UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21326
Cohen & Steers REIT and Preferred Income Fund, Inc.
(Exact name of registrant as specified in charter)
757 Third Avenue, New York, NY 10017
(Address of principal executive offices) (Zip code)
Adam M. Derechin
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 832-3232
Date of fiscal year end: December 31
Date of reporting period: June 30, 2005
Item 1. Reports to Stockholders.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
July 28, 2005
To Our Shareholders:
We are pleased to submit to you our report for Cohen & Steers REIT and
Preferred Income Fund for the quarter ended June 30, 2005. The net asset value
at that date was $30.34 per common share. The fund's common stock is traded on
the New York Stock Exchange and its share price can differ from its net asset
value; at quarter end, the fund's closing share price on the NYSE was $27.05 per
share. During the quarter ended June 30, 2005, the fund produced the following
total returns (including income) compared to its relevant benchmarks:
TOTAL RETURN,
PERIOD ENDED 6/30/05
-------------------------------------
MARKET PRICE(a) NET ASSET VALUE(a)
----------------- -----------------
YEAR YEAR
QUARTER TO DATE QUARTER TO DATE
------- ------- ------- -------
Cohen & Steers REIT & Preferred Income
Fund.................................... 10.8% 4.0% 12.8% 5.3%
NAREIT Equity REIT Index(b)............... 14.5% 6.4% 14.5% 6.4%
Merrill Lynch Fixed Rate Preferred
Index(c)................................ 2.6% 0.1% 2.6% 0.1%
The asset mix of the fund at quarter-end consisted of approximately 56% REIT
common stocks, 39% preferred securities, and 5% corporate bonds. During the
quarter, three monthly distributions of $0.195 per share were paid to common
shareholders. In addition, three monthly distributions of $0.195 per share were
declared and will be paid on July 29, August 31, and September 30.(d)
-------------------
(a) As a closed-end investment company, the price of the fund's New York Stock
Exchange-traded shares will be set by market forces and at times may deviate
from the net asset value per share of the fund.
(b) The NAREIT Equity REIT Index ('Equity REITs') is an unmanaged
market-capitalization-weighted index of all publicly traded REITs that
invest predominantly in the equity ownership of real estate. The index is
designed to reflect the performance of all publicly-traded REITs as a whole.
(c) The Merrill Lynch Fixed Rate Preferred Index is an unmanaged index of
preferred securities.
(d) Please note that distributions paid by the fund to shareholders are subject
to recharacterization for tax purposes. The final tax treatment of these
distributions is reported to shareholders after the close of each fiscal
year on form 1099-DIV. To the extent the fund pays distributions in excess
of its net investment company taxable income, this excess would be a
tax-free return of capital distributed from the fund's assets. To the extent
this occurs, the fund's shareholders of record would be notified of the
approximate amount of capital returned for each such distribution.
Distributions of capital decrease the fund's total assets and, therefore,
could have the effect of increasing the fund's expense ratio. In addition,
in order to make these distributions, the fund may have to sell portfolio
securities at a less than opportune time.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
INVESTMENT REVIEW
Both REIT common stocks and corporate preferred shares performed well in the
second quarter, rebounding from weaker performance in the prior quarter, and
driving a 12.8% total return for the fund.
During the quarter, continued momentum in the recovery of real estate
fundamentals and REIT earnings, and a flurry of merger and buyout activity,
drove REIT share prices to new highs. Buyout activity reached a crescendo in
June as Catellus, Gables Residential and CRT Properties all announced that they
were being acquired.
Consolidation activity has accelerated in the REIT sector over the past
year, as seven sizeable REIT buyouts have been announced since August 2004.
These buyouts, totaling approximately $27 billion in value, included the retail,
apartment, industrial and office property types. On average, the implied
capitalization rate (the current income generated by these properties compared
with the price paid for the investment) for these sales was 6.3%, consistent
with the high quality single property transactions that we observe in the
private marketplace but certainly lower than the capitalization rate regime that
existed for many years. Finally, these deals were all struck at significant
premiums to the pre-announcement target stock prices -- ranging from 7.2% to
33.4%.
Perhaps even more interesting for the rest of the REIT market, all of these
deals were struck at prices above the commonly perceived value of the target
company's real estate net asset value (NAV). In every instance, the deal price
was greater than most, if not all the published analyst estimates of NAV. As a
result, many Wall Street analysts who had been negative on the REIT sector for
most of the previous three years, and who fostered a sense of disbelief among
many investors, turned more positive on the REIT group, lowering their assumed
capitalization rates and boosting their NAV estimates.
Although economic data points indicating a moderating pace of growth have
become more common, we continue to believe that the economy is fundamentally
healthy and that any short-term moderation in economic growth will not
meaningfully disturb the forward momentum in occupancies and rents for most
property types in most areas of the country. The fund's best performing REIT
investments during the quarter were in the regional mall and health care
sectors, which produced total returns of 21.4% and 17.4%, respectively. Our
stock selection in apartment, office, shopping center and industrial sectors, as
well as our overweight in the regional mall sector, were the most significant
contributors to our relative performance in the quarter. The worst performing
sector was the manufactured home sector, with a 7.2% total return.
Two of the fund's best-performing holdings for the quarter were Gables
Residential, in the apartment sector, with a 31.9% return, and Macerich Company,
a regional mall company, with a 27.2% return. Gables recently agreed to be
acquired for $43.50 per share in cash. Laggards during the quarter included
Mission West Properties and American Financial Realty, both office companies,
with total returns of -1.6% and 1.9%, respectively.
The preferred market performed well in the quarter as bond yields fell and
credit markets regained footing. The negativity that pervaded in the credit
markets in early 2005 dissipated in the second quarter as credit rating agencies
lowered their ratings of Ford and General Motors to below investment grade.
These long-awaited actions
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
finally brought traditional 'high yield' investors into the market, thereby
stabilizing trading in many auto and auto-related issues. Stability in this
important sector had a calming effect on the broader credit market.
The new issue calendar opened up, bringing attractively priced preferreds to
a supply-starved market -- particularly in tax-advantaged issues. This was
primarily as a result of new rules at Moody's, the credit rating agency, that
enabled issuers to claim higher 'equity credit' (i.e., to treat more of the
issue like equity, as opposed to debt) in financial strength measurements. Many
of the new issues, such as two massive MetLife deals totaling $2.1 billion, had
specific dividend suspension triggers necessary for the company to obtain this
more favorable ratings treatment. We expect complicated new language and
structures to become the norm in this market, making value-added research even
more important in the preferred market.
The fund's defensive posturing in preferreds, which helped performance in
the first quarter, detracted from it in the second quarter. REIT preferreds were
among the fund's standout performers. Fundamentals continued to improve for most
property types, and ratings agencies continued to express a more positive view
of the sector. In addition, certain non-callable bank and insurance issues rose
meaningfully in value as long-term interest rates fell to their lowest levels so
far this year. In a reverse of the prior quarter, interest-rate-defensive, high
coupon and floating rate issues were among the fund's worst performers.
INVESTMENT OUTLOOK
In the mid to late 1990s, real estate company share prices as a group
consistently traded at large premiums to NAV -- up to 30% for the REIT group as
a whole. The public market's perception of the value and growth prospects of
real estate assets was clearly ahead of that of the private market, and this
enabled massive amounts of assets to flow from private to public ownership.
REITs were, in fact, the marginal buyers of most large real estate assets during
this time period, and REIT market capitalization expanded dramatically through
IPOs and secondary offerings of existing companies.
Today, the public market and private market views of real estate value are
much more closely aligned, as evidenced by the fact that most commentators see
REIT valuations as closer than many had realized to private market NAV. This has
profound implications for the way the real estate stock cycle will evolve, in
our opinion.
We believe that assets will continue to flow from private to public hands as
skilled public players seek out selective, strategic acquisition and development
opportunities and as the moderate but steady and disciplined pace of IPO
activity continues. Additionally, we think that current strong investor interest
in REITs' investment attributes, as well as the improved outlook on the sector
by analysts offer an attractive environment for companies to utilize secondary
stock offerings in order to finance these activities. However, if private market
values continue to be strong as well, as we expect, REIT equity issuance should
not get out of hand as it did during the latter stages of the REIT stock cycle
in the late 1990s. The large premiums to asset value that resulted in many
instances in undisciplined equity issuance contributed significantly to the
severity of the downturn in REIT share prices in 1998 and 1999.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
In our view, assets will continue to flow from public to private and from
public to public -- as public companies that can neither create value for
shareholders nor achieve an attractive valuation are taken private or merged
into other public companies. Again, the converging views of real estate asset
value by both private and public capital markets, in conjunction with continued
strong private market demand for real estate assets can potentially serve as a
governor on REIT stock prices -- helping to guard against the massive discounts
to asset value that persisted in late 1999 and 2000 in the aftermath of the REIT
bear market.
