Edgar Filing: RMR REAL ESTATE FUND

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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: 811-21241

RMR REAL ESTATE FUND
(Exact name of registrant as specified in charter)

400 CENTRE STREET
NEWTON, MASSACHUSETTS 02458
(Address of principal executive offices) (Zip code)

(Name and Address of Agent for Service of Process)		Copy to:
Thomas M. O'Brien, President RMR Real Estate Fund 400 Centre Street Newton, Massachusetts 02458		Robert N. Hickey, Esq. Sullivan & Worcester LLP 1666 K Street, N.W. Washington, D.C. 20006
		Thomas J. Reyes, Esq. State Street Bank and Trust Company One Federal Street, 9th Floor Boston, Massachusetts 02110

Registrant's telephone number, including area code: (617) 332-9530
Date of fiscal year end: December 31
Date of reporting period: June 30, 2005

Item 1. Reports to Stockholders.


Semi-Annual Reports June 30, 2005

RMR Real Estate Fund
RMR Hospitality and Real Estate Fund
RMR F.I.R.E. Fund
RMR Preferred Dividend Fund

About information contained in this report:

•: Performance data is historical and reflects historical expenses and historical changes in net asset value. Historical results are not indicative of future results.
•: If RMR Advisors had not waived fees or paid all of each fund's organizational costs and a portion of each Fund's offering costs, each fund's returns would have been lower.
•: Investment in each fund's shares is subject to material risks, including but not limited to those described in each Fund's annual report on Form N-CSR filed with the SEC for the period ended December 31, 2004, or with respect to RMR Preferred Dividend Fund, the registration statements filed with the SEC related to the initial public offering of common and preferred shares.

NOTICE CONCERNING LIMITED LIABILITY

THE DECLARATIONS OF TRUST OF RMR REAL ESTATE FUND, RMR HOSPITALITY AND REAL ESTATE FUND, RMR F.I.R.E. FUND AND RMR PREFERRED DIVIDEND FUND, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO, ARE DULY FILED IN THE OFFICE OF THE SECRETARY, CORPORATIONS DIVISION OF THE COMMONWEALTH OF MASSACHUSETTS, PROVIDES THAT THE NAMES "RMR REAL ESTATE FUND", "RMR HOSPITALITY AND REAL ESTATE FUND", "RMR F.I.R.E. FUND" AND "RMR PREFERRED DIVIDEND FUND" REFERS TO THE TRUSTEES UNDER THE DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF ANY OF THE FUNDS SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, ANY OF THESE FUNDS. ALL PERSONS DEALING WITH ANY OF THE FUNDS IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THAT FUND WITH WHICH HE MAY DEAL FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

	RMR Funds June 30, 2005 To our shareholders,
	We are pleased to present you with our 2005 semi-annual report for four funds: • RMR Real Estate Fund (AMEX: RMR), which began operations in December 2003; • RMR Hospitality and Real Estate Fund (AMEX: RHR), which began operations in April 2004; • RMR F.I.R.E. Fund (AMEX: RFR), which began operations in November 2004; and • RMR Preferred Dividend Fund (AMEX: RDR), which began operations in May 2005. We invite you to read through the information contained in this report and to view our website, at www.rmrfunds.com. Sincerely, Thomas M. O'Brien President

RMR Real Estate Fund
June 30, 2005

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the first six months of 2005 and our financial position as of June 30, 2005.

As a result of our investment activities for the first six months of 2005, our net asset value was $16.75 per common share as of June 30, 2005, a 0.8% increase from $16.61 per common share six months earlier. In addition to this increase in net asset value per common share, we made monthly distributions totaling $0.60 per common share during the first six months of 2005.

For the first six months of 2005, our allocation in the manufactured homes sub-sector increased from 4.5% to 6.6% of total investments, our largest sub-sector increase. During the same time period, our allocation in the apartments sub-sector decreased from 18.6% to 13.2% of total investments, our largest sub-sector decrease. These changes partly reflect trading activity based upon our view of the strengths and weaknesses of these sub-sectors and the companies that operate in them and partly reflect the impact of stock market conditions. During the remainder of 2005, we will continue to monitor market conditions and position our portfolio according to our view of those conditions.

For shares that we held continuously during the first six months of 2005, our three best performing investments were Equity Office Properties Trust, Colonial Properties Trust and U-Store-It Trust, with total returns during this period of 17.3%, 16.2% and 13.0%, respectively. Our worst performing investments during the first six months of 2005 were Bedford Property Investors, Inc., Eagle Hospitality Properties Trust, Inc. and Trustreet Properties Inc. with total returns (losses) during the first six months of (15.2)%, (6.5)% and (4.2)%, respectively.

Thank you for your continued support, and be sure to view our website, at www.rmrfunds.com.

Sincerely,

Thomas M. O'Brien
President

RMR Real Estate Fund
June 30, 2005

Relevant Market Conditions

Real Estate Industry Fundamentals. We believe the investment environment for most real estate companies at June 30, 2005, and for the remainder of 2005 is generally positive. We believe that the environment for the remainder of 2005 will include revenue growth and stabilizing to improving occupancy rates. We believe that a majority of real estate investment trust's balance sheets reflect modest debt leverage and low floating rate debt.

Real Estate Industry Technicals. We believe demand for real estate securities over the long term will continue to increase. Demographic trends in the U.S. include growth in the over age 50 population; we believe that individuals in that age category tend to focus their investments in higher yielding stocks like real estate investments trusts, or REITs. Institutions, too, seem to be increasing their allocations to real estate securities as the market capitalization of REITs has increased. Both of these are positive factors affecting the real estate securities market.

Fund Strategies, Techniques and Performance

Our primary investment objective is to earn and pay a high level of current income to our common shareholders by investing in real estate companies. Our secondary investment objective is capital appreciation. There can be no assurance that we will meet our investment objectives.

During the first six months of 2005, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV) was 4.8%. During that same period, the total return for the MSCI US REIT Total Return Index was 6.4% and the total return for the MSCI REIT Preferred Index was 2.8%. We believe these two indices are most relevant to our investments because our investments, excluding short-term investments, as of June 30, 2005, include 72.7% REIT common stocks and 26.1% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 Stocks) total return (loss) for the first six months of 2005 was (0.8)%.

RMR Real Estate Fund
Portfolio of Investments – June 30, 2005 (unaudited)


Company			Shares	Value

Common Stocks – 103.1%
Real Estate Investment Trusts – 101.5%
	Apartments – 16.8%
		AMLI Residential Properties Trust	106,700	$	3,335,442
		Apartment Investment & Management Co.	149,100		6,101,172
		Associated Estates Realty Corp.	141,400		1,305,122
		BNP Residential Properties, Inc.	200,000		3,200,000
		Home Properties, Inc.	121,200		5,214,024

					19,155,760
	Diversified – 24.1%
		Bedford Property Investors, Inc.	150,000		3,453,000
		Colonial Properties Trust	145,000		6,380,000
		Commercial Net Lease Realty	289,600		5,928,112
		Crescent Real Estate Equities Co.	324,000		6,075,000
		Lexington Corporate Properties Trust	200,000		4,862,000
		Liberty Property Trust	20,000		886,200

					27,584,312
	Health Care – 11.0%
		Health Care REIT, Inc.	150,000		5,653,500
		Nationwide Health Properties, Inc.	250,000		5,902,500
		Omega Healthcare Investors Inc.	83,200		1,069,952

					12,625,952
	Hospitality – 0.5%
		Eagle Hospitality Properties Trust, Inc.	60,000		546,600
	Industrial – 5.8%
		First Industrial Realty Trust, Inc.	165,000		6,583,500
	Manufactured Homes – 3.3%
		Sun Communities, Inc.	100,900		3,752,471
	Office – 21.4%
		Arden Realty, Inc.	114,600		4,123,308
		CarrAmerica Realty Corp.	10,000		361,800
		Columbia Equity Trust, Inc.	30,000		460,500
		Equity Office Properties Trust	250,000		8,275,000
		Glenborough Realty Trust, Inc.	285,000		5,868,150
		Highwoods Properties, Inc.	85,000		2,529,600
		Maguire Properties, Inc.	100,000		2,834,000

					24,452,358
See notes to financial statements and notes to portfolio of investments.

	Retail – 11.7%
		Glimcher Realty Trust	75,000	$	2,081,250
		Heritage Property Investment Trust	200,000		7,004,000
		New Plan Excel Realty Trust	156,200		4,243,954

					13,329,204
	Specialty – 4.8%
		Getty Realty Corp.	28,600		792,220
		Trustreet Properties, Inc.	280,000		4,650,800

					5,443,020
	Storage – 2.1%
		Sovran Self Storage, Inc.	50,000		2,273,000
		U-Store-It Trust	10,000		190,500

					2,463,500
Total Real Estate Investment Trusts (Cost $102,922,084)					115,936,677
	Other – 1.6%
		Panamsat Holding Corp. (Cost $1,584,000)	88,000		1,804,880
Total Common Stocks (Cost $104,506,084)					117,741,557
Preferred Stocks – 36.5%
Real Estate Investment Trusts – 36.5%
	Apartments – 2.1%
		Apartment Investment & Management Co., Series G	32,800		872,480
		Apartment Investment & Management Co., Series T	60,000		1,518,000

					2,390,480
	Diversified – 1.3%
		Colonial Properties Trust, Series E	62,910		1,541,295
	Health Care – 7.7%
		LTC Properties, Inc., Series F	160,000		4,092,000
		OMEGA Healthcare Investors Inc., Series D	160,000		4,240,000
		Windrose Medical Properties Trust, Series A*	20,000		495,000

					8,827,000
	Hospitality – 12.6%
		Ashford Hospitality Trust, Series A	107,900		2,818,888
		Equity Inns, Inc., Series B	34,000		889,100
		Eagle Hospitality Properties Trust, Inc., Series A	28,000		719,600
		FelCor Lodging Trust, Inc., Series A*	83,000		2,027,690
		FelCor Lodging Trust, Inc., Series C	29,200		716,276
		Innkeepers USA Trust, Series C	120,000		3,068,400
		Winston Hotels, Inc., Series B	160,000		4,111,200

					14,351,154
See notes to financial statements and notes to portfolio of investments

	Manufactured Homes – 6.2%
		Affordable Residential Communities, Series A	280,000	$	7,084,000
	Office – 0.7%
		Kilroy Realty Corp., Series F	30,000		762,000
	Retail – 2.7%
		CBL & Associates Properties, Inc., Series B	20,000		1,065,000
		Glimcher Realty Trust, Series F	20,000		535,800
		Glimcher Realty Trust, Series G	50,000		1,277,500
		The Mills Corp., Series E	7,100		192,409

					3,070,709
	Specialty – 3.2%
		New Century Financial Corp., Series A	20,000		506,000
		RAIT Investment Trust, Series A	125,000		3,150,000

					3,656,000
Total Preferred Stocks (Cost $40,145,246)					41,682,638
Short-Term Investment – 3.3%
	Other Investment Companies – 3.3%
		SSgA Money Market Fund, 2.883%(a) (Cost $3,811,737)	3,811,737		3,811,737
Total Investments – 142.9% (Cost $148,463,067)					163,235,932
Other assets less liabilities – 0.9%					1,035,925
Preferred Shares, at liquidation preference – (43.8)%					(50,000,000	)
Net Assets attributable to common shares – 100%				$	114,271,857

Notes to portfolio of investments

*: Convertible into common stock.
(a): Rate reflects 7 day yield as of June 30, 2005.

