<PAGE>
COHEN & STEERS
REALTY INCOME FUND
757 THIRD AVENUE
NEW YORK, NY 10017
[GRAPHIC OMITTED]
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COHEN & STEERS
--------------
REALTY INCOME FUND
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------------------
SEMI-ANNUAL REPORT
JUNE 30, 2000
<PAGE>
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COHEN & STEERS REALTY INCOME FUND, INC.
July 20, 2000
To Our Shareholders:
We are pleased to submit to you the semi-annual report for Cohen & Steers
Realty Income Fund, Inc. for the quarter and six months ended June 30, 2000. The
net asset value per share at that date was $7.04. In addition, a regular
quarterly dividend of $0.13 per share was declared for shareholders of record
June 23, 2000 and payable on July 14, 2000.
MID-YEAR REVIEW
For the quarter ended June 30, 2000, Cohen & Steers Realty Income Fund total
return, based on income and change in net asset value, was 13.1%. This
performance compares to the NAREIT Equity REIT Index* total return of 10.5%. For
the six months ended June 30, 2000, the Fund's total return was 14.0% compared
to the NAREIT Equity REIT Index total return of 13.2%.
Stated simply, the first half of this year has been full of encouraging news
and positive statistics for REIT investors. The group has made what we believe
is a significant bottom and has registered its best absolute and relative
returns in years. For example, the second quarter's absolute total return was
the best since the third quarter of 1997, and relative to the major stock market
averages, REITs turned in their best performance since the first quarter of
1993.
This turnabout was precipitated by a host of technical and fundamental
factors. In our view, it is clear now that REITs were substantially oversold by
the end of last year, and therefore due for a bounce. In addition, the
volatility and price decline in technology stocks, which had been the market
standouts over the past two years, tilted investor sentiment more towards the
stability offered by REITs. More important, in our opinion, was that the
combination of strong underlying real estate fundamentals and exceptional
valuations were just too compelling for investors to ignore any longer. REIT
earnings grew at a healthy rate in the first quarter, surprising many Wall
Street analysts and reflecting the continued strengthening of most property
markets. Whereas most analysts were expecting average cash flow per share growth
in the 7% range, the industry recorded average growth in the 9% range. Further,
income growth for many companies with properties in the strongest markets
actually reaccelerated in the first half of the year, soaring to the low-teens.
As these earnings were reported, most realty stocks reacted very favorably.
In the meantime, construction activity in nearly all property types peaked
in the early part of the year and has since begun to decline substantially.
Thus, it appears that the rally in REIT shares also reflects expectations for a
continuation of what has been an ideal economic and financial market environment
for property owners. Assuming that the Federal Reserve is successful in
engineering an economic slowdown but with no recession, a so-called "soft
landing," we would not expect to see a material rise in construction activity
for the foreseeable future. This would enable property markets to continue to
enjoy positive supply/demand conditions.
Our current holdings reflect our favorable view of the Office, Industrial
and Hotel sectors. Both the Office markets and the Industrial markets are
currently enjoying a "landlord's market" as demand for space is equal to or
greater than supply. In this environment we expect rent growth at a rate greater
than inflation. The Hotel sector continues to benefit from greater than
anticipated demand and a deceleration in construction activity, as well as
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1
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COHEN & STEERS REALTY INCOME FUND, INC.
extremely attractive valuation levels. We are also maintaining our position in
the Health Care sector. While some of this sector's leaders performed well in
the first half, we expect continued improving performance as the senior care
industry moves forward in its nascent recovery.
INVESTMENT OUTLOOK
We believe that one of the strongest determinants of the direction of REIT
share prices is the direction of the underlying property values, which in turn
influences REIT net asset values (NAVs) per share. When the market expects
property values and NAVs to rise, such as they did in the mid 1990's, REIT share
prices can rise strongly and even sell at a premium to the then current NAVs. We
believe that in the bear market of 1998-99, the reverse took place, whereby the
market expected NAVs to decline, due to concerns about deflation and its impact
on hard assets, as well as the prospect of increased construction at the tail
end of the economic cycle. In short order, REITs began to trade at a meaningful
discount from NAV. This expected decline in NAVs, however, never took place. The
near-absence of capital in the REIT industry and the capital market discipline
imposed on all property market participants effectively attenuated construction
and development activity.