Our investment strategy in both REIT stocks and preferreds is predicated on
the belief that the U.S. economy will continue to grow. We have focused the REIT
portfolio on those sectors that are benefiting most from the cyclical recovery
in occupancies and rents: office, self storage, hotel and certain segments of
the apartment market (including student housing). Steady economic growth should
also help contain preferred security credit risks and minimize the potential for
credit risk spreads to widen.
We also expect that the Federal Reserve is nearing the end of its monetary
policy tightening cycle as economic growth moderates. We believe that inflation
is well contained, and look for long-term bond yields to remain within their
recent trading ranges. A low inflation environment should likely foster a low
return environment. Accordingly, investor appetites for quality income should
remain strong. However, because of the choppiness of bond markets in recent
quarters, we have a slightly more defensive interest rate posture in our
preferred holdings. We believe the growth-oriented nature of the fund's REIT
equities is a natural hedge against the possibility of a 'hotter' economy than
we expect.
In closing, while REIT share prices continue to perform well, and valuations
inch higher, we believe that in a low return environment, with fundamentals
improving and the interaction between private and public real estate increasing,
REITs should continue to provide attractive investment returns. Preferreds,
which offer what we believe is some of the highest high quality income available
globally, also should remain in strong demand and should continue to perform
well, in our view. The fund's balanced approach to REIT and preferred investing
should
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
provide attractive income and total return potential, while reducing portfolio
volatility. We believe the fund is well positioned to continue to deliver these
favorable attributes to investors.
Sincerely,
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
Co-chairman Co-chairman
JOSEPH M. HARVEY JAMES S. CORL
JOSEPH M. HARVEY JAMES S. CORL
Portfolio Manager Portfolio Manager
WILLIAM F. SCAPELL
WILLIAM F. SCAPELL
Portfolio Manager
VISIT COHEN & STEERS ONLINE AT COHENANDSTEERS.COM
For more information about any of our funds, visit cohenandsteers.com, where
you'll find daily net asset values, fund fact sheets and portfolio highlights.
You can also access newsletters, education tools and market updates covering
the REIT, utility and preferred securities sectors.
In addition, our Web site contains comprehensive information about our firm,
including our most recent press releases, profiles of our senior investment
professionals, and an overview of our investment approach.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
OUR LEVERAGE STRATEGY
(UNAUDITED)
While we do not attempt to predict what future interest
rates will be, it has been our philosophy to utilize
interest rate swap transactions to seek to reduce the
interest rate risk inherent in our utilization of leverage.
Our leverage strategy involves issuing auction market
preferred shares (AMPS) to raise additional capital for the
fund, with an objective of increasing the net income
available for shareholders. As of June 30, 2005, AMPS
represented 33% of the fund's managed assets. Considering
that AMPS have variable dividend rates, we seek to lock in
the rate on a majority of this additional capital through
interest rate swap agreements (where we effectively convert
our variable rate obligation to a fixed rate obligation for
the term of the swap agreements). Specifically, we have
fixed the rate on 63% of our borrowings at an average
interest rate of 3.66%, for an average remaining period of
3.5 years (when we first entered into the swaps, the average
term was 5.3 years). By locking in a large portion of our
leveraging costs, we have endeavored to adequately protect
the dividend-paying ability of the fund. The use of leverage
increases the volatility of the fund's net asset value in
both up and down markets. However, we believe that locking
in a portion of the fund's leveraging costs for the term of
the swap agreements partially protects the fund from any
impact that an increase in short-term interest rates may
have as a result of the use of leverage.
LEVERAGE FACTS(a)
Leverage (as % of managed assets).................. 33%
% Fixed Rate....................................... 63%
% Variable Rate.................................... 37%
Weighted Average Rate on Swaps..................... 3.66%
Weighted Average Term on Swaps..................... 3.5 years
Current Rate on AMPS............................... 3.32%
-------------------
(a) Data as of June 30, 2005. Information is subject to change.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
JUNE 30, 2005
TOP TEN HOLDINGS
(UNAUDITED)
MARKET % OF
SECURITY(a) VALUE MANAGED ASSETS
----------- ----------- --------------
1. Equity Office Properties Trust...................... $83,852,230 3.83%
2. Health Care REIT.................................... 65,791,664 3.00
3. Heritage Property Investment Trust.................. 64,772,992 2.96
4. Health Care Property Investors...................... 63,684,608 2.91
5. Archstone-Smith Trust............................... 59,876,448 2.73
6. Mack-Cali Realty Corp............................... 54,337,350 2.48
7. Arden Realty........................................ 53,563,426 2.45
8. Glimcher Realty Trust............................... 50,910,150 2.32
9. Liberty Property Trust.............................. 50,659,623 2.31
10. First Industrial Realty Trust....................... 42,848,610 1.96
-------------------
(a) All holdings listed are common stock.
SECTOR BREAKDOWN
(Based on Managed Assets)
(UNAUDITED)
[PIE CHART]
Office/Industrial 23.33%
Other 17.01%
Shopping Center 9.97%
Residential 9.48%
Health Care 9.40%
Insurance 8.82%
Bank -- Foreign 6.02%
Bank 5.55%
Diversified 4.87%
Finance 4.01%
Other Assets in Excess of Liabilities 1.54%
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
COMMON STOCK 83.13%
DIVERSIFIED 5.96%
Capital Trust -- Class A............ 500 $ 16,705 6.58%
Colonial Properties Trust........... 300,000 13,200,000 6.14
Crescent Real Estate Equities Co.... 636,900 11,941,875 8.00
iStar Financial..................... 990,000 41,174,100 7.04
Spirit Finance Corp................. 150,800 1,771,900 6.47
Vornado Realty Trust................ 239,100 19,223,640 3.78
--------------
87,328,220
--------------
HEALTH CARE 12.41%
Health Care Property Investors(b)... 2,355,200 63,684,608 6.21
Healthcare Realty Trust............. 256,400 9,899,604 6.79
Health Care REIT.................... 1,745,600 65,791,664 6.58
Nationwide Health Properties........ 1,362,200 32,161,542 6.27
Ventas.............................. 335,000 10,117,000 4.77
--------------
181,654,418
--------------
HOTEL 2.90%
DiamondRock Hospitality Co.......... 565,600 6,391,280 6.11
Hospitality Properties Trust........ 545,200 24,026,964 6.54
Strategic Hotel Capital............. 671,500 12,087,000 4.89
--------------
42,505,244
--------------
INDUSTRIAL 2.93%
First Industrial Realty Trust....... 1,073,900 42,848,610 6.97
--------------
MORTGAGE 2.34%
Newcastle Investment Corp........... 1,135,074 34,222,481 8.29
--------------
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
OFFICE 25.45%
American Financial Realty Trust..... 1,047,600 $ 16,112,088 7.02%
Arden Realty........................ 1,488,700 53,563,426 5.61
Brandywine Realty Trust............. 787,800 24,146,070 5.74
CarrAmerica Realty Corp............. 935,700 33,853,626 5.53
CRT Properties...................... 290,000 7,917,000 5.13
Equity Office Properties Trust...... 2,533,300 83,852,230 6.04
Highwoods Properties................ 910,200 27,087,552 5.71
HRPT Properties Trust............... 1,466,100 18,223,623 6.76
Mack-Cali Realty Corp............... 1,199,500 54,337,350 5.56
Maguire Properties.................. 1,286,100 36,448,074 5.65
Prentiss Properties Trust........... 389,100 14,178,804 6.15
Reckson Associates Realty Corp...... 87,500 2,935,625 5.07
--------------
372,655,468
--------------
OFFICE/INDUSTRIAL 4.76%
Duke Realty Corp.................... 346,800 10,979,688 5.87
Liberty Property Trust.............. 1,143,300 50,659,623 5.51
Mission West Properties............. 778,800 7,998,276 6.23
--------------
69,637,587
--------------
RESIDENTIAL -- APARTMENT 12.20%
American Campus Communities......... 275,500 6,248,340 5.95
Apartment Investment & Management
Co............................... 135,100 5,528,292 5.87
AMLI Residential Properties Trust... 590,400 18,455,904 6.14
Archstone-Smith Trust............... 1,550,400 59,876,448 4.45