See notes to financial statements and notes to portfolio of investments

RMR Real Estate Fund
Financial Statements – continued

Statement of Assets and Liabilities


June 30, 2005 (unaudited)

Assets
	Investments in securities, at value (cost $148,463,067)		$	163,235,932
	Cash			500,517
	Dividends and interest receivable			1,200,458
	Receivable for investments sold			1,004,767
	Other assets			24,084

		Total assets		165,965,758

Liabilities
	Payable for investment securities purchased			1,511,101
	Advisory fees payable			80,158
	Distributions payable – preferred shares			29,660
	Accrued expenses and other liabilities			72,982

		Total liabilities		1,693,901

Preferred shares at liquidation preference
	Auction preferred shares, Series T; $.001 par value per share; 2,000 shares issued and outstanding at $25,000 per share liquidation preference			50,000,000

Net assets attributable to common shares			$	114,271,857

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 6,824,000 shares issued and outstanding		$	6,824
	Additional paid-in capital			96,710,623
	Distributions in excess of net investment income			(229,676	)
	Accumulated net realized gain on investments			3,011,221
	Net unrealized appreciation on investments			14,772,865

Net assets attributable to common shares			$	114,271,857

Net asset value per share attributable to common shares (based on 6,824,000 common shares outstanding)			$	16.75

See notes to financial statements

RMR Real Estate Fund
Financial Statements – continued

Statement of Operations


Six Months Ended June 30, 2005 (unaudited)

Investment income
	Dividends (Cash distributions received or due)			$	5,327,859
	Interest				29,567

		Total investment income			5,357,426

Expenses
	Advisory				658,477
	Audit and legal				66,484
	Administrative				65,351
	Preferred share remarketing				62,919
	Custodian				30,594
	Shareholder reporting				21,000
	Compliance and internal audit				20,000
	Trustees' fees and expenses				10,400
	Other				47,887

		Total expenses			983,112
	Less: expenses waived by the Advisor				(193,670	)

		Net expenses			789,442

			Net investment income		4,567,984

Realized and unrealized gain on investments
	Net realized gain on investments				2,646,894
	Net change in unrealized appreciation/(depreciation) on investments				(1,501,942	)

	Net realized and unrealized gain on investment transactions				1,144,952
	Distributions to preferred shareholders from net investment income				(703,260	)

		Net increase in net assets attributable to common shares resulting from operations		$	5,009,676

See notes to financial statements

RMR Real Estate Fund
Financial Statements – continued

Statement of Changes in Net Assets


				Six Months Ended June 30, 2005			Year Ended December 31, 2004

				(unaudited)
Increase (decrease) in net assets resulting from operations
	Net investment income			$	4,567,984		$	3,196,785
	Net realized gain on investments				2,646,894			4,348,707
	Net change in unrealized appreciation/(depreciation) on investments				(1,501,942	)		16,866,604
	Distributions to preferred shareholders from:
		Net investment income			(703,260	)		(320,690	)
		Net realized gain on investments			–			(343,770	)

			Net increase in net assets attributable to common shares resulting from operations		5,009,676			23,747,636

	Distributions to common shareholders from:
		Net investment income			(4,094,400	)		(3,622,828	)
		Net realized gain on investments			–			(3,883,572	)
Capital shares transactions
	Net proceeds from sale of common shares				–			2,144,250
	Net proceeds from sale of preferred shares				–			49,195,335

		Net increase from capital transactions			–			51,339,585
	Less: Liquidation preference of preferred shares issued				–			(50,000,000	)

		Total increase in net assets attributable to common shares			915,276			17,580,821
Net assets attributable to common shares
	Beginning of period				113,356,581			95,775,760

	End of period (net of distributions in excess of net investment income of $229,676 and $0, respectively)			$	114,271,857		$	113,356,581

Common shares issued and repurchased
	Shares outstanding, beginning of period				6,824,000			6,674,000
		Shares issued			–			150,000

	Shares outstanding, end of period				6,824,000			6,824,000

See notes to financial statements

Financial Highlights – RMR Real Estate Fund

Selected Data for a Common Share Outstanding Throughout the Period


		Six Months Ended June 30, 2005			Year Ended December 31, 2004			For the Period December 18, 2003 (a) to December 31, 2003

		(unaudited)
Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	16.61		$	14.35		$	14.33	(c)

Income from Investment Operations
Net investment income (d)			0.67	(e)		0.47			0.10
Net realized and unrealized appreciation on investments			0.17	(e)		3.11			(0.05	)
Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income		(0.10)	(e)		(0.05	)		–
	Net realized gain on investments		–	(e)		(0.05	)		–

Net increase in net asset value from operations			0.74			3.48			0.05
Less: Distributions to common shareholders from:
	Net investment income		(0.60)	(e)		(0.53	)		–
	Net realized gain on investments		–	(e)		(0.57	)		–
Common share offering costs charged to capital			–			–			(0.03	)
Preferred share offering costs charged to capital			–			(0.12	)		–

Net asset value, end of period		$	16.75		$	16.61		$	14.35

Market price, beginning of period		$	14.74		$	15.00		$	15.00

Market price, end of period		$	14.29		$	14.74		$	15.00

Total Return (f)
Total investment return based on:
	Market price (g)		1.27	%		6.42	%		0.00	%
	Net asset value (g)		4.80	%		24.73	%		0.14	%
Ratios/Supplemental Data:
Preferred shares, liquidation preference ($25,000 per share) (000s)		$	50,000		$	50,000		$	–
Net assets attributable to common shares, end of period (000s)		$	114,272		$	113,357		$	95,776
Ratio to average net assets attributable to common shares (h) of:
	Net investment income, before total preferred share distributions (d)		8.67%	(e)		3.22	%		27.45	%
	Total preferred share distributions		1.34	%		0.67	%		0.00	%
	Net investment income, net of preferred share distributions (d)		7.33%	(e)		2.55	%		27.45	%
	Expenses, net of fee waivers		1.50	%		1.69	%		2.40	%
	Expenses, before fee waivers		1.87	%		2.05	%		2.65	%
Portfolio turnover rate			9.08	%		35.52	%		17.49	%

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at December 18, 2003, reflects the deduction of the average sales load and offering costs of $0.67 per share paid by the holders of common shares from the $15.00 offering price. We paid a sales load and offering costs of $0.68 per share on 6,660,000 common shares sold to the public and no sales load or offering costs on 7,000 common shares sold to affiliates of RMR Advisors for $15 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A(7) to the financial statements, these amounts are subject to change to the extent 2005 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(f): Total return for periods less than one year are not annualized.
(g): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(h): Annualized.

See notes to financial statements

RMR Real Estate Fund
Notes to Financial Statements

June 30, 2005 (unaudited)

Note A

(1) Organization

RMR Real Estate Fund, or the Fund, was organized as a Massachusetts business trust on July 2, 2002, and is registered under the Investment Company Act of 1940, as amended, as a non-diversified closed end management investment company. The Fund had no operations prior to December 18, 2003, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933.

(2) Interim Financial Statements

The accompanying June 30, 2005, financial statements have been prepared without audit. The Fund believes the disclosures made are adequate to make the information presented not misleading. In the opinion of the Fund's management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. The Fund's operating results for this interim period are not necessarily indicative of the results that may be expected in the future.

(3) Use of Estimates

Preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires the Fund's management to make estimates and assumptions that may affect the amounts reported in the financial statements and related notes. The actual results could differ from these estimates particularly for reasons described in Note A(7), and for other reasons.

(4) Portfolio Valuation

Investment securities of the Fund are valued at the latest sales price whenever that price is readily available on the day of valuation; securities for which no sales were reported on that day, unless otherwise noted, are valued at the last available bid price on that day. Securities traded primarily on the NASDAQ Stock Market, or NASDAQ, are normally valued by the Fund at the NASDAQ Official Closing Price, or NOCP, provided by NASDAQ each business day. The NOCP is the most recently reported price as of 4:00:06 p.m., eastern time, unless that price is outside the range of the "inside" bid and asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, NASDAQ will adjust the price to equal the inside bid or asked price, whichever is closer. Because of delays in reporting trades, the NOCP may not be based on the price of the last trade to occur before the market closes. Some fixed income securities may be valued using pricing provided by a pricing service. Any of the Fund's securities which are not readily marketable, which are not traded, which have other characteristics of illiquidity or whose quotations are unreliable are valued by the Fund at fair value as determined in good faith under the supervision of the Fund's board of trustees. Numerous factors may be considered when determining fair value of a security, including cost at date of purchase, type of security, the nature and duration of restrictions on disposition of the security and whether the issuer of the security being fair valued has other securities of the same class outstanding. Short term debt securities with less than 60 days until maturity may be valued at cost, which when combined with interest accrued, approximates market value.

(5) Securities Transactions and Investment Income

securities received. Interest income, including accretion of original issue discount, where applicable, and accretion of discount on short term investments, is recorded on the accrual basis. Realized gains and losses from securities transactions are recorded on the basis of identified cost.

(6) Federal Income Taxes

The Fund has qualified and intends to qualify in the future as a "regulated investment company" and to comply with the applicable provisions of subchapter M of the Internal Revenue Code of 1986, as amended, so that it will generally not be subject to federal income tax.

(7) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are declared pursuant to this policy. On June 28, 2005, the Fund declared distributions of $0.10 per common share payable in August, September and October 2005. Distributions to Fund shareholders are recorded on the ex-dividend date.

The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital. The Fund estimates that the sum of the distributions declared for the 2005 year through June 30, 2005, is not greater than distributions and interest received or accrued by the Fund on its investments over expenses and cost of leverage plus net realized capital gain from sales of securities during 2005.

For financial reporting purposes as required by generally accepted accounting principles, the Fund generally reflects distributions and interest received or accrued on its investments and distributions made to shareholders as ordinary income, long term capital gains and return of capital in accordance with the characterization of these amounts required by the Internal Revenue Code of 1986, as amended. However, it is not possible to characterize distributions received from real estate investment trusts, or REITs, in which the Fund has invested a substantial portion of its assets, during interim periods because these issuers do not report their tax characterization until subsequent to year end 2005. Final characterization of the Fund's 2005 distributions to shareholders is also dependent upon the magnitude or timing of the Fund's securities transactions prior to year end. Therefore, it is likely that some portion of the Fund's 2005 investment income and distributions to shareholders will be recharacterized as long term capital gain and return of capital for financial statement and federal income tax purposes subsequent to year end and reflected accordingly in the Fund's year end financial statements.

To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry forwards, it is the policy of the Fund not to distribute such gains.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes, as of June 30, 2005, are as follows:

Cost	$	148,463,067

Gross unrealized appreciation	$	15,883,130
Gross unrealized depreciation		(1,110,265	)

Net unrealized appreciation	$	14,772,865

(8) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in income producing common shares, preferred shares and debt securities, including convertible preferred and debt securities, issued by real estate companies and REITs. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the real estate industry due to economic, legal, regulatory, technological or other developments affecting the United States real estate industry.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

The Fund has an advisory agreement with RMR Advisors, Inc., or RMR Advisors, to provide the Fund with a continuous investment program, to make day to day investment decisions and to generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to this agreement, RMR Advisors is compensated at an annual rate of 0.85% of the Fund's average daily managed assets. Managed assets means the total assets of the Fund less liabilities other than any indebtedness entered into for purposes of leverage. For purposes of calculating managed assets, indebtedness entered for the purpose of leverage and the liquidation preference of preferred shares are not considered liabilities.

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets until December 18, 2008.