Without capital, nearly all REITs were forced to adopt self-financing
business plans and recycle capital through property sales in order to enhance
shareholder value. Share buybacks became very common and, naturally, purchases
of shares at a discount to NAV increased the NAV of the remaining shares. There
continues to be nearly no new common equity financing in the industry. In the
meantime, real estate fundamentals at the property level have remained very
strong. The growing economy has caused the demand for space to exceed supply in
many markets, and this has resulted in higher occupancy levels and stronger rent
growth than nearly anyone could have imagined.
Consequently, we believe that NAVs are on the rise once again. Current and
prospective NAV growth is coming from several sources. If one assumes that the
capitalization rates (earnings yield) for most property types remain unchanged,
then property values should rise in line with operating income growth. Since we
expect industry-wide growth in operating income of 6% this year, this would
imply a commensurate growth in property values. Further, because most REITs
employ fixed-rate debt financing, the growth in earnings and NAV per share is
magnified. In addition, because of the inflation that has been experienced in
land, materials and labor costs for the real estate industry, the replacement
values for many properties are rising. If one adds to this the fact that many
REITs own properties in prime locations that cannot be duplicated, it is easy to
see the potential for continued value creation.
One further factor that we would expect to have a material impact on REIT
share valuations is dividend yield. If the Federal Reserve is successful in
slowing the growth of the economy, we would expect this ultimately to lead to a
leveling off or even a reduction in long-term interest rates, as well as the
yields on U.S. Treasury and high-grade corporate bonds. At the same time,
investor sentiment for higher yielding or "junk" bonds has turned negative as
the performance in this sector has deteriorated over the past few years. We
believe this could be beneficial overall for REITs, as yield-oriented investors
look for other income producing alternatives. Moreover, since the percentage of
cash flow that the average REIT is paying out to investors is at a historically
low level, under our forecast REITs generally should continue to be able to
maintain significant dividend income returns.
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2
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COHEN & STEERS REALTY INCOME FUND, INC.
Ironically, in what we consider to be a positive sign, the flow of money
into real estate mutual funds has been remarkably low this year; less than $400
million flowed into the funds, whose total assets are about $8 billion. While
this is a reversal of the outflows experienced last year, it is well below the
levels experienced in the prior bull market. Considering the extraordinary
relative performance of the sector and the velocity at which capital flows in
this day and age, we would have expected a much higher level of investor
attention. The reason we find this encouraging is that this "quiet recovery", in
our view is typical of what many sectors experience at the beginning of a
reversal and this may indicate that we are still in the early phases of this
upturn.
Nonetheless, the question most asked of us lately is "is it too late to
invest in REITs?" While their strong absolute and relative performance clearly
places REITs in a somewhat less undervalued position than they were six months
ago, we believe the growth in earnings and asset values so far this year
justifies much of their price appreciation. In addition, even after this price
increase, relative to stocks, bonds and their own underlying asset values, we
believe that REITs remain solidly undervalued. Thus, we remain optimistic about
the future of REITs and will continue to seek attractive returns for our
investors.
Sincerely,
Martin Cohen Robert H. Steers
MARTIN COHEN ROBERT H. STEERS
President Chairman
Steven R. Brown
STEVEN R. BROWN
Portfolio Manager
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Cohen & Steers is now online at www.cohenandsteers.com.
Visit our website for daily NAVs, portfolio information,
performance information, recent news articles, literature
and insights on the REIT market.
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* The NAREIT Equity REIT Index is an unmanaged, market capitalization weighted
index of all publicly-traded REITs that invest predominately in the equity
ownership of real estate. The index is designed to reflect the performance of
all publicly-traded REITs as a whole.
