auction market preferred shares, Series T28, ($25,000
liquidation value, $0.001 par value, 2,040 shares
issued and outstanding) (Notes 1 and 5)............... 51,000,000
--------------
671,000,000
--------------
TOTAL NET ASSETS APPLICABLE TO COMMON SHARES................ $1,264,140,600
--------------
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
19
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED) -- (CONTINUED)
TOTAL NET ASSETS APPLICABLE TO COMMON SHARES consist of:
Common stock ($0.001 par value, 48,251,666 shares issued
and outstanding) (Notes 1 and 5)...................... $1,130,407,583
Distributions in excess of net investment income........ (8,329,974)
Accumulated net realized gain on investments and
interest rate swap transactions....................... 3,524,159
Net unrealized appreciation/(depreciation) on
investments and interest rate swap transactions....... 138,538,832
--------------
$1,264,140,600
--------------
--------------
NET ASSET VALUE PER COMMON SHARE:
($1,264,140,600[div]48,251,666 shares outstanding)...... $ 26.20
--------------
--------------
MARKET PRICE PER COMMON SHARE............................... $ 23.14
--------------
--------------
MARKET PRICE PREMIUM/(DISCOUNT) TO NET ASSET VALUE PER
COMMON SHARE.............................................. (11.68)%
--------------
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
20
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
Investment Income (Note 1):
Dividend income (net of $16,958 of foreign withholding
tax)................................................. $ 36,371,678
Interest income......................................... 17,122,679
------------
Total Income....................................... 53,494,357
------------
Expenses:
Investment management fees (Note 2)..................... 6,317,281
Preferred remarketing fee............................... 841,851
Administration fees (Note 2)............................ 608,326
Reports to shareholders................................. 297,762
Professional fees....................................... 72,113
Custodian fees and expenses............................. 65,683
Directors' fees and expenses (Note 2)................... 21,874
Transfer agent fees and expenses........................ 5,672
Miscellaneous........................................... 50,108
------------
Total Expenses..................................... 8,280,670
------------
Net Investment Income....................................... 45,213,687
------------
Net Realized and Unrealized Gain/(Loss) on Investments
(Note 1):
Net realized gain on investments........................ 9,390,877
Net realized loss on interest rate swap transactions.... (5,850,311)
Net change in unrealized appreciation on investments.... (28,257,597)
Net change in unrealized appreciation on interest rate
swap transactions.................................... 10,152,477
------------
Net realized and unrealized gain/(loss) on
investments..................................... (14,564,554)
------------
Net Increase Resulting from Operations...................... 30,649,133
------------
Less Dividends and Distributions to Preferred Shareholders
from:
Net Investment Income................................... (4,022,313)
------------
Net Increase in Net Assets from Operations Applicable to
Common Shares............................................. $ 26,626,820
------------
------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
21
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS APPLICABLE TO COMMON SHARES (UNAUDITED)
FOR THE PERIOD
FOR THE JUNE 27, 2003(a)
SIX MONTHS ENDED THROUGH
JUNE 30, 2004 DECEMBER 31, 2003
---------------- -----------------
Change in Net Assets Applicable to Common Shares:
From Operations:
Net investment income............................... $ 45,213,687 $ 33,187,500
Net realized gain/(loss) on investments and interest
rate swap transactions............................ 3,540,566 (134,249)
Net unrealized appreciation/(depreciation) on
investments and interest rate swap transactions... (18,105,120) 156,643,952
-------------- --------------
Net increase resulting from operations.......... 30,649,133 189,697,203
-------------- --------------
Less Dividends and Distributions to Preferred
Shareholders from:
Net investment income............................... (4,022,313) (2,787,195)
Net realized gain on investments.................... -- (290,684)
-------------- --------------
Total dividends and distributions to preferred
shareholders.................................. (4,022,313) (3,077,879)
-------------- --------------
Net increase in net assets from operations
applicable to common shares....................... 26,626,820 186,619,324
-------------- --------------
Less Dividends and Distributions to Common Shareholders
from:
Net investment income............................... (49,940,475) (26,695,512)