On May 16, 2005, Barry M. Portnoy became the sole owner of RMR Advisors. This change in ownership is deemed to be a change in control resulting in termination of the then existing investment advisory agreement under the Investment Company Act of 1940. A new investment advisory agreement with the same terms as the previous agreement (except for dates of execution and effective dates) was approved by the shareholders on May 11, 2005.

RMR Advisors, and not the Fund, has agreed to pay the lead underwriter of the Fund's initial public offering an annual fee equal to 0.15% of the Fund's managed assets. This fee is paid quarterly in arrears during the term of RMR Advisors' advisory agreement and is paid by RMR Advisors, not the Fund. The aggregate fees paid pursuant to the contract plus reimbursement of legal expenses of the underwriters will not exceed 4.5% of the total price of the common shares in the initial public offering.

RMR Advisors also performs administrative functions for the Fund pursuant to an administration agreement with the Fund. RMR Advisors has entered into a sub-administration agreement with State Street Bank and Trust Company ("State Street") to perform substantially all Fund accounting and other administrative services. Under the administration agreement RMR Advisors is entitled to reimbursement of the cost of providing administrative services. During the six months ended June 30, 2005, the Fund reimbursed RMR Advisors for $65,351 of sub-administrative fees charged by State Street.

The Fund pays each trustee who is not a director, officer or employee of RMR Advisors and who is not an interested person of the Fund as defined under the Investment Company Act of 1940, as amended, (a "disinterested trustee") an annual fee plus fees for board and committee meetings.

programs. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of the allocated portions of related premiums.

Note C

Securities Transactions

During the six months ended June 30, 2005, there were securities purchases and sales transactions (excluding short term securities) of $14,032,332 and $16,745,343, respectively. Brokerage commissions on securities transactions, exclusive of transactions settled on a net basis, amounted to $26,730 during the six months ended June 30, 2005.

Note D

Preferred Shares

The Fund's 2,000 outstanding Series M auction preferred shares have a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the Investment Company Act of 1940, of at least 200%, the preferred shares will be subject to redemption at an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 3.05% per annum as of June 30, 2005.

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on May 11, 2005. Following is a summary of the proposals submitted to shareholders for vote at the meeting:

Proposal		Votes for	Votes against/ withheld	Votes abstained
Common shares
	Election of John L. Harrington as trustee	6,621,501	83,622	–
	Approval of investment advisory agreement	6,549,776	88,532	66,516
Preferred shares
	Election of John L. Harrington as trustee	1,984	14	–
	Approval of investment advisory agreement	1,983	15	–

RMR Hospitality and Real Estate Fund
June 30, 2005

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the first six months of 2005 and our financial position as of June 30, 2005.

As a result of our investment activities for the first six months of 2005, our net asset value was $23.31 per common share as of June 30, 2005, a 1.2% increase from $22.94 per common share six months earlier. In addition to this increase in net asset value per common share, we made monthly distributions totaling $0.75 per common share during the first six months of 2005.

For the first six months of 2005, our investment allocation to the sub-sector of diversified real estate investment trusts, or REITs, increased from 12.0% to 13.6% of total investments, the largest sub-sector increase. During the same time period, our allocation to the hospitality sub-sector decreased from 31.2% to 27.0% of total investments, the largest sub-sector decrease. These changes partly reflect our view of the performance of each sub-sector and the companies in them and partly reflect the impact of stock market conditions. During the remainder of 2005, we will continue to monitor market conditions and position our portfolio according to our view of those conditions.

For shares that we held continuously during the first six months of 2005, our three best performing investments during the period were Gables Residential Trust, Equity Office Properties Trust and Colonial Properties Trust, with total returns during this period of 24.9%, 17.3% and 16.2%, respectively. Our worst performing investments during the first six months of 2005 were Bedford Property Investors, Inc., Eagle Hospitality Properties Trust, Inc. and Trustreet Properties Inc. with total returns (losses) during the first six months of (15.2)%, (6.5)% and (4.2)%, respectively.

Thank you for your continued support, and be sure to view our website, at www.rmrfunds.com.

Sincerely,

Thomas M. O'Brien
President

RMR Hospitality and Real Estate Fund
June 30, 2005

Relevant Market Conditions

Hospitality Industry Fundamentals. We believe the favorable operating environment for hospitality companies that existed in 2004 has continued into 2005. In general, strong earnings reports have been released for the first two quarters from most of the major U.S. lodging companies. The first six months of 2005 for the hospitality industry were characterized by improvement in revenue per available room, or RevPAR, as a result of improved demand and limited growth in new room supply. The positive impact of revenue gains was offset somewhat in the period by increased labor, benefits and energy costs.

Barring any material unexpected economic or geopolitical events, we see positive trends continuing through the second half of 2005.

Fund Strategies, Techniques and Performance

Our primary objective is to earn and pay our shareholders a high level of current income by investing in hospitality and real estate companies. Our secondary objective is capital appreciation. There can be no assurance that we will meet our investment objectives.

During the first six months of 2005, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV) was 5.10%. During that same period, the total return for the MSCI US REIT Total Return Index was 6.4% and the total return for the MSCI REIT Preferred Index was 2.8%. We believe these two indices are most relevant to our investments because our investments, excluding short term investments, as of June 30, 2005, include 55.9% REIT common stocks and 28.9% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 Stocks) total return (loss) for the first six months of 2005 was (0.8)%.

RMR Hospitality and Real Estate Fund
Portfolio of Investments – June 30, 2005 (unaudited)


Company			Shares	Value

Common Stocks – 67.7%
Real Estate Investment Trusts – 67.5%
	Apartments – 8.0%
		Apartment Investment & Management Co.	10,000	$	409,200
		Associated Estates Realty Corp.	16,600		153,218
		BNP Residential Properties, Inc.	16,000		256,000
		Gables Residential Trust	65,000		2,809,950
		Home Properties, Inc.	9,900		425,898
		Town & Country Trust	20,000		570,200

					4,624,466
	Diversified – 15.6%
		Bedford Property Investors, Inc.	45,300		1,042,806
		Colonial Properties Trust	59,000		2,596,000
		Commercial Net Lease Realty	73,400		1,502,498
		Crescent Real Estate Equities Co.	95,000		1,781,250
		Lexington Corporate Properties Trust	87,000		2,114,970

					9,037,524
	Health Care – 7.5%
		Health Care REIT, Inc.	47,000		1,771,430
		Nationwide Health Properties, Inc.	91,000		2,148,510
		Windrose Medical Properties Trust	30,100		422,303

					4,342,243
	Hospitality – 1.2%
		Ashford Hospitality Trust, Inc.	28,300		305,640
		Eagle Hospitality Properties Trust, Inc.	36,000		327,960
		Hersha Hospitality Trust	6,000		57,240

					690,840
	Industrial – 4.6%
		First Industrial Realty Trust, Inc.	67,000		2,673,300
	Office – 18.0%
		Brandywine Realty Trust	32,000		980,800
		Equity Office Properties Trust	131,900		4,365,890
		Glenborough Realty Trust, Inc.	75,000		1,544,250
		Highwoods Properties, Inc.	75,000		2,232,000
		Reckson Associates Realty Corp.	38,000		1,274,900

					10,397,840
See notes to financial statements and notes to portfolio of investments

	Retail – 7.0%
		Heritage Property Investment Trust	73,900	$	2,587,978
		New Plan Excel Realty Trust	53,000		1,440,010

					4,027,988
	Specialty – 5.0%
		Getty Realty Corp.	30,000		831,000
		Trustreet Properties, Inc.	124,700		2,071,267

					2,902,267
	Storage – 0.6%
		Sovran Self Storage, Inc.	8,100		368,226
Total Real Estate Investment Trusts (Cost $31,568,754)					39,064,694
	Other – 0.2%
		Panamsat Holding Corp. (Cost $133,200)	7,400		151,774
Total Common Stocks (Cost $31,701,954)					39,216,468
Preferred Stocks – 34.9%
Real Estate Investment Trusts – 34.9%
	Apartments – 2.8%
		Apartment Investment & Management Co., Series R	38,000		993,700
		Apartment Investment & Management Co., Series U	24,000		602,400

					1,596,100
	Diversified – 1.6%
		Colonial Properties Trust, Series E	23,067		565,142
		Digital Realty Trust, Inc., Series A	15,000		388,725

					953,867
	Health Care – 4.4%
		Health Care REIT, Inc., Series F	40,000		1,010,800
		LTC Properties, Inc., Series F	40,000		1,023,000
		Windrose Medical Properties Trust, Series A*	20,000		495,000

					2,528,800
	Hospitality – 14.9%
		Ashford Hospitality Trust, Series A	46,000		1,201,750
		Boykin Lodging Co., Series A	70,000		1,942,500
		Eagle Hospitality Properties Trust, Series A	28,000		719,600
		Host Marriott Corp., Series E	60,000		1,650,000
		Innkeepers USA Trust, Series C	27,000		690,390
		Winston Hotels, Inc., Series B	95,000		2,441,025

					8,645,265
See notes to financial statements and notes to portfolio of investments


Company			Shares or Principal Amount		Value

Preferred Stocks – continued
Manufactured Homes – 0.4%
		Affordable Residential Communities, Series A		9,600	$	242,880
	Office – 9.9%
		Alexandria Real Estate Equities, Inc., Series C		120,000		3,166,800
		Bedford Property Investors, Inc., Series B		30,000		757,650
		SL Green Realty Corp., Series D		70,000		1,795,500

						5,719,950
	Specialty – 0.9%
		New Century Financial Corp., Series A		20,000		506,000
Total Preferred Stocks (Cost $19,208,140)						20,192,862
Debt Securities – 18.1%
	Hospitality – 18.1%
		Felcor Lodging LP, 9.00%, 06/01/2011**	$	1,600,000		1,748,000
		MeriStar Hospitality Corp., 9.125%, 01/15/2011**		1,000,000		1,050,000
		MeriStar Hospitality Corp., 10.50%, 06/15/2009**		1,000,000		1,070,000
		American Real Estate Partners LP, 8.125%, 06/01/2012		2,000,000		2,060,000
		ITT Corp., 7.75%, 11/15/2025		3,275,000		3,373,250
		Six flags Inc., 9.75%, 04/15/2013		1,260,000		1,189,125
Total Debt Securities (Cost $10,046,777)						10,490,375
Short-Term Investment – 6.3%
Other Investment Companies – 6.3%
		SSgA Money Market Fund, 2.883%(a) (Cost $3,643,043)		3,643,043		3,643,043
Total Investments – 127.0% (Cost $64,599,914)						73,542,748
Other assets less liabilities – 2.4%						1,376,523
Preferred Shares, at liquidation preference – (29.4)%						(17,000,000	)
Net Assets attributable to common shares – 100%					$	57,919,271

Notes: to Portfolio of Investments
*: Convertible into common stock.
**: Also a Real Estate Investment Trust.
(a): Rate reflects 7 day yield as of June 30, 2005.