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COHEN & STEERS REALTY INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- -----------
<S> <C> <C>
EQUITIES 97.12%
COMMON STOCK 81.68%
APARTMENT/RESIDENTIAL 13.17%
Apartment Investment & Management
Co. -- Class A........................ 7,800 $ 337,350
Camden Property Trust.................... 17,600 517,000
Gables Residential Trust................. 14,800 382,025
Home Properties of New York.............. 14,800 444,000
Summit Properties........................ 21,900 459,900
United Dominion Realty Trust............. 60,300 663,300
-----------
2,803,575
-----------
HEALTH CARE 10.85%
Health Care Property Investors........... 33,600 915,600
Healthcare Realty Trust.................. 26,700 455,569
Nationwide Health Properties............. 54,400 758,200
*Ventas................................... 56,700 180,731
-----------
2,310,100
-----------
HOTEL 7.68%
FelCor Lodging Trust..................... 21,300 394,050
Host Marriott Corp. ..................... 36,100 338,438
MeriStar Hospitality Corp. .............. 42,900 900,900
-----------
1,633,388
-----------
INDUSTRIAL 7.03%
First Industrial Realty Trust............ 23,800 702,100
Pacific Gulf Properties.................. 31,700 794,481
-----------
1,496,581
-----------
OFFICE 22.39%
Arden Realty Group....................... 29,200 686,200
Brandywine Realty Trust.................. 49,200 940,950
CarrAmerica Realty Corp. ................ 20,000 530,000
Crescent Real Estate Equities Co. ....... 41,700 854,850
Highwoods Properties..................... 37,300 895,200
Mack-Cali Realty Corp. .................. 33,400 857,962
-----------
4,765,162
-----------
</TABLE>
See accompanying notes to financial statements.
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4
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COHEN & STEERS REALTY INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- -----------
<S> <C> <C>
OFFICE/INDUSTRIAL 7.73%
Liberty Property Trust................... 34,800 $ 902,625
Prentiss Properties Trust................ 4,000 96,000
Prime Group Realty Trust................. 23,300 353,869
Reckson Associates Realty Corp.--Class B. 11,500 292,531
-----------
1,645,025
-----------
SELF STORAGE 0.50%
Storage USA.............................. 3,600 106,200
-----------
SHOPPING CENTER 12.33%
COMMUNITY CENTER 4.10%
Pan Pacific Retail Properties............ 16,400 330,050
Philips International Realty Corp. ...... 31,200 542,100
-----------
872,150
-----------
REGIONAL MALL 8.23%
JP Realty................................ 27,800 495,188
Macerich Co. ............................ 23,000 507,437
Simon Property Group..................... 20,400 452,625
Taubman Centers.......................... 27,000 297,000
-----------
1,752,250
-----------
TOTAL SHOPPING CENTER.................... 2,624,400
-----------
TOTAL COMMON STOCK (Identified
cost -- $18,201,381).............. 17,384,431
-----------
PREFERRED STOCK 15.44%
Apartment Investment & Management Co.,
9.00%, Series C....................... 29,000 574,563
Apartment Investment & Management Co.,
9.375%, Series G...................... 37,600 782,550
Camden Property Trust, $2.25, Series A
(Convertible)......................... 18,600 449,887
CarrAmerica Realty Corp., 8.57%,
Series B.............................. 10,000 207,813
Colonial Properties Trust, 8.75%,
Series A.............................. 17,500 381,719
Crescent Real Estate, 6.75%, Series A
(Convertible)......................... 4,300 66,650
Crown American Realty Trust, 11.00%,
Series A.............................. 11,100 419,025
Health Care Property Investors, 8.75%,
Series B.............................. 3,200 63,400
Health Care Property Investors, 8.60%,
Series C.............................. 6,300 120,881
United Dominion Realty Trust, 9.25%,
Series A.............................. 9,600 219,600
-----------
TOTAL PREFERRED STOCK (Identified
cost -- $3,074,774)............... 3,286,088
-----------
TOTAL EQUITIES (Identified
cost -- $21,276,155).............. 20,670,519
-----------
</TABLE>
See accompanying notes to financial statements.
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5
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COHEN & STEERS REALTY INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
CORPORATE BOND 0.98%
<S> <C> <C>
#Macerich Co. 144A, Convertible, 7.25%,
due 12/15/02
(Identified cost -- $199,484)......... $235,000 $ 208,269
-----------
COMMERCIAL PAPER 3.21%
Tampa Electric Co., 6.81%, due 7/5/00
(Identified cost -- $684,482)......... 684,482
-----------
TOTAL INVESTMENTS (Identified
cost -- $22,160,121)................... 101.31% 21,563,270
LIABILITIES IN EXCESS OF OTHER ASSETS.... (1.31)% (279,493)
----- -----------
NET ASSETS (Equivalent to $7.04 per share based on
3,024,603 shares of capital stock
outstanding)........................... 100.00% $21,283,777
====== ===========
</TABLE>
-------------------
* Non-income producing security.
# Security is restricted and subject to Rule 144A and trades infrequently. The
Fund prices this security by obtaining a bid and ask price from two market
makers on a weekly basis. The average of the bid and ask prices is used as the
security's price.