Net realized gain on investments.................... -- (2,784,165)
Tax return of capital............................... -- (11,524,470)
-------------- --------------
Total dividends and distributions to common
shareholders.................................. (49,940,475) (41,004,147)
-------------- --------------
Capital Stock Transactions (Note 5):
Increase in net assets from common share
transactions...................................... -- 1,148,126,750
Increase in net assets from shares issued to common
shareholders for reinvestment of dividends........ -- 1,375,745
Increase in net assets from preferred offering cost
adjustment........................................ 266,434 --
Decrease in net assets from underwriting commissions
and offering expenses from issuance of preferred
shares............................................ -- (8,030,126)
-------------- --------------
Net increase in net assets from capital stock
transactions.................................. 266,434 1,141,472,369
-------------- --------------
Total increase/(decrease) in net assets
applicable to commmon shares.................. (23,047,221) 1,287,087,546
-------------- --------------
Net Assets Applicable to Common Shares:
Beginning of period................................. 1,287,187,821 100,275
-------------- --------------
End of period(b).................................... $1,264,140,600 $1,287,187,821
-------------- --------------
-------------- --------------
-------------------
(a) Commencement of operations.
(b) Includes distributions in excess of net investment income of $8,329,974 and
undistributed net investment income of $419,127 at June 30, 2004 and
December 31, 2003, respectively.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
22
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements. It should be read in conjunction with the financial
statements and notes thereto.
FOR THE PERIOD
FOR THE JUNE 27, 2003(a)
SIX MONTHS ENDED THROUGH
PER SHARE OPERATING PERFORMANCE: JUNE 30, 2004 DECEMBER 31, 2003
-------------------------------- ------------- -----------------
Net asset value per common share, beginning of period....... $26.68 $23.88
------ ------
Income from investment operations:
Net investment income.................................... 0.93 0.74(c)
Net realized and unrealized gain/(loss) on investments... (0.30) 3.23
------ ------
Total income from investment operations.............. 0.63 3.97
------ ------
Less: dividends and distributions to preferred shareholders
from:
Net investment income.................................... (0.08) (0.06)
Net realized gain on investments......................... -- (0.01)
------ ------
Total dividends and distributions to preferred
shareholders....................................... (0.08) (0.07)
------ ------
Total from investment operations applicable to common
shares............................................. 0.55 3.90
------ ------
Less: Offering and organization costs charged to paid-in
capital -- common shares................................... -- (0.06)
Offering and organization costs charged to paid-in
capital -- preferred shares............................ -- (0.18)
Preferred offering cost adjustment....................... 0.01(d) --
Dilutive effect of common share offering................. -- (0.01)
------ ------
Total offering and organization costs................ 0.01 (0.25)
------ ------
Less: Dividends and distributions to common shareholders
from:
Net investment income.................................... (1.04) (0.55)
Net realized gain on investments......................... -- (0.06)
Tax return of capital.................................... -- (0.24)
------ ------
Total dividends and distributions to common
shareholders....................................... (1.04) (0.85)
------ ------
Net increase/(decrease) in net asset value.................. (0.48) 2.80
------ ------
Net asset value, per common share, end of period............ $26.20 $26.68
------ ------
------ ------
Market value, per common share, end of period............... $23.14 $25.90
------ ------
------ ------
Net asset value total return(e)............................. 2.33%(f) 15.56%(f)
------ ------
------ ------
Market value return(e)...................................... -6.90%(f) 7.16%(f)
------ ------
------ ------
-------------------
(c) Calculation based on average shares outstanding.
(d) See note 5
(e) Total market value return is computed based upon the New York Stock Exchange
market price of the fund's shares and excludes the effects of brokerage
commissions. Dividends and distributions, if any, are assumed for purposes
of this calculation, to be reinvested at prices obtained under the fund's
dividend reinvestment plan. Total net asset value return measures the
changes in value over the period indicated, taking into account dividends
as reinvested.