See notes to financial statements and notes to portfolio of investments

RMR Hospitality and Real Estate Fund
Financial Statements – continued

Statement of Assets and Liabilities


June 30, 2005 (unaudited)

Assets
	Investments in securities, at value (cost $64,599,914)		$	73,542,748
	Cash			500,322
	Receivable for investments sold			811,542
	Dividends and interest receivable			729,426
	Other assets			11,736

		Total assets		75,595,774

Liabilities
	Payable for investment securities purchased			500,000
	Advisory fees payable			36,637
	Distributions payable – preferred shares			19,999
	Accrued expenses and other liabilities			119,867

		Total liabilities		676,503

Preferred shares at liquidation preference
	Auction preferred shares, Series Th; $.001 par value per share; 680 shares issued and outstanding at $25,000 per share liquidation preference			17,000,000

Net assets attributable to common shares			$	57,919,271

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 2,485,000 shares issued and outstanding		$	2,485
	Additional paid-in capital			47,460,854
	Undistributed net investment income			100
	Accumulated net realized gain on investments			1,512,998
	Net unrealized appreciation on investments			8,942,834

Net assets attributable to common shares			$	57,919,271

Net asset value per share attributable to common shares (based on 2,485,000 common shares outstanding)			$	23.31

See notes to financial statements

RMR Hospitality and Real Estate Fund
Financial Statements – continued

Statement of Operations


Six Months Ended June 30, 2005 (unaudited)

Investment income
	Dividends (Cash distributions received or due)			$	2,022,583
	Interest				551,448

		Total investment income			2,574,031

Expenses
	Advisory				303,603
	Administrative				65,330
	Audit and legal				52,500
	Custodian				30,158
	Preferred share remarketing				21,392
	Compliance and internal audit				20,000
	Shareholder reporting				15,000
	Trustees' fees and expenses				8,628
	Other				43,886

		Total expenses			560,497
	Less: expenses waived by the Advisor				(89,295	)

	Net expenses				471,202

		Net investment income			2,102,829

Realized and unrealized gain on investments
	Net realized gain on investments				728,566
	Net change in unrealized appreciation/(depreciation) on investments				185,287

	Net realized and unrealized gain on investment transactions				913,853
		Distributions to preferred shareholders from net investment income			(238,979	)

			Net increase in net assets attributable to common shares resulting from operations	$	2,777,703

See notes to financial statements

Statement of Changes in Net Assets


				Six Months Ended June 30, 2005			For the Period April 27, 2004(a) to December 31, 2004

				(unaudited)
Increase (decrease) in net assets resulting from operations
	Net investment income			$	2,102,829		$	1,750,200
	Net realized gain on investments				728,566			1,055,756
	Net change in unrealized appreciation on investments				185,287			8,757,547
	Distributions to preferred shareholders from:
		Net investment income			(238,979	)		(151,512	)
		Net realized gain on investments			–			(23,262	)

		Net increase in net assets attributable to common shares resulting from operations			2,777,703			11,388,729

	Distributions to common shareholders from:
		Net investment income			(1,863,750	)		(1,615,688	)
		Net realized gain on investments			–			(248,062	)

Capital shares transactions
	Net proceeds from sale of common shares				–			47,720,000
	Net proceeds from sale of preferred shares				–			16,660,339

		Net increase from capital share transactions			–			64,380,339
		Less: Liquidation preference of preferred shares issued			–			(17,000,000	)

			Total increase in net assets attributable to common shares		913,953			56,905,318
Net assets attributable to common shares
	Beginning of period				57,005,318			100,000

	End of period (including undistributed net investment income of $100 and $0, respectively)			$	57,919,271		$	57,005,318

Common shares issued and repurchased
	Shares outstanding, beginning of period				2,485,000			5,000
		Shares issued			–			2,480,000

	Shares outstanding, end of period				2,485,000			2,485,000

(a): Commencement of operations.

See notes to financial statements

Selected Data for a Common Share Outstanding Throughout the Period


		Six Months Ended June 30, 2005			For the Period April 27, 2004 (a) to December 31, 2004

		(unaudited)
Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	22.94		$	19.28	(c)

Income from Investment Operations
Net investment income (d)			0.85	(e)		0.71
Net realized and unrealized appreciation on investments			0.37	(e)		3.95
Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income		(0.10)	(e)		(0.06	)
	Net realized gain on investments		–	(e)		(0.01	)

Net increase in net asset value from operations			1.12			4.59
Less: Distributions to common shareholders from:
	Net investment income		(0.75)	(e)		(0.65	)
	Net realized gain on investments		–	(e)		(0.10	)
Common share offering costs charged to capital			–			(0.04	)
Preferred share offering costs charged to capital			–			(0.14	)

Net asset value, end of period		$	23.31		$	22.94

Market price, beginning of period		$	19.98		$	20.00

Market price, end of period		$	19.70		$	19.98

Total Return (f)
Total investment return based on:
	Market price (g)		2.58	%		3.93	%
	Net asset value (g)		5.10	%		23.16	%
Ratios/Supplemental Data:
Preferred shares, liquidation preference ($25,000 per share) (000s)		$	17,000		$	17,000
Net assets attributable to common shares, end of period (000s)		$	57,919		$	57,005
Ratio to average net assets attributable to common shares (h) of:
	Net investment income, before total preferred share distributions (d)		7.71%	(e)		4.96	%
	Total preferred share distributions		0.88	%		0.50	%
	Net investment income, net of preferred share distributions (d)		6.83%	(e)		4.46	%
	Expenses, net of fee waivers		1.73	%		1.86	%
	Expenses, before fee waivers		2.05	%		2.18	%
Portfolio turnover rate			5.16	%		20.83	%

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at April 27, 2004, reflects the deduction of the average sales load and offering costs of $0.72 per share paid by the holders of common shares from the $20.00 offering price. We paid a sales load and offering costs of $0.90 per share on 2,000,000 common shares sold to the public and no sales load or offering costs on 480,000 common shares sold to affiliates of RMR Advisors for $20 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A(7) to the financial statements, these amounts are subject to change to the extent 2005 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(f): Total returns for periods less than one year are not annualized.
(g): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; distributions are assumed to be reinvested at market prices. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(h): Annualized.

RMR Hospitality and Real Estate Fund
Notes to Financial Statements

June 30, 2005 (unaudited)

Note A

(1) Organization

RMR Hospitality and Real Estate Fund, or the Fund, was organized as a Massachusetts business trust on January 27, 2004, and is registered under the Investment Company Act of 1940, as amended, as a non-diversified closed end management investment company. The Fund had no operations until April 27, 2004, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

(5) Securities Transactions and Investment Income

(6) Federal Income Taxes

(7) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are declared pursuant to this policy. On June 28, 2005, the Fund declared distributions of $0.125 per common share payable in August, September and October 2005. Distributions to Fund shareholders are recorded on the ex-dividend date.

To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry forwards, it is the policy of the Fund not to distribute such gains.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes, as of June 30, 2005, are as follows:

Cost	$	64,599,914

Gross unrealized appreciation	$	9,180,735
Gross unrealized depreciation		(237,901	)

Net unrealized appreciation	$	8,942,834

(8) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in income producing common shares, preferred shares and debt securities, including convertible preferred and debt securities, issued by hospitality and real estate companies and REITs. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the hospitality and real estate industries due to economic, legal, regulatory, technological or other developments affecting the United States hospitality and real estate industries.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets, until April 27, 2009.

RMR Advisors, and not the Fund, has agreed to pay the lead underwriters of the Fund's initial public offering an annual fee equal to 0.15% in the aggregate of the Fund's managed assets. This fee is paid quarterly in arrears during the term of RMR Advisors' advisory agreement and is paid by RMR Advisors, not the Fund. The aggregate fees paid pursuant to the contract plus reimbursement of legal expenses of the underwriters will not exceed 4.5% of the total price of the common shares sold to non-affiliates in the initial public offering.

RMR Advisors also performs administrative functions for the Fund pursuant to an administration agreement with the Fund. RMR Advisors has entered into a sub-administration agreement with State Street Bank and Trust Company ("State Street") to perform substantially all Fund accounting and other administrative services. Under the administration agreement RMR Advisors is entitled to reimbursement of the cost of providing administrative services. During the six months ended June 30, 2005, the Fund reimbursed RMR Advisors for $65,330 of sub-administrative fees charged by State Street.

programs. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of the allocated portions of related premiums.

Note C

Securities Transactions

During the six months ended June 30, 2005, there were securities purchases and sales transactions (excluding short term securities) of $3,630,338 and $7,309,107 respectively. Brokerage commissions on securities transactions, exclusive of transactions settled on a net basis, amounted to $3,401 during the six months ended June 30, 2005.

Note D

Preferred Shares

The Fund's 680 outstanding Series Th auction preferred shares have a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the Investment Company Act of 1940, of at least 200%, the preferred shares will be subject to redemption at an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 3.10% per annum as of June 30, 2005.

In June 2005, the Fund's board authorized the issuance of additional preferred shares. Subject to market conditions, the Fund intends to offer additional preferred shares which together with the Series Th preferred shares will represent approximately 33% of the Fund's managed assets after issuance.

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on May 11, 2005. Following is a summary of the proposals submitted to shareholders for vote at the meeting:

Proposal		Votes for	Votes against/ withheld	Votes abstained
Common shares
	Election of John L. Harrington as trustee	2,087,045	16,980	–
	Approval of investment advisory agreement	2,075,034	14,583	14,408
Preferred shares
	Election of John L. Harrington as trustee	680	–	–
	Approval of investment advisory agreement	677	–	3

RMR F.I.R.E. Fund
June 30, 2005

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the first six months of 2005 and our financial position as of June 30, 2005.

As a result of our investment activities for the first six months of 2005, our net asset value was $23.54 per common share as of June 30, 2005, a 1.9% decrease from $23.99 per common share six months earlier. We paid five monthly distributions totaling $0.73 per common share during the first six months of 2005. We completed investing the proceeds from our December 2004 preferred share offering in the first six months of 2005 and paid our first monthly dividend in February 2005.

Our allocation in the hospitality sub-sector increased from 2.4% to 10.9% of total investments, the largest sub-sector increase. During the same time period, our allocation in bank securities decreased from 16.4% to 12.9% of total investments, the largest sub-sector decrease. These changes partly reflect trading activity based upon our view of business environments in these industries and the strengths and weakness of individual companies and partly reflect stock market conditions for real estate investment trusts and relatively weaker stock market conditions for banks. During the remainder of 2005, we will continue to monitor market conditions and position our portfolio according to our view of those conditions.

For shares that we held continuously during the first six months of 2005, our three best performing investments were Equity Office Properties Trust, Colonial Properties Trust and American Capital Strategies, Ltd., with total returns during the period of 17.3%, 16.2% and 13.1%, respectively. Our worst performing investments during the first six months of 2005 were Freidman, Billings, Ramsey Group, Inc., Bedford Properties Investors, Inc. and Farmers Capital Bank Corp., with total returns (losses) during the first six months of (22.8)%, (15.2)% and (14.3)%, respectively.

Thank you for your continued support, and be sure to view our website, at www.rmrfunds.com.

Sincerely,

Thomas M. O'Brien
President

RMR F.I.R.E. Fund
June 30, 2005

Relevant Market Conditions

Financial Services Industry Fundamentals. Financial stocks had a difficult first six months in 2005. The treasury yield curve flattening that has so far been the net result of Federal Reserve rate increases, has reduced most bank's spread between cost of funds and asset yields (commonly referred to as net interest margin). Despite this difficulty weighing on share prices, fundamentals have held firm for most banks. Consumer and real estate loan growth continued during the period and residential mortgage growth was much stronger than expected. Despite fears of possible credit quality deterioration, we have seen very little diminishing loan quality in reported statistics, a factor which has confounded the expectations even of some companies' management teams.

The first six months of 2005 also saw a dramatic slow down of merger activity. Recently, the consolidation that we believe may favorably impact bank share prices seems to have begun again.

Fund Strategies, Techniques and Performance

Our investment objective is to provide high total returns to our common shareholders through a combination of capital appreciation and current income. There can be no assurance that we will meet our investment objective.