Camden Property Trust............... 581,800 31,271,750 4.73
Education Realty Trust.............. 399,300 7,307,190 6.50
GMH Communities Trust............... 604,200 8,368,170 6.57
Gables Residential Trust............ 225,100 9,731,073 5.57
Home Properties..................... 257,900 11,094,858 5.86
Mid-America Apartment Communities... 349,000 15,851,580 5.15
Town & Country Trust................ 173,400 4,943,634 6.03
--------------
178,677,239
--------------
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
SELF STORAGE 1.19%
Extra Space Storage
(Restricted)(c,d)................ 94,500 $ 1,286,476 6.69%
Sovran Self Storage................. 222,200 10,101,212 5.32
U-Store-It Trust.................... 315,800 6,015,990 5.88
--------------
17,403,678
--------------
SHOPPING CENTER 12.99%
COMMUNITY CENTER 8.53%
Cedar Shopping Centers.............. 400,000 5,900,000 6.10
Heritage Property Investment
Trust............................ 1,849,600 64,772,992 6.00
Inland Real Estate Corp............. 395,700 6,362,856 5.97
New Plan Excel Realty Trust......... 1,340,500 36,421,385 6.07
Ramco-Gershenson Properties Trust... 390,000 11,419,200 5.98
--------------
124,876,433
--------------
REGIONAL MALL 4.46%
Glimcher Realty Trust............... 1,834,600 50,910,150 6.92
Macerich Co......................... 215,200 14,429,160 3.88
--------------
65,339,310
--------------
TOTAL SHOPPING CENTER............... 190,215,743
--------------
TOTAL COMMON STOCK
(Identified
cost -- $909,549,438)........ 1,217,148,688
--------------
PREFERRED SECURITIES -- $25 PAR
VALUE 26.47%
AUTOMOTIVE 0.16%
DaimlerChrysler, 7.25% (CBTCS)...... 26,208 668,304 7.10
DaimlerChrysler, 7.50% (CBTCS)...... 40,500 1,048,545 7.26
Ford Motor Co., 8.00% (CORTS)....... 26,400 600,600 8.79
--------------
2,317,449
--------------
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
BANK 2.60%
ASBC Capital I, 7.625%,
Series A (TOPrS)................. $ 75,500 $ 2,000,750 7.21%
Cobank ACB, 7.00%, 144A(c,f)........ 200,000 10,282,000 6.81
Colonial Capital Trust IV, 7.875%... 390,000 10,179,000 7.55
Countrywide Capital IV, 6.75%....... 71,100 1,845,756 6.51
First Republic Bank, 6.70%.......... 216,500 5,553,225 6.55
Fleet Capital Trust VIII, 7.20%
Series........................... 87,900 2,281,884 6.93
HSBC USA, Series F.................. 46,000 1,141,720 3.91
JPM Chase Capital XVI, 6.35%,
Series P......................... 160,000 4,054,400 6.27
Old Second Bancorp Capital Trust I,
7.80%............................ 62,150 674,328 7.19
--------------
38,013,063
--------------
BANK -- FOREIGN 1.03%
Abbey National PLC, 7.375%,
Series C......................... 493,264 12,982,708 6.99
Northern Rock, 8.00%, Series........ 30,000 752,400 7.97
Royal Bank of Scotland Group, 7.25%,
Series H......................... 55,600 1,428,920 7.04
--------------
15,164,028
--------------
ELECTRIC -- INTEGRATED 1.79%
DTE Energy Trust II, 7.50%, due
6/01/44, Series.................. 76,800 2,065,920 6.99
Energy East Capital Trust I,
8.25%............................ 61,000 1,601,250 7.85
Entergy Arkansas, 7.40%, Series..... 10,205 1,056,218 7.15
Entergy Mississippi, 6.25%,
Series........................... 120,000 3,000,000 6.24
Enterprise Capital Trust, 7.44%..... 168,800 4,252,072 7.38
NVP Capital III, 7.75%, due 9/30/38,
Series........................... 81,900 2,053,233 7.74
NVP Capital I, 8.20%, due 3/31/37,
Series A (QUIPS)................. 2,600 65,000 8.20
Northern States Power Co., 8.00%,
Notes (PINES).................... 41,700 1,109,220 7.52
Pacific Gas & Electric, 7.04%,
Series........................... 22,000 574,750 6.74
PSEG Funding Trust II, 8.75%
Series........................... 199,900 5,417,290 8.08
Puget Sound Energy Capital Trust II,
8.40% (TOPrS).................... 70,800 1,837,260 8.09
Sierra Pacific Power, 7.80%,
Series 1......................... 40,000 1,008,000 7.74
Virginia Power Capital Trust II,
7.375%, (TruPS).................. 79,761 2,115,262 6.94
--------------
26,155,475
--------------
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
FINANCE 0.96%
MBNA Capital, 8.125%,
Series D (TruPS)................. 234,100 $ 6,241,106 7.61%
MBNA Capital, 8.10%,
Series E (TOPrs)................. 166,300 4,490,100 7.52
Merrill Lynch & Co.,
Series 1 (FRN)................... 140,000 3,437,000 3.71
--------------
14,168,206
--------------
GAS -- DISTRIBUTION 3.21%
Dominion CNG Capital, 8.40%......... 78,700 2,060,366 7.45
Laclede Capital Trust I, 7.70%
(TOPrS).......................... 56,300 1,497,862 7.25
Southern Union Co., 7.55%,
Series C(e)...................... 1,040,000 27,664,000 7.11
Southwest Gas Capital Trust II,
7.70%............................ 600,000 15,810,000 7.32
--------------
47,032,228
--------------
INSURANCE 4.58%
LIFE/HEALTH INSURANCE 0.34%
Principal Financial Group, 6.5180%,
Series B......................... 200,000 5,000,000 6.35
--------------
5,000,000
--------------
MULTI-LINE 2.80%
Aegon NV............................ 400,000 10,108,000 6.29
ING Groep NV, 7.05% Series.......... 241,600 6,317,840 6.73
ING Groep NV, 7.20% Series.......... 165,700 4,366,195 6.83
MetLife, 6.50%, Series B............ 800,000 20,144,000 6.47
--------------
40,936,035
--------------
PROPERTY/CASUALTY 0.71%
ACE Ltd., 7.80%, Series C........... 389,300 10,433,240 7.28
--------------
REINSURANCE 0.16%
Everest Re Capital Trust II, 6.20%,
Series B......................... 100,000 2,379,000 6.52
--------------
REINSURANCE -- FOREIGN 0.57%
PartnerRe Ltd., 6.75%, Series C..... 206,500 5,265,750 6.63
PartnerRe Ltd., 7.90%, Series D..... 54,000 1,348,920 6.53
RenaissanceRE Holdings Ltd., 7.30%,
Series B......................... 65,900 1,728,557 6.98
--------------
8,343,227
--------------
TOTAL INSURANCE..................... 67,091,502
--------------
See accompanying notes to financial statements.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
MEDIA 1.49%
CABLE TELEVISION 0.83%
Shaw Communications, 8.50%,
Series B (COPrS)................. 479,700 $ 12,093,237 8.45%
--------------
DIVERSIFIED SERVICES 0.66%
AOL Time Warner, 7.625%,
Series A-1 (CABCO)............... 117,600 3,089,352 7.27
Liberty Media Corp., 8.75%
(CBTCS).......................... 153,600 4,047,360 8.31
Liberty Media Corp., 8.75%
(PPLUS).......................... 95,345 2,517,108 8.30
--------------
9,653,820
--------------
TOTAL MEDIA......................... 21,747,057
--------------
OIL -- EXPLORATION 1.10%
Nexen, 7.35%, due 11/1/43,
Series B......................... 608,660 16,050,364 6.98
--------------
REAL ESTATE 7.44%
DIVERSIFIED 1.32%
Digital Realty Trust, 8.50%,
Series A......................... 29,000 751,535 8.22
iStar Financial, 7.875%, Series E... 400,000 10,314,000 7.64
iStar Financial, 7.80%, Series F.... 243,600 6,236,160 7.62
iStar Financial, 7.65%, Series G.... 80,000 2,040,000 7.49
--------------
19,341,695
--------------
HEALTH CARE 0.55%
Health Care REIT, 7.875%,
Series D......................... 100,000 2,568,000 7.67
Health Care REIT, 7.625%,
Series F......................... 10,000 252,700 7.56
Omega Healthcare Investors, 8.375%,
Series D......................... 200,000 5,300,000 7.89
--------------
8,120,700
--------------
HOTEL 0.25%
Eagle Hospitality Properties Trust,
8.25%, Series A.................. 50,000 1,285,000 8.02
Innkeepers USA Trust, 8.00%,
Series C......................... 93,500 2,390,795 7.82
--------------
3,675,795
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
13
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
OFFICE 1.76%
Cousins Properties, 7.75%,
Series A......................... 457,500 $ 11,757,750 7.55%
Kilroy Realty Corp, 7.80%,
Series E......................... 100,000 2,585,000 7.54
Maguire Properties, 7.625%,
Series A......................... 288,900 7,303,392 7.56
SL Green Realty Corp., 7.625%,
Series C......................... 100,000 2,560,000 7.46
SL Green Realty Corp., 7.875%,
Series D......................... 60,000 1,539,000 7.68
--------------
25,745,142
--------------
RESIDENTIAL -- APARTMENT 1.98%
Apartment Investment and Management
Co., 8.00%, Series T............. 93,700 2,370,610 7.91
Apartment Investment and Management
Co., 8.00%, Series V............. 101,000 2,565,400 7.87
Apartment Investment & Management
Co., 7.875%, Series Y............ 110,000 2,761,000 7.85
Associated Estates Realty Corp.,
8.70%, Series B.................. 40,000 1,049,000 8.31
Hovnanian Enterprises, 7.625%
Series........................... 90,500 2,262,500 7.64
Mid-America Apartment Communities,
8.30%, Series H.................. 690,600 17,955,600 8.00
--------------
28,964,110
--------------
SHOPPING CENTER 1.58%
COMMUNITY CENTER 0.28%
Developers Diversified Realty Corp.,
8.00%, Series G.................. 38,700 1,006,200 7.69
Developers Diversified Realty Corp.,