(f) Not annualized.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
23
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED) -- (CONTINUED)
FOR THE PERIOD
FOR THE JUNE 27, 2003(a)
SIX MONTHS ENDED THROUGH
RATIOS/SUPPLEMENTAL DATA: JUNE 30, 2004 DECEMBER 31, 2003
------------------------- ------------- -----------------
Net assets applicable to common shares, end of period
(in millions).............................................. $1,264.1 $1,287.2
-------- --------
-------- --------
Ratio of expenses to average daily net assets applicable to
common shares(b)........................................... 1.30%(c) 1.17%(c)
-------- --------
-------- --------
Ratio of net investment income to average daily net assets
applicable to common sharesb............................... 7.08%(c) 5.51%(c)
-------- --------
-------- --------
Ratio of expenses to average daily managed assetsb.......... 0.85%(c) 0.84%(c)
-------- --------
-------- --------
Portfolio turnover rate..................................... 5.10%(d) 7.66%(d)
-------- --------
-------- --------
PREFERRED SHARES:
------------------------------------------------------------
Liquidation value, end of period (in 000's)................. $671,000 $671,000
-------- --------
-------- --------
Total shares outstanding (in 000's)......................... 27 27(e)
-------- --------
-------- --------
Asset coverage per share.................................... $ 72,099 $ 72,958(e)
-------- --------
-------- --------
Liquidation preference per share............................ $ 25,000 $ 25,000
-------- --------
-------- --------
Average market value per share(f)........................... $ 25,000 $ 25,000
-------- --------
-------- --------
-------------------
(a) Commencement of operations.
(b) Ratios do not reflect dividend payments to preferred shareholders.
(c) Annualized.
(d) Not annualized.
(e) At December 31, 2003, total shares outstanding (in 000's) and asset coverage
per share were previously presented incorrectly as 28 and $70,949,
respectively, and have been revised.
(f) Based on weekly prices.
See accompanying notes to financial statements.
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24
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Cohen & Steers REIT and Preferred Income Fund, Inc. (the fund) was
incorporated under the laws of the State of Maryland on March 25, 2003 and is
registered under the Investment Company Act of 1940, as amended, as a
closed-end, nondiversified management investment company. The fund had no
operations until June 6, 2003 when it sold 4,200 shares of common stock for
$100,275 to Cohen & Steers Capital Management, Inc. (the investment manager).
Investment operations commenced on June 27, 2003.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America. The preparation of the financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates.
Portfolio Valuation: Investments in securities that are listed on the New
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected at the close of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
for the day. If no bid or asked prices are quoted on such day, then the security
is valued by such method as the board of directors shall determine in good faith
to reflect its fair market value.
Securities not listed on the New York Stock Exchange but listed on other
domestic or foreign securities exchanges or admitted to trading on the National
Association of Securities Dealers Automated Quotations, Inc. (Nasdaq) national
market system are valued in a similar manner. Securities traded on more than one
securities exchange are valued at the last sale price on the business day as of
which such value is being determined as reflected on the tape at the close of
the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by the investment
manager to be over-the-counter, but excluding securities admitted to trading on
the Nasdaq national list, are valued at the official closing prices as reported
by Nasdaq, the National Quotations Bureau or such other comparable sources as
the board of directors deems appropriate to reflect their fair market value.
However, certain fixed-income securities may be valued on the basis of prices
provided by a pricing service when such prices are believed by the board of
directors to reflect the fair market value of such securities. Where securities
are traded on more than one exchange and also over-the-counter, the securities
will generally be valued using the quotations the board of directors believes
reflect most closely the value of such securities. Unrealized gains and losses
from securities that result from changes in foreign exchange rates, as well as
changes in market prices of securities, are included in unrealized
appreciation/(depreciation) on investments.
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25
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Short-term debt securities, which have a maturity of 60 days or less, are
valued at amortized cost which approximates value.