See accompanying notes to financial statements.
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6
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COHEN & STEERS REALTY INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified
cost -- $22,160,121) (Note 1)........................ $21,563,270
Cash.................................................... 612
Dividends and interest receivable....................... 170,575
Receivable for investment securities sold............... 1,544
Other assets............................................ 3,892
-----------
Total Assets....................................... 21,739,893
-----------
LIABILITIES:
Payable for dividends declared.......................... 393,198
Payable to investment adviser........................... 11,435
Payable to administrator................................ 5,475
Other liabilities....................................... 46,008
-----------
Total Liabilities.................................. 456,116
-----------
NET ASSETS applicable to 3,024,603 shares of $0.01 par value
common stock outstanding (Note 4)....................... $21,283,777
===========
NET ASSET VALUE PER SHARE:
($21,283,777[div]3,024,603 shares outstanding).......... $ 7.04
===========
MARKET PRICE PER SHARE...................................... $ 6.63
===========
MARKET PRICE PREMIUM/(DISCOUNT) NET ASSET VALUE............. (5.82)%
===========
NET ASSETS consist of:
Paid-in capital (Notes 1 and 4)......................... $23,732,610
Distributions in excess of net investment income........ (46,472)
Accumulated net realized loss on investments sold....... (1,805,510)
Net unrealized depreciation on investments.............. (596,851)
-----------
$21,283,777
===========
</TABLE>
See accompanying notes to financial statements.
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COHEN & STEERS REALTY INCOME FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income (Note 1):
Dividend income......................................... $ 885,168
Interest income......................................... 24,330
-----------
Total Income....................................... 909,498
-----------
Expenses:
Investment advisory fees (Note 2)....................... 62,672
Reports to shareholders................................. 25,698
Administration and transfer agent fees (Note 2)......... 25,587
Professional fees....................................... 23,245
Directors' fees and expenses (Note 2)................... 16,789
Miscellaneous........................................... 16,389
-----------
Total Expenses..................................... 170,380
-----------
Net Investment Income....................................... 739,118
-----------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized loss on investments........................ (1,322,121)
Net change in unrealized appreciation/(depreciation) on
investments.......................................... 3,268,821
-----------
Net realized and unrealized gain/(loss) on
investments..................................... 1,946,700
-----------
Net Increase in Net Assets Resulting from Operations........ $ 2,685,818
===========
</TABLE>
See accompanying notes to financial statements.
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COHEN & STEERS REALTY INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income................ $ 739,118 $ 1,799,780
Net realized loss on investments..... (1,322,121) (1,344,606)
Net change in unrealized
appreciation/(depreciation) on
investments....................... 3,268,821 (2,044,176)
----------- -----------
Net increase/(decrease) in net
assets resulting from
operations.................... 2,685,818 (1,589,002)
----------- -----------
Dividends and Distributions to
Shareholders from (Note 1):
Net investment income................ (785,590) (1,478,851)
Tax return of capital................ -- (441,964)
----------- -----------
Total dividends and
distributions to
shareholders.................. (785,590) (1,920,815)
----------- -----------
Capital Stock Transactions (Note 4):
Increase in net asset value of shares
issued to shareholders in
reinvestment of dividends and
distributions from net investment
income and net realized gain on
investments....................... 82,559 566,758
----------- -----------
Total increase/(decrease) in net
assets........................ 1,982,787 (2,943,059)
----------- -----------
Net Assets:
Beginning of period....................... 19,300,990 22,244,049
----------- -----------
End of period (including distributions in
excess of net investment income of
$46,472 at June 30, 2000).............. $21,283,777 $19,300,990
=========== ===========
</TABLE>
See accompanying notes to financial statements.