During the first six months of 2005, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV) was 1.4%. During the same period the S&P 500 Financial Sector Index total return (loss) was (2.3)%, the total return for the MSCI US REIT Total Return Index was 6.4% and the MSCI REIT Preferred Index was 2.8%. We believe these three indices are most relevant to our investments because our investments, excluding short-term investments, as of June 30, 2005, include 27.6% of financial services stocks, 31.5% REIT common stocks and 38.1% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 Stocks) total return (loss) for the first six months of 2005 was (0.8)%.

RMR F.I.R.E. Fund
Portfolio of Investments – June 30, 2005 (unaudited)


Company			Shares	Value

Common Stocks – 90.1%
Financial Services – 38.5%
	Banks – 19.7%
		Comerica Incorporated	14,800	$	855,440
		Farmers Capital Bank Corp.	3,035		105,132
		Fifth Third Bancorp	3,000		123,630
		First Commonwealth Financial Corp.	28,000		383,600
		First Horizon National Corp.	11,400		481,080
		Firstmerit Corp.	22,800		595,308
		F.N.B. Corp.	28,500		560,025
		Hudson United Bancorp	17,100		617,310
		JPMorgan Chase & Co.	7,500		264,900
		Keycorp	17,100		566,865
		National City Corp.	27,400		934,888
		Regions Financial Corp.	23,200		786,016
		Susquehanna Bancshares, Inc.	12,600		309,834
		Trustco Bank Corp NY	23,400		305,604

					6,889,632
	Thrifts – 6.3%
		Capitol Federal Financial	17,400		599,952
		Flagstar Bancorp, Inc.	25,000		473,250
		New York Community Bancorp, Inc.	63,200		1,145,184
		Beverly Hills Bancorp, Inc.	100		1,095

					2,219,481
Other Financial Services – 12.5%
	American Capital Strategies, Ltd.		17,000		613,870
		CharterMac	44,200		970,632
		Capital Trust, Inc.*	4,900		163,709
		Fannie Mae	17,000		992,800
		Friedman Billings Ramsey Group, Inc.*	54,000		772,200
		Lazard Ltd	3,000		69,750
		MCG Capital Corp.*	46,500		794,220

					4,377,181
Total Financial Services (Cost $14,448,369)					13,486,294
See notes to financial statements and notes to portfolio of investments

Real Estate – 47.5%
	Apartments – 2.3%
		AMLI Residential Properties Trust*	10,800	$	337,608
		United Dominion Realty Trust, Inc.*	19,200		461,760

					799,368
	Diversified – 13.2%
		Colonial Properties Trust*	8,400		369,600
		Bedford Property Investors, Inc.*	24,000		552,480
		Liberty Properties Trust*	18,000		797,580
		Lexington Corporate Properties Trust*	26,400		641,784
		Crescent Real Estate Equities Co.*	82,400		1,545,000
		Commercial Net Lease Realty*	34,200		700,074

					4,606,518
	Health Care – 4.1%
		Nationwide Health Properties, Inc.*	26,000		613,860
		Health Care Property Investors, Inc.*	3,000		81,120
		Health Care REIT, Inc.*	17,900		674,651
		Windrose Medical Properties Trust*	5,000		70,150

					1,439,781
	Hospitality – 1.0%
		Eagle Hospitality Properties Trust, Inc.*	36,500		332,515
	Industrial – 3.8%
		First Industrial Realty Trust, Inc.*	32,900		1,312,710
	Office – 7.8%
		Arden Realty, Inc.*	9,600		345,408
		Equity Office Properties Trust*	23,050		762,955
		Glenborough Realty Trust, Inc.*	64,400		1,325,996
		Reckson Associates Realty Corp.*	8,400		281,820

					2,716,179
See notes to financial statements and notes to portfolio of investments

	Manufactured Homes – 2.1%
		Sun Communities, Inc.*	20,000	$	743,800
	Retail – 7.5%
		Glimcher Realty Trust	44,000		1,221,000
		Heritage Property Investment Trust*	16,800		588,336
		The Mills Corp.*	1,600		97,264
		New Plan Excel Realty Trust*	26,800		728,156

					2,634,756
	Specialty – 4.6%
		Trustreet Properties, Inc.*	61,000		1,013,210
		iStar Financial Inc.*	14,000		582,260

					1,595,470
	Storage – 1.1%
		Sovran Self Storage, Inc. *	8,200		372,772
Total Real Estate (Cost $16,544,139)					16,553,869
	Other – 4.1%
		Panamsat Holding Corp. (Cost $1,274,400)	70,800		1,452,108
Total Common Stocks (Cost $32,266,908)					31,492,271
Preferred Stocks – 60.1%
Real Estate – 57.3%
	Apartments – 10.5%
		Apartment Investment & Management Co., Series U*	32,500		815,750
		Apartment Investment & Management Co., Series V*	27,700		703,580
		Apartment Investment & Management Co., Series Y*	65,000		1,631,500
		Home Properties NY, Inc., Series F*	18,800		521,230

					3,672,060
	Diversified – 6.2%
		Bedford Properties Inv., Series B*	45,000		1,136,475
		Digital Realty Trust Inc., Series A*	20,000		518,300
		Cousins Properties, Inc., Series B*	20,000		509,400

					2,164,175
See notes to financial statements and notes to portfolio of investments

	Health Care – 2.0%
		Health Care REIT, Inc., Series F*	26,900	$	679,763
	Hospitality – 15.7%
		Eagle Hospitality Properties Trust, Series A*	14,000		359,800
		Winston Hotels, Inc., Series B*	10,900		280,076
		Equity Inns, Inc., Series B*	50,000		1,307,500
		Lasalle Hotel Properties, Series A*	36,000		961,920
		Entertainment Properties Trust, Series B*	40,000		1,014,400
		Felcor Lodging Trust, Inc., Series C*	64,000		1,569,920

					5,493,616
	Manufactured Homes – 0.5%
		Affordable Residential, Series A*	6,900		174,570
	Office – 2.4%
		Alexandria Real Estate Equities, Series C *	31,600		833,924
	Retail – 10.3%
		CBL & Associates Prop., Series D*	10,000		253,300
		Glimcher Realty Trust, Series F*	26,500		709,935
		Taubman Centers, Inc., Series G*	15,000		384,750
		Glimcher Realty Trust, Series G*	41,000		1,047,550
		Ramco-Gershenson Properties Trust, Series B*	36,000		957,960
		The Mills Corp., Series E*	9,500		257,450

					3,610,945
	Specialty – 9.7%
		RAIT Investment Trust, Series B*	59,000		1,523,380
		MFA Mortgage Investment, Inc., Series A*	13,800		358,800
		New Century Financial, Series A*	20,000		506,000
		Thornburg Mortgage, Inc., Series C*	40,000		1,007,599

					3,395,779
Total Real Estate (Cost $20,008,725)					20,024,832
See notes to financial statements and notes to portfolio of investments

	Financial Services – 2.8%
		Corts-UNUM Provident Financial Trust	38,000	$	986,860
Total Financial Services (Cost $982,300)					986,860
Total Preferred Stocks (Cost $20,991,025)					21,011,692
Short-Term Investments – 2.7%
	Other Investment Companies – 2.7%
		SSgA Money Market Fund, 2.883%(a), (Cost $941,506)	941,506		941,506
Total Investments – 152.9% (Cost $54,199,439)					53,445,469
Other assets less liabilities – 4.3%					1,493,512
Preferred Shares, at liquidation preference – (57.2)%					(20,000,000	)
Net Assets attributable to common shares – 100%				$	34,938,981

Notes to Portfolio of Investments

*: Real Estate Investment Trust
(a): Rate reflects 7 day yield as of June 30, 2005.

See notes to financial statements and notes to portfolio of investments

Statement of Assets and Liabilities


June 30, 2005 (unaudited)

Assets
	Investments in securities, at value (cost $54,199,439)		$	53,445,469
	Cash			896
	Receivable for investments sold			1,043,412
	Dividends and interest receivable			527,479
	Other assets			14,768

		Total assets		55,032,024

Liabilities
	Advisory fees payable			26,887
	Distributions payable – preferred shares			11,664
	Accrued expenses and other liabilities			54,492

		Total liabilities		93,043

Preferred shares at liquidation preference
	Auction preferred shares, Series W; $.001 par value per share; 800 shares issued and outstanding at $25,000 per share liquidation preference			20,000,000

Net assets attributable to common shares			$	34,938,981

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 1,484,000 shares issued and outstanding		$	1,484
	Additional paid-in capital			35,212,862
	Undistributed net investment income			124,163
	Accumulated net realized gain on investments			354,442
	Net unrealized depreciation on investments			(753,970	)

Net assets attributable to common shares			$	34,938,981

Net asset value per share attributable to common shares (based on 1,484,000 common shares outstanding)			$	23.54

See notes to financial statements

Statement of Operations


Six Months Ended June 30, 2005 (unaudited)

Investment income
	Dividends (Cash distributions received or due)			$	1,735,553
	Interest				21,703

		Total investment income			1,757,256

Expenses
	Advisory				225,644
	Administrative				63,628
	Audit and legal				42,150
	Custodian				31,449
	Preferred share remarketing				25,168
	Compliance and internal audit				20,000
	Shareholder reporting				10,750
	Trustees' fees and expenses				11,300
	Other				45,986

		Total expenses			476,075
	Less: expenses waived by the Advisor				(66,366	)

		Net expenses			409,709

			Net investment income		1,347,547

Realized and unrealized gain on investments
	Net realized gain on investments				249,752
	Net change in unrealized appreciation/(depreciation) on investments				(895,386	)

	Net realized and unrealized loss on investment transactions				(645,634	)
		Distributions to preferred shareholders from net investment income			(273,376	)

			Net increase in net assets attributable to common shares resulting from operations	$	428,537

See notes to financial statements

Statement of Changes in Net Assets


			Six Months Ended June 30, 2005			For the Period November 22, 2004(a) to December 31, 2004

			(unaudited)
Increase (decrease) in net assets resulting from operations
	Net investment income		$	1,347,547		$	152,000
	Net realized gain on investments			249,752			104,690
	Net unrealized appreciation/(depreciation) on investments			(895,386	)		141,416
	Distributions to preferred shareholders from net investment income			(273,376	)		(22,688	)

		Net increase in net assets attributable to common shares resulting from operations		428,537			375,418

	Distributions to common shareholders from net investment income			(1,083,320	)		–
Capital shares transactions
	Net proceeds from sale of common shares			–			35,496,000
	Net proceeds from sale of preferred shares			–			19,622,346

		Net from capital share transactions		–			55,118,346
	Less: Liquidation preference of preferred shares issued			–			(20,000,000	)

		Total increase (decrease) in net assets attributable to common shares		(654,783	)		35,493,764
Net assets attributable to common shares
	Beginning of period			35,593,764			100,000

	End of period (including undistributed net investment income of $124,163 and $133,312, respectively)		$	34,938,981		$	35,593,764

Common shares issued and repurchased
	Shares outstanding, beginning of period			1,484,000			4,000
		Shares issued		–			1,480,000

	Shares outstanding, end of period			1,484,000			1,484,000

(a): Commencement of operations.