Security Transactions and Investment Income: Security transactions are
recorded on trade date. Realized gains and losses on investments sold are
recorded on the basis of identified cost. Interest income is recorded on the
accrual basis. Dividend income is recorded on the ex-dividend date. The fund
records distributions received in excess of income from underlying investments
as a reduction of cost of investments and/or realized gain. Such amounts are
based on estimates if actual amounts are not available, and actual amounts of
income, realized gain and return of capital may differ from the estimated
amounts. The fund adjusts the estimated amounts of the components of
distributions (and consequently its net investment income) as an increase to
unrealized appreciation/(depreciation) on investments as necessary once the
issuers provide information about the actual composition of the distributions.
This adjustment has no impact on the net assets of the fund.
Interest Rate Swaps: The fund uses interest rate swaps in connection with
the sale of taxable auction market preferred shares. The interest rate swaps are
intended to reduce or eliminate the risk that an increase in short-term interest
rates could have on the performance of the fund's common shares as a result of
the floating rate nature of leverage. In an interest rate swap, the fund agrees
to pay the other party to the interest rate swap (which is known as the
counterparty) a fixed rate payment in exchange for the counterparty agreeing to
pay the fund a variable rate payment that is intended to approximate the fund's
variable rate payment obligation on the taxable auction market preferred shares.
The payment obligation is based on the notional amount of the swap. Depending on
the state of interest rates in general, the use of interest rate swaps could
enhance or harm the overall performance of the common shares. The market value
of interest rate swaps is based on pricing models that consider the time value
of money, volatility, the current market and contractual prices of the
underlying financial instrument. Unrealized gains are reported as an asset and
unrealized losses are reported as a liability on the Statement of Assets and
Liabilities. The change in value of swaps, including the periodic amounts of
interest to be paid or received on swaps is reported as unrealized gains or
losses in the Statement of Operations. A realized gain or loss is recorded upon
payment or receipt of a periodic payment or termination of swap agreements. Swap
agreements involve, to varying degrees, elements of market and counterparty
risk, and exposure to loss in excess of the related amounts reflected in the
Statement of Assets and Liabilities.
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid to common shareholders monthly. Dividends to
shareholders are recorded on the ex-dividend date. A portion of the fund's
distributions may consist of amounts derived from nontaxable components of the
dividends from the fund's portfolio investments. Net realized capital gains,
unless offset by any available capital loss carryforward, are distributed to
shareholders annually.
Dividends from net investment income and capital gain distributions are
determined in accordance with U.S. federal income tax regulations which may
differ from generally accepted accounting principles.
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26
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Series M7, Series T7, Series W7, Series TH7, and Series F7 preferred shares
pay dividends based on a variable interest rate set at auctions, normally held
every seven days. Dividends for Series M7, Series T7, Series W7, Series TH7, and
Series F7 preferred shares are accrued for the subsequent seven day period on
the auction date. In most instances, dividends are payable every seven days, on
the first business day following the end of the dividend period.
Series T28, Series W28A, Series W28B, and Series W28C preferred shares pay
dividends based on a variable interest rate set at auctions, normally held every
28 days. Dividends for Series T28, Series W28A, Series W28B, and Series W28C
preferred shares are accrued for the subsequent 28 day period on the auction
date. In most instances, dividends are payable every 28 days, on the first
business day following the end of the dividend period.
Federal Income Taxes: It is the policy of the fund to qualify as a regulated
investment company, if such qualification is in the best interest of the
shareholders, by complying with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies, and by distributing
substantially all of its taxable earnings to its shareholders. Accordingly, no
provision for federal income or excise tax is necessary.
NOTE 2. INVESTMENT MANAGEMENT FEES, ADMINISTRATION FEES AND OTHER TRANSACTIONS
WITH AFFILIATES
Investment Management Fees: Cohen & Steers Capital Management, Inc. (the
investment manager) serves as the investment manager to the fund, pursuant to an
investment management agreement (the management agreement). The investment
manager furnishes a continuous investment program for the fund's portfolio,
makes the day-to-day investment decisions for the fund and generally manages the
fund's investments in accordance with the stated polices of the fund, subject to
the general supervision of the board of directors of the fund. The investment
manager also performs certain administrative services for the fund.