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COHEN & STEERS REALTY INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
Financial Statements. It should be read in conjunction with the Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ------------------------------------------
PER SHARE OPERATING PERFORMANCE: (UNAUDITED) 1999 1998 1997 1996 1995
-------------------------------- ---------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...... $ 6.41 $ 7.56 $11.08 $10.70 $ 8.59 $ 8.30
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income.................. 0.24 0.60 0.69 0.69 0.68 0.64
Net realized and unrealized gain/(loss)
on investments....................... 0.65 (1.11) (2.20) 1.65 2.26 0.33
------ ------ ------ ------ ------ ------
Total from investment operations... 0.89 (0.51) (1.51) 2.34 2.94 0.97
------ ------ ------ ------ ------ ------
Less dividends and distributions to
shareholders from:
Net investment income.................. (0.26) (0.49) (0.41) (0.68) (0.68) (0.40)
Net realized gain on investments....... -- -- (1.52) (1.28) (0.15) --
Tax return of capital.................. -- (0.15) (0.08) -- -- (0.28)
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders.................. (0.26) (0.64) (2.01) (1.96) (0.83) (0.68)
------ ------ ------ ------ ------ ------
Net asset value, end of period......... $ 7.04 $ 6.41 $ 7.56 $11.08 $10.70 $ 8.59
====== ====== ====== ====== ====== ======
Market value, end of period............ $ 6.63 $ 6.50 $ 7.81 $11.56 $12.00 $ 9.13
====== ====== ====== ====== ====== ======
---------------------------------------------------------------------------------------------------------
Total market value return(1).............. - 11.86%(2) - 3.57% - 15.90% 13.20% 42.32% 15.97%
====== ====== ======= ====== ====== ======
Total net asset value return(1)........... 14.03%(2) - 7.39% - 13.77% 22.44% 33.32% 12.12%
====== ====== ======= ====== ====== ======
---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
-------------------------
Net assets, end of period (in
millions)............................ $ 21.3 $ 19.3 $ 22.2 $ 32.1 $ 30.8 $ 24.6
------ ------ ------ ------ ------ ------
Ratios of expenses to average net
assets (before expense reduction).... 1.70%(3) 1.66% 1.52% 1.42% 1.45% 1.73%
====== ====== ====== ====== ====== ======
Ratios of expenses to average net
assets (net of expense reduction).... 1.70%(3) 1.58% 1.51% 1.42% 1.45% 1.73%
====== ====== ====== ====== ====== ======
Ratio of net investment income to
average net assets (before expense
reduction)........................... 7.39%(3) 8.31% 6.89% 6.07% 7.34% 7.67%
====== ====== ====== ====== ====== ======
Ratio of net investment income to
average net assets (net of expense
reduction)........................... 7.39%(3) 8.39% 6.90% 6.07% 7.34% 7.67%
====== ====== ====== ====== ====== ======
Portfolio turnover rate................ 22.42%(2) 56.88% 88.32% 53.76% 30.45% 37.75%
====== ====== ====== ====== ====== ======
</TABLE>
-------------------
(1) Total market value return is computed based upon the American 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 reinvested
dividends.
(2) Not annualized.
(3) Annualized.
See accompanying notes to financial statements.
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COHEN & STEERS REALTY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Cohen & Steers Realty Income Fund, Inc. (the "Fund") was incorporated under
the laws of the State of Maryland on June 21, 1988 and is registered under the
Investment Company Act of 1940, as amended, as a closed-end non-diversified
management investment company. The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Portfolio Valuation: Investments in securities that are listed on the New
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected at the close of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
for the day.
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 mean of the
current bid and asked prices as reported by NASDAQ, the National Quotations
Bureau or such other comparable sources as the Board of Directors deems
appropriate to reflect their fair market value. Where securities are traded on
more than one exchange and also over-the-counter, the securities will generally
be valued using the quotations the Board of Directors believes reflect most
closely the value of such securities.
Short-term debt securities, which have a maturity of 60 days or less, are
valued at amortized cost which approximates value.
Security Transactions and Investment Income: Security transactions are
recorded on trade date. Realized gains and losses on investments sold are
recorded on the basis of identified cost for accounting and tax purposes.
Interest income is recorded on the accrual basis. Dividend income is recorded on
ex-dividend date. Interest income is recognized on the accrual basis. Discounts
and premiums on securities purchased are amortized using the effective yield
basis over their respective lives.
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid quarterly. A portion of the Fund's dividend may
consist of amounts in excess of net investment income derived from non-taxable
components of the dividends from the Fund's portfolio investments. Net realized
capital gains, unless offset by any available capital loss carryforward, are
distributed to shareholders annually. Distributions to shareholders are recorded
on the ex-dividend date.
--------------------------------------------------------------------------------
11
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COHEN & STEERS REALTY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Dividends from net income and capital gain distributions are determined in
accordance with U.S. Federal Income Tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
return of capital and capital gain distributions received by the Fund on
portfolio securities.