7.50%, Series I.................. 47,800 1,223,680 7.34
Saul Centers, 8.00%, Series A....... 69,400 1,817,586 7.64
--------------
4,047,466
--------------
REGIONAL MALL 1.30%
Glimcher Realty Trust, 8.75%,
Series F......................... 279,300 7,482,447 8.17
Glimcher Realty Trust, 8.125%,
Series G......................... 240,000 6,132,000 7.95
Mills Corp., 8.75%, Series E........ 197,600 5,354,960 8.08
--------------
18,969,407
--------------
TOTAL SHOPPING CENTER............... 23,016,873
--------------
TOTAL REAL ESTATE.............. 108,864,315
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
14
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
TELECOMMUNICATION SERVICES 2.11%
Centaur Funding Corp., 9.08%(c)..... 15,954 $ 20,366,219 7.11%
Telephone & Data Systems, 7.60%,
Series A......................... 197,800 5,093,350 7.38
United States Cellular Corp., 7.50%,
due 6/15/34, Series.............. 201,500 5,386,095 7.03
Verizon South, 7.00%, Series F...... 4,000 103,320 6.78
--------------
30,948,984
--------------
TOTAL PREFERRED
SECURITIES -- $25 PAR VALUE
(Identified cost --
$383,027,785)................ 387,552,671
--------------
PREFERRED SECURITIES -- CAPITAL
TRUST 35.96%
BANK 5.71%
AgFirst Farm Credit Bank, 7.30%, due
10/14/49, 144A(f)................ 29,100,000 31,067,189 6.84
Astoria Capital Trust I, 9.75%, due
11/1/29, Series B................ 13,500,000 15,862,500 8.30
BankBoston Capital Trust II, 7.75%,
due 12/15/26..................... 1,500,000 1,615,718 7.19
BT Preferred Capital Trust II,
7.875%, due 2/25/27.............. 1,000,000 1,081,088 7.29
First Tennessee Bank, Series
144A(f).......................... 2,000 1,970,000 0.10
Great Western Financial Trust II,
8.206%, due 2/1/27, Series A..... 2,232,000 2,425,492 7.56
Roslyn Preferred Trust FRN, 4.78%,
due 4/1/32, 144A(f).............. 7,500,000 7,556,250 6.94
Roslyn Real Estate Asset Corp. FRN,
4.813%, due 9/30/08, Series D.... 100 10,050,000 6.71
Sky Financial Capital Trust I,
9.75%, due 5/1/30, Series B...... 3,000,000 3,510,000 7.98
Webster Capital Trust I, 9.36%, due
1/29/27, 144A(f)................. 7,300,000 8,483,980 8.05
--------------
83,622,217
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
15
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
BANK -- FOREIGN 7.99%
Barclays Bank PLC, 6.278%,
Series 1 (ADR)................... 3,000,000 $ 3,097,500 6.08%
BNP Paribas Capital Trust V,
7.20%............................ 19,550,000 20,398,196 6.90
CA Preferred Fund Trust, 7.00%
(Eurobond)....................... 25,200,000 26,365,752 6.69
HBOS Capital Funding LP, 6.85%...... 25,000,000 25,919,475 6.61
HSBC Capital Funding LP, 10.176%.... 9,680,000 15,536,119 6.34
RBS Capital Trust B, 6.80%.......... 19,700,000 20,389,796 6.57
Royal Bank of Scotland Group PLC,
6.35%, Series N, (ADR)........... 200,000 5,074,000 6.27
--------------
116,780,838
--------------
ELECTRIC -- INTEGRATED 2.36%
Dominion Resources Capital Trust
III, 8.40%, due 1/15/31.......... 21,732,000 28,008,289 6.52
DPL Capital Trust, 8.125%, due
9/1/31........................... 3,000,000 3,551,754 6.87
Enterprise Capital Trust II, due
6/30/28, Series B................ 3,000,000 2,974,974 3.81
--------------
34,535,017
--------------
FINANCE 5.02%
CREDIT CARD 0.38%
MBNA Capital, 8.278%, due 12/1/26,
Series A......................... 5,200,000 5,624,362 7.66
--------------
DIVERSIFIED FINANCIAL SERVICES 2.17%
Old Mutual Capital Funding, 8.00%,
due 5/29/49 (Eurobond)........... 29,950,000 31,721,273 7.55
--------------
INVESTMENT BANKER/BROKER 1.51%
JPM Capital Trust I, 7.54%, due
1/15/27.......................... 1,925,000 2,074,601 7.00
JPM Capital Trust II, 7.95%, due
2/27/07.......................... 1,900,000 2,064,899 7.32
NBP Capital Trust III, 7.375%, due
10/29/49......................... 16,900,000 18,013,524 6.92
--------------
22,153,024
--------------
MORTGAGE LOAN/BROKER 0.96%
Countrywide Capital III, 8.05%, due
6/15/27, Series B (SKIS)......... 11,285,000 14,095,868 6.44
--------------
TOTAL FINANCE....................... 73,594,527
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
16
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
FOOD 1.51%
Dairy Farmers of America, 7.875%,
144A(c,f)........................ 135,000 $ 13,324,163 7.98%
Gruma S.A., 7.75%, due 12/29/49,
144A(c,f)........................ 9,000,000 8,795,475 7.93
--------------
22,119,638
--------------
INSURANCE 8.60%
LIFE/HEALTH 1.68%
AmerUS Capital, 8.85%, due 2/1/27,
Series A......................... 4,000,000 4,392,812 8.06
Liberty Mutual Insurance, 7.697%,
due 10/15/97..................... 18,230,000 20,197,345 6.95
--------------
24,590,157
--------------
MULTI-LINE 5.41%
AFC Capital Trust I, 8.207%, due
02/03/27, Series B............... 15,750,000 17,929,517 7.21
AXA, 7.10%, due 5/29/49
(Eurobond)....................... 26,500,000 27,724,300 6.79
GenAmerica Capital I, 8.525%, due
6/30/27.......................... 9,000,000 10,007,469 7.67
Prudential PLC, 6.50%, due
6/29/49.......................... 3,000,000 3,026,223 7.63
USF&G Capital, 8.312%, due 7/1/46... 3,845,000 4,842,924 6.60
Zurich Capital Trust I, 8.376%, due
6/1/37........................... 14,212,000 15,723,901 7.57
--------------
79,254,334
--------------
PROPERTY/CASUALTY 1.51%
Oil Casualty Insurance, 8.00%, due
9/15/34, 144A(f)................. 8,000,000 8,475,704 7.55
W.R. Berkley Capital Trust, 8.197%,
due 12/15/45..................... 13,100,000 13,605,765 7.90
--------------
22,081,469
--------------
TOTAL INSURANCE..................... 125,925,960
--------------
MEDICAL -- HOSPITALS 1.10%
Columbia/HCA, 7.50%, due 11/15/95... 16,534,000 16,145,699 7.68
--------------
OIL COMPANY -- EXPLORATION AND
PRODUCTION 0.76%
Pemex Project Funding Master Trust,
7.75%, due 9/29/49............... 11,000,000 11,132,231 7.66
--------------
PIPELINES 1.78%
K N Capital Trust I, 8.56%, due
4/15/27 (TruPS).................. 9,513,000 10,429,235 7.81
K N Capital Trust III, 7.63%, due
4/15/28 (TruPS).................. 13,330,000 15,648,180 6.50
--------------
26,077,415
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
17
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
----------- -------------- ------------
REAL ESTATE 0.36%
BF Saul Real Estate Investment
Trust, 7.50%, due 3/1/14,
144A(f).......................... 5,000,000 5,200,000 7.21%
--------------
RETAIL 0.34%
JC Penney Co., 7.625%, due 3/1/97... 5,000,000 5,000,000 7.63
--------------
TELECOMMUNICATION SERVICES 0.43%
Telephone & Data Systems, 6.625%,
due 3/31/45...................... 249,852 6,231,309 6.66
--------------
TOTAL PREFERRED
SECURITIES -- CAPITAL TRUST
(Identified cost --
$499,603,199)........ 526,364,851
--------------
PRINCIPAL
AMOUNT
-----------
CORPORATE BOND 1.73%
AUTOMOTIVE 0.23%
Ford Motor Co., 9.98%, due 2/15/47..... $ 3,400,000 $ 3,303,168
--------------
CELLULAR TELECOMMUNICATIONS 0.07%
Rogers Wireless Communications, 8.00%,
due 12/15/12, 144A(f)............... 1,000,000 1,082,500
--------------
MEDIA 0.73%
Liberty Media Corp., 8.25%, due
2/1/30.............................. 7,250,000 7,231,114
Rogers Cable, 8.75%, due 5/1/32........ 3,000,000 3,420,000
--------------
10,651,114
--------------
TELEPHONE -- INTEGRATED 0.70%
Citizens Communications Co., 9.00%, due
8/15/31............................. 9,925,000 10,222,750
--------------
TOTAL CORPORATE BOND
(Identified cost --
$26,560,522)............ 25,259,532
--------------
COMMERCIAL PAPER 0.66%
New Center Asset Trust, 2.20%, due
07/01/05
(Identified cost -- $9,642,000)..... 9,642,000 9,642,000
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
18
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
VALUE
(NOTE 1)
--------------
TOTAL INVESTMENTS (Identified
cost -- $1,828,382,944)............ 147.95% $2,165,967,742
OTHER ASSETS IN EXCESS OF
LIABILITIES........................ 1.64% 23,976,039
LIQUIDATION VALUE OF PREFERRED
SHARES............................. (49.59)% (726,000,000)
--------- --------------
NET ASSETS APPLICABLE TO COMMON
SHARES (Equivalent to $30.34 per
share based on 48,251,666 shares of
capital stock outstanding)......... 100.00% $1,463,943,781
--------- --------------
--------- --------------
GLOSSARY OF PORTFOLIO ABBREVIATIONS
ADR American Depositary Receipt
CABCO Corporate Asset Backed Corporation
CBTCS Corporate Backed Trust Certificates
COPrS Canadian Origin Preferred Securities
CORTS Corporate Backed Trust Securities
FRN Floating Rate Note
PINES Public Income Notes
PPLUS Preferred Plus Trust
QUIPS Quarterly Income Preferred Securities
SKIS Subordinated Capital Income Securities
TOPrS Trust Originated Preferred Securities
TruPS Trust Preferred Securities
-------------------
Note: Percentages indicated are based on the net assets applicable to common
shares of the fund.