For the services under the management agreement, the fund pays the
investment manager a monthly management fee, computed daily and payable monthly
at an annual rate of 0.65% of the fund's average daily managed asset value.
Managed asset value is the net asset value of the common shares plus the
liquidation preference of the preferred shares. For the six months ended
June 30, 2004, the fund incurred investment management fees of $6,317,281.
Administration Fees: Pursuant to an administration agreement, the investment
manager also performs certain administrative and accounting functions for the
fund and receives a fee equal to, on an annual basis, 0.06% of the fund's
average daily managed assets up to $1 billion, 0.04% of the fund's average daily
managed assets in excess of $1 billion up to $1.5 billion and 0.02% of the
fund's average daily managed assets in excess of $1.5 billion. For the six
months ended June 30, 2004, the fund incurred $443,012 in administration fees.
Director's Fees: Certain directors and officers of the fund are also
directors, officers and/or employees of the investment manager. None of the
directors and officers so affiliated received compensation for their services.
For the six months ended June 30, 2004, fees and related expenses accrued for
nonaffiliated directors totaled $21,874.
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27
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
six months ended June 30, 2004, totaled $112,688,204 and $99,532,161,
respectively.
NOTE 4. INCOME TAXES
At June 30, 2004 the cost of investments and net unrealized appreciation for
federal income tax purposes were as follows:
Aggregate cost................................... $1,782,836,744
--------------
--------------
Gross unrealized appreciation.................... $ 144,228,781
Gross unrealized depreciation.................... (10,750,573)
--------------
Net unrealized appreciation on investments....... 133,478,208
Net unrealized appreciation on interest rate swap
transactions................................... 5,060,624
--------------
Net unrealized appreciation...................... $ 138,538,832
--------------
--------------
NOTE 5. CAPITAL STOCK
During the six months ended June 30, 2004, the fund issued no shares of
common stock for the reinvestment of dividends. An adjustment of $266,434
related to preferred offering costs was credited to common stock during the same
period.
On June 27, 2003, the fund completed the initial public offering of
42,750,000 shares of common stock. Proceeds paid to the fund amounted to
$1,018,518,750 after deduction of underwriting commissions and offering expenses
of $50,231,250.
On July 17, 2003, the fund completed a subsequent offering of 2,500,000
shares of common stock. Proceeds paid to the fund amounted to $59,562,500 after
deduction of underwriting commissions and offering expenses of $2,937,500.
On August 5, 2003, the fund completed a subsequent offering of 2,940,000
shares of common stock. Proceeds paid to the fund amounted to $70,045,500 after
deduction of underwriting commissions and offering expenses of $3,454,500.
During the period June 27, 2003 (commencement of operations) through
December 31, 2003, the fund issued 57,466 shares of common stock for the
reinvestment of dividends.
On August 18, 2003, the fund issued 3,280 taxable auction market preferred
shares, Series M7 (par value $0.001), 3,280 taxable auction market preferred
shares, Series T7 (par value $0.001), 3,280 taxable auction market preferred
shares, Series W7 (par value $0.001), 3,280 taxable auction market preferred
shares, Series TH7 (par
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28
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
value $0.001), 3,280 taxable auction market preferred shares, Series F7 (par
value $0.001), 2,800 taxable auction market preferred shares, Series W28A (par
value $0.001), 2,800 taxable auction market preferred shares, Series W28B (par
value $0.001), and 2,800 taxable auction market preferred shares, Series W28C
(par value $0.001) (together referred to as preferred shares). Proceeds paid to
the fund amounted to $612,815,000 after deduction of underwriting commissions
and offering expenses of $7,185,000. These issues have received a 'AAA/Aaa'
rating from Standard & Poor's and Moody's.
On December 8, 2003, the fund issued 2,040 auction market preferred shares,
Series T28 (par value $0.001). Proceeds paid to the fund amounted to $50,154,874
after deduction of underwriting commissions and offering expenses of $845,126.
This issue has recieved a 'AAA/Aaa' rating from Standard & Poor's and Moody's.