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 ADVISORY AND ADMINISTRATION FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
Investment Advisory Fees: Cohen & Steers Capital Management, Inc. (the
"Adviser") serves as the Fund's investment adviser pursuant to an investment
advisory agreement (the "Advisory Agreement"). Under the terms of the Advisory
Agreement, the Adviser provides the Fund with the day-to-day investment
decisions and generally manages the Fund's investments in accordance with the
stated policies of the Fund, subject to the supervision of the Fund's Board of
Directors. For the services provided to the Fund, the Adviser receives a monthly
fee in an amount equal to 1/12th of 0.65% of the average daily net assets of the
Fund (approximately 0.65% on an annual basis). For the six months ended June 30,
2000, the Fund incurred $62,672 in advisory fees.
Administration Fees: The Chase Manhattan Bank N.A., through its affiliate
Chase Global Funds Services Company (the "Administrator"), serves as the Fund's
administrator pursuant to an Administration agreement (the "Agreement") with
Cohen & Steers Realty Income Fund, Inc., Cohen & Steers Realty Shares, Inc.,
Cohen & Steers Institutional Realty Shares, Inc., Cohen & Steers Special Equity
Fund, Inc. and Cohen & Steers Equity Income Fund, Inc. (the "Funds"). Under the
terms of the Agreement, the Administrator maintains the Fund's books and
records, prepares financial information for the Funds' tax returns, proxy
statements, quarterly and annual reports to shareholders and generally assists
in all aspects of Fund operations, other than providing investment advice,
subject to the supervision of the Funds' Board of Directors. For the services
provided the Funds, the Administrator receives a monthly fee at the annual rate
of 0.08% on the first $500 millions of the Funds' average daily net assets and
at lower rates on the Funds' average daily net assets in excess of that amount.
For the six months ended June 30, 2000, the Fund incurred $25,587 in
administration fees.
Directors' Fees: Certain directors and officers of the Fund are also
directors, officers and/or employees of the Adviser. None of the directors and
officers so affiliated received compensation for their services as directors of
the Fund. For the six months ended June 30, 2000, fees and related expenses
accrued for non-affiliated directors totaled $16,789.
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
six months ended June 30, 2000 totaled $4,393,232 and $4,489,015, respectively.
At June 30, 2000, the cost and unrealized appreciation or depreciation in
value of the investments owned by the Fund, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost............................................. $22,160,121
-----------
Gross unrealized appreciation.............................. $ 1,338,442
Gross unrealized depreciation.............................. $(1,935,293)
-----------
Net unrealized depreciation................................ $ (596,851)
===========
</TABLE>
--------------------------------------------------------------------------------
12
<PAGE>
--------------------------------------------------------------------------------
COHEN & STEERS REALTY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 4. CAPITAL STOCK AND DISTRIBUTION REINVESTMENT
At June 30, 2000, the Fund has one class of common stock, par value $0.01
per share, of which 50 million shares are authorized and 3,024,603 shares are
outstanding.
Distributions during the six months ended June 30, 2000 resulted in 12,306
shares being issued at an average price of $6.71 through the dividend
reinvestment plan.
Registered shareholders may elect to receive all distributions in cash paid
by check mailed directly to the shareholder by The Chase Manhattan Bank,
("Chase") as dividend paying agent. Pursuant to the Automatic Reinvestment Plan
(the "Plan") shareholders not making such election will have all amounts
automatically reinvested by Chase, as the Plan agent, in whole or fractional
shares of the Fund.