See notes to financial statements

Selected Data for a Common Share Outstanding Throughout the Period


		Six Months ended June 30, 2005			For the Period November 22, 2004(a) to December 31, 2004

		(unaudited)
Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	23.99		$	24.03	(c)

Income from Investment Operations
Net investment income (d)			0.91	(e)		0.10
Net realized and unrealized appreciation (depreciation) on investments			(0.44	)(e)		0.17
Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income		(0.19	)(e)		(0.02	)
	Net realized gain on investments		–	(e)		–

Net increase in net asset value from operations			0.28			0.25
Less: Distributions to common shareholders from:
	Net investment income		(0.73	)(e)		–
Common share offering costs charged to capital			–			(0.04	)
Preferred share offering costs charged to capital			–			(0.25	)

Net asset value, end of period		$	23.54		$	23.99

Market price, beginning of period		$	24.05		$	25.00

Market price, end of period		$	21.15		$	24.05

Total Return (f)
Total investment return based on:
	Market price (g)		-8.89	%		-3.80	%
	Net asset value (g)		1.35	%		-0.17	%
Ratios/Supplemental Data:
Preferred shares, liquidation preference ($25,000 per share) (000s)		$	20,000		$	20,000
Net assets attributable to common shares, end of period (000s)		$	34,939		$	35,594
Ratio to average net assets attributable to common shares (h) of:
	Net investment income, before total preferred share distributions (d)		8.10	%(e)		3.92	%
	Total preferred share distributions		1.64	%		0.58	%
	Net investment income, net of preferred share distributions (d)		6.46	%(e)		3.34	%
	Expenses, net of fee waivers		2.46	%		3.45	%
	Expenses, before fee waivers		2.86	%		3.73	%
Portfolio turnover rate			31.02	%		0.00	%

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at November 22, 2004, reflects the deduction of the average sales load and offering costs of $0.97 per share paid by the holders of common shares from the $25.00 offering price. We paid a sales load and offering costs of $1.125 per share on 1,280,000 common shares sold to the public and no sales load or offering costs on 200,000 common shares sold to affiliates of RMR Advisors for $25 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A(7) to the financial statements, these amounts are subject to change to the extent 2005 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(f): Total returns for periods less than one year are not annualized.
(g): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(h): Annualized.

RMR F.I.R.E. Fund
Notes to Financial Statements

June 30, 2005 (unaudited)

Note A

(1) Organization

RMR F.I.R.E. Fund, or the Fund, was organized as a Massachusetts business trust on August 6, 2004, and is registered under the Investment Company Act of 1940, as amended, as a non-diversified closed end management investment company. The Fund had no operations until November 22, 2004, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

(5) Securities Transactions and Investment Income

Securities transactions are recorded on a trade date basis. Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, including accretion of original issue discount, where applicable, and accretion of discount on short term investments, is recorded on the accrual basis. Realized gains and losses from securities transactions are recorded on the basis of identified cost.

(6) Federal Income Taxes

(7) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are declared pursuant to this policy. On June 28, 2005, the Fund declared distributions of $0.146 per common share payable in August, September and October 2005. Distributions to Fund shareholders are recorded on the ex-dividend date.

To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry forwards, it is the policy of the Fund not to distribute such gains.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes, as of June 30, 2005, are as follows:

Cost	$	54,199,439

Gross unrealized appreciation	$	802,361
Gross unrealized depreciation		(1,556,331	)

Net unrealized depreciation	$	(753,970	)

(8) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in common and preferred shares issued by F.I.R.E companies. "F.I.R.E." is a commonly used acronym for the combined financial services, insurance and real estate industries. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the F.I.R.E. industries due to economic, legal, regulatory, technological or other developments affecting the United States F.I.R.E. industries.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

The Fund has an advisory agreement with RMR Advisors, Inc., or RMR Advisors, to provide the Fund with a continuous investment program, to make day to day investment decisions and to generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to this agreement, RMR Advisors is compensated at an annual rate of 0.85% of the Fund's average daily managed assets. Managed assets means the total assets of the Fund less liabilities other than any indebtedness entered for purposes of leverage. For purposes of calculating managed assets, the liquidation preference of preferred shares are not considered liabilities.

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets, until November 22, 2009.

RMR Advisors, and not the Fund, has agreed to pay the lead underwriters of the Fund's initial public offering an annual fee equal to 0.15% in the aggregate of the Fund's managed assets. This fee is paid quarterly in arrears during the term of RMR Advisors' advisory agreement and is paid by RMR Advisors, not the Fund. The aggregate fees paid during the term of the contract plus reimbursement of legal expenses of the underwriters will not exceed 4.5% of the total price of the common shares sold to non-affiliates in the initial public offering.

services. Under the administration agreement RMR Advisors is entitled to reimbursement of the cost of providing administrative services. During the six months ended June 30, 2005, the Fund reimbursed RMR Advisors for $63,628 of sub-administrative fees charged by State Street.

The Fund's board of trustees and separately the disinterested trustees have authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of the allocated portions of related premiums.

Note C

Securities Transactions

During the six months ended June 30, 2005, there were securities purchases and sales transactions (excluding short term securities) of $24,287,405 and $15,808,877, respectively. Brokerage commissions on securities transactions, exclusive of transactions settled on a net basis, amounted to $21,985 during the six months ended June 30, 2005.

Note D

Preferred Shares

The Fund's 800 outstanding Series W auction preferred shares have a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the Investment Company Act of 1940, of at least 200%, the preferred shares will be subject to redemption at an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 3.05% per annum as of June 30, 2005.

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on May 11, 2005. Following is a summary of the proposals submitted to shareholders for vote at the meeting:

Proposal		Votes for	Votes against/ withheld	Votes abstained
Common shares
	Election of John L. Harrington as trustee	1,444,548	12,133	–
	Approval of investment advisory agreement	1,432,125	6,459	18,097
Preferred shares
	Election of John L. Harrington as trustee	798	2	–
	Approval of investment advisory agreement	789	1	10

RMR Preferred Dividend Fund
June 30, 2005

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the period from May 25, 2005, the date we commenced operations, through June 30, 2005, and our financial position as of June 30, 2005.

As a result of our investment activities for this initial period, our net asset value increased to $19.25 per common share as of June 30, 2005, a 0.8% increase from $19.09 per common share on May 25, 2005. In July 2005, we declared our first monthly distributions to common shareholders of $0.15 per common share to be paid in each of August and September 2005.

During this period we believe we have taken the initial steps in building what we believe will be a sound investment portfolio. Subsequent to June 30, 2005, we issued auction rate preferred shares, as described in the accompanying financial statements, and have begun to invest the net proceeds of that issuance.

Thank you for your continued support, and be sure to view our website, at www.rmrfunds.com.

Sincerely,

Thomas M. O'Brien
President

RMR Preferred Dividend Fund
June 30, 2005

Relevant Market Conditions

Real Estate Industry Technicals. We believe demand for real estate securities over the long term will continue to increase. Demographic trends in the U.S. include growth in the over age 50 population; we believe that individuals in that age category tend to focus their investments in higher yielding preferred and common stocks like real estate investments trusts, or REITs. Institutions, too, seem to be increasing their allocations to real estate securities as the market capitalization of REITs has increased. Both of these are positive factors affecting the real estate securities market.

Fund Strategies, Techniques and Performance

Our primary investment objective is to provide our common shareholders high current income. Our secondary investment objective is capital appreciation. There can be no assurance that we will meet our investment objectives.

During the period from May 25, 2005 through June 30, 2005, our total return on net asset value, or NAV was 0.8%. During that same period, the total return for the MSCI REIT Preferred Index was 1.0%. We believe this index is most relevant to our investments because our investments as of June 30, 2005, excluding short-term investments, include 76.4% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 Stocks) total return for the same period was 0.3%.

RMR Preferred Dividend Fund
Portfolio of Investments – June 30, 2005 (unaudited)


Company				Principal Amount		Value

Preferred Stocks – 57.2%
	Real Estate Investment Trusts – 54.1%
		Apartments – 4.0%
			Apartment Investment & Management Co., Series R	$	68,000	$	1,778,200
		Diversified – 3.9%
			Crescent Real Estate Equities Co., Series B		63,700		1,703,338
		Hospitality – 15.5%
			Boykin Lodging Co., Series A		20,000		555,000
			Eagle Hospitality Properties Trust, Series A		95,000		2,441,500
			Entertainment Properties Trust, Series A		40,000		1,080,400
			Felcor Lodging Trust, Series C		85,000		2,085,050
			Host Marriott Corp., Series E		15,000		412,500
			Sunstone Hotel Investors, Inc., Series A		12,500		321,875

							6,896,325
		Retail – 12.3%
			CBL & Associates Properties, Inc. Series B		4,600		244,950
			Mills Corp., Series C		87,500		2,359,438
			Mills Corp., Series E		10,000		271,000
			Pennsylvania Real Estate Investment Trust, Series A		44,000		2,596,000

							5,471,388
		Specialty – 18.4%
			Accredited Mortgage Loan REIT Trust, Series A		1,500		39,630
			American Home Mortgage Investment Corp., Series A		92,000		2,588,880
			Impac Mortgage Holdings, Inc., Series C		42,400		1,075,264
			MFA Mortgage Investments, Inc., Series A		40,000		1,040,000
			New Century Financial Corp., Series A		100,000		2,530,000
			Newcastle Investment Corp., Series B		30,000		807,000
			Thornburg Mortgage Inc., Series C		2,500		62,975

							8,143,749
			Total Real Estate Investment Trusts (Cost $23,808,976)				23,993,000
		Other – 3.1%
			Ford Motor Co., 6/15/43 Series		9,400		198,340
			General Motors Corp., 5/15/48 Series		26,100		525,393
			Westcoast Hospitality Corp., Series A		24,000		638,400
			Total Other (Cost $1,359,045)				1,362,133
Total Preferred Stocks (Cost $25,168,021)							25,355,133
See notes to financial statements

Debt Securities – 13.6%
		Six Flags Inc., 9.75%, 04/15/2013	$	2,740,000	$	2,585,875
		Ford Motor Co., 7.75%, 6/15/2043		1,200,000		1,796,049
		General Motors Corp., 8.375%, 7/15/2033		1,300,000		1,670,000
Total Debt Securities (Cost $5,972,384)						6,051,924
Short-Term Investments – 29.4%
	Commercial Paper – 29.4%
		American Express Credit Corporation, 2.6%, 7/1/2005		2,000,000		2,000,000
		American General Finance Corp., 2.6%, 7/1/2005		2,000,000		2,000,000
		General Electric Capital Corp., 2.6%, 7/1/2005		2,000,000		2,000,000
		HSBC Finance Corp., 2.6%, 7/1/2005		2,000,000		2,000,000
		Prudential Funding. Corp., 2.6%, 7/1/2005		2,000,000		2,000,000
		State Street Boston Corp., 2.6%, 7/1/2005		1,039,000		1,039,000
		UBS Finance Co., 2.6%, 06/27/2005		2,000,000		2,000,000
Total Commercial Paper (Cost $13,039,000)						13,039,000
Total Investments – 100.2% (Cost $44,179,405)						44,446,057
Other assets less liabilities – (0.2)%						(74,504	)
Net assets attributable to common shares – 100%					$	44,371,553

See notes to financial statements

RMR Preferred Dividend Fund
Financial Statements

Statement of Assets and Liabilities


June 30, 2005 (unaudited)

Assets
	Investments in securities, at value (cost $44,179,405)		$	44,446,057
	Cash			530,220
	Dividends and interest receivable			213,194

		Total assets		45,189,471

Liabilities
	Payable for investment securities purchased			770,825
	Advisory fees payable			10,870
	Accrued expenses and other liabilities			36,223

		Total liabilities		817,918

Net assets attributable to common shares			$	44,371,553

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 2,305,000 shares issued and outstanding		$	2,305
	Additional paid-in capital			43,994,445
	Undistributed net investment income			108,151
	Net unrealized appreciation on investments			266,652

Net assets attributable to common shares			$	44,371,553

Net asset value per share attributable to common shares (based on 2,305,000 common shares outstanding)			$	19.25

See notes to financial statements

Statement of Operations


For the Period May 25, 2005(a) to June 30, 2005 (unaudited)

Investment income
	Dividends (Cash distributions received or due)			$	90,066
	Interest				83,207

		Total investment income			173,273

Expenses
	Advisory				36,946
	Administrative				13,500
	Shareholder reporting				10,000
	Audit and legal				8,000
	Custodian				6,546
	Compliance and internal audit				3,500
	Trustees' fees and expenses				1,950
	Other				8,586

		Total expenses			89,028
	Less: expenses waived by the Advisor				(23,906	)

		Net expenses			65,122

			Net investment income		108,151
	Net change in unrealized appreciation/(depreciation) on investments				266,652

			Net increase in net assets attributable to common shares resulting from operations	$	374,803

(a): Commencement of operations.