(a) Dividend yield is computed by dividing the security's current annual
dividend rate by its value on June 30, 2005. The current dividend rate does
not reflect any potential reclassifications to capital gain or return of
capital.
(b) 75,000 shares segregated as collateral for interest rate swap transactions.
(c) Fair valued security. Aggregate holdings equal 3.69% of net assets
applicable to common shares.
(d) Resale is restricted. Security acquired 6/20/05 at a cost of $1,272,915;
equals 0.09% of net assets applicable to common shares.
(e) 74,000 shares segregated as collateral for interest rate swap transactions.
(f) Resale is restricted to qualified institutional investors. Aggregate
holdings equal 6.57% of net assets applicable to common shares.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
19
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
ASSETS:
Investments in securities, at value (Identified
cost -- $1,828,382,944) (Note 1)....................... $2,165,967,742
Cash...................................................... 4,567,803
Dividends and interest receivable......................... 16,624,732
Receivable for investment securities sold................. 11,935,934
Unrealized appreciation on interest rate swap
transactions (Notes 1 and 6)........................... 4,315,322
Other assets.............................................. 37,164
--------------
Total Assets......................................... 2,203,448,697
--------------
LIABILITIES:
Payable for investment securities purchased............... 7,523,001
Unrealized depreciation on interest rate swap
transactions (Notes 1 and 6)........................... 2,585,958
Payable to investment manager............................. 1,160,911
Payable for dividends declared on preferred shares........ 1,122,342
Payable for dividends declared on common shares........... 820,894
Payable to administrator.................................. 76,816
Payable for directors fees................................ 7,073
Other liabilities......................................... 207,921
--------------
Total Liabilities.................................... 13,504,916
--------------
LIQUIDATION VALUE OF PREFERRED SHARES:
Auction market preferred shares, Series M7,
($25,000 liquidation value, $0.001 par value,
3,280 shares issued and outstanding) (Notes 1 and 5)... 82,000,000
Auction market preferred shares, Series T7,
($25,000 liquidation value, $0.001 par value,
3,280 shares issued and outstanding) (Notes 1 and 5)... 82,000,000
Auction market preferred shares, Series W7,
($25,000 liquidation value, $0.001 par value,
3,280 shares issued and outstanding) (Notes 1 and 5)... 82,000,000
Auction market preferred shares, Series TH7,
($25,000 liquidation value, $0.001 par value,
3,280 shares issued and outstanding) (Notes 1 and 5)... 82,000,000
Auction market preferred shares, Series F7,
($25,000 liquidation value, $0.001 par value,
3,280 shares issued and outstanding) (Notes 1 and 5)... 82,000,000
Auction market preferred shares, Series T28,
($25,000 liquidation value, $0.001 par value,
2,040 shares issued and outstanding) (Notes 1 and 5)... 51,000,000
Auction market preferred shares, Series W28A,
($25,000 liquidation value, $0.001 par value,
2,800 shares issued and outstanding) (Notes 1 and 5)... 70,000,000
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
20
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
Auction market preferred shares, Series W28B,
($25,000 liquidation value, $0.001 par value,
2,800 shares issued and outstanding) (Notes 1 and 5)... 70,000,000
Auction market preferred shares, Series W28C,
($25,000 liquidation value, $0.001 par value,
2,800 shares issued and outstanding) (Notes 1 and 5)... 70,000,000
Auction market preferred shares, Series TH28,
($25,000 liquidation value, $0.001 par value,
2,200 shares issued and outstanding) (Notes 1 and 5)... 55,000,000
--------------
726,000,000
--------------
TOTAL NET ASSETS APPLICABLE TO COMMON SHARES.................. $1,463,943,781
--------------
--------------
TOTAL NET ASSETS APPLICABLE TO COMMON SHARES consist of:
Common stock ($0.001 par value, 48,251,666 shares
issued and outstanding)................................ $1,115,287,730
Dividends in excess of net investment income.............. (25,080,319)
Accumulated undistributed net realized gain on
investments and interest rate swap transactions........ 34,422,208
Net unrealized appreciation on investments
and interest rate swap transactions.................... 339,314,162
--------------
$1,463,943,781
--------------
--------------
NET ASSET VALUE PER COMMON SHARE:
($1,463,943,781[div]48,251,666 shares outstanding)........ $ 30.34
--------------
--------------
MARKET PRICE PER COMMON SHARE................................. $ 27.05
--------------
--------------
MARKET PRICE DISCOUNT TO NET ASSET VALUE PER COMMON SHARE..... (10.84)%
--------------
--------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
21
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
Investment Income (Note 1):
Dividend income (net of $20,442 of foreign witholding
tax)................................................. $ 32,773,954
Interest income......................................... 18,474,314
------------
Total Income....................................... 51,248,268
------------
Expenses:
Investment management fees (Note 2)..................... 6,798,143
Preferred remarketing fee............................... 898,699
Administration fees (Note 2)............................ 601,412
Reports to shareholders................................. 190,998
Custodian fees and expenses............................. 78,916
Professional fees....................................... 61,463
Directors' fees and expenses (Note 2)................... 25,619
Transfer agent fees and expenses........................ 9,335
Miscellaneous........................................... 109,771
------------
Total Expenses..................................... 8,774,356
------------
Net Investment Income....................................... 42,473,912
------------
Net Realized and Unrealized Gain/(Loss) on Investments
(Note 1):
Net realized gain on investments........................ 36,395,499
Net realized loss on interest rate swap transactions.... (1,956,650)
Net change in unrealized depreciation on investments.... (1,011,024)
Net change in unrealized appreciation on interest rate
swap transactions.................................... 2,149,778
------------
Net realized and unrealized gain on investments.... 35,577,603
------------
Net Increase Resulting from Operations...................... 78,051,515
------------
Less Dividends and Distributions to Preferred Shareholders
from Net Investment Income................................ (10,639,740)
------------
Net Increase in Net Assets from Operations Applicable to
Common Shares............................................. $ 67,411,775
------------
------------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
22
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS APPLICABLE TO COMMON SHARES (UNAUDITED)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2005 DECEMBER 31, 2004
---------------- -----------------
Change in Net Assets Applicable to Common Shares:
From Operations:
Net investment income................... $ 42,473,912 $ 86,763,445
Net realized gain on investments and
interest rate swap transactions...... 34,438,849 14,418,311
Net change in unrealized appreciation on
investments and interest rate swap
transactions......................... 1,138,754 181,531,456
-------------- --------------
Net increase resulting from
operations....................... 78,051,515 282,713,212
-------------- --------------
Less Dividends and Distributions to Preferred
Shareholders from:
Net investment income................... (10,639,740) (8,388,821)
Net realized gain on investments........ -- (2,460,647)
-------------- --------------
Total dividends and
distributions to preferred
shareholders................ (10,639,740) (10,849,468)
-------------- --------------
67,411,775 271,863,744
-------------- --------------
Less Dividends and Distributions to Common
Shareholders from:
Net investment income................... (56,454,450) (68,817,130)
Net realized gain on investments........ -- (22,427,735)
Tax return of capital................... -- (14,185,027)
-------------- --------------
Total dividends and
distributions to common
shareholders................ (56,454,450) (105,429,892)
-------------- --------------
Capital Stock Transactions (Note 5):
Increase in net assets from preferred
offering cost adjustment............. -- 266,434
Decrease in net assets from underwriting
commissions and offering expenses
from issuance of preferred shares.... -- (901,651)
-------------- --------------
Net decrease in net assets
from capital stock
transactions................ -- (635,217)
-------------- --------------
Total increase in net assets
applicable to common
shares...................... 10,957,325 165,798,635
-------------- --------------
Net Assets Applicable to Common Shares:
Beginning of period..................... 1,452,986,456 1,287,187,821
-------------- --------------
End of period(a)........................ $1,463,943,781 $1,452,986,456
-------------- --------------
-------------- --------------
-------------------
(a) Includes dividends in excess of net investment income of $25,080,319 and
$460,041, respectively.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
23
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
The following table includes selected data for a common share outstanding
throughout each period and other performance information derived from the
financial statements. It should be read in conjunction with the financial
statements and notes thereto.