Preferred shares are senior to the fund's common shares and will rank on a
parity with shares of any other series of preferred shares, and with shares of
any other series of preferred stock of the fund, as to the payment of dividends
and the distribution of assets upon liquidation. If the fund does not timely
cure a failure to (1) maintain a discounted value of its portfolio equal to the
preferred shares basic maintenance amount, (2) maintain the 1940 Act preferred
shares asset coverage, or (3) file a required certificate related to asset
coverage on time, all of the forgoing as defined in the articles supplementary
of the fund, the preferred shares will be subject to a mandatory redemption at
the redemption price of $25,000 per share plus an amount equal to accumulated
but unpaid dividends thereon to the date fixed for redemption. To the extent
permitted under the 1940 Act and Maryland Law, the fund at its option may
without consent of the holders of preferred shares, redeem preferred shares
having a dividend period of one year or less, in whole, or in part, on the
business day after the last day of such dividend period upon not less than 15
calendar days and not more than 40 calendar days prior to notice. The optional
redemption price is $25,000 per share plus an amount equal to accumulated but
unpaid dividends thereon to the date fixed for redemption.
The fund's common shares and preferred shares have equal voting rights of
one vote per share and vote together as a single class. In addition, the
affirmative vote of a majority of the holders as defined in the 1940 Act, of the
outstanding preferred shares shall be required to (1) approve any plan of
reorganization that would adversely affect the taxable auction market preferred
shares and (2) any matter that materially and adversely affects the rights,
preferences, or powers of that series.
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29
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 6. INVESTMENTS IN INTEREST RATE SWAPS
The fund has entered into interest rate swap agreements with Merrill Lynch
Derivative Products AG, UBS AG, and Royal Bank of Canada. Under the agreements
the fund receives a floating rate and pays a respective fixed rate.
Details of the swaps at June 30, 2004 are as follows:
UNREALIZED
NOTIONAL FIXED FLOATING RATE(a) APPRECIATION/
COUNTERPARTY AMOUNT RATE (RESET MONTHLY) TERMINATION DATE (DEPRECIATION)
---------------------- ----------- ------- --------------- ------------------ --------------
Royal Bank of Canada $58,125,000 3.3980% 1.300% August 25, 2007 $ 323,046
Royal Bank of Canada $43,250,000 3.4520% 1.252% September 16, 2008 838,103
UBS AG $58,125,000 2.8325% 1.300% August 25, 2006 358,986
UBS AG $58,125,000 3.9900% 1.300% August 25, 2009 628,184
UBS AG $58,125,000 4.3975% 1.300% August 25, 2010 129,777
UBS AG $58,125,000 4.5950% 1.300% August 25, 2011 86,437
Merrill Lynch
Derivative
Products AG $43,625,000 3.3200% 1.280% October 22, 2007 450,956
Merrill Lynch
Derivative
Products AG $58,500,000 3.2075% 1.113% October 2, 2008 1,713,017
Merrill Lynch
Derivative
Products AG $20,000,000 3.4100% 1.211% January 13, 2009 532,118
----------
$5,060,624
----------
----------
-------------------
(a) Based on LIBOR (London Interbank Offered Rate). Represents rates in effect
at June 30, 2004.