See notes to financial statements

RMR Preferred Dividend Fund
Financial Statements – continued

Statement of Changes in Net Assets


For the Period May 25, 2005(a) to June 30, 2005 (unaudited)

Increase in net assets resulting from operations
	Net investment income		$	108,151
	Net unrealized appreciation/(depreciation) on investments			266,652

		Net increase in net assets attributable to common shares resulting from operations		374,803
Capital shares transactions
	Net proceeds from sale of common shares			43,896,750

		Total increase in net assets attributable to common shares		44,271,553
Net assets attributable to common shares
	Beginning of period			100,000

	End of period (including undistributed net investment income of $108,151)		$	44,371,553

Common shares
	Shares outstanding, beginning of period			5,000
	Shares issued			2,300,000

	Shares outstanding, end of period			2,305,000

(a): Commencement of operations.

See notes to financial statements

Financial Highlights – RMR Preferred Dividend Fund

Selected Data for a Common Share Outstanding Throughout the Period


		For the Period May 25, 2005 (a) to June 30, 2005

		(unaudited)
Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	19.09	(c)

Income from Investment Operations
Net investment income (d)			0.05	(e)
Net realized and unrealized appreciation on investments			0.11	(e)

Net increase in net asset value from operations			0.16

Net asset value, end of period		$	19.25

Market price, beginning of period		$	20.00

Market price, end of period		$	19.80

Total Return (f)
Total investment return based on:
	Market price (g)		-1.00	%
	Net asset value (g)		0.84	%
Ratios/Supplemental Data:
Net assets attributable to common shares, end of period (000s)		$	44,372
Ratio to average net assets attributable to common shares (h) of:
	Net investment income (d)		2.49	%
	Expenses, net of fee waivers		1.50	%
	Expenses, before fee waivers		2.05	%
Portfolio turnover rate			0.00	%

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at May 25, 2005, reflects the deduction of the average sales load and offering costs of $0.91 per share paid by the holders of common shares from the $20.00 offering price. We paid a sales load and offering costs of $0.94 per share on 2,237,500 common shares sold to the public and no sales load or offering costs on 67,500 common shares sold to affiliates of RMR Advisors for $20 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A(7) to the financial statements, these amounts are subject to change to the extent 2005 distributions by the issuers of the Fund's investments are characterized as capital gains.
(f): Total returns for periods less than one year are not annualized.
(g): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(h): Annualized.

RMR Preferred Dividend Fund
Notes to Financial Statements

June 30, 2005 (unaudited)

Note A

(1) Organization

RMR Preferred Dividend Fund, or the Fund, was organized as a Massachusetts business trust on November 8, 2004, and is registered under the Investment Company Act of 1940, as amended, as a non-diversified closed end management investment company. The Fund had no operations until May 25, 2005, other than matters relating to the Fund's establishment, registration of the Fund's common shares under the Securities Act of 1933, and the sale of 5,000 common shares for $100,000 to RMR Advisors, Inc., or RMR Advisors. On May 25, 2005, the Fund sold 2,300,000 common shares in an initial public offering including 62,500 common shares sold to affiliates of RMR Advisors. Proceeds to the Fund were $43,896,750 after deducting underwriting commissions and $89,500 of offering expenses. There were no underwriting commissions or offering expenses paid on common shares sold to the affiliates of RMR Advisors. On July 11, 2005, the Fund sold 275,000 common shares pursuant to an over allotment agreement with the underwriters for net proceeds of $5,241,500 after deducting underwriting commissions and $11,000 of offering expenses.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

Short term debt securities with less than 60 days until maturity may be valued at cost, which when combined with interest accrued, approximates market value.

(5) Securities Transactions and Investment Income

(6) Federal Income Taxes

(7) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are expected to be declared pursuant to this policy. Subsequent to June 30, 2005, the Fund declared distributions of $0.15 per common share payable in August and September 2005. Distributions to Fund shareholders are recorded on the ex-dividend date.

The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital.

For financial reporting purposes as required by generally accepted accounting principles, the Fund generally reflects distributions and interest received or accrued on its investments and distributions made to shareholders as ordinary income and long term capital gains in accordance with the characterization of these amounts required by the Internal Revenue Code of 1986, as amended. However, it is not possible to characterize distributions received from real estate investment trusts, or REITs, in which the Fund has invested a substantial portion of its assets, during interim periods because these issuers do not report their tax characterization until subsequent to year end. Final characterization of the Fund's 2005 distributions to shareholders is also dependent upon the magnitude or timing of the Fund's securities transactions prior to year end 2005.

To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry forwards, it is the policy of the Fund not to distribute such gains.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes, as of June 30, 2005, are as follows:

Cost	$	44,179,405

Gross unrealized appreciation	$	322,039
Gross unrealized depreciation		(55,387	)

Net unrealized appreciation	$	266,652

(8) Organization Expenses and Common Offering Costs

RMR Advisors paid all the organizational expenses and all of the offering costs (other than the sales load) of the Fund's initial public offering of common shares which exceeded $0.04 per share on shares sold to the public. The total amount of expenses and costs incurred by RMR Advisors is estimated at $420,000. The Fund incurred offering costs of $89,500 in connection with the common shares sold in the initial public offering which were charged as a reduction of paid in capital and $11,000 in connection with the common shares sold pursuant to the over allotment option.

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in preferred securities issued by real estate investment trusts. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the real estate industry due to economic, legal, regulatory, technological or other developments affecting the United States real estate industry.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

The Fund has an advisory agreement with RMR Advisors to provide the Fund with a continuous investment program, to make day to day investment decisions and to generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to this agreement, RMR Advisors is compensated at an annual rate of 0.85% of the Fund's average daily managed assets. Managed assets means the total assets of the Fund less liabilities other than any indebtedness entered into for purposes of leverage. For purposes of calculating managed assets, indebtedness entered for the purpose of leverage and the liquidation preference of preferred shares are not considered liabilities.

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.55% of the Fund's average daily managed assets, until May 24, 2010.

RMR Advisors also performs administrative functions for the Fund pursuant to an administration agreement with the Fund. RMR Advisors has entered into a sub-administration agreement with State Street Bank and Trust Company ("State Street") to perform substantially all Fund accounting and other administrative services. Under the administration agreement RMR Advisors is entitled to reimbursement of the cost of providing administrative services. As of June 30, 2005, the Fund has a liability to RMR Advisors of $13,500 for sub-administrative fees charged by State Street during the period ending June 30, 2005.

The Fund's board of trustees and separately the disinterested trustees have authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund also participates in pooled insurance programs with the Advisor and other funds managed by the Advisor and makes payments of the allocated portions of related premiums.

Note C

Securities Transactions

During the period ended June 30, 2005, there were securities purchases and sales transactions (excluding short term securities) of $31,139,359 and $0, respectively. Brokerage commissions on securities transactions, exclusive of transactions settled on a net basis, amounted to $0 during the period ended June 30, 2005.

Note D

Use of Leverage

On July 18, 2005, the Fund issued 900 auction preferred shares, Series M, for $22,500,000, or net proceeds of $22,132,500 after deducting underwriting commissions and offering expenses of $367,500. The preferred shares have a liquidation preference of $25,000 per share plus an amount equal to accumulated plus unpaid distributions. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distributions of assets on liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the Investment Company Act of 1940, of at least 200%, the preferred shares will be subject to redemption at an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The initial preferred share distribution rate was 3.10% per annum as of July 18, 2005.

RMR Real Estate Fund
RMR Hospitality and Real Estate Fund
RMR F.I.R.E. Fund
RMR Preferred Dividend Fund
June 30, 2005

For the purposes of the following, RMR Real Estate Fund, RMR Hospitality and Real Estate Fund, RMR F.I.R.E. Fund and RMR Preferred Dividend Fund are each referred to as a "Fund" or collectively as the "Funds".

Consideration of Advisory Agreements

RMR Advisors serves as the investment advisor to each of RMR Real Estate Fund, RMR Hospitality and Real Estate Fund, RMR F.I.R.E. Fund and RMR Preferred Dividend Fund. On May 16, 2005, a change of ownership of RMR Advisors occurred.

RMR Real Estate Fund, RMR Hospitality and Real Estate Fund and RMR F.I.R.E. Fund

The change of ownership was deemed to be a change in control of RMR Advisors that resulted in the assignment, and therefore termination, of the then current advisory agreements. On May 16, 2005, each Fund entered into a new advisory agreement with RMR Advisors, each such agreement having been approved: (1) on February 14, 2005, by the boards of each Fund, and separately by the disinterested trustees of each Fund, subject to the change in ownership of RMR Advisors occuring; and (2) on May 11, 2005, by the shareholders of each Fund.

In making their determination to approve each new agreement, each board, including the disinterested trustees, considered all of the factors described below.

Each board considered the benefits to shareholders of retaining RMR Advisors. The boards' considerations included, among others: the nature, scope and quality of services that RMR Advisors has provided under each Fund's then current advisory agreement and would provide under the new agreements; that the advisory and other fees paid and the contractual fee waivers would not change as a result entering the new agreements; the quality and depth of personnel of RMR Advisors' organization before and after the change in ownership; the capacity and future commitment of RMR Advisors to perform its duties under each new agreement; the financial condition and profitability of RMR Advisors; the experience and expertise of RMR Advisors as an investment adviser; the performance of each Fund as compared to similar funds; the level of fees paid to RMR Advisors and the total expense ratio of each Fund as compared to similar funds; and the potential for economies of scale. Each board also considered RMR Advisors' representation that it would provide advisory and other services to each Fund of a scope and quality at least equivalent to the scope and quality provided to each Fund under the then current advisory agreements with RMR Advisors and that, other than the change of ownership, no structural, managerial or operational changes are expected to affect any of the Funds. Each board also considered that the terms of the new agreements would be substantially the same as the terms of the current agreements, except for dates of execution and effectiveness.

Each board considered the level and depth of knowledge of RMR Advisors. In evaluating the quality of services provided by RMR Advisors, each board took into account its familiarity with RMR Advisors' management through board meetings, conversations and reports. Each board also took into account RMR Advisors' compliance policies and procedures.

Each board compared the advisory fees and total expense ratio of its respective Fund with various comparative Fund data. Each board considered the Fund's recent performance results and noted that the board reviews on a

quarterly basis information about the Fund's performance results, portfolio composition and investment strategies. Each board further noted that RMR Advisors has waived a portion of its management fee in order to reduce the Fund's operating expenses. Each board also took into consideration the financial condition and profitability of RMR Advisors and any indirect benefits derived by RMR Advisors from RMR Advisors' relationship with the Funds.