FOR THE PERIOD
FOR THE JUNE 27, 2003(a)
FOR THE YEAR ENDED THROUGH
SIX MONTHS ENDED DECEMBER 31, DECEMBER 31,
PER SHARE OPERATING PERFORMANCE: JUNE 30, 2005 2004 2003
-------------------------------- ------------- ---- ----
Net asset value per common share, beginning of
period....................................... $30.11 $26.68 $23.88
------ ------ ------
Income from investment operations:
Net investment income...................... 0.88(b) 1.87 0.74(b)
Net realized and unrealized gain on
investments.............................. 0.74 3.97 3.23
------ ------ ------
Total income from investment
operations........................... 1.62 5.84 3.97
------ ------ ------
Less dividends and distributions to preferred
shareholders from:
Net investment income...................... (0.22) (0.17) (0.06)
Net realized gain on investments........... -- (0.05) (0.01)
------ ------ ------
Total dividends and distributions to
preferred shareholders............... (0.22) (0.22) (0.07)
------ ------ ------
Total from investment operations
applicable to common shares.......... 1.40 5.62 3.90
------ ------ ------
Less: Offering and organization costs charged
to paid-in capital -- common shares...... -- -- (0.06)
Offering and organization costs charged to
paid-in capital -- preferred shares...... -- (0.02) (0.18)
Preferred offering cost adjustment......... -- 0.01 --
Dilutive effect of common share offering... -- -- (0.01)
------ ------ ------
Total offering and organization
costs................................ -- (0.01) (0.25)
------ ------ ------
Less dividends and distributions to common
shareholders from:
Net investment income...................... (1.17) (1.43) (0.55)
Net realized gain on investments........... -- (0.46) (0.06)
Tax return of capital...................... -- (0.29) (0.24)
------ ------ ------
Total dividends and distributions to
common shareholders.................. (1.17) (2.18) (0.85)
------ ------ ------
Net increase in net asset value................ $ 0.23 $ 3.43 $ 2.80
------ ------ ------
Net asset value, per common share, end of
period....................................... $30.34 $30.11 $26.68
------ ------ ------
------ ------ ------
Market value, per common share, end of
period....................................... $27.05 $27.18 $25.90
------ ------ ------
------ ------ ------
---------------------------------------------------------------------------------------------------
Net asset value total return(c)................ 5.32%(d) 22.94% 15.56%(d)
------ ------ ------
------ ------ ------
Market value return(c)......................... 4.02%(d) 14.32% 7.16%(d)
------ ------ ------
------ ------ ------
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
24
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED) -- (CONTINUED)
FOR THE PERIOD
FOR THE JUNE 27, 2003(a)
FOR THE YEAR ENDED THROUGH
SIX MONTHS ENDED DECEMBER 31, DECEMBER 31,
RATIOS/SUPPLEMENTAL DATA: JUNE 30, 2005 2004 2003
------------------------- ------------- ---- ----
Net assets applicable to common shares, end of
period (in millions)......................... $1,463.9 $1,453.0 $1,287.2
-------- -------- --------
-------- -------- --------
Ratio of expenses to average daily net assets
applicable to common shares(e)............... 1.28%(f) 1.29% 1.17%(f)
-------- -------- --------
-------- -------- --------
Ratio of net investment income to average daily
net assets applicable to common shares(e).... 6.19%(f) 6.62% 5.51%(f)
-------- -------- --------
-------- -------- --------
Ratio of expenses to average daily managed
assets(e).................................... 0.84%(f) 0.85% 0.84%(f)
-------- -------- --------
-------- -------- --------
Portfolio turnover rate........................ 11.33%(d) 8.76% 7.66%(d)
-------- -------- --------
-------- -------- --------
PREFERRED SHARES:
-----------------
Liquidation value, end of period (in 000's). $726,000 $726,000 $671,000
-------- -------- --------
-------- -------- --------
Total shares outstanding (in 000's)............ 29 29 27
-------- -------- --------
-------- -------- --------
Asset coverage per share....................... $ 75,411 $ 75,034 $ 72,958
-------- -------- --------
-------- -------- --------
Liquidation preference per share............... $ 25,000 $ 25,000 $ 25,000
-------- -------- --------
-------- -------- --------
Average market value per share(g).............. $ 25,000 $ 25,000 $ 25,000
-------- -------- --------
-------- -------- --------
-------------------
(a) Commencement of operations.
(b) Calculation based on average shares outstanding.
(c) Total market value return is computed based upon the New York Stock Exchange
market price of the fund's shares and excludes the effects of brokerage
commissions. Dividends and distributions, if any, are assumed for purposes
of this calculation, to be reinvested at prices obtained under the fund's
dividend reinvestment plan. Total net asset value return measures the
changes in value over the period indicated, taking into account dividends
and distributions as reinvested.
(d) Not annualized.
(e) Ratios do not reflect dividend payments to preferred shareholders.
(f) Annualized.
(g) Based on weekly prices.
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
25
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Cohen & Steers REIT and Preferred Income Fund, Inc. (the fund) was
incorporated under the laws of the State of Maryland on March 25, 2003 and is
registered under the Investment Company Act of 1940, as amended, as a
nondiversified, closed-end management investment company. The fund's investment
objective is high current income.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America (GAAP). The preparation of the financial statements in
accordance with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
Portfolio Valuation: Investments in securities that are listed on the New
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected at the close of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
for the day or, if no asked price is available, at the bid price.
Securities not listed on the New York Stock Exchange but listed on other
domestic or foreign securities exchanges or admitted to trading on the National
Association of Securities Dealers Automated Quotations, Inc. (Nasdaq) national
market system are valued in a similar manner. Securities traded on more than one
securities exchange are valued at the last sale price on the business day as of
which such value is being determined as reflected on the tape at the close of
the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by Cohen & Steers
Capital Management, Inc. to be over-the-counter, but excluding securities
admitted to trading on the Nasdaq National List, are valued at the official
closing prices as reported by Nasdaq, the National Quotation Bureau, or such
other comparable sources as the Board of Directors deem appropriate to reflect
their fair market value. If there has been no sale on such day, the securities
are valued at the mean of the closing bid and asked prices for the day, or if no
asked price is available, at the bid price. However, certain fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed by the Board of Directors to reflect the fair
market value of such securities. Where securities are traded on more than one
exchange and also over-the-counter, the securities will generally be valued
using the quotations the Board of Directors believes most closely reflect the
value of such securities.
Securities for which market prices are unavailable will be valued at fair
value pursuant to procedures approved by the fund's Board of Directors.
Circumstances in which market prices may be unavailable include, but are not
limited to, when trading in a security is suspended, the exchange on which the
security is traded is subject
--------------------------------------------------------------------------------
26
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
to an unscheduled close or disruption or material events occur after the close
of the exchange on which the security is principally traded. In these
circumstances, the fund determines fair value in a manner that fairly reflects
the market value of the security on the valuation date based on consideration of
any information or factors it deems appropriate. These may include recent
transactions in comparable securities, information relating to the specific
security and developments in the markets.
The fund's use of fair value pricing may cause the net asset value of fund
shares to differ from the net asset value that would be calculated using market
quotations. Fair value pricing involves subjective judgments and it is possible
that the fair value determined for a security may be materially different than
the value that could be realized upon the sale of that security.
To the extent the fund holds securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of the securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.
Short-term debt securities, which have a maturity date of 60 days or less,
are valued at amortized cost, which approximates value.
Security Transactions and Investment Income: Security transactions are
recorded on trade date. Realized gains and losses on investments sold are
recorded on the basis of identified cost. Interest income is recorded on the
accrual basis. Dividend income is recorded on the ex-dividend date. The fund
records distributions received in excess of income from underlying investments
as a reduction of cost of investments and/or realized gain. Such amounts are
based on estimates if actual amounts are not available, and actual amounts of
income, realized gain and return of capital may differ from the estimated
amounts. The fund adjusts the estimated amounts of the components of
distributions (and consequently its net investment income) as an increase to
unrealized appreciation/(depreciation) and realized gain/(loss) on investments
as necessary once the issuers provide information about the actual composition
of the distributions.