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30
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
PROXY RESULTS
During the six months ended June 30, 2004, Cohen & Steers REIT and Preferred
Income Fund, Inc. shareholders voted on the following proposals at the annual
meeting held on April 29, 2004. The description of each proposal and number of
shares voted are as follows:
Common Shares
-----------------------------------------------------------------------------------------
SHARES VOTED AUTHORITY
FOR WITHHELD
-----------------------------------------------------------------------------------------
1. To elect Directors
Gregory C. Clark......................................... 47,100,489 494,255
Bonnie Cohen............................................. 47,094,901 499,843
George Grossman.......................................... 47,102,569 492,175
Richard J. Norman........................................ 47,097,879 496,865
Frank K. Ross............................................ 47,083,033 511,711
Robert H. Steers......................................... 47,100,664 494,080
----------------------------------------------------------------------------------------------
SHARES VOTED SHARES VOTED SHARES VOTED
FOR AGAINST ABSTAIN
----------------------------------------------------------------------------------------------
2. To ratify PricewaterhouseCoopers LLP as the
fund's independent registered public
accountants................................ 46,917,937 244,818 431,989
Preferred Shares
-------------------------------------------------------------------------------------------
SHARES VOTED AUTHORITY
FOR WITHHELD
-------------------------------------------------------------------------------------------
1. To elect Directors
Gregory C. Clark......................................... 15,040 274
Bonnie Cohen............................................. 15,040 274
Martin Cohen............................................. 15,040 274
George Grossman.......................................... 15,040 274
Richard J. Norman........................................ 15,040 274
Frank K. Ross............................................ 15,040 274
Willard H. Smith, Jr..................................... 15,040 274
Robert H. Steers......................................... 15,040 274
----------------------------------------------------------------------------------------------
SHARES VOTED SHARES VOTED SHARES VOTED
FOR AGAINST ABSTAIN
----------------------------------------------------------------------------------------------
2. To ratify PricewaterhouseCoopers LLP as the
fund's independent registered public
accountants.................................. 15,067 240 7
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31
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
AVERAGE ANNUAL TOTAL RETURNS(a)
(PERIOD ENDED JUNE 30, 2004) (UNAUDITED)
SINCE INCEPTION
ONE YEAR (6/27/03)
-------- ---------
18.46% 18.28%
The performance data quoted represents past performance. Past performance is no
guarantee of future results. The rate of return will vary and the principal
value of an investment will fluctuate and shares, if sold, may be worth more or
less than their original cost. Current performance may be lower or higher than
the performance data quoted.
-------------------------------------------------------------------
REINVESTMENT PLAN
We urge shareholders who want to take advantage of this plan
and whose shares are held in 'Street Name' to consult your
broker as soon as possible to determine if you must change
registration into your own name to participate.
-------------------------------------------------------------------
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Notice is hereby given in accordance with Section 23(c) of
the Investment Company Act of 1940 that the fund may
purchase, from time to time, shares of its common stock in
the open market.
-------------------------------------------------------------------
-------------------------------------------------------------------
A description of the policies and procedures that the fund
uses to determine how to vote proxies relating to portfolio
securities is available (i) without charge, upon request, by
calling 1-800-330-7348, (ii) on our Web site at
cohenandsteers.com or (iii) on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
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-------------------
(a) Based on net asset value.
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32
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
------------------------------------------------------------------
PRIVACY POLICY
The fund is committed to maintaining the privacy of its
shareholders and to safeguarding their personal information.
The following is provided to help you understand what
personal information the fund collects, how we protect that
information, and why in certain cases we may share this
information with others.
The fund does not receive any personal information relating
to shareholders who purchase shares through an intermediary
that acts as the record owner of the shares. In the case of
shareholders who are record owners of the fund, to conduct
and process your business in an accurate and efficient
manner, we must collect and maintain certain personal
information about you. This is the information we collect on
applications or other forms, and from the transactions you
make with us.
The fund does not disclose any personal information about
its shareholders or former shareholders to anyone, except as
required or permitted by law or as is necessary to service
shareholder accounts. We will share information with
organizations, such as the fund's transfer agent, that
assist the fund in carrying out its daily business
operations. These organizations will use this information
only for purposes of providing the services required or as
otherwise as may be required by law. These organizations are
not permitted to share or use this information for any other
purpose. In addition, the fund restricts access to personal
information about its shareholders to employees of the
adviser who have a legitimate business need for the
information.