NOTE 5. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED AND NET INCREASE/
UNREALIZED (DECREASE) IN NET
TOTAL INVESTMENT NET INVESTMENT GAIN/(LOSS) ON ASSETS RESULTING NET ASSETS AT
QUARTERLY PERIOD INCOME INCOME INVESTMENT FROM OPERATIONS END OF PERIOD
---------------------- ------------------ ------------------ -------------------- -------------------- -------------
PER PER PER PER PER
FISCAL 2000 AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31.............. $ 404,033 $0.13 $ 319,187 $0.11 $ (123,916) $(0.05) $ 195,271 $ 0.06 $19,145,510 $6.34
June 30............... 505,465 0.17 419,931 0.13 2,070,616 0.70 2,490,547 0.83 21,283,777 7.04
---------- ----- ---------- ----- ----------- ------ ----------- ------
$ 909,498 $0.30 $ 739,118 $0.24 $ 1,946,700 $ 0.65 $ 2,685,818 $ 0.89
========== ===== ========== ===== =========== ====== =========== ======
PER PER PER PER PER
FISCAL 1999 AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
March 31.............. $ 540,840 $0.18 $ 449,816 $0.15 (1,593,152) $(0.52) $(1,143,336) $(0.37) $21,000,169 $7.02
June 30............... 500,803 0.17 426,575 0.14 1,934,118 0.65 2,360,693 0.79 22,903,661 7.64
September 30.......... 513,565 0.17 429,634 0.15 (2,313,954) (0.78) (1,884,320) (0.63) 20,562,066 6.84
December 31........... 584,176 0.19 493,755 0.16 (1,415,794) (0.46) (922,039) (0.30) 19,300,990 6.41
---------- ----- ---------- ----- ----------- ------ ----------- ------
$2,139,384 $0.71 $1,799,780 $0.60 $(3,388,782) $(1.11) $(1,589,002) $(0.51)
========== ===== ========== ===== =========== ====== =========== ======
PER PER PER PER PER
FISCAL 1998 AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
September 30.......... $ 575,338 $0.20 $ 464,942 $0.16 $(2,534,416) $(0.86) $(2,069,474) $(0.70) $27,526,085 $9.37
December 31........... 597,425 0.20 479,894 0.16 (1,393,612) (0.47) (913,718) (0.31) 22,244,049 7.56
---------- ----- ---------- ----- ----------- ------ ----------- ------
$1,172,763 $0.40 $ 944,836 $0.32 $(3,928,028) $(1.33) $(2,983,192) $(1.01)
========== ===== ========== ===== =========== ====== =========== ======
</TABLE>
-------------------
AVERAGE ANNUAL TOTAL RETURNS*
(PERIODS ENDED JUNE 30, 2000)
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
---------- ---------- ----------
<S> <C> <C>
0.01% 9.94% 12.70%
</TABLE>
-------------------
* Based on net asset value.
--------------------------------------------------------------------------------
13
<PAGE>
--------------------------------------------------------------------------------
COHEN & STEERS REALTY INCOME FUND, INC.
PROXY RESULTS
During the six month period ended June 30, 2000, Cohen & Steers Realty
Income Fund, Inc. shareholders voted on the following proposals at the annual
meeting held on April 25, 2000. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
SHARES VOTED SHARES VOTED
FOR AUTHORITY WITHHELD
---------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect Directors
George Grossman 2,558,638 47,908
Robert H. Steers 2,559,185 47,361
---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VOTED SHARES VOTED SHARES VOTED
FOR AGAINST ABSTAIN
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify PricewaterhouseCoopers LLP as
the Fund's certified public accountantant 2,567,230 21,560 17,756
---------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
14
<PAGE>
--------------------------------------------------------------------------------
COHEN & STEERS REALTY INCOME FUND, INC.
<TABLE>
<S> <C>
OFFICERS AND DIRECTORS
Robert H. Steers INVESTMENT ADVISER
Director and Chairman Cohen & Steers Capital Management, Inc.
757 Third Avenue
Martin Cohen New York, NY 10017
Director and President (212) 832-3232
Gregory C. Clark FUND ADMINISTRATOR AND TRANSFER AGENT
Director Chase Global Funds Services Co.
73 Tremont Street
George Grossman Boston, Massachusetts 02108
Director (800) 437-9912
Jeffrey H. Lynford
Director CUSTODIAN
The Chase Manhattan Bank, N.A.
Willard H. Smith, Jr. One Chase Manhattan Plaza
Director New York, New York 10081
Elizabeth O. Reagan LEGAL COUNSEL
Vice President Simpson Thacher & Bartlett
425 Lexington Avenue
Adam Derechin New York, NY 10117
Vice President and Assistant
Treasurer
American Stock Exchange Symbol: RIF
Lawrence B. Stoller Website: www.cohenandsteers.com
Assistant Secretary
This report is for shareholder
information. This is not a prospectus intended for use in the
purchase or sale of Fund shares. Past performance is,
of course, no guarantee of future results and your
investment may be worth more or less
at the time you sell.
</TABLE>
--------------------------------------------------------------------------------
15
STATEMENT OF DIFFERENCES
The division sign shall be expressed as...................................[div]