Interest Rate Swaps: The fund uses interest rate swaps in connection with
the sale of preferred shares. The interest rate swaps are intended to reduce or
eliminate the risk that an increase in short-term interest rates could have on
the performance of the fund's common shares as a result of the floating rate
structure of the preferred shares. In these interest rate swaps, the fund agrees
to pay the other party to the interest rate swap (which is known as the
counterparty) a fixed rate payment in exchange for the counterparty agreeing to
pay the fund a variable rate payment that is intended to approximate the fund's
variable rate payment obligation on the preferred shares. The payment obligation
is based on the notional amount of the swap. Depending on the state of interest
rates in general, the use of interest rate swaps could enhance or harm the
overall performance of the common shares. The market value of interest rate
swaps is based on pricing models that consider the time value of money,
volatility, the current market and contractual prices of the underlying
financial instrument. Unrealized gains are reported as an asset and unrealized
losses are reported as a liability on the Statement of Assets and Liabilities.
The
--------------------------------------------------------------------------------
27
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
change in value of swaps, including the accrual of periodic amounts of interest
to be paid or received on swaps, is reported as unrealized gains or losses in
the Statement of Operations. A realized gain or loss is recorded upon payment or
receipt of a periodic payment or termination of swap agreements. Swap agreements
involve, to varying degrees, elements of market and counterparty risk, and
exposure to loss in excess of the related amounts reflected in the Statement of
Assets and Liabilities.
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid to common shareholders monthly. Dividends and
distributions to shareholders are recorded on the ex-dividend date.
Distributions paid by the fund are subject to recharacterization for tax
purposes. Based upon the results of operations for the six months ended
June 30, 2005, the investment manager considers it likely that a portion of the
dividends will be reclassified to return of capital and distributions of net
realized capital gains upon the final determination of the fund's taxable income
for the year. Net realized capital gains, unless offset by any available capital
loss carryforward, are distributed to shareholders annually.
Dividends from net investment income and capital gain distributions are
determined in accordance with U.S. federal income tax regulations which may
differ from GAAP.
Series M7, Series T7, Series W7, Series TH7 and Series F7 preferred shares
pay dividends based on a variable interest rate set at auctions, normally held
every seven days. The dividends are declared and recorded accrued for the
subsequent seven day period on the auction date. In most instances, dividends
are payable every seven days, on the first business day following the end of the
dividend period.
Series T28, Series TH28, Series W28A, Series W28B and Series W28C preferred
shares pay dividends based on a variable interest rate set at auctions, normally
held every 28 days. The dividends are declared and recorded for the subsequent
28 day period on the auction date. In most instances, dividends are payable
every 28 days, on the first business day following the end of the dividend
period.
Federal Income Taxes: It is the policy of the fund to qualify as a regulated
investment company, if such qualification is in the best interest of the
shareholders, by complying with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies, and by distributing
substantially all of its taxable earnings to its shareholders. Accordingly, no
provision for federal income or excise tax is necessary.
NOTE 2. INVESTMENT MANAGEMENT FEES, ADMINISTRATION FEES AND OTHER TRANSACTIONS
WITH AFFILIATES
Investment Management Fees: Cohen & Steers Capital Management, Inc. (the
investment manager) serves as the fund's investment manager pursuant to an
investment management agreement (the management agreement). Under the terms of
the management agreement, the investment manager provides the fund with day-
--------------------------------------------------------------------------------
28
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
to-day investment decisions and generally manages the fund's investments in
accordance with the stated polices of the fund, subject to the supervision of
the Board of Directors.
For the services under the management agreement, the fund pays the
investment manager a management fee, accrued daily and paid monthly at an annual
rate of 0.65% of the fund's average daily managed asset value. Managed asset
value is the net asset value of the common shares plus the liquidation
preference of the preferred shares.
Administration Fees: The fund has entered into an administration agreement
with the investment manager under which the investment manager performs certain
administrative functions for the fund and receives a fee, accrued daily and paid
monthly at the annual rate of 0.06% of the fund's average daily managed assets
up to $1 billion, 0.04% of the fund's average daily managed assets in excess of
$1 billion up to $1.5 billion and 0.02% of the fund's average daily managed
assets in excess of $1.5 billion. For the six months ended June 30, 2005, the
fund incurred $457,115 in administration fees.
Director's Fees: Certain directors and officers of the fund are also
directors, officers and/or employees of the investment manager. None of the
directors and officers so affiliated received compensation from the fund for
their services.
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
six months ended June 30, 2005 totaled $237,139,244 and $256,553,132,
respectively.
NOTE 4. INCOME TAX INFORMATION
At June 30, 2005 the cost of investments and net unrealized appreciation for
federal income tax purposes were as follows:
Aggregate cost................................... $1,828,382,944
--------------
--------------
Gross unrealized appreciation.................... $ 341,958,202
Gross unrealized depreciation.................... (4,373,404)
--------------
Net unrealized appreciation on investments....... 337,584,798
Net unrealized depreciation on interest rate swap
transactions................................... 1,729,364
--------------
Net unrealized appreciation...................... $ 339,314,162
--------------
--------------
--------------------------------------------------------------------------------
29
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 5. CAPITAL STOCK
The fund is authorized to issue 100 million shares of common stock at a par
value of $0.001 per share.
During the six months ended June 30, 2005, the fund issued no shares of
common stock for the reinvestment of dividends.
On October 14, 2004, the fund issued 2,200 auction market preferred shares,
Series TH28 (par value $0.001). Proceeds paid to the fund amounted to
$54,098,349 after deduction of underwriting commissions and offering expenses of
$901,651 This issue has received a 'AAA/Aaa' rating from Standard & Poor's and
Moody's.
Preferred shares are senior to the fund's common shares and will rank on a
parity with shares of any other series of preferred shares, and with shares of
any other series of preferred stock of the fund, as to the payment of dividends
and the distribution of assets upon liquidation. If the fund does not timely
cure a failure to (1) maintain a discounted value of its portfolio equal to the
preferred shares basic maintenance amount, (2) maintain the 1940 Act preferred
shares asset coverage, or (3) file a required certificate related to asset
coverage on time, the preferred shares will be subject to a mandatory redemption
at the redemption price of $25,000 per share plus an amount equal to accumulated
but unpaid dividends thereon to the date fixed for redemption. To the extent
permitted under the 1940 Act and Maryland Law, the fund at its option may
without consent of the holders of preferred shares, redeem preferred shares
having a dividend period of one year or less, in whole, or in part, on the
business day after the last day of such dividend period upon not less than 15
calendar days and not more than 40 calendar days prior to notice The optional
redemption price is $25,000 per share plus an amount equal to accumulated but
unpaid dividends thereon to the date fixed for redemption.
The fund's common shares and preferred shares have equal voting rights of
one vote per share and vote together as a single class. In addition, the
affirmative vote of the holders of a majority, as defined in the 1940 Act, of
the outstanding preferred shares shall be required to (1) approve any plan of
reorganization that would adversely affect the preferred shares and (2) approve
any matter that materially and adversely affects the rights, preferences, or
powers of that series.
--------------------------------------------------------------------------------
30
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 6. INVESTMENTS IN INTEREST RATE SWAPS
Interest rate swaps at June 30, 2005:
UNREALIZED
NOTIONAL FLOATING RATE(a) APPRECIATION/
COUNTERPARTY AMOUNT FIXED RATE (RESET MONTHLY) TERMINATION DATE (DEPRECIATION)
------------------------------- ----------- ---------- --------------- ------------------ --------------
Royal Bank of Canada........... $58,125,000 3.3980% 3.3143% August 25, 2007 $ 621,060
Royal Bank of Canada........... $43,250,000 3.4520% 3.2363% September 16, 2008 663,827
UBS AG......................... $58,125,000 2.8325% 3.3143% August 25, 2006 656,399
UBS AG......................... $58,125,000 3.9900% 3.3143% August 25, 2009 18,476
UBS AG......................... $58,125,000 4.3975% 3.3143% August 25, 2010 (966,631)
UBS AG......................... $58,125,000 4.5950% 3.3143% August 25, 2011 (1,619,327)
Merrill Lynch Derivative
Products AG.................. $43,625,000 3.3200% 3.2800% October 22, 2007 590,151
Merrill Lynch Derivative
Products AG.................. $58,500,000 3.2075% 3.1300% October 2, 2008 1,381,955
Merrill Lynch Derivative
Products AG.................. $20,000,000 3.4100% 3.2100% January 13, 2009 383,454
-----------
$ 1,729,364
-----------
-----------
-------------------
(a) Based on LIBOR (London Interbank Offered Rate). Represents rates in effect
at June 30, 2005.