------------------------------------------------------------------
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33
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
MEET THE COHEN & STEERS FAMILY OF OPEN-END FUNDS:
FOR HIGH CURRENT INCOME: FOR TOTAL RETURN
COHEN & STEERS COHEN & STEERS
EQUITY INCOME FUND REALTY SHARES
IDEAL FOR INVESTORS SEEKING A HIGH DIVIDEND IDEAL FOR INVESTORS SEEKING MAXIMUM TOTAL
YIELD AND CAPITAL APPRECIATION, INVESTING RETURN THROUGH BOTH CURRENT INCOME AND
PRIMARILY IN REITS CAPITAL APPRECIATION, INVESTING PRIMARILY IN
A, B, C AND I SHARES AVAILABLE REITS
SYMBOLS: CSEIX, CSBIX, CSCIX, CSDIX SYMBOL: CSRSX
ALSO AVAILABLE: COHEN & STEERS INSTITUTIONAL
REALTY SHARES (CSRIX) REQUIRES A HIGHER
MINIMUM PURCHASE, BUT OFFERS A LOWER TOTAL
EXPENSE RATIO
FOR TOTAL RETURN: FOR CAPITAL APPRECIATION
COHEN & STEERS COHEN & STEERS
UTILITY FUND SPECIAL EQUITY FUND
IDEAL FOR INVESTORS SEEKING MAXIMUM TOTAL IDEAL FOR INVESTORS SEEKING MAXIMUM CAPITAL
RETURN THROUGH BOTH CURRENT INCOME AND APPRECIATION, INVESTING IN A LIMITED NUMBER
CAPITAL APPRECIATION, INVESTING PRIMARILY IN OF REITS AND OTHER REAL ESTATE COMPANIES
UTILITIES CONCENTRATED, HIGHLY FOCUSED PORTFOLIO
SYMBOLS: CSUAX, CSUBX, CSUCX, CSUIX SYMBOL: CSSPX
FOR MORE INFORMATION ABOUT ANY COHEN & STEERS FUND
OR TO OBTAIN A PROSPECTUS PLEASE CONTACT US AT:
1-800-330-7348, OR VISIT OUR WEB SITE AT COHENANDSTEERS.COM
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE
INVESTING. A PROSPECTUS CONTAINING THIS AND OTHER INFORMATION ABOUT THE FUND MAY BE OBTAINED BY
FOLLOWING THE INSTRUCTIONS ABOVE. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
COHEN & STEERS SECURITIES, LLC, DISTRIBUTOR
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34
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
OFFICERS AND DIRECTORS KEY INFORMATION
Robert H. Steers INVESTMENT MANAGER
Director and chairman Cohen & Steers Capital Management, Inc.
757 Third Avenue
Martin Cohen New York, NY 10017
Director and president (212) 832-3232
Bonnie Cohen FUND SUBADMINISTRATOR AND CUSTODIAN
Director State Street Bank and Trust Company
225 Franklin Street
George Grossman Boston, MA 02110
Director
TRANSFER AGENT -- COMMON SHARES
Richard J. Norman Equiserve Trust Company
Director 250 Royall Street
Canton, MA 02021
Frank K. Ross (800) 426-5523
Director
TRANSFER AGENT -- PREFERRED SHARES
Willard H. Smith Jr. The Bank of New York
Director 100 Church Street
New York, NY 10007
Greg E. Brooks
Vice president LEGAL COUNSEL
Simpson Thacher & Bartlett LLP
Adam Derechin 425 Lexington Avenue
Vice president and assistant treasurer New York, NY 10017
Joseph M. Harvey New York Stock Exchange Symbol: RNP
Vice president
Web site: cohenandsteers.com
William F. Scapell
Vice president This report is for shareholder
information. This is not a
Lawrence B. Stoller prospectus intended for use in the
Assistant secretary purchase or sale of fund shares.
Past performance is of course no
guarantee of future results and your
investment may be worth more or less
at the time you sell.
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35
COHEN & STEERS
REIT AND PREFERRED INCOME FUND
SEMIANNUAL REPORT
JUNE 30, 2004
COHEN & STEERS
REIT AND PREFERRED INCOME FUND
757 THIRD AVENUE
NEW YORK, NY 10017
STATEMENT OF DIFFERENCES
------------------------
The division sign shall be expressed as ..................................[div]
The section symbol shall be expressed as ..................................'SS'