In considering the approval of the new agreements, each board, including the disinterested trustees, did not identify any single factor as controlling. Based on each board's evaluation of all factors that it deemed to be relevant, each board, including the disinterested trustees of each board, concluded that: RMR Advisors has demonstrated that it possesses the capability and resources to perform the duties required of it under the new agreement for that Fund; RMR Advisors maintains an appropriate compliance program; performance of the Fund is reasonable in relation to the performance of funds with similar investment objectives; and the proposed advisory fee rates are fair and reasonable, given the scope and quality of the services provided and to be provided by RMR Advisors. Each board noted in particular that the change in ownership of RMR Advisors did not present any material change in the type and quality of service it would provide to each Fund.

RMR Preferred Dividend Fund

At a meeting held on February 14, 2005, the board of trustees, including a majority of the disinterested trustees, approved two advisory agreements between RMR Advisors and the Fund in order to comply with the statutory requirements relating to the anticipated change in ownership of RMR Advisors. The first advisory agreement was effective from February 14, 2005 until May 16, 2005. The second advisory agreement was effective on May 16, 2005, the date of change of ownership of RMR Advisors. The two advisory agreements were substantially the same, except for dates of execution and effectiveness. In making their determination to approve the advisory agreements, the board, including the disinterested trustees, considered all of the factors described below.

In considering the approval of these two advisory agreements, the board reviewed various materials and considered: (1) the level of fees of the Fund as compared to competitive funds of a comparable size; (2) the estimated expense ratio of the Fund as compared to competitive funds of a comparable size, the fact that the estimated expense ratio of the Fund is reasonable compared to other funds and the fact that RMR Advisors has agreed to waive a portion of its fee during the first five years of the Fund's existence; (3) the nature, extent and quality of the services provided by RMR Advisors, including the experience of RMR Advisors and its affiliates in managing public companies; (4) the performance of similar funds managed by RMR Advisors; (5) anticipated benefits derived by RMR Advisors from its relationship with the Fund; (6) the costs of providing services to the Fund; (7) the financial condition and anticipated profitability of the Fund to RMR Advisors; (8) the benefits, in particular the research and related services, within the meaning of Section 28(e) of the Securities Exchange Act of 1934 which could be derived by RMR Advisors as a result of allocation of its brokerage transactions and the fact that RMR Advisors does not expect to seek or participate in these so-called "soft-dollar" arrangements; and (9) any potential for economies of scale. The board of trustees also considered that RMR Advisors agreed to pay all of the Fund's organizational costs and all of the Fund's offering costs for the initial offering of the Fund's common shares, other than sales load, that exceeded an amount equal to $0.04 per common share issued to non-affiliates.

The board also considered that the terms of both agreements would be substantially the same, except for dates of execution and effectiveness. The board considered RMR Advisors' representation that it would provide advisory and other services to the Fund of a scope and quality at least equivalent under both advisory agreements with RMR Advisors and that, other than the change of ownership, no structural, managerial or operational changes are expected to affect the Fund.

The board considered the level and depth of knowledge of RMR Advisors. In evaluating the quality of services provided by RMR Advisors, the board of trustees took into account its familiarity with RMR Advisors' management through board meetings, conversations and reports of the other funds managed by RMR Advisors.

The board of trustees considered the historical performance of the other funds managed by RMR Advisors and noted that it would review on a quarterly basis information about the Fund's performance results, portfolio composition and investment strategies. The board of trustees also took into account RMR Advisors' compliance policies and procedures.

The board compared the advisory fees and estimated total expense ratio of the Fund with various comparative fund data. The board further noted that RMR Advisors would waive a portion of its management fee for the first five years in order to reduce the Fund's operating expenses. The board also took into consideration the financial condition and profitability of RMR Advisors and any indirect benefits to be derived by RMR Advisors from its relationship with the Fund. The board of trustees concluded, based upon a review of the financial statements provided by RMR Advisors, that the level of profitability to RMR Advisors from its relationship with the Fund was reasonable.

In considering the approval of the advisory agreements, the board, including the disinterested trustees, did not identify any single factor as controlling. Based on the board's evaluation of all factors that it deemed to be relevant, the board of trustees, including the disinterested trustees, concluded that: RMR Advisors has demonstrated that it possesses the capability and resources to perform the duties required of it under the advisory agreements; RMR Advisors maintains an appropriate compliance program; and the proposed advisory fee rates are fair and reasonable, given the scope and quality of the services to be rendered by RMR Advisors. The board noted that the change in ownership of RMR Advisors did not present any material change in the type and quality of service it would provide to the Fund.

Privacy Policy

Each of the Funds are committed to maintain shareholder privacy and to safeguard shareholder nonpublic personal information.

The Funds do not receive any nonpublic personal information relating to shareholders who purchase Fund shares through an intermediary that acts as the record owner of the shares. If a shareholder is the record owner of any Fund's shares, that Fund may receive nonpublic personal information on shareholder account documents or otherwise and also have access to specific information regarding shareholder Fund share transactions, either directly or through the Fund's transfer agent.

The Funds do not disclose any nonpublic personal information about shareholders or any former shareholders to anyone, except as permitted by law or as is necessary to service shareholder accounts. The Funds restrict access to nonpublic personal information about shareholders to employees of the Funds and RMR Advisors with a legitimate business need for the information.

Proxy Voting Policies and Procedures

A description of the policies and procedures that are used by the investment advisor of the Funds to vote proxies relating to each Fund's portfolio securities is available: (1) without charge, upon request, by calling us at 1-866-790-8165; and (2) as an exhibit to each Fund's annual report, (except RMR Preferred Dividend Fund which started operations on May 25, 2005), on Form N-CSR, which is available on the website of the U.S. Securities and Exchange Commission (the "Commission") at http://www.sec.gov. Information regarding how the investment advisor has voted the proxies received by each Fund, except RMR Preferred Dividend Fund which started operations on May 25, 2005, during the 12 month period ended June 30, 2004, is

available (1) without charge, on request, by calling us at 1-866-790-3165, or (2) by visiting the Commission's website at http://www.sec.gov and accessing each Fund's Form N-PX information regarding how the investment advisor has voted the proxies of each Fund during the 12-month period ended June 30, 2005, will become available when the Funds file their report on Form N-PX which is due by August 31, 2005.

Procedures for the Submission of Confidential and Anonymous Concerns or Complaints about Accounting, Internal Accounting Controls or Auditing Matters

The Funds are committed to compliance with all applicable securities laws and regulations, accounting standards, accounting controls and audit practices and have established procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters. Any shareholder or other interested party who desires to communicate with our independent trustees or any other trustees, individually or as a group, may do so by filling out a report at the "Contact Us" section of our website (www.rmrfunds.com), by calling our toll-free confidential message system at 866-511-5038, or by writing to the party for whom the communication is intended, care of our director of internal audit, RMR Funds, 400 Centre Street, Newton, MA 02458. Our director of internal audit will then deliver any communication to the appropriate party or parties.

Portfolio Holdings Reports

Each Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q, which are available on the Commission's website at http://www.sec.gov. The Funds' Forms N-Q may also be reviewed and copied at the Commission's public reference room in Washington, D.C. Information on the operation of the public reference room may be obtained by calling the Commission at 1-800-SEC-0330. Each Fund provides additional data at its website at www.rmrfunds.com.

WARNING REGARDING FORWARD LOOKING STATEMENTS

THESE SEMI-ANNUAL REPORTS INCLUDE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON THE BELIEFS AND EXPECTATIONS OF EACH OF RMR REAL ESTATE FUND, RMR HOSPITALITY AND REAL ESTATE FUND, RMR F.I.R.E. FUND AND RMR PREFERRED DIVIDEND FUND (EACH A "FUND" OR COLLECTIVELY "THE FUNDS"), THEIR TRUSTEES, THEIR OFFICERS, OR THEIR INVESTMENT ADVISOR, BUT THEY ARE NOT GUARANTEED TO OCCUR. FOR EXAMPLE, MR. O'BRIEN'S LETTERS STATE THE BELIEF THAT INVESTMENT ENVIRONMENT FOR REAL ESTATE COMPANIES FOR REMAINDER OF 2005 IS POSITIVE AND COULD SUGGEST THAT THE MARKET PRICES OF REAL ESTATE SECURITIES IN WHICH THE FUNDS INVEST AS WELL AS THE MARKET PRICE OF THE FUNDS' SHARES COULD INCREASE. IN FACT, THE INVESTMENT ENVIRONMENT FOR REAL ESTATE COMPANIES FOR THE REMAINDER OF 2005 MAY NOT REMAIN POSITIVE AND THE MARKET PRICES OF REAL ESTATE SECURITIES AND OF THE FUNDS' SHARES MAY NOT INCREASE BUT MAY DECLINE. SIMILARLY, MR. O'BRIEN'S REFERENCES TO THE FINANCIAL SERVICES SECTOR CONSOLIDATING AND THE REAL ESTATE SECTOR CONTINUING TO IMPROVE MIGHT NOT HAPPEN. THESE UNEXPECTED RESULTS MAY OCCUR FOR MANY DIFFERENT REASONS, WHICH, SUCH AS A GENERAL DECLINE IN ECONOMIC ACTIVITY, ARE BEYOND THE FUNDS' CONTROL OCCUR; AND INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.


WWW.RMRFUNDS.COM

Item 2. Code of Ethics.

The information is not required for the semi-annual report on Form N-CSR.

Item 3. Audit Committee Financial Expert.

The information is not required for the semi-annual report on Form N-CSR.

Item 4. Principal Accountant Fees and Services.

The information is not required for the semi-annual report on Form N-CSR.

Item 5. Disclosure of Audit Committees for Listed Companies.

The information is not required for the semi-annual report on Form N-CSR.

Item 6. Schedule of Investments

The information required under Item 6 is included as part of the report to shareholders filed under Item 1 of this Form N-CSR.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

The information is not required for the semi-annual report on Form N-CSR.

Item 8. Portfolio Managers of Closed-End Investment Companies.

The information is not required for this semi-annual report on Form N-CSR.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

During the six months ended June 30, 2005, there were no purchases made by or on behalf of the registrant or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares of the registrant's equity securities that are registered by the registrant pursuant to Section 12 of the Exchange Act.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's board of trustees.

Item 11. Controls and Procedures.

(a): The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940), as amended (the "1940 Act") are effective, as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures.
(b): There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 12. Exhibits.

(a): (2) Certifications of principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act are attached hereto.

(b): Certifications of principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

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.

		RMR REAL ESTATE FUND
		By:	/s/ THOMAS M. O'BRIEN Thomas M. O'Brien President Date: August 22, 2005

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/ THOMAS M. O'BRIEN Thomas M. O'Brien President Date: August 22, 2005
		By:	/s/ MARK L. KLEIFGES Mark L. Kleifges Treasurer Date: August 22, 2005

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Item 1. Reports to Stockholders.

Item 2. Code of Ethics.

Item 3. Audit Committee Financial Expert.

Item 4. Principal Accountant Fees and Services.

Item 5. Disclosure of Audit Committees for Listed Companies.

Item 6. Schedule of Investments

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Item 8. Portfolio Managers of Closed-End Investment Companies.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Item 10. Submission of Matters to a Vote of Security Holders.

Item 11. Controls and Procedures.

Item 12. Exhibits.

SIGNATURES