--------------------------------------------------------------------------------
31
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
PROXY RESULTS (UNAUDITED)
During the six months ended June 30, 2005, Cohen & Steers REIT and Preferred
Income Fund, Inc. shareholders voted on the following proposals at the annual
meeting held on April 28, 2005. The description of each proposal and number of
shares voted are as follows:
Common Shares
--------------------------------------------------------------------------------------
SHARES VOTED AUTHORITY
FOR WITHHELD
--------------------------------------------------------------------------------------
To elect Directors
Bonnie Cohen................................................ 44,626,190 701,709
Richard E. Kroon............................................ 44,641,412 686,487
C. Edward Ward, Jr.......................................... 44,646,544 681,355
Preferred Shares
--------------------------------------------------------------------------------------
SHARES VOTED AUTHORITY
FOR WITHHELD
--------------------------------------------------------------------------------------
To elect Directors
Bonnie Cohen................................................ 21,675 153
Richard E. Kroon............................................ 21,675 153
Willard H. Smith Jr......................................... 21,675 153
C. Edward Ward, Jr.......................................... 21,675 153
--------------------------------------------------------------------------------
32
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
AVERAGE ANNUAL TOTAL RETURNS
(PERIODS ENDED JUNE 30, 2005) (UNAUDITED)
BASED ON NET ASSET VALUE BASED ON MARKET VALUE
-------------------------- --------------------------
SINCE INCEPTION SINCE INCEPTION
ONE YEAR (6/27/03) ONE YEAR (6/27/03)
-------- --------------- -------- ---------------
26.58% 22.20% 27.73% 12.81%
The performance data quoted represents past performance. Past performance is no
guarantee of future results. The investment return will vary and the principal
value of an investment will fluctuate and shares, if redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance data quoted.
REINVESTMENT PLAN
We urge shareholders who want to take advantage of this plan and whose
shares are held in 'Street Name' to consult your broker as soon as possible to
determine if you must change registration into your own name to participate.
OTHER INFORMATION
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the fund may purchase, from time to time, shares of its
common stock in the open market.
A description of the policies and procedures that the fund uses to determine
how to vote proxies relating to portfolio securities is available (i) without
charge, upon request, by calling 1-800-330-7348, (ii) on our Web site at
cohenandsteers.com or (iii) on the Securities and Exchange Commission's Web site
at http://www.sec.gov. In addition, the fund's proxy voting record for the most
recent 12-month period ended June 30 is available (i) without charge, upon
request, by calling 1-800-330-7348 or (ii) on the SEC's Web site at
http://www.sec.gov.
The fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The fund's
Forms N-Q are available (i) without charge, upon request by calling
1-800-330-7348, or (ii) on the SEC's website at http://www.sec.gov. In addition,
the Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Please note that the distributions paid by the fund to shareholders are
subject to recharacterization for tax purposes. The final tax treatment of these
distributions is reported to shareholders on their 1099-DIV forms, which are
mailed to shareholders after the close of each fiscal year. The fund may pay
distributions in excess of the fund's net investment company taxable income and
this excess would be a tax-free return of capital distributed from the fund's
assets. To the extent this occurs, the fund's shareholders of record will be
notified of the estimated amount of capital returned to shareholders for each
such distribution and this information will also be available at
cohenandsteers.com. Distributions of capital decrease the fund's total assets
and, therefore, could have the effect of increasing the fund's expense ratio. In
addition, in order to make these distributions, the fund may have to sell
portfolio securities at a less than opportune time.
--------------------------------------------------------------------------------
33
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
MEET THE COHEN & STEERS FAMILY OF OPEN-END FUNDS:
FOR TOTAL RETURN: FOR TOTAL RETURN:
COHEN & STEERS COHEN & STEERS
REALITY SHARES INSTITUTIONAL REALTY SHARES
DESIGNED FOR INVESTORS SEEKING MAXIMUM TOTAL DESIGNED FOR INSTITUTIONAL INVESTORS SEEKING
RETURN, INVESTING PRIMARILY IN REITS MAXIMUM TOTAL RETURN, INVESTING PRIMARILY IN
SYMBOL: CSRSX REITS
SYMBOL: CSRIX
FOR HIGH CURRENT INCOME: FOR CAPITAL APPRECIATION:
COHEN & STEERS COHEN & STEERS
REALTY INCOME FUND REALTY FOCUS FUND
DESIGNED FOR INVESTORS SEEKING HIGH CURRENT DESIGNED FOR INVESTORS SEEKING MAXIMUM CAPITAL
INCOME, INVESTING PRIMARILY IN REITS APPRECIATION, INVESTING IN A LIMITED NUMBER OF
SYMBOLS: CSEIX, CSBIX, CSCIX, CSDIX REITS AND OTHER REAL ESTATE SECURITIES
SYMBOLS: CSFAX, CSFBX, CSFCX, CSSPX
FOR TOTAL RETURN: FOR TOTAL RETURN:
COHEN & STEERS COHEN & STEERS
INTERNATIONAL REALTY FUND UTILITY FUND
DESIGNED FOR INVESTORS SEEKING MAXIMUM TOTAL DESIGNED FOR INVESTORS SEEKING MAXIMUM TOTAL
RETURN, INVESTING PRIMARILY IN INTERNATIONAL RETURN, INVESTING PRIMARILY IN UTILITIES
REAL ESTATE SECURITIES SYMBOLS: CSUAX, CSUBX, CSUCX, CSUIX
SYMBOLS: IRFAX, IRFCX, IRFIX
FOR MORE INFORMATION ABOUT ANY COHEN & STEERS FUND
OR TO OBTAIN A PROSPECTUS PLEASE CONTACT US AT:
1-800-330-7348, OR VISIT OUR WEB SITE AT COHENANDSTEERS.COM
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE
FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND
OTHER INFORMATION ABOUT THE FUND. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE INVESTING.
COHEN & STEERS SECURITIES, LLC, DISTRIBUTOR
--------------------------------------------------------------------------------
34
--------------------------------------------------------------------------------
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
OFFICERS AND DIRECTORS KEY INFORMATION
Robert H. Steers INVESTMENT MANAGER
Director and co-chairman Cohen & Steers Capital Management, Inc.
757 Third Avenue
Martin Cohen New York, NY 10017
Director and co-chairman (212) 832-3232
Bonnie Cohen FUND SUBADMINISTRATOR AND CUSTODIAN
Director State Street Bank and Trust Company
225 Franklin Street
George Grossman Boston, MA 02110
Director
TRANSFER AGENT -- COMMON SHARES
Richard E. Kroon Computershare
Director 250 Royall Street
Canton, MA 02021
Richard J. Norman (800) 426-5523
Director
TRANSFER AGENT -- PREFERRED SHARES
Frank K. Ross The Bank of New York
Director 100 Church Street
New York, NY 10007
Willard H. Smith Jr.
Director LEGAL COUNSEL
C. Edward Ward, Jr. Simpson Thacher & Bartlett LLP
Director 425 Lexington Avenue
New York, NY 10017
Adam M. Derechin
President and chief executive officer New York Stock Exchange Symbol: RNP
Web site: cohenandsteers.com
Joseph M. Harvey
Vice president This report is for shareholder
information. This is not
James S. Corl a prospectus intended for use in the
Vice president purchase or sale of fund shares.
Past performance is of course no
William F. Scapell guarantee of future results and your
Vice president investment may be worth more or less at
the time you sell.
Lawrence B. Stoller
Secretary
Jay J. Chen
Treasurer
John E. McLean
Chief compliance officer and
assistant secretary
--------------------------------------------------------------------------------
35
COHEN & STEERS
REIT AND PREFERRED INCOME FUND
SEMIANNUAL REPORT
JUNE 30, 2005
COHEN & STEERS
REIT AND PREFERRED INCOME FUND
757 THIRD AVENUE
NEW YORK, NY 10017
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 above.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
None.
Item 10. Submission of Matters to a Vote of Security Holders.
None.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have concluded, based upon their evaluation of the registrant's disclosure
controls and procedures as conducted
within 90 days of the filing date of this report, that these disclosure
controls and procedures provide reasonable assurance that material
information required to be disclosed by the registrant in the report it
files or submits on Form N-CSR is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms and that such material information is accumulated
and communicated to the registrant's management, including its principal
executive officer and principal financial officer, as appropriate, in order to
allow timely decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable.
(a) (2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a- 2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
By: /s/ Adam M. Derechin
-------------------------------
Name: Adam M. Derechin
Title: President and Chief Executive Officer
Date: August 23, 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/ Adam M. Derechin
-------------------------------
Name: Adam M. Derechin
Title: President and Chief Executive Officer
(principal executive officer)
By: /s/ Jay J. Chen
----------------------------------------
Name: Jay J. Chen
Title: Treasurer
(principal financial officer)
Date: August 23, 2005
STATEMENT OF DIFFERENCES
The division sign shall be expressed as....................................[div]
The section symbol shall be expressed as...................................'SS'